There is much work to do in the Philippines

The recent conference sponsored by the Joint Foreign Chambers (JFC) and ArangkadaPhilipines, a business advocacy group shows the current Philippine government still have so much to do to move the country forward. It will need all the help it may get particularly from foreign investors in creating jobs in the country.

From BusinessWorld Philippines

6 February  2012

By Rafael Alunan

Rising to the challenge

A year ago, the Joint Foreign Chambers produced a seminal document entitled “Arangkada Philippines” that contained 471 specific recommendations to move the country forward. Two weeks ago, they unveiled the status of those recommendations based on the evaluation of over 50 experts that included senior consultants, former public officials, business execs and academics. A six-star rating system was used: 1 star — no longer relevant; 2 stars — backward/regression; 3 stars — not ongoing; 4 stars — started; 5 stars — substantial progress; 6 stars — completed.

The 471 recommendations were lumped in four categories as follows: Part I — Growing Too Slow; II — Becoming More Competitive; III — Seven Big Winning Sectors; IV — General Business Environment. In summary, 243 were rated 1-3 stars, while 228 received 4-6 stars. Of the latter, 185 recommendations were evaluated to have been started, 36 are seen to be progressing well, while seven have been completed. Six of the seven recommendations that reached completion belonged to Part III (7 Big Winning Sectors); the seventh belonged to Part IV (General Business Environment).

Overall, after one year, 45% of the recommendations were rated above 3 stars, while 55% fell within 3 stars and below. Three parts are within reach of the halfway mark, but Part II — Becoming More Competitive — was a big fat ZERO. It’s disconcerting because we’ve deteriorated in the following categories: Best Countries for Business; Index of Economic Freedom; World Competitiveness Yearbook; Doing Business; Paying Taxes; and Travel and Tourism Competitiveness. We improved slightly, but still not trending well, in the following areas: Failed States Index; Corruption Perception Index; and the Human Development Report.

Offhand, I would say “not bad” after one year. On the other hand, many of these recommendations are really not new that the public and private sectors just haven’t been able to start or complete for the longest time. What else could explain our dismal international standing all these years notwithstanding the better GDP growth average in the past decade? One reason is that growth was not inclusive and did not benefit the poor, even the middle class, if I may add. And there’s the corruption issue that has crippled our institutions. You may go to or to www.investhpilippines.infofor more detailed information.

Another gauge is our mixed performance to-date in meeting our eight Millennium Development Goals: 1 — eradicate extreme poverty and hunger; 2 — achieve universal primary education; 3 — promote gender equality and promote women; 4 — reduce child mortality; 5 — improve maternal health; 6 — combat HIV/AIDs, malaria and other diseases; 7 — ensure environmental sustainability; and 8 — develop a global partnership for development. Based on the probability of hitting our targets by 2015, Goals 2 and 5 were found LOW; Goals 1, 3 and 6 were rated MEDIUM; and Goals 4, 7 and 8 got a HIGH rating. With four years to go, we really have to double, if not triple, time.

It is apparent that there is a lack of synchronicity between the national and local governments, and with other sectors of society. The lack of it is turning off new investments that are finding their way to stable and predictable environments in ASEAN and elsewhere. Arangkada means accelerate but at the rate we’re sputtering, HSBC may be right that it will take us until 2050 to becoming the world’s 16th largest economy, and it’s not even clear if that implies reaching First World status. FVR told me last week we could very well be that large, yet, remain a Third World country if we don’t undergo a serious national transformation.

AmCham ICIP estimates that the country’s GDP must grow annually at an average of 11.6% to reach high income status by 2030. That assumes a population of 133 million, a GDP of $1.6 trillion and per capita income of $12,087. Compare that to today’s 100-million populace, GDP of approximately $190 billion, and per capita income of just under $2,000. Moreover, according to UNCTAD, our FDIs are trending as of 2010 at $1.6 billion annually on average, versus, $19.6 billion for Singapore; $6.5 billion for Thailand; $4.7 billion for Malaysia; and around $3.8 billion each for Indonesia and Vietnam. It seems the only thing rising consistently every year for us is OFW remittances.

That’s quite a challenge to surmount in two decades, which we must, if we are to win our future. On top of that, there are external factors that bear watching that could make our steep climb even steeper: a.) rumors of war in the Middle East war over Iran’s nuclear bomb ambitions some time this year, and the growing resentments and hostility between the Philippines and China over the Spratlys; and b.) the euro zone’s probable meltdown and its shock waves worldwide. The consequences of a war with Iran, deteriorating relations with China and the rising likelihood of Europe’s collapse are definitely not good for the region’s stability and our national security.

Overwhelming as they are, I cannot help but ask if our public leaders have dusted off their contingency plans to mitigate these anticipated external shocks to our economy, and to our OFWs safety abroad. There are around two million Pinoys deployed between the Mediterranean and the Persian Gulf whose jobs and lives are at risk, not to mention their families’ well-being back home. Interrupted oil flows through the Straits of Hormuz feeding the world’s industries, and the potential for another world war from that region, raises the inevitable question: how prepared are we to save ourselves from humanity’s follies and manage all the dilemmas that flow from it?

There are tough days ahead and it will need the full concentration, decisiveness and synchronicity of government and society to move the country forward faster than usual, while at the same time protecting the nation from the harm that may arise from external shocks. The only way out is to rise above ourselves and act in the best interests of the country now, not later. And while we’re at it, may God help us all.

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