Winds of change could bring home Philippines’ economic exiles

This is the second article written by William Pesek in praise with what the current administration of President Aquino is doing that is drawing attention of confidence towards a better future from expats like him.  One must remember though the President needs every help he can get in making this cultural and economic transformation. For Filipino expats like myself, it means making an effort too in promoting the country as a primary destination for foreign investment for Australian business. We may not have the huge population or market size of China or India but a lot of the other things that make such investments sustainable and easy to do. Like we speak English (though more American English), a high customer service driven ethic, abundant skilled labour and professionals (from ICT to Nurses to tradesmen to seamen), and most of all for me what spells the biggest difference is a hospitable and friendly culture that will be there despite of life’s daily challenges. This last difference is something we can appreciate after living for an extend period abroad after coming from the Philippines (or vice versa). Its from here I get to see that’s there is more to life than pure economic growth or high income status for a country to be the place to be in.

Originally read in the Sydney Morning Herald

Philippines tackling brain drain

By William Pesek

last updated: April 11, 2012 06:19:34 PM

Aegis PeopleSupport workers at their workstations inside the company's offices in Makati City, near Manila, Philippines, Nov. 11, 2011. Many companies have moved their customer service lines to Manila to take advantage of workers who speak American English and are familiar with American culture. (Jes Aznar/The New York Times) - NYT - JES AZNAR
Aegis PeopleSupport workers at their workstations inside the company’s offices in Makati City, near Manila, Philippines, Nov. 11, 2011. Many companies have moved their customer service lines to Manila to take advantage of workers who speak American English and are familiar with American culture. (Jes Aznar/The New York Times) – NYT – JES AZNAR

Ethiopia isn’t the first place most would look for clues about Asia’s economies. And Jose Rabacal, a 29-year-old Filipino sipping beer at an Addis Ababa airport cafe, doesn’t think he’s a human economic indicator.

But he is, and so are his 10 compatriots as they bided their time during a multihour layover. Each moved to Africa from the Philippines for opportunities that leaders failed to offer at home. Each left behind a family they see once a year.

“I haven’t seen my three kids in 14 months,” says Rabacal, who works in mining in South Africa. “But the money I make here is more than I could ever hope to make at home. It would be nice if my government thought about the sacrifices we Filipinos, we Asians, are forced to make.”

The good news is that the Philippines now has a president who not only gets the problem, but is doing something about it.

Since taking office in 2010, Benigno Aquino has attacked corruption, gotten a handle on public expenditures, improved infrastructure and worked to boost competitiveness. These days, the Philippines can raise funds almost as cheaply as investment-grade Italy.

Yet the issue of remittances from expatriate earnings, such as those sent home by Rabacal and his friends, has long been ignored in Manila. It’s the human equivalent of China’s vast currency reserves. Conventional wisdom says hoarding $3.2 trillion in cash is a strength, the ultimate rainy-day fund. In reality, it’s a trap. If China unloads that cash, markets crash.

Remittances are often called the Philippines’ secret weapon. About 10 percent of the nation’s 102 million citizens work overseas and the cash they send home supports domestic consumption. That helped insulate the nation from global shocks after Lehman Brothers blew up in 2008.

But there is a growing realization that remittances are a trap of a different kind. Sending so many young, hard-working citizens abroad causes a brain drain that lowers the quality of the labor force and, ultimately, growth. It leads to social problems as entire generations of children grow up without one or both parents.

“The president wants to make being an overseas Filipino worker a choice, not a necessity,” Finance Secretary Cesar Purisima said.

Purisima is matter-of-fact about the pros and cons of remittances. “We play the hand we are dealt,” he says, referring to a three-decades-old practice of exporting ever-growing numbers of workers.

The government understands the short-term benefit of all that cash pouring in. And it is working to see that money used productively, including getting more of it invested in financial assets.

“Used properly, (remittances) can help strengthen countries in the long run, not just provide instant gratification today,” says Eric-Vincent Guichard, the chief executive officer of London-based Homestrings, which helps members of the Filipino diaspora with investment opportunities.

The real goal is to “create conditions for the workers to come back,” said Purisima.

So the Aquino administration is overhauling the education system. More funding is being met with efforts to upgrade the curriculum. And Aquino is rooting out the corruption that stymies the building of roads, bridges, ports, communications and power grids.

It also means doing two things previous administrations talked about but didn’t do: attracting foreign investment and cultivating industries such as tourism. For the first, the plan is to harness the natural beauty and vast biodiversity of the archipelago’s 7,000-plus islands.

For the other, the Philippines is trying to increase back-office outsourcing and manufacturing.

Aquino’s team is taking on overpopulation by offering family-planning services. That has been a difficult topic in a deeply Catholic nation, but condoms, birth control pills and other contraceptives are now more widely available.

Finance ministers are one part economic manager, one part cheerleader and one part shrink. Along with stabilizing finances and waving the investment flag, they must also sell the idea that change is afoot. That’s easier to do if your policies are working, which appears to be true in the Philippines.

“I’m a big believer in the Pygmalion concept — if people believe things can change for the better, they will,” Purisima says. “And Filipinos are beginning to believe again — to hope again.”

That means the Philippines’ economic exiles might be seeing their kids more than once a year in the future.

BLOOMBERG NEWS

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