The recent State of the Nation Address by Gloria Macapagal-Arroyo painted a rosy picture that, for a lack of a better way to describe it (pardon my French): broke a lot of people’s bullshit threshold. Before you characterize this post as yet another dissenting opinion, I enjoin you to read because the Filipino nation requires us to look at ourselves with fresh, honest and open eyes.
The economic upheaval going around the world certainly makes today, an interesting time. To speak of the Philippines in relation to the global financial “meltdown” alone will be missing the point. To speak of millions of lost jobs and uprooted lives as simply, “hurt” is deflecting from the absence of jobs that has long existed in the Philippines, global economic crisis or not. To say, “crisis” in front of the Filipino is nothing new, yet there is no sense of urgency, no zen-like calm that we are in the zone, hard at work in meeting the test of generations, and strengthening of our national resolve.
“We are weathering the storm,” is the gospel Filipino leaders have been selling for years. In my humble opinion, relatively unscathed, is a false gospel. Truth is, the multiple-shocks to the global economy is opening opportunities everywhere even as the world requires greater energy to fuel the digital, always connected lifestyle that is transforming the world. The Filipino nation requires one to look at ourselves with fresh, honest and open eyes.
It has been asked often enough: economic indicators are telling us of growth. More than 30 quarters of positive growth yet why can’t the Filipino feel this?
Take a look at this snap:
The economy is growing, but investment is declining
Those two graphs are from the World Bank. It is from a paper “On the Rising Growth and Declining Investment in the Philippines: The Puzzle of the Philippines”.
Bocchi wrote:
“Three reasons explain this puzzle: in the Philippines, investment does not grow at the pace of GDP because the public sector cannot afford it, the capital-intensive private sector does not want to expand that fast, and the rest of the private sector does not need it.”
What does he mean? The Filipino Government, Alessandro Magnoli Bocchi says, can no longer sustain spending because it has to make up for years of weak performance. It has to pay for debt. On the other hand, an oligopolistic private sector, he adds: “does not find it convenient to expand investment at the economy’s fast pace, as it expects little return”. Lastly, Bocchi says the fast-growing businesses in the Philippines: BPOs, electronics assembly, even information and communication does not need to increase investment at rate the economy is growing to enjoy growth in their business.
if there is any doubt that the Philippines has not performed as well as it ought to, a quick look at the recently compiled Global Competitiveness Report ranks the Philippines as 71, unchanged from 2007-2008 and falls behind Vietnam. This is a snap from the Global Competitiveness Index:
The Global Competitive Index rankings 2008 to 2009 comparison
The Philippines was ranked 85 under basic requirements; 105 in institutions; 92 in infrastructure; 53 in Macroeconomic stability; and 90 in Heath and primary education:
Institutions, Infrastructure, Macroeconomic stability, health/primary education
In higher education and training the Philippines was ranked 60; good market efficiency 81; labor market efficiency: 101; financial market sophistication: 78; technological readiness: 70; market size, 34:
Higher Education, Market Efficiency, Labor, Finance, Tech readiness
Under innovation and sophistication: the Philippines is ranked 67; specific to business sophistication, 57, innovation at 76:
Innovation and Sophistication
What does the Global Competitive Index say of our neighbor, Thailand?
“Thailand, ranked 34th, has fallen six places since last year. The country derives certain competitive strengths from its market size as well as the efficiency of its labor market (rank 13th), the result of strong cooperation in labor-employer relations (ranked 17th) and low non-wage labor costs (ranked 20th), for example. The country’s infrastructure is also very good, particularly roads and air transport. But the country lags in technological readiness (66th), with low penetration rates for Internet use, broadband, and mobile telephones in particular. The health of Thailand’s workforce is another area of concern (ranked 76th), with high rates of HIV, tuberculosis, and malaria (ranked 108th, 96th, and 93rd, respectively). Some aspects of the financial market also require attention, especially concerns about the soundness of the banking sector. Given the political turmoil experienced over the past year, it is notable that the decline in the overall ranking this year can be traced in part to a weaking assessment of government institutions, with increasing concerns about the transparency of policy making and public-sector efficiency more generally. (emphasis mine)
That last point is most interesting, isn’t it?
Here’s what GCI says about Vietnam:
Vietnam, at 70th place, enjoys specific key advantages in various areas, particularly related to its relatively large market size and the functioning of its labor market, with strong female participation in the labor force (ranked 10th) and a strong relationship between pay and productivity in the economy (ranked 17th). But the country’s overall competitive position is eroded by weakness in the quality of infrastructure and institutions, as well as in higher education and training. Vietnam’s infrastructure gets a poor rating overall (93rd), especially with regard to roads and port facilities. In terms of quality of its institutions Vietnam suffers from burdensome government regulation and weak auditing and reporting standards, where it is ranked 105th and 106th, respectively. And given the increasing importance of innovation for the country’s competitiveness, its low university enrollment rate (placing the country 106th) and the poor assessment of the quality of its educational system (ranked 120th) require urgent attention.
What of the Philippines?
Here is a copy of the Global Information Technology Report 2008-2009:
Global Information Technology Report
“… at 71st place, benefits from its relatively large market size (rank 34th). In addition, the country has seen an improvement in its macroeconomic stability since last year, with a shrinking government budget deficit and lower public debt. On the other hand, the main obstacles to greater competitiveness are related to the quality of the country’s public institutions and a lack of efficiency in its labour market. The institutional environment is characterized by the perception that government spending is highly wasteful (ranked 120th), a lack of evenhandedness in the government’s dealings with the private sector (117th), and general concerns about corruption in the public sphere. In addition, the threat of terrorism imposes significant costs on businesses in the country (ranked 125th). With regard to labor market inefficiencies, wages are not flexibly determined by companies (108th), regulations impede firms from hiring and firing workers (ranked 108th), all of which hinders job creation.”
“Government spending is highly wasteful,” and “the lack of evenhandedness in the government’s dealings with the private sector” is a huge accusation. Jarius Bondoc recently wrote about a letter from Gernman Cancellor Angela Merkel to Philippine President Gloria Arroyo. The letter is about the unpaid millions the Philippine government owes German company Fraport-Piatco for the construction of a new international airport terminal in Manila:
Three administrations allegedly extorted from Fraport-Piatco. Worst was the Arroyo team, for which they hired in 2001 a “PR consultant” as $20-million briber, Sen. Ed Angara said then. In Mar. 2007 Malacañang hurriedly gave Fraport-Piatco $62 million (P3 billion) in belated down payment for the expropriation. Reports had it later that only half the amount went to Piatco, while the other half went back to admin hands for the elections in May that year. In Sept. 2008 Malacañang prepared to pay another $400 million through two state banks. But a group associated with ex-Sen. Bobby Tañada exposed the scam to reimburse Fraport $136 million (P6.8 billion) more than it had sunk into NAIA-3.
Merkel must have heard of the shenanigans. “As you know, Fraport suffered substantial losses as a result of the expropriation,” she reminded Arroyo. “Fraport has already been promised compensation several times by the Government of the Philippines, but unfortunately the full amount has not yet been paid. This has cost the German taxpayer Euro 42 million, because in 2008 Fraport had to call on a Federal Government guarantee for that amount.”
That’s just one. How does the old adage go again? Where there is smoke there is fire?
Neither Global Competitiveness Index nor the World Bank paper on Rising Growth and Declining Investment in the Philippines have even mentioned any needed constitutional reforms. In either paper, has there been no mention of economic constraints that the Philippines imposes because of its constitution. The GCI mentions this: “With regard to labor market inefficiencies, wages are not flexibly determined by companies (108th), regulations impede firms from hiring and firing workers (ranked 108th), all of which hinders job creation.” Certainly, this labor problem is a matter of law, a matter that Congress can readily address with public policy.
On the one hand, Bocchi notes what the Global Competitive Index skips (because the GCI is not concerned with it):
“Yet, despite the resulting decline in investment, the economy keeps growing; and this is because its least protected sectors – the informal labor market and the non-capital-intensive activities – stimulate demand and drive supply. On the demand-side, work-seekers – denied entry into the formal labor market – migrate massively to industrialized economies, attracted by better remuneration; the resulting remittances and transfers (which, combined, account for over 13 percent of GDP) fuel consumption-led-growth – and lower the penalty for élite-apturing policies. On the supply-side, the service sector and a few non-capital-intensive manufactures, free from rent-capturing regulations, boost exports.”
The puzzle according to the world bank is that private sector, in spite of the favorable business climate refuses to reinvest in the Philippines. Bocchi keeps stressing that:
“… but there is still little willingness to invest. Despite the more favorable environment, the savings-investment gap widened in recent years and the domestic appetite for investment remained stagnant (Table 2 and Figure 10). As a result of present growth and deficits, the “public debt-to-GDP ratio” is declining, but public investment has not picked up. The low and declining lending interest rate (Figure 9) suggests that, in spite of the ample liquidity, the demand for credit is not increasing. Also, despite the favorable lending-deposit spread, banks are cautious in their lending to the private sector (Figure 12), preferring to finance the government in local and foreign currency.14 In short, the private sector still invests little. Without a deeper reform of the investment climate, businesses are unlikely to lift spending on new plant and equipment (World Bank, 2005c).”
One thing Bocchi has missed is the fact that the Philippines still has one of the highest cost of electricity in Asia. This is detrimental to any reinvestment in Information and Communication.
*** added emphasis: ***
That said, has the Philippines reached a chicken and an egg problem?
“Gintis proposes a theory called “strong reciprocity,” arguing that bonds of trust and cooperation within a community often serve as greater motivation than material reward. The theory is based on the premise that humans evolved in small groups with strong social contracts and plenty of contact with strangers. Cooperation within the tribe was advantageous so long as free riders were punished. It was also the best gambit on encountering strangers. Cooperation, particularly in times of famine, was the only means of survival, so altruism became a favored evolutionary trait.”
The Altruism in Economics via cvj
Conclusion: government’s underspending = worsening economy
The government is the economic actor that should take the risks and work to stimulate the economy. Following the principle of subsidiarity, the government should move in when the private sector fails to induce development and increase social welfare – and with statistics for personal consumption spending and capital formation falling, the government should have acted swiftly and strongly to avert contraction. In this respect, as the first quarter GDP data show, the Arroyo government failed dismally, showing a lack of foresight and blinded vision by not spending high enough.
* * *
updated:
Between @caffeinesparks’ “Number-crunching, Lying and Arroyo’s SONA,” and the arguments presented here, I hope the reader is able to distill that the Philippines is standing on a house of cards.
* * *
If we agree with Bocchi, and that the Philippine government is at the point where it can no longer spend itself out of its troubles, what now?
This is the bitter pill. Without raising taxes, the government very well need to cut operational expenditure, balance its budget and to make itself more efficient by whatever means necessary. It has to be more liberal and cut the bureaucracy. If it means seeding much of its services to local governments: health care, education, civil defense, jails to do so, it must, even at the risk of making those service less useful to the general public. It needs to find ways to collect taxes better: remove income tax but raise value added taxes to make up for the loss.
President Arroyo’s recent State of the Nation called for a Department of ICT, without much data, it hints, it signals at least deeper regulation by the government on all things digital. That would be a mistake. Yahoo! and Nielsen’s study on Philippine Internet habits point to a young Internet sector. Hardly anyone is doing online transactions. Slowly, Filipinos are favoring the Internet across the country over print, radio, and television. Here is an opportunity to break oligopolistic practices. Make Internet use more liberal. Reduce taxes on books, computers, mobile phones, information technology, whether consumer or for commercial use. Encourage the population to be more technologically inclined. With these devices in place, telecoms would have to upgrade their infrastructure to meet up with the pent-up demand.
Another area that needs to open up is the use of mobile money. Not everyone banks, so encourage the use of mobile phones as wallets and act as credentials. Money that is prepaid, existing on the phone can be used to spend for anything.
Without local banks lending to start local businesses that is a surefire way to stifle any innovation in the local sphere. No money to fund startups and venture caps. And how do you open it up? Even if the Philippine government doesn’t reduce cost for books, and technology, there must be competition and that competition can come from Filipinos already sophisticated in their thinking. While entrepreneurship is clearly not a universal gift the fact remains the Filipino diaspora: more than ten million Filipinos living outside the Philippines is the biggest catalyst to invest back to challenge the oligopolistic tendencies of the status quo. This means not just sending kids to school in the Philippines or fueling their material needs, but to build businesses and infrastructure of every sort. Filipinos need jobs, the diaspora can fund those enterprises. That does not require government at all.
When Gloria Arroyo gave her state of the nation address, twitter was fuming, so much so that it ranked as a trending topic. If you want to see some of it, here are some archived tweets:
Archive of Tweets on Gloria Arroyo’s 2009 State of the Nation Address
See, the bullshit meter really got broken.
The Philippines would be in the same state it is now, with or without the global economic challenges that have risen. The factor terrorism plays is perhaps the weakest of reasons because it is an endemic of the sociological challenges in the Philippines. The fact is, the answers to the pressing challenges of the Filipino relies less on external factors like foreign direct investment, but through investment by regular Filipinos that goes hand in hand with fixing government institutions. The moment Filipinos everywhere become open and honest about their skill set and the resources we have at hand, is the first step towards prosperity for all.
* * *
References
*edited* i am just referencing the embedded documents to my tumblr. Think too much embedded scribds was crashing my browser.
“On the Rising Growth and Declining Investment in the Philippines: The Puzzle of the Philippines”
Spatial Disparities and Development Policy in the Philippines;
Global Competitive Report 2008-2009.
Oh, and thanks to @mlq3 and @caffeinesparks for the PDFs and links.
Popularity: 3% [?]
Cocoy – Would love to hear you expound on the second clause in this sentence:
Nick, just to add to BrianB’s comment, are you familiar with Y Combinator? We need something like that but for Filipino businesses. We need something like that to give local banks, competition. Filipinos need to start investing in the country because no one else will.
OK. So you’re not talking about the mega-project, infrastructure investments – but more on the small-medium scale entrepreneurial initiatives.
Haha. By regular you mean not corrupt. Cool.
You don’t believe in the Keynesian concept of government being the primary growth starter?
One good mega project= CARP
BrianB: i think the status quo can handle the mega projects ;)
Pfft. Clearly they can’t. LOL. You mean like NBN, NEA 3, North Rail, DPWH contracting.
There’s a lot of glaring reasons for the lack of investments in the Philippines – ad nauseam. Can’t have the cake and eat it, too. Address the inefficiencies first.
Appealing to nationalism and altruism as the basis for investing in the Philippines ain’t cutting it.
BongV, not altruism at all. of course, one shouldn’t invest without properly doing due diligence. that goes without saying. As for the inefficiencies: like i said both has to happen in parallel. even as one “fixes” government the other hand has to be hard at work.
Bong, they are starting. I’m seeing an uptick of significant increased interest from Filipino firms investing in the power generation sector (not mega-generators, but smaller ones) just over the past year and less. They are small generators, but not small investments – on the order of P500M. These are the regular Filipinos as Cocoy would put it – not the Aboitiz or Lopez, although they are very active too.
NIck:
Small investment in power generation is okay, but, it’s not fast enough, and it’s not big enough, and local investments is not enough.
LOL Nick! I don’t want to touch mega projects. Too many cogs would need to move to get anywhere. Subic-Clark road seem to get off better than most. So did the NLEX.
No more explanation needed. What he means is that rich Filipino families should stop being leeches to government and stomach worms to the Filipino people. Instead of simply funneling OFW money into their import-heavy businesses, they should consider going into innovative and internationally-competitive industries. Instead of laying their fat asses on our heads, they should get on their feet and start thinking like real business leaders.
I’ve mentioned this a few times already. Neither GMA nor the administrations have had the courage to make electricity rates more conducive to business growth.
Singapore, Australia and others have been doing this for years already and yet Pinas has not implemented the straightforward solution. Per-kwh-rates charged to homes should be raised 10% or more so that per-kwh-rates charged to businesses and factories can be lowered by 12% or more.
well, the market has no incentive to produce at lower rates. there’s no competition and the power producers are assured of revenue.
moreover, i don’t agree with my house electricity bill having to subsidize businesses and factories.
I don’t think it’s moral for ordinary consumers to subsidize the electricity consumption of big businesses. If electricity rates will have to come down, it is because of the price mechanism of a free market. I think when there’s a free market in the electric power industry, private firms ought to invest in better technology that could provide power at a much, much lower cost.
I agree that an abnormally high cost of electricity is one reason why this country’s economy is not growing as high as it could be, but I say no to the proposal of government subsidizing businesses at the expense of household consumers.
This is a concept (relying less on external factors) I have a lot of interest in. I’m wondering is there is any particular significance to the use of the term “regular Filipino” as opposed to just “Filipino” and I’m wondering what kinds of investments might go “hand and hand with fixing government institutions.”
“regular Filipino” = ordinary people = Filipino. sorry for the mixup there. People assume that having a less corrupt government is what will “fix” the country. Definitely, it would help, but Filipinos everywhere would need to invest in the Philippines if we want it to be a better country. There has to be a mechanism to do so.
It is a mechanism called accountability and responsibility – no sane minded individual will invest in a business with an unstable bottom line due to an unstable policy environment courtesy of the Philippine electorate’s vacuous choices.
i don’t know much about economic theory. all i know is that graft and corruption stifles progress. for one, it drives up the cost of government projects. it can also have the reverse effect — instead of causing costs to go up it forces contractors to cut corners. the result of course is sub-standard output such as poorly made roads.
graft and corruption affects everything from infrastructure, education, basic services, law enforcement etcetera etcetera.
of course, it’s pretty obvious how it can directly affect business. some businessmen friends of mine are always complaining how difficult it is to deal with the BIR and local government agencies during the tax and business permit renewal season. they want to pay the right taxes and other fees but the people running these agencies have other things in mind and so they are forced to put up with highly irregular demands. one of them is already thinking of closing down his business.
i agree though that there are other things that can be done to boost the economy aside from addressing this graft and corruption problem.
“no sane minded individual will invest in a business with an unstable bottom line due to an unstable policy environment…”
this is very true. i think only those with really deep pockets would even dare take the risk.
Foreigners with deeper pockets are waiting so they can plunk some petty-cash into Pinas gamble of an economics. They are waiting for some changes to 1987 constitution, they are (and when this happens, expect Pinas real estate prices to get an up-bump).
… and Mindanao can expect more foreign investments if only GMA sends more troops/police to quiet down that promising geographic area.
I remember your blog:
http://filipinovoices.com/tomorrow-on-the-road-to-2010
your blog about legitimizing commissions for every transaction.
That incorporated to your idea of everybody investing.
Your Y
combinator example is for financing startups in the IT field or IT biz seems intersting.
The idea of access to funds other than microfinancing and five-six would be nice.
That is the problem with the formal banking. sector,not evryone has access to it.
Now about startups and upstarts.
I remember being shot down by Ben Kritz when I said that that small business is the way to go, and he even expounded his disagreement by blogging
http://badmannersgunclub.blogspot.com/2009/07/theres-good-reason-why-theyre-called.html
I am for for small business,but I agree with the need for a stable policy environment and the need for Foreign direct investments.
Foreign direct investments are needed for the mega stuff.
Also, who says that small businesses intend to remain small.
Maybe GMA can get a seminar from Gen Petraeus on military solutions to a economic problems in case she is thinking of a Fallujah.
Karl, I’m still for the idea to get an official commission for government agents. I think it will help give an incentive to officials of the government. I think we can help reduce corruption if we legalize it. I think it can help in revenue collection. I think it can give clear rules as to what is allowed when transacting with government officials.
Bong and Karl, as for Foreign Direct Investment, I reference chart 1 above. There has been a constant decline in FDI and the domestic market isn’t picking up because it isn’t interested or sees no need to reinvest.
i fear it can’t be we have to wait for a stable and clean government. it has to start while we fix government. it should be two trains running in parallel. One train is we fix the political situation. One train is private Filipino enterprise investing in the Philippines.
The clear and present danger, I think is this: given a global crisis, and the numbers seem to point to the beginning of a government that can’t sustain the level of activity in the economy and without the private sector picking up where government can’t, what happens then to the Philippines?
cocoy:
the adage is – "sink or swim", "shape up or ship out"
A common consensus in the developed nations as far as the Philippines is concerned FDI is declining – because:
1) The Philippines is not competitive – cost of doing business, corruption, lack of infrastructure, restrictions on foreign investment.
2) There are more countries competing for FDI – thus compared to the Philippines the competition provides lower cost of doing business, minimal corruption, availability of infrastructure, and minimal or restrictions on foreign investment..
However, the trade approach to development has met a setback due to the global recession. Thus one can make a case for mercantilism and import substitution as a buffer against the impact of global recession. On the upside, the Philippine economy has shown growth despite a reduction in inbound/outbound trade. On the downside, such growth has not translated to a reduction in the Gini coefficient but has actually increased it.
A solution lies in having a more balanced mix – currently the market is skewed in favor of the domestic economic elite. Addressing the restrictions which turn off FDI will level the playing field and spur competition.
Cocoy,
Commissions. I suppose they could be helpful, say at the LTO, to get an agent to expedite things, like the fixers do now. But what about court fees and fees to file police charges? Can we do away with them? And how about that police dude who wants to write a ticket unless I spiff him. What kind of agent will intercede?
And agents will arrange the big construction kickbacks?
Hmmmm . . .
Joe
Joe, I was thinking more a long the lines of Mega Projects along the lines of NBN-ZTE. Also along the lines of supplier contracts.
BongV,
*points at the main post* That was addressed in my post. The reason why the Philippines has shown grown is because the government has been fueling it. It has been doing the classic approach of spending on infrastructure and thus the economy grew as a result.
My prediction for next year is that whatever slowdown we will see in GDP this year, will likely improve next year as campaign spending goes into a frenzy.
The rate the philippines has been growing is not sustainable because the a) government can’t fund it anymore, b) business elite are taking their money elsewhere, c) BPOs as the nature of the beast, don’t really need to reinvest at the rate of GDP and d) the electronics and semiconductor industry worldwide is in deep shit.
we agree *points at main post again*
Why chase after FDI? It was tough enough without the global economic crisis, it’ll be tougher now. Clearly Filipinos need to develop our own industries? Clearly Filipinos need to challenge the current status quo of the domestic elite? Who else is going to do it if not Filipinos themselves?
We’re talking about mom and pop operations, and nothing on the scale of an Ayala or a Henry Sy. We’re talking about doctors and nurses in america, who maybe would like to invest a few thousand dollars as well as new techniques in private hospitals in their hometowns.
Why? because I believe we need to start somewhere. anywhere for that matter.
Cocoy,
Ahhh, that makes sense.
I also think the Philippines could leverage what little capital wealth it does have (in relation to the huge population) by spending government money to develop a stronger credit infrastructure. I’m thinking of the credit agencies in the US that track and record consumer lending/repayment patterns, thereby helping banks and other lenders moderate their risks. Leverage up a bit. Microloans, plus . . .
Joe
cocoy:
that’s precisely the point – if the locals had the capital – mom and pop shops will have flourished like mushrooms – it has not.
who is saying FDI has to be large scale? – FDI can be a Frenchman opening a school in Malate – and owning it 100% – and not having to marry a local just to do business. But the, charter does not allow it. Or an expat retiree who wants to develop a 10 unit apartment – and own it 100%.
Joe, i honestly don’t know how local banks track credit ratings. my understanding (and i could be wrong) is that they don’t or hardly ever.
Cocoy,
That is exactly my point. There is none, so banks lend on “who they know” or super-high security. Roads are infrastructure. Credit agencies are infrastructure for bank lending. An investment in infrastructure would support greater, more objective risk assessing, more lending, and ramp up consumer buying power. It is a big separate issue, I suppose.
Joe
Cocoy,
I just came back to this post of yours.It got burried under the newer posts .
I read your response and your exchanges, I have learned more from them.
Thanks Karl!
How does land reform fit in to all of these? It seems that we’re forgetting that the Philippines is still largely an agricultural country and that no agricultural country has progressed into an industrialized one without undertaking some significant land reform.
We all can’t have startups or be entrepreneurs. How can we if the banks aren’t willing to lend money? And if the oligarchs are too conservative to invest locally, where else would the ordinary Filipino (who is most probably a farmer or in the agriculture sector) would find capital? From his farm of course!
The credit cooperatives have taken up the slack of lending operating capital to farmers.
Venture capital is another matter.
Grant money to start a business is another matter, too.
And, the Philippine implementation of land reform is a comedy of errors – like anything else that is implemented in the darn islas de ladrones.
Jhay: There are many micro-finance NGO’s in Pinas (ASKI – Alalay sa Kaunlaran; ASHI – Ahon sa Hirap; PMPC and many cooperatives) operating in Cavite, Isabela, Pasay, Negros, others. Foreign money coming in (Intel, Kiva, others).
Banks must not lend money easily. If it does, expect malinvestments. For oligarchs or other businessmen, if it is not really lucrative to invest here for now, why invest here just for the sake of nationalism? I will not invest anywhere for reasons other than profit.
You know, I am exhausted by all the statistical data. There is so much my head spins. I found the NSCB web site and hundreds of categories of information and I figure about 683 thousand bazillion numbers there with no MEANING attached to them. Trends and numbers out the gazoo and no one knows what to do with them. Everything remains screwed up. I read three articles on FV dealing with SONA and came away spinning in opposite directions. Pin ball Joe.
But I look around and I see a LOT of poor folks; all the neighbors and wife’s friends and relatives positively beg for cash. You like statistics? 73% of Filipinos age 42 and above lack more than 57% of their teeth, have been to a doctor 0.007 times during the past 10 years, and owe an average of 7,430 pesos to 15.91 people. Guess the lady in pink forgot that one.
I think the solution is step up the baby production. Build the one product that the Philippines is known for worldwide. Ramp up those remittances and things will be fine. Screw the rest of the numbers. Forget about mining and tourism and all that industrial crap.
Just put a “baby production line” in the GNP calculation, maybe right below a newly inserted line for “siphonage”, which is a tabulation of money siphoned from government coffers into private pockets. You can have subcategories of siphonage since the number is so large. Construction kickbacks, re-routed roads, pet pork projects aimed at re-election, contract skimming (airports, ZTE’s). Why hide it? Take pride in it. Indeed, create a class that Blackshama can teach called “Siphonage and the Science of Graft”. Doctoral level, of course. The skills here are amazing; world class.
WHATEVER you do, don’t scope out government expenditures on any kind of RETURN VALUE basis; that might lead to productivity and screw things up. Just keep building those fine concrete roads through the rice paddies so that local reps can get re-elected and the big fat karabao can keep their feet dry and have a clean, empty place to poop. Shove thick wads of paperwork at importers so they take their troublesome wares elsewhere. Make sure to balance the books by taxing the poor folks to kingdom come with fees every time they come to a government office and BLINK. But DON’T tax properties of the landowners at fair value; no, no, they might whine.
(Pardon the double post. As I said, I’m exhausted . . .)
Joe
are your describing “corruption” chicago style? i suggest you read the very well-researched, well-documented book by michele malkin (a fil-american who’s blazing a world-class shining trail in real journalism), “A Culture of Corruption”, and weep.
Joe:
Here’s an extensive read – by James Fallows –
http://jamesfallows.theatlantic.com/archives/1987/11/a_damaged_culture_a_new_philip.php
Bong,
Thanks for the article. I scanned it and it looks very helpful. I’ll read it in more depth in the next day or two.
Joe
Trouble with stepping up Pinoy baby production is that you increase your cost base for very little commensurate incremental income growth. All you get are future commodity labourers — nurses, call centre agents, domestics, etc.
Now if you were a society where every baby born has a higher probability of becoming an engineer, world-class artist, or all-around outside-the-square thinker, then your proposal might just work.
Btw, I was addressing the above to Joe.
Ahhhh,
damn.
We’re really screwed then. No hope at all . . .
Joe
Philippines SONA…
same o same o
SNAFU
or FUBAR
period.
All you have to do is to go to the proverty striken places in Metro
Manila or other large cities in the country. Go to the Provinces,
towns and municipalities. Talk to people about their lives. See with
your own EYES the conditions they are living. THIS IS THE TRUE STATE
OF THE NATION.
Let me tell you about what happened to a retired couple who did just that. A retired surgeon and his wife settled in South Cotabato in the mid 90s. Bought a house in Kalsangi. Invested their retirement money in a clinic, a trucking business, and a fishing business. After the exercise, the couple swore they will NEVER invest in the Philippines ever again, even at gunpoint. The wife narrated their experience:
The trucking business. She bought a fleet of trucks. The drivers that she hired had high fuel expense. Turns out the drivers would fill up their trucks. Then, they will remove the fuel and sell it to trike and jeepney drivers. She replaced the drivers, same crap happens. She closed the business.
The fishing business. She buys a fishing fleet. She maintains the boats, provides the fuel, provides allowances to the boats crew. The fishermen she hired, they sell their catch before they reach land. She replaced the crew, same crap happens.
The medical clinic. Her husband opened a medical clinic and designed it to US standards. The other physicians bad mouthed him and told the patients her husband will be expensive because he is from the US? When it came time to share clinical data, the local colleagues were not collaborative. He found it strange because in the US he was used to MDs discussing their cases so they can have faster resolution thereby improving health delivery to the public. The husband got tired of the bad-mouthing and the uncooperativeness of his colleagues. They closed the clinic.
Their residence. When they arrived, the wife was so happy because she had a maid, a gardener, and a driver. Her utensils, her groceries, her linen, her family’s clothes was slowly pilfered by the maid, the gardener, and the driver – and their relatives who would hang out in the house all day. Months later, she was back to the US do-it-yourself lifestyle and people couldn’t visit unless they called in advance. She bought a Whirlpool washer and dryer because the labandera’s daughters had a habit of wearing clothes that weren’t theirs.
Today, they narrate their experience to every doctor and nurse who asks about investing in the Philippines.
The story BongV tells is one I’ve seen multiple times with balikbayans and foreigners from developed countries. My impression is that it reflects an utter failure on their parts to come to grips with and understand the horrors and reality of living in deep-rooted, unmitigated poverty.
These people (balikbayans) have been blind-sided. The fact is, they were unprepared and ill-equipped. And it points out the complexities involved in addressing bone-crushing poverty which churns out people with different value perspectives, out of necessity.
Nick:
Exactly.
On one end, the couple’s intentions were noble – they wanted to help. When the maid, the gardener, the fishermen, the truck drivers focused on short-term gain, they lost in the long term, because the business lost its viability because the cost of doing business was abnormally high.
They were unprepared with a reality where a lot of stealing is the norm than the exception.
The couple cut their losses and returned to the US. As far as the doc’s wife is concerned when I asked her about the US recession and investing in the Philippines, she said “a bad day in the US is still better than any best day in the Philippines. No way am investing in the Philippines ever. I will die in the US.”
ditto, what nick said.
Investors are customers. Consider this survey on customer dissatisfaction.
I suspect that the investor defection in the Philippines is higher than 70% but it is not being measured.
argghhhh, I read that as “60 to 80 per cent of defecating customers”
Joe
This is almost like a textbook case of Investing in the Philippines Reality 101.
You extend a helping hand to Pinoys and they bite off your entire arm.
You give them a machine to plow their fields, and they sell it piece-by-piece.
You distribute land for them to till, and they sell it to Henry Sy.
The solution to the Pinoy Condition is not to throw money at it. It’s like trying to install alloy wheels and low-profile tires on an onher-type jeep.
The more we try half-brained approaches, the tackier we get, to put it quite simply.
The solution is to re-wire the very DNA of our society as it is a society flawed at the molecular levels of its design.
benign0 – Ha! The hyperbole and metaphors are intriguing. Of course, none of this is exclusive to the Philippines nor to Pinoys.
Absolutely, Nick. Never in my nine years of pushing the “getrealist” agenda did I assert that The Pinoy Condition was unique to Pinoys. ;-)
Lou Gehrig Disease for example is a label given to a medical condition. But the way Lou Gehrig Disease afflicts different individuals vary, and therefore their individual experiences in the way they are afflicted are unique to each case. Certainly they were all and each different from how Lou Gehrig himself suffered it.
The fact remains that we are afflicted with an instance of an over-arching condition (maybe we can call this over-arching — or underlying — condition “primitivism“, for example). While afflictions can be underpinned by an identifiable strain/class of virus, cancer cell, bacterium, or genetic condition, the symptoms and the way these pan out or propagate for a specific instance of said affliction can be unique to an individual patient because of variations in other parameters (e.g. race, environment, personal habits, upbringing, etc.) inherent in said patient the combinations of which are likely also to be unique to said afflictee.
I posted this via my tumblr. It is from a link that @jesterinexile sent: Cory’s Advice to Fil-Ams:
Food for thought.
The Fil-ams have a different culture Fil-ams are already standing shoulder to shoulder with the world’s best. Then they hear about their countrymen voting for a bamboozling baboon – an embarrassment of galactic proportions.
The Jews have a participatory culture. The Philippines culture is a mix between subjects and parochial. Any admonition to become participative – is seen as “foreign”. So, if they wanna stay backward and irresponsible, eh di hayaan silang manigas. Tutulungan mo na ikaw pa ang masama.
There is NO NEW PHILIPPINES – nothing has changed.
All talk, no walk.