On our way to inclusive growth
The Philippines has achieved considerable progress in tackling corruption and upgrading competitiveness, which makes it earn the respect of world economists, thanks to the high confidence enjoyed by President Aquino. From the “Sick Man of Asia” in the past, the country is now considered as the possible “Tiger Economy” before long.
The President has stated that in the second half of his term, the government will focus on providing opportunities for the creation of quality employment and livelihood, since these are the country’s pathway out of poverty.
Building on the substantial improvements so far reached by the Cabinet economic cluster, the various business organizations have reiterated the need for sectoral economic planning of products and services, which have the potentials to be globally competitive and where the country can benefit from the global economies of scale that will meet the challenging targets of generating 14.6 million employment and livelihood until 2016. The Philippines will become a global player in a broad field of products and services, which will benefit its resources (both human and natural), financially, technologically, socially and culturally. It will provide the seed of economic renaissance, which was proposed by the combined local and joint foreign business chambers two years ago.
The approach is similar to the ADB’s “Taking the Right Route to Inclusive Growth”—a strategy supported by the National Competitiveness Council’s private sector experts (NCC being a public-private sector partnership).
This transformation is proposed to be an active (not passive) attack in identifying the major problems of the key sectors. Such obstacles may be policy-matters, infrastructure deficiencies, governance issues of executive officials and others. There will also be positive trends such as potentials for spillovers and clustering with other sectors that must be identified for immediate synergies.
Due to the exigent nature of this renaissance, NCC should “prioritize, prioritize, prioritize” and push for “execution, execution, execution”—focusing on the potential “winning sectors” in agriculture, industry and services that have already been identified by the business chambers and, through NCC, have been noted in the latest MTPDP, instead of “reinventing the wheel.” The business chambers believe that the world demand for these key products/services will be such that 20 million jobs will be generated and $75 billion in direct investments will be attracted from foreign/local sources during the 10-year planning period. These achievements will be made even while the lengthy amendments to the constitution and the labor code are not yet fully resolved. The strategic importance of these sectors can be confirmed by the PIDS economic model known as the Aldaba framework.
Additional sectors will undoubtedly be proposed by other lobby groups but in order to avoid unduly burdening the capabilities of our economic strategic teams, these must first pass the test of “significance” by the above PIDS model Aldaba framework. Otherwise, the country might run the risk of delayed inclusive growth due to lack of focus.
The eight key products and services considered to be world-class are:
1. Agri products/services
4. IT-enabled services—BPOs. Software, medical transcripts, professionals, creatives, etc.
5. Logistics-enabled products—garments, furnitures, creatives, decors, food, components, etc.
6. Health, wellness, retirement services
7. Manufacturing—vehicles, ships, chemicals, housing, etc.
8. Mining products
The DTI is already playing a professional coordinating role with the NCC in developing road maps with the various agencies concerned for some of the above products/services. However, a coordinating role must be given to the chair of the NCC to ensure achieving parallel progress in different sectors, clusters and in nationwide consideration, especially with the synergies that can be achieved from common processes or infrastructure, technologies or training resources.
It is envisioned that each sectoral team, headed jointly by a business expert and a policy official, will provide end-to-end support to enterprises in their sector. Hence, the importance of having the coordination czar at NCC, strategic planning where political (not business) considerations may bring the country to grandiose, unrealistic expectations such as during the Marcos regime.
Strategic planning must therefore be actively owned by the private sector to be credible, guided by the following three principles as reported in my earlier article:
First, the government must not overreach to the point that it substitutes its own wisdom for those of the private sector.
Second, the challenge of finding ways of meaningfully fostering private institutions without posing a threat to public finances, especially when plans stray outside the defined priorities.
Third, keep in mind that the aim is to serve society at large—not the bureaucrats or the businessmen who receive the incentives. Such incentives must be open to new entrants and passed on to the consumers in terms of reduced pricing, in an environment of transparency and accountability.
Michael Fairbanks and Stace Lindsay of Harvard Business School describe in their book “Plowing the Sea” a host of examples of developing countries that nurtured their sources of growth and allowed both government and the business leaders to succeed in the world market and eliminate poverty. The challenge is to have a good relationship between the government and private sector built on trust and confidence.
MAP and the rest of the business chambers have played the part of a responsible partner of the government with numerous cooperative projects that have been beneficial to the governance and anti-corruption programs of the President during the first half of his term. While the opportunities for successes and more growth can be foreseen by the entrepreneurs and their technical experts, the benefits will only emerge once government policies are changed to be supportive and responsive.
When the strategies bloom in the next few years, the Philippines will achieve the distinction of having sizably reduced its poverty level by a sustainable economic strategy, meeting one of the Millennium Development Goals.
Our top-level investment support officials can guide potential investors identify which of the above sectors will be in line with their specific interests/expertise, as supported by the government’s stable and transparent policies, and where we have comparable advantage, with sizable market prospects, with end-to end support in an environment of good governance. The identified leaders of these sectors will be available 24×7 to respond to any questions or hurdles facing the investors along the way—even until the actual operations.
The author is chairman of the Committee on National Competitiveness of the Management Association of the Philippines.