Japan’s tragedy can spur Philippine growth

THE earthquake and tsunami, coupled with the threat of radiation, continue to cause human and material problems in Japan.

The Filipino people are one in expressing sympathy and praying for the quick amelioration of the Japanese people. But we know that the Japanese are strong and resilient people whose ancestors have gone through worse disasters in the past. We expect them to come out of this episode stronger than ever.

However, the level of damage to Japan’s factories, infrastructure and economy is so extensive and deep that it will take years before their various sectors can rebound as in the past.

Experts expect the nature of its supply chains in industries and services to undergo a transformation as old and inefficient operations will probably be shut down and replaced with newer versions or offshored to low-cost neighboring countries.

The Philippines is certainly a leading candidate to benefit from this transformation of Japan’s industries and services.

The Japanese have the highest admiration for our people’s work ethic and talent especially in high-quality, precision and technical/innovative fields.

Their tales of successful activities in the Philippines are replete with anecdotes, such as the start-up of complex factories in record time and with minimum supervision by Japanese experts-trainors.

There was a time in the 1980s when a precision plastic forming project could not be inaugurated due to a military coup that closed the airports and seaports preventing the most senior engineers from Japan to be present for the start-up procedures. Despite the situation, the high-tech plastics plant was started on time and on spec by Filipino engineers.

This early, there are already reports of Japanese firms migrating their sources of electronic components to the Philippines, China, Taiwan and Vietnam. The same situation is true in motor vehicles, in appliances and in other component industries.

Existing Japanese operations in the country are starting to work longer hours and longer weeks to fill in the void of their Japanese operations.

There have been reported inquiries about availability of lots or buildings in the Peza regions. All this points to condition that will help President Aquino’s government to achieve its strategic objective of creating jobs and livelihood opportunities to reduce poverty incidence by half before his term ends.

Yes, the driving force to move the country’s economy forward is building up from Japan. However, our Japanese friends tell us that there are a number of factors that bring up the cost of doing business in the Philippines. These will have to be addressed, and this is not just the labor cost.

They say that if only the following urgent factors can be tempered, the Philippines can certainly be the preferred investment destination in the region.

Cost of energy and its availability. Instead of charging the highest rate in the world, the National Competitiveness Council suggested simple measures that can bring power cost to a more competitive level.

Professionalizing the government agencies. At the moment, the President has spurred the continuation of organization reforms and customer orientation in 12 government agencies following the successful initial outcomes using the Harvard Balanced Scorecard System. The initiative is being championed by the Institute of Solidarity for Asia with excellent results. With continued dynamism from the heads of departments concerned, this aspect will stop being the heaviest bane on the back of our people and investors in two to five years.

Appropriate infrastructure (logistics) and policies to support productivity of sunrise industries and services (Arangkada). Investors do not expect to see multilevel overpasses or bullet trains and subways, etc., before they plunk in their bets in the country. But it is necessary to have effective linkages between their sources of assets, resources and the processing centers, on to distribution centers in our gateways to overseas markets.

Major gateways such as the Batangas Port and Naia 3, which were installed at huge costs, must be made operational soon despite the hassles being presented by some LGUs and others.

Appropriate policies to improve productivity in the processing of products and services are required by world markets such as the Japanese sphere of influence. This focused approach to policy reforms has been proposed by various chambers-stakeholders of the National Competitiveness Council.

Some aspects of these policies may require legislation—but many only need executive action. Only then will the Japanese and other investors, including Filipino investors, strengthen their confidence in the Philippines with their actual show of fixed investments.

We can send a strong signal to investors that it’s not “business as usual” in this country by setting up a Senior Investors Relations Group patterned after Indonesia, Thailand and our Peza.

This high-profile team will ensure that there will be no more hustling of investors by minor or senior functionaries because this will not be tolerated anymore by the highest officials of the Aquino government.

If handled properly, it will immediately burnish the brand image and “reputation” of the Philippines.

There are certain occasions where strategies may spur opportunities on a global scale. This may be one such opportunity that will favor President Aquino’s goals of improving the lot of many Filipinos (poverty, forced to work overseas, weakened family values/culture, etc.).

The private sector should rally behind the President in his determined drive against corruption, which is essential to achieve broader economic-social outcome.

(The author is a former secretary of the Department of Trade and Industry.)