More growth drivers of the economy
Much has been written lately about the rebounding situations in Southeast Asia’s emerging economies, led by the Philippines. The expert observers are right—for the first time, our economy has attained a measure of stability resulting from President Aquino’s tremendous efforts to tackle corruption, to dismantle cronyism and to improve the country’s reputation as being business-friendly.
In my article last 26 December 2011, “The ‘dark horse’ of Asia,” I noted the bullishness of Bank Julius Boer’s Mark Matthews who described the Philippines to their fund managers as an attractive site for their portfolio investments, giving it an overweight position.
Recently, the same optimistic view was expressed by Maulik Parekh, CEO of SPi Global (a BPO company) in an interview with Businessweek May edition article entitled “Philippines Astounds the Skeptics.” He is impressed with how much difference our transformation government makes in an emerging economy such as ours. He compared our President Aquino with their PM Manmohan Singh’s government, which remains plagued with scandals, causing self-inflicted injuries to their enterprises and people resulting in a standstill for India. The Philippines should not succumb to self-inflicted injuries as in the past, Maulik says.
Similarly, Mukesh Bubna, Western Union’s director for Asia-Pacific, reported in an interview with Malaya Business Insight last week that with the increasing job openings in BPOs, which attract younger workers, Filipinos might be encouraged to stay here and find work here, hence reducing the OFW exodus.
I hope Mukesh Bubna is right and the number of OFWs will be reduced soon, but the figures do not support his optimism at this point. The BPO industry is expected to increase its current 600,000 employment to 1.3 million in 2016, or an additional 700,000 in the next three years. However, the statistics show that we need to generate 1.5 million job opportunities per year to take care of the new entries to the work market and to take care of those who are not busy now, and provision for returning OFWs. There will still be a huge job gap to fill even if BPOs optimistic growth patterns continue.
These experts agree that the growth drivers in recent years are: (a) the OFWs with their remittances, and (b) the BPOs.
It is painful irony to consider OFWs’ growth a success since it is the outcome of our failure in the past. When we export manpower to all sorts of places in the world with conditions ranging from abysmal to barely decent, we are paying too high a price for the kind of success. It is our failure because we failed to develop our ample resources (natural, human, finance) to establish world-competitive products and services that will keep our people engaged.
Our successes in BPOs, electronics, some agri products, etc., show their positive impacts in the economy when coupled with an environment of governance, confidence/participation of private sector and level playing field. The Management Association of the Philippines (MAP), together with other business groups, has prepared a list of more growth drivers replicating the above winners to achieve the position of leadership that the Philippines deserves. Then, there will be no further need for the desperation measure of exporting labor overseas but instead, we look forward to bring home half of our OFWs as the lasting measure of success.
However, it will take ten more high-potential products/services to replicate the success of BPOs, electronics, some agri products, etc., at a broader, faster growth for the Philippines to become a tiger economy by 2016. In other words, we need a longer and broader list of growth drivers, which we prepared with National Competitiveness Council (NCC) three years ago.
Here are the products and services that have been identified by both the private and public sectors as those where the Philippines has the assets to be globally competitive, serving large global demands, and generating massive employment/livelihood opportunities. These reports have previously been published by the NCC in its reports, the Joint Foreign Chambers in their Arangkada, and by Neda in the 5-Year Philippine Development Plan. They have not achieved their full potential due to official indifference/corruption in the past. The self-inflicted woundings by Filipino officials on Filipino enterprises were in effect like “shooting our own feet.”
There is need for government and the private sectors to seize the moment to ensure that tailwinds behind these products/services do not get deflected, ensuring level playing fields vis-a-vis imported alternatives, to enhance equitable growth of our country soonest. PIDS is leading a study team that will identify long/medium-term approaches to achieve the sustainable benefits from these high-potential products and services with the help of business experts in the specified sectors. MAP experts have been invited to participate in this process, specifically to identify the 3-4 key policies that will quickly enable each product/service groups to reach their potential.
3. Electronic products
4. IT-enabled services (BPO, animation, med transcripts, etc.)
5. Logistics-enabled services (global supply chain, apparels, furnishings, etc.)
6. Health, wellness, retirement
7. Manufacturing—e.g., vehicles (land/ocean), housing, components, etc.
9. Creative industries
The collaborative approach in crafting strategic plans for “Winning Services/Industries” will be undertaken by the NCC where the concerned cabinet secretaries and the business experts are to jointly combine their talents and voices in giving the Filipinos the best economic opportunities in the near future.
The PPP strategic team will have to be involved in the determination of the strategic infra to get desired results, the execution process and the setting of datelines and review mechanisms of each road map.
Clustering of each product/service group is an important feature of the strategy to make more use of our people’s talents, especially the SMEs. Progressive sites for each Winner group will be identified with the support of the LGU Sparkplugs, as envisioned in one of our PIP (Policy Improvement Programs) commitments to the Millennium Challenge Corporation.
I received some articles from Filipino students in graduate schools in the US about the turnaround being demonstrated by the Philippines as a result of the two-year performance of the Aquino administration. Brilliant! They all say but where is this leading to? Is the country still in Sick Bay or is it already a Growing Tiger Cub? My answer is the Philippines is out there developing to be a tiger economy, but we have to find more growth drivers like BPOs and electronics, agri crops, etc., with competitive tailwinds and in world-scale markets. This has been described in this article, the government and the private sectors are working hand-in-glove at the NCC to ensure that the plans do not remain plans for too long.
But how do we know that you are succeeding, they ask. Will it be the reduction in poverty and a narrowing gap between the rich and the poor? Yes, I say, but watch out for the 40 percent reduction in OFWs. These must be felt in 2016 during the last year in office of President Aquino who’ll leave this as his legacy to the Filipinos and that of his parents.
(The author is chairman of MAP National Competitiveness Committee and chairman of CIBI Information Inc. Feedback at [email protected] For previous articles, visit www.map.org.ph.)
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