Making haste slowly

April 8, 2014 at 16:45


Posted on March 10, 2014 08:47:30 PM

Making haste slowly

By Rafael M. Alunan III

“THERE is no other time in our history where so many favorable factors are converging in our favor: our economy is robust and getting stronger, we have a young and dynamic citizenry, the entire investment world is focusing on us and giving us favorable marks, unlike the attitude in past years — it is a rare time in our history…. — Ramon del Rosario Jr., Chairman, Makati Business Club, Feb. 11, 2014

  I promised John Forbes to write about Arangkada Philippines’ Forum last week that featured its 2013 Third Assessment Report that includes updates from the National Competitiveness Council. Excerpts below:

“The three biggest challenges facing the Philippine economy are to move up to a higher level of sustained growth, create more and better jobs, and make growth inclusive. After two decades (1980-2000) of negligible per capita GDP growth, per capita income has steadily increased from 2000 onwards as population growth eased and OFW remittances accelerated.

“Of the ASEAN-6, for the past five decades, the Philippines had the lowest GDP and PCI growth, but from 1999 to 2013, real GDP growth improved, averaging 5.1% and tracking closely to Indonesia, Singapore and Thailand. From 2010 to 2013, GDP growth fell from 7.6% (2010) to 3.6% (2011), then rose to 6.8% (2012) and 7.2% (2013).

“This achieved the distinction of being the fastest-growing of the ASEAN-6 economies for two successive years. This is the first time in our data series (beginning 1960) that the Philippines has placed first, hopefully the start of extended catching up with the other regional economies.

“The Philippines has also lagged in job-creating FDI within ASEAN, no matter what measures are used — absolute, per capita, or percent of GDP. However, 2013 saw a significant increase to a record level of $3.1-B in the first nine months, for an estimated annual figure of $4.1 B, almost 50% higher than the $2.8 B in 2012, and over twice the $1.8 B in 2011.

“This development places Arangkada’s target of $7.5-B per year within arm’s reach.”

1. Succeeding administrations should consider planning and implementing the doubling of GDP growth rates to 9% within three years as a high priority goal. This has to be supported by a long-term industry policy.

2. Job creation in the private sector should be considered a high priority to reduce unemployment and underemployment by 50%, and to give Filipinos more alternatives than working abroad.

3. FDI should be targeted to reach over $7-B annually in three to four years. It should also be measured in terms of job creation and exports (products and services) generated.

4. An export target of $100-B in five to six years should be set, with more diversified exports and new markets.

5. Adequate funds should be made available for the international promotion of Philippine exports, inward remittances, tourism, medical travel and retirement programs.

6. A significant share of remittances should be channeled to productive investments in the domestic economy through bonds and other funds.

7. Double the funds available for physical and social infrastructure, civil service quality improvement, investment, tourism and trade promotion, and other growth-promoting expenditures through less government misspending, better tax collection, and selectively increasing the EVAT before other taxes.

8. Public and private sectors should organize a Special Experts Group comprising economic, business, labor and government leaders to recommend key reforms to make the economy grow by at least 9%.

While Filipinos are highly competitive in the world job market, the country’s domestic competitiveness has much room for improvement. Global rating surveys abound with ever-expanding coverage stimulated by the globalization of investment, trade, and information.

The Philippines was on a downward trajectory in international competitiveness rankings in the last decade but in recent years has reversed direction, making significant gains in closing gaps with several of its comparable regional economies, especially in measures of corruption, governance, and infrastructure.

This improvement can be credited to more systematic efforts undertaken by the Philippine Government through the National Competitiveness Council for several years to regain competitiveness. However, these efforts must be sustained and accelerated to produce more encouraging results faster.

1. Transparency leads to competitiveness.

2. “Work in progress” is not good enough.

3. Execution and delivery matter.

4. Teamwork is important.

5. We need to work on multiple fronts.

6. The competition never sleeps.

7. The bar always rises.

8. “Speed to reform” is important.

9. Maintaining momentum is important.

10. We need to institutionalize change.

1. The President should undertake aggressive efforts to improve [the country’s] rankings faster. The government and private sector should select areas of competitiveness (whether low or medium-ranked) which are most important to investors and where the Philippines can move up the most, the fastest and focus resources on improving these.

2. The government and private sector should identify areas where the Philippines is weak and plan effective strategies to improve rankings. The Philippines should maintain and improve those high-rated competitiveness ratings. Since corruption adds to business costs, most competitiveness surveys rank corruption as the most serious problem negatively affecting the Philippines’ investment climate. The government should join with the private sector to fight corruption through the Integrity Initiative driven by the Makati Business Club and the Joint Foreign Chambers.

House Speaker Feliciano Belmonte, Jr. had this to say about our competitive status during the meeting with Joint Foreign Chambers and Philippine Business Groups on Feb. 12:

“While the macroeconomic fundamentals of the Philippines have been impressive, its share of foreign direct investments pales in comparison with those of other countries in the region. If we do not make our economy attractive for foreign investments, we would not be able to maximize the benefits from economic integration. Investments will pour in and factories will be built in our neighboring countries, and they will be exporting goods to us while we export our workers to them to run their factories… a most sorry scenario.”

1. We need a forward-looking Constitution with enabling provisions that will enhance national competitiveness, good governance and national security.

2. We must clean up our institutions and reinforce their ethical foundations adopting a “whole of government” and “whole of nation” approach.



  All rights to the stock images are owned by Getty Images and its image partners and are protected by United States copyright laws, international treaty provisions and other applicable laws.
Getty Images and its image partners retain all rights and are available for purchase by visiting gettyimages website.

Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines