|
‘THE
Philippines should emulate China by posting a
9.5-percent growth continuously for 25 years. Maybe
then, it would become a First World country,” said an
official from the Asian Development Bank (ADB) at the
presentation of the results of the 2005 Purchasing-Power
Parity Preliminary Report.
That ADB
official is right about the need for a sustained high
growth rate to achieve progress in the
Philippines.
What he didn’t tell us is that we can’t emulate the
strategy of China in achieving our development goals.
China,
or even India, for that matter, is a unique experience
that could never be replicated by anyone else. The
Philippines should evolve its own strategy.
But
surely, we need an investment-driven growth strategy à
la China. In the last several years, China has been
growing at 10 percent to 11 percent, courtesy of about
$60-billion to $70- billion worth of annual foreign
direct investments. These dollars are channeled to
manufacturers using cheap labor and repressed laborers.
And
lately, China is trying to go up the value chain by
attracting high-tech operations by multinationals, as
well as by overseas Chinese.
It would
be hard to follow the China route. For one, we don’t
have an authoritarian form of government that could
impose a Chinese-style “political stability.” We have
already rejected that route when we toppled Marcos in
February 1986, spurned the continuing offer for a
“dictatorship of the proletariat” by the local
communists, and resisted the siren songs of Gringo
Honasan when he still had dark hair and youthful energy
for military coups.
And more
basically, we no longer have the cheap labor to dangle
to multinationals—thanks to long years of minimum-wage
legislations and a more progressive regulatory framework
in industrial relations.
China
has enough of these investments within her shores.
Lately, there is an increasing trend toward “innovation
offshoring,” or the internationalization of product
research and development (R&D) by multinational
corporations (MNCs). In reality, most of what the MNCs
are doing in these R&D centers is more of “development”
rather than high-end research.
The R&D
centers are intended largely to tailor-fit existing
products and technologies for the local Chinese market.
It means that those investments are intended to take
advantage of the huge Chinese market.
We don’t
have such a huge market to attract those innovation-type
investments. That explains why we can’t seem to attract
the level of investments the way that our neighbors are
getting.
You
probably wonder why
Vietnam,
Laos and even Cambodia are registering 7-percent growth
rates or higher these days. It’s because of their
advantage in labor arbitrage, or the tendency for jobs
to move in areas where labor is inexpensive.
MNCs are
there for that reason—cheap labor. And why is India, or
at least an urban-based segment of its economy, booming?
It’s because—just like China—it has a huge domestic
market (1.3 billion Indians), a growing middle class and
millions of engineers that MNCs could tap for having
innovation-type operations. On both counts, labor
arbitrage and market size, the Philippines doesn’t have
those advantages.
So
what’s the best model for the Philippines? We may have
to get back to the old model:
Japan.
Why Japan? Because it has a low population base and yet,
was able to grow fast and become First World in just a
few decades.
Its open
secrets are three things: education, education and
education. According to Nobel laureate Amartya Sen, this
is the same secret being followed by the tiger economies
of
South Korea,
Taiwan and Singapore—and look where they are now.
When
society produces lots of scientists and talents, it
would be easy to generate products, services and
intellectual properties that entrepreneurs could sell to
the rest of the world—and whose competitive advantage
depends less on labor cost and more on knowledge content
and other intangibles (like branding).
There is
a gold mine of Filipino scientific talent in the
Philippines and abroad, doing great and innovative
products, but their operations are hard to scale up to
make a difference because we don’t produce hundreds of
thousands of engineers or scientists at the scale that
China and India are churning out each year.
Investing in education, especially in primary, is a
long-term social investment. However, while reforming
education, we could actually hasten progress by just
tweaking existing economic policies.
We seem
to be so happy to know that we increasingly have Korean
and Chinese visitors in the hundreds of thousands. And
yet, that’s miniscule, considering that Thailand and
Malaysia are attracting millions of them each year. Why?
It’s because they have more flights from those
countries, an argument that bolsters the need to open
our skies to ensure more flights coming from the rest of
the world, even as reciprocity remains a relevant issue
also.
Corollarily, we also need to open our seas and our ports
to more participants to foster competition and lower
charges. That would be a big boost to producers of farm
products in Mindoro, as well as the islands of the
Visayas and Mindanao.
Infrastructure development is crucial. Since Congress
can hardly include big-ticket projects in the annual
budget, the only way we could finance these huge
projects is through private money. Our experiences in
build-operate-transfer projects have not been good
because of corruption during the bidding.
The only
way to address this is by legislating a “transparency in
governance” or a “freedom of access to information” law
that would allow every citizen in this country access to
all documents and contracts being proposed by the
bureaucracy for signing with local or foreign providers
and vendors. We had all those infrastructure-related
scandals (e.g. PEA-Amari, Naia Terminal 3, and lately,
the national broadband network) because of this utter
lack of transparency.
These
reforms could be done right away if only the country’s
political leadership has the guts to do so. And the
impact, in terms of propping up economic growth, would
be immediate.
Hello,
Malacañang. Hello, Congress. |
