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And
let’s get it right this time.
As the
storm of 1997 blew over the Philippines, we lowered our
economic heads and prayed for clear skies. We did
nothing to take advantage of the situation and spent
most of the time whining and complaining about the good
old days.
When the
Philippines could have prospered from other nation’s
mistakes, we decided that politics was a much easier
game to play than business. By the time that fiasco was
finished, our regional neighbors had recovered their
focus and began to push forward.
The only
positive thing to come out of 1997 for the Philippines
was that the government and business got their fiscal
houses in order. No more massive government and
private-sector borrowing to fund growth and no more
complacency to global storms.
Then, I
wrote that that Asia was experiencing financial AIDS;
Asset/Investment Deflation Syndrome. The 1997 crisis was
caused by the value of assets, like real estate and
stock prices, along with currencies, trading way above
honest valuations. The Asian bubble burst. Asian assets
had become inflated because of too much debt,
particularly foreign-denominated borrowing by keeping
currencies artificially strong, and by government
support of failing corporations. Does that sound exactly
like what is happening in the West today? It is.
Situations like the current “First World” financial
crisis are similar to what can happen during a
basketball game. A key player on the other team is out
of position and there is a clear lane to the basket.
While the crowd is screaming, “Take the shot, take the
shot!” what do you do? You can:
§
Discuss
with your team members who is most qualified or most
deserves to shoot the ball; or
§
Try the
low percentage three-pointer to maximize the favorable
chaos on the court.
Call a
time-out. Take the safe lay-up.
In 1997,
the Philippines called a time-out and had a team
meeting. By the time the country came back on the court,
the game was over. Maybe this time we need to play to
win.
The
Philippines has the opportunity to prosper from this
crisis by strengthening our public and private financial
position and increasing foreign investment and,
therefore, building our national wealth.
Despite
all the negative news, the world is flooded with
liquidity, with excess cash. Remember, as stock markets
and investments such as gold and commodity prices fall,
cash is freed up. Global interest rates are much lower
than inflation and all that money is looking for havens
from the storm.
The
Philippines could become that haven. Believe it or not,
we have much more political stability than nations like
Thailand and Indonesia. Our interest rates are
attractive in relative terms and in relation to the
“price” of the peso. Our property sector is very strong
and stable, unlike almost all of the rest of the world.
Corporate profits and growth are very good. We are not
dependent on one particular vulnerable economic driver
like exports or foreign investment for our growth. Our
critical financial strength of overseas remittances
shows no signs of weakness.
So how
do we win the game? We need to do several things both
institutionally and individually.
First,
stop the politicking right now. The political
establishment and the media need to impose a
“cease-fire” until the middle of 2009. We need to use
the next nine to 12 months to build national wealth, not
political careers. Nobody walks into a store and buys
something when the owners are yelling and fighting
behind the cash register. This is the time for everyone
to be smiling and making nice with each other, even if
they don’t mean it.
Our
political and business leaders need to be spreading out
around the world showing the Philippines as an
investment, business and financial safe harbor with a
sound banking system, a politically stable environment
and a country that can maximize the profitability of
foreign investment.
Businesses, on the other hand, should be acting as if
their businesses were in a great crisis. Do not spend
any money that is not going to make more money. During
potential boom times, you have to be calculating and
shrewd. Companies in the West are desperate for new
customers and are selling their products and services at
a discount. Look for new processes and technology that
will make your company more cost-efficient and
profitable. Companies around the world are downsizing
and closing. Look for new markets that can be exploited
because of their local firms shutting down.
Individually, we need to spend locally, and this is
critical. Preserve our foreign currency and protect the
peso from the global typhoon. No more trips to Singapore
or Hong Kong or the United States unless it is for
money-making business. Buy locally. If that snack food
says “Made in the USA,” do not buy it. You need to
support the Philippines with your buying patterns, not
the rest of the world. Look, you probably work for or
own a Filipino company that employs Filipinos. Would you
want your customers buying from foreign companies and
not from you? Think about it.
You want
the Philippines to become wealthier? Then right now, we
need to think locally and act locally. Forget the rest
of the world. Time to take advantage of their problems.
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