SITTING in a coffee shop in a mall somewhere in Makati City, global economic and policy analyst Dr. Dan Steinbock blended well with the crowd, who were either out shopping or taking a quick break from their work in their offices nearby.
It was early in the afternoon and he just flew back again to the country after one of his quick sojourns in the Asian region. Dr. Steinbock is one busy person. He constantly moves between the United States, China and the emerging markets in the Asian region.
He first came to the country in 2009 to become a keynote speaker in an environmental conference. From there, it was a love affair with the country where he sees so much potential going forward.
“I was curious and intrigued. I fell in love with the country. It is the beauty and sensibility of the people. The Philippines’s historical background is unique,” Dr. Steinbock said.
A rising economy
Notwithstanding what he saw at the airport when he first arrived in the country, Dr. Steinbock saw the chaos as something positive for the country.
“There were a lot of opportunities missed in the Philippines because the airport is what they see. It was a bad mistake. I have talked to friends and there was discrepancy from what they thought the country was about. Their expectations were only based from what they knew in the 1980s and 1990s,” Dr. Steinbock said.
He then mentioned what had happened in Singapore under the leadership of former Prime Minister Lee Kwan Yew.
Dr. Steinbock said that Lee likened the airport before to a shopping window, knowing that it is the first touch point for everyone coming to their country. He said Lee micromanaged what was happening in Singapore, which had a lot of problems then and reframed everyone’s expectations.
“Singapore is a small country and it is easy to do it there. There are more problems here in the Philippines. There were mistakes made in the past,” Dr. Steinbock said.
However, since 2010 Dr. Steinbock said the country has been on an upswing. It was an altogether different scenario which he likened to what happened during China’s economic boom.
“The Philippines is close to a new potential edge. It reminded me of Shanghai where cars exploded in numbers and there was no sidewalk. There is momentum here in the country now,” Dr. Steinbock said.
Employment opportunities
To Dr. Steinbock, there are a lot of things going for the country including a stronger campaign against corruption. However, all the economic data will never matter if new employment opportunities are not created.
He mentioned Brazil and the Middle East, specifically Egypt, as prime examples of countries that failed to capitalize on their economic momentums.
“Egypt in the 1960s showed a lot of potential with their reforms. Same thing with Brazil. But the reality is that people came to the cities and found no jobs. With no jobs, the youth became radicalized. In the Middle East, it is the same circle of violence,” Dr. Steinbock said.
But for the Philippines to create jobs, foreign direct investments must come in at a much faster pace.
“Poverty in the country is still high. The government could have been tougher in liberalizing foreign direct investments. It pains me when people with doctorate and masters degrees work in jobs that fall far from their capabilities,” Dr. Steinbock said.
He said the Philippines should have a medium-term plan of bringing back Filipinos now working overseas.
“Emerging economies send people abroad to learn and then come back,” he said while explaining that the country has a low degree of competence in certain areas.
He said that if there is no inclusive growth, the Philippines will have serious problems especially now with 10 percent of the GDP dependent on overseas Filipino workers’ remittances.
It is a situation that is very unique among emerging countries that Dr. Stienbock has observed, and which the Philippine government should look at 20 years ahead.
“Remittance drives consumption, but it is only derived,” Dr. Steinbock said, while adding that the services sector in India did not develop the country as a whole.
The value of China
According to Dr. Steinbock, China can play a critical role in the economic development of the Philippines.
He said capitalist China is the most important event to have happened after Japan in the 1970s.
“China saw globalization coming. China is now creating a domestic capital base and is moving out,” Dr. Steinbock said.
He said with the boom period fading, the focus of China investing overseas is something the Philippines should take a long hard look, especially with Chinese companies looking to take risks.
Another interesting development Dr. Steinbock saw in China is that they are no longer as labor intensive as 10 years ago. He said Chinese companies are going to the US to learn and advance their manufacturing industry.
He said that it would not come as a surprise when at some point in time China will be known for its innovation and not its cheap prices.
“It is not late in the game for the Philippines. Vietnam has diffused some of the issues. There must be a common understanding that it will work,” Dr. Steinbock said, while citing that Chinese investments in the Philippines are currently “just a drop” when compared to other countries in the region.
He added: “The Asean [Association of Southeast Asian Nations] region can benefit from China. There is regional economic interdependencies. It is better to find solutions to geopolitical differences.”
According to Dr. Steinbock, while other countries in the region are insulated geopolitically, the Philippines must look long term, including the role played by the US in the country.
Dr. Steinbock believes that China wants regional stability and that it cannot afford a long-term conflict.
In the Philippines long term
Dr. Steinbock started an office in the country a year ago and has largely been moving between Metro Manila and Cebu.
To this date, Dr. Steinbock claims that he still has to get used to the traffic in the city. He sees the Philippines as having no tangible urban planning at this time.
Still, together with his wife, one of the best things they like to do in Metro Manila is to walk around and taste the different dishes available, especially the seafood.
He sees the Philippines’s culinary tradition and the country’s arts and crafts as some of its strongest points and should be promoted internationally.
Image credits: Jimbo Albano