ONE of the great strengths of a flourishing democracy is the “seasonal” changes of leadership, especially the top ones of a country, thereby injecting new ideas and styles into otherwise complacent status quo, and charting perhaps a different, better course for the country, all, hopefully, in line with the will of the people. The Philippines, like many a Southeast Asian country, has experienced the post-colonial ebb and flow of democracy, much to both the joys and pains of its people. This is perhaps why the Philippine presidency, barring constitutional changes, is limited to one long six-year term, balancing the need for policies to be effectuated over an extended period, with the fear of an overstayed imperious dictatorship. And it is perhaps customary for commentators (albeit foreign ones such as myself) to layout some of our wishes and aspirations at the commencement of a new national leadership.
There are indeed high hopes and expectations bestowed upon newly inaugurated President Rodrigo Duterte. I would venture to say that while most of the earnest hopes are foreign-directed, which would be nice if achieved but are admittedly of less urgency, the exigent expectations are domestic-oriented and should be of top priority for the new administration. There is an immediate need for the Philippines to put its house in order if it were to weather through these globally stormy times.
At the head of the to-do list is the economy. The Philippines has registered impressive economic growth during recent years, but one must sadly keep in mind that this was measured from a relatively low base as compared to quite a few of its Southeast Asian neighbors. Over half a century ago, the Philippine economy was the envy of Asia, together with its many other socio-economic progresses. Students from all over Southeast Asia, for example, aspired to study in Philippine universities. What happened next was, of course, unfortunate. And today, despite a large outsourced service industry eclipsing that of competing India, the Philippine economy is still dominated by commodities exports and remittance from overseas workers.
This need not be so for long. The Philippines must develop a full-fledged industrial system that could transformatively value-add to its abundant commodities. And to do so, foreign capitals and technologies are required. But when asked of what are some of the obstacles they face when contemplating planting a stake in the Philippines, potential foreign investors typically cite the nightmarish bureaucratic entanglements and the outdated (in this globalized era) market and foreign ownership restrictions.
There is no other way around it. The new Duterte administration must endeavor to streamline the regulations and the bureaucratic practices, as well as loosen market entry and domestic ownership criteria. Only then would the foreign direct investment come in droves. And they will still be in partnership with the local entrepreneurs, because the latter’s expertise in navigating the on-the-ground scenes, from labor disputes to marketing peculiarities, are still needed. The local partners, meanwhile, could learn of the state-of-the-art management techniques.
Overly assiduous protectionism serves nobody’s interest but only perhaps the elites. Neighboring Malaysia’s national car policy serves as an instructive lesson. Since the 1980s, Malaysia has slapped on whopping car import taxes of up to several hundreds percent, allegedly to nurture the then-nascent national car industry. But despite various other protective measures and various other incentives, Malaysia’s national car industry remains—well, nascent, producing cars with poor quality but hefty prices, which understandably repel potential car owners who continue to hog foreign-branded cars. As a result, average Malaysians have to fork out more than twice of what their American counterparts would have to pay for the same car, while politically well-connected fat cats enrich their coffers almost by official diktat.
The vast opening up of domestic market and attendant national treatment for foreign investors are not only beneficial economically in the short-to-medium term; they are also in tandem with the eventual Philippine accession to the Trans-Pacific Partnership free-trade agreement, which would open up access to a vast market of nearly half the world’s economy. The Philippines must emerge from an economic victim mentality common in many other developing countries, and be resolute in its attempt to fully integrate itself in the world economy as a confident partner.
And the Philippines should see great potentials in its creative industries, ranging from entertainment and art to tourism and services. As I see it, the Philippines is endowed with some of the greatest assets in this respect: its deeply artistic and creative popular manifestations; its vast expatriate population that undoubtedly gained globalized views while working overseas; its superior command of English and also active participation in the outsourced service industry. The new administration must think hard and roll out new policies that could incentivize and coalesce all these positive aspects of the Filipino creative mind and practices, and harness them into a viable creative industry that could take center stage in the Philippine economy.
The wish list for the new administration continues next week.