The Philippines investment labyrinth

Mike Wootton

Mike Wootton

I took a trip to Lucban in Quezon the other day to see the decorations for the Pahiyas festival. They were indeed impressive and Lucban was a very nice place. Problem was actually getting there and back. I had carefully checked the route beforehand and it looked quite straightforward on the map, but there were lots of intersections and so few of them have direction signs with the result that we had to ask directions from random tricycle drivers and passers-by and took the wrong road—twice—and the journey time was 2hrs 45 minutes instead of the “advertised” 1hr 20 minutes. Tourists, beware, things can take longer than expected.

This problem, of course, to some degree reflects the way things are here and may well be the reason why external observers and commentators laud the economic progress of the Philippines and its regulatory development. On paper it all looks and appears reasonably under control (if you don’t read the Manila Times that is!)—democracy, lots of laws, regulators, stock market, free enterprise and the other trappings of economies well on the road to becoming fully developed. But in reality it is not under control. Things take a lot longer than expected and there are so many opportunities to take the “wrong road.” And it is very difficult to find out why you are on the wrong road or where it goes to—and it’s frequently in a circle! It takes a lot of time, effort and money running around trying to find the right road.

Ah, people will say, “you need a Filipino partner” (and with the Constitution as it is, you do) who will know what is the right route. But even they find it difficult, unless of course your local partner is one who is going to devour you, or just tell you who has to be paid off to get through the minefield of risks. And even paying people off may not work, the people who like to be paid have a proclivity of taking the money, always up front of course, and then not delivering.

It is a mystery trying to fathom how to get around or deal with the unexpectedness and apparent irrationality of the way business in the Philippines actually operates. That quasi-government organizations will use their members’ money to buy things which are more expensive when cheaper and better quality products are readily available simply defies the imagination. What defies the imagination even more is that despite an awareness of such practices nobody does anything about it. The money just gets wasted while everybody stands around and watches. Weird, isn’t it? Government and its rules and regulations just don’t function.

So despite following the prescribed route to achieve some sort of business objective it turns out that this is in fact most usually one of an infinite number of wrong roads. Go back and start again. Perhaps somebody needs to be paid off? But who? Pick one, pay him and find out that

he cannot deliver, even after the price has been increased by several steps in the process. Oops, wrong again. And on and on down lots of different avenues none of which produce the desired result regardless of the benefits to all and disadvantages to none in so many of these matters.

Most people would put this irrationality down to corruption, somebody somewhere has an ability to stop something happening if they don’t get something out of the deal for themselves so they just keep erecting roadblocks or putting diversions in place. But can it always be corruption? Surely not. There are significant elements of fear (of making a mistake and being either ridiculed or fired), confusion (what do the regulations really mean) and plain ignorance (the current fashion of management by unqualified amateurs) all now compounded by the latest current fashion of this administration to devolve what they cannot give away to friends in the so powerful “private sector,” to the LGUs—what an even bigger mess is coming up.

Investing and trying to do business in the Philippines is to tackle a tortuous labyrinth of irrationality in which the direction signs if there are any cannot be relied upon. In reality it is just a set of fiefdoms so to find the right route you first need to find the feudal lord . . .

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    • Bagong Bayani on

      Yes, you got it John. The writer complains a lot but offers no suggestion – the worst kind of critic. What does this writer know about business and investing anyway to sound like he has done it all, he earns his living by writing, right? We know Manila Times has political leanings but to go beyond and pay someone to put Philippines in a bad light is simply unpatriotic!! Many things need improvement we know that, but we know also the transformation has already started. Many of us do not want anything less than what this country has achieved so far. We don’t want to need writers of this kind this time, Manila Times needs to be Filipino first, you should know that.