• Too many ‘winners,’ not enough actual winning

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    Ben D. Kritz

    Ben D. Kritz

    ONE of the key messages that emerged from the 5th Arangkada Forum earlier this week was a bit of a head-scratcher: In a press briefing on the sidelines of the meeting, American Chamber of Commerce of the Philippines (AmCham) president Rick Santos divulged that the Joint Foreign Chambers (JFC) were seeking to expand their list of “winning sectors” from seven to 10.

    A “winning sector” is, as far as can be determined from various explanations, one that the JFC has identified as having good potential for growth in general, show the most promise for attracting foreign investment, and present opportunities for more ‘inclusive’ growth. The seven current ‘winning sectors’ are agribusiness, IT-business process management, creative industries, infrastructure, manufacturing and logistics, mining, tourism, medical tourism, and ‘retirement,’ which is a somewhat vague amalgam of businesses catering to retired foreigners and their presumably reliable incomes.

    What three sectors the JFC considers good additions to this list were not disclosed. To be clear, the JFC did not suggest it necessarily considers all these sectors current “winners,” but ones that could be if they’re not already, and which would, if given greater attention, have significant multiplier effects.

    Focusing on the economic sectors that present the biggest potential gains is certainly not a bad idea by any means, but what makes the JFC’s list a bit tenuous is that it is simply too long. Management in this country, whether in the government or private sector, does not – to put it as kindly as possible – do its best work when it tries to do too many things at once. As a result, we have an economy that has a number of ‘winning sectors’ that are not doing enough actual winning, nor are likely to unless they are approached in a more critical manner.

    In conversations I’ve had over the past week or so with people in different businesses – other media people, government technocrats, and executives in the mining, financial, automotive, BPO, air transport, shipping, and property sectors – an emerging theme seems to be that the focus of the next government, and consequently, of investors and business developers as well, should be narrowed to a few vital areas that provide the foundation for the rest of the economy. The areas that are mentioned most often are agriculture, infrastructure and mining, with the BPO sector and tourism seen as the most likely ‘next steps’ once the country finally addresses its basic economic requirements.

    The perspective makes perfect sense, which is why more than one sarcastic wag has suggested the country has a hard time following it. Infrastructure is at the top of everyone’s list already, and has been for some time. It is not entirely unfair to say that if the next President does nothing but makes visible progress in infrastructure, he will be considered a success. Without infrastructure to move goods and people around, provide reliable and fair-value necessities like water, power and basic civic services, and allow efficient communications, no other sectors on the JFC’s or anyone else’s list can even function, let alone serve as the focus of an economic strategy.

    The Philippine economy is somewhat unique in that it hasn’t followed the normal progression from agrarian, to manufacturing, to services, but has jumped directly from being a largely farm-based economy to a largely services-oriented one. The Philippine experience over the past decade or so has demonstrated that taking that significant shortcut is actually possible, but it certainly hasn’t proven that it’s a good idea (interesting fact: It’s not.), and it can’t, so long as the country’s agriculture sector is such a spectacular underperformer.

    Mining is a trickier prospect, because it is perceived as being highly environmentally and socially invasive, although in both respects its destructive power pales in comparison to agriculture, at least in this country. And no matter how it is handled, it is unavoidably impermanent; the minerals will at some point run out. Be that as it may, there is a vast amount of wealth buried in the Philippines, and it would be stupid not to put it to some prudent use – with, of course, as much weight of meaning the word “prudent” can bear with respect to environmental and social issues, as well as economic ones.

    Putting mining into its proper place in the economy is a big challenge, but the Philippines at least has the advantage of plenty of examples of what not to do in places like Indonesia and China, and from that find solutions everyone can live with.

    Focusing on just these three issues, even building an entire economic program around them (without completely ignoring everything else, naturally) would have a tremendously positive impact, certainly more so than trying to prioritize an entire basket of issues.

    ben.kritz@manilatimes.net.

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