Through the eyes of a Foreigner
By Andrew Engel
Can the Philippines grab the Opportunity?
Living in the Philippines could, from one perspective, be described as living in the worst house on the best street. The other houses have been updated or are undergoing renovation, but the Philippine house remains largely untouched and dilapidated.
As a metaphor for the emerging Asian economies, the picture of houses on a street goes some way towards describing today’s realities and where the Philippines sits in relation to its neighbors and the economic growth they are experiencing.
I say some way, because not all the Asian economies are booming and because there are good things happening here. But too many impediments remain problematic, too many indicators are below where they should be, too many lag behind many other Asian countries, whose people are no smarter or hard working than Filipinos.
And while many of these indicators can be depressing, it is also true that sooner or later, investors are going to realize the opportunity the Philippines offers because of what has happened with the economic value of all the other houses.
It may come in the form of investors who can sense the opportunity for profitability; it may come from the owners themselves who realize that the status quo can be changed, or it may be a combination of both. And it will come if impediments are cleared.
It would be a mistake to think it is not possible. Investors with literally billions of dollars are watching the Philippines waiting for signs of change and a move to address the obstacles that keep too many away and wary of putting capital into the Philippines in the quantities needed to kick start Asian style economic growth.
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The Philippines is at the center of the greatest shift in the global economic structure seen in recent history. The days of European and US dominance and the lions share the world’s wealth they have traditionally taken are coming to an end. No longer are the poor neighbor’s price takers. Increasingly, Asia is a partner and beneficiary of global wealth production. Moreover, Asian economies are capable of driving the world economy even when the rich countries of the developed world falter.
There is no longer any doubt that the economies of greater Asia are playing an increasingly important role in global economic prosperity. Statistical indicators all point to growing prosperity of what are now being described as emerging economies. From exports to the need for raw material, innovation and an increased domestic demand, it is now clear the quality of life in most Asian countries is improving. And it has only just started with abundant capacity for further expansion.
It is no longer the case that Asian economies just offer cheap labor. As prosperity grows in these populous countries their domestic markets become opportunities in and of themselves and the first cousin of this growth is innovation.
The sheer size of these domestic markets, with over half the world’s population, and the amount of catch up available to get a slice of what the rich nations have long enjoyed, sets the pattern for years to come.
No longer can it be said that when the US catches a cold, the rest of the world gets pneumonia. We can see that today with the problems in the US and Europe can cause for global growth being offset to some extent by China, India and other Asian countries. While the structure is not yet completed and it is a period of transition, meaning many of the norms still operate, the building process is well underway. A new global structure (what economist describe as structural, not cyclical change) is emerging, and it is one which will benefit Asia greatly.
When you think about it, the untapped potential of the world’s poor countries has been there for decades, waiting for the right set of conditions, the spark to get things started along the road to increased prosperity. Small individual actions helped to pre-position these economies for the lift-off that has now seen not just China emerge as a global economic power house, but Asian economies generally prosper.
Sooner or later, it will happen here in the Philippines.
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The existing impediments in the Philippines are well known and extensively documented, not only by those who watch or govern the Philippines, but its citizens. Ask any Filipino what these problems are and they list the same things. Poverty, corruption, and lack of employment will always feature at the top of the list. Foreign investors will talk of political stability, institutional concerns, inadequate infrastructure investment, red tape and corruption, as well as other subjects less spoken of that I will also leave aside.
Clearly, there is a culture of corruption in the Philippines which while oiling the process of redistribution is a key impediment to growth and shared prosperity. Some would say it is the single greatest impediment.
For many it is both necessary to make ends meet and a simple reflection of what many of those in authority do or are forced by the system to do. As it riddles the system from top to bottom it can be justified as unavoidable. It can be used as an excuse that says everyone does it. It provides a pretext for saying it can’t be changed.
Few are comfortable with this system, and most would like to see it changed. A majority of people seem to despair feeling it can’t be altered and that it has become too ingrained.
Indeed it would be foolhardy to think corruption can be eliminated. It occurs everywhere in the world. But can the pervasiveness of corruption in the Philippines be changed?
Absolutely!
It starts with great leadership; it grows in small increments as demonstrable victories are obtained; it comes from systemic changes that make dishonesty too costly; it needs to happen at all levels of the social structure. People need a reason to buy into the idea that it might be possible. It comes with determination to write a brand new chapter based on what is possible.
It is not easy to change a belief system, but when the benefits are made obvious by the neighbors in the street, the gravitation pull ultimately becomes irresistible.
At least that is my hope.
The house may be seen to be full of termites by those who despair, but I prefer to see the inherent benefits in taking a positive view. That is a vision to be seen by just looking at the neighbors. If they can do it, so can we.
That is a vision of change which gives a reason to believe. Do you believe it is possible?
(See Andrew’s blog at andewengel.blogspot.com)
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