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Saturday, October 21, 2006

Missing the boat

Opinion: ABS-CBN News
October 21, 2006
Missing the boat

Friday’s concluding ceremonies of the annual Philippine Business Conference cap two weeks of forums organized by the business community meant to identify issues it believes the government must address to lift the country’s competitiveness.

Over the past two weeks, we have read a slew of proposals from organizations ranging from the Makati Business Club to the Foreign Chambers of Commerce of the Philippines and the Philippine Chamber of Commerce and Industry. Their overarching message is simple: the Philippines is again falling behind its neighbors at a time when Asia has regained its footing and is poised for takeoff.

The signs of an Asian revival have been with us since last year, when key economies in the region posted decent growth rates on the back of a rising China and a resilient US economy. During the recent Asean Economic Ministers’ Meeting, the 10-nation group unveiled a commissioned study showing that foreign direct investments in the region have returned to pre-Asian crisis levels. Key beneficiaries of this renewed foreign interest in Southeast Asian businesses are the tourism, export, medical, infrastructure and business process outsourcing sectors.

Unfortunately, not every country in the region is growing at the same pace, as old unresolved issues have returned to haunt those markets where reform failed to make any headway. The Philippines is one such market, where a huge gap between actual performance and potential still exists. The latest World Bank study on the ease of doing business highlighted again the cost of the Philippines’ inordinate preoccupation with politicking. The bank’s annual review showed that the government failed to institute meaningful reforms to facilitate business in the country, as none of the 10 key bottlenecks identified in the study had been addressed since last year.
Consequently, investors chose to plunk a bigger share of their money in other less-complicated markets. A recent United Nations survey showed that the Philippines’ attractiveness as an investment-destination dropped 12 notches from 103rd place last year to 115th this year. True, renewed investor interest across Asia has lifted all boats in the region, but the Philippine ship remains moored on the rocks of inefficiency.

The key, as the World Bank and the Asian Development Bank have noted, lies in improving the country’s infrastructure—be it transportation, communication, energy and the like—and its governance structure. The underlying issue is to provide businesses with some measure of predictability, allowing them to earn decent returns on their investments, and in the process generate jobs and other business opportunities that would spread the dividends of investment to all Filipinos.

True to form, participants in the just-concluded 32nd Philippine Business Conference drew up for the nth time a list of must-do measures that the government should pursue to make every Filipinos’ aspirations to a better life a reality. As we suspected, the list, although containing some minor revisions, comprised by and large the same set of issues the business community has been raising every year.

We sympathize with the businessmen who every October, have to troop to the same meeting rooms to air their age-old complaints about how this country is not being run as it should be. The timing cannot be more apt, as growth in the Philippines’ key markets, primarily the US, has been slow in the near term. With expansion set to slow, investors naturally would be pickier on where to spend their scarce resources. In this regard, we cannot overemphasize the need for the government to immediately work on improving the country’s infrastructure and governance systems. Filipinos cannot afford to miss the rising tide of Asian affluence again.

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