Tuesday, 10 August 2010

Economic courage

Written by John Mangun
Outside the Box
Business Mirror

The weakest link in any organization is at the top. Every institution is only as strong and as effective as the leadership.

The leadership of the Philippines has lacked courage, or to use the vulgar Spanish term, cojones, for far too long. That is not to criticize any one person because, while courage is an individual characteristic, personal courage is just about worthless unless that quality is cascaded throughout an organization.

A courageous general cannot win battles unless that courage becomes a part of the policy and the mindset and behavior of everyone within the army. However, a courageous general has the obligation to get the troops to buy-in and become part of the general’s courageous thought and actions.

What is courage? The traditional dictionary definition goes something like this: “The quality of a confident character not to be easily afraid or intimidated. It is the ability to do things which one finds frightening.” American author Mark Twain wrote, “Courage is not the absence of fear. It is acting in spite of it.”

An important reason to revere and respect Dr. Jose Rizal was his courage. He took it directly, too, and put his grievances and ideas right in the face of the Spanish and the Church that supported the abuses of the Spanish colonizers. His courage inspired courage in dozens of other leaders and thousands of ordinary Filipinos.

Perhaps the best way for a leader to judge his or her courage is to look at the reaction of people when that courage is displayed. Those who understand and embrace the benefits of that courageous thought and action, themselves are emboldened to do the right thing. Those who are satisfied with the way things are, will find reason to rebel against the leader’s courage.

President Aquino took a bold move in banning sirens on private and non-emergency public vehicles. Of course, it is only a symbol but it is an important symbol. Less symbolic is his strong language about corruption. The cancellation of the “midnight” appointees also is symbolic but important. It would have been easier and less courageous just to have ignored the issue. He did not.

Honestly, though, it is easy to be courageous about corruption. Displaying economic courage is an entirely different matter and rarely has the Philippine government and its leaders shown economic courage.

You get a job offer from another company. Leaving the comfort zone of your present employer after many hears takes courage but you know that it is an economically wiser decision to transfer. Ever done that or known someone who has? That takes cojones.

You may have decided to quit your job after many years and struck out on your own, opening your own business. That takes a lot of courage, especially when many others are telling you how foolish you are both before and after you make the move.

President Fidel Ramos exhibited economic courage during his term. Deregulating and opening up the telecommunications sector was a bold and courageous move. Of course, the established system did not work very well. But changing to an unknown was frightening. And the small minority that benefited from the status quo fought madly to stop Ramos.

From the moment he uttered the words about public-private partnership in his State of the Nation Address, the benefactors of the current system began howling. Those who hate the private sector and love big government (because of the benefits they receive) bared their fangs and claws.

But those looking for courageous economic leadership, understanding the potential if the President’s vision could be realized, started thinking outside the comfort zone.

San Miguel Corp. vice chairman Ramon S. Ang is the first to challenge the President’s word and to test his resolve and courage. From the Daily Inquirer: Ang “is proposing the privatization of Philippine Amusement and Gaming Corp. [Pagcor] to raise as much as $10 billion.” With $10 billion in cash, Ang said the impact of Pagcor’s privatization would be “stunning” not only on the government’s cash position but also on the country’s debt stock and economic standing in the region. Mr. Ang is right.

Privatizing Pagcor would be the jewel of public-private sector partnership for the government. The government would still regulate and control, but the government would receive a huge financial windfall unavailable any place else.

Pagcor’s casino operations are a bit of a joke in the international gaming and travel community. The only reason foreign gambling enthusiasts come to the Philippines is that it is cheap. I know. I used to be one. I have traveled to almost every major casino hub—Monaco, Las Vegas, Malaysia and Aruba. Pagcor’s casinos are exactly what they are supposed to be—a government-run corporation, lifeless, not very user-friendly, and non-competitive.

True, Mr. Ang is thinking very big with his proposal. But that is what real courage can lead to. That P450-billion investment would never be equaled. But think of what it could do for this economy. Each good-paying, sustainable job costs about P150,000 to create. Privatizing Pagcor could potentially create 3,000,000 new jobs if the government spends the money productively.

It will take an immense amount of courage on the President’s part to make this proposal happen. He will be opposed at every turn. He will have to fight every single individual who benefits under the current system. But that is what being a leader is all about.

Mr. Aquino now has been given the opportunity to put action behind his words and to prove to the nation that he has the courage to implement his convictions. It will be interesting, to say the least, to see how this plays out over the next six months.

Are we entering a new era of economic leadership? The answer to that question rests with Malacañang.

E-mail comments to mangun@gmail.com. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.

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