Tuesday, 29 November 2011

Helping an expert understand PHL

Business Mirror

ANOTHER expert has stepped up to tell the Philippines, to give the magic formula for the Philippines on its economy.

A doctor in economics from the Asian Development Bank pretty well trashed the Philippines in a speech before the 1st Manufacturers and Producers Summit last week. I was invited to be there, not as an expert, of course, but had a previous engagement.

That was probably a good thing for my blood pressure and the good doctor’s nose.

All these discussions start out the same. In this case it was the phrase a “diversified manufacturing sector.” Like I said, I have heard this all before.

Forget about the last 30 years when the Philippines could have, should have, would have. Let’s just talk about 2011.

Thailand is a great country. Nice elephants and cool rivers. The Philippines is always being compared to Thailand.

I did business there for three years in the mid-1980s, but the “experts” have all their statistics neatly lined up on a spreadsheet.

But the problem is that countries are different and the numbers mean and come from different experiences. That is what you would know if you were a “feet-on-the-ground” business person instead of an “expert.”

Thailand created the world’s highest economic growth rate from 1985 to 1996. Thailand has a lot of manufacturing. Therefore, so should the Philippines.

Now let’s do a reality check. You can get into a large truck carrying shipping containers and drive to each of Thailand’s five largest cities in about 24 hours. You can go to each of the Philippines five largest cities in 24 hours on an airplane. And you can drive that same truck in Thailand filled with manufactured goods for export directly to one of the largest seaports in the world, Singapore.

You think that fact might have some effect on the economic development of the two countries? The doctor-expert ignores that difference.

Thailand is the world’s biggest exporter of rice. The Philippines has been the world’s largest importer of rice. But Thailand has this “fact” on its border known as the Mekong River. Because Thailand sits in the Mekong River subregion, they do not have to bother much with irrigation like we do to grow rice. They also have the Chao Phraya, Mae Klong, Bang Pakong and Tapi rivers. We have the Cagayan River and the Davao River,which are actually better for rafting than for irrigation, although local farmers use them.

Maybe being in a river valley might contribute just a little to Thailand’s large rice crop.

Did you hear about the massive flooding that just happened in Thailand? It was a big news story. You know why? Because Thailand’s rice fields do not get wiped out by typhoons every year like in the Philippines.

Needless to say, tourism is big in Thailand and we need to do more. This is how Thailand does it.

According to research by Chulalongkorn University on the Thai illegal economy, prostitution in Thailand in the period between 1993 and 1995 made up around 2.7 percent of the GDP. A newer study says business is booming. One estimate published in 2003 placed the trade at $4.3 billion per year or now more than 3 percent of the Thai economy. I hope the US ambassador to Manila is reading this. It is believed that at least 10 percent of tourist dollars are spent on the sex trade. In other words, visitors to Thailand spend almost as much on sex as tourists to the Philippine spend on everything else.

Another thing the doctor said is that the Philippines cannot rely on call centers for economic growth. From the Philippine Star: “The booming BPOs provide short-term growth.” Obviously, he never talked to the people in the industry that have worked there for a decade and more.

“The industry only accepts college graduates. There are no job opportunities for those who don’t finish high- school or are only high-school graduates.” For the high school graduates, tens of thousands of BPO jobs have been created for guards, drivers, messengers, kitchen staff and janitors.

He is right. After having worked in the industry several years, I never met a summa cum laude from a five-star university working as an agent.

What I did see was thousands from the “Bundok State College” with a two-year degree making P15,000 a month with medical care and bonuses. And I have seen De La Salle graduates in economics working as tellers in a bank making P10,000 a month.

What do you think a call center is? A manufacturing plant, a factory that provides a service rather than goods? And we do not have to drive to Singapore to export it.


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

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