Saturday, 12 November 2011

Now is our chance

Peter Wallace
Manila Standard

The world is in turmoil. There is the Arab Spring where three governments have fallen, sadly in far too bloody ways. Europe is in crisis, one that may bring the world down. Due to debts that can’t be paid. The Greek prime minister has gone, Italian prime minister Silvio Berlusconi is following. Ireland had to be rescued, Portugal, too. Disgust with the world’s financiers and their excessive greed has led to an “Occupy Wall Street” revolution that is sweeping the world, and may lead to sweeping change in how that financial world is managed.
Then there’s nature doing its bit with a tsunami that took nearly 16,000 lives and cost some $300 billion in Japan. And now flooding in Thailand so severe that 10,000 factories have closed and millions of lives have been disrupted. These are the worst such disasters in over 50 years. Earthquakes have rocked Turkey, Alaska and New Zealand.

Amidst all this turmoil, there’s a haven of calm: The Philippines. Where we are arguing over whether Gloria should be allowed to travel or not. And how did one woman get away. The pettiness of Philippine politics suddenly doesn’t seem so bad.

It seems heartless to take advantage of another’s misfortune, but there’s an opportunity here the Philippines can grab. The first is that companies need to diversify their operations to have factories in several locations. The Honda plant in Thailand, for example, is underwater and it will be weeks, if not months, before it’s back in operation. If there were a plant here, cars could still come off the line. There will be many other industries where diversification makes sense.

Then there’s tourism. Tourists will be looking for alternative sites. We just need a polite way of saying “Make it here!”

On finance, this now looks like a much safer bet. A country with banks in sound shape, no debts of any significance to write off, a financial system that is stable and strongly backed by gross international reserves worth $75 billion that could cover 11 months worth of imports, and rating agencies that are upgrading the country, not downgrading like elsewhere, is not to be sniffed at. The world’s rich are still rich (a sad irony in this debacle) and will be looking for safer havens.

It wouldn’t hurt the Philippines at all if it doubled its bond offerings and then spent it on infrastructure. At 2.4 percent of GDP being budgeted for 2012 it is the lowest among the major Asean countries. It needs to, at a minimum, match the Asean average of 6 percent. More for a couple of years would be better. Private funds into public-private partnerships and official development assistance, for other projects won’t reach this level. We have more than 30 years of underspending to catch up. In 1971 when Thailand and the Philippines were about equal, a GDP of $7.38 billion and $7.41 billion, respectively, their lack of infrastructure was about the same. For more than three decades Thailand spent a total of $130 billion on infrastructure, the Philippines only half that—$60 billion. And the Philippines had a more difficult (islands not a contiguous land mass) area to cover. By our estimate we have lost over 2 percentage points (6.3 percent vs 4 percent) of GDP in the first half because government didn’t spend. Spending creates jobs, so there must be much more urgency to finalizing projects and getting them going.

The President wants to make a dramatic positive impact on the people, this will do it. The direct employment and leverage into jobs for every other sector is enormous. Eliminating corruption would be a wonderful step forward, but it won’t eliminate poverty by and of itself. Infrastructure and an efficient bureaucracy are needed too. An executive order ordering EVERY government process to be reduced by at least half by December 2012 or the department head loses his/her job would be good first step in the bureaucracy. The President has to be tough and demanding and radical. The Philippines won’t turn around by a cautious approach to the problems.


We were having some doors installed in our rest house and I was watching one of the tradesmen and his careful approach to the job. At 5 o’clock work stopped and the others left, but he didn’t. He kept going till the job was done at about 7.

So I talked to him. He wasn’t a carpenter, a job he’d been doing proficiently all day, but an electrical engineer who’d spent six years in Saudi but wanted to return to his family and be part of his kids’ lives.

This was a part-time job, contractual just for this project. So I hired him as we have more than enough work to be done and, as he told me, he could weld, do plumbing and masonry. A Man Friday if ever there was one.

After a couple of weeks he asked if he could borrow for his daughter’s entry into college. I thought “Oh no, here we go.” But I lent. I was going to give him a couple of weeks of steady income before deducting, but next pay day he reminded me I hadn’t deducted. Did you get that? He reminded me. A few weeks later my wife and I decided he deserved a salary increase, so next pay I gave more. He counted it and said “Sir, you’ve given me too much” Did you get that? He told me I’d overpaid. There’s more, his workmanship is meticulous, careful and tidy. And he puts tools back (other engineers will know how rare and important this is!)

You can’t have him.

There’s more, like him but not enough. The thing is there could be if the training was there. You shouldn’t have to go to Saudi to learn all this, our local colleges should be more than capable of doing it. But they’re not, oh they are quite good, but that insistence on excellence, on perfection just isn’t there.

I kill (figuratively of course before someone rushes me into court) electricians who twist wires together. It’s an ideal way to burn a house down when, after a few years, corrosion builds up, resistance develops, heat is created and the fluff inevitable in any household catches fire. The house, soon follows. But twisting saves P5 on a terminal block. P5, or a house worth millions, which would you prefer?

My point though is that Filipinos can match the renowned Germanic precision and attention to detail, all it needs is training. “Bahala na” is not genetically implanted it’s learned from poor teaching, and a society that doesn’t insist on more. It should start at school, but with the president too. If there’s demand for excellence, for attention to detail, to doing it right it filters down to all levels.

There is only one way to do a job: Properly.

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