Will the Philippines roar in the tiger economy?
WHAT are the sources of energy for enterprises this year? There is a coming together of forces — international and local — that make this a real Tiger Year — by tradition, a year of great energy but also with risks for those who cannot ride the power of a king of beasts.
While many businesses have closed and others are in wait-and-see mode, these situations are market openings for new players and those still ready to punch, to take over markets. The growth and decline of enterprises have happened much faster in recent years. The pandemic’s health dangers are declining. Will you wait?
True entrepreneurs, Chinoys and others, while trying to time for a favorable trend, don’t wait for ideal conditions. They accept the game of having to adjust to any environment and risks: pandemic, elections, disruptions. Today’s trend is clearly upward, although possibly a stormy one. Why?
Great growth sources
Three great sources of growth are converging mightily, beginning to link up as never before.
One is the logistic interconnectivity — internal to the Philippines and internationally between us and the highest growth area in the world, Asia, which is itself interconnecting at a rapid pace.
Asean is now the second largest trading bloc with China at about $800 billion a year in trade and growing fast. The 1,000-kilometer Laos-China rail connection is completed. Thailand is already exporting rice and fruits faster, fresher, in larger volumes to China. The Thais have ordered adding a Nong Khai bridge to Laos to increase this interconnection and have started their rail construction with China. Despite having disputes, practical Vietnam’s first metro rail has been completed with the help of China. Indonesian interconnecting rails are being built by China, including Indonesian self-reinvention by a resolution to move its capital to Borneo.
The Philippines is already part of this dynamic trade belt, which will grow even faster, unless Sinophobia is expanded by politicians and those who have not studied beyond black and white mainstream media material.
Even during the pandemic, Philippine exports to China grew 15 percent to $18 billion, 30 percent of the Philippines’ total export volume. FDI continues to grow, with Congress and Senate are modernizing the Public Service Act, planning to lift many restrictions on foreign investments which will definitely bring more dynamism into the country, upgrading our technologies and diversifying our sources and markets for goods, finance and services.
We will be connected to this intercontinental trade belt of Asia, all the way to Europe through the Belt and Road Initiative — physically, digitally. How well will we utilize this?
Presidents Fidel Ramos, Gloria Macapagal Arroyo, and Benigno Aquino 3rd put us back in the map of the trade belt. President Rodrigo Duterte showed that the the hardware infrastructure building can be fast-tracked.
The Manila subway has started, as well as the rail to New Clark City, in cooperation with Japan. Two beautiful new bridges in Manila (donated by China), Skyway, Cebu Cordova Link, and airports are already constructed. Transportation Secretary Arthur Tugade just announced the P150 billion PNR Bicol Express in cooperation with China, connecting Calamba City to the Bicol Region and reducing travel time to 4 hours from 12 and benefiting 14 million Filipinos annually. The PNR Express will be part of a line connecting Manila to Batangas and Sorsogon in what will be a 565-kilometer line eventually, transporting both people and cargo. New highways now connect Cavite to Nuvali, Lipa City, Sto. Tomas, Quezon, everywhere to everywhere. MRT-7 will cut travel from parts of the city to Bulacan from 3 hours to 40 minutes. LRT extension will reduce travel time between Baclaran and Bacoor, Cavite to 25 minutes, from one hour and 10 minutes. Airports in Sangley and Bulacan, and ports are being opened all over the country.
The legal and administrative highways of the Regional Comprehensive Economic Partnership trade agreements linking Asean with the largest markets in the world have been opened.
Second is digital access. This is already bringing increased education and transactions to previously unreachable areas of the country of the world. The large Asian unbanked populations are now beginning to have access to savings, loans, and investments services and their incomes are increasing. E-commerce is direct between producers, SMEs and markets. Costs of information, training and advertising, and logistics have dropped to a fraction. Cross border market is erasing borders to markets.
Third, demographics are in our favor; we have an increasing population in the Philippines and India. In Asia, income levels are increasing, creating vast and nearby markets. Even the aging population of our neighbors in China, Japan, Hongkong, etc. are opportunities for us, if we will study and cater to the market needs.
All these three factors create exponential, networked market and supply growth, interconnecting us domestically and with the world. The markets opening up are unsurpassed in world history. Great wealth will be created, and those countries and people who don’t adapt will be left behind.
Are we even learning the languages, developing goods and services to sell, or just watching telenovelas, sending cute pictures, arguing about politics?
Potential negative factors
What are potential negative factors for enterprise at this time?
Interest rates increase, and if too much, can further weaken businesses and markets that are just recovering.
Increased inflation will crowd out the purchasing power of our people, and possible production costs of products and services may make us uncompetitive. Partly the effect of excess printing of money by countries without producing more goods.
War. Ukraine crisis between two nuclear superpowers US and Russia may lead to oil shooting to $100 to $120 per Goldman Sachs, and supply chain disruptions and embargoes create shortages. A military conflict, if Taiwan continues to be encouraged to secede, would be more than an economic problem for the Philippines, which may become a target if a war breaks out, if we allow ourselves to be a staging area or depot for weapons.
Tiger or kitten?
All success and accomplishments come from the ability to execute, without which dreams are for lazy people. (Unless one is naturally handicapped). European and American power grew explosively once the rails interconnected across their continents, then when phones allowed communications. We have the equivalents laid for us today.
Every factor for the Philippines to become a tiger economy is now here. Yes, there are obstacles as well, but every successful person and country has, and will, overcome them, and do that even for far greater obstacles. We should stop whining, sniping, or wasting time.
Achieving dreams comes not from lack of risks and problems, but the ability to overcome and pay the price. The pandemic is declining, the potential growth hinted at last November, December showed the leading areas, and potential strength to the recovery.
The Year of the Tiger is a year for tigers with stripes, not for a chattering class of kittens. Time for the Philippines to come out roaring?
George Siy is a Wharton-trained international trade practitioner and negotiator, business leader, and chairman emeritus of the Anvil Business Club. He has advised various Philippine government agencies and organizations in trade negotiations with Asean, Japan and the United States.
Also published in Manila Times. We welcome logical feedback and possibly working together with compatible frameworks. (email@example.com)