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Analysis

Davos disease blurs reality on ground

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Speaking from the Alpine heights of Davos, Switzerland, President Aquino spun a stupendous tale at the World Economic Forum (WEF) of the dramatic transformation of the Philippines from being the “sick man of Asia” into a dynamic country swimming against the current of global economic downturn in a record time of three years.

In the past three decades since Edsa I in 1986, this reporter finds it hard to recall any developing country in Southeast Asia that has transformed itself from an economic basket case into a “tiger economy” (using the regional buzzword) within such a brief period.

In a speech at one of the roundtable meetings in Davos, Mr. Aquino said: “What we offer you today is a Philippines where change has set in. That, perhaps, is the single most compelling reason to come and invest in our country.” He was making a pitch at a meeting with  business executives on the periphery of the forum on Friday.

The President invited investors to participate in three rapidly growing sectors of the economy—agriculture, tourism and infrastructure.

“Those who have already bet on the Philippines have not been disappointed; they have the sincerity of our commitment to restoring integrity and leveling the playing field. This is a commitment we keep with all who wish to conduct honest, fair business in the Philippines,” he said.

At the end of the three-day forum, Mr. Aquino summed up the results of his participation in the WEF with an exuberant claim that the Davos experience had bolstered the Philippines’ confidence in joining global events.

“We can participate on the world stage and not feel like a second-class citizen. It’s no longer shameful for us to participate because we have something to be proud of,” the President said.

P49-M junket

He did not specify what is that “something” we can be proud of because there was nothing to quantify in terms of pesos and centavos worth of committed investments to justify a junket originally reported as a 63-person delegation with a budget of P49 million. Conference fee is $20,000 per head.

The question keeps on popping up: What did the country gain from the participation? The government has responded by stonewalling behind generalities. The President reported at the end of the forum that he had lined up “a new stream of prospective institutional investors” and that the Philippines would host the WEF’s East Asia Summit next year.

Mr. Aquino attended a number of top-level meetings in none of which he played a pivotal role or was a keynote speaker. There were up to 2,500 participants, known as the world “shakers”—heads of government, elite leaders in politics, in  business, industry and finance and bankers, diplomats, the cream of the academic community and scholars, nongovernment institutions and journalists.

That he was thrown in the company of this circle of eminent persons from around the globe could be an intoxicating experience for a first-time Davos man, such as

Mr. Aquino, which could disorient or overwhelm his sense of proportion of his vision or importance.

The President said: “We were not on the radar screen of so many entities for the last five years or so, but now we are, so they want to know better. We received universal praise from so many  countries. (Now) we can put in more substance.”

Relegated to sidelines

He said one of the prospective investors had indicated plans to send a mission to the Philippines to explore fresh investment possibilities. He didn’t identify the prospective investor. Translated to reality, the “possibilities” are still up in thin air.

There were 200 sessions at the WEF. The main concern was the sluggish global economic recovery and its ramifications in the United States and the European Union. Hence, the keynote speakers were German Chancellor Angela Merkel, the Italian prime minister, International Monetary Fund (IMF) Managing Director Christine Legarde and European Central Bank President Mario Draghi.

Thus, Mr. Aquino was relegated to the sidelines of the forum with the topic “Partnering Against Corruption Initiative,” which gave him the platform to amplify his favorite anticorruption theme—the nexus between governance and economic growth.

However, he talked with Legarde after the IMF upgraded its growth forecasts of 6 percent and 5.5 percent next year for the Philippines, representing an upgrade from its 3.8-percent growth for both years. But the upgrade came with a warning.  In an interview with CNBC in Davos, she said officials have to “consider the leading role played by the US economy” in any global upturn.

In the world, she said growth could be undermined if uncertainty persists over the issue of the US debt limit that has yet to be settled in the US Congress. “Confidence is something that is really fragile, can be eroded gradually, or broken down,” she said.

In his sick man statement of the Philippine economy,

Mr. Aquino recognized the vulnerability of the growth rate “in a world increasingly dominated by uncertainty and pessimism.” In regard to the exuberant claim of Mr. Aquino on the fantastic transformation of the economy from the basket case, this needs to be examined against certain information published ahead of the Davos summit.

Trust barometer

According to the Economist magazine, as the “movers and shakers” head for Davos, their credentials as global leaders look anything but resilient. Their official theme will be “resilient dynamism,” but what they ought to be talking about is the “low level of trust of the public in their ability to do or say anything useful.”

The Economist cited the annual “Trust Barometer” survey published by Edelman, a public relations firm, which reports widespread skepticism about the ethics practiced by political and business leaders. Edelman asked people in 26 countries which institutions and business sectors they do (or do not) trust and what information they believe.

Edelman pointed out that if you look at levels of trust in the world today, on a five-year review, or since the 2008 financial crisis, there had been a sharp downturn in the level of credibility commanded by western institutions. Confidence in  banks, for example, has tumbled sharply, while faith in government, and business has eroded, too. The media have also suffered.

A couple of decades ago, when Edelman asked people who they looked up to for guidance, they gave a high ranking to traditional “authority” figures, such as chief executives and political leaders. That is not the case now. These days, academics and technical experts are still trusted. But CEOs, government officials and regulators are at the bottom of the list. People put more trust in their peer group, defined as “person like me.”

Why the big gap between the trust in leaders and institutions they lead? Edelman suggests, according to the Economist, that leaders have been slow to adapt to the requirements of the world “in which top-down is no longer the best way to lead.”


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Tags: Benigno Aquino , business , Davos , foreign investments , Philippine economy , Philippine stock exchange , Switzerland , World Economic Forum



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