Let’s dance
The huge outpouring of support for a country in need shows just what the international community can do when it’s called upon to help. Lives have been saved, health restored, people fed by a world willing to help.
Well, we have a wider crisis, far less dramatic but a crisis nonetheless. Tens of millions of Filipinos go to bed unfed every day; poverty is on the rise. Whatever figure you look at—whether from the government or, more believable, the private sector—there are more people in poverty than there were 10 years ago, than there were when President Aquino took over. There are more people without a job, the two statistics are obviously related. The support the world showed for the typhoon survivors can be repeated to create jobs.
As it is, the poor have no life ahead. But they can have a life if they have jobs. The Philippine business sector has done a good job at creating jobs, but it just can’t provide enough. The world can help, but major sectors of the economy are denied to it. Denied to it because of a highly restrictive Constitution written at a different time in a different world, a time when the word “globalization” was just somewhere in the dictionary.
The business community has overwhelmingly (over 80 percent in a survey we did) recognized this, and has appealed to the President to agree to fully open up the economy. To treat all investors, all businessmen, equally. Congress agrees; the Speaker even had it as his first resolution.
Only the President is opposed, for reasons that are not clear, although he has said we don’t need to as we’re getting foreign direct investments (FDI). Well, we’re not, we are getting the least among the major countries in Asia by multiple factors.
It’s no good quoting project approvals, because approvals aren’t actuals, they’re promises. And projects, once they are committed, include loans and local equity added to the recorded FDI. They are different numbers. The intercountry comparison that is made is actual equity (FDI) inflow. The Philippine record is dismal.
For just one small example of how bad it is, take last year’s figures. Latest data from the central bank show that for the first 10 months of 2013, FDI grew by 36 percent: to $3.4 billion from $2.5 billion recorded in the same period last year. But $688 million of that was Coca Cola Mexico buying Coca Cola US’s equity in the Philippine operation. No new jobs were created, no new business started. Take that out and the level of FDI is actually around $2.7 billion. So it actually grew by only 8 percent.
Mr. President, in the three years you’ve been in power you’ve attracted $6.3 billion in FDI. Vietnam got $23.8 billion. Thailand got 4 times that, at $25.5 billion, Malaysia $31.4 billion, Indonesia almost 10 times at $53 billion.
If we’d gotten Vietnam’s level we’d have created an estimated 270,000 additional jobs, jobs that didn’t happen because FDI didn’t come. At Indonesia’s level (and why not?), that would have been about 700,000 jobs. In major part, FDI didn’t come in because it couldn’t; the Constitution won’t allow it—or discourages investors with the closed-economy message it sends. It’s no good saying foreigners can adapt, can find local partners, etc. They can’t (I know; it’s something I try to do for clients). Elsewhere they don’t have to, so they go elsewhere. The numbers tell you that, if nothing else does.
I’m at a loss to know why he won’t listen to the clamor (and it is a clamor) of those on the ground, in the trenches, intimately involved. If Filipino businessmen see it as an opportunity and not a threat, then why does he ignore that?
Why does he not listen when someone like myself, with 55 years of business experience, 15 of them in executive positions with multinational companies and 31 advising CEOs, tells him opening up the economy will create jobs?
Mr. President, you want to leave power with a successful economy behind you. Do this, open up the Constitution, and just watch the benefits it brings. The world is watching you closely today; show them you know what’s good for business, open up. There’s no need to be fearful that Congress will hijack the discussion by taking it into the political arena, as the public won’t allow it. As the pork barrel controversy showed, the public has a new weapon: social media, through Facebook and Twitter. Any attempt to extend political terms will go viral and will be stopped dead in its tracks.
One country that is also restrictive in its constitution is North Korea! Is that who we’re to be compared with?
Congress wants to debate the issues, encourage it. Let’s get the discussion going in each chamber toward later coming up with a common stand that, with the President’s nod, can be taken to the people in a plebiscite. Let the people, the bosses, decide.
It can be done this year, probably the only year in a long time when it can be, when we have a President we can fully trust to not want to extend his hold on power. It’s been 27 years since the Constitution was written. In fact, for many of the economic provisions we want changed, it’s been 78 years, as they were just lifted from the 1935 Constitution with only minor change.
We live in a far, far different world now, one that’s interconnected in every way, and becoming more so almost daily. Various multicountry agreements will be upon us soon; they require not only open trade but also open, equal opportunity for investment. But, more importantly, our jobless people need that opportunity, too.
In the coming weeks I’ll expand on why constitutional change is essential in creating a successful economy as I believe this is the most important issue for this year.
