Internet, the globalization equalizer
Thanks to the kind invitation of Tony Tan Caktiong, conference chair of the just-concluded “Apec 2015 CEO Summit” (and board chair of Jollibee Foods Corp., the ninth largest quick-service restaurant on earth in market capitalization), I had a ringside seat (on the first row) listening to US President Barack Obama speak on climate change, Chinese President Xi Jinping on trade pacts, Russian Prime Minister Dmitry Medvedev on fighting terrorism, and several other leaders on other issues.
Best speaker. But by far, in my humble opinion, Alibaba executive chair Jack Ma delivered the most moving speech. With passion and conviction, the 51-year-old self-made Chinese billionaire and former school teacher (current net worth according to Forbes: $23.3 billion, making him the richest man in China and the 18th in the world) explained that the Internet is the economic equalizer in our globalized world.
Online, impoverished but ingenious manufacturers and producers can easily reach any buyer in the world. Thus, wood carvers and embroiderers in Laguna and tailors in Manila can sell their wares to a buyer in New York, London, Beijing, or anywhere else via the Internet, something that was nearly impossible in 1989 when the Apec was born.
Alibaba can facilitate delivery and payment via digital money (on Alipay) at the cheapest possible way. By 2020, Alibaba will account for $650 billion in trade in China alone. Yet, Alibaba “does not own any factory. It is merely an enabler.”
Verily, in only 15 years, Alibaba became the biggest Internet marketplace in China since it was founded in a small shack by Ma and 16 friends, half of whom including himself, did not even know then how to operate a personal computer.
It outsells the older Amazon, the biggest online trader in the United States, and almost equals the sales revenue of Walmart, the largest department store in America and in the world. Incidentally, Rocket International was formed in Germany two years ago, aiming to dominate Internet trading in the world outside of the United States and China.
Borderless world. The Apec, like the World Trade Organization (WTO), aims “to support sustainable economic growth and prosperity … by championing free and open trade and investment…” It believes in competition as the key to producing higher quality products and services, and selling them inexpensively to customers.
To do this, the Apec, again like the WTO, believes in drastically lowering—if not totally eliminating—tariffs, quotas and taxes that hinder the entry of foreign goods and services, in privatizing public assets and utilities, and in deregulating prices and businesses.
Unlike the WTO, however, the Apec is mostly a forum where statements and declarations have no binding character. In contrast, the WTO and regional groups (like the European Union and the Association of Southeast Asian Nations or Asean) require members to comply with agreements.
Upholding Philippine membership in both the Apec and WTO, our presidents—especially Fidel V. Ramos—robustly promoted free trade and implemented globalization, deregulation, privatization and liberalization.
Thus, the telecom, banking, insurance and airline industries were liberated from monopoly; water utilities and toll ways privatized; and the oil business and power generation deregulated.
My economist-friends, like Romeo L. Bernardo, tell me that freer trade in goods and services has uplifted our economy as shown by the steady rise of our gross domestic product from an annual average of 2.9 percent in 1991-2000, the first decade of globalization, to 4.8 percent in 2001-2010, and to about 5.9 percent in 2011-2014.
Inflation, averaging 8.3 percent in 1996, was reduced to only 1.4 percent at present.
Critics, however, lament that these statistics have benefited mostly the rich, while the poor, the daily wage workers, the farmers and the underprivileged continue to wallow in low pay, malnutrition, inadequate shelter and ill health. Thus, they vehemently oppose globalization policies espoused by the Apec and WTO.
However, I note that this trend of the rich getting richer first (and the poor next) is equally evident in the rise of the United States during the 20th-century industrial age and of China in the current 21st-century digital age.
Championing equality. To hasten the propoor trajectory of benefits, Apec leaders now stress the need for inclusive growth, to be sure that the wealth created by free trade is equitably distributed and enjoyed by all, especially by the weak and the marginalized.
The call to assist MSMEs (micro, small and medium enterprises) has become as loud as the advocacies for liberalization and deregulation. This is why the Apec has created a concurrent summit for MSMEs, as it did for the giant multinationals.
In fact, President Obama’s unorthodox “moderating” of a panel composed of Jack Ma and Aisa Mijeno, the young Filipina who pioneered the production of electricity from salt water, drew the most applause. It showed entrepreneurial ingenuity at its best, with an accomplished giant and a very promising startup both being buoyed by free enterprise.
And here is where Ma’s rags-to-riches story of how entrepreneurship and innovation created an Internet behemoth can help bridge the gap between poor inventors and producers on one hand and heretofore unreachable foreign markets on the other, and in between provide them also the needed financial, marketing and logistics muscles.
Indeed, the Internet is the globalization equalizer that worked for Ma. It should equally work for Mijeno.
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