Entrepreneurs key in growing jobs, fighting poverty

BANGKOK—From the aftermath of Super Typhoon “Yolanda/Haiyan” to continuing tensions with both Hong Kong and mainland China, the Philippine government seemingly has more than enough to worry about than its 108th-place showing in a ranking for the ease of doing business.

That would be a mistake though, for continued progress in the World Bank rankings would signal an even more economically vibrant nation, and one better able to finance the investments needed to strengthen its presence and role in the region.

From top-ranked Singapore to lowly ranked Laos, the ease of doing business in Asia, particularly Southeast Asia, is all across the board. Indeed, both Malaysia and Thailand—despite floods, shutdowns and protest-filled Bangkok streets—have been among the top 20, attracting multinational investors in wide-ranging industries, from automotive to high-tech.

Yet, when it comes to doing business, there are few places worse, it seems, than the likes of Burma (Myanmar), unless you make your way to parts of Africa. That’s at least according to the World Bank, which has Burma ranked as worst in Asia—at 182nd of 189 economies—on ease of doing business.

Rounding out the “Top 5” for worst in Asia in “The World Bank 2014 Doing Business” report, the latest annual assessment, are Timor-Leste (179th), Afghanistan (164th), Laos (159th) and the Federated States of Micronesia (156th).

None of these nations, the Philippines included, should take heart in the retort, “Well, at least we’re better than Burma and Somalia.”

Clearly, investing in Somalia is not for the faint-hearted. The World Bank report once again skips Somalia entirely, with lawlessness and lack of reliable data no doubt two of the factors why Somalia continues to be absent in the rankings.

Yet, just as in the Top 5 economies for ease of doing business—Singapore, Hong Kong, New Zealand, the United States and Denmark—there are lessons to be taken even from Somalia on how best to grow economies and address persistent poverty, whether in Africa or in Asia.

More than ever, given dwindling government budgets and reduced foreign assistance dollars, the private sector can play a critical role in fighting poverty.

With well-thought-through partnerships, such efforts can be done in a way that is quite frankly good for business, and be more sustainable than aid packages subject to donor fatigue and annual budget cuts.

Just ask Alisha Ryu and David Snelson, the two American business pioneers first spotlighted by me in Fortune. The two entrepreneurs are behind a Mogadishu guesthouse and security firm, which employs nearly 40 Somali men and women, and by a conservative estimate, indirectly supports another 400 extended family members.

Ryu, a former combat journalist, and Snelson, a retired US Army warrant officer, have been living and running their business in Mogadishu full time since 2011. Last year, the US news program “60 Minutes” described their role in digging up and returning to the United States the remains of a helicopter shot down and made famous in the book and blockbuster Hollywood film “Black Hawk Down.” Both recount the US military raid to capture a Somali warlord. A deadly battle ensued, killing hundreds of Somalis and 19 Americans 20 years ago in Mogadishu this past October.

That battle was just one of many tragedies in this restless nation on the Horn of Africa. Since then, Somalia has been ravaged by clan warfare, and feared worldwide as a breeding ground for pirates and al-Shabaab militants.

Ryu told me, “It was, and still is, our hope that by showing it is possible to do business in Somalia in a smart, knowledgeable way, others will follow our example.” Indeed, whether in Asia, Africa or the United States, it will be small businesses and entrepreneurs, regardless of nationality, who will drive long-term change and job creation.

“Business investments that can make money and simultaneously empower communities at the grassroots level is key to economic growth and the reduction of poverty-related violence in Somalia and everywhere else in the world,” Snelson says.

For nearly four years, I served as US ambassador to and board member of the Asian Development Bank, the Manila-headquartered international financial institution focused on poverty reduction and infrastructure investments, and there too, Ryu and Snelson’s message would have great relevance.

While development banks and aid agencies can provide incremental good, it is good governance and a strong rule of law that are critical to businesses and essential to job creation and long-term growth. The private sector must be a critical partner if we are to sustainably lift people out of poverty, including in the Philippines.

Few may have the nerve, or the heart, to do what Ryu and Snelson are trying to do in Somalia, building a business that can turn a profit while promoting economic growth.

But by creating jobs for three dozen Somalis who would otherwise be prey for pirates and religious extremists, perhaps they offer a bit of hope and an example that a Filipino entrepreneur or small business can have an impact, regardless of how long or how fleeting, even in the most troubled places in this world. And that’s as true in Rangoon, Manila—or even Tacloban in the long run—as it is in Mogadishu.

Curtis S. Chin served as US ambassador to the Asian Development Bank and is managing director of advisory firm RiverPeak Group, LLC. Follow him on Twitter at @CurtisSChin.