The Philippines and ADB

From May 2 to 5, we will be hosting the 45th annual meeting of the Board of Governors of the Asian Development Bank. This is a major event for the country, specially because Manila is also the headquarters of the bank. The last time the Philippines hosted was almost 10 years ago.

Some 4,000 delegates worldwide are expected to participate in the event. The delegates are comprised of finance ministers of the ADB member countries who also serve as ADB Board of Governors, economic and planning ministers, local and foreign media.

I am told that as the host country, our organizing committee headed by Finance Secretary Cesar Purisima is introducing pioneering initiatives for this year’s ADB Annual Meeting. There is the ASEAN + 3 parallel event and the Philippine Corporate and Investment (PCI Pavilion) which will be the center of activities to highlight our economy and investment opportunities.

The PCI Pavilion will feature seminars, industry networking activities, an exhibit, and socials. Set to be staged at the SMX Convention Center, the PCI Pavilion will hopefully give delegates and guests an insightful and meaningful experience of the Philippines’ key industries during the four-day gathering.

I vaguely recall similar excitement some 46 years ago when the Asian Development Bank was established and we won the right to host it. That was in 1966, and we were justifiably proud to have been chosen to host ADB’s headquarters.

According to Nandy Pacheco, former ADB information chief who was there at the creation, there was this rare cooperation between our warring politicians instrumental in our country winning its bid to host the ADB. It was President Diosdado Macapagal who initiated the bid but the bid was finally won after the 1965 election and Ferdinand Marcos was already president-elect.

There were many Asian countries who wanted the honor, but soon it was just us and Japan fighting it out. Japan, the major contributor to ADB, wanted Tokyo but eventually we prevailed. Nandy said that among others, the fact that we spoke pretty good English at that time was a big factor. It would have been expensive to have the same quality of staff we could provide if Tokyo won.

They had a well organized campaign to win the bid, Nandy said. Other than the element of an efficient English speaking support staff, the Philippines did its homework. A presidential proclamation was issued declaring a suitable area in Roxas Boulevard as the site of ADB. They also presented a complete set of architectural drawings and plans for the proposed building.

But still, it was not a walk in the park. Japan was determined to win it for Tokyo. And a few days before the vote was taken in a meeting held at the offices of the Department of Foreign Affairs in Padre Faura, a vicious rumor started to spread.

Nandy said the rumor sought to paint the Philippine political situation as unreliable for something as long term as hosting the ADB. According to the rumor, President-elect Marcos will not honor the commitments of outgoing President Macapagal. Given the context of how vicious the previous election campaign was, the rumor was believable.

So Nandy said he had to work fast. He contacted Press Secretary-designate Jose Aspiras who got Marcos to say that he stands behind commitments made by Macapagal. They even released a photo showing a rare case of unity among warring Filipino politicians.

Well, we won our bid and ADB came to be in our shores. And the development institution started working in support of Asian countries including ours that are mostly in various stages of underdevelopment.

The Philippines is not only a founding member of ADB it is also the bank’s 11th largest shareholder. We are the fifth largest borrower in cumulative loan amount, accounting for about eight percent of total sovereign lending. In terms of cumulative non sovereign financing, the Philippines is the fifth largest client with 6.3 percent of ADB’s total non sovereign operations.

The Philippines is also one of the biggest suppliers of consultancy services under ADB-funded investment and technical assistance projects. ADB also employed a good number of top Filipino experts, including now UP president Alfredo Pascual. ADB soon outgrew the headquarters building provided by the Philippines and it moved to its present site in Ortigas Center.

Since it was founded, ADB had been a major partner in our country’s development programs. The Country Partnership Strategy for 2011 to 2016 targets governance reforms and measures to drive broad-based growth and poverty reduction efforts. The program amounts to $3.8 billion for the six-year period.

The new strategy is fully aligned with the priorities of our government, focusing on strengthening the investment environment to attract more private funding for infrastructure development and job creation. ADB provides around $600 million assistance to the Philippines annually.

But despite this show of support, the Philippine economy has failed to take off unlike many of its neighbors. One by one our Asean partners overtook us and the country that was once second only to Japan became the regional laggard.

As an ADB economist noted, “the Philippines was an early leader, with a relatively advanced manufacturing sector and well-developed human capital in the 1950s and 1960s. Despite these favorable initial conditions and being located in growing East Asia, the country failed to achieve the high growth that other countries in the region achieved over the last few decades.”

When Japanese economist Norio Usui took over as ADB’s senior country economist on the Philippine desk, he too wondered what happened. He did an exhaustive study, crunched the numbers, talked to the locals in government and academe and came out with a comprehensive report on what went wrong with the Philippines.

Entitled “Taking the Right Road to Inclusive Growth,” Usui’s study noted our stubbornly high poverty incidence even if the economy has been growing year after year. Our growth, he pointed out, is not inclusive because of weak industrialization. And what’s left of our industrial base is dominated by electronics that is subject to cyclical market forces.

I attended a briefing by Usui on his study and he made it look so simple. We need to grow our industries. We cannot live on our services sector alone. The BPOs, good contributors to the economy as they are, cannot provide the jobs needed by less educated workers leaving the farms. The country could lift more people out of poverty by boosting the industry sector. Manufacturing shouldn’t have been allowed to slowly decline.

Usui then proceeded to show a strategy we could use to revive manufacturing. But, and it is a big but, he said we need to attract more foreign investments to match what our neighbors are attracting recently.

Our problem in attracting investments, he said, is rooted basically in poor infrastructure and poor governance. These are nothing we do not already know. But something we need to constantly prod our government to focus on.

So someone asked Usui how our government officials reacted to his presentation and he gave a diplomatic answer. I guess ADB can only suggest and very diplomatically at that.

I asked Nandy how ADB can be happy when things don’t seem any better after working and dispensing all that aid money these past years. Nandy said ADB can only help in ways that the individual countries deem fit. Nandy too pointed out, ADB can only suggest what ought to be done.

That is probably the problem. ADB has thrown in a lot of money doing studies, training our bureaucrats and helping build our institutions. But after nearly half a century, the story is still the same dismal incidence of poverty.

The ADB and the World Bank should probably think of new ways of making governments like ours see the light by going straight to the people. In this social media era, it shouldn’t be undiplomatic if ADB proactively shares details of what it tells our government.

Perhaps, armed with the right information, the people themselves can exert the necessary pressure on the politicians in government to go against the vested interests and do what must be done to cut the incidence of poverty and ensure more inclusive growth.

For now, I guess we will overdo the hospitality stuff and make sure our ADB conference guests will go home with fond memories and convinced it was more fun in the Philippines. But the real meat still lies in getting things done along the lines of the lofty objectives that are at the core of ADB’s reason for being.

Until we get those things right, ADB’s presence in our midst would continue to be symbolic of the right intentions waiting to be realized in terms of better lives for our people.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco