Selling the Philippines abroad

I was pleased to learn that there has been a sustained effort to sell the Philippines abroad.  For example, Lilia de Lima of PEZA just had a “one woman roadshow” which has received rave reviews abroad as well as earning a very flattering editorial from a major newspaper.

In London, there was another successful roadshow led by Trade Secretary Greg Domingo and Finance Secretary Cesar Purisima. There was an equally impressive private sector group led by former Ambassador to the UK, Jesus P. Tambunting, chairman of the Philippine British Business Council (PBBC) as well as Roger Lamb of the local British Chamber of Commerce. Incidentally, the London roadshow was first hatched as an idea in a meeting in November last year of Jesus Tambunting and his UK counterpart PBBC chairman Nigel Rich, formerly of Jardine Matheson Group and currently BPI Europe board member. 

Lord Stephen Green of Hurstpierpoint, the UK Minister of State for Trade and Investment, was one of the speakers at a session attended by 200 British businessmen. Lord Green called the Philippines an “undiscovered opportunity” from the British point of view.  He encouraged British business to take a look at the new Philippines with a government very focused on addressing “corruption in public procurement”, “the bureaucracy of investment” and the “challenge of infrastructure”, issues that have been there for many years. Apparently responding to the minister’s call and buoyed by the roadshow, two business missions to the Philippines are scheduled this month and in early December, the first led by PBBC UK and the second by UK ASEAN Business Council. 

Ambassador Tambunting was an excellent choice because of his knowledge of London and the nuances of dealing with British businessmen. He was not a career diplomat but a banker by profession.  This worked to his advantage in the British financial capitol. Parenthetically, Lord Green was former chairman of HSBC.

It is significant to point out the participation of Shell Philippines chairman Ed Chua, and HSBC (Philippines) CEO Wick Veloso.  Both represented very successful if not iconic British business in the Philippines; proof positive that British business thrived in the Philippine environment.  

As a former foreign secretary, I was accustomed to the professional attention and support accorded me by the British ambassador and his staff  to ensure a successful visit to the UK. In 1995-96, I became the chairman of the same Philippine-British Business Council.  I did not expect the same quality attention. To my surprise, the ambassador and FCO (DFA in our parlance) worked hand in glove with DTI and other agencies to ensure an equally productive visit of the mission delegation. The same was accorded the roadshow. Clearly, this is standard procedure in their foreign service worthy of emulation.

Unfortunately, I have experienced instances in our embassies when our ambassadors and DTI personnel were unaware of what to do when a roadshow comes to their jurisdiction. Perhaps a template should be jointly developed and documented by DFA and DTI based on the London roadshow.

PORK: Will it impact our sales efforts abroad ?

This renewed interest in the Philippines comes on the back of sustained good economic performance whose credibility has been enhanced by President Aquino’s reputation for honesty and his well-publicized effort at cleaning house. This hard-earned favorable perception by global business risks being eroded by the escalating revelation on what is now widely considered by the Filipino public as the institutionalized plunder of government coffers through the pork barrel system.

The international press has so far not viewed this as a significant downside to Philippine economic prospects or its attraction to foreign business. They have taken President Aquino’s declaration to abolish the pork barrel at face value and see this as a positive development. Back in October 2011, the President’s announcement of a P75-billion economic stimulus package – which it dubbed the Disbursement Acceleration Program (DAP) – was hailed as a bold move to counter the impact of global economic slowdown.

How long can this blissful view of the state of affairs of the country last without global media digging deeper, reporting the emerging views of the business sector and the public and making their own conclusions of what I would submit in essence amounts to a weak link in an otherwise strong economic governance? Now there is growing public skepticism that the PDAF (aka pork barrel) will be abolished. Malacañan has admitted as much to its necessity and so it will be reincarnated albeit with more stringent controls. The public does not seem to agree, if the recent internal polls conducted by the Palace showing the President’s approval rating plunging precipitously, is an indication. Setting aside its legality (now the subject of a Supreme Court case) the DAP is also now being depicted in a more sinister light as the President’s “pork” instead of economic palliative, forcing the President to make an impassioned defense. I will give the President the benefit of a doubt as to the motive for DAP. Still, to me it seems bad economics and I tend to agree with analysts who have pointed out that the DAP did not really result in the rapid creation of jobs and stimulating spending since they went to capital expenditures and other uses which either did little to stimulate jobs and spending or if they did, would not be realized until much later.  The World Bank Philippines team crediting DAP with helping raise GDP growth in the same quarter it was announced seems a bit too generous. I think they simply injected government spending in the quarter in the equation to arrive at the contribution to GDP and attributing this all to DAP. As an economic stimulus DAP is severely wanting. Economic stimulus package combines fiscal measures and targeted budget intervention to stimulate consumption and the creation of jobs. They should have also included eliminating the hindrances to the implementation of the many infrastructure projects already in the pipeline, including those under the PPP, which would have released public spending already in the budget, obviating the need for a DAP.

I mentioned in a previous article how the astute management of the economy by the BSP (on monetary policy) and our economic managers (on fiscal policy) have been largely responsible for the sustainability of our good economic performance in contrast to the boom and bust cycle of the past. Sadly, I cannot say the same for the way in which our budget planning and management is being undertaken. According to the OECD, the Mid-term Philippine Development Plan is a wonderful economic blue print, but unfortunately it plays just a perfunctory role in the budget process. The result is an amalgamation of proposed expenditure items from all government agencies, which in the absence of a masterplan for resource allocation results in gaps requiring frequent in-year adjustments and lump sum appropriations like PDAF. The main argument for PDAF is that it addresses failure in resource allocation, particularly at the local level. But this at best represents poor planning and the inefficient of use limited resources and perpetuates the system of political patronage

The whole country looks to the President to do the right thing. The reason the president’s approval rating has plummeted is because he appears not just reluctant but even steadfast in his defense of the need for PDAF and DAP – however they are called. He obviously believes in PDAF which, started as the Countryside Development Fund (CDF) during President Cory Aquino’s term and, which is why the allocation for the PDAF was doubled in the first year of his presidency from that of the previous year. But the President has to take a more objective view. No one is accusing him of being a thief. It’s just that he seems not to have taken cognizance that this is not just a corruption issue – of bad people taking advantage of a good thing – but also the equally important matter of good economic management and respect for the system of checks and balances in a democracy. The end does not justify the means. Circumventing rules and the system of checks and balances, even in the name of righteous cause is not the right thing. Failure to recognize this risks his being tarred with the same brush as those he has accused of malfeasance. This would be unfortunate because the President obviously means well, and to many he represents the country’s best hope for really meaningful reform.