Lessons from our neighbors

Have you ever driven through one of those plush neighborhoods and, amidst a row of nice-looking houses, noticed one house with a grand architecture but run down and obviously seen better times? That’s the Philippines in the neighborhood of Thailand, Vietnam and Malaysia.

Our house was once upon a time the envy of the neighbors but it has fallen into disrepair. The residents don’t seem to care and are probably just stripping it of valuable antiques. The neighbors, on the other hand, who were struggling economically, worked hard to improve their economic status and succeeded.

I asked ChatGPT to tell me what happened to this neighborhood. Why did the neighbors of the Philippines end up doing so well? What are their secrets that we Filipinos, if we care enough to improve our lot, can learn from?

Two things stand out: heavy investment in infrastructure and heavy inflows of direct foreign investments. They all did well in those two areas and we, Filipinos, floundered. It seems they were determined to succeed while in our case, our leaders were determined to financially succeed--but never mind the country.

Take, for example, war-torn Vietnam. When the war ended in 1975, we even took in their refugees. Vietnam had to build up their economy almost from scratch. This is how they succeeded, according to ChatGPT:

“Vietnam leads the ASEAN region in infrastructure spending, allocating about six percent of its GDP to infrastructure projects. Vietnam has been investing in expanding its port infrastructure to support its growing manufacturing sector and export activities. It is also developing new airports and upgrading existing ones to meet increasing demand. Regarding roads, Vietnam has been expanding its road network to improve domestic connectivity and support economic growth.

“This robust investment has been a significant driver of Vietnam’s rapid economic expansion. The country has maintained an average growth rate of nearly seven percent since 1990. For 2025, Vietnam has set an ambitious GDP growth target of at least eight percent, reflecting its commitment to leveraging infrastructure to bolster economic performance.”

As for Thailand: “Thailand has been enhancing its port infrastructure to support its role as a logistics hub in Southeast Asia. The country has invested in expanding its airports, including Suvarnabhumi Airport in Bangkok, to accommodate increasing passenger and cargo traffic. Thailand has developed an extensive road network, supporting domestic connectivity and trade.”

As for Malaysia: “Malaysia’s investments in ports, airports, roads and other basic infrastructure have been substantial, positioning the country as a key player in regional logistics and trade. While Vietnam leads in infrastructure spending as a percentage of GDP, Malaysia’s targeted investments in modernizing and automating its infrastructure demonstrate a strategic approach to maintaining its competitive edge in the region. Malaysia has been investing in automation and modernization of its ports, aiming to enhance efficiency and environmental sustainability.

“Malaysia has developed major international airports, including Kuala Lumpur International Airport, which serves as a significant regional hub. Malaysia boasts an extensive network of highways, such as the North-South Expressway, facilitating efficient transportation across the peninsula.”

As for FDI: “Historically, Malaysia has been a significant recipient of FDI, especially in the early 1990s, with inflows exceeding eight percent of its GDP. In recent years, FDI inflows have stabilized around two to five percent of GDP. The country has attracted substantial investments in the semiconductor industry, with Penang emerging as a crucial hub for AI semiconductor chip manufacturing, drawing major firms like Intel and Micron.

“Thailand’s FDI inflows have been around two to three percent of GDP before the Asian financial crisis, with recent figures stabilizing around similar levels. The country has been a significant destination for manufacturing FDI, particularly in the automotive and electronics sectors.

“Vietnam is the fastest-growing FDI destination due to low labor costs, rapid industrialization and strong trade agreements. It has become a key beneficiary of manufacturing relocations due to global trade shifts. In 2023, its FDI was $19.1 billion.”

What about us? Our leaders are not able to see the importance of investing in infrastructure. Over the last three years, Congress has reduced the budgets for badly needed infrastructure and social services originally proposed by the BBM administration. Congress chose instead to fund Congressional pork-barrel projects to the tune of over a trillion pesos. Bad as that is, the amount NEDA claims as expenditure on infrastructure is not the true value if we net out corruption.

I understand that our corruption is now so scandalously bad that only 30 percent of budgeted amounts for infrastructure projects go to the actual execution. As a result, our bridges and DPWH highways are shoddily constructed with substandard materials. That bridge in Isabela that collapsed less than a month after inauguration, the potholes in Panguil Bridge in Northern Mindanao less than two months after inauguration and that Iloilo flyover which closed because of structural failure, all come to mind.

As for FDI, our experience shows we cannot merely legislate incentives and expect FDI to come rushing in. Our neighbors have been more successful in attracting FDI because they have been more serious about dealing with bureaucratic corruption and red tape. They also have more reliable judicial systems compared to ours. A better-educated labor force is also a big factor. While we are still better at conversing in English (like the Malaysians), investors are looking for better technical training and the capability of the education sector to produce the workers whose skills they need.

We are so far behind our major ASEAN peers that I was afraid to ask about Cambodia because it may soon overtake us too.

Our leaders enjoy playing their political games and fattening their financial net worth at the expense of the nation’s economic growth. We must worry about the future of our grandchildren. Make that worry count when we choose our officials.

Boo Chanco’s email address is bchanco@gmail.com. Follow him on X @boochanco