Good governance and responsible citizenship: Crucial elements in economic competitiveness

(Remarks before government, civic and business leaders September 17, 2002 in Tagbilaran City)

At the outset, let me thank Governor Erico Aumentado and Tagbilaran City Mayor Jose Torralba for arranging this visit to Bohol, and for the opportunity of meeting with the leaders of this historic province. I am delighted that you are now focusing on economic growth instead of partisan politics.

At the turn of the 1950s, Filipinos had the highest GNP per head in Asia, with the exception of Japanese and Malaysians. Although Philippine GNP per capita of US$150 (at 1953-54 prices) was only four-fifths that of Malaysia and about one-half that of Japan in 1950, it was about a third higher than that of Taiwan and more than twice that of South Korea.

In Thailand – a country whose population and natural resources endowments are comparable with ours – GNP per capita was only US$80.

But only 20 years later – by 1970 – our GNP per head was already lower than those of Korea and Taiwan.

In 1981, Thailand overtook us in individual incomes; and, by 1988, our gnp per head was only 63 percent of that of the Thais – and by now, Thailand has left us even farther behind.

Our economic performance during my term from 1992 to 1998 I leave to historians to judge. Suffice it to say that we achieved an average GNP growth rate of five percent (in spite of the twin-whammies of the 1997 financial turmoil and the prolonged el niño drought), provided long-term electrical power and water supply, and reduced the incidence of poverty from 43 percent to 30 percent. The flow of foreign direct investments returned together with positive credit ratings.

We capped our presidency with a joyous celebration of our centennial of Philippine independence and infused a new buoyant spirit to our people.

But, soon after, a third whammy hit all of us in the form of an incompetent and cronyist estrada administration that brought the nation down. In just two years, we had fallen back from our front position in the pack of Southeast Asian economies to the tail-end, next only to Indonesia which had become the "kulelat" by end 2000.

Failures of performance like this – by our political and economic elite – cannot but reflect on the national spirit. Meanwhile, Philippine poverty – proportionate to population – had again become the highest in East Asia.

That is why I regard the controversial Pulse Asia Survey of last June – which found 19 percent of all its respondents as agreeing that this country is "hopeless" and wanting to migrate – to be a reproach to all of us who have any claim to leadership roles considering our advantages in human resources, education, English proficiency, natural endowments and a diverse culture.

What is to be done?

So what are we to do?

To this question, my short answer is always that we should get the state out of the business of choosing winners and losers in the economy.

Unwarranted government intervention in the economy unavoidably produces passionate, factional politics – because it sets interest groups in direct competition with each other to win government favors.

We should free the economy as far as we can – allowing the competitive market to make the decisions that our all-too-fallible politicians and bureaucrats cannot do.

The most important macro-economic agencies – particularly the national economic and development authority, the Department of Finance, Department of Budget and Management, and the Central Bank – we must insulate from political intervention.

But until the state is strong enough to do more, it must focus on its basic duty – which is to create the conditions that will enhance our people’s capacity to produce efficiently and enable free markets to flourish – and to assure all our people equality of opportunity, if not of outcome.

I think it time that you speak up – as private sector leaders and as responsible officials with an immutable stake in the better future of our beloved Philippines.

It makes no sense for anyone of us to say, "this country is so messed up that no one can set it straight – so let me just make my money, cultivate my garden, and look after my family."

None of us can say this – not only because citizenship is a duty – but also because no man is an island.

We are all anchored to this country by blood, by kinship, by culture, by common experience in two – not just one – peaceful people power revolutions.

What happens to it will impact on our own lives, and those of younger Filipinos after us, and will define our standing of respect and dignity – or the lack of it – in the community of nations.

Government’s ideal role

I think it is also time we stop overloading government with more tasks than it could carry out competently.

Our foremost economic reform should be to reduce government’s power to decide winners and losers in business by curtailing its authority to award or withhold incentives, concessions, franchises, and monopolies.

Government’s proper role is to provide the framework of political stability, the rule of law, the sound macroeconomic policies, the financial backbone, and the physical infrastructure within which enterprise can flourish. All the rest should be up to individual and corporate effort. In every thing we do, we should see to it the economy is run efficiently – for the majority and not for the few.

The other heavy drag on the economy is corruption.

We need particularly to increase public oversight of government by expanding the information made available to and the role of ordinary people in regard to public programs.

Like many of our neighboring peoples, we Filipinos are only now beginning to realize that while democracy’s trappings – elections, peoples’ assemblies, media freedom, independent judiciaries – are easy enough to assemble, making them work properly for common people requires a long learning process, for which leaders and citizens themselves often have little patience.

All of the above prescriptions can be summed up in what i called the "5 d’s of governance" – devolution, decentralization, deregulation, democratization (of opportunity), and development (of a sustainable kind). Our immediate task, of course, is to survive the downturn. so our enterprises and corporations should take this opportunity to reduce, keep fit – to be slimmer and meaner – and thus, become fully prepared to grow once again as soon as the situation improves.

Nurturing our country’s competitiveness

For East Asia, the shrinking of global markets is being complicated by China’s accession to the World Trade Organization (WTO) – which will give it better access through lower tariffs to its export markets.

As you know from painful, day-to-day, experience, China’s labor costs are the lowest in the region – outside of Indonesia. already, cheap chinese exports like garments and motorcycles are strangling domestic manufacturing in Vietnam and elsewhere.

In 1999, China’s exports to the United States rose to over 24 percent of all east Asia’s exports, up from 22 percent in 1997. Meanwhile, Asean’s own share fell from 23 percent to 20 percent.

The only long-term salvation for China’s competitors is to move up the high-technology ladder – ahead of China’s lower-value manufacturing.

The only way East Asia’s smaller economies, like ours, can protect themselves from being swamped by Chinese competition is to find – and then nurture, maintain and enhance – their niches in the global division of labor.

And the factors that add up to a country’s competitiveness are always changing. In fact, the whole point of successful economic development is to forego competitiveness in low-value industries and to keep moving up the value-added ladder of products and services. This will happen only with quality education for young Filipinos and good governance at all levels.

So, at any given time, a country like our own – or like thailand or Singapore – may be losing its market position in some industry or product line – whether it be textiles or disk drives – as other cheap-labor players come into the picture.

The more important factor is whether a country is, at the same time, gaining competitiveness in higher value-added areas.

Lessons I have learned

In our globalized, knowledge society of the 21st century, there is a new arithmetic at work out there: 1+1 is no longer equal to 2, but 1+1 could be equal to 11; 1+1+1 is no longer equal to 3, but could be equal to 111 – all depending on the synergy that we as a people can generate. Others in our east asia region have been doing this for years!

On the other hand, 1+1 could be equal to zero or minus 11, or minus 111, if we allow partisan politics and cronyism to do their dirty work. Take your pick – but for the great, great majority of our people, their fondest hopes are for a prosperous future, enduring peace and sustainable development.

I know whereof I speak – for I have been there. I was privileged to be the president of our beloved Philippines for six years, not so long ago.

Allow me to share with you five vital lessons I learned from my presidency and 51 years of public service:

1. Political will and hands-on leadership are crucial. The political leadership must make the tough decisions because the bureaucracy will not.

2. Time is of the essence in any situation. Deliberate speed must mark every decision – there is no room for delay.

3. Careful planning is essential – but useless without action/implementation.

4. The nation’s economy and security are paramount, but comprehensive parallel reforms are necessary.

5. International attention has to be won and our position of respect and dignity in the community of nations must be maintained. The Philippines is blessed with so many assets and advantages that other nations – many of them more progressive than we are – do not have. Our country’s blessings we must always give thanks to the Lord. But prayers must be matched by deeds. We must also perform as we pray and, similarly, pray as we perform – sapagkat nasa tao ang gawa, at nasa diyos ang awa.

Concluding remarks

Now to sum up and conclude.

I do believe we must quickly make a strategic shift from external to internal sources of growth – to focus once more on our huge domestic market of 79 million people.

Success will lie in philippine products and services that are clearly different and more cost-effective from those products other countries and other industries have to offer. Success will lie in the distinctiveness of – and the value we add to – Philippine products.

Certainly, our decision-makers – both in government and in the private sector – will need to exercise leadership skills, which I believe we have an abundance of – to keep our enterprises competitive, to lead them in weathering the storm, and to move on to the rewards that await us beyond this crisis.

Obviously we must keep up morale – and uplift our core workpeople through the hard times. And most important, our leaders at each level must be prepared to accept and assume their share of the burden of responsibility – so that the Philippines will be ready to hit maximum growth as soon as things improve.

This is what I call our caring, sharing and daring for each other and for our nation. Caring and sharing may be easy enough to do – but daring to change ourselves for the better, daring to act together to make a big difference, daring to give more than take, daring to sacrifice for the common good – these are the true and ultimate tests for each and everyone of us – as responsible citizens of our beloved Philippines!

Let us make it part of our life’s work to help lead the Philippines to its rightful place – of respect and dignity – in the community of nations.

Democratic government cannot do everything by itself. That is why, in a democracy, the country’s business is every citizen’s business. Every Filipino, even those who have retired from a career or a profession – never retires from his/her duties as a citizen of this country, until he or she drops dead.

Together we should awaken our people to the virtues of good governance, to nurture it in our everyday life because, in our globalized world, responsible citizenship – as much as good governance – has become crucial elements in a country’s competitiveness – and ultimate survival.