When you are inside looking in, situations tend to be muted or amplified, depending on which side you are on. I was never entirely certain how the world viewed the Philippines given the violence and extrajudicial killings going on. I hoped that by some fluke, the ferocities of this administration had slipped under the radar and that people, especially the global business community, were somehow oblivious on the true state of this formerly peaceful and fun-loving country of ours.
My involvement in various chambers of commerce and the Entrepreneurs Organization (EO) allows me to interact with numerous business owners from around the world. In the last two months, I had the opportunity to meet with entrepreneurs from Japan, Qatar, Spain, and Portugal. My interaction with them gave me first hand insights on what the world really thinks about the country. My worst fears were confirmed.
Per first hand testimonies, I gathered that the general sentiment about the Philippines is that it is a nation governed by a viscous government that equates power with brute force. It views human rights not as a sacred constitutional statute, but as an option. It cradles the rich, powerful, and corrupt politicians for so long as they abet its violent ways. Meanwhile, it shows no mercy for the poor, women and children, if there is even a shadow of doubt that they are involved in the drug trade. It maintains animosity against Western democracies and is hostile towards the investors that come from them. The Philippines, in their eyes, is unsafe, unpredictable, and a political time-bomb. Not my words, but theirs.
The same narrative was parroted, almost to a tee, by most CEOs I spoke with. The painful comments became more acerbic after each meeting. I tried to assuage their pessimism by telling them that the situation, on the ground, is not as bad as what media reports. In fact, our investment conditions and economic fundamentals have never been better. My attempts to save the country’s reputation were politely brushed off as a valiant effort of a patriot. They were not convinced given the compelling cases of murder. At some point, my attempts to sugarcoat the situation only exacerbated it. So I stopped.
We can pretend not to care about how the world views us and be belligerent about it as the President is. But the reality is that our global reputation matters.
Without exception, every CEO I spoke with had ruled out the Philippines from their expansion plans. Most are involved in the manufacturing, BPO, trading, and hospitality industries. The sentiment of pessimism is confirmed by NEDA itself when it reported a massive 62% drop in foreign direct investments (30% drop if the P37-billion investment of Bank of Tokyo in Security Bank is factored out) in the second quarter of the year. In the BPO sector, the country’s greatest employer and source of foreign exchange, PEZA reported a 35% drop in new BPO investments in the first five months of 2017.
Even worse is that those who have an existing business in the Philippines are now planning their exit strategies including a large BPO company which employs more than three thousand call center agents. The exodus is not confined to American and European companies either. Last month, the Korean Chamber of Commerce of the Philippines announced that several of its member companies involved in manufacturing are moving to Vietnam. They cited peace and order issues, rising costs and difficulty in doing business in the Philippines as the reasons.
All these will manifest itself in lower manufacturing activities, a deceleration in capital formation, and weakening export earnings in the years to come. Its going to hurt the economy and derail the economic miracle we were all hoping for. To think, just a year ago, we were touted “Asia’s Brightest Star.” Its sad how the reputation of the nation plummeted so quickly, so uselessly.
The war on drugs is doing us more damage than good. The travesty is that the killings will not even save the next generation from drug dependency nor solve the drug menace. Even Malacañang admits it. Instead, it will confine the next generation to a life of poverty since the killings are starving the country of the investments it badly needs to propel the economy forward. The social and economic costs of this war is more than its worth.
THE CONSOLATION WE WERE COUNTING ON
Amid the violence and an economy losing its luster, we put our hopes on the promise that this administration will bridge the infrastructure gap. Fast tracking infrastructure projects would have been its saving grace as it would capacitate businesses, provide a pump priming effect to the economy and provide relief for the riding public. Unfortunately, government’s much trumpeted Build! Build! Build! campaign is failing to deliver too.
In a conversation I had with Transportation Secretary Arthur Tugade last March, he disclosed that the following projects were set to break ground this year: The 100-kilometer Clark-Subic railway; the 93-kilometer Tutuban-Clark (via Malolos) railway; Phase 1 of the Mindanao railway; the Tutuban-Bicol line (via Calamba); and the LRT-MRT Common Station in North Edsa, among others.
By early next year, a monorail to connect BGC and NAIA and a Bus Rapid Transit to traverse EDSA were set to break ground as well.
As we approach the fourth quarter, it looks like none of these projects will make the deadline. In fact, records show that the DoTr only spent 18% of its budget so far. In other words, it accomplished less than 20% of its planned programs. We know Secretary Tugade is trying his best but legal impediments, a slow-footed bureaucracy, and the lack of qualified engineers are standing in his way. Regardless, for whatever good intentions the Secretary may have, the bottom line is that the DoTr is failing to deliver.
If only Malacañang shows the same interest in infrastructure as it does its war on drugs, perhaps things would move faster.
CULTURE OF (IN)DECENCY
Another festering issue among investors is the increasing sense of entitlement among politicians. This is succinctly displayed in Congressman Rudy Fariñas’s shameless proposal to exempt members of the legislature from minor traffic violations when Congress is in session.
Why is this a cause for concern? It is worrying because it sends the signal that Congressmen and Senators who kiss the ass of the President feel they are above the law. They are the new generation of cronies who operate according to different rules. It is a confirmation that favoritism, entitlement, and special privileges exists for those cozy with Malacañang.
Adding to the discomfort is the fact that the very legislators who write our laws seek to be exempt from it. It is a case of double standards and a manifestation that the playing field is by no means a leveled one.
The mere fact that Fariñas was bold enough to propose this statue is an indication that he, and others like him, have lost their sense of decency. They look at themselves not as public servants but as children of god. Where this sense of entitlement stems from is unclear. But one thing is for sure, a government lead by entitled politicians will only weaken our institutions.
Decency is the foundation of a civilized, fair, and responsible government. Take away decency from the equation and you have an inequitable government where the rich, powerful and well-connected rule and the poor and unimportant perish. The entitled lawmakers of today will be the oligarchs of tomorrow.
Let’s be honest, the business climate today is deteriorating quickly. The numbers show it. It’s a shame because business optimism was on an all-time high when the administration announced its 10-point economic plan just 12 months ago. It is not too late to recoup lost ground. If only Malacañang re-aligns its priorities and makes its 10-point economic plan the center of its agenda, sentiments can shift for the better just as quickly as it was eroded.
Andrew J. Masigan is an economist.