‘Glocalization’ is the way to go

Last week, Graphic columnist Tony Abaya told the managers of a local conglomerate that globalization must be slowed down and some amount of protectionism adopted to protect what is left of Philippine industries. Anyway, Mr. Abaya correctly pointed out, the developed countries advocate globalization but practice protectionism. Why shouldn’t we?

Economist Romy Bernardo, speaking before the same forum, took a different approach. Romy thinks it isn’t a question of welcoming globalization or not. Globalization is a given, it is here to stay whether we like it or not. It is up to us to use it for our advantage. And Romy feels globalization is our hope for economic development, taming inflation and protecting the consumer among other things.

The thing is, both Tony and Romy are right. There is a good and a bad side to globalization and it is how we manage it that will make a positive difference. Tony is right about not being more Popish than the Pope on the matter of how fast we liberalize our economy. The Americans and the Europeans are the worst market protectionists there are, their sermons on free and open markets notwithstanding.

But Romy is right too. He said we would do ourselves much damage if we reversed gears on market liberalization. For one thing, consumers will suffer with high prices and shoddy products. For another, protectionism and controls won’t work since Filipinos are the best smugglers there is if the price is right.

So I guess the best approach is what New York Times columnist Thomas Friedman calls, "glocalization." For India and China, two of the world’s most populous nations, Friedman observed it is no longer a question of accepting or rejecting the globalization process. "They have decided that opening their economies to trade in goods and services is the best way to lift their people out of abject poverty and are now focused simply on how to globalize in the most stable manner."

Friedman observed that in most of the Third World, "even those who are suspicious now want to find a way to participate, but in a way that manages the risks and the pace. So we’re finding ways to ‘glocalize,’ to do it our own way. It may mean a little slower growth to manage the social stability, but so be it…"

Indeed, the pressure of globalization will force us to clean up our act. The rent-seeking elite of our society, long used to taking it easy on inherited wealth and power, will be forced to get off their butts and make themselves useful. Protectionism will no longer be there to allow them to exploit the consumers any longer because globalization will produce alternatives.

Labor, too must go beyond simple Marxist rhetoric. At the end of the day, local labor must be competitive with that of China, Thailand and Vietnam. Labor productivity will determine survival in a highly competitive globalized world.

But Tony Abaya is right too. We are now faced with an emergency situation because we have not adequately prepared for globalization. We need to save jobs that are migrating to Thailand and Vietnam. Unilever can easily do a Colgate and manufacture in Thailand where the environment for business is said to be more favorable. And because goods of Asean countries can enter each other’s market freely, it is as if those Colgate products were still being manufactured in Makati.

This is perhaps, where "glocalization" comes in. For the short term, and assuming things are more or less equal, consumers must make buying decisions also on the basis of saving local jobs. But we must understand that while a "Buy Pinoy" strategy can help for now, it cannot be a long term approach. We must be competitive on price and quality, because consumers do not buy their bath soap or laundry detergent on the basis of patriotism.

"Glocalization" can slow the pace of globalization to enable us to catch up. It enables us to adopt to the worldwide trend at a pace that minimizes dislocations that require social safety nets our drained treasury cannot afford. But it cannot stop the trend. Catching up is not an option. Even Burma, the hermit kingdom, is opening up. I don’t think we want to resign ourselves to be left behind forever.

Bankruptcy lawyers

I didn’t realize there is a group of local lawyers who specialize in handling cases of businesses that have gone under or about to. It is called Corporate Recovery & Insolvency Practitioners Association of the Philippines ("INSOLPHIL"). It is headed by an old friend, Atty. Manny Yngson, Jr. who sent me an e-mail voicing his concern over the slow legislative action on a package of three bills that will help clean up the local business landscape.

These bills are the Special Purpose Asset Vehicle ("SPAV"), which is intended to inject new blood to our banking system, by allowing banks to dispose of their non-performing loans (NPLs) to asset management companies. This will enable banks to clean up their books and resume lending activities.

The second bill is the Securitization Law, which will enable these asset management companies to sell asset-backed securities to investors. This will help them recover their capital plus profit, which they will hopefully plow back to buy more NPLs.

The last and, according to Atty. Yngson, the most important bill of all is the Corporate Recovery and Insolvency Act ("CRIA"). It will not only update our Insolvency Law (which is of 1909 vintage), but also insure that the assets coming from the NPLs will be out of the reach of the creditors of the ailing bank from where the NPLs originated, if it becomes bankrupt.

According to Atty. Yngson, these three bills constitute a package. "If the SPAV becomes a law without its sister bills, the Securitization Law and the CRIA in place, the revitalization of the banking system may not be realized. This is because if there is no assurance that the assets from the NPLs will not be out of the reach of the creditors of the financially strapped bank where they originated, there may not be any buyers of such assets at all."

Atty. Yngson said it is unfortunate President Arroyo has not certified the CRIA bill like she did with the SPAV and the Securitization law. The House economic affairs committee led by Rep. Oscar Moreno is now working with the CRIA technical working group in hammering out the final form of the bill. But no similar work has been started in the Senate, where there are two counterpart CRIA bills filed by Senators Sergio Osmeña III and Ramon Magsaysay, Jr.

Maybe, Atty. Yngson suggests, the pall of pessimism pervading in the business sector can be brightened up with the passage of these bills because the task of rebuilding can begin. Manny then surmises, "the exodus will stop."

Time management

An architect, an artist and an engineer were discussing whether it was better to spend time with the wife or a mistress. The architect said he enjoyed time with his wife, building a solid foundation for an enduring relationship.

The artist said he enjoyed time with his mistress, because of the passion and mystery he found there.

The engineer said, "I like both."

"Both?"

Engineer: "Yeah. If you have a wife and a mistress, they will each assume you are spending time with the other woman, and you can go to the lab and get some work done."

Boo Chanco’s e-mail address is [email protected]