College educated shoe shine boy saddens investor

"I always get my shoes shined in the Manila Airport before I leave," Dr. Ta Lin Hsu told the Makati Business Club recently, "and the one who shines my shoes has a bachelor’s degree."

Mr. Hsu, the Taiwanese chairman and founder of venture capital firm H&Q Asia Pacific, told his hosts that this "is sort of the saddest story that he has such a high-level of education, and yet the country cannot afford to give him a good job."

A visiting foreign investor found that pathetic, but for us, we have grown used to this anomaly and maybe, no longer feel bad about it. Actually, for so long as we have millions of OFWs who can’t find work at home, our economy is nothing to be proud of. Speaking of OFWs, the OFW situation also shocked Dr. Hsu.

"You have about six to 10 million OFWs. They are generating a lot of remittances… $8 billion or so. But I know some unofficial estimates…that number could be more than twice.

"On the other hand, that money came back almost like Chinese "ku hung pao" money. You just use it quickly and that’s a lot of money when you measure from FDI (foreign direct investment) standard. Your OFWs come up with $6 to $8 billion a year. They have to suffer a lot of abuses and hardships and the money come back in the form of shopping malls. You have some of the largest shopping malls in the world."

Dr. Hsu is also appalled with our large army of unemployed. He thinks we should be more serious in attracting investors in manufacturing.

"You have a lot of people unemployed. Why not get into the manufacturing business in a big way? Get a little bit from the Chinese manufacturing. I talked about this idea with a lot of government officials and business leaders, but they don’t seem to be that interested. Because the main business interest here is more into the domestic consumption side, the consumer type, the food type."

Yet, Dr. Hsu feels we have what it takes to be an economic star. He recalled that in 1965 outside of Japan, the Philippines had the highest living standard and GDP per capita… In 1986, Thailand’s GDP was the same as the Philippines. Population was the same. You know what happened today? Thailand is ahead and their population is more under control. China, as recent as 50 years ago, was nothing. With only 10 years or so, they have achieved a lot. The world we live do change and somehow the Philippines seems to be slow and fall behind."

So, what does he recommend? "First of all, it’s important to have a peaceful environment, because without stability – with coups, with kidnapping – you can’t really conduct business."

Then, he thinks we should put more effort in "better quality education. Less lawyers, less accountants, more engineers, more technicians. And don’t always go for a bachelor’s degree or a Ph.D. In the technical industry, you need this whole spectrum of talents – two, three years of IT training could really be useful skills for these people to find a job."

In so many words, he said we could be as good as India in the IT field.

"Today, we are on the verge of getting into a knowledge-based, technology-based economy. Even China, they can go through this path very, very fast, so they all go for the higher technology, higher-value type of economy. With the Philippines’ level of education, that’s what it should aim at. I have full confidence that the Filipino can do it."

I have no doubt we can do it alright… We just have to stop playing games and set our minds and hearts to get it done. Item one in our agenda should be to start voting intelligently. I know, easier said than done.

Sugar Industry

James C. Ledesma, administrator of the Sugar Regulatory Administration, wrote me an e-mail to inform me that as of this year, the Philippines has regained its status as a net exporter of sugar.

"Yes we were net importers for so many years since the early 90s," Ledesma admitted, "but for the past three years, production and productivity have been on the upward trend. Ledesma proudly pointed out, the sugar industry is not only self-sufficient but also had enough to cover our US export quota. They are apparently so upbeat that for the next crop year, they "intend to export some sugar to the world market."

So I wrote Ledesma back to ask if they are also able to produce local sugar at world market prices. Ledesma responded that "the prevailing world market price (at six cents a pound) is a dumped price, the result of the surplus of the major sugar producers (EU, Brazil, Thailand, South Africa and Australia)."

These producers, he explained, enjoy some form of assistance or subsidy, whether it be in the form of high domestic price (as in the EU), or a parallel program that supports sugar (as the ethanol program in Brazil), or government bailouts (like in Thailand).

Ledesma admits "that at this time our local industry is still not globally competitive (even sans the subsidies from the others). Estimated cost of production in the Philippines would be around 11-12 US cents per pound. The US support price is 18 cents per pound (the EU is I believe close to 30). World market price is hovering around 6 cents."

Ledesma claims that "if ALL subsidies are removed no country in the world can be profitable selling to the so-called world market." But how can they aim to sell to the world market if they are unable to meet the prevailing price, no matter how unfair?

The local sugar industry, he said, is "aiming to bring down our costs (basically through productivity and efficiency gains as contained in our master plan) to nine to10 cents over the period leading up to 2010. We believe that this is the realistic level that we can attain on our own without any direct government support (considering the tight fiscal situation government is in). What the industry is asking from government is that window to do it, and this we are getting through some tariff protection."

I don’t know who Mr. Ledesma is, so I asked my friend, Dr. Rolly Dy, agri-business expert of the University of Asia and the Pacific. Here is Dr. Dy’s reply.

"James Ledesma is perhaps one of the most competent administrators SRA has ever known. He is from the private sector, and he knows his potatoes (sorry, sugar). He is a straight talker.

"Sugar production has increased among others due to stable prices and use of high yielding varieties through research funded by voluntary private sector levy to the private Phil. Sugar Research Institute. There is hope."

Bohol Beach

Speaking of Rolly Dy, he also made this incidental comment in his e-mailed reply to me.

"By the way your story about Bohol Beach Club is very true. My balikbayan sister from New Jersey (away for 22 years) stayed there with her family late December last year. It was a let down after stints at Regency Boracay and Mactan Shangri-La. I was embarrassed (Napahiya). Friends recommended it to me without them staying in it."

Well, that resort just had a PR puff piece last Sunday. The only thing in that full page spread that I can vouch for is the beautiful beach. A PR writer’s account cannot compare with the actual experience of a paying guest, namely, people like me and Rolly Dy’s sister.

Txt Joke

Congressmn’s wife awaknd by suspicious noise at midnite: "I think der r thieves in d house!"

Congressmn: Yes, I knw but we hav our counterparts in d SENATE too.

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