Nurturing dimming bright spots

We despair of the fact that the Philippines had often times ranked poorly in international surveys on competitiveness. How many times have we heard investors complain on so many issues about doing business in the country?

These investors, on several occasions, have voiced stern warnings that they would rather place their money elsewhere if corruption is not stemmed, the bureaucracy continues to be inefficient, electricity cost is allowed to remain unreasonably high, if rules governing business are continually changed in the "middle of the game," and the latest craze, the courts‚ interference on what appears as basically economic policy matters.

Yet despite the often-cited disappointing features of Philippine society, some bright spot sectors have kept the economy resilient through the years.

Taking off from Monday’s column, here is a list of these few bright spots in the Philippine economy that have shown a modicum of resilience and sustainability, which incidentally were described by economist Bernardo Villegas in his book "The Philippine Advantage."

Attention must be given though to ensure that the brightness of these sectors or industries will not easily tarnish.

Electronics Industry Still Fundamentally Flawed

Electronics products comprise close to 70 percent of Philippine exports. Over the last 10 years, it has registered an average annual growth rate of 30 percent, making the industry undoubtedly one of the leading sectors of the Philippine economy.

Again, the major attraction among foreign investors in the electronics industry is the country’s large pool of highly skilled laborers. Figures suggest the ecozone sector has been one major source of livelihood for hundreds of thousands of workers now.

Last year, there was some apprehension that new investments in ecozones were slowing down, in stark contrast to the recovery enjoyed by most of our Asian peers. Apparently, not even the weaker peso or the fact that the US and Japan, our two largest markets, have recently recovered had boosted export earnings.

It is a relief that first quarter figures this year as released by the Philippine Export Zone Authority showed the entry of a number of big investors. But the weak link between technology and human capital persists.

According to Dr. Villegas, "The present curriculum in Philippine education is not ready to churn out a substantial number of graduates suitable for a dynamic industry. Enrollment is biased against the technical sciences." Something must be done now about this.

ICT Remains Backward

The Philippines is now known as one of the e-service hubs in Asia, competing aggressively with India in areas such as call centers and other computer-related services.

Multinationals have been enticed to set up call centers in the Philippines given our English-speaking, easily trainable, and "cost effective" labor force. But despite the abundance of such positive traits, the Philippine workforce still falls at the low-end of the IT skills ladder.

Current low value-added IT competencies of workers and students will make future expansion unsustainable. We need to prepare our IT workers to go beyond being mere users to creators and implementers of technology to be able to compete in the world market, Dr. Villegas noted.

He also added that English proficiency alone is not sufficient to maintain the country’s competitiveness in this field. We need to improve on our math and science education to move to higher value-added activities such as hardware design and software programming.

High-End Furniture

Considered to be the "Milan of Asia," the Philippines’ furniture industry ranks eighth among the top 10 exporters of furniture in the US, while a number of our top furniture exporters enjoy healthy patronage from the European Union, now considered as the largest market for furniture in the world.

Cebu, Metro Manila and Pampanga are the three main centers of furniture production. Cebu – furniture capital of the Philippines – specializes in rattan, fossilized stone, mixed media. Pampanga is known for wood carving, wrought iron and wicker furniture.

Warning signs that threaten the sector’s potential can now be gleaned in the increasing cost of labor but not commensurate improvement in skills, and the poor access to financing for upgrading of equipment and machinery.

Wooing A Fickle Tourist Market

The natural advantages of the Philippines in the area of tourism are often times overshadowed by the country’s peace and security problems, particularly rising incidents of kidnapping in Southern Philippines. Yet, the potential of the industry in general is huge, if only for the quick buck it can generate for so little capital. "Good food, good entertainment and tourist spots require little or no dollars to be marketable," Villegas wrote.

A survey however by the tourism department of foreign visitors in 1998 showed that more than a third of the respondents were turned off by heavy traffic, while a fifth complained about a dirty environment, particularly air and water pollution and bad roads. Some also disliked widespread poverty as manifested through beggars roaming all over the metropolis, cheating and reckless taxi drivers and poor airport facilities.

Again, luck plus our irresistible tourism gems have helped us overcome the negative vibes in our tourism industry. But we have to work hard to put in place a solid network that will truly cater to the long-term growth of this strategic sector.

These bright spots in our economy need nurturing. Here’s hoping whoever we elect as our leaders will not miss them.

What Ails Our Agri Sector On TV

"Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p,m,, Monday to Friday) ends today a discussion of the agriculture sector and what ails this vital component of our economy. While imported agri products are easily finding their way into the domestic market, either as legitimate importations or through smuggling, countries such as Australia are blocking our own produce. Apparently, some countries are imposing entry barriers despite WTO agreements allowing freer flow of products among members. There is a need to review our WTO commitments particularly as it affects agri sector. Watch it.

‘Breaking Barriers’ With B. P. Romualdez, Chamber Of Mines President

"Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature Benjamin Philip G. Romualdez, president of the Chamber of Mines of the Philippines and president of the Asean Federation of Mining Associations on Wednesday, 21st April 2004.

Join us break barriers and gain insights into the current issues confronting the local mining industry. Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.