Adding value

What we need are strategic thinkers on top of our policy formulation and program execution. What we have are bureaucrats, technocrats and politicians with very myopic views. We need leaders who can DREAM BIG for the country and decisively move to deliver on execution.

Outgoing Indonesian President Joko Widodo is a good example of a strategic thinker as a national leader who had started to execute his dreams.

Indonesia is a major exporter of nickel ore. But President Widodo banned the exports of raw nickel ore. He wanted to add value to Indonesia’s metal reserves by attracting investments in the processing industry – the ore is smelted into nickel, used to make stainless steel and is also a key component of batteries for electric cars.

Indonesia’s exports of processed nickel reached an estimated $30 billion in 2022, a huge increase from just $1 billion in 2015. The country is expected to account for half the world’s increase in nickel production by 2025.

Widodo was proven right. So now, metals such as copper, tin and bauxite may follow the same strategy. Widodo is seeking to turn his country’s economic fortunes around by making Indonesia a hub for manufacturing.

A bold vision by Widodo has placed Indonesia on the path of reducing its reliance on commodity exports and promoting economic diversification. Jokowi saw wisdom in taking that path and he immediately set it to motion. We endlessly talk of attracting foreign investors, while Jokowi simply did.

Domestic value creation is cited as Jokowi’s primary goal. On paper, the results of the export ban are striking. Almost $14 billion has been invested in Indonesia’s smelting capacity. Indonesia’s nickel downstreaming provinces experienced double-digit growth rates in 2021, driven primarily by investment in the industry. Jokowi has highlighted how the ban has seen a 30-fold increase in the value of Indonesia’s nickel-related exports.

Indonesia is not afraid of foreign capital the way we are. In order to facilitate the required new investments, Jakarta has created economic zones that relaxed the country’s investment and labor laws. This opened up large areas of the economy to foreign ownership.

So, since 2020, foreign buyers of Indonesian nickel must now invest in domestic smelters and process the raw material locally. Indonesia has the world’s largest nickel reserves and the metal is in high demand.

In our case, our top exports are people. Remittances from OFWs make up about 10 percent of our GDP. What is our government doing to help make our exports better valued?

Nothing much. We even have to be threatened by the Europeans that our sailors would be denied employment unless we improve the quality of the maritime training they are getting.

Because a good part of our labor exports are geared toward the lower end of the value stream, there should have long been a national training program to give them needed skills, more than what TESDA is pretending to do.

Former PBEd executive director Lovelaine Basillote told a PIDS seminar there are significant gaps in our training programs.

“Based on Tesda’s 2022 annual report, program registration is falling behind demand.”

Another presenter, Jason Alinsunurin, associate dean of the La Salle School of Economics, observed:

“Despite higher college participation outcomes among younger people, they do not always go to professional jobs. Findings show an increasing share of the youth going into the middle skilled or lower skilled occupations. This translates to young senior high and college graduates entering low skilled jobs and underemployed.”

It gets worse for our other “export” industry: the BPO. They reported increasing difficulty in hiring qualified people. Often only two or three out of 10 applicants qualify.

McKinsey observed that “the growing complexity of offshoring requirements necessitates building a proper talent hub to help bridge employee gaps and better match local talent to employers’ needs.” In other words we need workers with better skills if the BPO industry is to meet its target $38 billion contribution to the economy this year.

A BPO industry spokesman agrees. He recently observed the industry needs to focus on the talent supply before addressing the challenges concerning investors.

That’s not surprising. Our young people are no longer as comfortable with the English language as our generations were. The low PISA test results in Math, reading and science also make them poor candidates to work in the BPO industry.

We must resurrect DepEd from the dead. Unfortunately, we don’t see any sense of urgency in the overblown bureaucracy of over a million that seems to getting over politicized.

If people are going to be our main exports, we should add to their value by enhancing their skills. By exporting them them like raw nickel ores, the country’s economy earns less value and we are short selling our people.

This brings us back to Indonesia’s Widodo. He has a strategic vision to make Indonesia a full fledged industrial nation by 2045. Sure we have NEDA’s Ambisyon. But there is little buy-in among our leaders. Politicians couldn’t care less.

We have absolutely no vision. Our politicians only want to get richer than ever.

Our politicians

A politician in the last week of his campaign ends up in a small remote barangay, eager to get every last vote he can.

“Do you people have any problems?” he asks.

“Only two big ones,” a barangay elder replies.

“Tell me about them,” says the politician.

“We have a medical clinic here, but we don’t have a doctor.”

The politician grabs his cell phone, dials a number and has a brief conversation with someone at the other end.

“Problem solved. You’ll have a doctor within two weeks” he says proudly to the gathered barangay people. “What’s your second problem.”

The barangay elder replies: “we have no signal here, no cell service!”

Boo Chanco’s email address is [email protected]. Follow him on X or Twitter @boochanco.