Looking out for the Philippines

My son Jesse was very excited when he got an A for a very challenging graduate level course he took during his last semester at Trinity College in Hartford, Connecticut. The final paper he wrote was on "Direct Investment in China." I asked him how direct investment contributed to China’s economic growth. He said, "Mom, isn’t it amazing how all of a sudden so many of the goods that we buy all over the world are now made in China?" He said China quickly learned through foreign direct investment how to develop the overseas market for its products. If China had instead looked inward at its over one billion population, those goods produced by investors from abroad could not have found as lucrative a market because the per capita income is too low, so Chinese factories, instead of looking inward, looked to the outside world.

That led me to think about the Philippines. Contrary to popular assumptions, there is actually abundant capital in our country. The reason why it seems so difficult to find capital, notwithstanding the wealth of many people, is because we tend to look at the prospects of a rather limited domestic market. "We have come into the habit of looking only at our domestic markets, rather than the export market," says Paul Cuyegkeng, who increased Dole’s Philippine fruit exports to Japan eightfold during his tenure there.

Why, I wonder, did the Philippines remain so insular? Is it because past protectionist policies created a monopolistic mindset short of which makes the struggle to conquer new markets too difficult to undertake? Or is it just a lack of confidence to face the unknown? Or is it a lack of training to develop outside markets? How can we shift and open up our minds to look out for new markets for the Philippines?

It may take more than just incentives that are available through the Export Incentives Act. Government, industry and labor must work hand in hand, on the same side of the table, to identify our key areas of competence, and to outline the vision and strategy for each. This includes how to improve the quality of the product or service, how to find new export markets, and how to institutionalize an export promotions fund. For example, Taiwan’s China External Trade Development Council, (CETRA) a non-profit trade-promoting organization, is supported by a fee paid by the exporter equivalent to a small percentage of the total export value.

There are efforts being made. The domestic shipping industry has just published a primer on its vision and strategy to become more competitive and responsive to its customers. Part of the industry’s goals is to expand the scope of its market to the region, with Philippine tonnage carrying at least 50 percent of our intra-Asia trade by 2010. Today, we are not present in the intra-Asia trade. While the Taiwanese shipping lines dominate it, there are Japanese, Korean, Singaporeans, Thais, and Indonesians etc., in the trade as well. So instead of domestic shipping lines looking at the little pond of our domestic market, we just need to look a little to the left and right and see the vast ocean of opportunity out there for its growth.

The swine industry has also organized their various associations to agree on a vision for the future, a key component of which is to export prepared meats by 2010. To support this vision, the corn industry is also working on re-engineering its trade and production practices so that the swine industry will have a steady supply of its main feed input.

There are so many more industries that should be addressed. At the Farm at San Benito, a beautiful health spa, I had a lesson on the benefits of the coconut. "Did you know," said Echardt Rempe, its indefatigable owner, "that the nutrition of each Filipino child would be satisfied with one buko a day? And do you realize that if copra is cold-pressed rather than heated for oil, what is produced would be the most beneficial and valuable product for export similar to what olive oil is to Italy?" The key industry players must go back to regain the coconut export markets with massive promotions on its health benefits.

Can you imagine what transformations would take place if we were to look outward for the Philippines?

* * *

Thanks so much for your comments at dorisho@attglobal.net.