Is the Philippines ready to be the next Asian Tiger?

MANILA, Philippines - On July 26, 2011, President Benigno S. Aquino III delivered his State of the Nation Address to the Congress of the Philippines and the nation as a whole. He committed his administration to turning away from the “crooked path” of personal and political interest to the detriment of the nation, and identified the government waste and corruption that his administration had uncovered.

He was not vague: he spoke of specific instances of gross overspending and wrongdoing. He even called for top officials of the Metropolitan Waterworks and Sewerage System — accused of enriching themselves while the “people lined up for water” — to resign “if they have any shame left.” He talked about malfeasance in infrastructure spending and tax evasion.

But President Aquino was not simply the bearer of bad news. He also proposed a solution: public-private partnerships. He stated that private investors have expressed interest in building a new expressway stretching from Manila to the end of Cagayan Valley “without the government having to spend a single peso.”

He spoke of using funds from public-private partnerships to fund his administration’s plans for education, declaring his intention to extend the basic education cycle from seven to the global standard of 12 years. He also spoke of limiting government spending through the Fiscal Responsibility Bill, whose passage he supports.

The president’s flashlight is certainly directed internally, but is that all that is needed to make the Republic of the Philippines the next Asian Tiger? To ask that question, we first must understand what the Four Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) have in common.

First, all four countries rapidly industrialized while maintaining annual growth rates in excess of seven percent between the 1960s and 1990s, having developed “advanced” and “high-income” economies (as defined by the International Monetary Fund and World Bank, respectively) by the 21st century. They achieved this by specializing in areas of competitive advantage. For example, South Korea is the top producer of ships, controlling over half the global market share; Taiwan is a major global supplier of semiconductors; and Singapore and Hong Kong became major financial centers.

Next, the Four Asian Tigers’ rapid growth has been attributed to industrial policies that pursued an export-driven model of economic development, manufacturing goods for export to highly industrialized nations, with domestic consumption of goods discouraged largely by high tariffs.

Lastly, the Four Asian Tigers invested heavily in education as a means to improve productivity and mandated that education be compulsory through high school. If the first question is “What does it take to be the next Asian Tiger?” then the next is “Where is the Philippines now?”

The Philippines is considered one of the “Tiger Cub Economies” following the Four Asian Tigers: Indonesia, Malaysia, the Philippines, and Thailand.

The Philippines has made major strides in finding areas of competitive advantage to specialize in: of the Tiger Cub Economies, it is the largest coconut producer and shipbuilder, and is one of the world’s largest BPO providers. It also leads the group in the Press Freedom Index, but trails in the Corruption Perceptions Index and Gross Domestic Product per capita.

P-Noy seems to have a good grasp of what needs to be done internally: reduce corruption, tax evasion, and government waste; pursue public-private partnerships to fund projects in the national interest; and invest in education. It is clear that to be the next Asian Tiger, however, the Philippines must look outward as well as inward, pursuing industrial policies that provide maximum economic benefit while specializing in more areas of competitive advantage, and increasing that advantage in areas where the Philippines is already a major competitor.

How is the president going to achieve these goals? Can he possibly make the Philippines the next Asian Tiger when over 12 percent of the nation’s GDP comes from overseas remittances? Are public-private partnerships just a pipe dream, or can P-Noy really make them a reality?

Get the opportunity to dialogue with President Aquino at the ASEAN 100 Leadership Forum 2011 that will convene in Manila next month. The forum focuses on dialogue, debate and open discussion on key issues facing Southeast Asia and their implications on business and politics. It is a highly interactive meeting of minds of the most promising Southeast Asian next-generation leaders from business, government, and civil society.

The ASEAN 100 Leadership Forum will convene on Sept. 28 and 29 at the Makati Shangri-La, Manila, Philippines. For more information, visit http://www.asean100forum.com.