Potential

A top Western diplomat who quietly visited Manila observed that the Philippines is a country full of potential.

I told him that we’ve been full of potential for over two decades now. Similar observations were made of Brazil in the past, he said, and it eventually realized its potential.

Spoken like a diplomat, but who knows? Maybe he’s right and the realization of our potential is just around the corner.

As I’ve written recently, the signs are encouraging at the start of the year. Moody’s has just upgraded the country’s credit rating, reflecting the general economic bullishness over the six-month-old Aquino administration.

Some foreign observers have remarked to me that the country has been relatively quiet for several weeks now. This must be unusual for people who have grown used to the Pinoy environment where there’s never a dull moment, where living in interesting times is day-to-day reality and not just something one wishes for one’s enemies as the Chinese do.

Maybe people are still busy trying to get rid of the unwanted pounds they piled on during the holidays.

Or maybe with P-Noy still enjoying high popularity ratings, political opponents find it prudent to say that six months is still too early to pass judgment on the hits and misses of a new administration.

But P-Noy’s window for producing results gets smaller every day. By the time he delivers his second State of the Nation Address in late July, he must have something more than banning wang-wang and politicians’ names from project billboards to report to impatient Pinoys.

He must dispel concerns that under his watch, we are going to be stuck in a rut, resistant to change, unable to realize our potential.

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The 2011 Index of Economic Freedom, released Wednesday in Washington by the conservative think-tank Heritage Foundation and The Wall Street Journal, should give P-Noy an idea of the challenges the nation faces.

While the country inched up in terms of dealing with corruption, its overall ranking in economic freedom slipped by 0.1 percent from the previous year. A negligible figure, but a score of 56.2 percent is below the global average of 59.7, putting the Philippines at 115th place among 179 economies – a fall of six notches from the previous year’s 109th place.

The country placed 21st among 41 economies rated in the Asia-Pacific. The region is home to the world’s top two freest economies (for the 17th straight year) – Hong Kong and Singapore – as well as the most repressed, North Korea.

The scores were based on 10 categories: freedom in the areas of labor, business, trade, fiscal, monetary, financial, investment and property rights as well as government spending and freedom from corruption.

It is no coincidence that the world’s most prosperous economies are also ranked as the freest. Following Hong Kong and Singapore are Australia, New Zealand, Switzerland, Canada, Ireland (OK, it’s in trouble these days), Denmark, the United States and Bahrain.

These economies also consistently rank high in surveys on global competitiveness and human development indicators.

The 2011 report noted economic recovery in the Philippines due to strong exports since mid-2009 but warned that long-term economic development remained a challenge particularly with the absence of “entrepreneurial dynamism.”

The report called for “deeper institutional reforms” in business freedom, investment freedom, property rights and freedom from corruption.

“The government imposes formal and non-formal barriers to foreign investment, and foreign remittances do little to promote sustainable growth. The judicial system remains weak and vulnerable to political influence and corruption,” the report said.

Potential entrepreneurs face “severe challenges,” the regulatory framework is “burdensome” and the legal framework “ineffective,” the report noted.

The labor market is “structurally rigid,” organized crime is a “serious problem,” enforcement of intellectual property rights “remains problematic” and tax rates are “relatively high,” according to the report. Also, “a culture of corruption is long-standing.”

Other economies have made better progress than us in dealing with those issues, which is why we fell several notches in our ranking even if the slip in score was negligible. There’s no reason why we can’t do better – and be on the road to realizing our potential.

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FEEDBACK: The general manager of Everything Nice Cake Shop and Café at Camp John Hay, where my normally unflappable brother lost his cool over the food and service during the holidays, wrote to say that measures were being put in place to prevent a repeat of such incidents.

Techie Pantaleon wrote that the Big Breakfast description – “the meal is good enough for two” – is being deleted from the menu. All hot meals “will be served hot, at all times,” she wrote, as she clarified that poking a sausage on a plate (at the prodding of my brother, she clarified) to check if it is still cold “is not a tolerated practice.” The staff will be retrained on proper customer relations.

A notice will also be posted to inform senior citizens that they can either use their discount cards or get a free cup of coffee for the promo breakfast meals. Getting both, she wrote, is tantamount to a double discount. My mother got her discount on the meal plus a 20 percent discount on an order of hot chocolate (no coffee). Pantaleon clarified that my brother was given a second pat of butter for free (but this was after he protested when told he had to pay for it).

The 10-year-old café, Pantaleon wrote, is noted for its cassava cake.