The three I’s

FRANKFURT – On my way to this German city for the annual meeting of the Asian Development Bank (ADB), I transited through Taipei’s Taoyuan International Airport.

Taoyuan is no Singapore Changi, but seeing that modern, sprawling airport in tiny Taiwan again gave me a pang of envy.

Taiwan was among the first Asian economies to sprint to tiger status. Despite its problems with Beijing, which continues to move aggressively to diplomatically isolate Taipei, tiny Taiwan remains an economic powerhouse. It is one of the Philippines’ major sources of aid and one of the top destinations for Filipino migrant workers.

On the 50th anniversary of the Manila-based ADB, it’s good to remember that when the bank was deliberating on where to set up its headquarters, the Philippines was more prosperous than South Korea, and second only to Japan in terms of economic development.

Since 1966 when the ADB was born – nearly my entire lifetime – our country has progressively fallen behind our neighbors in various aspects of development.

Whoever wins the presidential race on May 9 must consider how much the other ADB member economies have progressed in the past half-century, and how we can catch up with the better performers.

After World War II, many of our neighbors were rocked by bloody internecine wars and violent struggles for independence from colonial rule, followed by repressive authoritarian regimes.

Yet look how far they have come since then: Taiwan, South Korea, Singapore, Malaysia. Japan rose spectacularly from war including two nuclear attacks. It can be argued that Japan was already economically ahead of the rest of Asia before the war, and it had a lot of help in post-war recovery from Uncle Sam. But we also received substantial post-war aid from the US. And we should have led in scientific and technological innovation, considering that back in the day, Asia looked up to our educational institutions as the region’s best.

Today we have been left behind in many development indicators even by Thailand, Ground Zero of the 1997 Asian financial crisis. And of course China has overtaken Japan as the world’s second largest economy.

Our next president must have a long-term goal: to make the country regain its regional standing when the ADB was founded 50 years ago.

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ADB President Takehiko Nakao cited the Philippines’ stable economic growth in recent years and expressed hope that it would be sustained.

This is possible, he told me in an interview last week, “by continuing to pay attention to governance, infrastructure investment, education and an open trade and investment regime.”

In previous interviews, Nakao had also cited other conditions for economic development: investment in health, macroeconomic stability, streamlining the regulatory framework and reforming state-owned enterprises, social inclusiveness, a vision for the future, political stability and security.

Nakao refused to be drawn into a discussion about Philippine politics and the upcoming elections, except to emphasize the need for “the three I’s” – a more innovative, inclusive and integrated development thrust.

It is also the thrust of the ADB in its area of operation, which covers 48 economies from South and Central Asia to the Asia-Pacific.

Nakao, who is running for a second term as the ADB chief when he finishes his term in November, is proud of the bank’s contribution to the development of what has to be the world’s most dynamic region.

“It’s quite an achievement,” he told me. Fifty years ago, he noted, Asia was so poor people thought “it could never develop to the level of advanced economies. Never.”

He added that half a century ago, the biggest challenge in Asia was how to feed large numbers of people. “Now we have achieved enough food productivity.”

But Nakao admits that food security and poverty continue to be major challenges. If it’s any comfort to President Aquino, the failure to make growth inclusive is not unique to the Philippines. Nakao said the income gap is growing even in Asia’s advanced economies.

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To promote inclusion, the ADB is putting emphasis on financing for public education, primary health care, gender equity and infrastructure development.

Inclusion and growth can be promoted, Nakao said, if communities have roads, electricity, efficient mass transportation. In the Philippines, such facilities can encourage manufacturing, which can provide decent jobs outside business process outsourcing.

Unless the Pinoy workforce gets a capacity boost to fill knowledge-based outsourced services, BPO employment could shrink as automation makes current jobs redundant.

Human capacity building is also needed with the organization of the ASEAN Economic Community. Nakao said the Philippines’ edge in this regional integration is its pool of young, educated and English-speaking workforce. But the country lags in foreign direct investment, with inadequate infrastructure again among the reasons.

In transportation infrastructure alone, we are being left behind. Thailand already has a subway system to ease traffic in Bangkok; Vietnam’s Ho Chi Minh is building one while Jakarta is planning its own.

Pinoys are worried that a subway is vulnerable to earthquakes and flooding. But so are subways in Japan and South Korea. Some subways even pass through seas.

Public Works Secretary Rogelio Singson, during a visit to The STAR, told us that he believed a subway in Metro Manila is viable. But if we can’t even make the light railways run without a glitch or revive the Luzon railway service that was running a century ago, a subway in Metro Manila looks like a pipe dream in my lifetime.

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If the government seriously considers building a subway, the ADB is likely to support it. The bank remains heavily engaged in assisting the Philippines in development efforts. It recently released P400 million for the conditional cash transfer. The ADB now has an even larger participation in the CCT than the World Bank, which initiated the program together with the Arroyo administration.

ADB financing for the country, which has amounted to $18.3 billion since 1966, supports water projects, capital market reforms, senior high schools in line with K-12 especially in Mindanao, and of course infrastructure such as roads. The ADB is also moving to strengthen public-private partnerships particularly for infrastructure development.

In the first quarter of 2016 alone, the ADB approved $562 million in loans and grants for the Philippines. Another $830 million is in the pipeline for the rest of the year; if the loans are approved, 2016 will be a banner year for ADB support to the Philippines.

We should be grateful, but the better news is if we can wean ourselves from development aid. Whoever wins on May 9 should have this long-term goal.