Where is the beef?

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

What is done is done and we all have to live with it. But  how do we, and that includes the presumptive winner, move on from here? Unity? There is no meat there… no beef.

We have no idea what’s in his head because he avoided interviews and public forums. On the economy, the only thing I can recall is his promise to bring the price of rice to P20/kg. Experts are saying that will kill the farmers or bankrupt the government in subsidies.

We also have not been told who the new  economic managers are. Names were floated, mostly of investment bankers, as potential Finance Secretary.

Whoever it is will have to be able to top the performance of outgoing Secretary Sonny Dominguez. I remember that there were rumblings about the economy after Duterte was elected. Then he appointed Sonny and through Sonny’s sheer gravitas, quieted down most doubts.

So, who is Junior’s Sonny D? He can’t be just an  investment banker because the job calls for exposure to a rather wide expanse of the national economy and an ability to navigate the bureaucracy. Sonny, for instance, was once agriculture secretary and head of Philippine Airlines, among others.

The quicker Junior names his chief economic manager, the better it will be for the investment climate. I am not just talking about calming the fears of potential foreign investors. Junior needs to reassure local investors too.

Just before the elections, Ayala announced it will  invest in Myanmar to the tune of $237 million. That’s after Ayala divested from Manila Water, LRT1 and the Muntinlupa-Cavite Expressway.

Ayala explained that they are targeting to divest some assets and raise $1 billion by 2023 for their core investments. That’s understandable. What boggles the mind is that Ayala considers investing in strife-torn, junta-ruled Myanmar safer than here.

We can only guess who among our monied elite moved money out of the country before the election and how much. Capital knows no patriotism, only safety and return on investment.

Another good reason for Junior to quickly name his Finance Chief is the historic debt level he will inherit from Duterte. The national government’s outstanding debt will climb to a record P13.42 trillion by the end of 2022.

Sec. Sonny reassured that our debt level should not be a problem if we grow the economy.

How do we grow the economy? For ideas, let us sneak into a lively exchange of views in one of my Viber groups among economists and kibitzers.

Says one who had been hopeful Junior is the answer to his prayers for change:

“To me, the greater immorality isn’t corruption, but the persistence of  poverty and massive unemployment.  It behooves all parties – pro or anti-Marcos – to propose and implement a strategy for industrialization, i.e. generation of manufacturing and agro-industrial jobs, because growing the service economy won’t reduce poverty.”

Says someone invested in what used to be a major export industry: “I hope we can convince the government to make a big push (most importantly, by enacting the land ownership and labor reforms, among others - CREATE  and PSA were big moves, now in place) to capture some of the investments being made to rebalance global supply chains (as many seek to diversify away from China).

Says Junior’s sympathizer: “We are at a geopolitical golden moment. Thailand took advantage of the rise of the yen after the Plaza Accord. In the same way, we can become Japan’s industrial workshop due to our large labor pool.

“Thailand is aging fast and its workforce is shrinking. It can’t be the manufacturing workforce for Japan anymore.  Deglobalization will also force the Western countries to consider the Philippines. They can’t rely on Vietnam, which is communist and autocratic.  Incidentally, South Korea is also facing a demographic crisis.”

Says a resident cynic: “Vietnam may be autocratic, but trustworthy. Can the Philippines be trusted when PPP contracts can be ignored?”

“That indeed is a risk in our PPP contracts, but doesn’t exist when it’s not PPP. Investors are now more keen about geopolitical risks.”

“Speaking of Thailand… for decades, Thailand’s main petrochem facility, Map Ta Phut, gave it a competitive advantage over the rest of SE Asia. Dow’s been a client of ours and both their previous and immediate CEO’s passed through Dow Thailand as their local CEOs. That familiarity gives Thailand an advantage when western firms make investment decisions.

“It’s what made them an alternative in SE Asia in auto, white goods and electronics. Right now, Thailand is well ahead of us. Their main challenge is getting their EV policy right. We can’t even get our auto policy right. Thailand is losing their hard drive business to solid state drives, which is going to Malaysia, which is emerging as a major chip investment destination.

“And to solve their labor issues, the Thais are importing workers from Cambodia, Myanmar, and Laos or relocating factories to the Thai-Cambodia border. And building the infrastructure for this.”

The digital economy came up:

“India has a massive pool of computer software engineers because of an industrial policy set by its government decades ago. By comparison, the Philippines has a much smaller pool and it ranks poorly, according to Hacker Rank, which tests competence of software engineer applicants for offshore freelancing jobs.”

Then the infrastructure issue came up again: “Our major constraint near term is infrastructure.

“We need to make massive bets on infrastructure today. Do we have the capacity to do so?”

But our infra expert butted in: “Don’t bet on our infra, heavy on ‘wow’ projects ending as white elephants.”

The discussion turned to ports.

This question: “Does MICT really have to be in Manila? I’ve never been able to figure this one out, as to why we can’t move our main port a bit outside the capital, with its congested roadways?”

“Very relevant question,” chipped in another. “Shallow waters, heavy silting, narrow roads, expensive real estate.”

Interesting discussion on ports, but I have run out of space. To be continued na lang.

The election is over and battlecries like unity are meaningless. We need substance now. Tell us Junior, where’s the beef?



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


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