Investments

President Marcos claims he brought home some $13 billion in deals that will create 24,000 jobs from his Japan trip. Most of these involve the Metro Manila North South commuter train system and the Metro Manila subway that are all already being constructed.

In all honesty, we all know that these Japanese-funded projects have been in the pipeline even before the last administration exited. None of these needed an expensive trip to Japan by a president but that’s what our presidents do. So, sigue na nga.

One thing we must realize, however, is that not all investments are the same. Some investments depend on earlier investments being made.

We tend to think of infrastructure investments when we talk of investments. Politicians love this because infrastructure presents to the public a concrete proof of an administration’s achievements.

Even Tita Cory, whose real achievement was the return of democratic processes, had to rush all those flyovers in Metro Manila just before she bowed out of office. Good for her, Ping de Jesus delivered.

But something tells me we are neglecting a type of investment that must come before pouring concrete on roads, bridges, etc. Without the proper investment in our people’s education and health, infrastructures become meaningless monuments for people who continue to live in poverty.

The World Bank, in its “The State of Global Learning Poverty: 2022 Update,” showed that nine out of 10 children in the Philippines at late primary age are not proficient in reading. That’s 91 percent compared to the regional average of 34.5 percent.

Before the pandemic, the Program for International Student Assessment (Pisa) by the Organization for Economic Cooperation and Development (OECD) showed that Filipino students fared worst among 79 countries in reading comprehension and second-lowest in both mathematical and scientific literacy.

Just 10 percent of Grade 5 pupils, according to the OECD study, have enough reading skills to go to high school. After the pandemic, we can imagine things got worse.

Why are all these numbers important? Simply because unless we have a workforce with the skills necessary for today’s tech-based businesses, investors will skip us in favor of countries with better educated workers.

For example, China’s pandemic experience led many companies to look for alternative manufacturing sites. Where are they going? India, Vietnam, Thailand, Malaysia, and Bangladesh. The Philippines is not even being considered.

India will soon manufacture iPhones as Apple diversified out of China. India’s FDI hit a record $83.6 billion in the past fiscal year, according to government data. Yet, India, like us, is plagued by bureaucracy and multiple vested interests that prolong decision-making.

As for us, the BSP further lowered its net FDI inflow target to $8.5 billion from the original target of $10.5 billion for 2022 and to $11 billion instead of $12.5 billion for 2023. What BSP considered FDI are mostly reinvestments of foreign companies already here.

Apple has already moved some iPhone manufacturing to Vietnam and is planning to move some of its MacBook production as well. Other companies that have shifted some of their production lines out of China to Vietnam are Nike, Adidas, and Samsung.

What do these countries have that we don’t that attracts big investors? Trained manpower. India and Vietnam both have more engineers that investors need to run the manufacturing operations. We have more lawyers.

US Treasury Secretary Janet Yellen was said to have identified the fundamentals sought by investors: First, good governance; second, a skilled workforce; and third, a culture of innovation.

That explains why we are not attracting our share of investors beyond polite expressions of interest during presidential state visits. Our governance sucks. Our workers are badly educated. Innovation? What’s that?

Here’s India’s secret. There are 23 campuses of the Indian Institute of Technology all over India governed by the Institute of Technology Act 1961. The Indian parliament has declared these institutes as important to the nation.

They have more than enough technical expertise in India so that they have been exporting them to the world. Indian tech talents are now holding CEO, CFO, CIO and CTO level positions in companies like Alphabet (Google) and Microsoft and Twitter before Musk.

Having those cutting-edge tech centers within India is a big attraction for foreign investments. Investors want to benefit from the fruits of good training in technology and engineering.

We are wasting our time using legislation to attract FDI. Tax cuts are nice but having the trained manpower to run the business is more important to investors.

If President Marcos wants to make a real difference in terms of attracting foreign investments, he should make training in science and technology a top concern. Start with having more campuses for the Philippine Science High School.

Then pour heavy support to the colleges of engineering of top schools like the University of the Philippines. The Yuchengco-led Mapua University that used to be Mapua Institute of Technology should be supported not just by the government but by the local taipans.

Make it a principal responsibility of the Department of Science and Technology to develop the engineers and technical experts our economy needs. Based on the PSHS experience, DOST has done well.

The President should have a long talk with Dado Banatao, the poor boy from Cagayan who became a Silicon Valley technopreneur. Banatao made early efforts to help in our technical education, but has been quiet lately. Was he frustrated by the experience?

It will take time to have a pool of skilled and tech/ engineering-savvy workers. But let us show the world we have recognized our problems and are miraculously doing something about it.

We can keep shouting until we are blue in the face that we are open for business. But for so long as potential investors cannot see a pool of workers with the right skills, we will be left out.

We cannot forever depend on OFWs and BPOs. Our OFWs are being abused and foreign employment may not always be available.

As for BPOs, technology is moving so fast and if we remain in the bottom layer of the industry, we will lose to AI-powered alternatives.

And yes, we have no time to lose.

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