Our economic elites

We have reached a point where depending mainly on the government to lift our nation from the pits is no longer realistic. Every Filipino with the ability and resources to do something that will make a positive difference should not hesitate to do so.

Our economic elite, the less than one percent of our population that has cornered much of the nation’s wealth, should take heed. They are historically responsible for making the country’s economy the mess it has now become.

History tells us why we were overtaken by war-torn countries like South Korea and Vietnam. Our economy was second only to Japan for the longest time, but we lost that because we have an economic and political elite that’s so greedy that they prevented our economy from becoming internationally competitive.

Our elites were largely rent-seekers. They cultivated politicians who granted them favors, providing unfair advantages that their potential competitors, local or foreign, could not overcome. Corruption, of course, was involved. Our elite bankrolled the public careers of their favored politicians – something that’s still happening now.

During the time of the late president Carlos Garcia, they launched a Filipino First policy that focused on import-substitution industrialization. That called for high tariff walls to protect the Filipino elites from world-quality competition. Then these so-called Filipino industrialists produced shoddy and expensive products that shortchanged the consumers.

We had a steel industry that was in the business of merely importing steel in coils, which they cut into roofing sizes and added the curls like beauty parlors. Calling them a steel industry is an exaggeration. And even when the government financially supported what was claimed to be an integrated steel mill, it failed because its management standards and the cost of its products prevented it from being competitive.

The Pinoy industrialists defended this Filipino First policy and its protective tariffs by claiming that they were “infant” industries and needed nurturing. But the so-called “infant” industries never grew up, so economist Bernie Villegas referred to them as “bondying” industries. That’s with reference to “Bentot,” a grown man in diapers who acted like a baby in a radio-television comedy program.

As if high tariff walls were not enough, there was a time when even access to foreign exchange was strictly regulated. That was also a source of corruption that enriched politicians and bureaucrats.

In agriculture, the sugar barons abused their workers to the point of slavery. They enjoyed preferential tariffs in the US, which allowed them to live like royalty. Some of those majestic heritage houses in Negros are fruits of that era.

But most of the sugar barons salted their export earnings in foreign accounts and didn’t reinvest in modernizing their sugar mills or the planting methods in their haciendas. In time, the Thais were producing sugar more efficiently and cheaply. Now we are importing sugar, again through favored traders related to the sugar elite.

The elite – economic and political – have consistently underinvested in education, healthcare and basic infrastructure, which hindered the development of a skilled workforce and a conducive business environment. This resulted in a scarcity of jobs, forcing our people to work abroad. Eventually, our economy developed a dependence on OFW remittances.

In essence, the Philippine economic/political elite pursued policies that enriched themselves and their cronies while hindering broader economic development and perpetuating a cycle of poverty and inequality.

The Filipino economic elite have never been true entrepreneurs. Even today, they stick to sure things like property development, banking and abusing our natural resources with government permission.

I went through the pains of our economic history to drive the point that our economic elite have blood debts to pay the Filipino people. Put another way, we are all on board a sinking ship, MV Philippines, and all hands should be on deck to save our ship.

Our taipans must reorient their business strategies to take into account, in their corporate plans, what our economy needs most.

To some extent, some are doing that. San Miguel, Metro Pacific and Aboitiz are heavily into infrastructure – from expressways and airports to power plants. Our arguably number one business conglomerate, the SM Group, could do more.

SM Prime recently revealed plans to invest P100 billion this year in building and expanding more malls and premium condominium units. Our country no longer needs more malls and especially doesn’t need more condos, even the high-end type. We have eight years’ worth of unsold inventory.

While investing in what delivered best for the SM Group through the years may be their comfort zone, some of the capital resources they have earned through the years should be better invested in infrastructure that we lack and need badly.

This is not to say that SM is not doing that. Indeed, they are risking big capital looking for geothermal resources and helping tourism grow. But instead of malls and condos, couldn’t they try their expertise in building and managing industrial export zones? The Aboitiz Group has one in Lipa. The Lopezes have one in Tanauan, Batangas. Privately managed export zones seem more like what the country needs.

Maybe the SM Group will have one soon. I understand the Duterte crony who took over Clark Global City from supposedly Kuwaiti investors is heavily in debt with BDO and China Bank. I am told the Sy-blings are only waiting for a promised amendment of the law that will allow them to title the land. Right now, it is only covered by a long-term lease.

It will be extremely good news if the SM Group finally takes over that property. The country is suffering a serious opportunity loss because the Duterte crony has not shown obvious capability. Sayang. The Sy-blings know how to maximize its value. That’s how to put money where it could deliver the most benefit – not just to their bottom line but to the country’s economic future.

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