I’m here for life and I intend to do all I can to try and help fix this situation.

It’s the start of the year and it’s a good time for us to contemplate what lies ahead not just in the succeeding year but in the midterm as well.

So instead of crystal ball gazing, let me engage instead in a little bit of human intuition, walk through what I see are the drivers, and what the terrain will be like for us in the country over the next several years.

What word comes to mind when thinking about the Philippines? As a hint, I’d like to tell you about a story that my counterpart trade minister from Russia told me about his country. He expressed it to me in the Russian language but the essence of his story was that the Russians never miss an opportunity to miss an opportunity. And that same sentiment filled me when I contemplated our state as it were.

The Filipino word for it is: Sayang. I think it’s a word that best describes our country’s condition. Its closest translation in English is “what a waste,” a word that connotes regret, forlornness over what could be and might have been. As is always the case with language, the meanings can easily be lost in the translation.

Cavity in our Souls

As the first colonial people to regain our freedom, we had a headstart in the race for development among the new nations.

At Independence, thanks to a comparatively benign American colonialism, our individual incomes were among the highest in Southeast Asia.

Then, after having led our neighbors in GDP growth in the post-Independence period, we soon started to lag behind.

Thailand passed us by in 1981. Now the average Thai has per capita income is twice that of the average Filipino. Malaysians have per capita four times that of Filipinos, Singaporeans almost 20 times more than the average Filipino. Indonesia and Vietnam are breathing down our necks.

Sayang.

The day-to-day erosion of the people’s trust in our institutions in an increasingly dysfunctional political system—this, to me, is the most worrisome source of sayang in our society today.

I am certain that many Filipinos agree with me about this, particularly this expanding cavity in our very souls, this sense of loss that all of us are feeling today. Sayang.

Low Trust

The latest surveys show public satisfaction for all top four government institutions significantly declining compared to the previous quarter.

From a net positive 32 rating in September, the Senate has declined 13 points, to a positive19 as of year-end.

The House of Representatives' net satisfaction score fell from positive 18 to only positive 3.

The Supreme Court dropped from positive 24 in September to a neutral net positive 5 in December. This is more glaring, given the fact that it has enjoyed double-digit positive approval ratings over the past four quarters.

The Cabinet went from a neutral net positive 1 to a negative 9, a steep plunge that reflects the President’s own negative trust ratings.

In light of the people’s mistrust of governmental institutions, the media has become a more trusted repository of people’s grievances and yearnings. But media cannot be government. To see the truth and to tell it like it is; these are noble duties, but the duties of government extend far beyond that.

The administration has very concrete and immediate opportunities to arrest this trend of mistrust and disillusionment.

How difficult would it be to appoint credible, qualified and eminent persons to the Comelec, the Civil Service Commission, or to the position of chief of staff of the Armed Forces of the Philippines? All these can be done in the next two months.

Outsourcing Thrives

A silver lining though is that business continues to exist and in some instances thrives in what is its own parallel universe.

Having jumpstarted its development when I was DTI secretary in 2000, I am happy to note that the BPO sector is scaling new heights.

A stronger peso and a shrinking pool of qualified workers could slow down the pace of growth in this sector. In spite of this, though, we continue to hope that this will remain a shining star of the Philippine economy.

From mere contact center and customer support services, it is poised to move up the value chain and increase specialization. We are seeing wave upon wave of offshore services opening shop: from stock brokerage, to animation and design, to content development. The opportunities and possibilities are boundless.

The service sector will continue to lead the way in terms of opportunity and employment particularly as tourism arrivals increase and as the OFW remittances likewise remain steady.

It is the government’s job to ensure that these opportunities are not wasted – ensuring an educated and motivated work force, delivering a focused promotion effort, providing a level playing field, dispensing timely, competent and above-board regulation are some of what government has to do in order that these potentialities are not squandered.

Mining and Communities

Mining will continue to draw in foreign investors. As of September last year, investments in this sector reached more than $150 million, multiples of what it was for the entire 2006.

Demand and prices of metals in the world market is currently being driven by the appetite of China and other industrializing states.

We must take advantage of this, as our country is one of the most endowed in mineral resources: it is is 3rd in the world in terms of gold reserves, 4th in copper, 5th in nickel and 6th in chromite.

In order for mining to continue to be a viable and acceptable enterprise, though, the local community’s trust must be ensured.

And it is the government’s job to ensure that trust: To guarantee that all environmental and health safeguards are in place, that the community is included and not estranged, that concerns are taken into consideration and not simply compensated; and that any windfall is not taken at the expense of environmental degradation.

Aligned Stars for Agriculture

Agriculture has, and will continue to come to life as prices for basic foodstuffs have risen.

For once, the stars are aligned for the agriculture sector. The China dynamic that has driven up prices for minerals also is increasingly felt for food items. Government should realize this and invest heavily in agricultural modernization now! By being proactive, we can convert this China driven demand into real opportunities for greater productivity and incomes in the countryside.

For sure, we’ve come a long way over these last 20 years since we brought down the authoritarian Marcos regime. But, given the enormity of our economic problems, what we’ve been able to do has been very little indeed.

For instance, Philippine competitiveness is still falling. Last year, our country ranked 49th out of 61 surveyed by the Swiss Institute for Management Development, whose local partner is the AIM (Asian Institute of Management).

In the World Bank Group’s most recent yearly survey of “ease in doing business,” the Philippines’ ranking slipped by five notches—from 121st in 2005 to 126th out of 175 countries in 2006.

In the same survey, countries in our neighborhood, Thailand ranked 18th, Malaysia 25th, Taiwan 47th. Even Vietnam is ranked 104th.

Many Filipinos have begun to lose hope in our country’s future.

Goodbye, RP

Even well established professionals are migrating. Everyday, nearly three thousand citizens leave the country to work abroad. More than a hundred Filipinos per hour are packing up and leaving to secure a brighter future for their families. They prefer two-year job contracts elsewhere than to face unemployment and underemployment here at home.

Young Filipinos have learned to plan their lives around self-contained exit plans as migrant workers, call center agents, telemarketers, freelance tutors, teachers, professionals, and self-made entrepreneurs.

Development and nation building is all about hope; “take that hope away and the smart ones use their energies not to build their nation but to escape from it”.

This “escaping the default destiny” is apparent in other societal engagements as well. The concept of collective empowerment through trade unions, sector-based movements, and cooperatives is on the wane.

Social networks thrive on the Internet, offering quick virtual escape and tenuous online alliances.

Technology has made it easier for new values and old principles to be dispersed and dispensed with: all this at lightning speed.

In the end, we see an empowered individual in an environment of declining political awareness and civic spiritedness, having dispersed interests and opinions, and a dissolved sense of belonging.

For sure, the government can do a lot more than it is doing right now. If it were performing as it should be, we would not be experiencing this much distrust and jadedness from the citizenry.

With the declining trust in our institutions, we see the phenomenon of individuals empowering themselves through their own initiative.

While I am proud of our people and their resilience and dogged determination to create opportunities for themselves, I am greatly saddened that they can only find these opportunities abroad.

What kind of a country have we become that we cannot even offer a future for our people, that Filipinos must move away to find decent futures for their children?

As for myself, I love this country: I’m here for life; and I intend to do all I can to try and help fix this situation.

Relief and Education

The single biggest challenge before us is the fraying of our society brought about by mass poverty. We cannot allow the masses of Filipino to continue passing down to their children only an inheritance of poverty.

Until now, roughly one in every five Filipino families lives in absolute poverty. The World Bank defines “absolute poverty” as subsisting on the equivalent of one dollar a day. At P40, that’s equivalent to one small hamburger.

My approach is two-fold: first, relief, and then second, a massive and focused investment in our people through education and health.

For relief, I recently offered one concrete and simple proposal.

I have, for the past several days, turned up the volume on a very specific issue: suspending the EVAT on oil.

I believe that the time has come for a fair and urgent step to give our people a break from high oil prices during these extraordinary times of high oil prices. As the citizenry tightens its belt, is it not only appropriate for the government to tighten its belt in turn?

I have proposed a moratorium on the 12% EVAT on oil during this extraordinary time of extremely high oil prices. This will result in P4 per liter savings for consumers of diesel, and more than P65 per tank of LPG (11kg).

The executive branch was quick to reject this proposal. Which is not at all surprising; how can they accept it, when the government has chosen to rely on oil revenue collections, an easy get, rather than closing the loopholes and performing more effectively by running after big-time tax evaders and smugglers?

Let me put things in perspective:

When we imposed the EVAT, oil was at $30 a barrel, and the government annual deficit was in excess of P250 billion a year, and today is remarkable reversed. Government is in budget equality, and oil is at $100 per barrel.

By cutting EVAT on oil from 12% to zero, though, we put the money back in people’s pockets. They get to have more money to spend on other needs, and we stimulate consumption; in this way we never really “lose” the revenue.

Re-circulating the money by having the consumer spend as he answers the concern regarding his own needs. The money will be spent either way – by the government, or through the individual.

Compassionate and Reasonable

I am not compromising my belief in market economics and a disciplined fiscal policy in serving the Filipino’s self-interest. The important thing is that we give the citizens a choice on how to spend their hard-earned cash at a time they need it most.

This is a reasonable and compassionate approach in light of contemporary economic conditions. The unprecedented global rise in energy prices is driving both the rethinking and practical modification of economic policy around the world. Why should we be any different?

China is advocating the imposition of strict price controls on energy and our neighbor Thailand has reduced some levies on fuel sales. Their energy minister is even advocating further excise tax reductions on oil products. Many other governments around both the developed and developing world are taking similar formal and informal actions to mitigate the high energy prices.

I specifically referred to China and Thailand because both nations have historically fueled their robust economic success by refusing to be the captive of an absolutist economic policy. Both nations pick and choose, modify and negotiate their economic path with as much flexibility as the interest and wellbeing of their citizens requires.

Here, sadly, our government refuses to look at the big picture and deliver the goods for the common welfare. Why are we so afraid of fighting for our own needs?

2008 could be 2007 all over again, unless the administration breaks the mold and decides to use its remaining time in power to build a real legacy and a real nation.

If we are to succeed in 2008, and beyond, the status quo in the Philippines today – this perception of sayang—is simply unacceptable. If we are to rise as a nation, it cannot be business as usual; we must build from past regrets and begin to work with our eyes set on the future. Then, and only then, can real, meaningful change happen.

(These are excerpts from a speech delivered at the 11th FOCAP Conference on Prospects for the Philippines, January 15, 2008, Mandarin Hotel, Makati)

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