Arangkada in the News

Arangkada Philippines 2010 By Edilberto C. de Jesus

THIS 400-plus page monograph, subtitled: “A Business Perspective,” was the grand, yearend gift of the Joint Foreign Chambers of Commerce in the Philippines (JFCCP). With the wealth of data on business and the economy contained in it, the volume serves as a handy reference tool, a gift that will keep on giving over the years.

JFCCP represents over 2,000 entrepreneurs and corporate executives coming from the United States, Canada, Japan, Europe, Australia, New Zealand and Korea, whose interests lie in improving trade and investment relations between the Philippines and their home countries. Arangkada is their “advocacy paper,” presenting their recommendations on how to promote Philippine competitiveness and enable it to share in the prosperity of the world’s fastest-growing region (8.9-percent growth in 2009).

Over the last five decades, the Philippines has lagged behind the rest of the original Asean 6 in GDP and PCI (per capita income) growth. It has also failed to spread the fruits of growth equitably among its people. The 24 million Filipinos living below the poverty line in 2006 represented nearly 33 percent of the population, about the same proportion of poor Filipinos in 1986. In the same period, its Asean 6 neighbors reduced poverty by half or eliminated it entirely in their countries.

Since 1990, the labor force has grown 50 percent to 38 million. But 43 percent work in the informal sector and combined unemployment and underemployment rates exceed 25 percent. Remittances from immigrants and overseas Filipino workers, approaching $20 billion in 2010, may soon emerge as the country’s largest source of foreign capital. While remittances help shore up the economy, the JFCCP fears that they also free the conservative elite from the pressure to reform the status quo.

The current pattern and pace of economic growth, Arangkada argues, cannot raise PCI from the current $1,748 to $12,000 by 2030. To reach this World Bank benchmark for high-income economies would require an 11.6 percent GDP growth rate and a drop in the population growth rate from 2 percent to 1.5 percent. FDI (foreign direct investment) flows would need to reach $7.5 billion from the $1.4 billion annual average in the last decade, and annual exports to double to $100 billion.

JFCCP believes the country can rev up and accelerate (“arangkada”) economic growth to reach these targets, if it can implement the reforms required to improve the general business environment and promote investment in seven sectors that it has identified as potential “big winners.” The core of Arangkada consists of the recommendations arising from focus group discussions (FGD) on these seven “winners”: AgribusinessInformation Technology-Business Process OutsourcingCreativeIndustriesInfrastructureManufacturing and LogisticsMiningTourism; Medical Travel; and Retirement.

Over 300 participants contributed to the FGD. Industry experts, many of them corporate chief executive officers, served as FGD moderators to guide the discussions and the drafting of recommendations. Apart from its own membership, JFCCP also obtained the support of Philippine business associations, academic institutions and government agencies. Few institutions can mobilize the kind of resources that JFCCP deployed to produce Arangkada.

John D. Forbes, the principal author, and his team deserve congratulations and thanks for the research that generated six maps, over 250 figures and 90 tables to document the review and analysis of the Philippine economy, the skillful organization of the materials and the clarity of the report. Their monograph will provide much grain for the mill of academic analysts, business practitioners and policymakers.

The first copy of the monograph went to President Aquino. As the cover letter to P-Noy noted, the JFCCP advocacies align with the administration’s own general aspirations for the increase of investments and jobs, the reduction of poverty and the curbing of corruption. Some of the specific recommendations echo what the President had already declared as his own priorities, such as the promotion of private-public partnerships and the implementation of the K+12 basic education program.

In his Acknowledgment, Forbes offers the report as a “living document” that should evolve as the government undertakes its reforms. Though JFCCP members compete among themselves, they have a collective interest in supporting the reform process and the implementation of their recommendations.

The effort invested in generating the recommendations and the commitment of support are welcome gifts to the administration, but they also impose a burden on the President and his Cabinet. It would be unreasonable to expect the Aquino administration to implement in their entirety 471 specific recommendations, even assuming that it accepts all of them as feasible. But drawn from historical evidence and expert opinion, their rejection also needs justification.

When the administration comes to the end of its term in 2016, Arangkada should serve as a benchmark against which to measure its accomplishment. It should be fairly easy then to determine which recommendations have been implemented and with what impact on the country’s economic growth.

Edilberto C. de Jesus is president of the Asian Institute of Management.
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To view the original article as printed by the Philippine Daily Inquirer on Jan. 8, 2011, click here.

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