Campaign 2010: Whither investors

Michael Alan Hamlin

Posted on February 18, 2010

Presidential candidates are understandably focused on the voters who will or will not elect them in May. With voters in socio-economic classes D and E accounting for 90% of the population and close to that many registered voters, candidates’ value propositions invariably communicate promises of education, increased prosperity, and new opportunities. This is the moment for classes D and E, the only time they have a profound impact on the political future of the Philippines.

It is also the moment when the perpetual economic influencers-classes A, B, and C-are relegated to the political backwater. While they can attempt to influence the less economically well off D and E voters, their voices are drowned out by multimedia advertising blitzes dominating both traditional and new media. And if they weren’t there is little chance classes D and E would listen to more prosperous fellow citizens anyway, given the great and historic misalignment in their perceived best interests.

Domestic and foreign investors are among the eclipsed publics that national politics in the Philippines produces. While investors are the primary job creators, opportunity generators, and economic producers their opinions matter little unless they have the resources and the will to invest significantly in candidates’ campaigns to defray increasingly intimidating campaign advertising budgets.

Post-election, the center of influence rapidly shifts back to classes A, B, and C because they have the economic wherewithal to make their voices heard, and elected officials depend on them to create jobs and provide a tax base. Including investors, classes A, B, and C are forced to live with whatever leader classes D and E have foisted upon them-or create conditions favorable to an extra-constitutional transition of power. Neither is an ideal situation.

So when I heard second-hand last week that investors in the business process outsourcing (BPO) industry are alarmed that the present crop of presidential aspirants has said little about the industry or its plans to foster its continued development, I couldn’t help but smile to myself. After all, aspiring to a job in the BPO industry-which at a minimum requires an impressive command of English-is a dream well beyond the reach of most Filipinos in classes D and E.

But classes D and E do benefit from BPO job generation, albeit mostly indirectly. The industry generated approximately $7.2 billion in revenue last year according to estimates by the Business Processing Association of the Philippines (BPA/P), a 19% increase over 2008. That’s about 40% of total remittances by overseas foreign workers last year. Total jobs at the end of last year was 442,000, with contact center and knowledge process outsourcing jobs expanding 23% and 25%, respectively. These sectors accounted for the bulk of employment.

But for every job created, it is estimated that at least two more indirect jobs are created in a broad range of industries, including food, housing, transportation, and communications. Many of those jobs are within the reach of classes D and E. Ideally, tax revenue generated by employers and employees will provide the means to rehabilitate educational infrastructure, which can catapult many Filipinos from classes D and E into the ranks of the reasonably prosperous.

One of the reasons investors are concerned about the Philippines’ capacity for sustaining investment is negative perception associated with its country brand. This is an urgent concern because many other emerging economies are presenting themselves as alternatives to the Philippines for BPO investment. Although we’ve seen a number of industry expansion announcements in recent weeks, BPA/P executive director for research Gillian Virata told an industry gathering last week that for the Philippines to attain its BPO revenue goal of $12 billion in 2011, among the challenges that must be addressed is getting its image right.

How the candidates-and the present administration-conduct the national election is likely to have a palpable impact on investor perception of the Philippines. To measure that impact, BPA/P, Outsource2Philippines, and TeamAsia (Disclosure: BPA/P is a client of my firm, TeamAsia, and I am a director of O2P.) are conducting a survey among industry executives. The results will be available well before the election in May.

The first priority of candidates is obviously to get elected. That’s enormously difficult. But compared to the job ahead for the successful candidate-assuming he or she is truly well intentioned-getting elected is relatively easy. And while short-term value propositions will help the successful candidate get elected, it is long-term investment and development strategy that will make his or her administration successful.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.).

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