“Change has touched the Filipino”

Michael Alan Hamlin

Posted on July 25, 2012

“From the womb, to school, to work, change has touched the Filipino,” President Benigno S. Aquino told his nation Monday afternoon in an annual State of the Nation Address (SONA) that took more than an hour and close to 10,000 words—and a video—to deliver. And he made a convincing case, although he overdid the blame game targeting his predecessor as well as repeated references to his “bosses,” the Filipino people.

If Mr. Aquino had dropped the first and last quarters of his speech, he quite possibly might have delivered one of the most memorable speeches in the history of Philippine democracy. Not that there have been many. As it was, Sona 2012 was a resounding—albeit long winded—accounting of the often overlooked accomplishments of an administration that was elected in an emotional wave of hope for something better than the classic cynicism of Philippine politics and its clumsy disregard of the hearts and minds of Filipinos.

The list of accomplishments is long, and is rooted in what many will justifiably view as populist politics—handouts to the poorest of the poor in the form of “conditional” cash transfers, free and low-cost cradle-to-grave health insurance, and educational vouchers. But the Philippines is a country that for nearly a century denied the vast majority of its citizens equal opportunity to a productive life. Modern feudalism kept them subjugated, uneducated, and poor.

So there’s a debt to repay, and Mr. Aquino seems intent on doing so. It can’t be because he wants to be re-elected—he can’t run again. It can’t be because he wants to avoid being removed from office or being prosecuted when his term ends—his administration is into its third year, and as veteran reporter and South China Morning Post correspondent Raissa Robles observes, Mr. Aquino’s administration—and the president personally—is untainted by even a hint of corruption.

It can’t even be the hope of a successor similarly elected on the promise of good governance and accountability—personality-based politics threatens to rear its unseemly head as ambitious—and aging—presidential hopefuls jockey for opportunity in 2016. Perhaps Mr. Aquino has the irrational hope that the reforms leading up to 2016 will make such a profound difference on the poor, average Filipino that he or she will demand more than gratuitous acknowledgement of his plight.

Mr. Aquino is not all populist politician, or at least he made that argument. Someone has to pay to uplift the poor, and increasing taxes isn’t realistic. Expanding the tax base is. Doing so requires local and foreign investment that will create jobs, and increase the number of Filipinos gainfully employed and paying income and a myriad of indirect taxes—such as the new sin tax the President hopes Congress will soon pass.

“Doing business in the Philippines was once considered too risky,” Mr. Aquino told the nation Monday afternoon. “The rules were too opaque and they were constantly changing.” Keeping the rules and a level playing field intact is enhancing the attractiveness of the Philippines to investors, he argued, citing consistent growth in employment, particularly in hot industries like IT-BPO.

The Philippines has a long way to go in generating foreign direct investment (FDI) on the surface. FDI fell slightly in 2011, but grew sharply in the first quarter, some 72%. But the Philippines remains far behind its neighbors, which receive substantially more—billions more—in FDI, primarily to create manufacturing jobs. Poor infrastructure, high energy costs, and limited options for shipping products make manufacturing a long shot for the Philippines.

FDI into the Philippines—with the exception of semiconductors and electronics—is mostly intended to create service jobs, particularly in the IT-BPO industry, where job creation is much more cost effective than in the manufacturing sector. By some estimates, it takes six times as much investment to create a manufacturing job as it does to create a services job. And as the Philippines transitions to higher value services, those jobs are often worth much more than jobs in the manufacturing sector.

When it comes to service jobs—especially in IT-BPO—Mr. Aquino is correct to assert that FDI is strong, and is likely to be sustained. IT-BPO is expected to grow more than 20% this year, with high value, complex services outpacing growth in traditional voice-based support services. Administration initiatives to improve public transport and infrastructure in general support this trend, as does the administration’s “It’s More Fun in the Philippines” campaign, enhancing the nation’s image.

Mr. Aquino also sought to address other wrongs both past and present, locally and internationally. He wants the Maguindanao’s Ampatuan clan prosecuted successfully for one of the mostly dreadful mass murders anywhere. And the President wants the nation to unite in the face of what many characterize as Chinese aggression in the West Philippine Sea. “Help me,” he said. “Let us speak with one voice.”

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author and commentator. His latest book is High Visibility: Transforming Your Personal and Professional Brand. Write him at mahamlin@teamasia.com and follow him on TwitterFacebook and LinkedIn. Copyright © 2012 Michael Alan Hamlin. All Rights Reserved.)

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