The coming boom: Earth, water, air and fire

Conclusion

In the Asian Development Bank’s latest rating of regional bonds, the Philippines emerged among the best rated in East Asia, helped by growing confidence in the economy since the May elections boosted political stability after years of chronic unrest. That affirms our Friday column, which expounded on the political and policy underpinnings of the eco-nomy’s bullish prospects.

Now let’s look at the economic drivers of growth in the coming years and decades, both in the country and, more powerfully, around the world. Unquestionably the biggest economic force for years, if not decades to come, is the rise of China and India. With their growth and Japan’s still massive size, we now have within a half-day’s flight, three of the five largest economies on the planet.

Manufacturers may have reason to fear the battalions of low-cost, highly skilled workers manning modern plants in China, India and Vietnam too. But for farmers, agricultural enterprises, mining companies and other commodity producers, the growing and increasingly wealthy populations across the South China Sea and the Indian Ocean are 2 and a half billion mouths to feed and countless factories to supply with minerals and metals.

In fact, China has dispatched many of its state corporations and local enterprises to set up or acquire farming, mining and fuel production ventures all over the world. Several years ago a hybrid grain company from Northeast China’s Jilin Province was looking to cultivate as much as 1 million hectares of land to produce rice and corn for both the Philippine and Chinese markets.

There will be many more such food- and resource-seeking enterprises and opportunities from across the seas to find edibles for the table and consumables for the factory. More and more of these products will be for the burgeoning Asian middle class, now estimated by the Asian Development Bank at 800-million strong, with regional consumer spending expected to grow sevenfold to $32 trillion in a generation.

The challenge for the Philippines is not only to ramp up production, but also to dramatically enhance efficiency and local value added, while protecting the environment. With bountiful sun and rain, Philippine farmers should be outproducing foreign ones. But the agricultural productivity of, say, water-scarce Israel far outstrips ours. Closer to home, Taiwan agriculture is among the world’s most productive, and we have long tired of how Thai and Vietnamese farmers trained in Los Baños now export huge rice surpluses to the country where they learned cutting-edge cultivation.

Investment in modern technology and ample inputs are key to making our farms globally competitive, not only in cost but also in value added, including package and processing for more affluent tastes. For decades, that indispensable ingredient in agricultural success has been left largely to the government.

That won’t cut it anymore. Corporate capital and knowhow, including those from foreign ventures leasing land, must be harnessed.

The $1-billion food production joint venture between San Miguel Corp. and Malaysian billionaire Robert Kuok is the way to go for Philippine agriculture and the government, especially local ones, must pave the way for private enterprise to invest in farming through secure, mutually beneficial arrangements for both firms and farmers. The Church and civil society, while rightfully insisting on a fair deal for rural folk, as they are doing in Hacienda Luisita, should also endeavor to see the advantages of corporate investment in small farmers, not blindly opposing such ventures.

The same approach should apply to other undertakings that harness land resources like mining. And water resources too, through aqua-culture and mariculture. Our coastal areas are not as fully exploited as our farmland, so fisheries, seaweed production and other water industries are waiting to be set up for markets here and abroad. Infrastructure and incentives for marine and aquatic ventures, including long-term leases for foreign investors, should be put in place, along with safeguards to protect our waters.

Besides marine products, our coastal areas offer another great economic bounty: tourism. With sun, sand and surf all across the archipelago for most of the year, there is no reason why the Philippines cannot vie for the 14 million in annual tourist arrivals Thailand boasts. China alone has more than 100 million tourists going on holiday every year.

The Arroyo administration prioritized tourism infrastructure, especially airports, expressways and RORO ports. One policy option the current government can consider: opening up more international gateway airports for more direct flights to favorite destinations. Land and coastal leases for hotels and leisure facilities is another investment come-on to international travel enterprises.

If land offers resources to the world, and water brings leisure, then air is for IT-enabled services. In this ether that is the Internet, a surging industry earning upwards of $7 billion a year has thrived, including business and, now, knowledge process outsourcing and offshoring, animation and other creative services, and lately, the young but rapidly growing online optimization service sector, which helps enterprises reach out to millions of people across the globe using websites, search engines and social networks like Facebook and Twitter.

With telecom services liberalized far more than even transport is, the shrinking cost and widespread availability of global online connections is driving the expansion of IT-enabled services. One online services company began as a video gaming facility in Cagayan de Oro. When competition from other Internet cafes squeezed profits thin, one proprietor decided to harness young gamers adept at creating animated figures for their pastime. They now do websites for domestic and overseas clients.

But growth in BPO, KPO and other online services, not to mention such industries as tourism and aviation, depend on ensuring a steady, highly trained and competitively priced pool of expert workers. The world will need more and more of them, especially in rich economies where some 800 million are forecast to retire in the next 10 years, opening up jobs and increasing demand for health and personal care services.
Even now, despite global economic woes, the demand for Filipino talent is unrelenting, from crisply accented call center agents, sharp legal researchers and medical transcribers, creative animators and web designers, reliable airline pilots and staff, and client-centered baristas, hotel attendants, caregivers, nurses and home managers.

The fire of knowledge is keeping the growth and jobs engine surging. And lamenting the exodus of talent is like wishing typhoons away. Filipinos have the talent, training and adaptability to thrive abroad: instead of crying about it, we should redouble education and training capacity and churn out more knowledge workers for the world. For decades, the development of human capital has been largely left to the government, even at the tertiary level. But now private investment is flowing into higher learning, with even taipans like Lucio Tan and Henry Sy putting money in universities.

That may be exactly what the Philippines needs: private enterprise bringing quality and efficiency to higher education, boosting its output for the hungry job markets of the 21st century. The entry of foreign institutions is also welcome, lifting learning to world class levels and giving overseas credence to local credentials. And of course, two additional years of basic education, one added in the past decade and another under the current administration, is a long-overdue reform in our human capital development.

So will the Philippines finally boom? The ingredients are there: political and macroeconomic stability, expanding human development services, governance reform, public-private partnerships and the harnessing of our earth resources, fun-filled waters, high-tech air, and the blaze of brainpower to serve ballooning global demand. This is not just an opportunity for particular administrations or corporations. This can be the way ahead for the entire Filipino nation, across the archipelago and all over the planet, if we will invest in right policies, honed talents, sus-tainably harnessed resources, boldness, perseverance and drive.

What are we waiting for?

Ricardo Saludo heads the Center for Strategy, Enterprise & Intelligence ( ric.saludo@censeisolutions.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it ), providing expertise in strategy and management, enterprise development, intelligence, Internet and media. –RICARDO SALUDO, Manila Times

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