Author’s foreword: This paper was first published in May 16, 2009. Since then and even before its publication, the Philippine government has yet to formulate a coherent policy to improve the country’s export sector. It is still imperative that this be given top priority by the government. Hence, this is republish in hopes of getting the various sectors involved to get their act together.
by Ryan N. Zapanta
While several countries in Asia are enjoying the hefty fruits of globalization, the Philippines is still at the bottom list of the Asian exporting countries. Japan and Singapore lead the traditional nations that have remained mainstay in exports. While China, Indonesia, Taiwan are among the new ones that boost their economy consistently due to their export capabilities. Even Cambodia and Vietnam have joined the ranks of successful exporters beefing up their gross national product tremendously.
China is a good model to emulate. It has now, by recent statistics, US$607 billion in its reserves and swiftly rising. It has benefited the most over the windfall of globalization. At this writing, the United States has its dollar continuously plummeting, along with its huge fiscal deficit markedly rising. But the Chinese yuan is gaining momentum. Soon, media and economic pundits forecast a new shift in the decision making process between China and the U.S. in favor of China. PRC is known to have begun a greater say in international trade in the long term.
Why is the Philippines left behind? And how to reverse this path?
The answers to these two questions are interrelated. The inability of the Philippine government to have a vision is the core of the issue. Or maybe the vision is there but it was lost in the maze of selfish politics, misdirected media hypes, corruption and trivial national pursuits that have nothing to do with the socio-economic health of the country. But even with the government’s inertia on the economic front, the saving grace is that it is still the government that can undoubtedly lead all sectors in reversing the path from steamrolling economic failure to a robust success.
Some Legislative/Executive Policies that needs to be addressed, formulated and done to accelerate the Philippines’ climb to economic prosperity via the vehicle of export industry are:
-Incentives re-engineering favoring the existing export industries and creating rewards to new export entrepreneurs. This can be done by giving effective and term tax exempt privileges; providing ready access in private loan funds with low start up interest rates; giving incentives as well to the private bank lenders.
-Speeding up Infrastructure support and development: an expanded world-class seaport terminals in Metro Manila, as well as in Metro Cebu and Davao City and Cagayan de Oro city; building comprehensive rail networks to link the export provinces to these seaports bearing in mind that rail is the most cost effective type of transportation in intermodal systems; cargo airfreight must be developed as well by way of adding more fleet to the present levels; communications system like telephone and internet systems must be developed and expanded.
-Rationalizing government regulations and enforcement: tariff and customs charges must be simplified and standard and there should be no room for guesswork that becomes a doorway to corruption; streamlining customs infrastructure to make it more responsive to exports outflow and not as an obstacle to it; institutionalize security programs; professionalize customs personnel and ferret out undesirables; fair application and enforcement of tariff and custom duties as well as competitive terminal fees.
-Creating a department of transportation as an entity in itself. This will give more focus and thereby optimize operations, regulations, security, etc. in the area of transportation, i.e. railways, oceanways, airways and inland transport systems.
The above policies appear to be comprehensive. However, there maybe some sectors that could be later on gleaned as well as a substantial part of this policy re-direction. In that case they should be re-aligned to this development so that holistic approach is assured with the end in view of achieving the country’s economic objectives via the export sector.
Learning from the People’s Republic of China
Before she became a giant in the globalization sphere, China has made a conscientious effort and no-nonsense development over its export sector. These are the packages completed and continue to be harmonized and built:
-over 120 seaports with high tech terminal systems and management spread across the country and strategically sited at seaport cities and near factories in most provinces, foremost of these seaports are Shanghai, Guangshou, Shekou, Ningbo, Shenzen, etc. with Hongkong as main gateway and finance center.
-creation of privatized port authorities and government entities like customs and the like that foresee the smooth flow of goods and overall transportation and industry related businesses.
-enhancement and expansion of communications systems, internet facilities and the like.
-expanded and developed high tech railway systems that networks to all ports and factories
-rationalized incentives to all exporters and international traders.
-building of effective and efficient private sector logistics agencies through less government interference
-enhancement of education systems with emphasis in courses in exports industries, international trade, global logistics, English language instruction, foreign service and the like.
After Japan, the coming economic power in Asia is no doubt China. In fact she has already arrived. Her three billion population alone staggers the imagination of marketing specialists and economic gurus. American businessmen are joining the so-called “China Gold Rush” an had already set foot in China for their business expansion and to remain profitably afloat. The Philippines must also look to this economic miracle and to do business with China, and explore the vast export potential there. The country is in an advantageous position due to its geographic proximity to the economic mammoth. The Philippines has no other economically viable option but to ride on the China bandwagon. She must look and go towards the East; her neighbor is no longer a sleeping giant.