Government Investment News Analysis

Asean and the asinine

ASEAN protests

As easily predicted – Potential-protest puzzle – the vultures of the Left are starting to gather around the corpus of the Association of Southeast Asian Nations (Asean) Summit. As usual, there’s little clear cohesion – they’re anti-US President Donald Trump; they’re anti-Philippine President Rodrigo Duterte; they’re there to protest lack of support by both leaders for human rights; they’re there to highlight the plight of the poor and the list of grievances is likely to expand as we get closer to Sunday and Trump’s arrival.

Two of the groups the militant Kalipunan ng Damayang Mahihirap (Federation of Mutual Aid for the Poor, or Kadamay) and the combative Bagong Alyansang Makabayan (New Patriotic Alliance, or Bayan) – an alliance of Left and Far Left interests – are denouncing the summit itself. They claim it’s a huge waste of public funds; that the money for the summit could have been “rechanneled to provide basic social services and needs for poor Filipino families”.

PHP15.5 billion (US$302.33 million) has been set aside for the event. That doesn’t mean all that will be spent; it simply means that’s the amount that’s been allocated to cover all contingencies; the known and the unforeseen.

No small part of it, however, will go to paying for security to keep the 1,700 VIP delegates – including 25 or so world leaders – safe and to contain any over-exuberance from demonstrating groups. Some 19,000 police officers will be deployed during the two days of the summit. And none of that comes for free; in fact the police bill is one of the largest individual costs.

Kadamay is the group that in March took over and occupied some 5,000 housing units belonging to the National Housing Authority at Pandi in Bulacan province. Effectively, they stole the properties. Duterte denounced the action as “anarchy”; one of his most outspoken critics, Senator Antonio Trillanes IV, referred to Kadamay as a “front organisation for communist rebels”.

Naturally, Bayan, along with other Leftists groups such as the Alliance of Concerned Teachers, Gabriela Women’s Party, Kilusang Mayo Uno, and Anakpawis, fully supported the Kadamay action. These groups will doubtless be turning out to add their voices to the anti-summit chorus.

But, glorious as the causes of these groups might seem to them, they have little to commend them it terms how the real world operates. Everyone wants to put an end to poverty in the Philippines – the Far Left certainly has no exclusive claim to that cause, even though it behaves as if it has. The point is, there’s a lot more to it than simply rechanneling budgets from one area to another.

In 2019, the Philippines will host the 30th Southeast Asian Games – wait till the bill for that comes in; Kadamay and Bayan will have kittens. Let’s give an idea of what they can expect. The last SEA Games, held earlier this year in Malaysia, cost US$106.42 million – in other words, PHP5.46 billion. The cost of the previous games, held in Singapore in 2015, came to US$193.84 million, or PHP9.94 billion.

Certainly, that’s also a lot of money that could be redirected to the poor, most of whom will never get to see a single event of those games. But no administration anywhere works like that – at least none outside the naive mindsets of the loony Left. National budgets appropriate money to all areas of society; it’s all part of the economic development process.

Large state-sponsored events – such as the Asean Summit – have other purposes. They promote the country on the world stage, building its stature as a solid entity – and by so doing; they send the message that they’re open for business. And open for investment – which is precisely what the Philipppines needs if it’s ever going to make any impression of alleviating the country’s poverty levels.

The Kadamay and Bayan ‘rob-Peter-to-pay-Paul’ school of economics can never achieve anything more than switching the deficit from one area to another. And it can’t accomplish any improvement in terms of national growth. It’s certainly never going to attract trade and investment, that’s for sure.

A sports event, for example, such as the SEA Games, raises the country’s regional/global status; brings in sports-tourism dollars; promotes the country as an investment destination and so on and so on. Here’s a classic example of that.

In 1959, just 10 years after the end of World War II, an economically floored Japan was chosen to host the 1964 Olympic Games – the Games of the XVIII Olympiad. Japan, back then, was a fairly poor country. Its gross domestic product (GDP) per capita in 1960 was US$479; a fraction of the First World economies it later joined. America’s GDP back then was US$3,007.12; the UK, also still struggling from the high cost of that war, was US$1,380.31; Canada, US$2,294.57 … etcetera.

According to Kadamay and Bayan thinking, then, the last thing Japan should have had on its radar in 1959 was splashing out on hosting the ’64 Summer Olympics. Thankfully, they weren’t around to advise the Japanese who dug deep and spent big. Large infrastructure projects – including the Shinkansen bullet train – were beefed up to be ready for the event; Haneda Airport was upgraded and modernised; highways, expressways and subway lines were built; and new sporting venues were erected.

It was high cost and certainly there were other areas of the economy crying out for cash at the time. Japan had suffered devastating poverty after World War II and was only pulling out of it by the late 1950s. But the Japanese Government of the day saw past that – it saw an opportunity for a positive economic impact. The Olympics, it believed, would give the economy much-needed momentum and launch Japan Inc. And that’s exactly what happened. The 1964 Tokyo Olympics became the launch pad of the Japanese Economic Miracle.

There are many such examples of financially constrained governments seizing the day with expensively dressed events that would go on to deliver great economic benefits to their countries. But they can provide more than that.

The 1998 Seoul Olympic Games – no definitive costs available, but the average bill for this event is US$5.2 billion – has been described as a “coming-out party for South Korea”. What it achieved was to demonstrate that the Republic of Korea was a world economic power and a serious international actor. It also did something else – like the Tokyo Games and many others – it bolstered national pride.

With regards to the Asean Summit, this is the pinnacle event of the Asean year – this year a particularly auspicious one, marking as it does the 50th anniversary of the grouping. It’s not something that any country would look to do on the cheap irrespective of how noble the cause might be to attempt that.

It’s about prestige and promotion; it’s about showing the world it can have confidence in the Philippines. That it’s a fully functioning democracy with sound rule of law; that it’s a good place to visit; that it’s a good place for investment. That it’s open for trade.

That can’t be achieved by simply hanging out the poverty sign. The Philippines doesn’t need charity – it’s only just stopped paying that bill – it needs investment; it needs foreign expertise. Investors don’t put their money in poverty, even though some might exploit it. They invest where the signs are positive; where there’s clear evidence that an economy is developing and on the up.

Generally, the investor community gives a wide berth to places with teeming poor. That’s why, in order, the European Union; the US, the UK, and Hong Kong topped the world list for received FDI last year; and why the likes of Nepal, Haiti, Rwanda and Sudan (with zero stock) found themselves at the bottom of it.

These are facts of life, unpalatable as they might seem. The 50th year of Asean has given the Philippines a golden chance. And, as the host country, the Philppines has taken it. It’s set out it stall with an elaborate and full agenda that’s sought to find commonality of purpose with its neighbours and fellow members on everything from defence to trade, cultural exchange to technology transfer.

Taking as its theme, ‘Partnering for Change Engaging the World’, it’s enhanced cooperation, promoted unity and set the goals for a more prosperous community of states. The payback for all that will be trade and investment which, in turn, will kick start parts of the rural economy where poverty is most rife by creating jobs in new ventures as sectors expand.

This Asean year has been an extremely successful one – and one which Filipinos can be proud of. Their country’s star has risen considerably over the course of Asean 2017, and so it needs to end on the right note. A positive note. And it will do by showing that the Philippines is as capable as any country in this region of putting on a complex and logistically challenging programme; that it has the style, the energy and the wherewithal to put on an event worthy of celebrating the landmark 50th year of Asean.

Facile and asinine arguments that suggest the current administration is insensitive to the plight of the country’s poor – that it’s only spending the money ‘to impress US President, Donald Trump’ – have as much basis in truth as Kadamay and Bayan have to any meaningful poverty solution. Let’s be honest, these groups regard poverty as there political constituency; take it away – which Duterte’s socio-economic agenda is aiming to do – and their political platform disappears.

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