There’s a prophetic story about a penniless immigrant who set off for London where he’d heard the streets were paved with gold. After an arduous sea voyage he steps off the ship and onto the quay of the London dock. And there, on the ground, is a fat wallet bulging with cash. The man looks at it for a moment, scratches his chin and decides, as he walks past it, “No. I’ll start work tomorrow”.
Governments which fail to seize investment prospects or delay them, for whatever reason, will find those prospects disappear – they’ll move to other quaysides where they’ll be readily taken up.
The fact of life is that for all commerce, today’s world is a highly competitive place where opportunities need to be seized. Investors don’t have the time to waste on filling out ridiculous forms, or await permissions and licences while lazy public servants take extended lunches or hold out for “gifts”. They need the paperwork to be dealt with immediately, not sitting in someone’s in-tray for the next three weeks.
Foreign direct investment (FDI) is a fluid thing; it flows to places where it can generate returns, not to a place where prospects stagnate.
Similarly, entrepreneurs need to have their ideas taken up and supported – such people are vital to a developing economy – not put on hold by some middle-ranking government clerk whose more concerned about his/her days-off entitlement or how he/she will benefit from some arcane departmental bonus system.
Sadly, such behaviour has long defined the experience of doing business in the Philippines. And the Philippines has paid the price. Certainly, there have been improvements over the course of the past two administrations and the current one. Unfortunately though, they’ve failed to keep pace with improvements made elsewhere.
The rest of the world hasn’t been waiting for the Philippines to catch up. The FDI Stakes isn’t a handicap race; countries run with the weight they’ve got – weights that include burdensome regulations and inefficient government departments.
Investors and entrepreneurs are the lifeblood of every economy – not, believe it or not, every economy except that of the Philippines. Delays imposed by stubborn officials who inflate their importance with petty rules and procedures and lashings of bureaucratic red tape are no better than the self-serving oligarchs who’ve perpetuated the arrogant notion that the Philippines can go it alone – that it has all the expertise it needs.
Look around. Their Flat-Earth economic model played into and fostered a nationalist form of economic Luddism which, along with an equally self-serving public sector, managed to put the Philippine economy in a straightjacket. Consequently, instead of leading the way for the countries of Southeast Asia, the Philippines has been left spluttering in their wake.
By now it should be the ‘Rich Man of Asia’ – not the ‘Poor Man’ or the ‘Sometimes Poor Man’. It has resources – natural and human – in profusion. And yet it squanders them. It has the energy, the wit, the innovation not just to be an Asian economic tiger, but to lead the pack. And yet, it barely got out of its lair.
For investors, domestic and foreign, and entrepreneurs, one of the most critical ways of assessing the viability and long-term prospects of starting or expanding a business is the level of a country’s ‘Regulatory Efficiency’. The 2017 Economic Freedom Index (EFI) – produced by the prestigious Washington-based think tank, The Heritage Foundation – defines this in terms of ‘Business Freedom’, ‘Labor Freedom’ and ‘Monetary Freedom’.
A country’s performance in these three areas, it believes, gives the clearest understanding of what investors and entrepreneurs face in terms of both regulation and the efficient implementation of it. Thus, by studying the ‘Regulatory Efficiency’ of 186 countries world wide, the EFI provides a fairly good measure of these countries’ relative market freedoms.
Here, from the index, we’ve extracted the global results for the 10 states of the Association of Southeast Asian Nations (Asean) to show how the Philippines ranks with its Asean peers in the category of ‘Business Freedom’. And here’s what we found. Singapore, 1st; Malaysia, 8th; Brunei, 44th; Thailand, 64th; Laos, 88th; Philippines, 107th; Vietnam, 119th; Myanmar, 160th; Indonesia, 166th; Cambodia, 182nd.
In other words, there are five countries within Asean that have a greater degree of business freedom than that enjoyed in the Philippines. What that means is that overall, the efficiency of the government’s regulation of business – in all areas from starting to operating to closing a business – falls far short of what’s needed to make the Philippines competitive regionally, let alone globally, as a free marketplace for doing business. ‘Business Freedom’ in the Philippines has been snared in a trap.
It’s little wonder then that the fat wallets of overseas investors find their way to other parts of Southeast Asia rather than to the Philippines. And they’ll continue to as long as government boffins dream up new ways to regulate business rather than find new ways of deregulating it. It’ll continue as long as pompous petty bureaucrats wallow in the self importance of their presumptive power to delay and deny the march of enterprise; and as long as idle administrators, protectionist oligarchs and Flat-Earthers continue their pagan dance of economic suicide.
We’re in the Third Millennium, not the Dark Ages. The trick for economies is to evolve, develop and expand, not devolve, languish and contract. Less is more where government regulation on business is concerned. It’s not a difficult concept to get hold of; economic freedom is the gateway to economic success – restrict one and you restrict the other.