News Analysis Trade

Hostility to ability

‘Opportunity Start-up’ and ‘Human Capital’ – two of the indicators for assessing ‘Abilities’, a sub-index component of the GEI.

No one doubts for a moment that the Philippines is in dire need of much more infrastructure – roads, bridges, ports, airports – even parts of that which is already there could do with some serious upgrading. But there’s another area that’s also in dire need of attention – an area, just like infrastructure, that has the potential to put the spark plugs on this economy and jolt it to new levels of productivity; new heights of economic growth.

The area we have in mind is entrepreneurship – a much neglected resource that’s been left to fumble against tough odds for too long. And yet the latent dynamism of this sector has the capacity to reach virtually every type of economic endeavour from getting agricultural produce faster and fresher to market, to unclogging the country’s rancid waterways, to producing a range of national cuisine that could win international acclaim.

Unfortunately, there seems to be a reluctance to tap into this resource – at best, support is lukewarm; at worst, there’s an open hostility to those who put forward new ideas. Those who offer new ways of working, for example, are often seen as a threat or of exhibiting airs of superiority. And yet, in many cases, they hold the keys to the future.

Our adaptation (below) of the 2017 Global Entrepreneurship Index (GEI) – an annual indicator supplied by the Washington-based Global Entrepreneurship and Development Institute covering 137 countries world wide – shows the scores for each of the 10 member states of the Association of Southeast Asian Nations (Asean). Being measured here are ‘Opportunity Start-up’ and ‘Human Capital’ – two of the indicators for assessing ‘Abilities’, a sub-index component of the GEI.

‘Opportunity Start-up’: Singapore, 1.00; Brunei, 0.71; Malaysia, 0.61; Thailand, 0.36; Cambodia, 0.34; Philippines, 0.34; Laos, 0.31; Indonesia, 0.28; Myanmar, 0.25; Vietnam, 0.20.

‘Human Capital’: Brunei, 1.00; Singapore, 1.00; Malaysia, 0.90; Thailand, 0.50; Vietnam, 0.46; Philippines, 0.45; Cambodia, 0.43; Laos, 0.43; Myanmar, 0.37; Indonesia, 0.19.

Let’s be candid, these are not great results for the Philippines – a nation with a large tech-savvy workforce. Human capital is certainly not in short supply – 50% of the population is at or under 23.4 years of age. There are around 20 million Filipinos aged between 15 and 24. So quantity is not the problem.

The common thread of these two factors is the quality of education. To state the obvious, societies with good education systems are far more likely to produce more innovative and more successful entrepreneurs. For an entrepreneurial sector to flourish, therefore, it requires what’s referred to as ‘high-quality human capital’ – in other words, an educated and experienced workforce. And basically, the more educated and more experienced that workforce is, the more robust the entrepreneurial sector becomes.

There are other determinants also involved here; among them, bureaucratic red tape – for which the Philippines is a top world producer – and unhelpful tax regimens where start-ups are hampered even before they get the chance of starting up.

On the human-capital side, the level of labour freedom is an issue – the amount of regulation that restricts hiring and firing, for example – as is the degree and quality of staff training and the amount of investment in it.

The point is, entrepreneurs rarely do well in societies with burdensome bureaucracies, high-taxation levels, over-regulation and a poor culture for training employees. The opposite side of that coin is that they excel in societies where government agencies facilitate doing business – rather than make it more difficult, as has traditionally been the case in the Philippines (though that’s now starting to change) – where taxation maintains a competitive edge with other jurisdictions, where there’s greater labour freedom and where there’s real investment in and prioritising of employee training.

The problem then – and we stress we’re talking solely about entrepreneurial skills here – is the quality of that human capital. And the problem with that is that in the Philippines, as a resource, it’s been terribly neglected. The education system has stubbornly refused to gear its curriculums to turning out free-thinking individuals who can quickly analyse the potential of an opportunity and make it happen.

By the same token, governments have repeatedly under-invested in training courses for the young to develop their entrepreneurial skills. There are probably very few Filipino politicians who haven’t said at some time “the young are the future” – and yet, when it comes to investing in that future they don’t show the same enthusiasm. They certainly don’t put their money – actually, the people’s money – where their mouth is, that’s for sure.

What are they afraid of; that the next generation might turn out to be smarter than theirs and threaten a status quo that’s cemented to an outmoded oligarchic system which they support and control – actually with the help of ‘educators’ (a term we abhor)? We certainly hope they’re going to be smarter – the thing is, that goal should be encouraged.

Make no mistake; Filipinos have the capacity to forge entrepreneurship into a major driver of their country’s economic development. But they’ll never do that as long as the schools’ system remains stuck in a time warp where students are deterred or even prevented from challenging the status quo – a prerequisite for those aspiring to become entrepreneurs – and where governments limit the oxygen (through lack of investment in training and apprenticeship schemes, for example), that would give this sector the impetus it needs.

Look, entrepreneurs aren’t seeing to take over the economy; they’re seeking to expand it; enrich it – and in ways that established business is unlikely to. Sure, they’ll innovate and streamline their own operations and even the sectors in which they function, but new ideas for new goods and services – the one’s still outside the box – they come from free-thinking, non-programmed, entrepreneurs.

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  • Another reason for the lack of entrepreneurship is the ingrained culture. Our indio mentality. Education is now starting to tackle this, albeit slowly. Before, our education was mainly centered on getting a job. Now there are schools offering entrepreneurship courses. Yes, this area requires impetus and government support.