WILSON LEE FLORES: DOING A MANNY PACQUIAO ON THE ECONOMY
CEBU CITY, February 7, 2004 (STAR) By Wilson Lee Flores - How and when can the Philippine economy become as aggressive and as victorious as the world featherweight boxing champion Manny Pacquiao, the formerly poor tailor and construction worker born in General Santos City, Mindanao? The day the value of the Philippine peso plunged to another historic low due to worries about military coups, the government budget deficit and political uncertainties, the 77-year-old founder of the country’s most diversified industrial conglomerate delivered a rare public speech in the country’s second biggest city, boldly calling for five major reforms to strengthen our weak, heavily-indebted and uncompetitive Philippine economy.
On that day, Cebu’s prestigious 409-year-old San Carlos University (USC) led by President Fr. Roderick C. Salazar Jr., SVD, and Chairman Engr. Jesus N. Alcordo conferred to John Gokongwei Jr. the honorary degree of Doctor of Science in Business and Enterprise Development at the Rigney Hall Engineering Building, Talamban Campus of USC. It was a touching moment for his family, friends, former teachers and old classmates.
In his speech, Gokongwei used the inspiring example of the small but feisty Pacquiao to challenge the presidential candidates to undertake steps to make the country gain global competitiveness.
Dream big, work hard and pursue it – that’s the philosophy of John Gokongwei Jr. In his 20-minute speech, Gokongwei cited the need for five major reforms to make the Philippine economy truly globally competitive: better access to short-term and long-term capital for entrepreneurs, better labor management, cheaper electric power, better agricultural productivity management, and better foreign exchange management. He lamented the tragedy of a declining Philippine economy if no real reforms are pushed, warning: "If we do not change… We will be a country that creates nothing and imports everything."
A business leader who refuses to be embroiled in the country’s bitter and dirty political wars, Gokongwei nevertheless reminded the leaders of the republic: "I have refrained from speaking about graft and corruption, peace and order, population management, and poor infrastructures. That these must be solved is obvious."
Gokongwei expressed hopes that bold and far-reaching reforms can strengthen the Philippine economy to become a strong fighter and world-class winner, just like Manny Pacquiao. He urges the country’s future leader to consider the following:
*Provide access to capital, both short-term and long-term. Gokongwei said that Filipino entrepreneurs borrow money at seven to eight percent interest, while Thai entrepreneurs can borrow at rates as low as 2.3 percent for short-term loans and five percent for long-term loans. He recommends that Philippine firms issue bonds in small denominations like P5,000 with at least five years maturity – thus allowing financing for industrial/commercial/tourism ventures, and allowing average Filipinos to partake in the economic fruits of such investments. He suggested that these bonds be traded like equity, so investors are assured of liquidity.
*Provide better labor management. Gokongwei laments how local entrepreneurs suffer from difficulty in forecasting labor costs, especially when labor comes into conflicts with management and disrupts business plans. He suggested that Congress pass a new law that will be good for both labor and management, giving extra one to six months’ worth of separation pay on top of the present legislated separation pay, but allowing entrepreneurs to let go of people without any questions asked. He said this proposal will increase separation pay benefits for labor and will encourage entrepreneurs to generate more employment in the long run.
*Provide cheaper power. Gokongwei said his Thailand factories pay only P3.5 per kilowatt hour for electric power, but his Philippine factories pay P7 per kilowatt hour. He suggested that entrepreneurs be allowed to build power plants for their own needs and with excess electric power to be sold by them to other businesses within a certain boundary. Gokongwei cited his petrochemicals and textile businesses, which had built their own power plants, because high power costs had killed most of their competitors in both industries.
*Provide better agricultural productivity management. Gokongwei asked why we used to export sugar and rice, but today we import both in huge quantities, while Thailand exports rice and can produce sugar at half our Philippine costs. He urges Philippine society to cut costs and make our rural farms more efficient, urging that agriculture should be made "a pillar of our economy" and a catalyst for creating more jobs.
*Provide better foreign exchange management. Gokongwei said the fluctuation of the peso-US-dollar rate of the past few years "has ruined many businesses and has scared many entrepreneurs who need to borrow for projects." He pointed out that in July 1997 at the start of the last Asian crisis, the US dollar’s average rate was 29.48 Thai baht and P29.33. Today, the baht has devalued to 39 baht to the US dollar, while the Philippine peso has declined all the way down to P56 per US dollar! Gokongwei urges better foreign exchange management in order to support our entrepreneurs and to entice more investors.
If his call for the five major reforms, plus other issues, is addressed with political will, the Philippine investment climate can dramatically improve. Gokongwei predicted that with a better investment environment "we will create an entrepreneurial class that will be more than willing to take risks and therefore more prepared to take on the competition of the new world... After all, it is as simple and clear as human nature. It is important for entrepreneurs to estimate our risks and cost structures before we invest."
He added, "To the end, I believe that there can be a better future for the Philippines and the Filipino. But we must first face reality. We cannot hide from the changes brought by the WTO (World Trade Organization) and AFTA (ASEAN Free Trade Agreement), and must prepare by creating a class of Filipino entrepreneurs who will be able to compete with the best in the world. Entrepreneurs will create jobs and let me be clear in saying that no matter who the next President is, job creation must be top priority."
At the end of his speech urging five major reforms, Gokongwei concluded with cautious optimism on the country’s future: "I hope that these humble suggestions gleaned from 62 years of experiences in business give the government an idea of how the mind of an entrepreneur works, and hopefully bold and far-reaching reforms can be implemented to make the Philippine economy globally competitive, and to make the Philippine future brighter and more exciting."
Reported by: Sol Jose Vanzi
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