Bangsamoro is a gamechanger

Introspective 
BUSINESS WORLD

http://www.bworldonline.com/content.php?section=Opinion&title=bangsamoro-is-a-gamechanger&id=95160 



THE GOVERNMENT’S herculean effort to put behind us a four-decade old, costly and painful civil strife and gain for us all the benefits of peace deserve our support. This can be a potential game changer in our economic landscape, not just in what is now called the Autonomous Region for Muslim Mindanao, but for the entire country. True, there are risks along the way. But it is well worth giving peace a chance.


The legitimacy of the Moro wars for independence was the basis for the peace negotiations from the time of Marcos to the present. The Bangsamoro claim they are a separate nation with a distinct identity, culture and independent state (sultanates) with a long history of resisting the colonizers. Nations like this have the “right to self-determination” (RSD), according to the United Nations. The Organization of Islamic Conference (OIC) supported Nur Misuari and the Moro National Liberation Front in part because they supported the Bangsamoro fight for independence under the RSD and in part because they believed that the Muslims of Mindanao were under threat of genocide during martial law.

Peace in the South can bring up Mindanao’s contribution to the gross domestic product (GDP). Mindanao has abundant primary resources, perfect agro-climatic conditions, lower wage rates (with the ARMM cost half of average labor cost in Mindanao), still lower power cost, and vast opportunities for growth and diversification through its BIMP-EAGA connection. Investments have stayed away from Mindanao, even more so than the rest of the country, due to security concerns. Remember the Zamboanga siege? The Ampatuan massacre? Killers for tourism and investments, and not just in Muslim Mindanao.

As for opportunities in the ARMM, the region has the biggest areas of untapped natural resources, rich fishing grounds and fertile lands, the best beaches anywhere in the Philippines or anywhere else, and closest cultural and historical links with Brunei, Indonesia and Malaysia which can allow the region to access new capital thru Islamic financing as well as a new export market in the still growing halal industry. Further, the barter trade between Sulu and Malaysia is an economic tie that is centuries old and can be revived, with BIMP-EAGA and the initiatives being mounted as part of ASEAN 2015, fully backed by the national governments and the Asian Development Bank.

The Bangsamoro will have even more powers than the ARMM government to help craft its own destiny. While the region has disadvantages largely due to the four decades of civil strife and neglect, it also has an important advantage -- starting fresh. It can learn from the history of flawed policies that have hurt the flow of investments and creation of needed jobs in the rest of the country -- rigid and costly labor policies, complex bureaucracies and red tape, a distorted fiscal incentive structure, a failed agrarian reform program and misguided environmental policies that choke the development of a responsible mining industry. As explained by Foundation for Economic Freedom President Toti Chikiamco in a workshop organised by the FEF/Philippine Center for Islam and Democracy, it may actually provide a model for the rest of the country, be the tail to wag the dog, the way Hong Kong/Shenzen has shown the way for the rest of China.

Investors may, by adopting their business models and organisational and management styles to the traditional leadership (datus) structures of the area, find that these can be better places to operate than in other places in the country. This is the encouraging lesson of Unifrutti of former Secretary Senen Bacani and the late Datu Paglas which have won international awards.

It would be fair to ask, who are these guys (in the Moro Islamic Liberation Front leadership) and why do we trust them to succeed? Why do we think that leadership won’t revert to the old traditional leaders/warlords after elections take place?

I posed this question to Amina Rasul, lead convenor of the Philippine Center for Islam and Democracy, also our home Bangsamoro expert. This is what she said: “The MILF leadership is better prepared to take on the mantle of leadership of a civilian government (unlike the MNLF after the signing of the 1996 peace agreement). Under Chair Murad, the MILF has succeeded in establishing the Bangsamoro Development Agency (BDA) and the Bangsamoro Leadership Institute (BMLI). The BDA and the BMLI, chaired by civilians, are led by boards consisting of the MILF Central Committee and professionals. The BDA is tasked to prepare the Bangsamoro Development Plan and has been assisted by development partners and government. The BMLI is putting together training programs for the Bangsamoro. Further, the MILF has been sending young Bangsamoro professionals to study, with the help of development partners.

While all development matters are still decided by the MILF Central Committee, it is clear that the MILF has been preparing for civilian government over the last few years. The failure of the MNLF to govern the ARMM, under Misuari, has been in large part due to their lack of preparation to govern under a democratic system. This is not the case with the MILF, which has been working with government and development partners to put in place programs such as the Sajahatra intended to provide services to its communities.

The MILF leadership also has the support of several political and traditional leaders, particularly in Central Mindanao. “

What can business do to help enhance chances of success at this time -- and moving forward after the Bangsamoro entity is set up?

The most urgent is for the business sector to support the passage of the Bangsamoro Basic Law. The MILF leadership under Murad has invested political capital in the peace agreement. Should the Basic Law be watered down or not passed, the pragmatists in the MILF Central Committee will lose out to the fundamentalist faction which is supported by younger (and more aggressive) leaders who already feel that the original demands of the MILF have been greatly undermined during the peace negotiations.

In the short term, before transition to the establishment of the Bangsamoro political entity, the business sector should assist in providing support for education. First, support adult literacy. Over half a million adults of ARMM are illiterate (more than a third of the voting population). When businesses are established in the Bangsamoro, labor will have to be imported from neighbouring non-Bangsamoro provinces if the existing labor force are unskilled and illiterate. This is a condition that will breed more conflicts, as the affected citizens will lose out on job opportunities to those who have not suffered from the armed conflicts. Second, support short management training for professionals who can run public and private sectors. Apprenticeships and internships can be provided by the private sector. Third, engage the BDA, the BMLI and the Bangsamoro private sectors (chambers of commerce and business councils) to identify opportunities for collaboration.

Let us begin.

Grains and Gilas: Geography, genes, dashed dreams

Opinion
BUSINESS WORLD
Posted on September 07, 2014 08:59:00 PM

Introspective
Raul V. Fabella


WE CAME very close to beating Croatia, Puerto Rico and Argentina in FIBA Spain. We beat Senegal by a whisker. All the basketball world marveled at our fighting spirit. The entertainment value was unmatched. But in the end we were eliminated. We tried; we even enlisted Congress to accord citizenship to foreign behemoths to raise our ceiling. This leaves a bad taste in the mouth, for how far can you go with instant citizens without eroding our team identity? Still, a win is a win. It was not quite our dream but it was certainly better than a “zero win “for China and India. Our genes in the end let us down.
 
And yet there is nothing wrong with our genes; the wrong is with our choice of competitive games. Basketball is a game of physical, not mental elevation. That is why a Jewish NBA player always inspires a chuckle like a ghost. And Jews are not insulted. It’s the case again of some Ivy League schools -- when their lowly football teams surprise some nationally ranked teams, a blue moon moment, there follows a groan of self-examination: a sign perhaps that we have lost our academic edge? For there is no free lunch, not even and especially academic edge. Wisdom dictates that we embrace our genetic make-up and choose the contests that enlist our genetic strengths. And for Filipinos, basketball cannot be the repository of lofty dreams. Jews don’t do so badly reposing their dreams in bio-, nano- and other techs. We can too.

As in sports, so in life. But in life, swimming against the tide can be disastrous. Basketball is at least fun and costs the taxpayer no money. Not rice self-sufficiency. In the annals of myths, rice self-sufficiency stands out as the most enduring. Dreams repeatedly get bludgeoned here, but it does not die. The fallacy is that any nation can just engineer it and thus should. In December 2011, Agriculture Secretary Proceso Alcala bragged that by 2014, the Philippines will be a rice exporter because by then the Philippines will have achieved rice self-sufficiency.

So a program of rice import reduction pulled imports down from 860 metric tons in 2011 to 350 metric tons in 2013 in the hope that domestic rice production will fill the void. Well, domestic production did not, despite the huge budget allocation for rice. In the first quarter this year, rice prices spiked. PNoy’s sagging rating had little to do with the Disbursement Acceleration Program (DAP) and everything to do with the price of rice.

Alcala’s was not just a shattered dream; it almost derailed Matuwid na Daan. The besieged Aquino administration quickly reversed course and rushed an import order of 800 metric tons of rice. It also stripped Alcala of four crucial units of the Department of Agriculture. In Japan, where honor is highly regarded, the same chain of events would have triggered a hara-kiri. Here, Alcala is still there.

Why did rice self-sufficiency fail? Rice self-sufficiency is a matter of geography. This is the message of the recent International Rice Research Institute study. Many economists, including Planning Secretary Arsenio Balisacan, have raised the warning. We do not have a comparative advantage in rice production. Our cost per cavan is too high. You can blame lack of infrastructure and farm-to-market roads till you are blue in the face, but if you do not have steady abundant water and a friendly soil, you will be marginal. Which means only limited areas in the Philippines will be competitive and not nearly enough for self-sufficiency. As Adam Smith once observed, Scotland can produce more wine, but if you have to artificially provide the warmth and abundant sunshine freely available in Portugal, you will go bankrupt. Why not produce woolens instead? Producing efficiently if only a fraction of consumption requirement and importing the rest is common sense. Geography is unfair; but it gets bloody if you bang your head against it. As with genes, you choose crops that suit your geography and not the geography that suits your crops.

It is the familiar law of comparative advantage in trade theory once again. If a country specializes according to comparative advantage -- that is, produce crops where it has a cost advantage, say rice for Thailand -- it realizes increases in its welfare. I prefer to emphasize perverse specialization in my class: countries often harvest a nightmare because their governments decide to defy comparative advantage, which for the Philippines is self-sufficiency in rice.

For an epilogue, I always observe that if left to the private sector, this madness does not arise because private business hates to lose money, its own money. Government bureaucrats, though, lose only other people’s money and worse perhaps make a pile for themselves on the side, making perverse specialization common.

Let me end by telling the story of a friend and fellow BusinessWorld contributor, Romy Bernardo, who turned 60 last week. Romy’s singularly successful career is a parable of genetic jujitsu. Had Romy chosen the tennis or basketball court as his Thermopylae, he would be dirt poor and miserable. But he chose as rapiers what the genetic gods dealt him -- abundant IQ and charming wit -- and he and we are all the better for it.

Raul V. Fabella the chairman of the Institute for Development and Econometric Analysis, a professor at the UP School of Economics, and a member of the National Academy of Science and Technology.

http://www.bworldonline.com/content.php?section=Opinion&title=grains-and-gilas:-geography,-genes,-dashed-dreams&id=94092

The life and times of our only Prime Minister

Introspective, Business World


I WAS PRIVILEGED to be Master of Ceremonies at a recent launch at the Yuchengco Museum of the book of Dr. Gerardo Sicat -- Cesar Virata: Life and Times Through Four Decades of Philippine Economic History (University of the Philippines Press). I highly recommend it to students of economics and history and admirers of the only Prime Minister our country ever had.
   
We waited 30 years for this book, and only Gerry Sicat could have written it. Professor, most prolific author of economic researches papers and textbooks, and development consultant, Sicat is also father of three economic-oriented institutions known for their excellence -- the UP School of Economics, the National Economic and Development Authority, and the Philippine Institute for Development Studies. (More recently, he is known as the father of the also excellent PSE President Hans Sicat.)

The hefty 800-plus-page book “stands on its own,” the author joked, making reference to its ability to stay vertical without support. He explains the reasons for its physical gravitas. “I see it as several books. The scope is large. First there is Cesar Virata. Along with him are other running stories: our nation in its young age of independence, and the problems of economic national building, then the Marcos years -- the positive, the controversial, and the crisis years. It is also about the transition afterwards.” You need to read the book to fully appreciate its intellectual heft.

Those present at that book launch had the privilege of listening to three “reviewers” and a beautiful musical number. These were, in the order of the program:

• Victor Macalincag -- I described him as “PM Virata’s right-hand man at the DoF,” “my former boss who was brilliant and hardworking,” and not the least “according to my wife and I heard the First Lady of that time, the handsomest undersecretary in government.”

• Washington Sycip -- “One of the few who can claim the high honor of being a mentor to PM Virata, even when the latter was still a student. Founder of the SGV Group, now a continuing mentor and guru to the nation.”

• Ambassador Alfonso Yuchengco -- “Industrialist, banker, diplomat, taipan, belonging to that breed of post-war nation builders which perhaps comes only once in a country’s history.”

The music in the forum was provided by the same person who provided the music in PM’s life: Mrs. Joy Virata, singing a soulful rendition of “Summertime.”

In the remarks I would have made had my iPad cooperated, I underlined some lessons for the idealistic public servant on a man who is the gold standard for public service, integrity and patriotism.

“This is the humbling story of a man who persevered and shepherded the economy through the Philippines most critical financial and political crisis. A man who sacrificed his own reputation, never abandoning the ship of state through the raging storm.”

Sicat writes of how PM typically shirked the limelight. He writes about a posthumous honouring of the late Finance Secretary Jaime Ongpin in Malacanang, during the Cory Aquino presidency, where Virata was unacknowledged by virtually all of those who spoke. That is, until Maribel Ongpin took the podium to give her response. She acknowledged Virata. According to Sicat’s recounting, “The full house thundered in applause. These were all faithful members of the Department of Finance, the career people who had worked for him for almost 16 years. He was a man they respected, who had performed his job in the department faithfully, and whose work was acknowledged as the most consistent and successful during his time in the post.”

Allow me to end this piece with an excerpt from Vic Macalincag. After elaborating on the roles PM Virata played across a wide front of economic reform -- banking and finance, trade, investment, industry, project development, international economic diplomacy, development of Mindanao, energy diversification, agrarian reform, etc., he ruefully considered:

“Reading his biography, one is tempted to conclude that in a different setting and stable political environment, and despite restrictive provisions in our laws, his economic management and policy prescriptions and strategies could have placed the Philippines not far behind South Korea, Singapore, Taiwan and Hong Kong.”