Channeling Filipino money to Filipino ideas: Filipinos can succeed in business!

Lots of people have great ideas. Unfortunately not all people with great ideas are very entrepreneurial. It remains a giant leap to get from an idea to a clear execution roadmap. The execution roadmap need not be written like a formal thesis, but it should at least demonstrate how said idea can be turned into a stable revenue stream; i.e., articulating the business value of an idea as a business plan. As such, developing an idea into one that captures the imagination of people with money to invest is already beyond the means of most would-be entrepreneurs.

Over at the GRP Community Facebook Group, I recently observed an increased interest in business-related topics.

Community member Ron Lazaro makes a very astute observation that is spot on in describing an abundant resource the potential of which remains largely under-exploited for building capital and is, instead, routinely mis-channeled towards dead-end consumption: the remittances of Overseas Foreign Workers (OFWs).

Usapang Business sa GRP: think [of] this… OFW’s remittance[s] have reached an average 18 Billion US Dollars per year! heck this is even bigger than the national budget!!! now the grinding question, where does this remittance money go[ and] how [is it] being spent??? the answer to that is a huge business opportunity for those with [the] entrepreneurial spirit!

Lazaro’s call is quite straightforward:

chase those billions now!

Indeed, those “billions” while routinely providing temporary relief at best for the mall-rat kin of OFWs toiling in some desert caliphate halfway around the world, do not seem to be fundamentally changing the core economic structure of the Philippines.

In short, despite the OFWs “contributing” to the “value” of Philippine economy, they do not change its composition but merely propagate it. The capital-rich become wealthier, and the capital-poor (despite the robust incomes they temporarily get from OFW relatives), at the end of the day gain and accumulate very little enduring equity. The value of OFWs as contributors to economic change is a myth. Whereas OFW’s merely channel money, true capitalists create it.

So, without question, there is money coming in. The challenge is in changing how it is used.

How then do we turn Filipinos from mere consumers into real capitalists?

Another community member, Eugene Dy, sees money sitting right under people’s noses and proposes that the community focus more on the important stuff: making money for ourselves and making Filipinos rich. A first step he proposes is to create a robust forum for advertising skills and services. Dy’s thread initiated a lively and very insightful discussion and is (as of this writing) running up a total 54 comments after just six hours online. What was an initial idea around advertising one’s individual skills and services became a discussion around the more ideal target of building business enterprise.

Indeed, the key challenge remains: how to move from employment (particularly in foreign-owned business ventures) to capital self-sufficiency. Filipinos are renowned (or like to see themselves as such) as star employees in both direct employment by overseas employers and clients and as outsourced service providers. As sources of capital and innovation, however, we are at the bottom of the pile. I have always asserted that we cannot compete in a free-for-all “globalised” world where capital is free to wantonly flow in — and out — of countries. Such a world order favours societies with an existing and extensive track record of creating capital indigenously (and then went on to export said capital). Unfortunately, the Philippines in its current stage of economic maturity is a net capital sinkhole. We absorb lots of the world’s capital but create hardly any of it. As such some of those who advocate the Philippines’ hooking itself onto the gravy train of hot global capital flow as a solution to its chronic impoverishment may be toying with a very dangerous notion

It raises the embarrassing possibility that even with doors thrown open to full foreign ownership and a “Buy us, PLEASE!” sign displayed, we will still be bypassed by the industrialists of the world.

Of course, cash not flowing into the country is not something any of us would like to see. But consider how OFW cash currently flows into the economy to the tune of more than 10% of its value. The really hard question with regard to this embarrassingly large elephant in the room is quite simple:

Where has all that cash been used?

The OFW remittances black hole illustrates how Filipinos remain clueless about the productive and sustainable use of money. A number of issues could be at work there — lack of skills, lack of attitude, lack of imagination, lack of information, lack of infrastructure, whatever. The point is, in the case of this consistently moronic use of otherwise abundant cash, access to it certainly is not an issue.

In short, before we can even consider playing with other people’s money we need to get our act together as far as putting our own money to good use. And that means, becoming net capital creators — become a society of people who create capital indigenously.

This indeed is a huge challenge. Many overseas Filipinos lack any faith even in their own family members when it comes to putting the money they send to them to good use. In a previous article I highlighted the scale of the contribution of Filipino-Americans alone to the Philippine economy — a contribution that accounts for 60 percent of total remittances to the Philippines by Filipino expats. Their expenditure for day-to-day activities in the US alone, at $50 billion per annum is double the National Budget of the Philippines. Yet the only appeal island-dwelling Filipinos can make for a piece of that yummy pie is an appeal to “generosity”.

One that sticks out is the quickness to attribute the $8 billion dollars to two imagined virtues in the Filipino: generosity and love of country, a conclusion [Inquirer.net columnist Jose Ma.] Montelibano encapsulates in the following statement [taken from his essay]:

The sterling example of Filipino-Americans in lending a consistent helping hand symbolized by an $8 billion remittance to relatives in the motherland is an affirmation that they continue to love the Philippines.

Firstly, it is debatable whether a big portion of the $8 billion dollars is sent by choice. It comes to a question of whether the forces that channel that money to the Islands is characterised by a pull or a push.

Do Filipino Americans push the money to the Philippines motivated by real “generosity”? Or do impoverished Filipinos in the Islands through their victim-esquely irresistible appeals to familial sentiments pull the money from their “more fortunate” kin overseas?

So we still have a long way to go from becoming more than just the subject of Filipino expats’ guilt trip. The goal is to turn ourselves into an attractive destination for capital on the basis of a cold, hard, sentimentality-devoid objective assessment of our ability to return on said capital.

I believe it starts with mixing together some key ingredients:

* * *

IDEAS

Ideas range from the nebulous or highly conceptual to the very specific and precisely-defined. Some members already presented interesting ideas.

GRP Community netizen Richard Ryan Cruz, for example, proposes the idea of a private airport bus company which capitalises on the utter lack of safe, reliable, and comfortable transport connection between the International Airport in Manila and its outlying business districts and residential suburbs. Follow-on downstream businesses that could be built around this service abound including other value-add services that returning balikbayans — or visiting tourists and/or investors — could find useful.

Lots of ideas need to be brainstormed, discussed, taken apart, and evaluated. More importantly such a “registry” of ideas need to be routinely harvested for value and turned into the ultimate scorekeeper — money.

BROADENED EDUCATION IN THE TRADES

Ron Ronquillo emphasises the need for more vocational schools

In as much as we’d like to have a lot of educated Pinoys, not everyone will be privileged to have white-collar jobs. The least we can do for the working-class folks (every society has one) is to improve the quality not only of their work but the conditions where they work to make them proud and have some dignity rather than feel looked down upon. Like it or not, we need people like them in our society.

WHEREWITHAL TO EXECUTE

Our very own B.p. Betterphilippines identifies that all-too-familiar analysis paralysis disease that afflicts many of us who are rich in ideas but thin on next steps

so many aspiring entrepreneurs have ideas. many even have the resources (capital etc.) unfortunately, many fail to realize their plans because of paralysis by analysis. what are your thoughts on this. have you had paralysis by analysis? were you able to get out of it? how did you do it?

Add to that “too hard” and “too risky” as the typical excuse of people otherwise brimming with bright ideas. To be fair, this is an affliction seen across societies, even amongst those in the affluent world. Yet, we seem to have a particularly ingrained cultural predisposition to shun the risky venture as the venerable Nick Joaquin himself observed and from which much inspiration can be gained…

Aldous Huxley said that some people are born victims, or “murderers.” He came to the Philippines and thought us the “least original” of people. Is there not a relation between his two terms? Originality requires daring: the daring to destroy the obsolete, to annihilate the petty. It’s cold comfort to think we haven’t developed that kind of “murderer mentality.”

CAPITAL FUNDING THAT SUITS THE FILIPINO CHARACTER

Joaquin then encapsulates the challenge we need to step aspire to prove wrong someday: “The depressing fact in Philippine history is what seems to be our native aversion to the large venture, the big risk, the bold extensive enterprise.” Perhaps if there is the fact of this sad cultural trait of ours, there must be a workaround for it — a solution that includes as part of its inherent features measures that mitigate this reality about our national character.

The financial system is normally a key component of the economic infrastructure that provides a safe — and in most cases, a state-guaranteed — destination for excess cash coming from ordinary people and, an institutional framework possessing of the scale and expertise to convert these funds into capital to be channeled to those who need it to engage in productive business ventures. Financial institutions, therefore, serve to bridge the flow of money from the risk-averse to the risk-savvy among us.

Unfortunately, even the relatively robust financial system of the Philippines is suffering from a crisis of confidence. In a society that is already beset by low collective trust, there have been many instances of spectacular breaches of public trust arising from the greed of those to whom the management of the public’s hard-earned savings had been entrusted. The collapses of major educational funds, pre-need businesses, and most recently, the collapse (and subsequent mismanagement in the hands of state receivers) of Banco Filipino did nothing to encourage Filipinos to save their OFW dollars rather than spend them on non-durable trinkets imported from China.

* * *

There are a few venture capital models out there being bandied as the “next big thing” by the Mainstream Media of the business world.

Fortune magazine featured in its website the possibility of earning $1,000 in 60 seconds in a “business plan contest” organised by Rice University. A bid for investment funds in 60 seconds — an “elevator pitch” — is, as the term implies, premised on the notion that if you are lucky enough to happen to get on an elevator with the CEO of your company, you will most likely have less than a minute to grandstand about whatever great idea you might happen to have in your head waiting for a person who matters to impart it to.

There is also a new “thing” called “crowdfunding” (another one of those things based on one of those “wisdom of the crowd” concepts around which consultants are pitching their latest cutting edge “services”) that CNN Tech is featuring where “Aha!” moments are turned into real inventions. As it turns out, we are eventually led to the point of that article, the launch of the site Ahhha.com, supposedly one of the pioneers of the emerging “social ideation” (you read that right) market.

Micro venture capital anyone? These new “social ideation” sites supposedly promise this as a rosy future for micro-ideaists.

Anyway, back to more sober down-to-earth ideas, perhaps it is high time that someone come up with a more innovative system and more robust process for channeling Filipino money away from idle non-capital-building pursuits and more into equity-building endeavours. The goal is to build an inherent ethic in the Filipino of creating and building capital indigenously (as opposed to a pathetic reliance on foreign capital) as a means to escape poverty.

As seen so far, discussion within the Get Real Philippines Community shows some promise that initial (albeit baby) steps are being taken with this new focus in mind. Indeed, the first step is to turn away from the idle low-intellect-applied banter of conventional Pinoy-style “discussion” and hook onto the world of insightful conversation. Check out the Community and take the first step towards exploring a bigger world!

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Post Author: benign0

benign0 is the Webmaster of GetRealPhilippines.com.

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30 Comments on "Channeling Filipino money to Filipino ideas: Filipinos can succeed in business!"

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ChinoF
Member
I see one problem here. There are just too many steps for even a local Filipino to register one’s business. So before they can actually set up a business, their capital has been used up by the numerous humongous fees and bribes being asked for even if they are shouldn’t actually be there. If you have enough capital to get through that, or could find a way around it, well and good. But still, changing the system is also needed so we can finally eliminate these unnecessary steps to setting up a business legally. Although many enterprising Filipinos engage in… Read more »
ChinoF
Member
Not just registering and starting up, but maintaining a business is also a pain. You have rising commodity prices and most especially that blasted electricity under Meralco. You have minimum wage to follow (unless you’re an unregistered business). Even the tax brackets are unfair, because they levy the same amount on all businesses, small or big (so small businesses could hardly grow)! No wonder so many local businesses shrink or close up in this country. Now I know why my bosses were so scrimpy on salary and benefits. Being in business at all could kill you, in a sense. Success… Read more »
ChinoF
Member

Argh, that should be: (Philippine business) environment.

Edward
Guest
Though ideas like that are really optimistic but there are inevitable forces (crime, corruption, terrorism, etc.) that restrict and even prevent Filipinos to even pursue business. We can succeed yes but it’s easier said than done. I myself am in the business environment and in my experience, if you do not have a very large capital, and I do mean large, a common person can’t even progress. I mean pang gastos pa lang sa mga pulis na humihingi ng kotong eh talo ka na. One time we were pulled off by one of them for smoke belching even though our… Read more »
ChinoF
Member

That’s what I was talking about. Getting into business is easier said than done, which all the problems in registering and even maintaining one. But hey, if you can pull it off, no one’s stopping you (referring to others in general).

bp
Guest

the move to change the bigger system (conref) is ok but i’d be careful about packaging it as the solution to problems as “small” as the red tape plaguing business registration.

removing red tape in the department of trade and industry can be done even under the present system provided there is serious political will on the part of the officials running that department.

i’m not sure but i don’t think the step-by-step procedures involved in registering a business is covered in great detail by any law.

ChinoF
Member

I would believe though removing red tape is also easier said than done. We don’t have yet a leader with political will, but isn’t it that under the current system, that kind of leader would never get into DTI? I think it’s no wonder such leaders with political will are not getting any positions where they can actually make a difference. The bigger change is not just OK, but it’s the ultimate solution.

I suppose reforming the registering laws will finally cover it in necessary detail and hopefully weed out the red tape.

bp
Guest

red tape has a lot to do with the culture of the people manning these agencies. setting up a better system within these respective offices would certainly do a lot of good.

i’d argue against packaging a specific system change approach as being the ultimate solution.

there are no ultimate solutions. there are many possible solutions and they’re all OK.

ChinoF
Member

I think we need all those solutions all at once considering the kind of situation we’re in. No one’s saying constitutional reform is the only one.

bp
Guest

i guess we should be clear then that it is not the ultimate solution because that would be misleading.

i hope more people would support conref. it’s worth a try in my opinion.

Hyden Toro
Guest

A country that is tight gripped in Feudalism; with the Oligarchs, becoming political leaders; will never progress…we see Political Offices as “Pots of Golds”…Government positions as Cash Cows….
Why sweat in thinking about : businesses; new products; etc…when you can run for Public Office; delude people; get elected and become rich…

Hyden Toro
Guest

A country that is tight gripped in Feudalism; with the Oligarchs, becoming political leaders; will never progress…we see Political Offices as “Pots of Golds”…Government positions as Cash Cows….
Why sweat in thinking about : businesses; new products; etc…when you can run for Public Office; delude people; get elected and become rich…

Edward
Guest

Tama ka dyan. That’s exactly my point! Why waste time on business when you can get even more money of corruption? Makes sense why people do things they do here.

ChinoF
Member

Or, if you want to stay legal, but get a bigger salary… become an OFW.

Hyden Toro
Guest

Or become an OFW Drug Mule…only, you get “lethal injection”, if you are “mahuli”…

Joshua T.
Guest

I blame lack of good economic opportunities on this one, Toro…..

Joe America
Guest
The economy in the Philippines is so thin that it is neither capitalist nor consumer, it is “subsist and support”. For a broad swath of the working population, the mentality is “I’ll work if I can (or want to), and will lean on my relatives when I can’t (or don’t want to). The motivations here are very different. There is no hope for riches other than the lottery. The disciplines for money-making are completely absent: a sense of the importance of time (appointments), living up to commitments, customer service. The overarching Filipino Ego limits vision and orienting work toward SOMEONE… Read more »
Edward
Guest
Ego or whatever anyone wants to call it but I call it GREED. Unless we see our leaders change for the benefit of the people by giving them good examples other than their fashion sense then greed will still be rampart in our country. Wrong messages on television, newspapers, magazines, books, and radios, these media mediums contribute to the psychology of the people’s minds. They create the foundation of our identity which is, to say, none existent. Magazines pa lang they show Pinay women on how liberated they are. My god! I hate to see Pinays being shown that way.… Read more »
Joe America
Guest

Edward,

I think greed is just one aspect of the Ego intense behaviour found hereabouts. Cheating, lack of consideration . . . they aren’t really greed, but are endemic.

You are right with respect to low-life media standards and poor treatment of women, by foreigners, by deadbeat husbands, by other envious women, by themselves.

Frank
Guest

The kicker is that it’s the people that try to save that suffer most in the end as their subsist-and-support families turn them into piggy banks. Eventually the savers too have to turn to relatives – especially their children – in order to survive when their capital is finally drained.

It’s not just endemic, it’s highly contagious. The only way to break free of it is self-excision, which is frowned-upon enough as it is.

Maria Clara
Guest

Ego? What about high unemployment rate in the Philippines? Have you heard of it? How about overpopulation? Guess not. With so little opportunities under a corrupt government plus an overwhelming devotion for religion, what should you expect?

I agree with Edward. There’s a difference between knowing the path and walking the path.

JasonB
Guest

Business skills sits on top of a pyramid of financial management skills, and the foundation of which are the skills related to spending (living within means) and saving.

Filipinos have not been taught about this. Jumping into business immediately without learning the basic financial skills will mean disaster.

ChinoF
Member

Any place where you need to make “diskarte” instead of follow the system in order to succeed is obviously screwed up.

Frank
Guest

Here’s an interesting document about something that I haven’t seen mentioned on GRP or AP yet.

http://emlab.berkeley.edu/users/webfac/emiguel/e271_s04/SEED.pdf

A group of Harvard and Princeton folks partnered with this tiny bank in Caraga to help form a very strict savings regimen. The metaphor is clear in the title: tying Odysseus to the mast of his ship to avoid him jumping overboard to the lethal song of the sirens.

Perhaps such a plan could also be adapted by our bigger banks as well.

Edward
Guest
I don’t think so. It’s also said there that “further research is needed” because what works for a short term, does not equal long term results. When I say long term, I mean 10-20 years or so. Though is does give benefits but the market shifts every year. Meaning “change” can’t be avoided and it’s the biggest factor that can hinder this experiment. It’s like marriage, you see everything good about your partner for a couple of years but when about 5 to 7 years you start seeing his/her true colors prompting you to decide whether you love your partner… Read more »
Frank
Guest
I think that’s why they used a tiny rural bank to start off with. This way the results are essentially confined to a more easily observable area. Plus, the project is relatively recent so we still haven’t reached “the long term.” And like marriages, if one really loves their partner then both of them would make the effort to do the occasional reconciliation or reaffirmation of their vows. As BongV once said, you can take a horse to water but it’s the horse’s decision do drink. The basic idea is this – Filipinos like to flaunt rather than save. So… Read more »
Edward
Guest
@Frank Yes, but animals drink base on instincts not decisions so “deciding” is not part of their brain system plus on Zoology, almost 98% of their brain is base on motor skills contrast to humans which has a larger prefrontal cortex (thinking part of the brain), 30% larger than animals, making us the higher species because we can decide. And your definition of marriage is very common. People marry for different reasons. in India, parents wed their children at a very young age. This is a sign of unity between two families so they can have strong family ties. Regardless… Read more »
Frank
Guest
You are correct when you say that simple discipline is the way to go. In this case, it’s the discipline of owning and maintaining a savings account that people won’t just fritter away as mentioned in this blog post. It is the discipline of commitment. The same one that keeps Libyan rebels and Egyptian demonstrators going despite the repression. And speaking of “creating new problems,” I have also observed and understood that no solution is perfect. The rebellions in Libya and Egypt may be resulting in the loss of life, but that’s what happens when people rebel against dictators with… Read more »
Edward
Guest
@Frank Ok I agree. I don’t mean to hit anything here. The point I’m trying to make is the solution that the Harvard guys suggested in their thesis. Honestly, I read that like 2 years ago and I already know that SEED program. What I’m really baffled at here is the “changing the mentality” part. It’s much more different and far difficult. It might have worked in Mindanao area but it’s different if you go whole scale on this or in Metro Manila. Don’t get me wrong, I was excited when I read this solution that these guys did but… Read more »
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