A trade war between the United States and China presents a wealth of opportunity to the Philippines — if, of course, Filipinos are up to the challenge of seizing them. Up for grabs is a bonanza for suppliers of goods and services that the US is set to cut China out of if this “war” escalates. It all depends on whether Philippine business is up to competing for a piece of the pie.
Key to this lies in the Philippines’ ability to gear up and put all hands on desk for the race to seize sizeable chunks of the new demand for non-Chinese supplied products that will be created in the US market. At present, the Philippine economy is doing well, but it is at risk of sputtering unless vital support foundations are laid to ensure it stands on solid footing. Key pillars of this foundation are essential transport and labour productivity infrastructure.
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The Philippines routinely produces a vast bumper crop of natural and human resources. However, mobilising these into economic output is an on-going challenge due to formidable physical and social constraints.
For one thing, the Philippines is an archipelago and, as such, transport and storage of goods is costly along much of the supply chain. Though a lot of investment has been poured into the throughput capacity of sea ports over the last several decades, roads and bridges connecting these to industrial centres remain substandard and often present a limit to both size, weight, and speed of trucks plying them. More importantly, the use of rail for freight movement remains at pre-1950s levels if at all existent. The biggest challenge is to reduce the cost of moving one tonne of Filipino product per kilometre. To do that freight transport in the Philippines badly needs to step up from tingi scales to the modern bulk logistics that make use of high-speed high capacity transport, storage, and handling facilities seen in truly competitive countries.
Second, the competitiveness of the Philippine labour force has been tapering off thanks to productivity gain not keeping apace with rising salaries and wages. Various leftist campaigns to raise the “minimum wage” achieved no more than to further highlight an emerging national delusion that Filipino workers are up to the task of building a truly strong national industrial machine. Higher wages can only be supported in a free market by a proportionate increase in labour productivity. Without the latter, higher wages only contribute to inflation and, down the line, more poverty. Add to that the Philippines’ enormous population which puts even more downward pressure on salaries and wages and it becomes starkly evident that the Filipino worker is in no position to compete unless her inherent capabilities as contributors to real industrial output is lifted.
Looking past the immense feat of upgrading domestic industrial capability and infrastructure, there are easy fixes in the horizon. The influx of experienced and pound-for-pound more economically valuable Chinese workers into the Philippines, while seen by many as a bad thing, itself presents vast opportunities for millions of underemployed Filipinos and struggling local businesses. The substantial purchasing power of these relatively better-paid foreigners represents new demand for local goods and services. The economic activity they will stir up, not to mention the construction work required to develop property needed to house them, will go into creating more jobs and demand that could spell boom times for enterprising Filipinos.
Key here is to find opportunity in what, at first, seems like adversity. It does not help that a community of Opposition “thought leaders” and “influencers” still sore from a catastrophic defeat in this year’s elections know nothing beyond blanketing the national discourse with a negative pessisimistic mood all for the purpose of undermining a government that is working hard in the service of Filipinos who had, for their part, loudly indicated a resounding mandate to continue down the new path it charted for them. It is time Filipinos come together and work towards the future. Together they should ditch the obsolete thinking that certain elements in their politics would like to see persist to keep them anchored in a past that is no longer relevant and beholden to old demons that only serve to haunt rather than inspire.
benign0 is the Webmaster of GetRealPhilippines.com.