Saturday, August 7, 2010

"Yes, I believe, he can!"

The head of a prominent foreign chamber of commerce believes that President Benigno S. Aquino can deliver on his campaign promises although he admits to being underwhelmed at the content and vision of the president’s recent state of the nation address (Sona).

In an exclusive interview before the SONA, Austen Chamberlain, president of the American Chamber of Commerce (Amcham) said that Aquino can deliver but it is contingent on his getting the right people, getting good advice, having the political will, and having the energy to continue to make the right decisions. He asserts, “I believe he can do it. And, hopefully, he will.”

His post-SONA rejoinder reads, “The message was clear and the content reasonable. I didn’t see a lot of Shock and Awe, but then again I might have, had there not been the build up in the papers.”

As head of Amcham, Chamberlain meets his counterparts monthly under the auspices of the Joint Foreign Chambers. He shares their impetus for growth to advance foreign direct investment (FDI): improve the climate for foreign investments by allowing more foreign ownership and participation in the economy, leveling the playing field, and a justice system that works.

The priority bills they believe will help the country attract substantial foreign investments are: the formation of a department for information and communications technology (DICT), and laws on transparency, anti-smuggling, and corruption.

Chamberlain said the new President is on the right track though. Aquino has to create jobs, invest in infrastructure, create transparency, improve procurement processes, and zero based budgeting.

There is a lot of work to be done and he hopes BSA’s team will stay focused on this vision of improving the lives of Filipinos, “I believe there is a lot more to do in order to accomplish these goals and fighting corruption is a major task that cannot be eradicated overnight. I hope that this does not sidetrack the new administration to the exclusion of a holistic approach to all the problems e.g., obtaining more foreign investment to create economic growth, jobs, extend education by 2 years, improve proficiency in the English language, and make hard decisions that are in the best interest of the country rather than populist.”

The Amcham president said it is hard to be in Aquino’s shoes because it is difficult to  keep everybody happy since there are so many opposing forces to everything, “You can get so bogged down and mired by having all these opposing forces that are just too complex  and too complicated. Somebody has to come in and say this is how we are going to do it. We are going to make some people angry but if want to get from this point and move forward we have to do this, this, and this. Unfortunately, you cannot keep everybody happy all the time.”

On the issue whether increased labor and electricity costs may force present investors to relocate elsewhere, he feels that labor cost is high because labor and government have not achieved the proper balance between productivity and populist policy. Labor cost in the Philippines compared to neighbors is higher. While, electricity costs have gone up basically because of lack of supply and sudden increase in demand.

Chamberlain explained that the country has been experiencing capital flight for a long time. Goodyear, Intel and many others closed their factories. He said a lot of it is due to China and the fierce competition from other Asian countries, “If you want the investments and the jobs, you have to compete regionally against China, India, Indonesia, Vietnam, Singapore, Hongkong, etc. But there have been new factories that have come in as well. Texas Instruments invested a billion and a half in Clark. So the companies that have been here for a long time and have flourished here have reinvested. But there is not a lot of new investment other than Hanjin shipbuilding factory in Subic.”

Chamberlain observed that there seems to be more optimism in the air—more than anytime in the last 10 years, and that the SONA built on that sense of optimism. “The people I have talked and listened to generally feel there is a better chance then ever that the country will finally begin moving forward. There are always people that will disagree and fight progress every step of the way...that is democracy. But I sense that the general population is behind this and that a new “People Power” will emerge. Not one that marches down EDSA but people uniting in a single purpose to fight the county’s problems together for the betterment of all its citizens. When you get enough people thinking that way, you get synergy and if you do it with honesty, with integrity and with the right principles and purpose in mind, good things can happen,” he said, concluding, “Well done Mr. Aquino!”

His company

Austen Chamberlain is the president and CEO of Carepak Moving and Storage, a leader in the international Moving, Storage, and Records Management Service industries in the Philippines.  Since investing in the company, it has grown two fold in 7 years with increased market share, and a diversified revenue base including handling of shipments in and out of Micronesia. Carepak is the Network Representative for Allied Pickfords in the APAC and ME, Allied International in the Americas and Team Allied Europe. It is the world’s largest network of quality moving companies. Allied’s parent company is Sirva Inc. and is listed on the New York Stock Exchange (NYSE). 


“Read the roadmap.”

This was Austen Chamberlain’s reply when asked about any unsolicited advice for President Noynoy. Chamberlain is on his second term as president of the American Chamber of Commerce (Amcham).

The Roadmap he refers to is an advocacy recommendation of the Amcham entitled, “Roadmap to More Foreign Investments.” It was first released in 2003 and later updated in 2004.

According to Chamberlain, the latest Roadmap, which is still a draft and being completed, is a joint effort of the Joint Foreign Chambers of the Philippines (JFC) but it encompasses the “7 Big Winners: High Growth Sectors for Investment and Jobs.” The Roadmap itself covers the entire investment climate but features the “7 big winners” as well. It will be recalled that the JFC presented the latter during a briefing attended by representatives from the Philippine government, private sector, international organizations, academe, think tanks, business groups and media last April 12 in Makati. It forecasts $75 billion in foreign direct investments (FDI) and 10 million jobs from 2010-2020 if the government follows its headline recommendations. Apparently, this recommendation for investment climate reform by the JFC was presented to the previous administration. JFC plans to resubmit it to Aquino this time.

The Seven Big Winners are 1) agribusiness, 2) business process outsourcing (BPO), 3) creative industries, 4) infrastructure: airports and seaports, power and water, road and rail, 5) manufacturing & logistics 6) mining, and 7) tourism (including medical travel and retirement). 

The 2006 Roadmap, on the other hand, included six broad areas for reform: 1) Infrastructure, 2) Governance, 3) Population Growth, 4) Legislative Reform, 5) English, and 6) Security.

For Infrastructure, the previous concerns centered on the Philippines not investing sufficiently on it compared to the $3+ billion needed each year. Foreign investors were particularly concerned about the poor conditions of most air, land and marine transport infrastructure. Four years ago, they already foresaw the high cost and expected shortages of electric power and the inadequate supply of quality water. Since only the private sector can finance, build and operate most of the needed infrastructure, a more attractive contractual, financing and operating environment is essential.
It is good to know, however, that not all recommendations fell on deaf ears as the need to accelerate the privatization of NPC and Napocor was heeded.

We will tackle the other areas for reform in succeeding columns in greater detail while we haggle for an advance copy of the 2010 Roadmap which will be submitted to President Noynoy.

Chamberlain is upbeat about their latest roadmap and it would be interesting to see what it contains.

I have a feeling it includes the creation of a Department of Information and Communications Technology (DICT), the need to seriously clamp down on corruption and smuggling, having a legal system that works, and the need for a level playing field.

Some may feel that it will be extremely difficult to comply with the JFC recommendations but Chamberlain believes that all it takes is just political will if we really want to achieve exponential growth in FDIs from the present $1 billion to a whopping $10 billion a year.

It now depends on how the new administration will treat it – will they value it as a roadmap … or, take it for granted as just a wishlist?