Satur C. Ocampo | Looking for answers

By Satur C. Ocampo
At Ground Level | The Philippine Star

“Where’s the vision?” “Where’s the road map?” These have been the common reactions to P-Noy’s second state of the nation address last Monday. The tones have ranged from disappointment on the part of those supportive of his government, to skepticism and cynicism on the part of those critical of its performance.

Indeed, questions on several issues raised during P-Noy’s first year in office were left unanswered — about his economic development plan, rising prices, unemployment and wages, agrarian reform, human rights, environment, among others. Let’s focus on two aspects of economic policy, one highlighted in his first SONA, the other cited in the second.

First, take the Public Private Partnership or PPP projects, mainly proposed by the foreign business chambers. In last year’s SONA, P-Noy declared: “Ito ang magiging solusyon: mga (PPP)… Makukuha natin ang kailangan natin; hindi tayo gagastos, kikita pa tayo… Lalago ang ating ekonomya at bawat Pilipino ay makikinabang.”

That evoked great expectations. P-Noy was expected to follow through with details in his second SONA. Yet he was silent on the PPP. Why?

Citigroup, the giant US bank that regards the PPP as the “centerpiece program and one of the key catalysts for a continued market rerating [referring to the upgrades given to the Philippines by three international credit-rating agencies],” ventures two sympathetic explanations for the silence:

1) P-Noy may have considered that since Public Works Secretary Mar Roxas has just assumed his post, he was cautious in speaking on the status of the PPP program as it is now Roxas’ responsibility; and

2) New “structures for project approvals and implementation to avoid anomalies at DPWH” are still being set up. “This appears to imply that once the structures are in place,” Citicorp observes, “the PPP can move on at a faster pace.” It concludes that the bidding and awarding of two projects, scheduled this year, may fall in 2012.

Whether it is cautiousness or technical difficulties that explain it, wide-ranging criticisms have been raised over the delayed implementation. More telling are the questions over the adequacy of the PPP as the centerpiece program aimed at boosting the economy (such as those raised by Ibon Foundation, and by the Movement for Good Governance, which rated P-Noy’s first-year performance at 4.7 percent).

Second, take the case of the business-process outsourcing (BPO) sector that the government is banking so much on for employment generation. Last Monday, P-Noy proudly said, “In the BPO industry (employment) was at 50,000 in the last 10 years; we are now between 700,000 to 800,000 by the end of the year.”

Now, note this. The United Nations Conference on Trade and Development (UNCTAD), in its World Investment Report 2011 presented last Tuesday, warned the Philippines and other developing nations against depending too much on non-equity modes (NEMs) of foreign direct investments; included in these are BPO services.

Why? Because while NEM investments are easy to get, “they are also easy to lose,” meaning that the investors can easily pull out since they don’t invest much in fixed assets, like buildings, machinery and the like. Trade Undersecretary Cristino Panlilio acknowledges this fact. He remarked, “We have to be wary because there is not much fixed assets involved in them and they capitalize more on the labor force. So it is a challenge for us to be always in tip-top shape and to work harder to sustain our competitive advantage.”

Panlilio emphasized that BPOs “will continue to be part of the focus of the government in its investment promotion campaigns.” The UNCTAD report says information technology and BPO operations in 2010 accounted for 4.8 percent of the Philippine GDP, realized $9 billion in export income, and provided 525,000 jobs.

However, the report points out that BPOs create mismatches between jobs and available skills and compel workers into irregular working hours. A BPO group executive concedes this situation, explaining that jobseekers with different skills are impelled to take call center jobs because no jobs fitting their skills are available.

In his second SONA, P-Noy did take note of this job-skills mismatch and reported that “at this moment, DoLE, CHEd, TESDA, and DepEd are working together to address this issue.” The curricula would be reviewed, he said, “to better direct them to industries that are first in need of workers, and students will be guided so that they may choose classes that will arm them with skills apt for vacant jobs.”

Why should the government adopt BPO-oriented curricula? Given the UNCTAD warning, this step isn’t advisable. It is in fact perilous over the long run.

Yet even Science and Technology Secretary Mario Montejo appears to play along with this government game plan. Early this month he announced that DOST would use communications technology to help expand and sustain the BPO industry, to raise the number of BPO workforce “in a significant way.”

This narrow-vision government line has prompted the group Agham (Advocates of Science and Technology for the People) to call on P-Noy to “institute a comprehensive reform program that would include national industrialization… that would harness the capabilities of our local, world-class scientists… to help propel our country from the agrarian stage to the industrial stage.”

Thoroughgoing rethinking is needed here.

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