Arangkada Philippines Forum 2021: Pathways to A Better Future
By Alice Llamas
Last December 1, 2021, I attended the Arangkada Philippines Forum 2021: “Pathways to A Better Future.” Opening the forum was a special address from Mr. Anthony Abad, Senior Partner from Abad, Alcantara & Associates.
In his address, he talked about poverty alleviation and inclusion and opening the Philippine economy to more foreign direct investments. According to Mr. Abad, the prerequisites of economic growth are enterprise, employment, entrepreneurship, manufacturing, agriculture, among others. If we have these, we will be able to achieve poverty alleviation or, better yet, poverty eradication.
He shared that Vietnam and China have been able to bring millions of people out of poverty within a period of at least a decade. According to him, people tend to take these countries for granted and just see them as they are now. We forget that, at a certain point in time, China, Vietnam, Singapore, and Malaysia were poor. People were hungry and suffered from the things we are suffering from now, including poor healthcare. Now that these countries have robust middle class populations, people wonder how they were able to do it.
Mr. Abad noted that even though the governments of China and Vietnam are led by strong communist parties, they used a very simple solution to achieve their level of development — foreign direct investments (FDIs). They have shifted to a market-based economy and did not dwell on democratic principles or institutions. Instead, they focused on lifting their population out of poverty. And this, according to him, is also something we should do.
Mr. Abad believes that until people are rescued from poverty, have economic choices, are able to feed themselves adequately, have proper healthcare, clothing, and shelter, are at ease and secure, it will be hard to talk to them about anything else. We cannot discuss being resilient, saving the environment, or climate change with them. People won’t think and care about these things if they are mired in poverty. We have to prioritize the eradication of poverty because this is how we can save ourselves from the effects of the pandemic.
Mr. Abad emphasized that FDIs are important because they bring benefits to our economy that are necessary to uplifting ourselves from underdevelopment. It’s transformative. It changes the whole dynamic and it will change how our economy will look like. FDIs will bring in competition from outside the country and while most think that this might harm profit margins of incumbent firms, there is empirical evidence that competition actually leads to higher share values. Competition turned out to be something good because it leveled the playing field for all players. He added that if there’s competition, firms will be driven to become more dynamic and innovative, leading to improved technology, more inventions, and employment that are strong foundations for the future.
Moving forward, Mr. Abad noted that capital accumulation is the most important factor in eradicating poverty and establishing a resilient and dynamic economy. Without the formation and accumulation of capital in our system, we will not be able to achieve the things we aspire for. We want a good manufacturing sector, we want infrastructure, we want small and medium enterprises to prosper, we want people to be gainfully employed. This will not be achieved through charity and aid and will not happen without capital. Capital has to enter and it is only through capital that we will be able to reverse the vicious cycle of poverty and underdevelopment. Economic studies have shown that an open economy bringing in capital is what reverses the vicious cycle of poverty and underdevelopment.
Touching on supporting tech start-ups, Mr. Abad mentioned that foreign investors usually want to bring in somewhere between USD 50,000 to 80,000. Unfortunately, our country’s required minimum investment of USD 200,000 for domestic market enterprise discourages investors from coming in. Additionally, they do not want to be limited to 40% equity. Incentives should be granted to foreigners who plan to invest in the Philippines. Regulations have to be simplified so that businesses can flourish and function. Simplicity is the key. Simplicity also means that we do not impose complicated rules and regulations that will tempt bureaucrats to tyrannize and harass small and medium enterprises.
The speaker also mentioned that capital accumulation and FDIs are paramount and absolutely necessary. Economic growth can be sustainable if we complement it with other important factors. He cited Adam Smith, stating that in a working market economy, we need a strong government that provides public goods and services to the population. We need a government that can take care of its people, not favoring any particular group, providing public goods, services, and shared facilities so that everyone can enjoy and make choices.
Moreover, Mr. Abad said that the government should ensure that there is peace and order. Inclusion happens when people are no longer hungry. If this happens, they will want to participate in the decision-making process. There should also be no doubts about our healthcare system. There should be a standard for food and shelter and efficient transport system for all.
He added that we have to look at how our political structure is set up because the economy and the political system work hand in hand. It’s wrong to leave politics to politicians and the economy to economists. People are wondering why things are not working out and it’s because our political system does not engender an economy that is resilient, feeds and takes care of everybody, and helps the Philippines function in an integrated world economy. This is another reality we have to face — that we are part of the world economy. We are part of regional trading arrangements, but this participation also requires that our governance and political system is in step with our economic ambitions.
Lastly, he expressed that it is important for everyone to participate in the amendment, improvement, and reform of our constitution and that hopefully, our next leadership will be up for that challenge.
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About the author:
Alice possesses a solid decade of experience in business development, human resources, recruitment and talent acquisition. She graduated from Far Eastern University with a degree in Political Science.
