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Is It
Safe to Smile?
By Michael Alan Hamlin
July 2003
A bit of optimism has begun to seep
through the gloomy corporate veneer that has characterized the business
community's outlook for the economy since Joseph Estrada was elected
president in 1998. It's been a cold nearly six years, despite government
claims of growth. Now, with SARS contained, the Iraq War apparently
over, the surprisingly fast rehabilitation of technology and e-business
seemingly sustainable, and signs of recovery in the U.S. market's
appetite for Philippine goods, services, and people, it's not all
that unusual to see businessmen smiling again.
But with less than 12 months to go
to the next presidential election and new uncertainty, is it in
fact safe to smile? Or will the Philippines do again what it has
so well and so consistently done to itself in the past: shoot itself
down?
Some will argue that government has
become so irrelevant that there's not much chance that whatever
happens by way of electing new leaders next year will mean very
much. After all, the chief sources of growth owe very little to
government. The Philippines has begun to legitimately emerge as
a center for e-Services, for instance, not because government has
poured significant resources into creating a positive image for
the country, but because pioneers and industry champions consistently
and anecdotally report out positive results to their peers, and
this is now being picked up in the international press.
Telecom services have grown phenomenally,
likewise, not because government has championed the sector, but
because it has largely left it alone (admittedly, a good, if passive,
thing) to compete to satisfy Filipinos' unquenchable thirst to communicate
24X7. Agriculture provides another fine example of the irrelevance
of government. For years, government has talked about modernization,
but the sector's business practices are more reminiscent of the
Dark Ages when God, as portrayed in Bruce Almighty, was on vacation.
As a result, the sector does well when it rains, and badly when
it rains too much, and not much else matters. The traditional manufacturing
sector is tiny, and getting tinier as it loses out to low-cost centers
in Indochina and China.
Given the irrelevance of government,
it's hard to understand why officials wonder why people don't want
to pay their taxes. But if government is so irrelevant, why shouldn't
the business community keep on smiling and making money? The answer
is easy enough. First, it is a lot better to have an irrelevant
government, than a plain bad government that causes business conditions
and therefore the economy to deteriorate. However, what are the
chances we'll be left with a merely irrelevant government, rather
than a bad one, next year? Second, a proactive, capable government
is better than an irrelevant government because it can make good
things happen.
When businesspeople contemplate the
not-so-happy prospect of another irrelevant government, or the very
unhappy prospect of a plain bad government, emerging from the next
election, it's unsettling. That feeling is particularly acute when
they daydream about what a difference a truly capable, well-intentioned,
dedicated administration could do for the country, and by extension,
their companies, employees, and suppliers. Smiles fade when we think
about what could be, and really, should be.
This perverse contemplation is further
"gloomified" because it takes place in the context of
a recent uptick in kidnappings, which suggests that the political
fund raising season has begun, at least to some. One executive recently
joked to me that some executives have been kidnapped so often that
they've been given gold loyalty cards for being such good victims.
This not-very-exclusive card apparently qualifies them for the option
of simply paying upfront and avoiding the inconvenience of disappearing
for several days. It's not just kidnappings, of course. Those big
golf tournaments purporting to support the underprivileged and uneducated
are starting up again. All this fund raising, in these and various
other forms, means that capital expense and marketing budgets are
going to be constrained, making it doubly difficult to stay on the
leading edge of any recovery that does take place over the next
few months.
As a result of growing unease over
what kind of government will be elected in 2004, and therefore what
prospects it has of lasting more than three years, business will
likely soon scurry back into its cocoon to wait and see how things
are going to turn out. Interestingly, given the presidential field,
more and more businesspersons I talk to are - apparently like George
Bush and Mahathir Mohamad - anxious for President Gloria Macapagal-Arroyo
to rethink her promise not to run. Others are simply so tired of
working in the context of a rudderless economy that they will welcome
just about any leader who will actually lead.
And so we continue to live and work
in uncertain times. The momentum of non-traditional and other service
sectors will no doubt continue to assure relatively strong growth
regardless of what happens in the elections. But that's not enough
to keep businesspeople smiling. My bet is that there's going to
be much biting of nails in the months leading up to the election,
and that in the end business voters will happily settle for the
status quo rather than take a chance on the unknown.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is
currently at work on High Visibility: The Making and Marketing
of Asian Professionals into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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