Masipag: Going Beyond Sustainability in the Philippines
"We have the best workforce in the world." -- Philippine Economic Zone Authority
"Masipag" is the Filipino word for industrious, a term that has often been used to describe the nation's workers and a trait that has made the Philippines a growing destination for foreign direct investment (FDI).
"Two factors -- skilled workforce and competitive labor cost -- account for investors' choice of the Philippines as an ideal investment site," according to the Manila Bulletin. "Many foreign companies reportedly prefer Filipino workers because they are easily trained, industrious, computer literate, English-speaking, and willing to work longer hours and at cheaper labor cost." These factors all played a role in the Philippines' recent eclipsing of India in call center revenue.
FAVORABLE INVESTOR SENTIMENT = HIGHER FDI
The nation’s central bank, Bangko Sentral ng Pilipinas (BSP), reported last week that in the first five months of 2011, FDI inflows totaled USD 714 million, up from USD 619 million from the same period last year, representing a 15.3 percent increase. Gross equity capital placements totalled US 209 million, primarily coming from the United States, Japan, Hong Kong, Singapore and the Netherlands, covering a variety of growth sectors, including real estate, manufacturing, mining, wholesale and retail trade, utilities and construction.
BSP said that the positive numbers reflected "favorable investor sentiment on account of the country's strong macroeconomic fundamentals, such as the improving fiscal situation, benign inflation and relatively stable banking sector." On June 23, Fitch ratings agency upgraded the Philippines sovereign credit to BBB- with a stable long-term outlook.
LOOKING TO JOIN AN EXCLUSIVE CLUB
Looking to the future, foreign companies may even be given the opportunity to build more of a foothold in the Philippine economy. Last week, while on a visit to Manila, the U.S. Ambassaor to the Philippines Harry K. Thomas Jr. said that the Philippine Finance Secretary Cesar Purisima will meet with U.S. Trade Representative Ron Kirk in Washington next month to discuss plans for the Philippines to join the Trans-Pacific Partnership (TPP), an Asia-Pacific trade agreement currently being negotiated by the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. The TPP aims to eliminate tariffs among members by 2015.
But in order to join the TPP, the Philippines has to jump a few hurdles, most significantly introducing a charter change in the 1987 Philippine Constitution (a move known as "Cha-Cha" to Filipinos), which currently bars foreign equity in certain types of industries, such as mass media, engineering, medicine, law and forestry, and also bars foreign companies to build majority stakes in others. "They have to change laws, issue executive orders and frankly, introduce amendments to the Constitution," said Thomas on Thursday at a Philippine-US relations forum organized by the Washington-based Asia Society. Opponents of "Cha-Cha" say that Uncle Sam wants too big a piece of the Philippine pie. Supporters want to eliminate what they see as draconian protectionism that has stifled economic growth.
GOING "BEYOND SUSTAINABILITY"
Whether or not "Cha-Cha" will rally enough public and legislative support is still a big question. But the interest of foreign investors will likely be piqued if it goes through. In particular, those investors with a focus on socially responsible investing (SRI) will be happy to note the nation’s increasing focus on corporate social responsibility (CSR). Last week, Cebu, one of the most developed Philippine provinces, hosted the Third Annual Global CSR Summit & Awards 2011, Asia's most prestigious awards program in the realm of CSR. The summit examined "issues of sustainability for businesses in Asia for the 21st century amidst weaknesses in the global economy, environmental disasters, political instability in the Middle East and the global food crisis," according to NonProfitHub.org.
This year's guest of honor and award presenter was Senator Manny Villar, the author of a bill (SB 1239) that seeks to make it mandatory for large taxpayers to devote a percentage of net income to CSR initiatives. The theme of the summit was "Beyond Sustainability," a concept described by the event's organizers as "going beyond narrow concepts of sustainability that aims at minimizing environmental harm and maintaining the status quo towards a new paradigm of embracing innovative and cutting edge solutions that contribute beneficially to profits, societies and the environment."
As far as the Philippines and its current and future investors are concerned, that new paradigm will undoubtedly be built on the "masipag" backs of Filipino workers.
image: Monument of Senator Benigno Aquino, Jr. in front of the Philippine Stock Exchange (PSE), Makati Tower, Manila. (credit: Jon Voltaire B. Aquino, Wikimedia Commons)