The Waves of Philippine Business P. 3

I mentioned in the first part of this series, that hindsight is 20/20, and foresight is ensuring you still have 20/20. It's about being prepared for the future. It is a bold attempt for me to be discussing about the waves of Philippine business. I'm no business guru. I just have a penchant for observation and deep thought. Quiet dissertation, so to speak.

I mentioned also that the biggest and most important indicator are OFW Remittances. This is the single most crucial factor that drives the Philippine Economy. Sure consumption is equally important. But to put things in perspective - if we are to illustrate it - the Philippine Economy is like a jeepney.

Consumption is the jeepney driver, OFW remittances are the passengers. The more passengers the jeepney driver has, the bigger his consumption power is. When he sees a lot of prospective passengers on the street, he'll drive the jeepney faster to finish his first trip and go right back to picking the next batch of passengers on his second trip. The Philippine Economy explained.

OFW remittances are the sole reason why the Philippine economy continues to exist. That's why even with high corruption level, bad business practices, rising poverty level, and dwindling natural resources, we aren't going under anytime soon. Obviously, all of these negative factors will catch up with the country one day, but when? The answer is up in the air.

I quoted John Gokonwei earlier, mentioning that we are a country that consumes everything, and produces nothing. Reading between the lines, it means that we have a low manufacturing base in the country. This is beacause most have migrated to investor-friendly China in the past few years. Apart from that, the lack of labor unions in that country allow foreign companies to scrimp on wages.

Even if we don't have a diverse set of manufacturing plants in the country, we still export our number one produce - human talent. However, unlike plants that manufacture goods in just a number of days or weeks or months, ours take years. It takes 20 years to send off able workers. Anyone younger than that would be considered illegal.

Since population is a growing resource for us, there are many who have gone abroad already. There is just so many Filipinos in that age range. So in understanding OFW remittances and OFW exports, we have to know, how many productive individuals are in that age range? And the next important question is, when will the existing ones retire? When they retire, do they plan to come back?

You can see where question leads to, but let's skip that for the moment.

As I've mentioned, even though we don't have a lot of manufacturers here, we are still exporters by my definition. Exporters of labor. But what have you been noticing? We don't just export DH (domestic helpers) anymore, we now export healthcare professionals, apart from engineers or IT professionals.

And this is something that is interesting to talk about. It's basically a hindsight analysis. In most manufacturing countries, they must go up the value chain to survive. China won't survive by just producing cheap garments. They must venture also into technology.

In the same way, our labor exports have gone up the value chain - by producing nurses. And like high value goods, our high value professionals produce/remit more dollars back home, thus driving our economy even more. With growing competition from Indonesia of domestic helpers, (at least in Hong Kong) it's interesting to note that we have shifted our human exports to a different industry.

It is in these analyses that will spring forth a slew of ideas. We'll discuss more in my next entry. Happy Halloween!