The Philippines’ place under the economic sun

I said it before and I will say it over and over again until our political leaders get it.

There are some facts we must face. First, our import dependence is unsustainable and this is reflected in our alarming trade and current account deficits. The former stood at -$58.43 billion and the latter stood at -4.4 percent of GDP last year. If not mitigated by an increase in investments and/or exports earnings of merchandise and services, our deficits will lead to ballooning debts, a weaker currency, constrained economic growth and economic imbalances. In other words, an economic bust.

Second, the country will never generate real inclusive wealth, neither will it have enough resources to modernize the military and to provide quality social services unless tax revenues, foreign investments and export earnings increase. Third, unless the country becomes a global leader in at least one industry, the probability of being caught in the middle-income trap increases significantly. Fourth, a country whose largest source of income are remittances from the export of its people is indicative of failed governance and an uncompetitive economy.

Let’s face it. Our very own laws and prevailing conditions make it impossible for us to become a manufacturing powerhouse. Expensive power cost, relatively high tax rates, a paralyzing bureaucracy, lacking infrastructure and a labor force shamefully poor in science, technology, engineering and math constrain us from competing with Vietnam, Indonesia and Malaysia.

But we have an ace up our sleeve. Our competence and competitive advantage lie in information technology-business process management (IT-BPM). This is our place under the economic sun. Government will be wise to channel its full support toward it. We have a clear shot at becoming the global leader in IT-BPM and, in the process, generate meaningful wealth for the country.

Yes, the industry is doing good, but it can do better if government gives it the support it needs. The immediate challenges are three-fold. First, to fill the talent gap. Second, to mitigate the effects of artificial intelligence. And third, to diversify and climb the value chain to such fields as AI, software