Noted Filipino economist Bernardo Villegas said in a forum organized by Management Association of the Philippines that the country’s electronic industry is on an ‘irreversible downward path’ because the government failed to help it.
That’s a big turnaround for Dr Villegas, who usually exalts private efforts and minds little government intervention. And he is also known as a Prophet of Boom for his overly optimistic forecasts. So his dire diagnosis comes as a big surprise. Is the prophet of boom going over to the gloom side?
But for him to issue a blanket statement that the government failed to support the industry is unfair, to say the least. Unfair to the government, to the private sector, to economic history. Export Processing Zones, tax breaks, duty-free imports. The government tried to extend to them whatever it could, and given the government’s depleted coffers, it wasn’t much. Besides, these electronic giants are transnational corporations, whose nature is look for or create situations that will serve their long-term business interests. And they are very mobile. Unfortunately for us, China emerged as a big market with deepening pockets.
It’s true that power costs are high in the Philippines, and tax breaks and incentives here are not as generous as those in other Asian nations. I tend to raise brows over excuses for low productivity because of high costs: power, wages, interest rates, etc. These are stop-gap measures that rarely last and only hinder a country’s long-term productivity.
So where did the government fail? Agriculture development, targeted export policies, governance and corruption, and declining education quality.
So the downward path is not unforeseen. It was an accident waiting to happen. Whether its irreversible or not is worth another article.
