A Strategy for Inclusive Economic Growth

While the criticism that the recent gains enjoyed by the Philippine economy barely tickles down to the masses is valid, it is not without a solution. 

Perhaps the primary challenge to the state is to create the mindset among the multitudes that they are active stakeholders and participants in the economy, and thus should not just wait for growth to trickle down to them. As I see it, the Filipino’s view of his role in all this activity is akin to that of Juan Tamad who spends his days under the guava tree with his mouth open, waiting for the fruit to fall into it, instead of picking the fruit, and more other fruits so that he can do more with his time, and perhaps earn a little money by selling the fruit in the market.

Creating an active mindset will entail education at the grassroots, not just through public information campaigns, but by providing a smorgasbord of livelihood options and training to those who wish to engage in it. Create opportunities for self-employment and entrepreneurship, and level the playing field, so that those who wish to do business from the lower classes can have as much a chance to succeed as those from the privileged classes.

Minimize the risk of failure in entrepreneurship first, by providing management training at a nominal cost for those who want to engage in it. Emphasize creative problem solving, analytical and critical thinking, and niche marketing, as well as innovation in the training process. Future entrepreneurs must be trained to become adaptable and independent decision makers because market conditions are unpredictable and thus, textbook solutions can only take them so far.

Utilize technology to support these startups, which will usually be small and medium in size in the beginning. Already, there are cloud based outsourced business solutions for accounting and human resources management, for instance, which can make their operations efficient and help them with “slow burn” of their seed capital, which is, help them spend their capital efficiently.

A possible ally in creating a nation of entrepreneurs could be the technology companies that offer cloud computing services. It is in their best interests to have an educated and sustainable market for their products, so they can lend the knowledge and management resources they have at hand to the government to provide training for future entrepreneurs.

Technology companies could also use this opportunity to create a market for their services, first by building brand equity through its education services. Among others, it could throw in consultation services as a perk or a premium to its technology services. It could tie up with knowledge management and consultation firms to provide such services. Attending business school is an expensive undertaking, but if enterprises are loyal to the provider, they could gain knowledge culled from such through their education and consulting services.

The technology provider could also partner with NGOs such as GoNegosyo and Gawad Kalinga to keep its ear to the ground and develop services that will remain relevant to its markets. It must be emphasized that continuous development of new services as technology and market demand evolve is a good survival strategy for them.

One platform that has endless potential as a business tool is mobile technology. With increasing mobile bandwidth and more sophisticated access tools (smart phones and tablets), the possibilities for using the platform for business applications is only as limited as our imagination. GPS based fleet tracking, real time inventory reporting, customer service updating, these are but a few of the examples of the business applications that can be developed for the mobile platform.

We emphasize the need to create and sustain small and medium enterprises because they are in the best position to provide employment and other benefits to communities at the grassroots level. They could provide livelihood to residents in their locale, because it is more efficient to do so. Unlike conglomerates and multinationals where responsibilities, duties and job descriptions have far reaching effects should an employee fail, failure in small scale businesses are more bearable and less costly for the company.  Thus, even low skilled individuals can qualify for employment in such enterprises. However, the cycle should not stop here. 

These employees must be given opportunities for further personal and professional growth through on the job training and education.

Moreover, the informal economy is already made up of such enterprises. All we need to do is get the Filipino out of the “sari-sari store mentality” and help him think of more creative means of making their money grow through more relevant and innovative enterprises.

To transform the informal economy, participants should also be taught the importance of paying proper taxes. Taxes fuel state operations, for better or worse, but given the right leadership, such as the one we have currently, the odds could be in the taxpayers’ favor. If taxes are reinvested properly in institutionalized entrepreneurship assistance programmes, such as business management training and microfinance and lending initiatives, it is possible to see positive results within one generation of such an investment.

Another element that needs to be addressed is the private sector social security system. The current system leaves much to be desired, with pensions not commensurate to contributions. News reports of fund mishandling and the use of the system as a milking cow by the executives abound. Whether this is a public relations or a real problem is immaterial. The government needs to build public trust in this institution, as well as get better executives, perhaps from the private sector, who will look out for the contributors’ best interests. A possible solution to the rampant corruption in this institution is its privatization and corporatization with its leaders answerable to a well represented midsection of the members.

Social security is important because it assures employees and entrepreneurs a fallback position should things go awry. Often, the unemployed are disheartened to try and become productive again after a bout with disability or a long period of non-productivity because they have experienced what it is like to be totally dependent and lose their dignity in the process. A reliable social security system that provides financial support within reasonable means will keep Filipinos hungry for the benefits of being independent and productive.

On leveling the playing field for the “haves” and “have nots”: minimize the cost of business registration, cut the red tape, and let the rule of law apply to everyone. This is a tall order, but it is not impossible: minimize, if not eradicate corruption in the government agencies and processes that deal directly with enterprises. For instance, computerize tax registration and payment processes by using online filing and bank to bank transfer services. Issuing of business permits can be migrated to a non-contact, electronic environment to eradicate opportunities for bribery. Let those who follow the rule of law reap the benefits of honour and obedience. 

The measures that could be undertaken to free the enterprise from the stranglehold of red tape and corruption are possibly infinite, all it would take is political will and genuine vision, as well as the desire to reach this goal through honourable means.