Monday, April 6, 2015

Detroit of Asia: Attainable goal or just whistling in the dark?

If there is one thing that Mr. Aquino ever said that made the whole nation line up behind him, that was his ambitious plan to transform a suitable part of the country into what he calls the “ Detroit of Asia.” No single soul, not even the most rabid critic of Mr. Aquino, said “ nay” to that.
It would mean many things to the nation, primarily:
• The return of manufacturing jobs, the ones we lost when the following industrial sectors mostly vanished—steel, garments, chemicals and rubber—to create pockets of desolate industrial wastelands
• We will get past the stage of exporting OFWs and electronic chips and will ship cars and trucks to overseas destination for a change. Plus car parts and parts for LCVs, or light commercial vehicles
• The psychic income that will come from the possession of the bragging rights that—at last—we have built an industrial foundry that we can be proud of
• The return of trade unions with powerful bargaining leverage. Mr. Herrera knows that the car industry of Detroit was associated with dynamic l trade unions
• You may or may not agree with the fifth. It will be our sweet revenge on the Thais, who have been selling us their surplus rice, patis, toyo and bagoong for half a generation. The olive-oil using elite are not aware of that, but for us in the lower strata of society are painfully aware of that. Those stuff make up about two thirds of our daily dietary requirement.
(Remember the dream of the old man Jacinto when he built the first integrated steel mill in Iligan? It was his dream to supply all the steel needs for a vibrant manufacturing sector. After the proclamation of martial rule, one of the first few acts of Mr. Marcos was to hunt him down and drive him out of the country.)
But much as we want to see that day of manufacturing renaissance, we have to ask this question. Is it a realistic, perfectly-attainable dream? Only two are plausible answers. Maybe. Or, it is just plain whistling in the dark.
To steal the thunder from Thailand, and initially grab a piece of the assembly business from the Thais, Mr. Aquino has to raise the ante on incentives—match, if not improve on, the tax and other incentives offered by Bangkok. The incentives should be radically attractive enough to lure in Toyota and the likes and the recent failure of government to accept the conditions for the assembly of the Innova here is a sign that, fiscally, the Aquino government would not bend over backward just to incentivize the vehicle assemblers.
Even if it were all systems go on the incentive/fiscal aspect, there is another gauntlet to be hurdled— the emotional/psychic thing. Many Filipinos would be spooked with a red carpet treatment for vehicle assemblers and zero consideration, tax-wise, for the Pacman. Especially if he KOs Mayweather in the May fight.
And the taxpayers levied a 32 percent tax, which is just about the majority of the fixed –income earners, would not look at a special fiscal arrangement for assemblers and zero consideration for them. That tax level of wage earners is the highest in the region.
Before his trust and approval ratings nosedived, Mr. Aquino could invoke unchallenged leadership—in contrast to deeply-polarized Thailand—as part of the incentives. No more now, with his precarious trust and approval ratings. Mr. Aquino used to bend the country to his will. That is no longer the case as his critics and detractors have stepped-up on their boldness and courses of action. In late 2010, remember, the most rabid anti-Aquino activists did not dare burn his effigy as the general public would frown upon it.
What if the next polling would show another steep drop in the trust and approval ratings of Mr. Aquino? Such occurrence would be a big negative on the campaign of Mr. Aquino to build thriving assembly enclaves for cars, pick-ups and light commercial vehicles here.
The major assemblers will realistically look at the time constraints too. Mr. Aquino has just a year in office and he cannot guarantee— like Lula of Brazil—a smooth electoral victory for his chosen presidential candidate, one who will share his policy directions. In fact, the LP is now called the Losers Party, a party that cannot win the 2016 presidential election.
All of the above do not mean that the Philippines has no major advantages over Thailand.
The things going for us are twofold: a manpower pool that is either skilled or easily trainable. Nothing can beat the willingness of young Filipinos to land a decent job—and stay on that job with fidelity. 

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