I am writing this on Sunday, the day before the new President’s state-of-the-nation-address (SONA). From earlier newspaper pronouncements, one of the topics he is going to talk about is poverty. I am glad he will. Poverty is one of the main reasons, if not the single main reason, why corruption thrives and why our country, despite abundance of natural resources, still struggles to claim its prideful place in the community of nations. Poverty reduction, alleviation or eradication have always been a principal concern of various political administrations, but so far no political administration has succeeded. This makes one wonder if we are asking the right questions or unfairly blaming anyone for our sad plight.
To be sure there are many reasons for our poverty. Hence one takes care not to ascribe it to one single reason. The lack of jobs available to our masses is certainly one of the bigger reasons. The lack of jobs is explained in the main by the lack of or insufficient, investments both from local and foreign businessmen. The lack of or insufficient investment is in turn explained by the perception of those who have the capital and entrepreneurial know-how that the environment for business in our country is not propitious for any number of reasons. This includes lack of infrastructures, lack of manpower trained precisely to address their requirements, unstable peace and order environment, lack of industry-specific government support, non-patronage by the market of local products, high transaction costs brought about by unclear, if not complex, regulatory regime, and corruption.
All of these underlying causes must be separately but simultaneously addressed. Hence we do not reform the legal system or the regulatory environment if we do not also address the problems spawned by unstable peace and order. Only businesses that can absorb the high cost of hiring private security services would dare invest in any place where bandits roam and insurgents disrupt normal operations every so often. Naturally they pass on their cost to consumers and also try everything to keep their monopoly status, since viable competition would make their operations unprofitable. Banditry in some provinces is one reason why development in the countryside is uneven and hard to come by. The pressure to maintain monopoly status is one reason why wealth is concentrated in a few hands, and why the entry of more players in certain industries does not happen.
Lack of efficient infrastructures is one big reason why local products and local produce are very costly, serving only a few. If you manufacture finished goods, you need to transport them to your markets. But if your trucking providers must stand endless hours waiting for traffic to ease up along highways that bog down every time there is heavy rain, you will not have any incentive to produce more at lower cost per unit, nor for the truckers to reduce their fees because of the productive hours wasted during travel. We need to upgrade our road systems, along with the transport sector, the shipping industry, and need to rehabilitate or put up new railways. Until then, fewer businessmen would want to produce anything that needed to be transported to far-away markets, and all we get in the end are very small business establishments that just cater to the day-to-day needs of local markets.
Lack of specific government support also lies at the roots of our poverty. If the necessary support had long ago been given, for instance, to the orchard farmers of Nueva Vizcaya, affordable local oranges and other native and even hybrid fruits could be flooding markets right now, driving employment opportunities there and nearby towns. Jatropha, a shrub that produces seeds from which oil can be extracted, could be grown almost anywhere in the Philippines . Why, despite our dependence on foreign oil, no specific government program has been devised to encourage, even push for, the organization of activities related to the planting, harvesting and processing of Jatropha, explains why investment in this area is insignificant, when it can provide a diverse source of livelihood for our people and wean us somewhat from our dependence on foreign-sourced fuels.
Lack of space prevents me from saying more about the many causes of our poverty. But what I want to stress is this: not any one cause, such as corruption, plays a role in our being poor. In fact it is poverty that also causes corruption, as people who cannot find legitimate means to adequately support themselves and their families resort to illegal and immoral means to have the income that would tide them by. In any case, there is a critical need for all forces of society to act in synch in fighting poverty. The sooner we face this multi-faceted problem squarely and stop fault-finding, the sooner we should be on our way. £
Original published in the July 30-31, 2010 issue of Business Mirror.
