Liquid, Liquefied and the Diaspora to the Rescue

Written on Monday, June 16th, 2008 at 9:46 pm | by caffeine_sparks

Emmanuel of IPE Zone points the massive outflow of portfolio investments from the Philippines this month. He hearkens it to the Asian financial crisis of 1997. To ‘counter’ the net exit of hot money, the Filipino Diaspora tops last year’s first quarter record by 14.5 percent. It is amazing to me how the multitude of Filipinos labouring overseas - unnamed and unmobilised, can nevertheless mount a unified response. Imagine the thousands of phone calls from family coursing through networks of telecommunications all over the globe. A mother complaining about the soaring prices of food at the palengke. A brother asking his kuya to send 10 percent more for his tuition this June. Buffeted by formless enemies, the Diaspora, just as formless, comes to the rescue.

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19 Responses to “Liquid, Liquefied and the Diaspora to the Rescue”

  1. cvj on June 16th, 2008 10:05 pm

    In his rejoiner to Nick Joaquin’s Heritage of Smallness essay, Abe Margallo has characterized the OFW remittances as little drops that make the ocean.

  2. Nick on June 16th, 2008 10:16 pm

    @sparks, welcome into the fray of things.. I’m glad to see your first post.. And a topic that many will agree, is one of the most important aspect of our society, a detached sector of society, in location, but not in spirit..

  3. sparks on June 16th, 2008 10:29 pm

    Chuck,

    You know how I am conflicted regarding the role of remittances as an alternative form of raising capital in the country, as evident here and here.

    Even economists themselves have no definitive answer with regard to the role of remittances and development. In our case, simply by the look of things, this type of inflow is keeping all of us afloat. It is meant as stop-gap measure. Because the local and public sector is unable to sustain basic social safetynets - our (dis)located transglobal networks are doing it for us.

    Obviously the sustainability of this temporary measure is in question. We cannot continue exporting people. And as the main engine of capitalism today (i.e the United States) looks set to retract, borders will most definitely harden against imported labour.

    Nick,

    No. Thank you. :)

  4. cvj on June 16th, 2008 11:32 pm

    Sparks, yes i agree we cannot build a world class economy on remittances alone. At some point we have to develop our home grown production capabilities if only our Oligarchs shift away from land (and trading) and invest in industry (preferably manufacturing).

    OFW capital can then play a role if the government can encourage us to channel more of our remittances to a retirement nest egg which can then be used as capital for an OFW Development Bank which i described in this comment over at Manolo’s.

  5. J on June 17th, 2008 5:21 am

    That’s a good idea, cvj. But, as you already know, I also advocate OFWs being encouraged to invest too.

  6. cocoy on June 17th, 2008 5:42 am

    i vaguely remember a chinese quote (correct me if i am wrong) that for the Chinese, the word for “Crisis” is composed of two characters with one meaning “danger” and the other “opportunity”.

    For startups there are two ways to raise capital— venture cap and well, you bootstrap it yourself. it isn’t a question of whether there isn’t any money.

    Entrepreneurs the world over always find ways to give their ideas a chance to grow. it is what makes them entrepreneurs. it is i think these two fundamental questions that are more important: 1) do you have an idea? 2) do you have enough passion and enough vision to see that idea through.

    Entrepreneurs the world over also know how to make things work, for as little resources as possible. It is like a painter having a picture in his head of what he’s about to paint. Or a writer having this idea where to take his characters. They have an idea of how their company is going to be and the will to make it happen.

    For the Filipino, the money’s been there. Every family in this country knows of at least one person who is an OFW. Sometimes even that money isn’t enough to feed all the kids in the house. Sometimes the sheer joy of being comfortable— for once is enough to forget about tomorrow. And sometimes each ofw family thinks the same way as the generations before: have family, send kids to school, retire.

    that said, is the Filipino ever interested in becoming an entrepreneur?

  7. Jon Limjap on June 17th, 2008 6:42 am

    Nah, the OFW diaspora continues and remittances continue to be both insufficient and useless because, as cocoy insinuates, Filipinos like chuck aren’t brave enough to risk entrepreneurship. Nor investment. Heck they’d even prefer 50″ plasma TVs over savings I’m sure.

    I have heard people lament of a culture of consumerism but I think that’s fine. I think the real problem is that we don’t produce anything that we consume. Nor do we even sell much of it. We just work, wag our tail to our employers, and consume the table scraps they give us.

    We, as a people, are happy and content with that little. While resilience is a virtue, it is only true for individuals. A people being resilient to bullshit and ugliness is NOT virtuous at all.

  8. sparks on June 17th, 2008 8:56 am

    Cocoy,

    Yes, you are correct. I believe I wrote something to the effect in my blog (about the Chinese word that is).

    There is this fiction that business students learn in school - that all you need to be an entrepreneur is ‘entrepreneurial spirit’ whatever that is.

    Possession of capital and ‘passion’ is not enough. You run a business, you have to engage with the existing infrastructure. Government has the sole purview to make the environment in which you start any business viable. Corruption not only exacts huge transaction costs on honest business practices, it kills true competition based on whomever can provide the best possible service or product at the lowest price. Take for example the ‘rumours’ of collusion between the rice cartels and NFA. Apparently this government institution imports cheap rice overseas - and sells them to local millers - who then mix the cheap imports with the locally produced rice and sell them at the same expensive cost.

    As development economists say, it is perhaps too much to expect OFWs to be both capital providers and entrepreneurs at the same time. Some say it is enough that they provide capital infusion to the local economy - and hopefully that creates a multiplier effect. Also, that they are able to finance their family’s daily needs - food, shelter, medicine, education - is an investment in human capital. Now the problem is, the culture of migration, once entrenched, means their children or families might want to migrate as well. Hence human capital investments leave the country.

    “Is the Filipino ever interested in becoming an entrepreneur?”

    - Well, we all live in Manila - the consumer capital of this country. I think the answer is quite obvious. The question is, what is it that we sell? Are we able to produce high value products? Let us take a close look at our largest corporations (if we take size as an exemplar of success). What is it that they sell? And how do their ’successful’ enterprises flourish and grow? Honest-to-goodness entrepreneurship?

    Jon,

    Well, spot on. That is why, at this point in time, any economic growth in this country is consumer-driven and financed by remittances. Most costs (Meralco! Meralco!) is also passed onto consumers.

  9. cvj on June 17th, 2008 9:34 am

    J, yes you made earlier post”>that recommendation earlier than me. The differences we have (aside from what i already mentioned in the comments section to your post) is on my emphasis on the neglected role of the Oligarchs in this discussion. (I’ll post the link in a separate comment so it won’t go under moderation.)

  10. Pochero on June 17th, 2008 10:17 am

    OFWs are salarymen(and women) who just happen to work elsewhere. Salarymen, whether working locally or abroad, have generally modest objectives: subsistence, education, retirement. Therefore, I don’t think there’s any merit in thinking that remittances is something that can be the source of lasting economic development. As for remittances being a source of capital — the banks are there to do that job.

    Still, the OFW cannot be ignored and it certainly deserves continuous scrutiny. Can the OFWs can be the agents for social and political change? Maybe the OFWs and their families are the new middle class.

  11. cvj on June 17th, 2008 10:23 am

    J, here’s the comment i was referring to. The gist of my differences with your approach is on the last paragraph.

    Jon, have you come across Habito’s column (in PDI) which debunks the claim that Filipino’s are not entrepreneurial?

  12. mabini on June 17th, 2008 10:38 am

    Our ship is certainly drifting with the captain not knowing how to steer or what direction to take.

    Our economy is becoming a service economy - not manufacturing. The manufacturing sector is slowly dying due to its uncompetitiveness for causes not of their own making - high power rates (NPC $$$$, tranco monopoly on transmission, meralco), poor/lack of infras, other costs for the sacred and mad cows, etc.

    The OFWs are still the lifesaver of our country in the coming decades. The OFWs working abroad are not of highly-skilled, technical or professional types anymore unlike years ago, its being dominated now by lowly employment (households, helpers, etc.). We certainly pitied our countrymen forced to seek this kind of employment.

    Somebody is dreaming that we will be First World country 20 years from now (I heard it several years ago and again the period is moved), rice self-sufficiecy by 2013, ad infinitum promises. Probably, somebody should wake them up; they are deeply day dreaming.

  13. Jon Limjap on June 17th, 2008 10:48 am

    cvj,

    Link it.

    mabini,

    It is not bad to dream. As a people we have ALWAYS lacked dreams because we have ALWAYS focused on problems. What we need is a clear battleplan; a clear solution.

    Focusing on immediate problems alone has only made us a people performing a wild goose chase after an unclear and elusive concept of progress.

    Putting a period after “they are deeply day dreaming” does not help. The real question is… what now?

  14. cvj on June 17th, 2008 11:02 am

    Jon, here.

  15. Jon Limjap on June 17th, 2008 12:37 pm

    cvj,

    So, it’s not that we’re not entrepreneurial, it’s just that we’re stuck with small-time businesses with little to zero creativity and vision?

    Sounds like the same banana to me.

  16. PSImeon on June 17th, 2008 2:11 pm

    The Filipino not being entrepreneurial enough is also a cultural trait, imbued by our parents, that a professional title or college degree is the end-all of education, not just the one of the means, to succeed say in business.

  17. cvj on June 17th, 2008 5:13 pm

    Jon, if as the GEM Research Study reveals, four out of ten Filipinos own a business (second only to Peru’s five out of ten), then the assertion that we prefer to be salarymen (or salarywomen) does not hold up. It can be argued that we are lousy entrepreneurs but that is a separate issue from the prevailing stereotype.

  18. Jon Limjap on June 17th, 2008 5:16 pm

    cvj,

    Touche.

    I’m wondering what the breakdown for that study is, e.g., what are the chances that someone with a college degree will become an entrepreneur.

  19. cvj on June 17th, 2008 9:47 pm

    Jon, i downloaded the report for the Philippines and it gives the following figures:

    By Educational Attainment:

    Secondary Without degree - 34%
    Secondary With degree - 28%
    Post-Secondary Without Degree - 17%
    Post-Secondary With Degree - 20%

    By Socio-Economic Status:

    ABC+ - 7%
    C- 19%
    D 54%
    E 20%

    It is found in this website.

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