Business, Economics and Consulting

It is not as if we only come to know about it today. The looming power shortage has been known, and was made known to the public, as early as more than 3 years ago. At that time, it was estimated that if the growth rate of demand persists, a power shortage would be experienced in Mindanao as early as 2009. That is if the government and the private sector will do nothing which would clearly point us to our only but unacceptable option – to sacrifice and forego business and investment opportunities especially those requiring power for their operation. But which ones do not require power at these times?

In this era, unlike in the late 80s to early 90s, all social interactions and business activities require power. Economies, not only the Philippines, have become power-dependent. Mass production and manufacturing of goods for domestic and export markets necessitate a steady and stable supply of power. Business sustainability, competitiveness and efficiency could only be attained by any growing and thriving economy when power is not a major problem. In reverse, it is hard to expect business expansion, social progress and economic growth when the supply of power is sluggish and unstable.

Power shortage is not as simple as enduring high room temperature during brownouts. It has financial and economic implications when our production lines are not able to meet their highest productive levels. Exchange of goods would be impaired, value chain disrupted, and transaction costs would escalate. These do not include yet the very important opportunity costs for every business deal that is given up because of power outages. In Mindanao, every prospect for business entry and development should not be missed at this time when we need to fire up economic and business activities all over the island which we expect to improve people’s well being and bring about social progress.

What I want to say is that we could have anticipated this problem much earlier. In fairness to the government, the Department of Energy (DOE) formulated a master plan for energy development for the various power grids of the country some years back. The problem I see is the very limited number of investors who are willing to go into the development of additional and alternative sources of energy. I am sure, enabling policies and various forms of incentives have all been put in place to facilitate the entry of potential investors in energy development. Despite these efforts of the government however, there is still a need to see concrete positive response from prospective financiers of energy projects. What else could be the problem?

Last week, we have seen the DOE Chief going around and meeting with owners and operators of power generating plants in Luzon, and ensuring everyone that there would no longer be rotating brownouts in Luzon. Power supply could last up to June 2010. The assurance came with a strong challenge for each one of us to observe prudence on our use of electricity. He further emphasized that power would not be a problem comes election day, and that’s a relief; yet, he hastened to add that rotating brownouts could still happen anytime due to maintenance and repair schedules of existing plants.

As we look for remedies to our power shortage problem, we should not forget the environment. Note that most of our power generating plants are coal-fired; exceptions are the power plants in Mindanao which are mostly hydrothermal and geothermal. In the context of climate change and clean environment, the cheap coal is an extremely dirty source of power, and imposes huge costs on people’s health, the environment and the economy.

While we still have the time before we reach a stalemate, let’s explore the use of clean renewable technologies like wind, solar, geothermal and solid biomass, and we should not forget that the Philippines still has a large amount of untapped deposit of fossil fuel. The government should continue to show us the way. The private sector should take the risk to invest, and every Filipino should endeavor to reduce our country’s coal dependence and move toward a future where power supply is both reasonably priced, sustainable and is not contributing to climate change. No brownouts and no destructions to Mother Earth!

Feel free to send your comments to nic_agustin@yahoo.com.

As I was reading a national paper, I feel so elated and a bit agitated to note the kind of progress that we have so far achieved when I came across a series of government-paid advertisement “Ganito Tayo Noon, Ganito Tayo Ngayon”. The material compares the social, economic and physical conditions some 10 to 20 years ago and that of the last 10 years based on acceptable indicators and backed up by hard facts and official records.

No one could possibly argue with the presentation; the figures and hard data can very well speak for themselves. Some could however express their concern that these data do not represent the circumstances of some individuals and communities around the country, and that is true and valid. And while some do not necessarily agree with the rosy picture being painted, we can not deny that indeed we have attained a certain level of national progress and growth.

Ordinary government officials and employees should feel proud – even if they have not realized yet that their mission as part of the government is to be able to contribute in bringing about growth and development – that what they have been working so hard despite their very meager salaries and having to withstand criticisms from those outside the government did not go to naught. They should likewise be commended for whatever achievement the nation has managed to attain for the last 10 years.

The paid advertisement is obviously intended to inform the public and create a positive image of the out-going administration and the government in general. It might be high time for the administration to proclaim what it has achieved. The President and other government officials have been the subjects of so much criticism, denigration and, to some extent, condemnation. Some recent years ago, her Cabinet deserted the President for some controversies. Since then, the approval rating of the President suffered great blows for a thread of scandals – valid, true, proven or otherwise. The dignity of the current administration – and all people in it - has to be restored as they prepare to leave Malacanang in June 2010. The trust of the people, the business sector, international community, and the general public on the government and what the government could do must be brought back; hence, the advertisement.

The government certainly invested a lot of funds for this campaign. It has to do this as part of its advocacy and outreach programs. Filipino people have the right to know what is happening to the country and where their taxes are going. This effort of the government to inform and promote awareness would go a long way and could generate immeasurable benefits. It could certainly benefit us all Filipinos – even if we are cynical, skeptic, passive, pathetic and indifferent spectators! Positive benefits would come in more ways than one. That’s how public information campaign work.

All these said, the gains and benefits would surely outweigh the investment put into it but the magnitude of such would entirely depend on one’s perspective and his/her ability to appreciate and relate with the positive outcomes of promotional campaign.

Unlike the macro indicators which are seen as not representative of the plight of the marginalized segment of the society, it is hoped that all of us would receive and enjoy an equal share of the benefits from this advertisement. But then again, that’s not how things work. We could simply ask ourselves “who would then benefit the most?”

Feel free to send your comments to nic_agustin@yahoo.com.

The business sector is the engine of economic growth. It propels the emergent opportunities and the quiescent potentials of any striving economy. At the very least, the sector could infuse capital which could result to the generation of jobs, the creation and production of more goods in the market, and the opportunity for the government to collect more taxes and the consequent provision of more public goods and services for the benefit of the people.

With the onset of the 2010 elections, however, there are valid fears that new investments would be sluggish during the campaign period and up to the election time, and may even extend up to the end of the year, as firms have started to display a wait-and-see attitude. It is then anticipated that the national and local economies would somehow slowdown a bit this year – being an election year.

We might ask: “what are firms waiting for and wanting to see” before they continue to fuel up the investment or economic engine? After all, firms – old and new alike – have probably studied their own markets. They already know what opportunities are there – what the people need and want. They know what types of investment they could put their resources into. Then, what else do they need to know? What else are they waiting for and wanting to see?

They are waiting for the results of the elections. It is not only the winning candidates that they want to see. They want to see whether the elections would be conducted successfully in terms of employing acceptable, fair and just processes and devoid of alarming and massive disorders and fraud. They want to see democracy in action as the ultimate gauge whether or not our current leaders and election candidates have matured well enough to act out their idealism and stand guard for what they promise as better ways of managing the affairs of the government. Election is a grand event where our leaders – both those who have long been exhausted with yet still enamored by public service and those who are yet aspiring to become one – could showcase how they could lead the people and how they could cause the whole community to behave as it should be. It is in this undertaking whereby the firms could detect how resolute our candidates are in establishing a conducive environment for their businesses to thrive.

The aspirations of the firms are quite simple yet complex. Simple and complex in the sense that everybody could easily understand them but they are difficult to attain. First, firms would want stable policy environment. Business firms deal with a lot of risks and they expect the political environment not to aggravate the vulnerability of the market. Second, firms are concerned with the cost or ease of doing business. National policies and guidelines as well as more specific and detailed facilitative local procedures would go a long way in enticing new investments to come in and old and flourishing businesses to further prosper. Labor productivity and minimum wage-related concerns are some of the most serious problems in doing business which need utmost attention. And finally, firms would want to operate unperturbed by war and community discord.

These said, political leaders are expected to spark those economic engines with the flame of creativity, resourcefulness, decisiveness, sincerity and unquestionable integrity. Only then could our business sector contribute significantly to our economic growth.

Feel free to send your comments to nic_agustin@yahoo.com.