Why investors avoid us:
The trust factor

by Teodoro C. Benigno

Philippine Star 26 July 2002

We are all aware of the main reasons why foreign investors avoid the Philippines like Mongolian rinderpest. Crowding the top are political instability, deteriorating peace and order situation, a skimpy infrastructure, a corrupt judiciary, difficulty in managing the labor sector. These are easily visible to the naked eye, need no explanation. But beneath the surface are reasons derived from our culture as Filipinos. They are listed down in a survey conducted by the Nomura Research Institute of Japan and they make a good, riveting read. And, of course, they resonate like alarm bells in the night. China is wolfing in the investors, the survey states, a China that could burgeon into the world's economic superpower this century.

The first on the cultural list is this: "Filipinos in conflict tend to cluster based on their place of origin."

Right on the barrelhead! These means Filipinos have never shed off their clannishness, their tribal origins I would even say, their continuing addiction to village or provincial culture. Send five Filipinos to work abroad, each from a different province. And either each will set up a provincial not Filipino association or join existing provincial ones, say in San Diego or San Francisco - all split on locale or place of origin. Ilocanos will cluster together, as will Cebuanos, Pampanguenos or Bicolanos. Result? Lack of social cohesion or coordination and the inability of a national trust culture to emerge. This is detrimental to nation-oriented economic progress. Look at the Chinese, the Japanese, the Jews. They bond and function as one. Bickering and feuding like fishwives in a public market (look at our Senate) are alien to their culture.

Second: "Language barrier which has hindered the smooth transfer of technology." The use of English was once our proud boast, a big advantage we had in Asia. But our English superiority is frittering away. And our neighbor nations in Asia, particularly China have, taken to English like ducks to water. English is the language of technology. And technology they have to absorb fast. With increasing productivity, national progress eventually rides a roller coaster. And if we surrender our once commanding lead in English to others, we will be a dead duck very soon in Asia.

Third: "Workers intolerance to criticism." Now I find this somewhat strange. I had always thought that Filipinos were subservient, easy to mold as clay. Now it appears that Filipino workers may have fallen prey to strident labor unions or organizations, which could explain the rash of labor strikes hitting multinational corporations (MNCs). And their migrating to more friendly countries. This we cannot afford. Filipino labor is in competition with other Asian nations. Once business establishments here pay higher wages and have to deal with recalcitrant, fire-breathing unions and workers, we lose to China, South Korea, Taiwan, Singapore, Malaysia which pay lower wages and salaries. Foreign investors find it easier to deal with them. As a result, their workplaces and factories hum with a productivity that beggars that of the Philippines.

Fourth: "Workers' apparent lack of initiative, as dictated by the attitude to do 'no more than what they are told to do."' This is lethal. It cuts deep to what is wrong with Filipino culture, the absence of a work ethic. And this absence will eventually sever our jugular. Because it means there is no sense of nationhood driving and motivating our economy, our leadership. Many Asian nations are driven today to excel. And to excel, their peoples do not mind sacrifice, hard relentless work (at times 16 hours a day) if that will rescue the nation from poverty. They work for their work defines them as a people striving to catch up with America and the West. They work overtime so goals and objectives can be exceeded for that is the nature of their catch-up culture today. Performance, pride in that performance.

Fifth: An attitude of "family first before country or company." Yes. This is probably one of the biggest holes in our culture. The Filipino is not community-driven, certainly not nation-driven. He may be Providence-driven, Almighty driven, but this alone goes against the core of nation-building. If the Filipino can trust only his family, or close extensions of his family, then he collapses on the hard, arduous road of economic progress. To effectively compete, he must learn to trust his neighbors, his community. Social trust is the indispensable cultural factor for progress. If the Filipino can only trust ten percent of Filipinos, and mistrust 90 percent, then he is not going anywhere. (We shall explain that in the second part of this column).

Sixth: "Workers' tendency to give up easily." Yes. This is another cultural malaise of ours. We have the manana, bahala na, puwede na or puweda pa habit. Not ours the Chinese slogan of: "The journey of a thousand miles starts with the first step." Chinese and other like-minded Asians peer at and prepare for the future in terms of decades and generations, maybe even centuries. They know the road ahead will be rough and tough, layered with booby traps and landmines. Some if not many of them will perish along the way. We Filipinos relish pleasure, abhor pain. We prefer lawyering or showbiz to other careers, for a diploma in law or a top movie or media billing are the best catapult to politics. In politics, power, instant riches, instant gratification are there for the taking. We Filipinos are not creators or builders. We are not even successful entrepreneurs for that will take time, planning, structuring and hard endeavor.

Now let's go to the subject of trust.

Let's start with Francis Fukuyama's understanding of trust. He said at the start of his book Trust (The social virtues and the creation of prosperity): "One of the most important lessons we can learn from an examination of economic life is that a nation's well-being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society."

A recent survey conducted by Prof. Jose Abueva, formerly UP president, showed that beyond the family, Filipinos hardly trusted anybody. Why? Maybe because the Philippines is an archipelago, splintered into more than 7000 islands. Progress is slow in archipelagic nations because ideas travel much more slowly, as do government services. Language difference and difficulties hinder easy understanding and coordination. Travel by boat takes much more time than land transportation over flat broad plains. Maybe also because we Filipinos have yet to achieve national unity, like the Risorgimento in Italy or successful revolutionary struggles like those of France, America, Russia, China, Japan that destroyed old, mediaeval, archaic systems that sought to choke economic progress.

So that brings us to social capital. This, says Fukuyama, "is the ability of people to work together for common purposes in groups and organizations." Where before the overpowering concepts underpinning economic progress were land, labor and capital, today it is human capital, another name for social capital. The level of trust obtaining in any society depends on the huge, ever growing cluster of groups, neighborhoods, clubs, charities, community, labor, church, workers, civic organizations that intervene between the individual and government. When this trust is widespread, nations emerge like steeples, because they have had the advantage of mass education, and access to health. The outcome? The most economically advanced, politically sturdy countries are the high-trust ones like Japan, Germany, the US and China. Occupying the cellar are low-trust countries like the Philippines, Cambodia, Burma, Laos, many in Latin America, a multitude in Africa. Lately, in recent decades, and just weeks ago and even today, the scandalous bankruptcy of some of the biggest corporate empires in America Ike Enron, Wall.Com, Anderson, Xerox, have impaled daggers into America's trust factor. The American model begins to pale and shrink.

Trust is deeply related into industrial culture, adds Fukuyama, and "the creation of those large-scale organizations vital to economic well-being and compe-titiveness." How can we bolster trust in the Philippines when even our 24 senators do not understand each other? Fukuyama also mentions four outstanding "familistic societies" namely China, France, Italy and South Korea where the family constitute the basic unit of economic organization. But this is also changing now as these countries integrate into the one-currency European Union while China and South Korea grow the muscles of economic empire that need high-trust societies.

And what is social capital, something we Filipinos have very little of? It is a capability, says Fukuyama, that arises "within a community of regular, honest and cooperative behavior, based on common shared norms, on the part of other members of the community". What makes social capital different from other forms of human capital? It is "usually created and transmitted through cultural mechanisms like religion, tradition, or historical habit." The most effective organizations "are based on communities of shared ethical values...Prior moral consensus gives members of the group a basis for mutual trust." Moral consensus is what we do not have.

And that is why we are weak. Our strongest associations are criminal gangs. Our crude familistic society has weak voluntary associations because unrelated peoples "have no basis for trusting each other."

And so where do we Filipinos go since much of our cultural roots are wobbly, no longer attuned to the present?. As recent events go, the most potent social force in the Philippines today, one that can lead to social trust, is civil society. It has found coherence, the beginnings of a vision in People Power. It is the only force the government respects and perhaps fears today. People Power exhibits the first sinews of a social trust society. Its members can easily link hands, heave into the streets in a mighty twinkle, because they understand each other. They are bonded by a common culture of distaste for corrupt and incompetent government. They understand the issues much better than anyone else in society. They have an ethical code that respects "moral rules", that cannot accept FPJ as president in 2004, that bristles in anger when Malaca´┐Żang opens its doors to Ronaldo Puno and Jimmy Policarpio, and yes, Blas Ople.

President GMA must cultivate this trust factor, not bushwhack it by going against the moral grain. This is the supreme test of leadership.

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