12 July 2016
Speech of Vice President Leni Robredo at the Business World Economic Forum, Shangri-La at The Fort, Manila
When I was elected Representative of the 3rd District of Camarines Sur in 2013, one of the first things that I did was visit the most remote barangays in my district (composed of Naga plus 7 towns). There, I discovered a wealth of information, which were beyond me before.
I saw children walking several kilometers each way to go to school, on dirt roads that were extremely dusty during dry season, and muddy during wet season. Some had to cross a broken, hanging bridge suspended way above the ground over a deep, rocky ravine.
In one elementary school, I was very surprised to see in front of a classroom a Manila paper that shows the schedule of which child can use chairs in the classroom.
There were 38 children, but only nine chairs available.
Even more heartbreaking was the sight of extremely malnourished children in the town of Magarao, where barangay health units had no salter weighing scales and height boards to measure them. Let me ask each one of you to imagine how you would feel if these were your children.
Once, when I was on my way to visit an IP community in Mt. Isarog, I saw a group of people huddled together by the roadside at the foot of the mountain.
Apparently, they were teachers and parents talking about how they will go about building their school, when what they had were only eight posts to start with. It was a Thursday. The school year was to start the next Monday.
They said they were waiting for the principal who was buying more materials from the town. The principal had to withdraw P10,000 from her own savings because the person who pledged the donation has not given the money yet.
The P10,000 seed money bought them some pieces of coco lumber, nails, some bags of concrete and nipa.
I remember I had P12,000 in my wallet and decided to give them the P10,000 to add to their little fund. When I got home, I posted about that experience on Facebook, and in less than a week, we were able to raise P300,000 for the school.
With that small amount of money, they were able to build four classrooms made of a combination of light materials and concrete—each one with a small comfort room.
On several occasions, I spoke about the classroom with only nine chairs in front of Rotary Clubs and other groups, and even without asking for help, we got a deluge of donations of chairs such that we were able to give chairs to other classrooms in that school.
The hanging bridge is no longer there, as we were able to build a concrete bridge for the children. Children did not have to walk too far because we have built schools nearer to where they lived. And the barangay health units now have equipment to measure the progress of the children who were already benefiting from feeding programs.
All these happened in very remote towns with very small population. Apparently, politicians did not bother to give them much thought. We don’t think the people there buy much of your products or services. So why should you care if their children go to school if they don’t have a direct impact on your bottom line?
The reason is this: research has shown that building nations where everyone can live and thrive and enjoy the benefits of economic growth is the best way to create even more growth.
The Organisation for Economic Cooperation and Development said that in Mexico and New Zealand, rising inequality took away 10 percentage points off their growth rates. In Italy, the United Kingdom and the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened. On the other hand, greater equality helped increase GDP per capita in Spain, France, and Ireland prior to the Great Depression.
In the Philippines, the richest 20% of the Philippine population received 52% of the country’s total income in 1994, nearly 11 times the share received by the poorest 20%.
This was a marginally worse situation than in 1985. I quote: “Indeed, from 1957 till today, aside from brief periods of improvement, the country’s gini ratio has changed little, consistently remaining the highest or one of the highest in Southeast Asia. In 2009, the poorest 20% of the population accounted for just 4.45% of national income.”
Our country’s best entrepreneurial minds are in this room. We hope these are not just numbers for you, because in reality, inclusive growth is an issue that affects real people on the ground—like the principal and the parents who built a school with only eight posts, P10,000 seed money, and an indomitable desire to solve a painful problem in their community.
They came together to address a clear and present need in their community, but with the donation of P300,000 from outside their community, what was impossible became possible.
Inclusive growth is not just critical for those in the fringes of society that we have vowed to serve, but also for your businesses to grow sustainably. Businesses and capital markets have been fueling global growth for decades, creating wealth for nations.
But while market-led economic growth transformed whole chunks of the global map, its unfortunate byproduct was the exclusion of swaths of population who did not gain equality of economic opportunity.
Faced with this trenchant problem, corporations around the world are reinventing capitalism and turning to disruption and innovation in the way they do business.
While traditional businessmen want to keep wealth circulating within a small closed group, a new crop of businessmen know that as more people break the cycle of poverty, more people can afford to buy their products or services. They know that when business is done as usual, the income gap widens. That’s why they are embracing business unusual.
How? Profit is now no longer the sole driver of growth. Shared value is. This way, growth does not have to slowly trickle down to the poor.
As the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time.
We need growth for all, not just for a select few. Progress that benefits only the elite is no progress at all.
There are issues in this conversation that may ruffle feathers. We might have to break up monopolies, correct poor labor practices, reassess our tax system, among other things.
I also personally believe that there is value in considering the continuation and expansion of the current social protection system through the Pantawid Pamilyang Pilipino Program and PhilHealth.
We may also have to think about incentivizing the adoption of more inclusive value chain models that create more rural jobs and livelihood. This should facilitate increased productivity in agriculture without compromising our competitiveness as we strive to grow our domestic and export market share.
Linked to all these, I also cannot overemphasize the importance of creating a better and more efficient business environment. Removing inefficiencies in doing business enhances the growth of both big and small corporations.
We in the government must also continue to find better ways to enable our micro, small to medium-scale enterprises (or MSMEs) to be more integral players in growing our economy. More than 99% of companies in the country are small and they employ 64.97% of our people!
As we support small players and social entrepreneurs, we bridge progress to the excluded bottom. Gone is business as usual. Let’s embrace business unusual, celebrate disruption and innovation, and create wealth and profit shared by both top and bottom.
The Office of the Vice President is committed to help in changing the face of poverty in the next six years. We want to focus on five areas: hunger, food security, universal health care, rural development, education, and people empowerment.
The President has recently offered us a cabinet position as Housing Secretary and as you know, we have gratefully accepted. Housing is also one of the things that my husband, Jesse, used to work on when he was still Mayor of Naga until he became Interior Secretary.
Before he passed away almost four years ago, Jesse was working on innovations that would allow the government to build cheap, climate change-resilient, in-city-on-site housing developments for the urban poor. We will not be working from scratch in this portfolio. We will be hitting the ground running.
We want to address the 1.4 million housing backlog within our term. We will disrupt and innovate. We will enjoin the private sector to be our partners in providing not just houses, but decent and affordable communities where our people will find jobs, where their children can safely go to school, attend church, run around and play safely.
We are not asking for your charity. Companies like Phinma Properties have proven that these developments can be commercially viable, as shown by their on-site resettlement investments in Quezon City.
In the past, informal settler families (ISFs) would pay anywhere from 1,500 – 3500 pesos a month to dwell in a 10-sqm space with no proper sewerage and drainage system.
Through Phinma’s partnership with the Quezon City government, Pag-ibig Fund and several partner NGOs, ISFs today shell out only a little bit more than P2,000 as monthly amortization through Pag-Ibig for decent 26-sqm homes with loft provisions that have proper sewerage and drainage and security of tenure.
Inclusive growth needs inclusive business, and that means corporations address a social need in a commercially viable way. This is just one example of addressing the “1% problem” that perpetuates the current instability of our nation’s social order where the poor continue to be poor and get left behind. I am positive you can think of more ways.
There are so many things we can do, but so little time. More important than what is how we will do them. Collaboration and consultation are key.
With you, the private sector who bring so much of your resources, your commitment, your expertise, your efficiency, and your networks, to the table. And with the beneficiaries themselves.
Over the course of our work as an alternative lawyer working with the marginalized, we have discovered that the best solutions come from those who have lived in poverty themselves. They know better than highly paid consultants or are equally knowledgeable about what is good for their hood.
For instance, when informal settlers are included at the table at the very start of planning their communities, these projects tend to be more successful. It’s true, consultations take time and trust issues need to be addressed, but when the poor are given a seat at the table, and their voices are heard, that’s when miracles happen.
For both of us—the government and the private sector—we need to embrace this disruption from within or else we risk being at the mercy of global developments. This elusive inclusive growth can only happen if we ourselves make it part of our personal, inner score card.
The fact that you are here indicates that you are willing for us to work together. Like the parents and principals huddled together to build that small school, working together have a way of igniting passion even from those who may be sitting on a fence. That urge to collaborate and build bridges of understanding, is our single, most important resource.
The imperative to harness our diverse gifts and unique roles in society towards concrete platforms of collective action can no longer be ignored. Let our driving force for this be the inclusion and the transformation of the lives of the majority of our people who have long been excluded from the benefits of the wealth that has been created.
Personally, I am filled with gratitude and enriched whenever I am given the opportunity to be an instrument in changing lives for the better especially those who have less.
I believe it will not be different for you.
We will be knocking on the doors of your boardrooms and we hope you welcome us.
Thank you all for listening.