Out on holiday

(The Philippine Star) Updated December 15, 2010

Businessmen have complained about it for years: there are too many holidays in this country.
The Arroyo administration ignored the complaints, believing that “holiday economics” would spur domestic tourism and economic activity especially in the countryside. The country did register sustained economic growth, but tourism accounted for only a thin slice of the pie, and whatever growth was achieved could not keep pace with the needs of a booming population.

Now a new administration wants more robust economic growth, and is trying to lure more job-generating investments. The message is that a new team is in charge and the country is open for business. Investors are guardedly optimistic, watching for signs of backsliding on promised reforms and assessing how receptive the new government is to investors’ suggestions.

The other day the Joint Foreign Chambers unveiled a medium-term plan for attracting $7.5 billion in direct investment, presenting a generally bullish outlook for the Philippine economy. Several of their suggestions were not new. A recurring complaint was that too many holidays deterred investment, forcing enterprises with low profit margins to cut jobs, close, or move into the underground economy.

Overtime pay adds to business costs and affects income projections. Some enterprises, such as those that must meet delivery deadlines, cannot afford to suspend production during holidays. Such enterprises suffer particularly when new non-working holidays are declared just weeks or even days before the date.

The problem wouldn’t be so bad if investors faced the same situation elsewhere. As the study undertaken by the foreign chambers pointed out, however, the country has had 21 public holidays so far this year, compared to nine in Vietnam, 11 in Singapore and 12 in Taiwan. Combine this with the general unpredictability of the Philippine business environment – a major complaint of investors here – and you can understand why the country is lagging behind most of its neighbors in levels of foreign direct investment.

Businessmen are now concerned about legislative proposals to add to the growing list of holidays, to honor children, families, farmers, fishermen, soldiers, human rights, the Chinese Lunar New Year and even pets. The government should pay attention to the investors’ concerns. A country that is open for business cannot be constantly on holiday.