While the world focuses on BRIC – Brazil, Russia, India and China – global investors may be missing agribusiness opportunities in ASEAN. Since its launch in 1967, ASEAN is consolidating as a credible, rules based trading bloc.
ASEAN´s relatively low profile is attributed to “mutual ignorance” in its relations with global markets. With the exception of Singapore, which establishes itself as a financial and trading centre, economic activities are broadly local or regional. Media attention on Myanmar’s poor human rights record and, in a number of its member states, the incidence of corruption and calamities downplay its opportunities. Wedged next to China and India’s markets, where 46% of humanity lives, ASEAN is understandably overshadowed.
The forthcoming publication of the book by Dr Rolando Dy2 – “Food for Thought: How agribusiness is feeding the world” – offers to correct this “mutual ignorance”. First, by informing the world about what ASEAN can offer in agribusiness; and second, what ASEAN needs to know about its own opportunities.Dr Dy argues for agribusiness as a motor for growth and as a pillar for ASEAN´s leadership.
Agribusiness – why is the world “missing” its allure?
The success of ASEAN countries in service industries serves as inspiration for its industrial aspirations: Malaysia’s tourism success paints a positive view of ASEAN. The Philippines´ business process off-shoring remains resilient, globally ranking it second only to India – a country fifteen times its size. Thailand and Vietnam are feeding the world with their agricultural exports, while Indonesia is becoming ASEAN´s lynchpin in global geopolitics through its G20 membership.
The importance of agribusiness to ASEAN belies its 13% to 15% GDP contribution in most ASEAN countries, with the exception of Singapore, Malaysia and Brunei. In spite of its fundamental role in nation-building and self sufficiency in food, agriculture suffers from benign neglect by governments and investors. In polite society, ASEAN agribusiness is “Cinderella” waiting to emerge in the ballroom with her prince.
So, why is the world missing its allure? I suspect the reasons are several, among which are: a) agriculture’s perceived status as a marginal activity; b) educational bias for “white collar” jobs; and c) corrupt and inept delivery of government services. Let us take each of these factors in turn.
The caricature of ASEAN agriculture is deeply ingrained. It is depicted as a farmer toiling their land with their bare hands, assisted by a water buffalo. While a tranquil life amidst the rural landscape is a welcome sight, the picture conveys subsistence farming as an accepted industrial model. Without linkages to logistics, technology and markets, agriculture indeed will remain subsistence, killing any hopes of ASEAN becoming the bread basket of the world.
Education is geared towards professional qualifications, rather than vocational skills. Farming families aim to send their children to universities to escape a life of servitude in agriculture. However, with graduates exceeding local demand, labour migrates to seek opportunities outside their home countries. Hence, it is not uncommon for qualified professionals to take on jobs requiring skills below what they were trained for – medical doctors work as nurses, accountants as care-givers, or teachers as domestic help.
How about governments … what roles are they playing in this dismal saga?
Flawed agricultural policies such as land reform in the Philippines, heavy regulation in Malaysia, and outdated tenancy arrangements condemn agriculture to subsistence living. A product of the 1960s agrarian reform, the Philippines distributes land for the landless. Without access to capital and entrepreneurial temperament, new landowners are largely incapable of matching previous agricultural output and productivity. With former landlords deserting agriculture, it was not long before farming fitted perfectly the caricature of a subsistence farmer.
After 44 years of failures, is it time to dump a policy that only produced misery?
Distribution of land resembles arbitrary sequestration, coupled with mob rule, with “beneficiaries” who never tilled the land queuing for the largesse. Inadvertently, in the midst of such chaos, bureaucrats commonly broker land transfers and payments, arguably for their own financial gain. Again, this is not unique to the Philippines. However, the country is unique in persisting with failures – hoping that the future will resolve itself while the present postpones its day of reckoning.