“Money goes where money grows” is an oft-used cliché by investors wishing to park their disposable funds in a lesser-risk ventures. Most seasoned investors go to great lengths dissecting the pros and cons of a particular investment-interest before they part with their hard-earned money, confident that the returns will be to their liking.
We’ve witnessed fairly recently the seeming disinterest shown by foreign investors in the local market, with most them either cashing in or cutting their losses as they withdraw from the local equities market. The peso, too, is taking a beating against the US dollar, plunging to 48, a seven-year low.
The suspension of some mining companies by the Department of Environment and Natural Resources (DENR), led by staunch antimining advocate Regina Paz L. Lopez, also contributes to what makes the minerals industry wobbly these days. To think that the Philippines is one of the substantial contributors to the world’s mineral needs, especially nickel.
Now, ratings agencies are one in saying they may revise the country’s investment grade downward.
What does this all mean? Is the Philippines losing its luster as a safe place to grow money? Is the Duterte administration up to the task of improving on the economic gains of the Aquino administration?
To be fair, at least the Asian Development Bank and the International Monetary Fund just raised the Philippines’s growth forecast this year to 6.4 percent from 6 percent, but this is mainly due to—again, as these two financial institutions say—the strong economic fundamentals painstakingly nurtured by the previous administration.
Most analysts with whom BusinessWise has spoken attribute the sudden souring of investment interest in the country to “internal headwinds” caused by President Duterte’s acerbic tongue. They say the President has shown little patience for dissent, which is essential in a democracy. His penchant for hurling invectives and profanities to those he perceives to be against his controversial policies on drugs is hurting the overseas image of the Philippines.
As Hillary Clinton succinctly puts it: “Words matter.” Indeed, the country suffers because President Duterte is putting his personal bias way above the country’s interest. His pronouncement to cut our economic ties from the US and the West, our traditional allies, in favor of China and Russia purportedly out of exasperation with US President Barrack Obama’s advice for him to conduct his war on illegal drugs “the right way” does not speak well of the country’s foreign policy.
Why do you think private firms prudently cultivate their brand names? It’s precisely because they know it can either make or break them: A good name can spell profit.
Wharton marketing professor David Reibstein explains that nations must learn to be conscious about how they are seen by others. Countries that purposely boost these perceptions could create a large economic benefit.
BusinessWise thinks Mr. Duterte’s antics do not help the nation any.
Can a brand be created for nations?
More than four generations of Filipinos have come of age or are growing up with products such as Coke, Pepsi, Colgate and McDonalds, among other popular brands that have taken deep roots in the psyche and lifestyle of consumers worldwide.
In building a positive image and sustaining goodwill for their respective brands, manufacturers and marketers continue to make huge investments in terms of funding, time and effort. Why do they advertise their products as superior to competition? Certainly, not to educate us! Investing over and over through the years on these deep-rooted brands ensures the heightened and persistent recall and patronage of consumers, which undeniably translate into profits for their makers.
Colorado is known as the US’s ski country. The wide expanse of Montana makes it “big sky,” while Georgia is the “peach state”. The slogan “What happens in Vegas, stays in Vegas’’—one of the more famous taglines in modern tourism—clearly paints Las Vegas as an adult playground, where you can do what you want without anyone judging you. So successful was this advertising campaign that efforts by the state to sell itself as a family-oriented recreation center by showcasing the MGM Grand amusement park proved ineffective. Realizing the difficulty and near-impossibility of competing with the “happiest place on earth” that is Disneyland, Las Vegas went back to its earlier campaign.
Along with the company that makes it, a product’s country- or city-of-origin usually has a direct and significant effect not only on its perceived quality, but on brand loyalty, association and awareness: Germany has BMW, Mercedes-Benz and T (Telekom); the US has Apple, Google, Amazon and Microsoft; France has AXA and L’Oréal; Japan has Toyota, Nikon, Uniqlo and Nintendo; the United Kingdom has Shell and Vodafone; Korea has Samsung and Hyundai… the list goes on and on.
Brand awareness, brand loyalty, perceived quality and brand association—all of these comprise the equity of a brand. Brand equity is a marketing-industry phrase, which describes how the owner of a well-known brand name is able to generate more revenue from products with that brand name compared with products with less well-known names. Much like how a customer perceives a product he intends to buy, how our country is perceived as a good investment is typically affected by advertising, reviews, public relations, social media, personal experiences and other channels.
In this era of globalization, Mr. Duterte must realize that, as President, he is our top diplomat, if not salesman. Anything he says and does impacts on the whole country, and no amount of spirited defense and context clarification by his avid supporters can change the way the world looks at us.
Boorish behavior has no place in a civilized world. President Duterte has to exploit his huge political capital to really effect the needed change he has promised; as Obama says, “the right way”.
He shouldn’t be the Pied Piper who will lead us all to perdition.
For comments and suggestions, e-mail me at mvala.v@gmail.com.