An Investment and its Product Must meet a Market Need

For the government officials, please note that it is not merely a matter of attracting investments, but knowing what investments creates Wealth and sustainable advantage.  One of the things I learned after all these years is that an investment is not an investment is NOT an investment.  In short, some creates results, while some are just a diffusion of resources. Some actually detrimental.

I have been an entrepreneur for over 30 years, have worked with entrepreneurs and wanna be entrepreneurs-students the last 25, and taught the subject in the MBA program for 4 years.  It is a great rally cry, but it is not an elixir. I always thought that the program to promote the creation of 5 or 10 million jobs through entrepreneurship by the previous governments is to mask its failure to attract the foreign investment and expertise that would provide the jobs and economic growth we need.   For sure, the billions it released provided income and sustenance for some, and helped some from sinking, but generally not very clear, long term, sustainable results.  Entrepreneurship cannot solve the unemployment problem for the simple reason that: 

A Person who does not have the skills that is needed to get a decent job will not have the skills to operate or manage a business, even a micro one.

For a business to be sustainable, it must be competitive, and must meet an unserved need.  The best entrepreneurs are those who were employees first, and learned, and then setup their business. Those who are not employable cannot be expected to carry on a successful enterprise. There are always exceptions, but overall, I would not bid against the statistics.

If a town already has 20 carenderias,  20 sari-sari stores, 15 barbershops, 10 DVD resellers,  and 20 tricycle operators, and all barely eking out a living,  a program to create more vendors, tricycle drivers, or sari sari stores , it will only make it worse for everybody because the problem is that there is no market.

However, if a foreign entrepreneur comes in and setup a BPO office for 200 employees, then suddenly, there is 25 million payroll money going to the local economy, a few million goes to local taxes, SSS, Pagibig, and Philhealth funds, another tens of millions going to various suppliers and related enterprises, and maybe earning 2 million dollars a year in foreign exchange.  now that will revive the town, and surely in a years’ time you now see twice the number of eateries, the barbershops, the tricycle operators, and the sari sari stores who will have been able to find the funding to start because there is a market.   The entrepreneurs have set up through investments a long term entity that seeks outside markets that brings money and the town’s economic growth in.

IN short, the most important thing for government is to create MARKETS, or to attract investments that help create value because the investors have access not only to capital, but to skills, technology, and markets that can benefits us.

wilson ng

Real knowledge is to know the extent of one’s ignorance.

Confucius

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