Archive for Global Awareness

Philippines: A Strategic Planning Dialogue

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With an estimated population of about 94 million people, the Philippines is the world’s 12th most populous country. An additional 11 million Filipinos live overseas officially, yet the unofficial numbers are higher around 30 million.

The Philippines economy is the 45th largest in the world, with an estimated 2011 gross domestic product (nominal) of $216 billion.

Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. Its unit of currency is the Philippine peso (₱ or PHP).

The Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing. Of the country’s total labor force of around 38.1 million, the agricultural sector employs close to 32% but contributes to only about 13.8% of GDP. The industrial sector employs around 13.7% of the workforce and accounts for 30% of GDP. Meanwhile the 46.5% of workers involved in the services sector are responsible for 56.2% of GDP.

The Philippines is the world’s largest exporter of skilled and unskilled labor and hence, the economy is heavily reliant on remittances, which surpass foreign direct investment as a source of foreign currency. Regional development is uneven with Luzon Island’s Metro Manila in particular, gaining most of the new economic growth at the expense of the other regions, although the government has taken steps to distribute economic growth by promoting investment in other areas of the country. Despite constraints, service industries such as tourism and business process outsourcing have been identified as areas with some of the best opportunities for growth for the country, being that they are the largest English-speaking Asian nation. Goldman Sachs includes the country in its list of the “Next Eleven” economies.

Bank lending expanded by 19.3 percent by the end of 2011, a pace of growth that the central bank said should help speed up growth of the Philippine economy in 2012.

The Bangko Sentral ng Pilipinas reported that outstanding loans of universal and commercial banks in the country amounted to P2.79 trillion by the end of 2011, up by 19.3 percent from that registered the year before.

The rise in bank lending aided the 6.3-percent growth of overall liquidity within the domestic economy, the BSP also said. It reported that “M3? – a broad measure of liquidity that includes currencies in circulation, savings and other types of deposits, money-market funds, etc. – amounted to P4.7 trillion by the end of 2011, up 6.3 percent year on year. The credit growth of 19.3 percent is considered robust by central bank officials, as bank lending was growing by only around 10 percent in the previous two years.

The Philippines is the 12th largest country by population but the 45th largest in terms of GDP, that imbalance has improved over the last 5 years. I do feel however, that more can be done at Government levels to stimulate growth.

Well, I have been traveling to the world’s second largest archipelago since 1984. The Philippines is truly a paradise rich in natural resources, I believe the world’s 5th richest, with an abundance of diverse horticulture species that has been highly developed since the Spanish first recognized their fertility 400 years ago, resulting in a healthy
agro-industry.

In addition to their rich agriculture, they are sitting right on the north-eastern geological formations within the South East Asian Horseshoe, known as the “Ring of Fire”, stretching from southern Borneo, up their east coast to the top at Brunei and out through the eastern islands, where there has been an abundance of rich hydrocarbons such as coal, oil and gas. Other countries within this area have enjoyed important productivity in the energy industry, having become major exporters regionally. Contrarily, President Marcos established a prohibition of foreign ownership of developments in natural resources. Subsequently, global interests in exploration and production by the world’s oil and mining giants waned significantly to nothing, giving the Philippines a pass…

However, to her credit, President Macapagal-Arroyo overturned the Marcos embargo in 2006, opening the doors to foreign investments in mining, offshore drilling and exploration. This has already served the nation well, with foreign mining and oil companies such as, Texaco, Shell, TotalFina, Agip and others already developing important fields in gas and oil, which will yield increases in government revenues and for the private sector in the years to come.

Independent of new offshore drilling enterprise, they have an abundance of high BTU coal deposits that have only recently begun development. The Philippines has major deposits of gold reserves in the Visayas, the islands south of Luzon, like Mindanao and Negro. It is said they have millions of ounces yet to be discovered. The government needs to provide better regional stability and security geopolitically, as they’ve had challenges with opposing militant factions in the minority Muslim populations making it less attractive to invest in resources development over the long-term.

One important program for an enhanced financial health that needs an immediate solution, that only the government can step in to provide, is to establish price controls for power and electricity to big enterprise and to the general public. They have the highest price per kilowatt-hour regionally. In fact, the rates are higher than in Japan, having a much higher GDP and personal wealth index than Filipinos do. Clearly, the country needs low-cost energy swiftly.

In fact, by all accounts the Philippines is estimated to be out of natural gas later this year, resulting in a possible economic crisis that some areas will find difficult to survive. There are aggressive solutions already on the books that require immediate action by the government using the new Public Private Partnership (PPP) initiatives as set forth by President Aquino, and to use this medium to deploy two important projects that were designed years ago. BATMAN 1 and BATMAN 2. Bataan to Manila and Batangas to Manila. These are two main LNG arteries that if immediately deployed would serve to significantly increase gas to highly populated areas, with reduced prices for electricity.

Establish growth to rural areas:

Rural Filipinos are hard-working citizens that would gladly work even harder to produce and contribute, if only their federal government would reach out through regional energy enhancements, being that the cost of conventional power chokes rural industry across the board. Last year the Aquino administration Department of Energy ratified a measure to induce creative ways of establishing local enterprise designed to provide low electricity directly to farmers and industry essentially off the main power grid.

Since the Philippines is the world’s largest producer of coconuts, they have an over abundance of coconut husks and other related biomass that can be used to burn for conversion to kilowatt power well below retail power prices.

Philippines’ neighbor, Indonesia could take notice of this strategy, also being the other major coconut producer and the world’s largest archipelago of some 13,000 islands. In fact, coconut husk residue from the outlying industry can be an environmental challenge and therefore, using husks to generate low-cost power to rural communities who simply can’t afford it will engage the people and develop more trust and faith in their federal and regional leadership, serving to augment local industry. There are already small private enterprise currently deploying from 1 kilowatt upwards of 10 kilowatt power plants burning coconut husk, purchased from local farmers, simultaneous with their harvesting of the fruit at very low prices. This is where local enterprise and ingenuity converge to everyone’s benefit. This is an appropriate example of how the federal government via the Department of Energy and it’s long arm, reaches out in real-time to embrace the needs of the many.

Strong agricultural base:

They have had many setbacks over the centuries that has remained to today that serve to stymie their real productivity…firstly the Spanish edict of forced agriculture was an unnatural beginning which has remnants in today’s farming practices. The other major external negative influence was from the United States in the mid sixties. President Johnson’s administration was being heavily lobbied by the California and Texas rice growers associations to reduce the large rice imports from the Philippines.

In those days, the Philippines were among the largest producers. During the early phases of the Vietnam War, the US military was building up an intense presence in Subic Bay and Clark Air Base. Hence, President Johnson used his political influence to pressure the Philippine President Diosdado Macapagal to introduce the Philippine National Land Reform Act, which only served to lay-waste financially and created an almost permanent poverty state, crippling the commercial rice growers, as well as all the other crops. Simply put, the Land Reform Act prohibits agro-producers from owning or producing on no more than five hectares, forcing them into large cooperatives, thereby reducing profit margins with significantly impaired productivity.

Harriman with President Arroyo

In fact, in 2007 I attempted to convince President Macapagal-Arroyo to use her executive powers to overturn the archaic act through the Supreme Court. However, she wouldn’t have it, sighting a potential loss of face, as it was her father who created the destructive measure in the first place. Hence, the good Philippine people have not yet reached their zenith in financial independence they so deserve. The Land Reform Act has since also served all of the Presidents financially, being frequently accessed by each since its inception. The LandBank of the Philippines holds among the largest of government accounts, accessible to only the Administration. Within the first day of each president’s inauguration, his or her first acts are to sign the reinstitution of the act. Today, directly as a result, the Philippines are the largest importers of rice regionally and they now regulate imports.

More important to the long-term enhancement of their nation’s agro-industrial complex, would be to see the Philippine Coconut Authority (PCA) act more responsively toward mass modernization of the country’s largest GDP contributor – coconut. With annual production fluctuating around 23 to 24 million tons annually, they could stand to gain tremendously through modernization of growing more sustainably, using updated rotations in reforestation.

In 1642, the Spanish made an edict upon each islander, forcing them to plant upwards of 200 coconut seedlings each or face incarceration. Thusly, coconut is their largest grown crop since, but their methods haven’t really advanced to standards practiced in other producing nations. Modernizations and business developments should keep pace with new global trends in varied commercialized coconut products. For example, although charming, farmers are still using oxen to haul fruit to market, whereas in other countries, producers use motorized vehicles for transport. Clearly, the PCA, having the richest bank accounts at the LandBank, could reach out through various forms of farming subsidy to provide more fully developed integrated solutions directly to farmers to increase productivity. Over 67% of the nation’s coconut trees have reached maturity and are slated for a massive replanting initiative. Farmers needn’t depend solely on their own financial resources. Hence, the LandBank, led by the PCA replanting and farming upgrades can advance the nation forward to compete globally.

An investment destination compared to other ASEAN Members:

In some areas, their investment landscape is stable at times and getting better as the nation expands relations internationally. Although, their SEC and public exchange was established with the help of the United States. Their investment rules of law were also greatly influenced by the U.S. as well. This does serve to provide legal framework of equilibrium for large strategic investment programs.

They also have their fair share of corporate and government graft and corruption, which has served as an external investment deterrent, being that countries that lack a sound base for the rule of law that serve to protect foreign investments, tend not to flourish. Yes, there are healthy areas where foreign investment finds it way successfully with little resistance from unwanted illegal intrusions. Tourism, commercial, retail and housing developments have enjoyed significant growth due to outside investment into joint venture partnerships. Moreover, the gaming industry has seen important growth, driven almost entirely from foreign investors from the likes of gaming goliaths Steven Wynn and Sheldon Adelson.

By comparison, neighboring Malaysia and Indonesia while having their fair share of challenges with corruption in both the private and public sector, are still enjoying a healthier rate of annual growth from new and improved investor relations practices and many through strategic alliances. Although, in other cases like in Vietnam, they have had to be somewhat more blatant in their battle against public and private corruption in major industries. Important multinational corporations like Motorola have had a tough road in their investor path in the Vietnamese business and manufacturing landscape. Other Vietnamese industrial sectors are challenged such as, forestry, wood products, coffee and electronics. Whereas, they too are fighting to right their inefficiencies and malfeasance in the general business environment and they’re slowly winning the fight. Business is booming, but really it’s the Philippines that have the edge over many of her ASEAN neighbors in numerous sectors. Nevertheless, there are challenges everywhere. It’s always about developing sound relationships with those that share similar interests and moral fiber, when viewing new investment horizons. In almost every environment, is about vetting each investment opportunity and having good people in on the ground providing requisite support.

President Benigno Aquino III’s term in office:

His mandate was clear from the start of his campaign for president. He was the heir apparent, the Crown Prince, since he tragically witnessed his father’s untimely assassination on the tarmac at the airport upon their arrival from the United States after living in exile from the Marcos regime. Upon his mother’s recent passing from cancer, his next chapter in life was set toward a path of fulfilling his father’s legacy; to effect real change in a land that is still wrought with the few, but influential Marcos cronies. Even in his own administration, those archaic elements exist, as they did in the previous administration. Accordingly, President Aquino has made slow progress forging only a dent in that ‘endemic’ corruption. Indeed, his promises are very hard to keep. Yet, he fights the good fight, while allowing the door to stay open to new frontiers to prepare the next generation of living in a world without such memories and favoritisms practiced in plain sight.

He had his hands full at the outset, cleaning house from the previous administration’s scandals and lack of performance, to refuel the fires of hope for so many millions who live marginalized and disenfranchised from living a good life, where the needs of the few, seem to outweigh the needs of the many.

But he does need to engage the private sector more aggressively, with challenges and opportunities that represent very real needs to the common man throughout the nation. There are many businesses that he can create today, simply by deploying programs and projects that are very much-needed in infrastructure, designed to improve the quality of life for everyone.

With the ongoing support of his government, he can accomplish three major objectives that will assist the hard-working people of the Philippines:

  1. Over time, establish significant increase in new jobs.
  2. Offer major opportunities for management, design, construction and other high-end, highly skilled jobs for Filipinos.
  3. Attract world-class multinational companies to make their home in the Philippines.

Infrastructure can serve to achieve these three important steps. Finally, the president should deploy the Intermodal Logistics Network, which was designed by an international infrastructure development firm, specifically to enhance the nation’s dilapidated and outmoded infrastructure that is desperately needed. From this, imperative, skilled jobs will come along with advanced materials developments, major construction and new management regimes will be put in place to safeguard and ensure proper methods for large systems deployment. Should the president awake to find these realities effective, his promise will be golden and the quality of life for his countrymen will be secure. He needs to break with the past and make bold strides forward. But alas, I’m not sure his timid character is ready for the rough and tumble road to enforce real change.

Attract foreign direct investment at levels comparable to neighbors:

Simple; they are not in touch with international standards and practices, as much as they can be. Vietnam became the new challenge in the late 90’s, being that the U.S. had just reinstated their diplomatic status with Vietnam and they were in a race to erase the past, by diving into the deep end of forging s new business rapidly. Thus, the world’s attention was and has been on seeing whether the gamble pays-off. It has in spades.

The Philippines needs to re-engage her 100 years old relationship with the US, since the 1992 divorce. Indeed, there are many reasons to ignite the flames and romance in free enterprise and industry. The US overseas manufacturing markets that have since replaced the Philippines with Chinese and Vietnamese low-cost labor are ready for a new infusion – to be refreshed by the largest English-speaking, skilled labor force in the region. As the Chinese desire for regional hegemony is a real thing to consider and observe, the Philippines is the actual center of ASEAN, hence making her the most logical place from which international business can more cost effectively deploy and enjoy market dominance. China has her sights on the Philippines as the source for so many important things such as, resources and a logistically favorable place from which to affect regional controls, as did the Japanese Imperial Navy during their unsuccessful experiment.

Until now, the Philippines has not engaged international assistance from the private business development sector, to aid them in promoting the hidden jewel in the South East China Sea at the heart of Asia, as the sixth Tiger. They have the resources and the manpower to realize it and it’s their time…

Public-Private Partnership programs – funding & management expertise:

Actually, they are in need of both and more. The expertise is there at the base. Leadership has been afraid to make strong calculated moves forward, simply due to a lack of value-added relationships internationally, that can serve to advance the developments rapidly and incentivize infrastructure developments. There are several private firms having highly developed relationships with multinational consortiums that have already openly defined sincere interests to invest there on many levels. The previous administration made a complete mess of overseas relationship building, with nations and private companies who actually executed contracts with Filipino companies, witnessed by the president in Europe and the Middle East that made significant financial commitments to design, define and deploy huge infrastructure projects. The third missing element is government leadership that understands how Public/Private Partnerships are designed to work and the methods and rules of engagement based on international standards, with which most multinational consortiums are used to working. The future looks bright for them, should they decide to embrace relationship building seriously at higher levels.

Par example – the previous president was personally introduced to the US Senate Chairman of Appropriations Committee, in her suite at the Willard Hotel, where the senator clearly delineated that he was willing to allocate many billions of dollars that had been held in a special account at the Congressional General Accounting Office (GAO) that was earmarked for the Philippines, resulting from years of reparations held since the Johnson administration due to the fallout from the Land Reform Act imposed by the US. There was absolutely zero follow-up by anyone from her government, not the Ambassador, not anyone since has even tried to make any inquiry. Nor did she pass this little item on to the new administration. The US Congress has funds in holding patterns for many countries who simply apply, such as Ireland who asked for assistance decades ago and now operates the largest foreign investment fund paid for by US taxpayers upwards of $260 billion today.

Or the fact that the government nor the private sector are attempting to utilize the newly formed Brunei Darussalam-Indonesia-Malaysia-Philippines - East ASEAN Growth Area (BIMP-EAGA). The new free trade agreement that was signed on 12 January 2007, Cebu City at the ASEAN Summit, with the overall objective of narrowing development gaps in ASEAN and for the realization of the ASEAN Community. Real issues and formulas for growth were forged from the Treaty, deepening the cooperation among the BIMP-EAGA member countries in the economic, security, energy, environment, and social and cultural areas.

Important initiatives to facilitate the accelerated implementation of the flagship projects; completion of the BIMP-EAGA database on cross-border trade, investment and tourism; development of the implementation mechanism for the Roadmap; preparation of the energy action plan; conduct of joint trade and tourism promotion activities; finalization of the guideline on pilot-testing ASEAN measures/program in BIMP-EAGA; and forging of stronger partnership with our development partners and international development. However, no major strides have been made in deploying the incentives built into the treaty. Once again, little or no follow-through.

There is an underlying treasure that rests in facilitating mechanisms for higher tax retention nationally, which would improve government spending. The government needs to privatize the Philippine Postal Corporation and convert it to be the centrifuge of a global remittance bank to better serve the upwards of some 30 million Overseas Workers stationed around the world, who everyday find it sometime impossible to ensure their hard-earned salaries find their way home to their awaiting families in need. There are champions in Congress poised to author and pass the legislative measures required that are already in place. With an official count of $18 billion remitted back home, by unofficial accounts it’s more like $26 billion. Even a small processing fee would serve the nations well and seriously improve standards for millions.

The technologies have been developed and the private companies are readied to deploy it under the president’s new PPP initiative. It’s these types of bold new enterprise that are what’s needed to augment the Philippine investment environment. Infrastructure is what drives the success in the MENATSA emerging markets. It will certainly be what will drive the Philippine economy for the foreseeable future.

“Privatize” is the key word here. There are major projects to be developed and managed over the long-term for air, land and sea. The Philippines needs expertise quickly, by embracing and engaging with firms internationally. Join the global community. Then partnerships, money and investments will flow freely unencumbered by the lack of capability.

Certainly, they live on the Brightside of Paradise…

~Christopher Harriman

Terraforming the Arab Spring

Value migration is the shifting of value-creating forces. Value often migrates from outmoded business models, or outmoded governing stratagems to business and management designs that are better able to satisfy customers’ or the plebiscites needs and priorities. There are direct correlating factors to the practice of deploying value migrations in the commercial space to socioeconomic and geopolitical environs that have recently been at play in the blossoming of a new era in the Middle East. Indeed, this is the Brightside of things yet to come.

Predicting the future is a fool’s errand. It is fraught with so many complexities and an element of uncertainty that the best of us can only attempt with integrity to concentrate on potential alternatives — plausible scenarios— across the horizon, and then try to consider what might be readied if one of those alternative paradigms materializes. These are undreamed of possibilities. Scenario planning has certainly been an effective non-intrusive discipline in geopolitical terraforming for decades by sophisticated elements in the intelligence communities; helping many organizations and governments to imagine potentialities that probably otherwise would not have shown up in their field of view in real-time. Colossal and astonishing, global trends have been in effect, any number of which would be enough to disrupt a nations former and present way of life. They have converged to precipitate extraordinary large-scale transitional events across the Arab world, fracturing every cherished aspect of the human condition. Some change-agents of which, can be considered as non-violent and non-intrusive catalysts for sociological imagination en-masse and an ultimate amendment in normality’s or the existing state of affairs.

One might carefully take note of the fine print on the back of the social terraforming MENA playbook such as, “No Shock’n Awe was deployed by marauders in the making of this new order”…or rather, “Little collateral damage occurred during the forging of your new interim government”. There couldn’t be a more apt time to evidence that positive change is possible for the needs of the many, using more cost-effective measures than the conventional methods of risking the lives of armies, navy’s and air forces. Although a necessary element over the last few millennia, in some instances force can be the harbinger of much-needed positive change, like a lotus that blooms from the mud.

Freedom, independence and liberty refer to an absence of undue restrictions and an opportunity to exercise one’s rights and powers. During the 20th Century, these seemingly basic earthbound states of being, many millions of people did not actually experience in their true forms, due to the leadership modus operandi of the governments in which they unwittingly lived under. Clearly, one by one, these imperfect structures failed miserably. They will continue to do so, as long as they fail to address the very basic real needs of their plebiscites.

Contrary to the halls of Washington’s beltway status-quo viewpoint, President Reagan personally did not believe the charade perpetrated by the Soviet Union’s Politburo of being an economic and military powerhouse. He felt strongly that they were a house of cards, weakened by their fledgling oil infrastructure used for over spending on military excess and protecting a nation of its starving citizens. And so it was, their Bolshevik Revolution and subsequent eighty-year Marxist experiment was toppled internally within days. President Reagan was right…

Indeed, the state of being free or at personal liberty rather than in confinement or under physical restraint by the very governments they entrust with their lives, is now more than ever a readily available state of existence. This is as it was intended to be for everyone, at least in his or her minds. In reality, trust in the ruling classes to govern life with compassion and benevolence had waned and spoiled like a bad apple on an un-nurtured tree.

These are the basic natural living elements needed, or lack thereof, for the western intelligence communities to use as champions or honor flags to subversively strike from within, specifically in a stealthy attempt to overthrow or cause the transformation of an established or legally constituted government.

Freedom, independence and liberty are the basic undiscovered paradiso’s that those in their twenties begin to question as to their scarcity. Across the MENA splintered ancient country space, from Iran, Syria, Yemen, Egypt, Bahrain, Libya, Tunisia and perhaps soon more, the average demographics are 23 years old. The young, many in universities yearning to expand their minds, naturally blossoms to expand their states of being to commence their life’s journeys. Raw and ready to experience new ideas, made it almost effortless, yet certainly less intrusive to suggest change internally in each of their respective paradigms. For example in Iran, in 2004 the intelligence community quietly introduced the ever pervasive satellite dish to those that could afford them on the black markets, offering up rich media of free thought from the west, visually spectacular invitations for everyone to eventually question why even the simple things of life were not theirs. The local security forces responded in typical tyrannical fashion. After only a few years of socio-terraforming trials, understandably the reality of risking actual deployments was apparent.

In order for the Coalition Forces to safely initiate reductions in troop strength, regional social reformatting was apparent. With surgical precision, it began on Saturday, December 18, 2010. First, it germinated in Tunisia, then Egypt and so on. Students and the young alike openly exercised their untried versions of freedom of expression. Surely, intel analysts were tenuous at the outset as to whether the internal seeds of new hope might grow, yet they did begin to actually work and take on shapes of their own. Interestingly, many of the protests had similar techniques of civil unrest in sustained campaigns. There were strikes, demonstrations and rallies. Moreover, for the very first time, American social media enterprise took on an important role, being available for young dissident techies to utilize as their party-planners communicating their causes and openly inciting change. Global conventional media also played an effective reactionary role with its own special skew tailored to each country. Nation-states again responded with their flavor-of-the-month repression, censorship and mobile network difficulties. Nevertheless, they – the young and determined marched onward. Their lives would never be the same again…They took the empty-handed leap into the void, that in and of itself was a true test of faith.

One might carefully take notice of the countries having very close and healthy relations with the world economies in both military and geo-economic concerns, that have staved off their own haughty versions of social discourse for now. Prosperous benefits abound. Stimulating and maintaining balanced healthy regional economic continuity is imperative. It helps to foster happiness and personal nobility from within.

It seems as a collective, we have perhaps become somewhat more sophisticated, elegant in our methods for social change, quietly stalking our targets weaponless.  It is impossible and unnatural to even consider extrapolating hope from the human psyche…the hope of a Brightside is in our DNA.

Peace through peaceful means is attainable.

~Christopher Harriman