With Barack Obama’s impending ascent to being the 44th President of the Unites States of America, a dark cloud looms and threatens to blot out the “sunshine” industry the Philippines has been exploiting over the past decade.

In his website launched as a primer on his policies as President-elect, aptly named Change.Gov, Obama has outlined his views with regards to sending jobs overseas, outside American shores:

End Tax Breaks for Companies that Send Jobs Overseas: Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers.

Reward Companies that Support American Workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America if it has ever been in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military. [Change.Gov]

The implications are therefore daunting. The Philippines may lose big given that the US is most likely its the biggest customer for business process outsourcing.

Business Process Outsourcing is, of course, not limited to call centers. While call centers were the primary “spark” that started the industry’s wild-fire spread (and remains to be its largest sector), other services are offered by Filipino outsourcing, including animation, software development, finance, logistics, accounting, and even legal services.

The positive effects of the growth of this sector is likewise far-reaching. When talent was brought to near-exhaustion in Manila, the industry was able to expand to other urban centers like Cebu and Davao, but services soon also rose in areas like Clark, Baguio, Bacolod, Iloilo, and Cagayan de Oro. Its expansion has allowed the Philippines to capture 20% of the English-speaking market ([PDF] as of 2004). It has allowed the Philippines to be third behind India and China, respectively, in terms of contact service outsourcing at least.

However, with this market now threatened by a major shift in US economic policy, it is of utmost importance that the local industry learn to adapt to these threats that may kill off the industry. Needless to say, the threats imminent to us would be similarly threatening to India and China, and it is inevitable that they themselves would respond to these policies once they are enacted into law perhaps in the second or third quarter of 2009, at the earliest.

So how do we respond? Personally I believe that the local BPO industry will benefit from the following:

• Seek new markets — While the US may be its largest customer, the Philippines will benefit from focusing on other similar English speaking markets, including but not limited to Canada, Australia, and the United Kingdom. The Philippines may be able to benefit as well from learning new language markets (e.g., Japan or Chinese speaking countries), but this would probably be an uphill battle considering the learning curves involved.
• Competitive pricing — India leads the Philippines when it comes to outsourcing, but they are constantly plagued by increasing salary levels and high attrition rates that are making their services more expensive. It may be difficult to compete with our Chinese competitors, but Filipino companies can take advantage of the skilled-labor problems of India to their advantage.
• Focus on skills, not just language — The Philippines boasts of its fluent English speaking workforce, but its advantage should not be limited there. Local skills, talent, and innovation should be developed further to create a labor pool that is not only adept at slang and twang, but is likewise genuinely competent at their work. This will open opportunities which would not limit it to th English-speaking or US market.
• Move the focus away from outsourcing and towards creating products with value — This is particularly true for the software development and animation industries. The dependence on outsourcing revenue limits software developers, for instance, to making software as designed and specified by their foreign clients and counterparts. Instead of following the Indian outsourcing model, Filipinos should instead explore the Israeli software product model, wherein they create web-based or shrink-wrapped products (similar to, say, Google and Microsoft, but not similar in scale) that can earn them revenue. If Filipinos manage to create software products that are truly innovative, the profit margins for this type of development would prove to be much, much higher than that of the corresponding outsourcing model (admittedly, the risks involved would likewise be higher).

I’m sure the Philippine BPO industry can think of more creative ways to be able to adapt and respond to the ever changing global economic climate. Unfortunately, Obama’s policy shift once more underscores just how dependent the Philippines is on the United States. Successfully responding to this challenge will hopefully lead to less dependence on one big customer, and perhaps even develop internal markets so that we won’t be at the mercy of foreign investment and trade.

In a few hours I shall be setting off and driving north towards my wife’s home province of Pangasinan, my adopted province since an unfortunate idiosyncrasy of my life is that I could trace seven generations back to Manila-dwellers beyond which I’ll have to go to China. But I digress — the two hundred kilometer journey will bring us to central Pangasinan, near Manaoag, home of a popular cathedral and Catholic pilgrimage site. Now I didn’t realize it until the first time I drove that trip, that there is a very big difference in seeing things when you ride a bus and when you drive. The primary difference is your keenness on landmarks. Because you need to know how much more lower back pain and leg strain you have to endure (it’s a four hour drive in light traffic, six hours in bad), as well as remember where you can stop to eat or pee, you notice the structures along the road, especially on McArthur Highway once you get off of the North Luzon Expressway.

One thing I immediately noticed are the various stores that line McArthur Highway. You wouldn’t really notice one store when you see it, however: you would notice it when a huge number of them are all selling the same thing, side by side. Around Bamban and Capas, both in Tarlac, it’s the stores that sell pastillas de leche and other milk-based sweets. By the time you hit Paniqui and Moncada, for around 10 kilometers it’s watermelons that line the road: there’s even a 250 meter stretch of watermelon stores. Reaching Urdaneta City in Pangasinan, a similar 300 meter stretch is lined, this time, with bottles upon bottles of bagoong. Once you reach Binalonan town, it becomes native corn, although with much fewer sellers. Leaving McArthur highway to head to Manaoag, near the church itself it’s not only religious icons and trinkets, but tupig (sticky rice and coconut meat roasted within banana leaves) is likewise peddled.

Copy this, copy that, copy cat

It’s no different from many places in the country, for that matter. Los Baños has its ubiquitous buko pie, and at one point all buko pie stores in Pansol, each one less than a hundred meters from the other were named “Colette’s”. Manila has had different “food fads” in its history; it has shifted from burgers, to shawarma, to lechon manok, to pearl shakes. But it has to be Cebu’s dried mango producers who are most guilty of gaya-gaya mentality, so much so that not only were the products the same, but even the branding was compromised.

The number of dried mango producers have skyrocketed from the 80s through the 90s due to the popularity of the delicacy as an export product, but they have some serious identity crisis. The pioneer dried mango had chosen a green package in white lettering, with a clear “window” at the lower part of the package to make the mango slices visible. Soon everyone packaged their dried mangoes in a green package in white lettering, with a window. Only one or two departed from the usual scheme (one of them went blue and green, the other changed to orange-brown).

Apparently, if the Filipino entrepreneur is efficient at anything, they are efficient in copying product offerings of seemingly-thriving businesses, down to the packaging.

A nauseating business proposition

The GEM Philippines 2006-2007 Report reveals that four out of ten Filipinos are entrepreneurs, and of those, 19% belong to the Class C segment, 54% belong to the Class D segment, and 20% belong to the Class E segment. While some people contend that these 54% are “following in the footsteps of the taipans”, it doesn’t present reveal the extent of planning, research, and marketing that these business owners apply into their business — in fact, one could assume that these businesses do not have any such activities in their enterprises.

The findings also affirm the observations I made above:

Survey results tend to affirm the common notion that the typical Filipino business person is risk-averse (segurista) and lacking in originality and innovation (gaya-gaya). Such attitude can be a hindrance to being able to exploit new opportunities and growth potentials, which is important in building dynamism in the enterprise sector. [GEM Philippines 2006-2007 Report]

The irony in this statement is that while the Filipino is, apparently, willing to go into business, they remain to be inherently risk-averse and lacking in innovation. The Report expounds:

There is a common observation (and lament) that most Filipino business owners are content with imitating other established firms rather than innovating with new and unique products and services, the so-called gaya-gaya (copycat) syndrome. This appears borne out by the finding that surveyed business owners predominantly believe that their products and services are not perceived to be unique or distinct from others. A dominant 71% of business owners indicated that they would not be seen by customers as offering something new or unfamiliar.[GEM Philippines 2006-2007 Report]

Unfortunately the effects are adverse, profit-wise. Put copycat syndrome and cutthroat competition together with a lack of marketing, and what you end up with is a bunch of palengkeras ready to kill each other off. Without the prosperity brought about by high profit margins, it seems that poor Filipino entrepreneurs will remain poor, in spite of the fact that they have chosen to put up a business.

They aren’t following the footsteps of the taipans, after all.

Taking a road less travelled

According to the Principles of Entrepreneurship publication of the US State Department, the concepts and ideas that make or break the business can be categorized into four:

• An existing good or service for an existing market. This is a difficult approach for a start-up operation. It means winning over consumers through merchandising appeal, advertising, etc. Entry costs are high, and profit is uncertain.
• A new good or service for a new market. This is the riskiest strategy for a new firm because both the product and the market are unknown. It requires the most research and planning. If successful, however, it has the most potential for new business and can be extremely profitable.
• A new good or service for an existing market. (Often this is expanded to include modified goods/services.) For example, entrepreneurial greeting-card makers use edgy humor and types of messages not produced by Hallmark or American Greetings – the major greeting-card makers – to compete in an existing market.
• An existing good or service for a new market. The new market could be a different country, region, or market niche. Entrepreneurs who provide goods/services at customers’ homes or offices, or who sell them on the Internet, are also targeting a new market – people who don’t like shopping or are too busy to do so.

Emphasis mine.

Note that while the ordinary Filipino would-be entrepreneur thinks that the safest route to go is to offer products and services that has an existing market, they do not realize that going up against existing competition makes the business less viable. Unfortunately the illusion of safety — and perhaps, the misconception that it is easier to mimic an existing operation — leads them to the cutthroat, opportunity-devoid copycat market that typifies the business environment of the unsuccessful Filipino entrepreneur.

Blast-freezing one’s way to success

That being said, local taipan wannabes must learn to focus their efforts on the more fruitful ventures of offering a new or modified good or service to an existing market, or offering an existing good or service to a new market.

There are some businesses that are becoming big this way. Lety’s Buko Pie in Los Baños is a good example of a business that was able to find ways to offer a new or modified product to an existing market, and at the same time offer an existing product to a new market.

Deluged with numerous buko (coconut) pie competition, Lety’s turned its attention to an unsolved problem with buko pies: microwaving them would turn the pies soggy. With the help of the Department of Science and Technology, Lety’s was able to find a solution: blast-freeze the pies to prevent ice globules, which form during conventional freezing, from coming up. A nice side-effect: their buko pies can be frozen up to 12 months, which allowed Lety’s to export their products abroad.

Going off-road to genuine entrepreneurship

It is clear that while the Filipino is not bereft of technical skills and capability, they have much to learn with regards to business savvy, risk-taking, and innovation. If Filipinos (beyond the usual Filipino-Chinese) are going to achieve success, much effort should be taken to be able to help them think out-of-the-box, reduce risk-aversity, and evangelize the virtue of innovation (or more specifically product-development), which in turn would lead to a much productive and high-profit business environment.

The lessons of the current state of entrepreneurship in the country should not be ignored, or worse dismissed — further education in entrepreneurship should be nurtured for the lackluster nation to be able to catch up with its more prosperous (and under the hood, more adventurous) neighbors. It’s high time the Filipino entrepreneur should learn to drive off of the unentrepreneurial, risk-averse, copycat road.

While the racetrack-like Elliptical Road in Quezon City rumbles with noise, fumes, and traffic, a few silent automobiles make their own rounds in the Quezon Memorial Circle that the road borders. Humbly seating four persons max, the curious rides called G Cars (in a pun-loaded attribution to their inventor, Gerry Caroro) can be hired for PHP30 per lap. Caroro laments, however, that he never intended his invention as an amusement park curiosity. He intended it to be the solution to the country’s dependence on imported oil, as well as reduce pollution in the metropolis.

Unfortunately Caroro has difficulty finding an investor for his invention, a plight shared with most of the country’s inventors. As any dutiful citizen of the Philippines tends to do, Ronald Talion of the Filipino Inventors Society blames the government for this:

“It’s already mandated under Republic Act Act 7459 (Inventors and Invention Incentives Act) and yet, for some strange reason, our inventors have to fend for themselves,” Talion noted.

“The only support we get is the P178,000 that is given to us every November to celebrate National Inventors Week (NIW). Obviously this is not enough, which is why a lot of my colleagues were forced to seek support from abroad,” he lamented. [Inquirer.Net]

An automotive industry that never was

The plight of Caroro’s fledgling effort to produce a viable automotive technology is but an addition to the tragic history of the country’s automotive industry, shared with its ubiquitous mode of transport and cultural icon: the jeepney. Originally coming from surplus and left-behind military jeeps, roofs were installed and lavish decorations applied to convert former war-wagons into colorful passenger vehicles able to seat six to ten people at a time. From the 60s until the 80s, a vibrant backyard industry emerged, where jeepneys and “owner-type” jeeps were manufactured as low-cost alternatives to lavish, large-engined American cars or their cheaper Japanese counterparts.

The jeepney manufacturing sector was never able to make it beyond “backyard” status to become a genuine car-manufacture industry, though. Beyond metal pressing and stamping, and fabrication of various “mods” to adorn and embellish each jeepney, they never went to the stage of standardization, efficient mass production, and assembly line automation. Over fifty years of jeepney manufacture remained in the realm of hand-pressed, hand-crafted, hand-painted methods. Moreover, it is peculiarly unclear if any two jeepneys are exactly alike, and it is even dubious if any of them had followed a clear cut blue print of any sort.

The last straw, however, is the country’s dependence on Japanese-made surplus engines. Despite whatever expertise local mechanics could boast about in the knowledge of assembling, maintaining and repairing car engines, not a single company has attempted to create its own internal combustion engine with the intent of mass production. The country was relegated to using surplus engines for jeepneys, as well as assembling completely knocked-down (CKD) body kits for various Japanese and American car manufacturers (and even one type of Armored Personnel Carrier for the Philippine Army). Never was the country able to completely manufacture of any mass-produced automobile from top to bottom.

Due to higher-quality offerings of truck-cabbed alternatives with passenger modules in the rear, the jeepney is now dying a slow death. While they are still “King of the Road” in Manila, low sales and profitability has killed all but the most persistent jeepney assemblers of Cavite. Their demise, however, is more pronounced in Cebu, where Chinese manufactured “multicabs” and truck-cabbed jeepneys with Isuzu Elf and Toyota Hi-Ace engines, chassis and driver modules now rule.

An industrial pariah

This situation isn’t even isolated to the automotive industry: while the Philippines has been home to several multinational companies, none of these had resulted in the creation of large local counterpart enterprises. The Philippines hosted Intel since the 1970s, but has yet to have any local company that manufactures PC components (S3 Graphics, while founded by Filipinos Dado Banatao and Robert Yara, was established in Silicon Valley). This is in stark contrast with Taiwan, which is home to computing giants Acer and Asus, among others. Texas Instruments has long had its electronics plant in Baguio, yet no local electronics company has become prominent. American Power Supplies and International Business Machines has been in the country longer than Intel has. The list goes on and on.

It is obvious that, despite the brain drain brought about by the labor export industry, the country does not lack, or at least at several points in its history, has never lacked the means to produce technical expertise that industrialization requires. Neither is there a lack in investment and funding, as evidenced by the continued presence of big-name corporations in the country, notwithstanding moves to shift factories to China. Further evidence of the above is the continued establishment of business process outsourcing firms in the country, which implies both investment and skill.

The government is not entirely remiss in its support to local industry either. Just last month the Department of Science and Technology launched the One-Stop Information Shop of Technologies (OSIST) website (http://www.osist.dost.gov.ph) to assist technology experts and inventors in finding venture capitalists and buyers. While several online pundits question the PHP20 million funding of what essentially is a turtle-paced-loading website, the project will hopefully take off and become a useful tool in aiding inventors like Mr. Caroro in fielding tech innovations like his G-Car. It has to be noted, however that this is not the first time the DOST attempted to set up a program that it hoped would help local industries take off.

Asia’s uncommon manufacturing industry roots

Asia has, arguably, three main manufacturing powerhouses: Japan, China and South Korea, but they each have unique histories in terms of the growth of their manufacturing sectors.

Japan embarked on a sizable Meiji Emperor-sanctioned industrialization effort during the late 19^th century, and while for most of mid-20^th century they had the reputation of producing cheap imitations, relentless improvements in process and technology eventually allowed them to come up with advances above and beyond their Western counterparts.

China, meanwhile, isolated for much of the half-century after the Second World War, had to rely on reverse-engineering much of Western technology, as well as technology-sharing with the USSR, and thus almost forcefully expanded its local manufacturing capability, even before its shift to the capitalist market model.

South Korea, on the other hand, was a little bit more orchestrated, with the regime of Park Chung-hee implementing continuous 5-year development periods during the 1960s that nursed and encouraged industrialization, in a rapid expansion that was eventually termed as the “Miracle on the Han River”.

During the 1950s and 60s the Philippines enjoyed a vibrant economy and an apparently advanced manufacturing sector. The sense of security this brought, however, was false: the industries that the Philippines relied on were primarily American and non-indigenous; and whatever prosperity Filipinos enjoyed rested on the mistaken belief that these foreign investments will remain on the country indefinitely. By the time the problems brought about by the Marcos dictatorship manifested itself in economic collapse, the happy-go-lucky era of American-funded industrialization was already on the way out.

An unwanted local manufacturing industry

The local market was, itself, a challenge. While the Chinese had no choice but to use whatever products are allowed by the Communist government, and the Japanese and Korean markets are fiercely nationalistic in patronizing their own products, moneyed Filipinos were obsessing themselves with everything “state-side”. Everything imported from the US was a godsend; anything local was cheap and “bakya” (out-of-fashion).

Whatever local manufacturing industry offering there was on its own, save for those that were American-branded (e.g., Concepcion Industries’ locally manufactured Carrier air conditioners). Probably the only thriving local manufacturing industry was involved in textiles, clothing, or jeepney manufacture: the latter was even threatened to be usurped by the introduction of Asian Utility Vehicles like Ford’s Fierra and Toyota’s Tamaraw.

What eventually killed the jeep industry, however, were steady albeit imperfect improvements in the local transport systems, as well as increased spending power that weaned private vehicle owners to vans and cars and away from locally crafted jeepneys and owner-type jeeps. It did not help that the local market did not have a genuine automobile product to respond to the demand.

Questions in catching up with a global economy

It is not difficult to surmise that it is now nearly impossible to catch up to the manufacturing behemoth called China. It’s hard to compete with the business viability of going Chinese: cheap labor, power, and highly developed infrastructure trumps any sort of nationalist lament; it simply dictates against the principles of profitability and sustainability. It would be rather ironic to even note that Caroro and his G-Car might turn out to be better cheaply manufactured abroad than made in the country. It should be noted that the e-jeepneys in Makati, Bacolod and Cebu are all made in China.

However, the ill-effects of the Philippine labor-export industry tend to undermine whatever benefits, both real and unrealized, that the said industry has. Large populations of disunited families will be more damaging in the long-run, and skilled overseas labor has brought neither expertise nor industry that the country could positively exploit. The questions now arise: should the Philippines try, daunting as it may seem, to catch up with the Asian manufacturing giants? Should it refocus on other sectors, particularly in services (perhaps, business process outsourcing), which might have been effective for some economies (Hong Kong comes into mind)?

Will Filipino industrialization remain as an electric dream?

Reciprocity

My wife, a travel agent, got fuming mad at a “friend” last weekend. Her “friend” inquired regarding passport renewal application with a caveat: “friend’s” birth certificate has some problems, preventing her from obtaining one from the NSO. My wife asked if she had consulted her local civil registrar or a lawyer to fix whatever her problems are. The reply (this was going on in SMS, if I recall correctly) made my wife hurl:

Nagpagawa na ako ng birth certificate sa Recto. Nakaprint naman sa NSO paper.

The “friend’s” excuse for taking desperate measures is the fact that she wants to become an OFW — our latest breed of national hero. And doubtless, nothing will stop her — if she has resorted to Recto to rectify (pun intended) her birth certificate issues and the DFA refuses to issue her a legit passport, she would doubtless return to those run-down shanties alongside the LRT Line 2 terminal at that avenue to obtain a fake one.

Read more…

Filipinos and Entrepreneurship: What’s the real score?

The result of the GEM Philippines 2006-2007 National Report, as cited by CVJ, is baffling, to say the least. In the study, GEM Philippines states that the distribution of entrepreneurs by socio-economic status is as follows: Class ABC+ 7%, Class C- 19%, Class D 54%, Class E 20%.

Results show that four out of 10 Filipinos (39.2%) aged 18 to 64 have businesses (see Figure 3) and the Philippines ranks second among the 42 countries surveyed by GEMfor 2006. The country is only second to Peru among middleand low income countries and ranks first among benchmarked countries in Asia.

This appears to state that Filipinos are, in fact, business-oriented. This is in stark-contrast to the often maligned notion of the Filipino as culturally biased against entrepreneurship, and having a seek-employment mentality as opposed to a business-oriented culture.

Read more…

Hope you check out Filipinovoices.com

I had the same quandary when my wife put up our contact information for I-NAV Travel and Tours. Naturally, because it was a home-based venture, business and personal contact information was almost one and the same. While there were risks in doing that, the fact that we depended solely on the internet as a marketing tool, as well as the fact that it will be immensely difficult to obtain trust in business transactions if, say, we withheld our real name. The necessity to publish contact information superseded the need to protect ourselves from the risks of online information mining, whether real or imagined.

So far, in the whole year that we’ve done that, the only annoyances that we’ve faced are some anonymous guys trying to add my wife on Friendster. Sorry guys, if you’re not gonna do any business with us, no luck for you. Besides, she’s already taken by me, and if you try to pull anything funny off to get my wife’s attention, I’ll cut yours off. Raaaawwr. Hope that’s clear

So, giving up anonimity is really a risk that we have to take, if only to establish both our sincerity and credibility. Of course, further measures can be taken in that direction; joining business contact repositories like the Asian Business Directory will not only publish contact information, it may benefit online businesses through more extensive networking capabilities.

In the end, it’s really up to you but, as a rule of thumb, don’t give up personal information if you don’t have to.

I have been meaning to do this myself, but somehow, that “passion and excitement” of writing down my dreams has not reached me. For some reason, I find it difficult to write it in serious detail, the most plausible reason of which is not really knowing what I want to attain. I do have some vague idea — the birth of my wife’s travel agency business is certainly part of that. But my inability to do so does not erase the need to write it down.

So here’s my meager attempt at writing at least some of my dreams, and then maybe I would be able to add details unto it slowly in the future:

1. Set up my own ISV (Independent Software Vendor) business – or simply, put up my own software company, which will most likely dabble with the travel and tourism industry which my wife is already in. I have already taken baby steps towards this direction, although I am keeping my day job until I’ve completed some extensive preparations. So far, I’ve been drafting a feasibility study for this, which is a requisite to writing a good business plan.
2. Put up our own resort/hotel – actually this is my wife’s dream, but after hearing of the idea and thought about it, I figured… that’s not a bad idea at all. Perhaps set up one of the real Value Hotels in the Philippines. Considering the fact that the Philippines suffers from a lack of hotels vis-a-vis interested foreign visitors, it’s actually crazy not to pursue this dream.
3. Be a “real” entrepreneur – By “real” entrepreneur, I mean someone who has set up a system or an otherwise efficient business model that creates jobs and generates a decent profit. The two previous items should lead to this.
4. Become a pilot – despite defects on my vision, I still hope to be able to afford laser eye treatment and learn how to fly a real plane, whether for recreational or business purposes. As you can see it’s still quite related to the business we’re in
5. Move/retire to a home away from the city – My wife and I have, at one point, considered moving to the province as an option, but we didn’t push through it because of the lack of employment options for either of us. But that was more than two years ago, when we didn’t have a business on our own. When we visited Puerto Princesa in Palawan last year, we were so impressed that we toyed with the idea of moving there, since we’re in the travel industry anyway and the city’s main industry is eco-tourism. Once I am able to go on my own and really set-up my ISV, it might actually be possible to do that.

So far that’s it. It’s not much, but I figured it’s a start. Wish me luck.

P.S. I’m flying to Cebu City tomorrow and will be visiting Bantayan Island. Not sure if I’ll have internet access there, and my wife and I do intend to enjoy ourselves, so I might not be able to moderate your comments until Monday. I’ll update if I ditch Puerto Princesa for Cebu City, but I think that will be highly unlikely :p

In that blog entry, I posited that the “the rich are getting richer, the poor are getting poorer” mantra was part of a “gospel of hopelessness” that poisons people’s minds into believing that there is absolutely no way for them to rise up above a life of poverty.

In turn, Sidney pointed out an article from Newsweek describing how, in many countries – even our more progressive Asian neighbors with so-called “tiger economies” – the gap between the rich and poor are widening, with the already-rich hogging any economic gains that a country achieves, leaving the poor to settle for the scraps from the dinner table which they fight for their lives for.

It was very painful for me to read that issue of Newsweek, and it boggled my mind as to how to answer Sidney’s challenge. I was in a quandary as to how view the situation – for every story of a successful individual borne out of poverty and raised in poor families but are now in the upper echelons of corporations or own businesses, there are a thousand stories of despair and failure in the filthiest of slums and squatters’ areas.

How do I resolve that? I knew that somewhere, somehow, there was an answer to this contradiction.

Then finally, I read about Gilbert, and posted my rather controversial take on his story.

Education has been the traditional answer to the scourge of poverty. It is the silver bullet that many believe to be the true ticket out of subsistence living. Finish college, find a secure job, perform well, get promoted, receive raises, and you’re on your way to becoming big. Gilbert’s story belies that – despite finishing an IT degree, he went abroad taking on a menial job more suited to a person who had finished high school.

While taking a job overseas is absolutely fine, he totally wasted his education in a field that promises big bucks and ample opportunities both within the country and abroad.

On the other hand, there is the story of Mariannet Amper. Although her alleged suicide is undergoing reinvestigation, assuming that her suicide note is true, she is a case of a person who has given up long before she could even start. The irony is that there are tycoons that have started from exactly where she was, and have made it big 40, 50 years down the line.

So now I ask, what was the difference between Gilbert, Mariannet and the big business figures we know that hadn’t finished college, and actually started from poverty-stricken backgrounds – Socorro Ramos of National Bookstore, Henry Sy of SM, John Gokongwei of Robinson’s, Julie Gadiongco of Julie’s Bakeshop to name a few?

Is it just a matter of, 40, 50 years? Was that world really so different — one that was devastated by war — that opportunity was just there right for the picking? If that were true, why isn’t every one of our grandparents filthy rich by now? Is it that the rich weren’t “preventing” the poor from getting richer back then?

There is no question that the answer to Sidney Snoeck’s challenge is no. Mariannet Amper cannot possibly have gotten out of poverty. If her suicide note is to be believed, she simply didn’t have the fight within her to have what it takes to get out of her rut. The same goes with Gilbert – his choice of career – or lack thereof – clearly shows the inability to take advantage of opportunities presented to him.

However, for a person who has both characteristics – that is, the relentlessness by which they refuse to succumb to adversity in their situations, and the ability to spot and exploit opportunities in every situation, whether positive or negative, being successful is inevitable. Throw in some talent, and you’ve got an achiever. Throw in a lot of guts, and you’ve got a surefire winner — rich preventing poor from taking a share of the pot or not.

There are a lot of talented people out there who don’t have the guts, or a lot of people who have the guts but do not or do not know how to hone their talents, and unless these change, it is unlikely that they will even be able to rise up to the nearest higher socio-economic stratum.

Some people will argue that there’s also luck — that some people are extremely lucky to have had certain opportunities in their lives. I, however, would argue that luck is a talent — it is no different from the ability to spot opportunities and make the best use out of them. For example, there are cases wherein people rose out of poverty because they had a benefactor — who gave them a scholarship and saw them through their education and eventually employed them or helped them put up a business. While some would think that the person is extremely lucky, it is unlikely that he will find that luck had he been not recognized by the benefactor by performing well in school.

Fortunately people are not born with these characteristics. These traits — skill, opportunity spotting, risk taking, and I dare say even luck — are learned, whether through others or through one’s life experiences.

In the end, it is totally up to an individual if they decide to fight back, or if they will believe that they do not have what it takes to rise up to the challenge of life.

One of the new year’s resolutions that I’ve been wanting to make is to be able to post more regularly to this blog. To say that this is difficult is by itself an understatement — my work schedule only allows me a few blocks of genuinely free time, which are then used up for things like family and genuine sleep, not to mention I-NAV Travel.

So scratch that resolution, it doesn’t seem attainable and realistic — at the moment.

The nice thing though was that starting last year the holiday economics law came in to effect, providing a wide range of long weekends within the year. Not only is it good for our business, but it allowed us to travel to a lot of places without me having to give up a lot of my vacation leaves.

It’s important, because starting last year we’ve been traveling like crazy; it’s the first time where I went to four different beaches within a year when before there are years that I wouldn’t even go out of town. It’s also been the first time that I hopped on a plane to two different destinations within the same year.

To sum up our travels, last year we’ve been to well known destinations like Subic, Boracay, and Palawan, and the lesser known beach in Bani, Pangasinan — a relatively new find which promises to be an excellent place for snorkeling and diving enthusiasts.

I’m excluding Laoac, Manaoag, Dagupan City and the beaches of San Fabian (all in Pangasinan) from this list — we go there practically all the time already.

This year, we’re already slated to go to Cebu in February and Bohol in March, and perhaps Davao later in the year. We’re going to look into other destinations as well.

You might be wondering what all the fuss about going around the Philippines is — well, there are several reasons. Being in the travel industry and not knowing what your clients and suppliers are talking about have proven as a handicap, so we’re taking a “see it from the horse’s mouth” approach and take a look at the different destinations ourselves. Secondly, we’re planning to have another baby by 2009 — so any and all the travel that we need or want to do will be best taken by 2008.

So to hell with the new year’s resolution — I will blog about the places we’ve been to soon (ironically, the Palawan Experience blog of Legend Hotel beat me to my own Palawan post), but I do promise that whatever comes out of this blog will continue to be worth your while — if not worth fighting over at Manolo‘s blog.

Hope to see you around.

While seeing a car burn to the ground is shocking enough for most people, a Ferrari F430 is worth a staggering 12 million pesos, sans excise tax, which goes at 100% the car’s value. If you’ve watched the video, you have just seen 24 million pesos burn to the ground.

The reactions when this first came out are varied, mostly to the tune of “sayang yung Ferrari”. Others can’t help but remember this funny Fita biscuit commercial of the “red sports car”:

However when the video initially came out on YouTube there were those who commented that it “serves the car owner right” for being “mayabang” in owning such a luxurious car in a third world country like the Philippines. Others simply say that the owner has “nowhere to put his money” (“walang mapag-lagyan ng pera”) so he wasted it on a Ferrari considering Manila’s potholed roads. Still others lamented the “insensitivity” of the car owner considering there are people in the country who cannot eat three times a day. There are those who assumed that the driver was “showing off”, leading to an engine overheat that caused the fire (apparently the overheat problem is specific to the Ferrari F430 and there have been cases of other F430s burning in several places around the world). Too bad the comments have been deleted by the video owner.

It is not difficult to agree with those who berated the owner of the Ferrari. With poverty staring us Filipinos on the face each and everyday, how can we be so insensitive as to even dare own, much less drive, a 24 million peso car? He should be ashamed of himself for owning such an expensive car, right? But let’s shed our Toyota-driving middle class shoes and put ourselves in the place of the really really poor.

Torn and Frayed, in an entry last year, tells of a friend (who used to blog but put the blog down, unfortunately) whose driver dared ask how much coffee from Starbucks costs:

My part-time driver put me to shame last week. I asked him to drop me off at Starbucks on UN Avenue in Manila. He asked, out of curiosity:

– How much is a coffee at Starbucks?

I tried to remember. I had actually never paid it much attention till now. I answered with my best guess:

– Around, I think, 60 or 65 pesos (US$ 1.25)

He was clearly shocked. He exclaimed aloud and was visibly upset for a moment. We spoke no more about it. We were both embarrassed, he at having so obviously shown surprise and disapproval, I at what I saw as my extravagance in his eyes. Later, I was even more embarrassed when I discovered that my guess for the price was way below the real cost: 80 pesos for a single shot (around USD 1.57). [Torn and Frayed]

It’s very easy for us to sneer at those who can afford what we can’t, and it’s very easy for us to condemn them for “burning” so much money in a country like the Philippines. But I wonder how many of us will be willing to give up our daily 100+ peso Starbucks fix? Or that 300 peso lazy-boy movie at Gateway? Or that 800+ peso dinner at Italianni’s? Or that 1000+ peso monthly out of town at Tagaytay? To the white collar middle class Filipino, these are luxuries that they have earned the right to enjoy because they worked for it, and they worked hard. Nobody has the right to tell them how they should spend the money they earned.

But what about the owner of the Ferrari? Didn’t he work hard for and earn the right to enjoy uber-expensive cars too? Can anybody dictate what kind of car they should drive, and at what cost a car should be deemed us “too expensive” to dare own in this country?

Truth to be told, it all boils down to our attitude towards money. If we see money as a finite resource that’s very hard to come by, like the poor and most of the middle class do, it’s very easy for us to condemn those who can afford to splurge simply because we cannot do what they are doing. What’s worse, some of us will go as far as assuming that it’s very likely that the rich person in question is doing something “bad” and that’s the reason they are earning so much money. Just listen to how the Kilusang Mayo Uno and other leftists condemn business owners as abusers and extortionists, and you’ll realize the attitude the poor has towards the rich.

The bottomline would still be how we view money, and whether we see it as something that is “finite” and “evil”. Besides, money is the root of all evil, isn’t it?

No.

Love of money is the root of all evil?

Wrong again!

Bo Sanchez, in 8 Secrets of the Truly Rich, posits that it’s the lack of money that is the root of all evil. I agree with him. All the negative attitudes we have towards having so much money (at least enough afford a Ferrari) is associated with how finite (and therefore, lacking) money is.

We have no right to question rich people how they spend their money in as much as nobody has the right to question us how we spend our money. But we do have the responsibility to ask ourselves how well we spend our money, and if, after all has been spent and done, we have spent it meaningfully or “burnt” it on overly-expensive espresso fixes.

That’s something you and only you can figure out.

Regulations affecting 10 stages of a business life are measured from the perspective of the entrepreneur. The stages are: Starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

According to the survey, the Philippines is lagging behind other Asian markets, including India (120th) and China (83th) whose phenomenal growth has made Asia the fastest growing region in the world. [Inquirer.net]

Any local businessman would affirm the findings of the study; the plethora of requirements and paperwork and the inefficiency of the bureaucracy will squeeze too much available capital and occupy too long a time that many entrepreneurs, including budding ones, consider quitting before day one.

It appears though, that it is even worse when one decides to close a business:

The Philippines scored most poorly in the criterion on closing a business, where it ranked 147th. The country was cited as one of the least efficient places in the world to handle a bankruptcy.

In starting a business, the Philippines ranks 144th, well in the bottom third.

The country also lags in the protection of investors (ranked 141th), ease of employing workers (122nd), paying taxes (126th) and enforcing a contract (113th).

The survey also showed that it takes 195 hours a year and 47 procedural steps to pay taxes here. The total tax rate is at a hefty 52.8 percent. [Inquirer.net]

If only to add insult to injury, a separate article from the same paper talks about the study of a University of Maryland professor which says that our economic malaise is part of a cultural heritage:

Some 330 years of Spanish rule had influenced the Philippines greatly, an impact that survived nearly 50 years of later colonial occupation by the US, the study by Robert Nelson of the University of Maryland said.

This Spanish Catholic influence, in contrast to the US Protestant model, had led to a “dominant political role” by large landholding families in the Philippines just like in Latin America, Nelson said.

A weak government and powerful political oligarchies combined to put the state in the service of private interests, he added.

“If culture is now to be considered an important economic influence, it may be that this common Spanish Catholic heritage is a main contributing factor in the economic histories of the Philippines and most of Latin America,” the study said. [Inquirer.net]

At best, Nelson’s study appears to be confirming something that we’ve already known — ever wonder why Spanish colonies appear to have all become third world countries? While I find it downright xenophobic and preposterous to continue laying blame on colonization — it’s all too long ago, really — it’s likewise important to underscore the fact that long after they’re gone we are still running along the circles that they drew on the ground for us to follow to be well on the path to “civilization”.

Lest this post becomes yet another ramble of the Philippine situation, which I abhor but occasionally do anyway, I will instead ask — is there any correlation between our culture and the difficulty in opening a new business?

Let’s start with some prevalent misconceptions. For example, some people would find the two studies contradictory. The first study shows businesses as being victims of an inefficient bureaucracy, while the second study points to corruption as serving mere private interests. The contradictions exist if people equivocate businesses with private interests, and see no difference between the rich, the business owners, and the oligarchs. If the prevalent culture benefits private interests, doesn’t that mean businesses have it easy?

The clear answer is no — businesses stand to loose a lot of money to corruption because of people who belong in cultures that make sweeping generalizations such as “all entrepreneurs must be rich”. In fact, when my father and aunt set up their sari-sari store some time ago, he made sure it was my aunt’s name that is used in the official documents. The reason for this is because we have a Chinese surname, which always attracts the pencil-pushing vultures. If you’re Chinese, you must have a deep pocket — and thus, you must have a lot of money to spare to their under-the-table antics.

We’re lucky that my wife didn’t experience this when she was setting up our travel agency, despite the surname. Have things changed for the better? Hopefully.

But the real contradiction lies in the fact that the under-the-table vultures at the city hall are not political oligarchs. They are in fact, poor government employees with meager salaries. The same goes for the corrupt policeman, the corrupt fireman, the corrupt soldier, the corrupt baranggay official, ad infinitum. The same people who are “victims” of economic injustice and the great divide between the rich and poor are the same people perpetuating the practices that doom them to such “injustices”.

This of course, is not to say that corrupt political oligarchs don’t exist — I just want to say that anybody, and that means anybody, even the very victims of a corrupt system, can choose to be corrupt when given the opportunity.

Going back to the perceptions of entrepreneurs as being rich and entrepreneurship as something exclusive to the rich, I find that ironic as well. I find the belief that Filipinos not being innately entrepreneurial as untrue — you will find a potential entrepreneur within every vendor, sari-sari store and carinderia owner, and tricycle driver out in the street. It’s just that these small-time entrepreneurs aren’t informed and educated enough to dream and think big, or do not band and help each other become better entrepreneurs, and bureaucratic hurdles like exorbitant fees and corruption only serves to sap that potential.

Unfortunately the sapping effect of entrepreneurship only tends to enforce the misconceptions that only people with deep pockets can legitimize their businesses. Which leads to lowly public servants believing they could easily earn from those people, and so on and so forth. Sad to say that the Filipino bias against entrepreneurship appears to be too deeply entrenched in our own culture.

Perhaps what “ordinary” people, especially those stuck in the “study hard–be a good employee–be promoted–retire with benefits” mindset do not understand is that business is also a public interest. In fact, we tend to demonize business owners as profit-hungry capitalists who care for nothing but money. What we do not understand is that we need them — in as much as they need us, as Jego shares in a comment in Expectorants.

Once when I was working with an NGO (we worked in coastal communities, teaching them how to gather and use information, especially on their resources), I sat down in front of the TV with some of my colleagues and we were watching a Speedo fashion show on TV. Of course, being young NGO-type guys, we sniggered at the fashion industry, thinking they were superficial, good-for-nothings.

Then as I was watching some babe parade in a swimsuit, I told my colleagues, “What have we accomplished? We come up with resource assessments and recommendations and feasibility studies, and we hand it over to the local government who’ll just probably sit on it or thrust it in a drawer til it gets eaten by mold and mildew, while these fashion models parading on the catwalk are selling clothes and might be creating jobs for the very people we want to help. I think they’re doing more for them than we are.”

My colleagues just nodded their heads. They didn’t have to say anything. [Jego in Expectorants]

Businessmen are citizens and part of the public too — and their businesses provide the very jobs many of us are dependent upon, even if they make products only Paris Hilton fans can ever appreciate. If we want to reverse the migration of skilled labor outside our country — if we want to stop the brain drain and turn it into brain gain, we must do anything and everything to shift the bias towards entrepreneurship.

If that bias is successfully changed, then maybe that’s the only time that enough people can apply political pressure to make legitimate businesses easier to set up.