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Wednesday, April 21, 2010

The World Gets Ready To Move Forward While Philippines Remains Stuck in A Moment It Can’t Get Out Of

It’s just another day in the Philippines. A prosecution brouhaha is about to put another black eye on the completely bruised, next-to-useless perception of the Philippine Justice System. A situation which is caused by a massacre which just is the tip of the iceberg on the culture of impunity. And this is going in parallel with a presidential elections where the the three frontrunners out of 8 or 9 candidates are known as 1) Do Nothing; 2) Stole Everything; and 3)-About to Steal Everything (if Do Nothing were to be believed). Then we add the recent molehill-to-mountain tantrums “caused” by Carolla, Chip Tsao, Teri Hatcher, Alec Baldwin. We have yet to include the recent blacklisting of Philippine airlines in the EU. The list of dysfunctions and missed opportunities just keeps going on and on. Guess what, the list is about to get longer.

As the world emerges out of a recession, the Philippines is once again, poised (I would love to use “destined” or tadhana) to miss more opportunities.

The magazine Inbound Logistics recently published the 2010 Global Logistics guide which highlights the countries which are poised to reap the opportunities. In its preface to the guide, the publishers wrote:

The weight of the world recession was felt in equal measures this past year, shocking local economies and regional trades, and seismically shifting the way U.S. businesses spin and span the globe.

Contraction was widespread. Consumerism dropped, freight flows congealed, and imports, exports, and GDPs took precipitous dives. While the sting of the financial crisis was largely impartial, a global rebound will be anything but. Countries that have made transportation and logistics infrastructure a priority will spring to demand — and it to them — when trade returns. Global expansion is increasingly complex as new markets open up and developing countries mature. Businesses are exploring secondary and tertiary sourcing strategies to reduce risk; balancing offshore and nearshore manufacturing points to manage lead times, reduce total landed costs, and increase market responsiveness; and they are looking at emerging markets where they can manufacture and sell.

Inbound Logistics’ 6th annual Global Logistics Guide offers a reference as you evaluate new horizons for growth. IL identifies global hotspots as excelling in three key areas:

1. TRANSPORTATION INFRASTRUCTURE. The density and breadth of airport, port, and road infrastructure.

2. IT COMPETENCY. The progressiveness of information and communication technology investment and development as measured by The World Economic Forum’s Networked Readiness Index.

3. BUSINESS CULTURE. The strength of homegrown logistics talent, cultural and language similarities, government leadership, historical U.S. foreign direct investment outflow, and economic freedom.

This year’s methodology adds a new wrinkle with the introduction of a Business Culture index. It includes cultural variables that appeal to U.S. businesses, as well as pro-business trends such as historical investment, future economic potential, and government leadership.

There are intangibles at play as well. Our X-Factor provision takes into account elements, such as political stability and labor availability, that may give businesses greater pause, or greater purpose, as they evaluate a country’s logistics capabilities.

Our Global Logistics Guide offers a macro perspective of the global supply chain to help you quantify and qualify expansion opportunities with countries that best fit your logistics and supply chain needs

Countries are ranked on three criteria: Transportation Infrastructure (1 to 4 points), IT Competency (1 to 3 points), and Business Culture (1 to 3 points). Points are totaled for all categories — taking into consideration X-Factor +/- points — to determine final ranking: 10 is highest, 3 is lowest.

Sources: U.S. Department of State; World Port Rankings, American Association of Port Authorities (AAPA); Airports Council International; World Economic Forum’s Growth Competitiveness Index; World Economic Forum’s Global Information Technology Report; Central Intelligence Agency’s World Fact Book; Bureau of Economic Analysis, U.S. Direct Investment Abroad; 2010 Index of Economic Freedom, The Wall Street Journal & The Heritage Foundation.

You can read the full guide here:

I zeroed in on Southeast Asia just to get a feel for what was coming in the horizon. The countries that were in the radar screen (from highest to lowest ranking) included:

Singapore – 9
Japan – 8
Taiwan – 8
China – 8
Korea – 7
Malaysia – 5
India – 5
Thailand – 4

I was looking for the Philippines, but obviously – it wasn’t even in the radar screen.

Don’t you remember the days when if a product was Made in Japan, it was inferior. Then Made in Japan became synonymous with quality. Taiwan replaced Japan’s stead – if it was made in Taiwan, it was “inferior”. Then, Taiwan was replaced by Korea, if it was made in Korea – it was “inferior”. Then Korea was replaced by Malaysia, if it was made in Malaysia, it was “inferior” and Japan, Taiwan, Korea were “superior”. Today, China has taken the stead that was once held by Taiwan, Japan, Korea, Malaysia. Singapore then wasn’t even in the radar screen. India wasn’t even a blip then. That was then, this is now, as IL points out:

India is a worthy challenger to China in terms of labor cost differential, and its cultural commonalities, logistics expertise, and educated workforce are major advantages for companies considering offshore expansion in Asia. The country also has a growing cluster of port facilities around its horn, though connectivity to the interior is still a major problem. As with China, India’s socio-economic standing is stressed by a large population and sizable disparity in wealth distribution. Still, its conservative fiscal policies and import/export trade balance have given foreign companies a solid footing for speculation.

Apart from Singapore and Malaysia, which are top logistics spots by virtue of their transportation facilities, Southeast Asia’s allure lies in non-developed countries such as Vietnam, Laos, and Cambodia.

These markets are still on the fringe for most U.S. companies, largely because primitive transport capabilities impede time to market. Still, some are circumventing these obstacles by regionalizing their offshore supply chains. Using locations such as Hong Kong, Mumbai, and Klang to distribute product from, thereby shortening transport miles where roads and resources are scarce, companies can still capture manufacturing economies without sacrificing expediency.

Here’s the guide for Southeast Asia – and the Philippines is nowhere to be found.

Shall we rally in the streets again because the Philippines was not included in the list? Shall we go to the Facebook of IL and say it is racist and spout vindictives? Shall we call DFA to protest why we are not in the guide? Ahhhh, the heights of Da Pinoy’s ridiculousness never knows any bounds.

After reading the guide, I had this nagging question.

Who next will we label as “inferior”, who in a few years will become “superior” – while the Philippines remains STUCK IN A MOMENT IT CAN’T GET OUT OF.

Before we even go into this “inferior”, “superior” labels, the Philippines and Da Pinoy needs to be reminded – we are not even in the game – and all the while, we have all these Pinoys mouthing the Philippines (or a part thereof) need not change, because it already is the best – the best in what exactly?

This is one of those days when Pinoys need to be reminded – Get Your Sh*t Together, Philippines.

About the author

A self-described "mutt" having ancestors of diverse origins - Maranao, Ilonggo, Butuanon, and Ilocano. Born and raised in Southern Mindanao's Davao City, now living in the East Coast's Sunshine State.

Countries are ranked on three criteria: Transportation Infrastructure (1 to 4 points), IT Competency (1 to 3 points), and Business Culture (1 to 3 points). Points are totaled for all categories — taking into consideration X-Factor +/- points — to determine final ranking: 10 is highest, 3 is lowest.

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