June 11, 2008


I had the privilege of touring the two major shipping ports in Ningbo, as well private time with the government ministers and company leaders that conceived and developed the Chinese port expansion plan of the early 90’s. Impressive is the best word to describe it. This government has a vision for the shipping hubs of the 21st century and it will surpass and dwarf ports like Singapore and HK (considered the worlds best).

In our 20-person shuttle bus, there was unanimous praise in the Chinese as well as a sense of foreboding and disappointment that our respective governments have been unable to compete as effectively. It was culturally amusing and slightly stereotypical to watch the Kazaks grunt in approval, the Koreans bow in amazement, and the Filipinos click their tongues while shaking their heads in stunned, clicking silence—quite the symphony! This was no group of slugs either; my shuttle mates included the former Prime minister of Kazakhstan, the former Prime Minister of South Korea, Minister Long Tong Yu, and a handful of leading shipping/logistics/port operators in the industry. How has China managed to develop and surge forward at such a rate? $$$! But also a strong, sustained drive towards a long-term vision, set forth by the government and defended by each successive leading body.

My beautiful country of the Philippines has an almost perfect model of how NOT to progress through “leadership continuity.” Projects are not centrally planned since we seem to choose to develop our country based on the whims of our presidents. This is NOT OK. In this model how do you develop the correct infrastructure? Zoning? Create the right atmosphere for foreign investment and provide/guarantee them with a reasonable payback period? How do ensure that projects that affect the nation are done in the best capacity of the country? The answer is you cannot. Which is why we have a patchwork of ports, roads, airports. Practically primordial infrastructure, which keeps our costs up, productivity/efficiency low and makes us uncompetitive in a world that has become increasingly competitive.

Let us take our airport system as a good example (since it has been in the news lately). Originally, when they were planning the expansion of the existing NAIA Terminal 1, they had several criterions to fill. Aside from being able to handle the capacity for several decades, it needed to be modern and people friendly. Passengers would have been able to come in from an international flight check-in at the terminal of entry for any domestic flight, and promptly walk over to the domestic terminal via bridge way. These were to be connected by a central transit hub where private vehicles, trains, and buses would convene. Interestingly, the MRT train line would run all the way to Clark, linking another air hub to the major NAIA terminal.

Of course, what we ended up with was a white elephant of a terminal 3 and the new domestic terminal entirely in the hands of PAL. In retrospect, I think the only two hubs ERAP gave thought to was the International Financial Hub of Equitable PCI (check this) and the International Entertainment Hub of Airforce One (not accurate chronologically, but you get the point!). The handling of GMA further exacerbated all of this. This project came together near the end of FVR's term, so in two presidential terms and 10 years of our lives, we have lost and near buried what would have been a boon to our economy. Disgusting.

Touching back on my previous entry discussing Nuvali or Clark, there is a distinct opportunity for us to fix our international image and give The Philippines a competitive edge. Anybody that looks at a map can see why we can still be a strong player in the region. Our location is suitable for all Central and South East Asian destinations. We have a wide berth of seafaring water on each end and can certainly provide a more attractive shipping route to China than Singapore, Malaysia and even HK (though depending from where). This is really just for transshipments, as our local economy will not create the demand that foreign companies are willing to invest in.

Clark and Subic have now been connected; there is plenty of room for growth in our major Freeport zones. There does exist infrastructure around the deep waters of Subic that can be expanded and the surrounding area has plenty of room for growth. I know of several groups, ICTSI being one of them that currently operates and can continue to develop our port capacities. We should take from the HK/Singaporean model and allow foreign firms like Maersk and MOL to handle their own port operations. With them come jobs, professionalism, and a glimmer of hope to foreigners that the Philippines is still a good location to park capital.

A greater frequency of inbound shipments lowers overall shipping rates, while opening up trade. The best part is, Subic and Clark are a destination in their own right, which means that we can develop a whole other city for the country, one of equal value to the CBD and its neighboring Nuvali. The Philippines can have the traditional port and airport (Subic/Clark) and the future information port (Nuvali). Great combination. Let us not forget that old logistics dream of cutting a swath of land through Quezon province connecting the Pacific in an almost straight line to Manila Bay. The possibilities of turning Luzon into a major Asian hub are tremendous and quite feasible, a dream for my generation perhaps! Logistics runs in my blood, and developing the Philippines geographic endowments is something I have always wanted to do. We can be so much more in this field.

We need central planning, political will, and a design that can make plenty of $$$ for foreign and local investors brave enough to invest large sums in the Philippines regardless of our present track record. Can it be done? I think it can.

June 04, 2008


"Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies...I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo Board." -Carl Ichan


The government released a statement a few days ago that it would be closely monitoring and would NOT be providing visas to foreigners that may be a potential threat to China. This comes after a wave of “ill mannered” foreigners have been booted out of the country on all sorts of charges.

On the local front, popular clubs and bars are now systematically being raided and closed (no doubt reopening when the Olympics are over)while dogs and undercover police are more obvious on the streets. Not that the locals have it any easier, the last few years of forced change are all the more evident now that the Olympics are around the corner. They have eradicated hutongs and street side advertising, chased away outdoor vendors, erected highways and subways (adios mom and pop store...adios mom and pop), and forced millions of Beijing locals to hold in their spit and snot missiles. That last one is a feat that I am quite thankful for.

The latest this week was delivered by WSJ.Com: “Tuesday, the Beijing Olympics organizing committee, known as Bocog, said it would stop coordinated groups of spectators from wearing uniforms or branded clothing in Games venues this August...The basic idea is to create a 'clean sports stadium,' which means it is not commercialized...the authorities will also control billboards in prominent locations to give priority to official sponsors. Athletes and coaches won't be allowed to lend their images to marketing without prior approval from Olympics officials.” The WSJ forgot to mention that all branded clothing, commercialized property and internationally patented and trademarked goods can be bought for “only 1 dollar” at the local markets. Quality is “same same.”

June 03, 2008


Presently hopping between HK, Shenzen and Beijing there has been a good flow of information on the recent buyouts by large Chinese companies. Mostly from irritated traders on the Hang Seng, who will be making all their money back in the coming weeks.

A subscriber breakup of 297 million for China Telecoms, 258 million for China Unicom and 425 million for China Mobile is certainly a better alternative to the present, fragmented, telecommunications industry in China. This wave of buyouts was forced on the local companies by the government as it works to strengthen the telecommunications industry in the most populated country in the world.

This is all well and good as it is the right step to take if the government wants to have a balanced and competitive industry. Of course, with a subscriber base at almost double any of its competition, China Mobile is the 800 lbs gorilla. Let us see how things roll out when the much baited 3g licenses are released. It is a fairly level playing field, one that will give the underdogs a fighting chance.

I am just glad that there seems to be some sort of agreed upon result from the last few months of negotiations. All of these grand industrial steps have been slowing thins down for the other players in the industry. It will be nice to get some attention again.


I can't seem to find that article I was reading a little while ago about an Airbus A380 that powered 20% of its electronics system through a green alternative. A large, PR Friendly photo of the airbus was framed nicely by yet another “Green is good” or “Clean Green” slogan, painted generously on its thick flank. Cute. Environmentally concerned. We like it.

There has been a moderate amount of movement in this industry to go green. Airbus and JetBlue just announced that they were studying how to generate Jet fuel from bio-alternatives-- algae being a main source (it is a great CO2 absorber). There was a Virgin Atlantic flight that was powered by a 20% biofuel mixture from coconut oil. Promises from other carriers to follow down a similarly environmentally friendly path and regulators vowing to assist wherever they can.

Of course, these days when one discusses the aviation industry one is really addressing how rising oil prices and recession have clobbered large, international companies. Green initiatives have been overshadowed in the media and put on the back burner by airline companies that have more pressing battles to fight. I was just emailed photos of the diamond studded Mercedes of some sheik and the all silver Audi S8 of a Saudi prince, they are last years models, which in oil producing country lingo means “time for replacement.” At least someone is benefiting from $130 + a barrel.

In my opinion there are two beacons of light at the end of this tunnel:

1) the green industry is in its infancy and offers a plethora of opportunities.

2) There are no state owned corporations in China that have addressed going green for aviation.

When you consider that the Chinese appetite for airplanes seems to be insatiable these days. Focusing on the mainland is a viable short, mid and long term strategy for most small/mid sized,environmentally focused company. Flying greener skies has taken a distinctly dollar green shade.


Porsche Roxter
The tiny SUV is inching its way towards production. It looks to have the 3.6 V6 that powers the Cayenne, with a name that fits a Taiwanese pop star better than Porsche's next abomination. Yes, I am a purist. The Cayenne and the Panamera are bad long term moves for a company that has thrived on basically a one car strategy for years. These are short term benefits over long term sustainability of the brand and it is going to bite someone on the ass sometime mid century or sooner.

Jerry Yang V.S. The Raider
Carl Icahn is steadily resurrecting the merger that I disappointedly watched disintegrate a month or so ago. His formal letter nicely articulates what we all knew: “That Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis. I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts.”

Jerry Yang did not actually think that he won that last one did he? As revenue generating models continue to surge forward in the web and mobile industries, Yahoo is the prime target for the big boys. This is going to be a title fight between Microsoft and Google, Yahoo is just another casualty of war.