June 11, 2008
THE PROBLEM WITH GAPS IN LEADERSHIP CONTINUITY
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.