Redesigning industrial economic zones

I am glad that Director Lilia de Lima of the Philippine Economic Zone Authority has been very strategic in her view about the future of our economic zones. Very early on, she gave the go-signal to the IT Parks, in which Eastwood City was a pioneer. Then there are the agro-industrial zones. More recently, there are the retirement village and tourism zones. Such a forward-looking strategy is adapting to the rapidly changing competitive dynamics in the global economy.

In the next twenty years, the Philippines’ competitive advantage will veer towards agribusiness, tourism, health care, BPO and manpower training. We must redesign our economic zones to move away from the industries that will lose their competitive edge based solely on cheap labor.

I was heartened to read a report of AFP that quoted Subic Freeport Administrator Armand C. Arreza saying the most sensible thing about the future of Subic. Commenting on the shift in Subic from manufacturing to tourism and logistics, he said that Subic's manufacturing future had been in question even before the ongoing global crisis hit electronics companies.

He said that for the past several years, low-wage competition from China and Vietnam has been luring companies away from Subic. He categorically states that "low-cost manufacturing is not the area where Subic is competitive. Most of our land area is protected forests and protected seas. We don't have any space to accommodate large industrial parks." In his opinion, the future of Subic lies in tourism, medical care, shipbuilding and logistics, using the ample space still available for warehouses especially around the largely unused Subic airport.

Subic is like a microcosm of the entire Philippines. We have more than 7,000 islands, many of which can attract millions of tourists (both domestic and foreign) if only we build more efficient infrastructures (which are part of industry). Besides, we have highly educated and motivated industrial workers.

We can, therefore, graduate to higher-value manufacturing in the electronics and semiconductor devices sector. When I say that the likes of Intel, Fairchild, Texas Instruments will phase out their labor-intensive manufacturing activities, I am not suggesting that the whole industry is doomed to extinction. The key is found in the statement in the same AFP report of Danny J Piano, President of the Subic Chamber of Commerce: "Subic manufacturers can survive. The Philippines has the capability to do good high-end work due to workers' better education, communication and English skills."

The electronics and semi-conductor devices industry is now in crisis because for thirty years, it has hardly graduated from low-value manufacturing to the high-end work to which Mr. Piano is referring. Unless we can produce more engineers and highly-skilled technical workers that can be employed at the higher end of electronics manufacturing, then we will see more firms in this sector (that accounts for more than 60 percent of our exports) following the example of Intel that decided to leave the Philippines even before the present deep recession. I hope other export-processing zones such as those in Mactan, Batangas, Laguna and Cavite are listening to the wise advice of the Subic officials.

They have to encourage their industrial tenants to go upscale in the manufacture of electronics and semiconductor devices.

The experience of the electronics industry should be studied very closely by the BPO industry that is just beginning its own thirty-year industry life cycle. Fortunately, there are enlightened leaders in this sector (that continues to grow at double-digit rates even as the global economy is taking a dive this year) who already realize that they have to move as quickly as possible from just call centers to higher-value BPO activities like medical transcription, animation, legal documentation, accounting and finance, investment research, etc. It is not impossible that in the next five to ten years, there will be millions of Chinese university graduates who will be very fluent in English and take over the role of Filipinos in manning call centers. We better make sure that we are ready for this situation by moving to higher-value BPO activities more rapidly than the electronics sector has been able to do in the last thirty years.

Finally, to once and for all bury the manufacturing bias of some of our leaders, let me quote from Zenaida Pineda, 40, a former electronics worker in Subic, who was also quoted in the AFP report. She said that she now earns as much working as a chambermaid in a Subic hotel as she did at her factory job: "I like housekeeping more because you can move around, not just stay at your work station. Besides, working on electronics hurt my eyes." These very sensible remarks of Ms. Pineda take away the mystique and glamour of manufacturing. Most labor-intensive manufacturing jobs, whether in textile, garments, shoes, electronics, etc. are dehumanizing.

They involve repetitive tasks with very little intellectual content and remind me of Charlie Chaplain's famous movie Modern Times. Service-oriented jobs are more humane and can be more challenging both intellectually and emotionally.

I always tell my friends jokingly that if I had to earn my keep as a blue-collar OFW, I will look for a job as a gardener in Barcelona or Vancouver rather than as a factory worker in Taipei. As a gardener, I will be using not only my brawn but also my creativity and intellectual capacity to understand the most exciting world of trees, shrubs and flowers. I will be combining earning a living with a very pleasurable hobby. For comments, my email address is bvillegas@uap.edu.ph.

By BERNARDO M. VILLEGAS - Manila Bulletin

Study counts worker supply in 20 ‘next-wave’ cities

An ongoing study by the government and an outsourcing advisory firm Tholons aims to measure BPO skills in 20 second-tier cities using a standard deployed in India.

The DTI (Department of Trade and Industry) and Tholons began the study last year, which looks at these "next-wave cities" and is intended to provide insights on how each can improve as BPO (business process outsourcing) sites.

The initial phase of the project involves gathering basic quantitative and qualitative data on second-tier cities, such as business environment, quality of life and infrastructure.

Phase two, which begins this year, will quantify the number of potential BPO workers in these cities based on skills, according to the DTI.

"Aside from offering a comparison of sites in terms of infrastructure and business environment, our next phase looks further into the skills level of people who, at the end of the day, are the ones that drive the industry," said Paul Santos, Tholons president for Asia Pacific.

An earlier study by Tholons ranked Cebu, Pasig and Baguio among the top 50 emerging cities worldwide suited for BPO.

The study is also intended to help formulate a national competitiveness standard for BPO similar to that of India's National Association of Software and Services Companies (NASSCOM).

Tholons is working with Merittrac, the skills assessment company that helped NASSCOM come up with its own competency standard in India.

According to BPAP, the country's BPO industry currently employs around 300,000 workers, two-thirds of which are from the call center sector, followed by back-office (non-voice) and software development. Cebu Daily News

Jobless rate down in ’07, says survey

By Michelle Remo
Philippine Daily Inquirer

MANILA, Philippines -- The unemployment rate fell to 6.3 percent of the total labor force in October from 7.3 percent in the same month last year, in what the government said was a natural consequence of a robustly growing economy.

Based on the Labor Force Survey released Tuesday by the National Statistics Office, there were some 2,261,700 unemployed persons in October out of a total labor force of 35.9 million, or 6.3 percent of all workers.

Conversely, the number of employed persons was 33,638,300 for an employment rate of 93.7 percent.

Myrna Asuncion, head of the National Economic and Development Authority policy and planning department, said the drop in the unemployment rate meant there was an increase in the number of people generating income. This supported the earlier report on the growth of the Philippine economy that beat most forecasts, she said.

“More people are now earning income. This is a reflection of the economy’s performance,” Asuncion said in an interview.

The economy, as measured by the gross domestic product (GDP), grew by 7.1 percent year-on-year in the first three quarters of 2007. This has kept the economy on track to surpass the official growth target rate of between 6.1 and 6.7 percent for the entire year.

The GDP, the most common yardstick of a country’s economic performance, is the sum of all goods produced and services rendered within an economy during a period.

The NSO said nearly half, or 48.8 percent, of all employed persons in October belonged to the services sector. The sector, which recorded the fastest growth among key sectors of the economy so far this year, includes the booming business process outsourcing (BPO) industry which counts call centers.

The latest data showed the services sector, boosted by the income generated by the BPO industry, grew 8.2 percent year-on-year from January to September this year, up greatly from the 6.1 percent recorded in the same period last year.

The agriculture, fisheries and forestry sector grew by 4.6 percent from January to September, while the industry sector (which includes manufacturing and mining) grew by 6.8 percent.

The NSO said that of the employed persons in October, 35.1 percent were part-time workers while the larger 64.9-percent share were full-time workers. Full-time workers are those who work at least 40 hours a week.

Employed persons looking for additional work are considered underemployed, according to the NSO. In October, the agency said, 18.1 percent of the labor force were underemployed.

Asuncion said the government had generated about 800,000 new jobs so far this year, still short of the target of 1 million jobs annually.

She said the government would work on meeting the million jobs a year target in 2008.

The government expects the economy to grow between 6.3 and 7 percent next year.

Asuncion said the government hopes this would translate to one million new jobs next year.

She said that if the growth would be in labor-intensive sectors, such as construction and manufacturing, the target of 1 million new jobs would be attainable.

Developer invites IT outsourcing firms to locate in Clark

PASIG CITY, Philippines -- A developer that has announced a 3,000-square-meter office space in the Clark Special Economic Zone, has invited outsourcing firms to consider locating in its facility.

Berthaphil Inc. representative Peter Herman said the property will start accepting occupants by the end of July.

This new facility is part of an IT office park the company is building on the former US base.

The developer said the 3,000-square-meter facility can be expanded in 500-square-meter increments as business expands, said Herman in a statement.

"This provides great flexibility for BPO service providers that need to be prepared to expand operations quickly in response to client demand," Herman said.

"We've provided a footprint that allows operators to add approximately 60 seats almost on demand, quickly and efficiently. That's an enormous benefit for both BPO contractors and shared services facility operators," he added.

Berthaphil said it was offering locators purpose-designed space for training and recruitment while facilities are being fitted out.

"We want our locators to have the resources they need to make their CSEZ operations successful from the start, so we make these facilities available to them. When the doors open to their new space, they can begin operations immediately, and immediately begin earning a return on their investment," Herman said.

The developer had developed an industrial park which is home to light manufacturers and semiconductor firms from Japan, Taiwan and the United States.

Herman said the plans call for the 14-hectare IT park to eventually offer outsourcing-ready space.

Berthaphil will develop almost 15 hectares of space in the CSEZ.

By Erwin Oliva - INQUIRER.net

RP BPO firms getting ready for next 3 years

MANILA, Philippines -- Philippine business process outsourcing (BPO) companies are setting new goals and improving existing ones that aim to keep the industry going for the next two years.

The multi-faceted plan is being developed by the Business Process Association of the Philippines (BPAP) and taps into three specific components, namely talent development, search for physical locations and creating a stable business environment.

A glimpse of the BPAP Roadmap 2010 was presented by it CEO Oscar Sanez during the opening ceremonies of the ongoing Call Center Conference Exposition 2007 at the Crowne Plaza Hotel in Mandaluyong City.

As it is still under the second phase of development, Sanez said the BPAP Roadmap 2010 is set to be official released by the fourth quarter of 2007.

Sanez said the strategy involves not just the BPAP members but also the local communities, education institutions and local government units to ensure its success.

Under the talent development component, Sanez noted that a major problem was mismatch between the location of the potential hires and the center, followed by the problem of top talents such as engineering, accounting and nursing graduates moving to other countries.

The talent component strategy should focus on increasing financial aid to students, improve work and study flexibility, launch continuous training campaigns that are relevant to industry requirements, and developing competency tests for students and trainers in schools.

A radical approach to the problem of hiring shortage involves opening up recruitment to non-traditional talents, such as high school graduates, college dropouts and housewives, thus the need for strict competency tests.

For the location component, BPAP will be developing a set of products that identify and evaluate areas considered as "next wave" cities where startups and expanding BPOs can build new locations.

The reporting of "next wave" cities will contain the number of companies already operating in specific cities, telecommunications readiness, physical landscape, available expertise and possible challenges.

Lastly, for the business environment component, BPAP intends to beef up perception regarding the Philippines as location for operators. In so doing, the group intends to conduct risk perception survey of locators, build success case studies and launch industry-wide campaigns to address intellectual property, Internet security, among
others.

Government involvement falls under the business environment component wherein local government units can have buy-in of locators, utilization of Bureau of Investments' "One Stop Action Centers," and lobbying to retain or protect current incentive programs.

By Alexander Villafania - INQUIRER.net