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Painful
Processes
By Michael Alan Hamlin
December 10, 2001
Is all the noise we hear about the Philippines targeting
the technology sector as a key driver of growth just a national
brand façade or has that noise established the momentum the
country needs to evolve into a techno-state? In terms of foreign
investor interest, it's obvious that the country has become a center
for backroom operations like call centers, data centers, and solution
development laboratories. The reason the aggregate amounts of investment
inflows look so puny is that compared to manufacturing operations,
the investment in intellectual capital-intensive sectors is small.
The recent uptick in consumer purchasing evidenced
by the recovery in automobile sales and credit card purchases (Cynics
say the upsurge in credit card usage reflects an increase in the
number of bank accounts with minimum balances.) suggests that despite
official government figures, the dynamics of the economy have much
more to do with hidden technology sectors than growth in agriculture.
But turning the Philippines into a techno-state depends
not only on foreign investment. Nor should it have only to do with
large corporations. Government policy should work in a way that
helps local small and medium-size companies, like mine, leverage
technology and Internet-generated opportunity for development. The
SME sector creates jobs much more quickly and efficiently than either
increasingly scarce traditional foreign investment or large domestic
corporations.
Unfortunately, our experience the past couple of months
trying to leverage technology suggests that there are huge hurdles
to leveraging technology and the Internet for SMEs. I'm talking
specifically of broadband access and opening online trading accounts.
By online trading account, I mean the facility to avail of Internet
payment gateways, so that customers can purchase products and services
online.
Let's consider broadband access first. For months,
we've been trying to get it. First, we checked with ePLDT to see
if DSL, a broadband technology that enables fast communications
over ordinary copper telephone lines, was available in our area.
The initial, "informal" indication was that indeed it
is available in our area. Six weeks or so later (And to think that
I publicly celebrated PLDT's acquisition by First Pacific because
I thought response times would improve!), we were told it isn't.
But, we were also told that since the lines in our area are fiber
optic, that we could obtain ISDN broadband, which is actually more
complicated and less reliable, but it is broadband.
You would think that would be the end of the saga,
but no, it isn't. In order to get either technology, we will have
to terminate our present Internet Service Provider and switch to
Infocom, a PLDT company, of course. And this doesn't come cheap
for a small business. The Infocom/PLDT tandem quoted us P18,000
a month for unlimited broadband access to the Internet. That's not
as high as some developed economies, just higher than the most developed
economy across the Pacific. But we were willing to bite that bullet,
nevertheless.
But you have to actually beg to bite that bullet. That's
because Infocom and PLDT, despite their incestuous relationship,
don't much like working with each other. We asked that a clear plan
be developed for the transition from our present ISP to Infocom
and provided to us. This is important because we must transfer our
corporate domain to Infocom, and it is critical for obvious business
reasons that downtime, if any, be minimal. Naturally, we're still
waiting for the plan.
To add considerable irony to the entire episode, yesterday
we were notified by the association for our area that PLDT is offering
DSL broadband to our area for just P2,000 per month. Yes, that's
probably for home use, rather than commercial. But it's unlimited
access and the differential we were quoted is huge. We ordered two
lines, despite the fact that I'm afraid to find out what the real
story is behind this offer. Why did I place the order? Because there's
no alternative, at least not an affordable one. The bottom line
is that I'm pulling my hair out trying to get broadband and have
no idea when I will get it.
What about the payment gateway? A number of banks offer
payment gateways. They include BPI, Equitable PCI, HSBC, and Citibank.
But none of them are easy to set up. Worse, because credit card
fraud is so prevalent in the Philippines (Russia and the Philippines
are in a neck-to-neck race for the hugely dubious distinction of
being the fraud capital of the world.), most of the banks require
high application processing fees, a substantial loss provision fund,
high discount rates, and a prolonged processing period. If you have
to get up fast, woe is you.
But just getting someone to talk to you is an enormous
productivity-sapping chore. Try it yourself. Call up and just try
to speak with the persons (I leave it to you, also, to find out
who.) in charge of marketing the payment gateways. If you're like
us, you'll find it takes a couple of weeks to even find some of
these individuals in their offices (I thought of sending out scouts
to the golf courses.). Once you do (We got the best responses from
the foreign banks.), you'll likely be asked to produce a business
plan even if you are an established, profitable business and are
simply taking processes online (How's that for customer relationship
management?), and that's just one of a bewildering array of requirements
to do something as simple as open an account.
I could go on, of course, except I'm out of space.
The point? Unless the Philippines makes it easier to leverage technology
and the Internet for SMEs by promoting competition among providers
and banks, we're not heading toward techno-state status anytime
soon.
(Michael Alan Hamlin is the managing director of consultancy
TeamAsia and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is
a co-author (Wiley, 2001).)
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