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Promoting
the Philippines: My Neighbor's Idea
By Michael Alan Hamlin
August 26, 2002
We've been in our new Northgate Cyberzone
office since the third week of May, and we're having a great time
out here. Northgate Cyberzone is part of the sprawling Filinvest
Corporate City located in Alabang. Although still under development,
the complex provides lots of shopping and entertainment, clear air
and open space - at least for now - and interesting neighbors who
are doing some very exciting things.
For example, NexC is a publishing
and recruitment outfit that specializes in the hospitality and entertainment
industry globally. Editorial and marketing is managed on the second
floor of our building, while the website is hosted on the company's
servers in Eastwood City. The magazine - called Rolling Pin in Asia
(www.rollingpin.com) - is printed offshore, and distributed worldwide.
Along with the website, it provides industry updates, job listings,
and executive search services. It's a good example of how the Philippines
is contributing to the IT-enabled services sector in a meaningful,
relevant, and value-added way.
Another neighbor is BGN Ventures,
whose managing director is Francisco (Paco) Sandejas. BGN is a venture
capital firm that specializes in designing and building computing
and communications hardware. Paco's mission is to entice Filipino
engineers and scientists working overseas to return to the Philippines
and work in centers of excellence developing original Filipino technology.
He doesn't consider himself just a VC, but a partner-engineer. And
he has a PhD in electrical engineering from Stanford to back that
assertion up. Paco set the example several years ago for overseas
Filipinos by returning himself to push the development of the local
ICT sector.
Paco is also a member of the Business
Development Committee of the Information Technology and E-Commerce
Council, and has some fascinating ideas about ICT development in
the Philippines, and how to promote the Philippines to overseas
Filipinos and investors alike. He is pushing the development of
a research center in one of the Philippines' IT zones, in line with
his vision to foster the creation of original Filipino technology.
It's a marvelous idea, and one that
has worked well elsewhere. There are three regional examples that
clearly demonstrate the effectiveness of this model: Taiwan, South
Korea, and now China. Early in its development, Taiwan established
75 centers of excellence that educate more than 8,000 engineers
annually. As a result, there are currently 43 research scientists
and engineers for every 10,000 people in Taiwan. South Korea followed
the same model, and boasts 33 scientists and engineers for every
10,000 people.
According to an Asian Development
Bank report, in 1966 "the government established the Korean
Institute of Science and Technology to undertake applied research
for industry. In the 1970s, the government setup other specialized
research institutes in a number of fields. By the end of the 1970s,
Korea had sixteen R&D institutions." Although South Korea
has had severe problems associated with the Asian financial crisis,
the early investment in research positioned the country for its
current technology-led recovery.
Consider that "in the early
1970s, the government accounted for nearly three-quarters of the
national R&D expenditures, but by the early 1990s, 80 percent
were borne by the private sector." Korean R&D helps explain
why the value of Samsung's corporate brand has grown to US$6.37
billion, up 22 percent in the latest period measured by brand consultancy
Interbrand. It's become a technology leader.
Microsoft, Intel, and Oracle have
all setup research centers in recent years in China to take advantage
of the highly respected engineers and scientists produced by that
country's demanding universities. In a way, it's a captive market.
While many of China's brightest engineers and scientists go abroad
for study, there are just too many of them to be sucked up by North
America's student-starved universities and graduate schools. But
more importantly for these investors, many of those who did go abroad
are on their way back. In part because many want to contribute to
their nation's development, and in part because China is actively
recruiting them back. But also because they have a place to continue
their research work.
Taiwan and South Korea are also benefiting
in a big way from the return of students from North American universities
and jobs. Like China, they are able to convince these valuable people
resources to return because they can promise world-class research
labs, equipment, and budgets waiting back home. Their work - theoretically
- is only interrupted by the necessity of taking a 12-hour flight
home.
That's not something the Philippines
can promise, and this country is not just years but decades behind
setting up world-class research institutes. It frittered away the
opportunity to do so in the 1960s and 70s, when its neighbors were
poorer but investing in the capacity to create value by setting
up and funding the research institutes that today contribute so
significantly to powering their economies.
Can the Philippines catch up? To
try, the first step will be to attract the necessary funding. Since
the Philippines itself doesn't have the money anymore to invest,
it's going to have to go to multilateral financial institutions,
venture capitalists, and other corporate sources of funds. I think
that's probably do-able. But only if government acknowledges the
fundamental role of an R&D capacity in creating conditions for
strong economic growth. Thankfully, people like Paco are around
to make the argument, and lead the charge.
(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). He can be reached
at mahamlin@teamasia.com.ph.).
Copyright © 2002 Michael Alan
Hamlin. All Rights Reserved.
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