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Can Cebu
Foster a High-Tech Cluster?
By Michael Alan Hamlin
February 26, 2001
No one knows for sure how to foster
a high-tech industrial cluster. In fact, no government or private-sector
consortium has ever strategically intended to develop an industrial
cluster of any kind and actually succeeded. Instead, industrial
clusters tend to develop when all the ingredients of the particularly
appropriate soup are in place, sort of like some theories of natural
creation.
What we do know about high-tech cluster evolution is
that like most evolutionary processes, it’s messy, and chaotic.
We also know that at the center of the process are heavyweight educational
institutions that attract — but frequently fail to retain —
very bright people. They leave to start fulfilling their visions,
but still draw on the pool of bright people they leave behind. While
there are other ingredients to the evolutionary soup that produces
high-tech clusters, they seem to be drawn together by intellectual
excellence manifest in innovative ideas with apparently practical
application.
So venture capitalists, people, corporate sponsors
of research and development are not "in place" when the
cluster begins to evolve. Like sharks picking up the scent of blood
in the water, they move in to capitalize on, absorb, or ride the
wave of innovation that clusters catalyze. But in doing so, they
also contribute to the evolutionary process.
One ingredient that seems to be noticeably absent from
successful high-tech industrial cluster development — so far,
at least — is government intervention. While regional governments
like Hong Kong, Singapore, and especially Malaysia have spent grandly
on science parks and high-tech investment zones, universally these
initiatives have been undertaken without the benefit of existing,
respected, producing institutions of higher learning.
In recent years each of these governments has belatedly
acknowledged the role of education in fostering high-tech cluster
development. And they have as a result spent lavishly developing
what one day are likely to be impressive institutions. But educational
institutions don’t evolve overnight. It takes decades to develop
a respected faculty with influence in their fields and the private
sector, a strong research and development program, and the prestige
to attract the brightest people around.
For that reason, principally, I’ve frequently
argued that the high profile initiatives of these governments are
experiments in political and enterprise folly. High-tech cluster
development has little to do with waving a financial magic wand
and enjoying immediate gratification. Instead, it has to do with
developing people, and the institutions that train them.
Why is it then that my firm has accepted an appointment
to help organize and manage an IT summit sponsored by the Cebu city
government? Am I simply failing to practice what I preach out of
greed (Nope, the fee we’re getting won’t cover our costs.
As one executive involved in the summit said, "These guys need
to give something back to the community.")? Am I willing to
conveniently forget my principles and arguments when a high-profile
opportunity presents itself that may generate future opportunities
for my firm?
While it’s often nice to be involved in important,
high-profile initiatives, playing a key role in one that turns out
not to be successful can be pretty embarrassing (I guess…).
But when we were presented with this opportunity, we quickly agreed,
even though it’s a government initiative — specifically
Mayor Alvin Garcia’s with support from the Cebu Investment
Promotions Center — and I’ve argued that government should
be passively supportive of enterprise development rather than the
architect.
But Mr. Garcia doesn’t seem to be trying to architect,
at least not alone. In statements to the media the mayor has called
on the national government, the IT sector in particular, and business
in general to develop a do-able IT vision for the city, and to develop
alternatives for achieving that vision. Mr. Garcia appears to be
genuinely trying to play the role of catalyst: he’s trying
to get everybody in the kitchen — that’s not there already
— to help make that evolutionary soup. That brings us back
to my earlier argument that high-tech cluster evolution can’t
really be managed.
A U.S.-based venture capitalist/incubator told me recently
that she didn’t believe that Metro Manila would ever develop
into a high-tech cluster. Her argument was that the Philippines’
capital is a political city, and there’s never been an instance
in which a high-tech cluster developed successfully in a political
environment. While Metro Manila is also a major enterprise center,
this VC said innovation requires an environment that nurtures fundamental
risk taking and contemplation. Hardly the kind of environment we
find in Manila.
Manila also has a lot of technical schools, and more
are in development. And that should be encouraging. But Cebu does
too — including six universities that attract students from
the entire southern Philippines and graduate thousands of IT engineers
and programmers every year. Although no reliable estimate of Internet
users in Cebu is available, we do know that the city — at about
one tenth of the size of Metro Manila — has 30 Internet service
providers and 300 Internet cafés.
As a result, Cebu has attracted the sharks. Virtually
every appliance NEC produces, for instance, is programmed in Cebu,
and the company is building another major development center. Because
of the dependable supply of graduates churned out by the universities,
investors like NEC don’t have the turnover problems that their
counterparts in Luzon and Metro Manila regularly face.
The point is that Cebu is already evolving into a high-tech
cluster, and it’s done so pretty much like other successful
clusters: on the strength of intellectual resources. What the Cebu
IT Summit should do is to look at ways that will continue to nurture
that development, rather than try to manage it. And it looks like
that’s what’s going to happen.
Four principal themes provide the framework for the
meeting: human resources, infrastructure, capital mobilization,
and public policy. Plenary sessions will feature representatives
of organizations that are and are eager to invest in Cebu because
of the potential it already exhibits, not hoped for. And that’s
why we’re involved.
For the ride.
(Mr. Hamlin is managing director of the consultancy
TeamAsia and the author of two books on Asian economies and managing
in Asia. His latest book is The New Asian Corporation: Managing
for the Future in Post-Crisis Asia. His e-mail address is mahamlin@teamasia.com.ph.)
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