|
ExecTech:
Cebu is it!
By Michael Alan Hamlin
April 04, 2001
Most of Asia's highly-hyped technology
hubs have bombed along with the dot-coms that inspired their development.
Last week, a report by the consulting firm McKinsey prepared for
the Multi-Media Super Corridor's top management said that the multi-billion
dollar project had achieved few of its goals. The reasons were straight
out of the traditional economy: too much bureaucracy, failure to
attract world-class talent, inadequate communications infrastructure,
and the dearth of quality educational institutions.
Hong Kong's Pacific Century Cyber Works at the end
of the week announced that it now has a negative net worth -- to
the tune of a whopping US$14.9 billion -- despite the acquisition
of Hong Kong Cable & Wireless, which accounted for the bulk
of the company's revenues. That was despite the fact that the dominant
telecoms provider contributed just four months of revenue, following
its takeover. Revenue generated by PCCW's original business units
was paltry by comparison, and the stock is down 38 percent just
this year.
These two high-profile examples demonstrate with painful
clarity that creating a technology hub involves a great deal more
than wishful thinking and billions of dollars in infrastructure
development. For Venture Path (VP)president Abby Molano, the difference
is in the intangibles. VP is a venture capital and development firm
headquartered in San Jose that is active in South Korea and lately,
the Philippines (Full Disclosure: VP is a client of my firm.). Ms.
Molano spoke last week at the "Cebu is it!" summit in
Cebu City with a number of other local and international venture
capital firm representatives, including Paco Sandejas (H&Q Asia
Pacific) and Francisco Dizon (Pacific Northstar).
"To develop a Silicon Valley-like ecosystem Cebu
must emulate the valley's intangibles," Ms. Molano said. She
explained, along with the other speakers, that those intangibles
include world-class technology educational infrastructure, a plentiful
supply of people, and government that stays out of the way. In fact,
Mr. Sandejas said that capital and e-commerce law -- which seem
to dominate discussions on IT hub development but have failed to
help the MSC or PCCW much -- will take care of themselves.
"What we need are people, infrastructure, and
a cool place to be," he said. Most speakers, including Mr.
Sandejas, felt that infrastructure would also take care of itself,
to the extent that a year from now it would no longer be an issue.
Indeed, the cost of new fiber optic and wireless broadband technologies
already available is expected to decrease by at least fifty percent
a year as demand increases, according to infrastructure experts
who spoke at the conference.
But people and being "a cool place" are issues
that do need to be urgently addressed, both speakers and participants
agreed. For years investors in Cebu benefited spectacularly from
the large pool of relatively low-cost, highly qualified people available
to work in their factories and development centers. Now, however,
the private sector is telling government that it is getting harder
and harder to find the right people.
One reason is that so many are being recruited outside
the Philippines, especially the U.S., but also developed Asian economies.
During the conference, a commercial attaché from the Japanese
embassy in fact described that country's efforts to recruit bright
Filipinos. Second, the sheer number of companies that have moved
into Cebu has increased competition for bright people as well. Local
companies are feeling this pinch particularly hard since they must
compete with international opportunity and multinationals
for people.
The Cebu City government and the private sector are
responding to this articulated need in a number of ways. Fred Kintanar,
who heads up an impressive technology development unit for NEC in
Cebu, is putting together a foundation that will supplement faculty
incomes and allow teachers to spend more time doing research and
studying themselves. Mr. Kintanar's concern is that without world-class
faculty, the Philippines won't have world-class technicians.
And he'll be needing plenty. He will expand the number
of technicians and programmers working for him from 145 to 195 next
month. In five years, he expects to have 500. They are already doing
original, internationally appreciated work. For example, a current
project involves the development of wavelength division multiplexing
technology that will ncrease the amount of information flowing through
communication cables by almost 200 percent. The customer the product
is being developed for is ATT. These sorts of examples of original
work are increasingly common not just in NEC, but in Cebu. To keep
them coming, Cebu will have to develop more of its people, and attract
others from around the country.
Being "a cool place" in part involves urban
infrastructure and leisure opportunities: such things as good roads,
communication access, shopping, entertainment, and leisure destinations.
Cebu has most of these things, and I met a number of former Manila
residents who are "Cebuanos by choice," as they are called
there. But to attract more people, Cebu must more consistently and
effectively communicate its attractions. This means investing in
a communications plan targeting the kind of professionals, investors,
and bright people required to make Cebu an IT hub.
By focusing on these "intangibles" Cebu in
a very real way has a leg up on other competitors for Asian IT hub
status, in part because it is addressing them early on, and making
them priorities. While Cebu will likely never have the investment
dollars poured into the MSC and PCCW -- and it's likely no one else
will either -- it has excellent chances for achieving its IT hub
dreams. The test will be in staying true to these priorities.
|
