Friday, August 10, 2012

A planet tottering on the brink


By Winston A. Marbella

In the land where God made man, one can already see the Earth beginning to die. 

The famous snows of Kilimanjaro in Ernest Hemingway’s stories are all but gone---and the waters of Lake Chad have shrunk to one-fifth their original size.

Unless we are able to keep global warming below the predicted tipping point of 2,5 degrees Celsius over the next few years, scientists warned, rising sea levels from melting ice will swamp 60 percent of Philippine coastal towns, where more than half the population lives. 

On the eve of the opening of the United Nations Climate Change Conference in Cancun in December 2010, scientists updated a report that small island states situated in the oceans could go under water earlier than predicted because of rapidly warming climes. 


Freakish weather

A year before that, freakish summer floods wrought havoc in China and Pakistan, while a massive summer heat wave ignited roaring forest fires in Russia, causing damage in the billions of dollars. 
A massive chunk of ice has broken away from Iceland, while the southern continent, Antarctica, continues to lose rapidly warming frozen land to the oceans. 

These are some of the drastic effects of climate change -- and unless we are able to turn back the tide of global warming, loss of habitat and mass extinction of species may be irreversible, United Nations scientists have warned.

Ironically, the UN scientists noted, the world has the resources and the technology to avert climate catastrophes.  It’s the political will that’s missing, observed the UN Intergovernmental Panel on Climate Change (UNIPCC), co-winners of the Nobel Peace Prize, together with environmental advocate Al Gore.


Manila early warnings

Long before Gore’s Oscar-winning documentary “An Inconvenient Truth” became fashionable among environmentalists, the Philippines had been sounding warnings on climate change and global warming. 
In February of 1995, the first Asia Pacific Leaders Conference on Climate Change, (ASPAC-LCCC) convened in Manila.  Some of its findings were prophetic.

The Manila conference declared: “Small island nations like the Philippines are vulnerable to the impacts of climate change and sea level rise, with added impact on agriculture, biological diversity, peoples and cultures, so that they must be given special status because of the imminent threat of climate change.”

In 2007, a conference of Filipino and foreign scientists in Manila warned that “the Philippines could lose about 6,000 of its 7,100 islands to the sea -- if predictions by global scientists of the catastrophic rise in sea levels and floods” came true. 
Climate refugees

Growing international awareness of global warming has spawned new phrases like “climate refugees” and “forced migrations.” 

Experts say the number of people affected could double in seven years and reach as high as 200 million once the global warming tipping point is reached. 

The numbers could swell as refugees flee flooded homes, parched lands, typhoon-ravaged areas, and disaster-prone countries in Africa and Pacific island nations including the Philippines.
Water shortages

The UN climate panel estimated that from one billion to three billion people would suffer drinking water shortages by 2080 and between 200 million and 600 million would go hungry.  

The exhaustive study by some 2,500 scientists from 100 countries found that the Earth was indeed growing warmer from human-caused emissions of so-called greenhouse gases, mostly carbon dioxide, from the burning of fossil fuels like oil and coal. 

These gases form a cover around the globe like a giant greenhouse, trapping the sun’s heat and increasing surface temperatures.
Snowballing events

The UN study warned of an uncontrollable snowballing of events arising from global warming.  

Rising ocean temperatures in the Atlantic already have caused lower rainfall levels in the Amazon tropical rain forest, ravaging 30 percent of the tree cover. 

Farmers along the equator will suffer decreasing crop yields due to drought.  Hundreds of millions of people living in more than three dozen river deltas -- like the Nile in Egypt, the Red River in Vietnam, and the Ganges-Brahmaputra in Bangladesh -- are likely to find themselves literally caught between the devil and the deep blue sea, between rising sea levels and more frequent floods inland.


Mass extinctions

The UN scientists see 20 to 30 percent of species under threat of mass extinctions if temperatures rise from 1.5 to 2.5 degrees Celsius.  At a rise of 4 degrees C, they said, “few ecosystems will be able to adapt.” 

“We are talking about a potentially catastrophic set of developments,” said the former head of the UN Environment Program, Achim Steiner.  “Even a half-meter rise in sea levels can have catastrophic effects in Bangladesh and some island states.” 

Those include the Philippines.  

But there is hope.  Experts say the dire effects of global warming could cost the world close to $7 trillion, but the world needs to spend only one percent of its annual gross domestic product, or roughly $300 billion, to stem climate change. 

In Cancun, a $100-billion climate fund was approved to get the ball rolling. It came not a day too soon.  

Thursday, August 9, 2012

Weather wild


By Winston A. Marbella

In the face of a climate gone wild globally, many are asking: If the planet is warming, why are winters getting colder while many parts of the globe including the Philippines are suffering killer landslides and flooding caused by torrential rains?

In the Philippines early last year, torrential rains triggered massive flooding and killer landslides in the Bicol Region, eastern and central Visayas, and four regions in Mindanao.  


2-M climate refugees

Almost 2,000,000 people  were displaced by the floods, government agencies reported, the result of warm temperatures colliding with the tail-end of a cold front blowing from Siberia.  The seasonal northeast monsoon also cause the cooler weather in Baguio and Luzon, including Metro Manila, early this year.

The weather agency, PAGASA, said more flooding was expected from the monsoon and the La Nina phenomenon which would dump more rains on the eastern parts of the country until the normally dry season till May.  Stronger typhoons carrying more rains will follow during the wet season beginning June, it said.

Temperatures plunged in the Cordilleras, destroying crops and causing a rise in vegetable prices. The Siberian winds also dropped temperatures in Metro Manila in the mornings.


Disasters waiting

Late in 2010, a study done by the World Bank, the Asian Development Bank, and the Japan International Cooperation Agency (JICA) warned that the Philippines was an environmental disaster waiting to happen.

An Asia-Pacific-focused US think tank also warned that government agencies were under-equipped and ill-prepared to cope with harsh environmental disasters.

The dire warnings have come true, even as hundreds of scientists, bureaucrats and business leaders from close to 200 countries gathered last December in Durban, South Africa. to continue efforts to forge a binding accord to curb climate change.


Sinking towns 

Scientists have warned that unless we are able to keep global warming below the estimated tipping point of 2,5 degrees Celsius over the next few years, rising sea levels from melting ice will swamp 60 percent of Philippine coastal towns, where more than half the population lives.

Scientists believe that small island states situated in the oceans could go under water earlier than expected because of rapidly warming climes. 

In Australia, a 30-foot rise in three river systems created an inland sea the size of Germany and France, flooding 40 cities and towns and displacing some 200,000 people.


Summer floods

In 2010, freakish summer floods wrought havoc in China and Pakistan, while a massive summer heat wave ignited roaring forest fires in Russia, causing damage in the billions of dollars. 

These are some of the drastic effects of climate change, UN scientists warned, and unless we are able to turn back the tide of global warming, loss of habitat and mass extinction of species may be irreversible.

Ironically, the UN scientists noted, the world has the resources and the technology to avert climate catastrophes.  It’s the political will that’s missing, observed the UN Intergovernmental Panel on Climate Change (UNIPCC), co-winners of the Nobel Peace Prize, together with environmental advocate Al Gore. 

Experts say the number of people affected could double in seven years and reach as high as 200 million once the global warming tipping point is breached. 

The numbers could swell as refugees flee flooded homes, parched lands, typhoon-ravaged areas, and disaster-prone countries in Africa and Pacific island nations including the Philippines.
Hunger

The UN climate panel estimated that from one billion to three billion people would suffer drinking water shortages by 2080 and between 200 million and 600 million would go hungry.  

The exhaustive study by some 2,500 scientists from 100 countries found that the Earth was indeed growing warmer from human-caused emissions of so-called greenhouse gases, mostly carbon dioxide, from the burning of fossil fuels like oil and coal. 

These gases form a cover around the globe like a giant greenhouse, trapping the sun’s heat and increasing surface temperatures.
Bad crops

Farmers along the equator will suffer decreasing crop yields due to drought.  Hundreds of millions of people living in more than three dozen river deltas---in Egypt, Vietnam, and Bangladesh—are likely to find themselves literally caught between the devil and the deep blue sea, between rising sea levels and more frequent floods inland.

The UN scientists saw 20 to 30 percent of species under threat of mass extinctions if temperatures rise from 1.5 to 2.5 degrees Celsius.  At a rise of 4 degrees C, they said, “few ecosystems will be able to adapt.” 

A recent international biodiversity survey found that the Philippines has among the most biodiverse ecosystems on the planet.

That makes the Philippines also most at risk of losing one of the rarest things on Earth: life in all its abundance.

(The author is chief executive of a think tank specializing in transforming social, political, environmental and technological trends into public policy, e-mail: mibc2006@gmail.com.).  

Wednesday, August 8, 2012

Disaster waiting to happen is happening now


By Winston A. Marbella


As close to 200 countries began in November 2010 a two-week meeting in Cancun, Mexico, to try to forge an agreement to curb climate change, several international agencies warned that the Philippines remained a disaster waiting to happen—with Metro Manila possibly going under water after just a heavy downpour.  

That disaster is happening now.

As in earlier meetings in Copenhagen, Denmark, and Bali, Indonesia, a legally binding international agreement is not expected in Cancun to put a cap on carbon emissions scientists believe to be causing global warming and worsening natural disasters. But at least a preliminary road map is expected to be drawn up to replace the aging Kyoto agreement expiring in 2012.

As 15,000 government delegates, environmentalists, business leaders and journalists gathered in the Mexican resort, the Philippine government appeared to be moving heaven and earth to avert more catastrophes from impending natural disasters in a desperate race against time in a dangerously warming planet.

On the eve of the Cancun conference, President Benigno Aquino III declared a Global Warming and Climate Change Consciousness Week, calling on the people to adjust their lifestyles to prevent further degrading the environment as temperatures climb, ice melts, seas rise and the climate that nurtured man shifts in unpredictable ways.

Mr. Aquino also ordered the scrapping of the P18.7-billion Laguna Lake rehabilitation project in order to include additional features to remove centuries-old silt, save the watershed, install global positioning mapping, relocate illegal settlers, and provide livelihood programs for displaced fishermen.

The President’s order came not a day too soon: Some 70,000 fishermen live in 170 coastal villages around the lake area covering 90,000 hectares.

A triple-agency international study has found Metro Manila, together with three other Asian coastal mega cities, in grave danger of killer floods that could devastate them anytime now unless steps are taken fast. An average of 20 typhoons strikes the country yearly.

The government-run Laguna Lake Development Authority (LLDA) issued a similar warning after Typhoon “Ondoy” (international name: Ketsana) unleashed killer floods a year ago that kept parts of Metro Manila underwater for many months.

The state-owned water regulatory agency, Metropolitan Waterworks and Sewerage System (MWSS), has reported that many more parts of Metro Manila have slid below sea level because of sinking water tables. It said massive siltation had also greatly reduced the Pasig River’s capacity to drain flood waters into Manila Bay, threatening to swamp the capital after even just a heavy thunderstorm.

An Asian-focused US think tank, Pacific Strategies and Assessments, recently accused the Aquino administration of underestimating the threat of natural disasters on the “most vulnerable” part of the country—Metro Manila—and overestimating government preparedness to cope with natural disasters like typhoons, floods and earthquakes in many parts of the country.

A series of international conferences over the past two years—in Bali, Indonesia, in 2008, Copenhagen, Denmark, in 2009, and now in Cancun—is expected to produce scant progress in reaching an enforceable agreement to cut pollution by the world’s leading industrial economies, notably China, India, the European Community, and the United States.


Silver lining

Happily, the gathering storm clouds have produced a silver lining: Filipino scientists are close to finding a breakthrough solution to environmental problems caused by fossil fuel. They are growing a species of algae suitable to large-scale biofuel production, an alternative energy source discussed in a new documentary film.

The film, “Cool It,” is heating up the global warming controversy first raised by the documentary “An Inconvenient Truth” and a disturbing UN report warning of imminent environmental disasters caused by climate change.

The earlier documentary won an Academy Award that catapulted former US Vice President Al Gore to the world stage and a new career as environmentalist. For their work in raising global-warming awareness, Gore shared a Nobel Peace Prize with the UN Intergovernmental Panel on Climate Change.


Skeptical

“Cool It” is making enough waves to rock the boat carrying Gore’s brand of environmental activists. The film questions the scientific bases of the climate change effects predicted by Gore and some 2,500 scientists comprising the UN panel.

“Cool It” is based on lectures and a book of the same title by Bjorn Lomborg, controversial author of “The Skeptical Environmentalist.” Lomborg founded the Copenhagen Consensus Center, a think tank that puts forward the views of the world’s leading economists on major global problems.

The award-winning filmmaker, Ondi Timoner, traveled the warming globe together with Lomborg to document climate change and find the most practical solutions to environmental problems.


Scare tactics

Lomborg says that Gore “oversold the message” of climate change and that Gore’s film was designed to scare people “witless.” He says it “works very well as a scary way to get everyone’s attention” but is an “incredibly poor way to make good decisions” about climate solutions.

Lomborg does not deny climate change but questions the scientific bases of the UN panel’s predicted environmental consequences. He also contests the cost effectiveness of proposed ways to fight global warming.

“There’s a lot of amazing ideas,” says Lomborg. “Solar and wind, of course, but we also look at growing your own oil fields through algae in the ocean, making artificial photosynthesis …”

Lomborg says current efforts to cut carbon emissions would reduce global temperatures only minimally, while much lower amounts spent for research could radically cut the costs of improving existing alternative energy sources and developing new ones.


Breakthrough

In one such effort, Philippine scientists have identified a species of algae capable of producing commercial quantities of oil for fuel.

Teresita Perez, chair of Ateneo de Manila University’s Department of Environmental Science, has isolated species of algae that can yield 40 to 50 percent oil when grown in a medium containing nutrients that increase production.

The Ateneo scientists are looking at growing algae without using chemical fertilizers. They are experimenting with chicken manure, hog waste, and even fresh water lakes as alternative growth media.


Zero emissions

To preserve the environment, the researchers are testing a closed carbon-loop method to grow the algae, meaning the carbon dioxide by-product of aerobic decomposition is fed back to enrich the growth medium, thus avoiding releasing CO2 into the atmosphere.

After the oil is extracted, the algae become a rich source of protein and carbohydrates for feeding fish and livestock, completing the cycle.

An advantage of producing fuel oil from algae is that the process does not displace croplands that are better used for growing food like corn, soybean and sugar cane, thus keeping prices stable. Algae are 150 times more efficient than soybean in using arable land.

Boeing, the airplane manufacturer, estimates that growing enough soybeans to supply the fuel needs of the aviation industry for a year would require fields as big as Europe, but algae would need only 30,500 square kilometers of ponds, the size of Belgium. 


Disaster-prone

The World Bank joint study released recently found Metro Manila—together with Asia’s biggest mega cities, Bangkok and Ho Chi Minh City—in grave danger of natural calamities triggered by climate change.

The country is already suffering the quadruple-whammy effects of global warming identified by UN climate scientists: rising sea levels, floods triggered by killer typhoons, dwindling drinking water supplies induced by drought, and shrinking food crops from parched agricultural lands.

A one-meter rise in sea level resulting from melting polar ice caps could put 64 of the country’s 81 provinces—a full 80 percent—in harm’s way, according to the environmental group Greenpeace.

That’s equivalent to 700 million square meters of coastal lands covering half of the country’s 1,610 municipalities, where half of the population depends on seafood as the main source of protein.

In 2006 alone, 3 million Filipinos were directly affected by natural disasters, according to the non government Citizen Disaster Response Center. The number is expected to rise with rising temperatures and sea levels.


Waiting to happen

A World Bank study done after Typhoons “Ondoy” and “Pepeng” (Parma) struck in 2009, titled “Post Disaster Needs Assessment,” recommended “immediate changes in land-use planning, housing, water management, and environmental protection.”

Another World Bank study, done with the Asian Development Bank and the Japan International Cooperation Agency, titled “Climate Risks and Adaptation in Asian Coastal Mega cities,” warned of climate-induced disasters in Metro Manila unless major steps were taken fast.

The study recommended constructing the Marikina Dam and embankments in the Pasig-Marikina river basin, and improving two major pumping stations serving Metro Manila, located beside the Manggahan River and in the Camanava area (Caloocan, Malabon, Navotas and Valenzuela).


Manila sinking

After Ondoy struck, the LLDA disclosed that the lake’s capacity to hold flood waters had been cut drastically by silt dumped by 24 river tributaries from denuded watersheds.

The MWSS has disclosed that many more sections of Metro Manila have slid several feet below sea level because of sinking water tables being rapidly depleted by deep wells.

The agency also reported that massive siltation of the Pasig River has dangerously reduced its capacity to drain Metro Manila of flood waters caused by even minor thunderstorms.

In the northern Luzon provinces devastated by Super typhoon “Juan” (international code name: Megi) in October 2010, the work of rebuilding broken lives and ravaged communities continues outside the peripheral vision of Manila—until the next environmental disaster strikes.

(Editor’s Note: The author is chief executive of a think tank specializing in transforming social, political, cultural and technological trends into business strategy and public policy. Comments are welcome at Marbella International Business Consultancy, e-mail mibc2006@gmail.com.)

Tuesday, August 7, 2012

Pacquiao's zest for life


By Winston A. Marbella 

Rep. Manny Pacquiao has found himself in the middle of a controversy completely alien to his comfort zone in the ring.  His unyielding opposition to the mislabelled Reproductive Health Bill, purported to pass Congress with the open support of Malacanang, has unleashed a barrage of criticism ranging from the personal to the absurd. 

In so many words, usually sober legislators have cried foul that Pacquiao’s popularity will detract from a dispassionate discussion of the bill.  Others have gone so far as to suggest that Pacquiao is not equipped to debate the intricate labyrinths of the bill because the congressman from Sarangani is not schooled in the concepts of law or craft of legislation.

Crusty old editors have always counselled cub reporters that the best way to expose the shady inner workings of government is to shine the light on them for all the world to see.  This is exactly what Pacquiao has done: by boiling down the debate to his simple statement that if this bill had been in place before he was conceived, he might not be around.

Pacquio’s logic is crystal clear and cuts to the bone like a laser beam:  Shorn of its adornments, the RH Bill is as basic as black or white, true or false, right or wrong, life or death.  And this is because this is the language he understands when he walks inside that ring to face his foe.

Moment of truth

In the moment of truth, he leaves behind all his trainers and staff, all the trappings of wealth and power, and the rich and famous who form his entourage.  He is alone against his opponent, just he and his God to whom he prays in full view of millions of fans worldwide.

By excelling in his craft, Pacquiao has learned to extract the essence from non-essentials.  In his sport, he is no less noble than the protagonists in the classical literary dramas: Man against nature, man against man, man against himself.  When all is said and done, the issue is boiled down to its core. The words of King Arthur in the legend of Camelot sum it all up, “Was I brave, and strong, and true?  Did I fill the world with love my whole life through?”

Peel away the layers of onions from eight world titles and what you get at the core is a man who values life more than anything else.  That is what makes him invincible.  What you see is what you get: A man in love with life and loves to champion it.

To be alive is better than not to be alive---even if life is mired in miserable poverty.  His own life is proof of this truth:  Succeeding in extricating one’s self from poverty is a result of one’s conviction, the courage of one’s indomitable will.

Fallacy

For far too long, runaway population growth has been foisted by scaremongers as the root cause of economic problems in the developing world, despite historical evidence to the contrary.  The issue has resurfaced in light of the hysterical debate over the deliberately misleading Reproductive Health Bill.

Shorn of histrionics, the economic argument for population control flies in the face of reality and may actually be counterproductive to economic growth.
The world’s richest economies have not found huge populations a hindrance to economic prosperity: the United States, Russia, India, Brazil, Indonesia, and now China.  Thirty years ago, China misguidedly promoted a one-child policy and is now regretfully reaping the fruits of that folly.

Chinese demographers are finding they have too few people in some areas and a critical shortage of workers and wives, threatening the very foundations of the economy that the government thought it was protecting. 

Ruthless, barbaric

The one-child policy, one of the most ruthless and barbaric social experiments of the 20th century, is estimated to have prevented the birth of 400 million babies, the population of Europe.  But like all drastic social experiments, it had unpredicted surprises. 

With too few workers and a rapidly aging population, China now finds itself caught in the horns of a dilemma.

In an extremely beastly example of a population policy gone berserk, officials in Xiamen, a city in southern China where many Chinese Filipinos trace their roots, forced a mother to abort an eight-month-old fetus by lethal injection.

Bill’s surprise

On a visit here recently, former US President Bill Clinton raised a few eyebrows when he said the country’s population was a strategic resource.  He was referring to the millions of Overseas Filipino Workers, whose family remittances of almost US$20 billion yearly have saved the economy.

Population is not our problem.  Government incompetence is.  It is time to put the blame squarely where it belongs: right at the doorstep of policy makers who think they can continue to raise the population bogeyman as a deterrent to economic growth.

When they sought public office, nobody promised them a rose garden.  In fact they should expect that the career that they chose would require all of their blood, tears, toil and sweat.  Feeding, clothing, sheltering, educating, rearing and caring for our children---all are part of the human condition and their mandate to serve.  

It’s tough.  But killing babies and stifling life is not a solution.  It’s bloody murder.  Pacquiao’s success celebrates a proactive life over a passive acceptance of poverty and death.

(E-mail mibc2006@gmail.com.)  

Saturday, August 4, 2012

For brokeback nations, breaking out is so hard to do


By Winston A. Marbella



Breakout Nations: In Pursuit of the New Economic Miracles.  By Ruchir Sharma.




Going by Ruchir Sharma's economic metrics, the Philippines is on the verge of joining the ranks of the elite group of “breakout nations,” newly emerging economies that might make it in a turbulent world.    


The country upbeat over a resurgent 6.4% first quarter growth rate that outpaced our ASEAN neighbors and was second only to China's. The good news reinforces the country's  potential  membership in “breakout nations,” a select group of high potential countries touted to become the new economic miracles.
 
BRIC a brac

In a 2001 paper published in 2005, Jim O'Neill popularized the acronym BRIC (for Brazil, Russia, India, China) to represent the rising new economies at the time. Sharma, head of the emerging markets division at Morgan Stanley, names the Philippines as among the emerging economies he calls the Breakout Nations, the sequel to the BRIC.


With Turkey and Indonesia, we make up TIP,  poised to upstage BRIC.  BRICs are losing steam; the breakout nations (including Nigeria and Thailand) will speed ahead.  To Sharma, President Aquino is a good leader who is “delegating power to competent technocrats and seems to understand what needs to be done to get the lights back on.”


Sharma recalls the good old days “back in the 1960s when the Philippines had the second highest per capita income in Asia, behind only Japan...”  He  believes we have the sound economic fundamentals to get back on track  if our politicians get it right this time. 


Poised for breakout

But becoming a breakout nation does not come automatically. Breaking out into sustainable growth must be “inclusive,”   economic jargon for growth that reaches the poorest of the poor.  


Sharma notes that the country’s stagnant  economy had  resulted from a few family-owned conglomerates dominating the markets. In contrast, Turkey’s breakout is happening because of its drive for greater inclusiveness;  the masses, once excluded for their religious values, now play a significant role in the economy.  Breakout nations will be distinguished by the quality of their politicians, Sharma stresses.


Sharma believes the Philippines is ready to exceed expectations in a world where the leading emerging nations (the BRIC) are starting to flounder with Europe and the United States.


Sharma recalls the good old days “back in the 1960s when the Philippines had the second highest per capita income in Asia, behind only Japan...”  He  believes we have the sound economic fundamentals to get back on track    if our politicians get it right this time.


Good economics key


“The failure of the Philippines is typically attributed to chronic political instability,” he says. But that explanation hardly suffices. “Thailand has been even more  unstable but its economy outperformed the Philippine economy through the 1990s...


“The difference is that at least until the 2000s, Thailand’s unstable leaders made better economic choices – from controlling debt and restraining crony capitalism to making the country more attractive to foreign investment, as Japanese car companies turned Thailand into their Asian factory away from home.”


Sharma's thesis banks heavily on President  Aquino's success: “Filipinos saw him as an honest figure who could deliver on the Aquino mandate for change, and they were desperate after nine years of drift and decay” under  President Gloria Macapagal Arroyo.  


Powered by revolution


Becoming a breakout nation “could be made to happen if the third Aquino can get the people power revolution right,” he says.  


Aquino needs “to create an environment in which businessmen are confident enough to invest – which in return requires tamping down corruption, taking on the family tycoons who sill dominate the economy and enforcing contracts fairly.”  


Indonesia offers a good example.  “Indonesia’s relative success over the past few years shows what the Philippines could become: it takes only a modicum of political stability and some basic economic sense...


“The Philippines also has some basic advantages over Indonesia – including a well-educated English-speaking population. For three decades it squandered those advantages, but there are signs of a turn-around, the most dramatic being the rise of the Philippines as a rival to India in ‘business process outsourcing.’”


Economy surges


And as if to prove Mr. Sharma right, the GDP growth rate for the first quarter surged to 6.4 percent after a laggardly 3.7 percent in 2011 due largely to massive government underspending in infrastructure and capital projects. Even the normally conservative Wall Street Journal observed that the Q1 surge  “defied most forecasts as well as the mood in the global economy.”


Bloomberg Businessweek observed: “President Benigno Aquino’s government has made progress getting the Philippines’ fiscal problems under control ....”  Said the Wall Street Journal, “Filipinos have reasons to smile. Asia’s perennial underachiever is outperforming.”   


All told, getting the people-powered revolution behind the breakout effort will still  take some doing. It will take the government's  syncopated efforts for the last four years of Mr. Aquino's term.  Getting that going in a largely feudal economy controlled by family conglomerates will require more than the usual wizardry of a Shaman.  


(The author is president of a management think tank specializing in transforming socio-economic trends into public policy and business strategy;  e-mail Marbella International Business Consultancy, mibc2006@gmail.com.) 

Friday, August 3, 2012

Why Nations Fail: The Origins of Power, Prosperity and Poverty


By Winston A. Marbella

The book, Why Nations Fail: The Origins of Power, Prosperity and Poverty, starts with a gripping account of the 2011 Arab Spring that will overwhelm veterans of our own People Power Revolution in 1986 with a great sense of pride and a poignant deja vu feeling. It also provides a road map as to how we may reap the benefits from our People Power Revolution a quarter of a century ago, a good thing to think about as President Aquino prepares his third State of the Nation Address.

Co-authors Daron Acemoglu, a professor of developmental economics at the Massachusetts Institute of Technology, and James A.  Robinson, a professor of political science at nearby Harvard, have earned well-deserved reputations for doing excellent academic work in political economics.   

They write matter-of-factly: “This book is about the huge differences in incomes and standards of living that separate the rich countries of the world, such as the United States, Great Britain, and Germany, from the poor, such as those in sub-Saharan Africa, Central America, and South Asia.”

Why Nations Fail is a sweeping historical attempt to explain why 1.29 billion people in the developing world subsist on less than $1.25 a day. That includes the Philippines.

The average American, on the other hand, is seven times more prosperous than the average Mexican, 10 times more than the average Peruvian, about 20 times more than the average inhabitant of sub-Saharan Africa, and about 40 times more than the average citizen of such impoverished African countries as Mali, Ethiopia and Sierra Leone.  How explain such gaping disparities?

As the authors were completing the book, the “Arab Spring” of discontent erupted in the Middle East.  But if we disregarded the world setting as the book was being written, we could almost sense a replay of our own People Power Revolution 25 years earlier.

The authors write: “As we write this preface, North Africa and the Middle East have been shaken by the 'Arab Spring' started by the so-called Jasmine Revolution, which was initially ignited by public outrage over the self-immolation of a street vendor, Mohamed Bouazizi, on December 17, 2010.” 

If we suspended our disbelief, the following account could be situated in EDSA in 1986: 

Political roots

Almost replicating our condition 25 years ago, the authors write ominously:   “Egyptians and Tunisians both saw their economic problems as being fundamentally caused by their lack of political rights. When the protestors started to formulate their demands more systematically, the first twelve immediate demands posted by Wael Khalil, the software engineer and blogger who emerged as one of the leaders of the Egyptian protest movement, were all focused on political change. Issues such as raising the minimum wage appeared only among the transitional demands that were to be implemented later.”
  
“To Egyptians, the things that have held them back include an ineffective and corrupt state and a society where they cannot use their talent, ambition, ingenuity, and what education they can get. But they also recognize that the roots of these problems are political. All the economic impediments they face stem from the way political power in Egypt is exercised and monopolized by a narrow elite. This, they understand, is the first thing that has to change,” the authors write.

“Yet, in believing this, the protestors of Tahrir Square have sharply diverged from the conventional wisdom on this topic. When they reason about why a country such as Egypt is poor, most academics and commentators emphasize completely different factors.”

Not the weather

The authors explain, reminding us of the uncanny similarity to our own situation: “Some stress that Egypt’s poverty is determined primarily by its geography, by the fact that the country is mostly a desert and lacks adequate rainfall, and that its soils and climate do not allow productive agriculture.

“Others instead point to cultural attributes of Egyptians that are supposedly inimical to economic development and prosperity. Egyptians, they argue, lack the same sort of work ethic and cultural traits that have allowed others to prosper, and instead have accepted Islamic beliefs that are inconsistent with economic success. 

“A third approach, the one dominant among economists and policy pundits, is based on the notion that the rulers of Egypt simply don’t know what is needed to make their country prosperous, and have followed incorrect policies and strategies in the past. If these rulers would only get the right advice from the right advisers, the thinking goes, prosperity would follow.”

It's the ruling elite

The authors conclude: “To these academics and pundits, the fact that Egypt has been ruled by narrow elites feathering their nests at the expense of society seems irrelevant to understanding the country’s economic problems.”

The authors argue that “the Egyptians in Tahrir Square, not most academics and commentators, have the right idea. In fact, Egypt is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people.”

People power

“Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities,”  the authors write.

“Fundamentally it is a political transformation of this sort that is required for a poor society to become rich. There is evidence that this may be happening in Egypt."  

That sounds uncannily close to what we heard at EDSA in 1986. The rest of the book tells us how we may proceed to reap the fruits of our own People Power revolution.

Thursday, August 2, 2012

Strategy: Targeting the poor


BusinessWorld
August 2, 2012

By Winston A. Marbella


Two iconic Philippine brands---Jollibee and Goldilocks--- adopted widely divergent strategies to address slowing domestic markets and growing overseas customers.  For the sake of the Philippine economy and our national pride, we can only hope that both, not only one, will grow.

Facing declining middle-class purchasing power, Jollibee went mass-market with Manong Pepe, a modern incarnation of the age-old Filipino carinderia.  Goldilocks targeted the upscale market with a niche brand, Luxe, aside from aggressively opening more franchisee-financed stores north of Manila to be served by a planned commissary in Pampanga.


Buy, not build

Replicating its earlier acquisition of Red Ribbon for much less than the cost of building equivalent own stores, Jollibee bought majority control of Mang Inasal (chicken barbecue) to dominate chicken retail sales.  Jollibee’s Chicken Joy sells more than its hamburgers.

Overseas, Jollibee is acquiring local brands and improving profitability by increasing efficiencies.  It bought another restaurant chain in China.  In contrast, Goldilocks said in a press statement it planned to open more outlets, including two stores in Thailand and a US commissary to serve Filipino communities from Chicago to the East Coast.

Two companies adopting strikingly different strategies.  Strategy is choice, and market  success will determine ultimately which one is making the smart choices.


US$5-trillion market

Almost two-thirds of the world’s estimated 6.6-billion people-–some four billion---live under the poverty line.  The World Bank’s private sector arm, the International Financial Corporation., and the think tank World Resources Institute estimate this under served market to be worth some $5 trillion in purchasing power.

The IFC-WRI study measured the size of this market using income and expenses from household surveys.  It found that families with incomes below $3,000 a year mainly work in the informal sector, have no bank accounts or modern financial services, and lack access to clean water, electricity and basic health care.

The study, “The Next Four Billion Market Size and Business Strategy at the Base of the Pyramid,” examined consumers at the base of the pyramid (BoP).   

The study found that the four billion BoP consumers yearly spend $20 billion for water, $51 billion for technology, $158 billion for health, $433 billion for energy, and $2.89 trillion for food (!).


Targeting the poor

In celebrating its 30th anniversary years ago, Jollibee announced that, with its product lines well-developed and its store operating systems well in place, the company would focus on “creating a formidable brand” locally and expanding overseas, targeting a part of the four billion customers with a purchasing power of $5 trillion, with more than half of that spent on food (the BoP).

In an unpretentious spot in Edsa Central at the corner of Shaw Boulevard, an experimental store quietly tested the concept: marketing to the poor.  In just the right site, Jollibee market-tested the idea of applying the quick-service-restaurant operating system to the age-old Filipino carinderia, probably as old as another cultural icon, the sari-sari store.

The pilot restaurant was called “Tio Pepe’s Karinderia.”  Within a year after that store opened, the president of Jollibee’s ChowKing operation renamed Tio Pepe to Manong Pepe.  Then Robby De la Rosa, who also ran Manong Pepe, opened two more stores.

At its annual stockholders’ meeting before the financial markets collapsed in late 2008, CEO Tony Tan Caktiong announced that Jollibee was paring down local store expansion plans because of weakening consumer demand.  But he was optimistic the company could continue growing by acquiring fast-food chains in China, which he would make more profitable not by re branding to Jollibee but by improving efficiencies.

Subsequently, De la Rosa announced that Manong Pepe was opening nine more stores, bringing the number to 12.  “We are top of mind among call-center employees, vendors, and jeepney drivers,” De la Rosa said, indicating core markets at the base of the pyramid.


Soft underbelly

Tan Caktiong says low-priced Filipino food is the largest segment in the eating-outside-the-home market, but only one of five Filipinos can afford the food served in over 1,500 outlets of the Jollibee group, which include ChowKing, Greenwich, and Red Ribbon.  Manong Pepe was to target customers across the broad socioeconomic class D, to which most of the once-lucrative class C customers slid down after losing purchasing power.

And so it was with some trepidation that the market received the announcement that Jollibee was shutting down its Manong Pepe stores in a so-called business rationalization move after acquiring the “Mand Inasal” chicken chain, which also targets the mass market, a segment apparently being served adequately by Jollibee's aggressive “Value Meals” promotion.

As more customers trickle down to the base of the pyramid, two iconic Philippine brands are adopting diametrically opposed strategies to sustain momentum.  The jury is still out on the results of Goldilocks' bold foray into the upscale market.  It is a family-owned business that is not traded in the stock market, so it is not required by law to submit public reports to shareholders.

With its quick exit from the Manong Pepe market, Jollibee is displaying the adroitness and dexterity of its entrepreneurial roots.  It does not become enamored of any strategy: The best strategy is what works best in the market, regardless of theory.  That is why it is so successful.

(The author is an Agora awardee for marketing management of the Philippine Marketing Association. E-mail  mibc2006@gmail.com.)