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Take the slack time to improve Opinion

Written by Outside the Box / John Mangun
Wednesday, 14 January 2009 21:58
The latest survey from Grant Thornton International, released here by local partner Punongbayan & Araullo (P&A;), on 2009 expectations from local business paints a very bright picture. The details were reported here in the BusinessMirror by Max V. de Leon yesterday, and you should read it.

The bottom-line profit expectations for local Filipino business are down, but that is not the important part of the survey. Business expects profits to be slightly lower. However, there is a greatly decreased expectation of inflation and, most important, local business is saying what I have been trying to convey for some time. The negatives 'slower export growth and a possible small reduction in remittances' will be offset by other factors, keeping the economy moving.

Greg Navarro, P&A; managing partner and CEO, was quoted in the article, "The Philippines, he said, is weathering the storm, and local PHBs [privately held businesses] just need to focus on cost-cutting and productivity improvements... take the slack time to train and retrain both management and employees, so they can emerge on the other side of this crisis stronger, better trained, more innovative, more competitive and more productive."

Notice two things. The survey records the views of private companies, not just the big boys and girls of Philippine business. That means that probably you or your company was speaking in this report. Further, Mr. Navarro does not say sit out 2009 and wait to see what happens. He is correctly advising you to get off your corporate chair and start improving your company.

Every one of Mr. Navarro's specific suggestions should be your corporate checklist for the next 12 months.

The larger economies in both the West and the East are going to have a very rough time in 2009. But they will recover, unless they individually and collectively shoot themselves not in the foot, but in the head. Using one of my silly basketball analogies, the other team has called an injury time-out. That does not mean our team is injured, and also, we need to use this opportunity to strengthen our position.

Exports: Find new export markets. Our top 10 export markets account for more than 80 percent of what we sell abroad. And most of those are in seriously bad shape. If you are in the export business and have not added two new countries to your list of customers by December 2009, you are both foolish and lazy. Here is an example of what I mean: A local distributor of legitimate DVD movies manufactures here in the Philippines for both local sales and to Singapore. He also set up a factory in Ghana, West Africa, to make and sell to three countries there. Those sales help fill the gap in revenue loss from Singapore and build an entirely new market.

Outsourcing: Get creative. India is finding new and creative ways to destroy their outsourcing business, the latest being the financial fraud at Satyam, employing more than 50,000 in computer solutions and software development. Do not think that outsourcing is a mature business in the Philippines and is only about customer and technical service at the call centers. Virtually anything that can be done in the West by telephone or by computer can be done better and cheaper here. Further, "outsourcing" is not limited to simply providing a traditional service in a mature services industry. Another example: Five years ago, a now 29-year-old Canadian non-college grad computer guy, almost a loser, starts a part-time web site. Although the Internet is overwhelmed with "dating sites," he starts another. His secret is that his site is free. It is now a force in dating web sites, booking over $10 million in 2008. He pays himself a $5 million annual salary, the revenue all coming from web advertising, not membership fees. And remember, web advertising is supposed to be a losing proposition right now, but not for's Markus Frind. He is "outsourcing" to his small three-man office in Canada, the largest dating web site in the United States. Filipinos are one of the largest users of social-networking sites like Friendster, Multiply and MySpace, and yet, why don�t we have a Filipino-owned site attracting all that foreign advertising revenue?

International relations: Kick them in the face and kick them hard. If your business must import goods or raw materials from the "First World," do this: Go to Baclaran, Divisoria or Quiapo, find the nastiest, meanest and most difficult merchant to make tawad with, and hire him to be your international purchasing manager. Forget about "sick man of Asia," "basket-case economy" and Third- World country. They need you and your money to buy their products. Take advantage of them at every opportunity. No more Mr. Nice Guy and save all that "Friendly Filipino" stuff for the tourists. The primary countries that we buy from include Japan, Singapore, Korea and the United States, and they all need your business and your money. It's payback time.

Look, it is simple. Everything the West did wrong "too much credit, inflated housing prices, bad banks" is not a problem here. Further, the Philippines is not economically dependent on all those First-World loser countries. Two thousand nine can be your year and the year the Philippines rises up if you put away the gloom and doom and get moving. The last time the Philippines had this opportunity was in the 1980s, and it was wasted. It is all up to you and your personal efforts.

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