November 09, 2003

The Philippine STAR, Opinion Page

Last Train to O.K. Corral   

By Babe Romualdez

HONG KONG -- In a meeting at our regional office in Hong Kong, our Beijing office reported that China stands out as the most economically promising country among all nations in the region. China has definitely changed from what it was 20 years ago. Armed with The Most Favored Nation Trade Status given by the United States, it has a trade surplus of 130 billion US dollars with the US. The Philippines, on the other hand, is certainly below this level despite the long trade relationship we have had with the US. The US is still the biggest investor in the Philippines, pegging a trade surplus of five billion US dollars, but this is nothing compared to what they have poured into China. The constitutional crisis we are facing are sending the wrong signals all across the Atlantic. We really have to work overtime to WOW tourists and investors to come into the country.

While China nears a population mark of 1.6 billion by 2030, it is also moving close in the top-three list of the world’s major foreign trade powers. In 2002, China pegged 600 billion US dollars in foreign trade, and reached a record 50 billion US dollars in foreign direct investments, making it the biggest recipient of overseas capital. China has so much going for itself that its planning to purchase a fleet of Boeing aircraft worth US$ 6 billion, making it the first country to have a fleet of Boeing’s new 747-500s. This new Boeing aircraft has a huge and extended upper deck and is considered state-of-the-art. Singapore Airlines is perhaps the only other carrier that will acquire other top-of-the-line aircraft. 

China is right now reengineering its population program, starting off with Shanghai. It will put up a population forecast data system, which will be published periodically, to make citizens aware of the situation. Shanghai’s local government has been very successful in the past 10 years in reducing the number of birth rates in China’s largest city. To keep the country’s economic growth from failing halfway, China is also working double time to improve its potable water supply. An estimated 22 billion US dollars in investment is now being used in an ambitious project to bring water to the North of the Yangtze River, which holds 40-percent of the population. As far as the environment is concerned, the Chinese government let loose 2,000 buses powered by natural gas, and closed down about 70 factories powered by coal. This is obviously in preparation for the Beijing Olympics in 2008. Local governments are investing 7.5 billion US dollars in wastewater disposal projects all across the mainland. This is roughly 2.8 times more than the efforts done in the previous five years. China is a very attractive market for wastewater treatment firms. Just imagine, China needs 10,000 sewage treatment plants all over the country, representing a market value of roughly 48.4 billion US dollars. In short, while the supposedly democratic and capitalist Philippines is still dealing with outdated, irrelevant, left-leaning Maoist civil society groups, China is moving ahead as one of the fastest growing economies to date. In 2001, the sleeping giant awakened, and is now a formal member of the World Trade Organization. Since then, its growth was nothing less than phenomenal. 

It’s amazing how China has transformed itself from what it was when I was there in 1974. It’s secret? It is a domestically-driven economy, and it is building a financially-capable middle class. The Philippines on the other hand, is having difficulty convincing the middle class to stay in the country, or just bring their money into the country. There is about 50 billion US dollars in Filipino overseas capital that’s waiting to be tapped. Manufacturing in China costs less than other Asian countries, making it a hub for IT and computer hardware. Other big movers are infrastructure, housing industry and the automobile industry. It sells three million cars a year, that’s why the country is growing when other neighbors, even Japan, are having a hard time. Not only investors, but potential engineers are flocking to China since it opened its universities to train design engineers. Getting design engineers in China is a major advantage for businesses everywhere. The country only has a value added tax of 17 percent for all goods imported into China. Coupled with very low labor cost – an average of about US$12,000 to US$15,000 per designer versus US$80,000 to US$150,000 in the United States (not including benefits) – the attraction, as one analyst said, is great.

Former US President Bill Clinton is now in Hong Kong to address the World Forum for CEOs. I was told that FVR is also here, even Mick Jagger of the Rolling Stones is here for a concert. He invited Bill Clinton to play the saxophone supposedly for a jamming session. In his address, Clinton predicted that Asia will be the “propeller” of unprecedented global prosperity in the 21^st century, and China will lead it. Asia would be the most prosperous region in the world and many economic experts agree with what Clinton said. Being part of Asia, the Philippines should really get its act together, especially after the May elections. Many Filipino businessmen, and I believe, this will be our last chance to take the train to OK Corral.

As I was about to depart from Hong Kong International Airport for Manila, we heard about this incredible news that former ATO head Captain Panfilo Villaruel took over the NAIA 2 tower shortly after midnight Saturday. What is even more incredible is that we know this man personally. He was a member of Philippines, Inc., a group of businessmen originally tagged as Team Philippines during the time of FVR. He’s always well dressed, and talked openly about his closeness to FVR. Ironically, he used to warn us about unrest in the military and its effect on the international community. Everyone was really shocked about what he did, more so that he was killed in the shootout. Once more, another negative news about the Philippines all over the world.  

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