Monday, 17 August 2009

Redesigning industrial economic zones

Manila Bulletin

I am glad that Director Lilia de Lima of the Philippine Economic Zone Authority has been very strategic in her view about the future of our economic zones. Very early on, she gave the go-signal to the IT Parks, in which Eastwood City was a pioneer. Then there are the agro-industrial zones. More recently, there are the retirement village and tourism zones. Such a forward-looking strategy is adapting to the rapidly changing competitive dynamics in the global economy.

In the next twenty years, the Philippines’ competitive advantage will veer towards agribusiness, tourism, health care, BPO and manpower training. We must redesign our economic zones to move away from the industries that will lose their competitive edge based solely on cheap labor.

I was heartened to read a report of AFP that quoted Subic Freeport Administrator Armand C. Arreza saying the most sensible thing about the future of Subic. Commenting on the shift in Subic from manufacturing to tourism and logistics, he said that Subic's manufacturing future had been in question even before the ongoing global crisis hit electronics companies.

He said that for the past several years, low-wage competition from China and Vietnam has been luring companies away from Subic. He categorically states that "low-cost manufacturing is not the area where Subic is competitive. Most of our land area is protected forests and protected seas. We don't have any space to accommodate large industrial parks." In his opinion, the future of Subic lies in tourism, medical care, shipbuilding and logistics, using the ample space still available for warehouses especially around the largely unused Subic airport.

Subic is like a microcosm of the entire Philippines. We have more than 7,000 islands, many of which can attract millions of tourists (both domestic and foreign) if only we build more efficient infrastructures (which are part of industry). Besides, we have highly educated and motivated industrial workers.

We can, therefore, graduate to higher-value manufacturing in the electronics and semiconductor devices sector. When I say that the likes of Intel, Fairchild, Texas Instruments will phase out their labor-intensive manufacturing activities, I am not suggesting that the whole industry is doomed to extinction. The key is found in the statement in the same AFP report of Danny J Piano, President of the Subic Chamber of Commerce: "Subic manufacturers can survive. The Philippines has the capability to do good high-end work due to workers' better education, communication and English skills."

The electronics and semi-conductor devices industry is now in crisis because for thirty years, it has hardly graduated from low-value manufacturing to the high-end work to which Mr. Piano is referring. Unless we can produce more engineers and highly-skilled technical workers that can be employed at the higher end of electronics manufacturing, then we will see more firms in this sector (that accounts for more than 60 percent of our exports) following the example of Intel that decided to leave the Philippines even before the present deep recession. I hope other export-processing zones such as those in Mactan, Batangas, Laguna and Cavite are listening to the wise advice of the Subic officials.

They have to encourage their industrial tenants to go upscale in the manufacture of electronics and semiconductor devices.

The experience of the electronics industry should be studied very closely by the BPO industry that is just beginning its own thirty-year industry life cycle. Fortunately, there are enlightened leaders in this sector (that continues to grow at double-digit rates even as the global economy is taking a dive this year) who already realize that they have to move as quickly as possible from just call centers to higher-value BPO activities like medical transcription, animation, legal documentation, accounting and finance, investment research, etc. It is not impossible that in the next five to ten years, there will be millions of Chinese university graduates who will be very fluent in English and take over the role of Filipinos in manning call centers. We better make sure that we are ready for this situation by moving to higher-value BPO activities more rapidly than the electronics sector has been able to do in the last thirty years.

Finally, to once and for all bury the manufacturing bias of some of our leaders, let me quote from Zenaida Pineda, 40, a former electronics worker in Subic, who was also quoted in the AFP report. She said that she now earns as much working as a chambermaid in a Subic hotel as she did at her factory job: "I like housekeeping more because you can move around, not just stay at your work station. Besides, working on electronics hurt my eyes." These very sensible remarks of Ms. Pineda take away the mystique and glamour of manufacturing. Most labor-intensive manufacturing jobs, whether in textile, garments, shoes, electronics, etc. are dehumanizing.

They involve repetitive tasks with very little intellectual content and remind me of Charlie Chaplain's famous movie Modern Times. Service-oriented jobs are more humane and can be more challenging both intellectually and emotionally.

I always tell my friends jokingly that if I had to earn my keep as a blue-collar OFW, I will look for a job as a gardener in Barcelona or Vancouver rather than as a factory worker in Taipei. As a gardener, I will be using not only my brawn but also my creativity and intellectual capacity to understand the most exciting world of trees, shrubs and flowers. I will be combining earning a living with a very pleasurable hobby. For comments, my email address is


  1. Wow I never thought of it that way... I liked your comment about being a gardener. I think you're right, that you have to feel more job satisfaction to stay happy.

    Justin Davis
    Freight Quote

  2. Hey I read your blog article, its really good. Two years before the growth of BPO was parallel to the growth of employment opportunities amongst the youth who may not be professionally skillful. But the existing demand of BPO jobs requires well educated youth who are proficient enough to handle calls. Call centre business has a great scope in India.