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President Message Archive


A message from the SBFCC President is included in all issues of the SBFCC monthly newsletter. Below is a list of archived President's messages (latest to oldest).



The 13th Baktun

by Prof Danny Piano; January 2013 Issue


Friends, here is my fearless forecast: the year 2013 would be good for the Subic Bay Freeport!

Okay, this is not based on any quantifiable economic data and stats—but simply because the Mayans said so.

No, I’m not drunk while writing this; maybe tipsy, but not groggy. Hey, it’s the holidays!

So, the apocalypse did not happen, and the world did not end; which means onward we march to another 5000 years.

Incredibly, according to a global independent market research company, Ipsos, one in ten people believed that the Mayans have prophesied the end of the world at the close of the 12th Baktun—21 December 2012 to you and me. So much so that a number of governments have told their citizens that the world won’t end. The Chinese government even had to resort to arresting people who were spreading doom and gloom.

Ironically, the Mayans said people predicted wrong and that they, the Mayans themselves, did not interpret the end of their Long Count Calendar as the catastrophic end of the world. Their calendar has simply run out, they said; nothing more, nothing less. In fact, the Mayan elders said that the correct interpretation was that the world will be transformed for the better—not end; a new beginning, a renewal, more like.

In this context, we can then look back a bit at 2012 and try to predict how things will roll inside the Subic Bay Freeport in 2013. Let’s look at the big ones.

The proposed marine cargo diversion to Subic and Batangas will be a big boon to the Subic Bay Freeport. At present, Subic’s container terminals only use 6% of its actual capacity. The Maritime Conference, organized by the Subic Bay International Terminal Corp (SBITC), a Chamber member, and SBMA, held here last August certainly helped at making businesses in central and northern Luzon become aware of Subic’s cargo potential. We hope that the recent big push by the Subic-Clark Alliance for Development (SCAD), headed by former SBMA Chairman Felicito Payumo, will at last make it happen. The container terminals were actually built during Chairman Payumo’s term as head of the SBMA.

This planned cargo diversion was long time in the making. I remember this being a regular item in the agenda of the SBFCC’s Business Development Committee during its frequent meetings with former Administrator Armand Arreza in 2011. I think it was he who made the request to the Department of Transportation and Communications (DOTC) to fund the Japanese International Cooperation Agency (JICA) study. In fact, the Subic Chamber is one of the first organizations the JICA talked to, in November 2011, regarding the study.

Should this push through, the year 2013 will certainly look promising to the marine cargo industry. It would also be a great income generation source for the SBMA.

Shipbuilding, too, is expected to continue to grow. Hanjin Subic, another Chamber member, which is now hiring more workers in addition to its 20,000 workforce, has catapulted the Philippines as the fourth largest shipbuilding country in the world. Add to that its new agreement with AMSEC, a subsidiary of Huntington Ingalls, to provide maintenance, repair, and logistics services to the US Navy, and you can very well imagine how huge this can be starting 2013.

Hanjin, in collaboration with the Home Development Mutual Fund (HDMF or Pag-Ibig) has even started building 1000 housing units in Castillejos for its workers, the biggest single housing project in the country today.

Shipbuilding in the country is so successful in stimulating the economy that the Department of Trade and Industry (DTI) has even invited nine Japanese shipbuilders to expand and set up operations here. It is now one of the government’s preferred industries under the Investment Priorities Plan (IPP) plan where a ton of perks and incentives are given to new entrants.

The Subic Bay International Airport is another one that is starting to show promise. Not only is general aviation seemed to be booming as evidenced by the success of Chamber member Aviation Concepts, it looks like there is a chance that a carrier, Astro Air International, might actually start its Subic-Taipei and Taipei-Boracay flights soon.

The increased VFA exercises is also seen as another activity that is expected to stimulate further the economic activity within the Freeport and surrounding areas. While regrettable that it has to happen because of the Scarborough and Spratly issues, we’ll take what we can. The end of the world has already passed anyway. The Subic Chamber has even formed a VFA Committee, headed by Joe Guthrie, to make sure to follow events as they unfold.

I predict, however, that it will be tourism that will shine brightest in 2013. It already did very well in 2012 despite all the ruckus on environment-related issues. The Department of Tourism (DOT) has even declared the Subic Bay Freeport as the “Premier Convention Capital of Central Luzon,” due mainly to the Subic Bay Exhibition and Convention Center (SBECC).

The SBECC, formerly the GVC Manufacturing building, was renovated around 2007. I vividly remember Armand Arreza telling me and John Corcoran, who was then the SBFCC President, when we visited the place while construction was going on, that he hopes it does not turn into a white elephant. A few months later, the 20th Ad Congress, the biggest event in the advertising industry, was held there and that started it all. It was one of the successful projects of SBMA and certainly one that helped spur tourism inside the Freeport.

While I am happy with the DOT declaration, I think that was a very modest and conservative pronouncement because the SBECC certainly rivals the Philippine International Convention Center, the Convention Center in Cebu, and even the World Trade Center in Manila. It is bigger than any of the three, truth be told.

Not only the SBECC, I was quite impressed, too, with how the SBMA’s Tourism Department, headed by Raul Marcelo, brought in and organized a good number of tourism events that continues to put the Subic Freeport on the map. I am so impressed with this department’s performance that when our good friend Susan Dudley gave notice (no, not because of the purported apocalypse), I had to scout from the tourism sector and found Donna Tamayo, a long-time acquaintance and now the Chamber’s Executive Director.

I am fairly certain that 2013 would be a banner year for tourism in the Freeport. Add to that Harbor Point, the newest and biggest mall in this area; possible airport commercial and general aviation flights; the likely completion of the Subic golf course; the scheduled renovation start of the Golden Dragon Resorts and Casino (former Legenda and newest Chamber member) this year; and then the completion of the Tarlac-Pangasinan-La Union Expressway (TPLEx) by middle of this year, which extends the SCTEx even more closer to Baguio, and you’ve got the perfect recipe for success.

Sure, we have our share of problems—smuggling and waste dumping to name a couple—but those will probably make us stronger, more alert, and learned. Two issues also: the CUSA and the Writ of Kalikasan on the coal-fired power plant, are both still in the courts. A decision on the latter will probably come out by next month while the former might take a bit longer. But, whatever the decisions of the courts will be, we can simply move on and continue to build the Freeport.

Incidentally, the ancient Mayans used a base-20 counting system (we use the decimal base-10) where a Katun translates into something like 20 years; and where 20 Katuns make for one Baktun. Their latest Katun ended at just about the same period as the 20th anniversary of the Subic Bay Freeport... and then it renews. Coincidence?

Yes, I agree with the Mayan elders that 2013 means a renewal. Yup, the 13th Baktun; it’ll bring forth prosperity, not upheaval.

Okay, that’s a pathetic wax poetic. But who cares. The world did not end. Happy New Year!

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Subic Bay Freeport 20th Anniversary

by Prof Danny Piano; December 2012 Issue


The week-long 20th anniversary celebration of the Subic Bay Freeport kicked off with a special flag raising ceremony last 19 November 2012.

Chairman Garcia led the actual raising of the Philippine Flag that morning, close to 20 years after it was first officially raised inside the Freeport.

At that time, 24 November 1992 to be exact, it was the world’s largest Philippine Flag. It was unfurled and raised by former President Fidel Ramos and former SBMA Chairman Richard Gordon to the top of a 94-foot flag pole which symbolizes 94 years of US military presence in the Philippines.

On a nice sunny morning 20 years hence, I still feel exhilaration watching the Philippine flag rise from exactly the same location and starts waving on the way up, urged by a gentle wind.

The day was a welcome respite, too, from the scandalous, headline hugging issue about the alleged toxic waste dumping.

Requested by SBMA to deliver a short message about the Freeport’s 20th Anniversary, I was more than happy to oblige. Here it is:

Good morning! This month, we are celebrating the Subic Bay Freeport’s 20th anniversary. But let me just quickly go back 10 more years before it all started. That would be 1982.

Where we stand now was then still part of the US Naval Base, once the largest US military naval base in Asia and home to the US 7th Fleet. At that time, I was an apprentice machinist and mechanic, 20-some years old, no gray hair, working a kilometer or so from here—just past the Dispensary. At that time, there were around 30,000 of us locals working for the US Navy. Interestingly, I still see many of those who used to work here.

If I recall right, there were two flag poles right in this area—one for the Philippine flag, and the other for the US flag. Both were raised in the morning and lowered late in the afternoon. The big difference then was that everybody stops—pedestrians and vehicles alike—during the raising and lowering of the flags.

It’s almost like a different era. I even miss the many rock & roll night clubs on both sides of the Magsaysay strip just outside the main gate.

Ten years forward, in 1992, just two years after this area was devastated by Mt. Pinatubo, the Base workers were about to lose their jobs, mine included. I was already a senior systems programmer at that time and part of PWC’s Management Department. But that doesn’t matter, all jobs, from the lowest to the highest positions were about to dissolve into nothingness. Republic Act 7227 was just enacted early in the year, but we did not even know how that can possibly replace our jobs, and how it can possibly put food on our tables. We were in despair.

I have to give it to the first SBMA Chairman and Administrator, Richard Gordon. He provided the spark that replaced misery and despair with inspiration and aspiration.

Even the succeeding administrations, in my opinion, also contributed to the growth of the Subic Bay Freeport in some degree or another. That may be arguable to some but there is one indicator of growth that would be hard to dispute—from some 30,000 workers during the US Navy time, there are now three times as many workers here. Investors everywhere, in every nook and cranny that SBMA is now fast running out of space to lease. If that’s not success, I don’t know what is.

If you asked me 20 years ago if that would even be possible, I would have said you are kidding or probably smoking pot. It is an incredible feat! It is mind boggling!

And that’s not through sheer luck either. I’ve been witness to the hard work that SBMA and Freeport stakeholders, including the Subic Bay Freeport Chamber of Commerce, have done.

Sure, it’s not utopia, far from it. The SBMA is now facing fiscal problems. But that problem is not insurmountable. The national government is getting billions of pesos from Subic Freeport collections after all.

Sure, we face other problems especially those related to the environment. But those are not insurmountable either. In the end, it will even likely make us stronger.

One can look at this progress one way or the other. The pessimists will compare the Freeport’s progress with other developed countries and will find it minuscule, trivial, and irrelevant. The optimists will compare where we were two decades ago with where we are right now—and find progress! I belong to the latter.

So today, I stand here in front of you, not only on behalf of the Subic Bay Freeport Chamber of Commerce, but also on behalf of the former Base workers, and of the locals who were born and grew up here. Let me say that I am proud of what this place has become; I am proud to be part of this accomplishment, and I am thankful to those who were here before us, and those who are now with us for being instrumental in this success.

Finally, I am certainly looking forward to what this place will become in the future. I have no doubt that a lot more are in store for us; I believe that a decade or two from now, we will look back and say to our grand sons and daughters—you know kids, I was there, and I helped build that place! ... Happy 20th Anniversary!

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Subic Bay Airport as US Forward Base?

by Prof Danny Piano; November 2012 Issue


Sometime around the first week of October, the Subic Bay Metropolitan Authority (SBMA) announced that the Subic Bay International Airport (SBIA) was being eyed as a forward base for the joint operations of the Philippine Air Force and the United States Air Force. The aim is to maintain regional balance in light of territorial disputes in the West Philippine Sea.

This obviously conflicted with the SBMA plan adopted early this year to convert the 200 hectare area into a tourism hub. That plan involved the development of family-oriented tourism facilities, theme parks, convention and entertainment centers, hotels and casinos, technology parks that could house business process outsourcing companies, a golf course and a yacht club, office and residential buildings, and of course, the SBMA corporate headquarters. The SBMA, consequently, said it will be deferring this plan.

So, airport conversion “deferred,” military forward base “eyed.” Not a lot of certainty reflected on both words.

However, from the look of things, it is almost certain that the SBIA will now be used for military purposes—either only for Visiting Forces Agreement (VFA) exercises or as a forward base.

The latter, most likely, since VFA Commission Executive Director Edilberto Adan pointed out that the US will be shifting the bulk of its fleet to the Pacific by 2020 as it focuses on Asia. This would mean more naval and air assets in the Western Pacific and Subic is one of very few ports that can accommodate these assets. If this would happen, then the airport conversion to a tourism hub is not only deferred, it is dead on the water.

Forward base it is then.

But how can this be possible? The Constitution of the Republic of the Philippines, under Section 25 of Article 18, specifically states, “foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate.”

While the VFA is actually a treaty—an international instrument concluded between countries in written form and governed by international law—it covers only troops and not the other two prohibitions of the constitution.

But is the VFA even constitutional? Yes, the Supreme Court decided in 2009 that it is since it was a treaty duly concurred by the Senate. It is, however, limited to only the movement of troops since the VFA does not cover military bases or facilities.

In fact, the VFA, or VFA-1 in particular, according to the Supreme Court, is an agreement which defines the treatment of US troops and personnel visiting the Philippines. It provides for the guidelines to govern such visits of military personnel, and further defines the rights of the US and the Philippine government in the matter of criminal jurisdiction, movement of vessel and aircraft, and importation and exportation of equipment, materials and supplies. The VFA is not a basing arrangement but an agreement which involves merely the temporary visits of US personnel engaged in joint military exercises.

Unless the Senate approves a new treaty that covers foreign military bases or facilities, a US forward base would be unconstitutional.

But are there workarounds? Sure.

How about subcontracting the US Navy’s ship repair requirements to a private company? What would stop the SBMA or the Philippine government, for that matter, from approving a commercial ship building and repair investor? And could not that investor undertake ship repair jobs for the military?

In fact, AMSEC, a subsidiary of Huntington Ingalls Industries, one of the biggest builders of ships for the US Navy, announced in April that it would set up a maintenance, repair, and logistics hub at Subic Bay using facilities owned by Hanjin. There you go.

What about air assets? Well, the same arrangement could also be made for aircraft repairs. This was, in fact, part of SBMA’s Plan “B”, which is to turn the Subic airport into an aircraft repair and general aviation facility.

With ships and aircraft repair facilities accessible from private commercial companies, with most supplies readily available from local vendors, and with the VFA as the basis for “temporary” troop movement, there seemed to be little need for an actual and official US military base.

Not enough? Throw in the Basa Air Base for good measure.

Indeed, Defense Secretary Voltaire Gazmin, in his letter to the SBMA, wrote about plans to transfer the Philippine Air Force (PAF) base from the Basa Air Base in Floridablanca, Pampanga, to the Subic Airport. Inside a Philippine Air Force base, the US can obviously have a more permanent status; you know, training and stuff as some of the reasons.

Or, maybe a bolder reason, perhaps something akin to “Operation Enduring Freedom” where, since 2002, about 1,200 members of the US Special Operations Command Pacific (SOCPAC) worked with the AFP against Islamist terror groups in Mindanao. Of course, the mission there was simply to “advise” the AFP in combating terrorism in the Philippines. That being the case, providing “advice” on combating the China bullying around the Scarborough and Spratlys may not be considered a stretch, therefore.

“Forward base?” Yes, it will likely happen.

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Alternatives to CUSA, Are There?

by Prof Danny Piano; October 2012 Issue


As of this writing, four different lawsuits are being readied against the SBMA’s CUSA fee. Assuming that a temporary restraining order (TRO) will be issued by the court and—heck, let’s dream bigger—assuming that the petitioners will eventually win, what then?

We all know that the SBMA is in deep financial trouble. It almost always has been. In fact, in its 20 years of existence under five different administrations, there were only seven years when it generated income—negligible at that. The other 13 years were all losses; so much so that the cumulative losses as of the present day amount to something like seven billion pesos.

Okay, SBMA in the red, no disagreement there. The argument is where to get the money to stop the bleeding.

But, why do we even have to care if SBMA bleeds to death? Because the Subic Bay Freeport will, too. Potentially including us. So let’s go back to our original assumption—we will win but what then?

We have to remember that while we are in conflict with SBMA regarding the CUSA, we are one with them in the pursuit of trying to reverse the expected decline of the Freeport due to lack of services.

Being able to stop the CUSA means the non-realization of SBMA’s expected revenue from it. Previously P350 million, it was eventually reduced to P170 million. We can presuppose that the P170 million supposed CUSA revenue cannot possibly be the all-encompassing solution for the money problems besetting the agency. But, assuming that it will be enough to slowly turn the agency around, do we have alternatives to generate that amount in lieu of the CUSA?

The Subic Chamber, in the position paper we submitted to SBMA last June 6, provided a good number of suggestions, mostly dealing with cost-cutting and streamlining of the SBMA bureaucracy. We have not, however, shown how much, in terms of actual money, those suggestions would amount to.

How about we try finding some P170 million right now?

But first, I have to qualify that we don’t have data metrics so reasonable assumptions would have to do.

Let’s start with SBMA’s bloated number of personnel. We do not know the exact number of personnel, but we know that SBMA’s expenses on salaries and benefits is close to P700 million. Let’s assume, therefore, that the number we are looking for is somewhere around 3,500, which would be a combination of plantilla and contract workers already. Is this number bloated? You bet it is. Chairman Garcia, without mincing on too many words, agrees. Even former Administrator Arreza agreed that it is very high (that’s even after a great number of personnel from the former FSC were removed during his term).

So how much can we consider a reasonable number? I’d say 2,000 would be more than enough. The Clark Freeport operates with way less number of personnel than this. So how much would SBMA save by removing 1,500 workers?

Assuming a conservative figure of P13,000 total monthly cost per worker, we are talking of P234 million savings! Wow, this alone is more than enough to replace the CUSA!

But the problem is more political than anything else. It would be political suicide to fire low-ranking workers, especially those who were previously original volunteers who safeguarded the Subic Freeport when the US Navy left.

But hey, maybe the workers don’t even have to be fired.

Last April, during the Locators’ Congress, I made a suggestion to Chairman Garcia. It involves the possibility of locators hiring a number of the original volunteers. I called it the Adopt-a-Volunteer program.

While the volunteers are no longer as strong as they used to be—okay, let’s call them elderly—they can still do menial tasks. But at least the locators would get some kind of service back and help the volunteers at the same time. With the CUSA, you basically pay something for nothing.

I would hire at least one volunteer myself. Some of the SBFCC Board Directors would, too. Given the chance to choose between the CUSA and “adopting” a volunteer? I think other locators would be leaning towards the latter also.

For plantilla positions, why not simply give them first priority when locators are hiring for similar skills? It seemed a no-brainer.

With only 2,000 personnel left, there would be a better inclination to streamline and reduce red tape. An indirect benefit.

While we’re on a roll, where else, if we are wearing SBMA’s shoes, can we get additional income?

How about a road user’s fee for those passing the Tipo Tollway? It doesn’t have to be humongous. Something like a ten peso fee for cars and a bit higher for bigger vehicles would do. Of course, this would have to be coordinated with the tollway operator to make it seamless. Exempted would be vehicles with SBF stickers.

What else? How about a ten peso environment fee for tourists? I could get flak for this suggestion since the Chamber opposed the original environment fee that SBMA proposed in 2010. But hey, that proposal was for hundreds of pesos; this one can be paid with one coin. It would be a bit tricky to implement this, though. An alternative would be to make available, ten peso raffle stubs within establishments with prices raffled from locator-donated tokens. Added benefit—it’s more fun-tastic in Subic!

With 5 million tourists a year, we could be talking more than P50 million from the two above!

Finally, how about revenue from tax-deductible donations? This will probably apply more for environment-related projects like the Subic Bay cleanup that I mentioned on last month’s President Message. But it might work.

So there, it looks like we will be able to marshal about P300 million just from the above. There could be better suggestions out there; some might even be crazier.

The key to finding solutions for the aforementioned problem is to seriously involve locators and residents into helping SBMA out. The SBMA cannot, and must not, act as the proverbial man with a hammer that sees everything else as nails. The majority of locators and residents are here for the long haul, even as administrations have come and gone. We can help.

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Our Bay, In Trouble, Right Now

by Prof Danny Piano; September 2012 Issue


The water quality in Subic Bay is at an alarming condition—this seemed to be what one can reasonably conclude from the preliminary data gathered by Berkman Systems Inc (BSI). The data was presented to the SBMA Governance Committee and other stakeholders recently.

First, a backgrounder.

BSI is the company contracted by the SBMA to prepare a Programmatic Environmental Performance Report and Management Plan (PEPRMP) for the Subic Bay Freeport (SBF). According to DENR Order No. 2003-30, a PEPRMP is a “documentation of actual cumulative environmental impacts of co-located projects with proposals for expansion. The PEPRMP should also describe the effectiveness of current environmental mitigation measures and plans for performance improvement.”

The failure to secure the PEPRMP by the SBMA was one reason why the DENR, early in 2009, revoked its 2006 MOA with SBMA. The MOA previously gave SBMA the power to issue environmental permits inside the Freeport. It was originally intended to devolve certain authorities to manage and protect the environment inside the SBF.

The DENR has since taken over the enforcement of environmental laws inside the Freeport.

The preparation of the PEPRMP was bid out by the SBMA in October 2010. The scope of work included the collection of primary data such as air and water quality and flora and fauna and the determination of the environmental carrying capacity of the entire Subic Bay Freeport. The close to P7 million contract was awarded to BSI in September 2011.

The study which will run for nine months covering both wet and dry seasons already started last February 2012 and expected to be completed by October this year.

Now, the preliminary results.

BSI conducted many samplings in the rivers and the bay. Thirteen rivers around the bay, both upstream and downstream, were checked for water quality. The results are upsetting!

The level of Coliform, a bacteria commonly used as an indicator of the sanitary quality of water, is unbelievably high. As comparison, the DENR Water Quality Standard for total Coliform is 1,000 MPN/100mL (Most Probable Number of Coliform per 100 mL) whereas the average downstream Coliform level in all 13 rivers is more than 800,000 MPN/100mL!

Try to wrap your head around that number! I sure hope the preliminary data from the rivers are wrong.

Fortunately, the bay itself is big enough to disperse the Coliform flowing to it. The study showed that the average Coliform from 24 sampling stations within the bay averaged only to 65 MPN/100mL.

Our bay is still safe from Coliform and still good for swimming, at least in areas far from the river mouths. Whew!

For heavy metals, three elements—Cadmium, Lead, and Mercury—have exceeded the standards.

The Cadmium level average from the water samples from the downstream end of 13 rivers is 0.12 mg/L while the DENR Standard is 0.01. It looks too miniscule to care about until you mathematically calculate what it means—1200% beyond the standards! The average from marine water samples from 23 locations, on the other hand, is not as bad but is still 260% higher.

For Lead, the rivers’ water samples average is 0.135 mg/L compared to the 0.05 DENR standard. For marine water samples, I am happy to say that the average is better than the DENR standard.

For Mercury, the average from both the water samples from the rivers and the bay were better than the standard. But wait... the Mercury levels from sediment samples tell a different story.

Based from the NOAA-ERL standard (US National Oceanic and Atmospheric Administration-Effects Range Low), the average Mercury level from river sediments is 147% higher. For the marine average from the bay itself, the Mercury level from 23 sampling stations showed that it is 533% higher than NOAA-ERL’s. Ugh!

That’s not the worst of it.

Various fishes were caught from the rivers and the bay to test for toxic residues. From the rivers of Mataain, Malawaan, Binictican, and Agusuhin, seven varieties of fish were caught and tested. The standard used was Australia’s National Health and Medical Research Council‘s (NHMRC) Maximum Residue Limits (MRL) where the limit for Mercury is 0.03 mg/Kg.

Guess what the average Mercury level from fishes caught from the four rivers was? It’s 7600% above the standard! For marine fish samples, it is 5133% beyond the MRL standard.

Now, what to do?

Simple: cleanup, enforce, sustain. But, this is easier said than done. The alarming levels of Coliform, Cadmium, and Mercury will be very difficult and very expensive to fix. It will require tons of money, it will require political will from LGUs around the Bay, it will require cooperation from all stakeholders.

The money part would seem to be the most difficult, but it is actually not. According to Republic Act 9275, otherwise known as the Philippine Clean Water Act of 2004, donations in support and maintenance of water quality management programs are tax-deductible and exempt from donor’s tax.

What does this mean? Well, in simple terms, you can donate part of your tax payments for the water-quality program instead. At least that’s how I understand it. And if all locators, residents, and other stakeholders would do it, we would have all the money we need, at least to start.

The political will from LGUs and cooperation from all stakeholders is another story altogether. But, that’s something up for discussion on another day.

For now, just keep in mind that our precious Subic Bay is in trouble, and we need to do something about it, soon. It is, fortunately, still safe for recreational purposes as long as you don’t go “agitating” the sediments.

Oh yeah, you’d better ask first where the fish was caught before you buy it, too.

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After the SONA, Revisiting the 2010 Expectations
from the Aquino Presidency

by Prof Danny Piano; August 2012 Issue


It seemed only yesterday when I first wrote about what we can expect from the Aquino presidency. That was, in fact, already two years ago. It was in the June 2010 issue of the SBFCC newsletter where I wrote The Subic Freeport, the Aquino Administration: What’s in Store? (http://sbfcc.blogspot.com/2010/06/subic-freeport-aquino-administration.html) While there wasn’t much information to go by at that time, I was still reasonably close in my assumptions. Below.

“…looks like we have gathered and should expect that the Aquino administration is pro-labor, does not like re-appointing government officials, strict about human rights abuses by the police and military, and hates graft and corruption…”

Three SONA’s (State of the Nation Address) later, on labor, more than 30,000 out of work nurses had been deployed to 36,000 barangays, more than three million jobs were created, government workers will get bonuses based on performance and achieved targets, even pensioners will receive at least P5,000 per month, from previously as low as P500. Although his proposed bill when he was still senator, SB1370−An act granting an annual productivity incentive to all workers in the private sector, never saw the light, I’d say it is pretty clear that he leans reasonably enough towards labor (although the left-wing militants might not agree).

On limiting the re-appointment of government officials, this was apparent from the get go. Barely a month after assuming office, he signed Executive Order No. 2 ordering the immediate removal of all midnight appointments. Also, the PNoy-backed Republic Act No. 10149 regarding fiscal discipline in GOCCs, includes limiting the term of office of GOCC Appointive Directors to just one year or until a successor is appointed.

However, the original senate bill that then Senator Noynoy Aquino authored, SB1719, was anchored more on limiting the re-appointments of presidential nominees bypassed by the Commission on Appointments (CA). On this, the House minority reminded PNoy of that bill he filed and urged him to do the things the way he tells others to. Note that the bicameral CA already bypassed several times the appointments of five Cabinet members—Justice Secretary Leila de Lima, Tourism Secretary Ramon Jimenez Jr, Interior Secretary Jessie Robredo, Environment Secretary Ramon Paje, and Social Welfare Secretary Dinky Soliman.

PNoy must now be realizing that limiting re-appointments is easily said than done; especially from the executive side of governance where trust is primal.

On human rights abuses by the police and military, PNoy ordered, in his first year, the Department of Justice to “begin the process of providing true and complete justice for all.” While the number of killings and disappearances implicating the military has gone down, the Human Rights Watch (HRW) claims that the Aquino administration has not taken the needed steps to bring recent cases of serious abuse to trial. While PNoy did not include anything about human rights abuses during his SONA, he did mention in an earlier occasion that the government is “working overtime” to prevent new cases of human rights violations and to resolve previous cases. No success yet but he is into it and has pleaded for patience.

Fighting graft and corruption is I think the area where PNoy made great strides. Almost on a daily basis, one can read success on this front from the news media. A number of proclamations and executive orders were made including EO 46 which further strengthens and reorganizes the Presidential Anti-Organized Crime Commission for a steadfast, strong-minded, and unwavering campaign to eradicate organized crime along with the graft and corruption it breeds. He is also currently urging Congress to pass amendments to the Anti-Money Laundering Act to strengthen measures to hold the corrupt accountable.

It will be a long and hard battle for PNoy especially considering that corruption exists in almost every level of Philippine society—tax evasion, public bidding evasion in awarding of contracts, ghost projects and payrolls, nepotism and favoritism, protection money and extortion, bribery—but it is a fight that has started and already reaped results. While corruption is still thriving especially in the lower rungs of government, there is without a doubt that PNoy’s reform agenda has reduced corruption in public service.

As expected, the government’s trust rating has increased. This had positive effects on the business climate and economy, too. Our GDP in Q1 of 2012 increased by 6.4%, the highest in Southeast Asia and second only to China in the whole of Asia. Total approved investments in 2011 has increased 37.6% from 2010. Even agencies such as Fitch and Standard & Poor’s has upgraded the Philippines’ credit rating to just one notch below investment grade.

While good and honest governance does not necessarily equate to good economics; while PNoy’s slogan, “There will be no poor if there is no corruption,” is not necessarily accurate as 1−1=0, is there even any doubt that progress had been made on graft and corruption? Only the purest of skeptics would have any.

Truth be told, I really wasn’t expecting much from the Aquino presidency two years ago. My only hope was that he would not renege on his promise to fight graft and corruption tooth and nail. For me personally, graft and corruption is the primary evil in government. Even just reducing it would make things start to fall into place; maybe not perfectly, but better than before. Fight graft and corruption! That is all I asked and prayed.

Three SONA’s later, President Aquino proudly showed results. Unlike in the past when we only get the middle finger from the corrupt, it seems they now have their tails between their legs. That alone makes me smile.

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Workaholic, Are You One?

by Prof Danny Piano; July 2012 Issue


Let me lay off from writing about government issues this time around. There’s just too many of it, from national to local, from the national economy and the Scarborough Shoal, to the CUSA and the new business permits, to name a few. Too much to think of, too much to work on.

So, let’s tackle something random. Perhaps something like workaholism?

So, what about it? Well, in the technical sense, a workaholic would be defined as somebody who is addicted to work. This does not seem to sound good at all! In fact, a WebMD article mentioned that like other forms of addiction, workaholism could have significant health consequences, including significantly higher work-related stress and job burn-out rates, anger, depression, anxiety, and psychosomatic symptoms such as stomachaches and headaches.

But, even with the above and while almost anything connected to the word addict has bad connotations, workaholism seems to have avoided the bad rep. Workaholism, in fact, generally implies that the person enjoys their work.

In the recent past, work means being at the office or equivalent place of work. Can’t say there are too many workaholics then since it entails bringing a bunch of documents home. With the onset of globalization and new technologies, however, the boundaries between work and private life have been blurred.

Today, working from home is not much different compared to working at the office. Your documents can simply be transmitted via the Internet, or if you have a slow connection, you can just copy documents, even thousands of them, into a drive as small as a thumb. Working at home, or anywhere else outside of the office, couldn’t be any easier.

Okay, so you’re not much into doing office work at home. But hey, there’s this other work-inducing, work-compelling evil that’ll make you work off hours—the cell phone. I don’t even know of anybody who would not make or receive work-related calls outside their regular working hours. But is that even considered work? You bet it is. Anything and everything you do for the benefit of your company is work. I’m not saying that you should charge time for every minute you do it but yeah, it is definitely work. In short, like it or not, you are working beyond your regular working hours. And almost on a daily basis too, ain’t it?

Are you then a workaholic? Most likely, but not necessarily. Workaholism does not necessarily equate to being hard working. Those are two entirely different things. Put simply, a hard worker sits at his desk but may still think about a beach (spelling is correct). A workaholic is on a beach but thinking about work. The former can be perceived as the more “balanced” of the two. However, the hard worker may just be compelled to do the work, a workaholic l-o-v-e-s to do the work.

But is thinking about work while on vacation a bad thing? Not always. Workaholics have their place in society—especially on a capitalist society. In fact, the majority of businessmen are workaholics. Bear with me.

You see, contrary to common opinion, businessmen are not always interested in just the classic motive—making profit. The vast majority work very long hours because they see business as a challenge, almost akin to a game. Business to them is mostly about the battle of brains; the excitement in the ups and downs of markets; it may even be about conquering and subjugating competitors. Business is pleasure, not business or pleasure.

True, money is the stick by which success is gauged, but it is almost just like an abstract unit of measure. Like winning monopoly money, it simply reflects intelligence and cunning, vision and acumen.

So yeah, workaholics identify business with pleasure. While many can be considered self-absorbed and conceited, they are entrepreneurial. They are usually the movers and shakers of society.

See? Being a workaholic isn’t so bad after all. Take that, WebMD!

So, are you one?

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Common Use Service Area (CUSA) Fee

by Prof Danny Piano; June 2012 Issue


Let me throw in a disclaimer before I proceed. The CUSA fee issue is still under study and deliberation by the Subic Chamber directors. Everything below, at this time, is just personal opinion but which purpose is to provide more information about the issue.

Okay, so what’s the CUSA fee about? The SBMA is having net losses primarily due to foreign exchange losses, depreciation expense, and debt servicing and wants locators and residents to pay fees for use of common service areas to alleviate its financial woes. That’s the short of it.

Paying fees for services provided is obviously not unheard of. SBMA is quite unpretentious, too, when it mentioned that it is relying on the “civic mindedness and spirit of cooperation of its locators and residents to help shoulder the cost of law enforcement, fire fighting, street cleaning and street lighting in order to, at the minimum, sustain the quality of these services and in the immediate future, look into further improving them, all for the betterment of the Freeport.”

But . . .

Two general comments from locators and residents: 1) The fees are outrageously high, and 2) Are we not already paying this fee?

Okay, are the proposed CUSA rates really that high? Let me put it in perspective for you. SBMA’s 2011 revenue from all leases is P793.3 million. Its projected revenue from CUSA less discounts is P354.8 million. On average, that’s a 45% additional expense for us on top of lease costs. Let me ask it again, are the CUSA rates really that high? All together now . . .

Are we not already paying the fee? No, according to the SBMA. It said, “Since its inception in 1992, the SBMA has shouldered the full cost of providing all municipal services within the Subic Bay Freeport Zone…” I have to fully agree with SBMA that it has shouldered all municipal services within the Freeport since the beginning.

Are we not already paying the fee? You’re not having a déjà vu. I still think that we are already paying for it. How? It goes back to the rationale of what taxes are. We pay taxes to the government—the government provides services. Is it silly to assume and expect that the 5% tax on gross income we pay comes with it municipal services? By the same token, shouldn’t the almost 90,000 Freeport workers who are paying individual income taxes to the government expect municipal services as well? I think it is a reasonable expectation.

The problem it seems, therefore, is that since the national government is not allotting back to the SBMA part of its revenue from the Freeport, the SBMA has to shoulder the municipal expenses out of its own coffers. But how much revenue is the national government receiving? In the past four years alone, the total remittance by the BOC and BIR from the Subic Freeport collections was—tadaa—P25 billion!

Shouldn’t SBMA be getting a slice of that humongous pie? The SBMA has to make its case to Malacañang that it need back some of the money that the Subic Freeport has transmitted to the national government. SBMA’s income from leases, port operations, and others is not enough. It was never enough, and never will be until such time that the port operations really, really take off; or if the peso depreciates to unimaginable lows against the US dollar.

Consider, SBMA’s depreciation expense from its assets alone is almost equal already to its revenue from Land & Building leases. Add debt servicing and you will have an amount that is insurmountable even if all SBMA employees, from the highest to the lowest ranking suddenly work for free. The SBMA is simply not set up, in at least its first 25−30 years of life, to have a black bottom line. It would not be a big surprise if there are only very rare occasions, if any, when SBMA has made a net income since 1992. The CUSA forum showed SBMA was in red since 2005. It incurred a P1.1 billion loss just last year.

Some Chamber members are asking how SBMA is able to get by over years of losing money. If I recall right, SBMA has something like a P20 billion paid-in capital. Any losses, therefore, would be simply reflected as deficit in retained earnings. Obviously, SBMA won’t be able to do this indefinitely.

Many are asking, too, about the ginormous depreciation expense. No details are available but looking at SBMA’s Balance Sheet for 2011, their PPE (property, plant, and equipment) is P27.2 billion. That’s huge! Obviously, it includes assets that SBMA paid for including the container terminals and airport renovation. What about the buildings that the US Navy left behind? The SBMA did not pay for them so should those be depreciated as well? I think yes. The SBMA must have done a revaluation of all those properties at the start of the Freeport in 1992, which they obviously accounted as property assets and, thus, must be depreciated.

Here’s a suggestion to the SBMA: Do a fresh valuation of its old US Navy assets and simply write off those that are barely or no longer leasable. The land would still be an asset anyway. It can even do it somewhat aggressively (wink, wink). This action would instantly decrease its depreciation expense. Sure, its PPE asset would decrease but that’s not too bad; the entire Subic Freeport is not for sale anyway.

Back to the CUSA fee. Even if by the grace of heaven (to SBMA), all locators and residents agree to the CUSA fee, that’s only a P350 million additional revenue for SBMA. Assuming a net loss of P1 billion for 2012, where is the rest going to come from?

The CUSA fee will certainly help in SBMA’s financial problems. But will it be acceptable to locators and residents?

The Subic Chamber sent out a survey to members last May 22 where the choices are:

1. No, I do not approve of the CUSA in any shape or form

2. Maybe, but in a form that is reasonable to locators and residents

3. Yes, I approve the CUSA as presented by SBMA

We haven’t had too many responses yet but on what we already got, 77% have chosen #1, 23% picked #2, and nobody voted for #3. As director and President of the SBFCC, it is my fiduciary duty to follow what the majority wants.

I personally would like to help SBMA but like others, would really like to see SBMA do its share of belt tightening and improving efficiency. Chairman Garcia has already declared that SBMA will no longer act with the mentality of a landlord but that of a business partner. It’s a step in the right direction.

The Subic Bay Freeport is not just the SBMA but the totality of all of us in the first place. Its success or downfall will affect each one of us. Perhaps there is another way out of the SBMA’s predicament. Perhaps we can help some other way. Perhaps.

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Deconstructing the Chinese Actions on Scarborough Shoal

by Prof Danny Piano; May 2012 Issue


With its current posturing, the present government of the People’s Republic of China seems to want the Scarborough Shoal. But what for and why now?

First off, China’s claim is based on historical accounts. China’s foreign ministry spokesperson, Liu Weimin, said China’s sovereignty over Huangyan Island (Scarborough Shoal) has full legal basis. He said China was the first to discover Huangyan Island, name it, incorporate it into its territory and exercise jurisdiction over it.

On the other hand, the Philippines has cartographic maps drawn in 1734 during the Spanish colonial times depicting the Bajo de Masinloc (Scarborough Shoal) as part of the country. Philippine flags have actually been raised on the area since the 1960’s. We even built a lighthouse on it. The US Navy stationed in Subic during their time even used the area as an impact range.

There’s your impasse right there.

The Philippine government has proposed taking the Scarborough Shoal issue to the International Tribunal on the Law of the Sea (ITLOS) but the Chinese government has rejected the idea, insisting on bilateral discussions and friendly consultations instead.

While the Philippines will likely submit the issue to ITLOS anyway, it will definitely not resolve the impasse. For how can a settlement be possible if only one party is present to abide by the ITLOS decision?

Now, if this shoal is somewhere in the middle of China and the Philippines, we probably would care less. But, this is only 124 nautical miles from the Philippines yet 472 nautical miles from China. The Subic Bay Freeport has a direct line of sight to it, in fact.

Back to the what and the why. Far from being an expert on foreign affairs, let me try to give it a go anyway from a layman’s point of view.

First, the popular allusion for the Chinese motivation on its incursion—the Scarborough has vast oil reserves underneath it.

Really?

To date, there is no finding that oil is indeed present in the Scarborough area. Further, China’s accelerated demand for crude oil has actually decreased and replaced by an increased importation of natural gas which is cheaper. Besides, if there ever is oil in the area, wouldn’t China simply buy the oil from the Philippines? It would be cheaper than buying from somewhere in the Middle East. And in the process, they do not alienate their neighbors. No, I’d say it’s not oil they are trying to go after.

Second, do they simply want to greedily grab and expand? This is highly unlikely. China has the second largest land area in the world at 3.7 million square miles. A miniscule addition would not matter at all especially when it means an economic whiplash, no matter how small, is expected to be a result.

Perhaps they are just trying to be funny by being a bully? If so, being good at tagging names, we can simply call their actions Tsinulying (Tsina Bullying) and be back merrily going about our daily lives. But that’s too adolescent; perhaps not for some of our politicians, but certainly so for an emerging super power.

So what is it?

China is not a country of dullards. They invented the compass, papermaking, printing, and the gunpowder for heaven’s sake. They could not have become one of today’s great economic powers by sheer luck. It would be unwise to make such an assumption.

China’s trade with the rest of Asia has been increasing substantially as well. No, there is not a reason why they would want to suddenly go the opposite way.

A safer supposition would be that they are doing this for a reason, a reason rational enough to substantiate their actions, perhaps something even borne out of fear.

Late last year, US President Obama told leaders in an Asia-Pacific summit that the US is “here to stay.” He announced plans to set up a military base in Australia and chided China for refusing to discuss its South China Sea disputes at regional forums. The recent talks in the Philippines about possibly resurrecting the hosting of US military bases were also an offshoot of the US strategy.

China countered. Army Major General Luo Yuan responded that the US has been positioning forces on China’s periphery with the clear aim and intention of containing China. He further emphasized that, “The United States has committed a fatal strategic error. It has misjudged its foes, it has placed its strategic focus in the wrong location, and its strategic means are wrong.”

China’s actions on the Scarborough seemed to indicate, therefore, a reaction to the encirclement strategy being applied by the US. Whether one action/reaction is better than the other, the Philippines, having better diplomatic relations with the US, will generally trust it more than China.

But no, China‘s political leaders have not lost their minds. Invading the Scarborough Shoal is far from their goals. China is simply using it to gain leverage in future negotiations.

So no, unless some fool starts firing bullets or some politician starts making wild and unprovoked accusations, actual warfare is not likely to happen. For the meantime, we just have to stand our ground.

The Philippines seemed to be caught in the middle of the US and China posturing. But, as in business, problems can sometimes be converted to opportunities. And since we are caught in the middle anyway, we might as well work to be the glue that will bind the two powers together.

This, me thinks, should be our strategy—for lack of anything else.

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The Subic Bay Freeport—Changes Afoot

by Prof Danny Piano; April 2012 Issue


No, this isn’t about the exciting, coffee-talk-provoking, SBMA-initiated changes as presented by SBMA Chairman and Administrator Roberto Garcia during the recently held State of the Freeport Address (SOFA). Rather, this is about the somewhat tedious, but national government-initiated, changes about to run us over while we are not looking. It is about the rationalization and harmonization of fiscal incentives for Philippine investments.

Okay, so what’s the big deal?

Well, how about the removal of the very legs from which the creation of the Subic Bay Freeport stands? What if an important provision in Republic Act 7227, the law that created the Subic Freeport, to wit, “The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment,” will be repealed?

How about excluding “service enterprises such as, but not limited to, those engaged in customs brokerage, trucking/forwarding services, janitorial services, security services, insurance and/or banking and other financial services, consumer cooperatives, credit unions, consultancy services, restaurants or such other services,” as Registered Enterprises which means they don’t get the incentives previously provided by RA 7227?

And how about putting a sunset provision to our existing incentives, which means it will now be time-bound and performance based?

Yes, it’s a big deal!

But why is the government trying to make all these changes? Confusing and complicated are two words that come to mind. See, over the years, different kinds of incentives were given to various investment promotion agencies (IPAs) like the Philippine Economic Zone Authority (PEZA), Tourism Infrastructure and Enterprise Zone Authority (TIEZA), and Subic Bay Metropolitan Authority (SBMA), among others. The purpose of the present initiative is to rationalize and harmonize all the incentives and to supposedly make the Philippines more competitive than other countries.

Not an easy task. In fact, since 2004, many House and Senate bills had been proposed to create a consolidated investments and incentives code of the Philippines, but most did not gain traction. Understandably so. The majority of IPAs are success stories and you don’t want to mess with something that’s working.

During the 15th Congress (2010-2013), however, four house bills were proposed. These were later consolidated into House Bill No. 4935 titled “The Investments and Incentives Code of the Philippines.”

Sensing the potential adverse effects of the proposed bill to the Subic Bay Freeport, the SBMA submitted a position paper last year to the chairman of the House Committee on Ways and Means basically opposing some of its provisions.

The consolidate bill was approved anyway on third reading during a House plenary session. It is now in the Senate.

The Senate may come out with their own version of the bill which should not be surprising. In fact, the Senate had about a dozen similar proposed bills since the 13th Congress.

But before they did, the Department of Finance (DOF), not to be outdone, came up with another version. The DOF version is more restrictive than that of the House, though. For example, the 25 years sunset provision of 5% tax on gross income earned on the House version is only 10 years on the DOF version. Another, where the House version provides for an income tax holiday (ITH) for export-oriented enterprises, the DOF version does not.

There are a lot of questions affecting the Subic Freeport that are not clear in the proposed bills: Will the application be retroactive? What about the perks of retirees and residents inside the Freeport? What happens to SBMA’s 2% share to LGUs? And more.

But the benefits from the proposed bills, at least according to our lawmakers, far outweigh the disadvantages. The harmonized incentives should be able to provide a more effective policy framework for a more stable and predictable economic climate, should encourage new investors, should streamline regulations which is a requisite in attracting investments, and should lessen the cost of doing business overall. (Note that the shoulds are not meant to be sarcasms.)

Will these changes be good? In the long term and for the country overall, probably yes. For new investors, highly likely. For existing SBF locators, can’t say for sure. For us, the bottom line is that we will lose some of the privileges that we normally get, directly or indirectly, from RA 7227. We will no longer be the “special” kid on the block and will just be akin to an export processing zone. The spirit of the law that created the Subic Bay Freeport will be lost.

Thenceforth we can only go to a corner and cry... at least for the time being.

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Effectively Creating Ineffectiveness

by Prof Danny Piano; March 2012 Issue


Last February 17, 2012, the Bureau of Internal Revenue (BIR) issued Revenue Regulation No. 2-2012 titled “Tax Administration Treatment of Petroleum and Petroleum Products Imported into the Philippines Including those Coming in Through Freeport Zones and Economic Zones and Registration of All Storage Tanks, Facilities, Depots and Terminals.”

For us lay people, this looks another one of those regulatory things that are harmless enough and not worthy of our time.

But wait...

Tax administration treatment? Aren’t we supposed to be inside a tax free zone?

Republic Act 7227, the law that created this freeport, is specific enough under Section 12, paragraph (b), to wit:

“The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment,”

and paragraph (c) which states very clearly that aside from the 5% tax on gross income,

“no taxes, local and national, shall be imposed within the Subic Special Economic Zone,”

and that,

“in case of conflict between national and local laws with respect to tax exemption privileges in the Subic Special Economic Zone, the same shall be resolve in favor of the latter.”

The BIR seemed to be saying though that while RR 2-2012 will apply the Value Added Tax (VAT) and excise taxes on all imported petroleum products to the Subic Freeport, the tax will be reimbursed through zero-rating when the importers and sellers are able to provide proof that the products have been “sold to a duly registered locator and have been utilized in the registered activity/operation of the locator.”

Now hold your horses!

Taking gasoline stations inside the Freeport as an example, how do you think they will be able to get their proof? Are they going to ask everybody to show their CRTEs upon every purchase of gas? Are they going to construct separate gas pumps for tax-free and with-tax gas prices?

And how in the world can it be proven during purchase that the gas will be utilized in the registered activity and operation of the locator?

Oh yeah, here is RR 2-2012’s answer: “joint supervision over the facilities with the BIR, through the assignment of revenue officers.”

Sure. Add more “righteous” personnel to the mix. Pathetic!

Bottom line, RR 2-2012 tramples on RA 7227. It does not matter if BIR will reimburse the tax later. By law, they cannot apply this tax in the first place.

RR 2-2012’s Repealing Clause states that, “All regulations, rulings or orders, or portions thereof which are inconsistent with the provisions of these Regulations are hereby revoked, repealed or amended accordingly.”

I think it is questionable that a mere government agency regulation can override a law, RA 7227, legislated by the Philippine Congress.

While we can certainly commiserate with the BIR in what is reported to be rampant smuggling resulting to BIR revenue losses, this is a problem better coordinated with other government agencies like the Bureau of Customs.

It is very disconcerting that investors and locators are the ones who will be penalized and forced to take the brunt of additional bureaucracy when the solution to the problem simply lies in government agencies doing their jobs. Put another way, isn’t corruption the basic problem that this regulation is trying to solve?

RR 2-2012 will take effect on March 3, 2012 or fifteen days following publication in a leading newspaper of general circulation.

We therefore appeal to Finance Secretary Cesar Purisima and BIR Commissioner Kim Jacinto-Henares to rescind RR 2-2012, and to our legislators in congress and President Aquino to repeal this ineffective, overreaching, and burdensome regulation.

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The Philippine Economy: Up, Down, What?

by Prof Danny Piano; February 2012 Issue


Ask somebody, anybody, from street vendors, media people, politicians, to businessmen, pundits, even economists, about the Philippine economic outlook for 2012 and you’ll get answers from one end of the spectrum to the other.

Understandably so. These are turbulent times. Nobody knows exactly.

Let me enumerate some of the more recent forecasts:

Cristino Panlilio, DTI Undersecretary: The prospect for manufacturing is very good because of the projects that we registered in 2010-2011. The country’s goal for higher exports of finished products would be supported by the government’s competitive strategies that aim to promote more finished products in selected industries.1

Ruperto Majuca, NEDA Asst. Director General: The GDP was estimated to have grown only between 3.6 and 4 percent in 2011. In the fourth quarter alone, GDP grew faster than the third quarter’s 3.2 percent but the expansion did not reach 5 percent as it earlier forecast. Almost definitely, exports contracted due to the debt crisis in Europe and the logistics disruption in Asia.2

Miguel Varela, PCCI President: Expect positive growth in the economy in 2012 but government should ensure that policies be more flexible to meet investors’ needs. It appears that while our competitiveness ranking has been improving, the cost of doing business remains significantly challenging. We need a more proactive engagement with government in lowering the transaction costs and time involved in opening a business and in closing one as well.3

Babe Romualdez, Phil. Star Columnist: It would seem that 2012 will be a relatively good year for the Philippines despite the economic downturn that European countries are experiencing due to the continuing debt crisis. For one, remittances from our “unsung heroes” – the reliable overseas Filipino workers – are expected to grow with continued strong demand for our workers abroad.4

Amado Tetangco, Central Bank Governor: The Philippine economy is facing major risks from abroad that could limit its growth prospects in 2012. Although the country enjoys sound macroeconomic fundamentals, and strong domestic demand, the economy could still be hurt by developments in Europe, the United States and China. The 2012 global economic outlook has deteriorated and that there would be more volatility and uncertainty that could affect the Philippines.5

Edwin Lacierda, Presidential Spokesperson: Our concern should always be high inflation as it would mean higher prices and all those consequent factors. [Pressures on global commodity prices are seen to continue to abate amid weaker global growth prospects. Due to these developments, the Philippine economy is likely to face external headwinds in 2012.] We believe that we would be able to weather whatever storms that would be coming as long as we manage the economy properly. The Aquino administration remains optimistic that the inflation outlook will remain within the target range.6

Singapore’s DBS Group: The peso is expected to trade at 45.50 to the dollar in the first quarter of 2012 as it fails to resist the current of eroding legal tender in Asia. The local money is unlikely to buck the trend of weaker Asian currencies despite a relatively strong showing in 2011. [Current FX rate is P42.84:$1] 7

United Nation’s World Economic Situation and Prospects 2012 Report: In East Asia growth is projected to decline to 6.9 per cent in both 2012 and 2013. China, the biggest economy in the region, is also expected to slow down from 9.3 per cent to 8.7 per cent growth in 2012. A major deceleration from China, however, would represent a more pronounced slowdown for the rest of the region.8

Arangkada 2012 Forum: While Filipinos are competitive in the world job market, the country’s competitiveness has declined. The Philippines is being left behind by most neighbors in too many measures of competitiveness. The Philippines is on a downward trajectory in international competitiveness rankings.

There you are. So what do you think?

A few things we are quite sure of: The Foreign Direct Investments (FDI) to the Philippines is one of, if not the lowest in southeast Asia; our dollar reserves are at its highest due to limited government spending; our imports are much higher than our exports; our labor rates is one of the highest in Asia; our electricity rates is the highest in Asia; corruption, followed by bureaucracy, lack of infrastructure, and policy instability are still on top of the list of the factors why investments would rather go elsewhere; OFWs are still sending a ton of remittances and keeping the Philippines afloat; Filipinos are an optimistic bunch of people.

What about the Subic Bay Freeport? I would be excited to get my hands on the 2011 economic data from SBMA but, unfortunately, it is not yet available as of this writing. It should be by the time of the SOFA, though.

So what then should we expect the economy to be in 2012?

Because of the expected global economic impacts, it would, unfortunately, be down, not up. However, the bright side is that we would likely be doing better than a lot of other countries.

Yes, Filipinos, are a bunch of optimistic people. Me included.


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1. http://www.mb.com.ph/articles/347054/manufacturing-to-flourish-in-2012
2. http://www.philstar.com/nation/article.aspx?publicationsubcategoryid=200&articleid=771473
3. http://www.mb.com.ph/articles/347056/pcci-optimistic-growth-calls-investorfriendly-policies
4. http://www.philstar.com/Article.aspx?articleId=764939&publicationSubCategoryId=66
5. http://business.inquirer.net/36381/philippine-economy-faces-growth-threats-in-2012
6. http://www.pna.gov.ph/index.php?idn=&sid=&nid=&rid=400183
7. http://business.inquirer.net/36445/peso-seen-at-45-50-to-1-in-q1
8. http://www.pna.gov.ph/index.php?idn=&sid=&nid=&rid=399162

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Honoring of COLR by Banks

by Prof Danny Piano; January 2012 Issue


On the second work day of the new year, the Subic Bay Freeport Chamber of Commerce sent a letter to SBMA Chairman and Administrator Roberto Garcia regarding the ineffectivity of the COLR as a financial instrument.

The COLR, short for Certificate of Ownership of Leasehold Rights, was devised and first drafted by the SBMA in 2009. This was later implemented early in 2010.

Under Section 5 of its General Provisions in the Implementing Rules and Regulations (IRR), it declares as policy for the SBMA to adopt an accurate, systematic, and comprehensive leasehold rights registration and information system, which shall:

  1. Enhance the value of leasehold rights over SBMA real estate properties;
  2. Protect the integrity of leasehold rights in conformity with the original terms and conditions of the Lease Agreement or Lease Development Agreement;
  3. Concretize ownership of leasehold rights through the issuance of a Certificate of Ownership of Leasehold Rights; and
  4. Regulate conveyances of SBMA real properties by the issuance of a certificate of ownership of leasehold rights and recordings of all transfers and encumbrances involving said real properties.

For all intents and purposes, the COLR is considered a title to leased properties which are:

  1. Duly registered;
  2. Technical survey done and approved;
  3. Property properly insured; and
  4. Corresponding titling fees paid.

The COLR, as originally intended, has the potential of being an excellent financial devise. It was expected to enhance the commercial value of the leasehold rights and should effectively facilitate commercial transactions and standardize all documents pertaining to loans and financial agreements entered into by COLR owners.

All good and well, especially since the acquisition of a COLR is voluntary (after the Chamber’s insistence of it being so).

The COLR, in short, when acquired and paid for by a locator is expected to be a valid collateral instrument in a bank loan application.

Regrettably, this has not happened. Banks do not consider the COLR as a valid collateral.

But can a COLR be actually considered a valid financial instrument? It should be.

According to the International Accounting Standards (IAS) 32 and 39, a financial instrument is defined as “any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.”

A financial instrument, therefore, is a tradable asset of any kind, either cash or evidence of an ownership interest in an entity. The COLR is an evidence of a title to an asset, specifically, ownership of a prepaid long-term lease; therefore, it is a financial instrument.

The ability of locators to use acquired COLRs as collateral in loan applications with the banks is a crucial tool in the financial development of the Subic Bay Freeport. This is essentially not different from any company using their assets to raise working capital.

However, the passive posture of the banks in the Philippines towards the COLR puts any locator in the Subic Bay Freeport in an awkward position. In fact, some locators, after investing in the acquisition of COLRs were surprised later of the banks’ policy of not honoring the COLR as valid collateral.

The Finance Committee of the Subic Chamber, headed by Director Tom de Bruin, tried to resolve this issue in a practical way by working with the previous SBMA administration but without much success. The banks will still not accept the COLR as collateral.

But perhaps the banks only need to understand more what the COLR is. Perhaps the SBMA only needs to proactively explain and guarantee the validity of COLRs. Perhaps the banks only need to be encouraged to be more responsive and be open to contribute to the development of the Subic Bay Freeport.

Since solving this issue is crucial in the economical development of the Subic Bay Freeport, the Subic Chamber requested the assistance and intervention of Chairman Garcia and the SBMA in an effort to finally resolve this important matter.

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The Year That Were

by Prof Danny Piano; December 2011 Issue


Wrong? Well, it just felt that way. While compiling the report for the upcoming General Membership Meeting, many of the things the Subic Chamber accomplished seemed like things that were done more than a year ago, maybe more. But not.

We were actually able to squeeze way more than a year’s worth of work in 2011… and we’re not even done yet.

So let me just provide a brief of the things we have done this year.

Early in the year, we were preoccupied in trying to persuade the newly elected President Noynoy Aquino to reconstitute the SBMA Board of Directors. But, being preoccupied with one thing does not necessarily mean we do nothing else.

In fact, we have written the President three letters in as little as a few weeks in between. The second was about our support for the Open Skies Policy and the third was requesting the fast-tracking of the ASEAN-India Free Trade Agreement (AIFTA). The first two we wrote late in the year prior and the last one early in January. That was quite a busy time. We were busy lobbying. We were being interviewed by reporters left and right. We were newsworthy. Eventually, it all paid off.

  • New SBMA directors—appointed;
  • Executive Orders 28 and 29 for Open Skies—issued;
  • AIFTA—approved!

Early in the year, we also organized our annual State of the Freeport Address. This one became the most attended SOFA in the Subic Chamber history. The first time, too, that the newly appointed SBMA directors and almost the entire Olongapo City government attended.

Collaboration between the SBFCC and the SBMA was at its highest in 2011. We met with no less than SBMA Administrator Arreza almost on a weekly basis. We got a lot of things done. We were part of the SBMA Traffic Safety Board, we collaborated with the Visa Processing office, and more. The SBFCC even participated in SBMA’s strategic meeting. The close collaboration was culminated by SBMA’s offer of an office space for the SBFCC at the SBMA Regulatory Building for closer cooperation. That is exactly where we are now located.

Not only with SBMA, we have also heavily collaborated with the Philippine Chamber of Commerce and Industry (PCCI). We have started to work with the Employers Confederation of the Philippines (ECOP). In fact, it was the first time ever that ECOP awarded a Subic Bay Freeport locator for good labor practices.

Going global, the SBFCC is also now a member of the World Chambers Network.

We became very busy, too, with various other issues including the Redondo Coal-Fired Power Plant issue, use of senior citizen cards, and utility rates increases where letters and position papers and attendance to public hearings were made.

We made sure to do our best to help individual problems of members. As Administrator Arreza aptly put it, “the SBFCC is the complaint desk of SBMA.” We do get many of the complaints before SBMA does after all. It is not uncommon for the Chamber office to receive requests for assistance for days on end.

On the flip side, we do get requests to grace or speak on events such as company openings, anniversaries, or school graduations by members—a welcome breathe of fresh air. Free food and sometimes a lei to boot. What can I say?

Since a coin actually has three sides, we get many solicitations as well.

Financially, the Chamber is in good financial standing. We have actually broken all records since 1995 in terms of gross income. We also expect to break the membership record soon. We had continuous increase in both membership and income since 2009 so we must be on the right track.

Not all business, one of the Subic Chamber’s advocacies is social responsibility. In this regard, we helped organize the very first Subic Bay Freeport Summer Sports Festival and the highly successful and most attended International Coastal Cleanup at around 6,000 participants. When typhoon-related disasters struck, we were there to help those that were affected. We even donated relief goods to as far as the province of Bulacan.

We also had our Annual Blood Drive. This particular event is always eagerly anticipated by the Philippine Red Cross (PRC) because of the considerable blood donations that we are able to provide to them. In fact, the PRC awarded the SBFCC with a certificate for this achievement sometime during the middle of the year.

Finally, we just did the SBFCC Board of Directors election. You’ll have to wait for the official announcement during the GMM but let me just congratulate not only the winners but everybody who ran. Winners or losers, the Subic Chamber always has a place for members who are willing to serve for the sake of the Subic Bay Freeport.

So yeah, it seems like we have done more than a year’s worth of work—2011 felt like “the year that were.”

…and don’t forget our final project for the year—the Toys for Tots program this December. Nailed.

Friends, Happy Holidays!

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Success, It’s Mostly Just a Choice

by Prof Danny Piano; November 2011 Issue


Do we need incredible talent or luck to succeed? Not really according to writer Jeff Haden who said that for any of us, in almost any field, success is but a decision that we have to make.

Sounds too general or vague even? But let’s see more of what he has to say about it:

“True story: I’m eating dinner with two old friends. One says, “I hate being fat. I’ve tried everything but can’t lose weight. What do you think?”

“I don’t think you want to lose weight,” I said. (I know, kind of blunt. Normally I would deflect and evade, but I know he wants to hear what I really think.)

He raises an eyebrow. “Really.”

“Really,” I say. “If you wanted to lose weight you would. But you’ve chosen not to, and that’s okay. The only problem is you’re beating yourself up for something you choose not to do.”

Why do I think that way? We all know how to lose weight: Eat less calories than you burn and voila! You lose weight. Sure, genetics and metabolism and glandular disorders can make losing weight harder, but the fact remains that everyone who eats fewer calories than they burn loses weight. Losing weight has nothing to do with a breakthrough diet or an innovative workout regimen or somehow flipping a magic fat-burning switch… and everything to do with deciding to eat less calories than you burn.

Losing weight is a choice. So being overweight is a choice too.

Does this makes sense? I think it does. It’s not too difficult to make analogies to the example he narrated.

Many of us often like to think that circumstances, or lack of connections, or unlucky breaks are the reasons we are held back from succeeding. But aren’t we just shifting the blame somewhere else just by thinking this way?

According to Haden, the only things truly holding us back are the decisions and choices we make.

“If you want to get promoted but haven’t, it’s almost never because your boss is unfair. Instead you decided not to work harder or take more initiative or take on more responsibility… or just play the corporate game the way it has to be played in your organization in order for you to “win.”

If you want your business to grow but it hasn’t, economic factors are certainly at play but you’ve also probably decided not to change your sales strategy or streamline your operations or just try new things in response to new market conditions.

You can see what makes other companies successful but you’ve chosen not to follow their example.

Aha! It hurts but moans aside, I think there is more sense to this stuff than meets the eye.

The blame, it seems, lie squarely within us. The good news is that, the power to succeed lies within us as well. It’s all about choices and decisions—OUR own choices and decisions.

And that includes what to let go.

“Think about your goals. Like most people, yours likely run the gamut: You want to create wonderful relationships, build a family, enjoy professional success, achieve something personal… you have lots of things you want to accomplish.

Great—but there’s a problem. You can’t have it all. And if you choose to try to have it all you will always be, to some degree, unfulfilled.

Say you want to raise a happy family. You can; it just takes effort and attention. Say you want to start a business. You can; you just have to work really hard. Say you want to write a book. You can; you just have to write, hour after hour and day after day, for however long it takes. Say you want to run a marathon. You can, as long as you do the training necessary.

But say you want to do all of the above—and all at the same time. Realistically that doesn’t work. Something will give. Your family needs you more than your running shoes, so training for a marathon will quickly hit the back burner. Your business needs you more than the publishing world, so after six months your book will look more like a pamphlet.

And that’s okay. We can’t do everything, but we can all do a few things really well. Decide what is most important to you, decide to focus on those things… and decide to let go of the things you may want to do but realistically cannot, at least for now.

The short of it is that you decide what you want and spend your energy achieving it.

Like running for public or private office, like running for the SBFCC Board of Directors (you know it’s coming), it would be very difficult to just will you way into it.

It will take a lot of work, a lot of time, a lot of patience. You need to be involved, you need to show your worth. Only then will it be inevitable. Only then will you succeed.

The cool thing is—it has been a decision that is yours to make all along—nobody else’s.

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Redondo Power Plant Monitoring and Visual Impact

by Prof Danny Piano; October 2011 Issue


Consistent with the Subic Chamber’s objective to be part of the Redondo coal-fired power plant multi-partite monitoring team (MMT) and to lessen its visual impact to tourism, the Chamber has written the project proponent, RP Energy, and the Department of Environment and Natural Resources (DENR) along this line.

The letter aimed to provide recommendations that will help ensure compliance of the Redondo plant to standard emissions and to mitigate its visual impact to tourism.

Subic Bay has become a premier tourism destination with billions of pesos invested by foreign and local companies. We seek to minimize the coal plant’s effect on us.

The recommendations, of which parts were extracted from the letter and listed below, are consistent with the mandate and principles of the SBFCC, which is to serve and represent its member businesses and to ensure environmental protection for the benefit of Subic Bay stakeholders.

1. Full transparency of emissions data

Emissions data that is open and readily available to the public—this is how we envision we can get participation and acceptance from the broadest range of stakeholders. We recommended to RPE and DENR, therefore, that emissions monitoring data and statistics be made available to the public in real time, or close to one, via an Internet website.

Compliance monitoring especially for environmentally-critical projects such as the Redondo power plant requires vigilance from DENR and various stakeholders. In the light of limited resources of the DENR, what better and cost-effective way to monitor emissions data than crowd-source the job to the very people who have interest in it.

The SBFCC believes that full transparency will gain DENR and RPE the trust of the public who has gone wary because of the perceived environmental impacts of the project.

2. Inclusion of the SBFCC to the MMT

The MMT is a required mechanism under the Environmental Impact Statement System (EISS) and that it aims to encourage public participation and greater stakeholder’s vigilance. The SBFCC aims to be part of the MMT.

The SBFCC is an independent, nonprofit, membership-funded organization founded in 1995 inside the SBF. We are actively involved in a number of areas and are at the forefront of issues, the environment included, affecting our member businesses, their employees, and their families. Our members come from some 20 countries around the world.

The SBFCC has the credibility and stature in the SBF community. We are committed, have a high sense of civic duty, are capable and readily available, and should be a good fit to the monitoring team.

The SBFCC, in fact, have been very much involved with the Redondo coal-fired power plant issue since 2005. We have attended all public hearings and have submitted several letters of which three were to the DENR.

We were surprised, therefore, upon knowing just this month that the Memorandum of Agreement on the Creation of the Multi-Partite Monitoring Team and Environmental Monitoring Fund was already executed in 2010 with the SBFCC not even considered. In fact, there was not one Non-Government Organization (NGO) on it which seems to be in violation of DENR Administrative Order No. 37 Section 11.0 (Composition of the MMT) which specifies, to wit:

“…In all cases, the MMT shall be composed of representatives of the proponent and of a broad spectrum of stakeholder groups, including representatives from the LGUs, NGOs/POs, the community, women sector, concerned PENRO and CENRO, with support from the Regional Office and/or the EMB, whenever necessary, the academe, relevant government agencies, and other sectors that may be identified in the negotiations leading to the execution of the MOA.”

In fact, even Olongapo City, which will be hugely impacted by the coal plant was also not included on the MMT MOA. In any case, the SBFCC reiterates its request that we be included on the MMT.

3. Mitigate visual impact of the power plant to tourism

While the circulating fluidized bed combustion technology to be used in the Redondo plant is considered “clean-coal” technology; while it can easily pass the standards as mandated in the Philippine Clean Air Act; the sad reality is that many people will still picture in their minds the dirty power plants of the past upon mention of a coal-fired power plant. This by itself will already have an effect on tourism around the Subic Bay.

There are a good number of tourism-related companies inside and around the Subic Bay Freeport. It is, therefore, imperative that the visual impact of the power plant to tourism be minimized.

The SBFCC suggests that the infrastructure, or at least the smokestack, be made to blend with the environment. Further, it would be best if the smokestack will have metal framing, like the one in the TCC Kuan-Tien plant in Taiwan, that will primarily serve as preventive maintenance access but from afar will look similar to a cell site tower. These should soften up the usually perceived menacing shape of the smokestack.

We hope that the aforementioned recommendations, especially our request to be part of the MMT, be given due consideration by RP Energy and the DENR.

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Reprise: Email Regarding the Redondo Coal-Fired Power Plant

by Prof Danny Piano; September 2011 Issue


Two weeks ago, on August 15, I sent to Subic Chamber members an email clarifying the issues surrounding the Redondo Coal-Fired Power Plant.

Boy, was I stunned with the flak I got from certain groups and individuals. Newspapers, blogs, social networks, emails, phone calls—you name it. Some from genuine environment warriors, who I have the highest admiration; some from self-proclaimed Johnny-come-lately “environmentalists;” yet some more are simply from opportunists who saw an opening for personal gain.

Some understood where I am coming from, some did not. Some used logic and reason to assert their case or provide advice; some just opened their mouths and thought whatever comes out is enough argument—which, at best, only proved a quote from good ol’ Abe Lincoln, “It is better to remain silent and be thought a fool than to open one’s mouth and remove all doubt.”

Those who know me never doubted the intentions. Although pale in comparison to environment warriors, I have done and been doing my part as best I could. Taking modesty aside for a second, how many companies have their own composting bins? Mine has. How many have actually rallied neighborhood kids on quiet Sunday mornings to clean up dirty canals in the city? I did. Who’s present in almost all eco forums and summits in this area? I was. How many have actually tried to look for and preserve heritage trees inside the Freeport? I did. I was born and grew up here. I love this place—very dearly; more than most.

So what was the fuss about? Well, mostly from newspapers or online stuff (ain’t it always) mentioning words like surrender, war, and battle, among others. Ironically, these words were never even mentioned in my email to Chamber members.

But what was the email about anyway? My apologies if it wasn’t clear enough to some.

The gist of it all is that the Subic Chamber has fought the coal-fired power plant tooth and nail since 2006. WE LOST.

One newspaper report said, “War on Subic coal plant losing battle, says trade group head.” One person wrote, “Can we know if the Chamber is still in surrender mode or is prepared to rejoin its members on the battlefield?”

Let me enumerate the facts:

  1. The previous Arroyo administration had already approved the coal-fired power plant;
  2. the Department of Environment and Natural Resources (DENR), in 2008, had already issued an Environmental Compliance Certificate (ECC);
  3. the current Department of Energy Secretary Jose Rene Almendras said the Philippines will continue to use coal “until such time that the renewables cost will come down to grid parity and where we can substitute renewable versus the traditional;”
  4. Presidential Spokesperson Edwin Lacierda had said that Malacañang will not stop the operations of the country’s coal-fired power plants amid protests from various sectors;
  5. President Aquino already gave his blessing to the project as he had given his blessing to the same project recently inaugurated in Cebu where he said, “While the power plant we are inaugurating today does not necessarily produce renewable energy, it does comply with the Clean Air Act;”
  6. finally, the work on the Redondo coal-fired power plant site has already been on-going since five months ago and the first phase expected to be completed by 2013 while the second phase and full project completion around 2015.

What surrender? What war? What battlefield? It was already a done deal. We already lost. While the Chamber won many issues in the past, we also lost some. We are like the proverbial bamboo that bends but is stronger than the oak that topples from strong winds.

In any case, the Subic Chamber does not, and will not, prohibit anybody in continuing to fight against the coal-fired power plant. We respect everybody’s opinions as much as we want respect on ours.

If it’s any consolation, the issue has awakened more people on the importance of preserving the environment. [Now, if we can only have the same vigor and enthusiasm in fighting the incessant gushing of sewage from surrounding communities into the bay, we would be made. Another Water Summit, anyone?]

Anyway, the Subic Chamber has to move on.

Strategy dictates that we have to make sure that the visual impact of the power plant to tourism is minimized. Strategy dictates that we have to lobby to be part of the Multi-partite Monitoring Team (MMT) to ascertain that the plant will actually, and continuously, comply with the law—the Philippine Clean Air Act.

These pragmatic and strategic actions the Subic Chamber cannot officially do and pursue if we will indefinitely continue to try to repudiate what was already approved by the national government.

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Safety in the Workplace – Statutory Requirements

by Prof Danny Piano; August 2011 Issue


Sure, we all have our own ideas on what safety in the workplace is. In the grand scheme of things, everybody needs to protect ourselves and our investments in the first place—even as we do have different notions on what that safety level is and the risks associated with it.

The thing is, that notion of safety, deliberately or unwittingly, is quite different and a lot of times less than the Philippine government requirements. And there lies the problem.

But are the requirements excessively stringent? Not quite. The Philippine government uses the Occupational Safety and Health Standards (OSHS) which was largely based from the U.S. Occupational Safety and Health Administration (OSHA) Standards. It is not unreasonable.

It was promulgated under Article 162 (Safety and Health Standards) of P.D. 442 otherwise known as the Labor Code of the Philippines. In short, it is based from a law, and we all know what happens when we violate the law, don’t we?

While the government, for lack of funds or manpower or “something” else, is sorely deficient in the enforcement and monitoring of the safety standards, it does not absolve companies from not following the rules or feigning ignorance.

I will not be able to cover every detail here, especially since different types of companies have different levels of safety needs; but let me enumerate the ones you absolutely need to have or know that are usually violated unsuspectingly.

Safety and Health Committee – OSHS Rule 1041 states that, “In every place of employment, a health and safety committee shall be organized.” This is not a token requirement; you need to submit an official list.

Safety and Health Workplace Policies – According to the Department of Labor and Employment (DOLE), “An occupational safety and health policy shall be formulated by each establishment addressing the priority safety and health concerns in workplaces.” Also, it is required that safety meetings be conducted at least once a month (OSHS Rule 1043). While the monthly meetings mentioned here may refer just to the Committee, a lot of companies, especially non-hazardous ones, seldom do this. Oh yeah, you need to keep minutes of the meetings, too.

Safety and Health Personnel – as business owner or manager, the law requires you to hire the applicable number of safety and health personnel such as safety officer, nurse, physician, dentist, and first-aid personnel. Not all may be required and the number will depend on the type of business and number of your employees (see OSHS Rule 1960: Occupational Health Services).

Training and Qualification – No, you cannot arbitrarily pick any of your employees and list them as your occupational health and safety personnel. Here are the basic requirements from OSHS Rule 1964:

First-Aider – Must have completed a course in first-aid conducted by the Phil. Red Cross or accredited organization.

Safety Officer – Must have completed the 40-hour Basic Occupational Health and Safety (BOSH) training.

Nurse – Must be licensed and must at least have 50 hours of training in occupational nursing. The latter requirement is a bit of a problem. It is usually the Occupational Health Nurses Association of the Philippines (OHNAP) that conducts this training and for some reason, there’s not a lot of training going on around this area (possibly due to lack of attendees).

Physician and Dentist – Not hard to find at all; you just have to shell a good amount of money out. You need to employ them in your workplace if you have 200 or more employees for non-hazardous and 100 and above for hazardous workplaces.

Personal Protective Equipment (PPE) and Devices – OSHS Rule 1081 states that, “Every employer… shall, at his own expense, furnish his workers with protective equipment…” This rule is violated whenever employers require their employees to buy the PPEs like goggles, gloves, safety shoes, and the like, especially as condition for employment.

Fire Extinguishers – OSHS Rule 1944.05 states that portable fire extinguishers shall be thoroughly examined, recharged, or repaired, at least every year. In general, for ordinary workplaces, a fire extinguisher should be available within 15 meters from any point in the work area. Better dust those fire extinguishers off.

Fire Drills – Rule 1948.03 states that, “Fire-exit drills shall be conducted at least twice a year to maintain an orderly evacuation of buildings, unless the local fire department requires a higher frequency of fire drills.”

Keeping of Records and Reporting – Yes, you need to do this, too (see OSHS Rule 1050: Notification and Keeping of Records of Accidents and/or Occupational Illnesses).

The above are just a tiny fraction of the rules and regulations on safety as required by law. They do differ as well from business to business but should be the basics of it.

Are you not compliant in any of the aforementioned? You’d better be or you will be in trouble sooner or later.

In any case, the above statutory requirements are there to protect you, your workers, and your investments. They aim to minimize accidents, fatal or non-fatal, caused by unsafe acts and conditions. According to studies, unsafe acts account for 88% of accidents while the latter accounts for 12%.

Safety is, of course, a global concern. In fact, the International Labor Organization (ILO) reported recently that more than 500 workplace accidents happen every minute and one worker dies every 15 seconds.

Don’t be part of the accident statistics, safety up.

(Prof. Danny Piano is a certified OSH safety officer and Premier Platinum member of the Phil. Red Cross.
His company has zero accidents in 16 years of operation inside the Freeport.)

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The VFA, Staying In or Going Out?

by Prof Danny Piano; July 2011 Issue


T“he VFA is a failure, because after 10 years, the AFP has not modernized sufficiently to keep up with our Asian neighbors and the terrorist groups are still active… because treaties are considered as part of the laws of the land, congress can unilaterally abrogate the treaty on its own,” so said a senator. But is it, and can they, really?

More importantly, what impacts will the VFA, or the absence of it, play in the current posturing of China in the Spratlys?

This issue is not inconsequential to us here at the Subic Freeport since we are literally facing the Spratlys and even China with just an expanse of water in between. We can, theoretically, swim on a straight line northwest and make landfall at the shores of China, or swim straight southwest and hit the Spratlys. Let’s see if we can make some sense out of this. Here’s a chronological brief:

  • 14 Mar 1947 – The RP-US Military Bases Agreement (MBA) was signed granting the United States lease for bases including Subic Bay.
  • 30 Aug 1951 – The Mutual Defense Treaty (MDT) was signed between the Philippines and the United States. It declares that both nations would support each other if either were to be attacked by an external party.
  • 7 Jan 1979 – the RP-US Military Bases Agreement was revised, turning over the sovereignty of the bases to the Philippine government.
  • 15 Oct 1986 – The 1987 Philippine Constitution (Section 25, Article XVIII, Transitory Provisions) declared that after expiration of the MBA in 1991, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty...
  • 13 Sep 1991 – The Philippine Senate rejected the ratification/extension of the treaty.
  • 24 Nov 1992 – The American Flag was lowered in Subic Bay for the last time.
  • 27 May 1999 – The RP–US Visiting Forces Agreement (VFA) became effective after ratification by the Philippine Senate.
  • 11 Feb 2009 – the Supreme Court of the Philippines sitting en banc decided that the VFA is constitutional.

So, the VFA is constitutional. But what is it about anyway? The VFA is directly about the treatment of visiting armed forces between the Philippines and the US, that’s all. Indirectly, it paved the way for bilateral military exercises and defense cooperation between the RP and US and is construed to be an implementing instrument to the RP-US Mutual Defense Treaty.

Is it a failure then because it has not modernized the Armed Forces of the Philippines? I have to respectfully digress. The VFA document does not mention, not even in passing, that it was created to modernize the Philippine Armed Forces or to neutralize terrorist groups. How can it fail in something it is not primarily devised to do?

Of course there could be other confidential documents relevant to the VFA such as the 2002 Mutual Logistic Support Agreement (MLSA). But these are just secondary documents that can be changed almost at whim as long as these do not contradict the VFA.

But is the VFA a lopsided agreement? I think not. VFA-1 (Regarding the Treatment of United States Armed Forces Visiting the Philippines) and its complementary VFA-2 (Regarding the Treatment of Republic of the Philippines Personnel Visiting the United States of America) are very similar. How can a mirrored document be lopsided compared to the other?

Sure, we all know that bilateral military exercises and other activities are conducted in the Philippines often. Those activities are either beneficial or harmful to the Philippines depending on what side you are listening to. And there’s no shortage of it from both sides, too.

But this is beside the point, the Philippines can say no to any bilateral military exercises at any time. The VFA does not automatically approve a military exercise.

Can congress unilaterally abrogate the treaty on its own? Here, I have to agree. But, President Aquino is for the “fine-tuning” of the VFA, not its abrogation. With a congress whose majority belongs to his political party, would it happen? Not.

It could be costly but the best way to settle the impasse (if you’d call it that) is to call a national referendum. So how do you think the citizens of the Philippines would vote? The VFA will pass, I’d have to predict. Two reasons: 1) In 1991 polls conducted regarding the stay of US bases indicated that 80% of Filipinos wanted the bases to stay; 2) The present and potentially explosive Spratlys issue with China.

This issue with China actually gives the VFA a huge boost. Without the US on our side, China will simply treat us as an annoying bug that, militarily, may not be even worth the effort of a swat. We have no cover to defend ourselves—except the RP-US Mutual Defense Treaty of which the VFA is part of.

According to the late Senator Blas Ople, who sponsored the VFA in 1999, our military alliance with the US “remains a major anchor of our national safety, security, and freedom.” How prophetic and spot-on even 12 years after.

Will the VFA stay or go? I’d say the former. But that’s just me.

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Two Popular Business Management Strategies: Fabs or Fads?

by Prof Danny Piano; June 2011 Issue


As entrepreneurs, we are always looking for ways to better run our companies. One option is to adapt a battle-tested business management strategy. But what?

There have been too many since time immemorial and some still work including Frederick Taylor’s 18th century Scientific Management Theory which maintains that it is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that faster work can be assured.

In more recent memory, various management strategies started popping up: Matrix Management and Six Sigma, among others. It is not uncommon to run into managerial job advertisements looking for people with experience in, say, Six Sigma. Just go to Jobstreet and you’ll see a ton of job openings from big companies—Accenture, HSBC, John Clemens—all looking for belted applicants.

While these strategies are serious (fabulous, some consider), I recently ran into an article by Geoffrey James of bnet.com which debunked eight management strategies in a hilarious manner. I had to share at least two of it:

Matrix Management

The theory: People with similar skills are pooled for work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a project manager while working on that project. Therefore, each engineer may have to work under several managers to get their job done.

The reality: An endless, debilitating turf war. Each manager fights to be considered the “real” manager of the personnel. They do this by forcing everybody to attend required “staff meetings” and by finding extra hoops to jump through and extra rocks to fetch, in order to prove that that they’re the ones who are really in charge.

The result: All productive work grinds to an immediate halt. Management becomes completely consumed in arguments over who will do what and when. Because the system creates more managers, the organization quickly becomes top heavy. Eventually, top management figures out that this is a terminally bonehead idea and puts one person in charge.

Opinion: I actually worked in an organization that had matrix management. Everyone reported to three managers, and each manager insisted upon having a mandatory 3 hour meeting every week (no agenda). Their manager also required everyone to attend a one hour mandatory meeting every week — to “facilitate communication.” That was 25% of the work week wasted in nonsense.

Your Strategy: Make sure you can access the Internet inside your company’s conference room. During the unending turf hassles, you can answer emails, surf the web, play games, etc. Otherwise, you have to wait this one out. It won’t last for more than a year.

Six Sigma

The theory: The idea is to improve the quality of your processes by identifying and removing the causes of defects. You assign various people different colored “belts” (like a karate class) based upon their expertise in the Six Sigma methodology. You also get a series of defined steps and quantifiable financial targets.

The reality: It creates a hierarchy of “belted” experts who run around the company pretending that they know how to do other people’s work better than the people who do the work. Endless meetings ensue, with little or no effect. The consulting firm who’s implementing the Six Sigma walks away with a fat paycheck.

The result: Wasted time and wasted effort. According to one quality control expert quoted in Fortune magazine, “of 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since.” On the other hand, it’s spawned an entire industry of “consultants” who make a living sucking productivity out of your firm.

Opinion: Oh, please. Potbellied managers running around with little colored belts like they’re part of some Bruce Lee movie on Bizarro world. That’s exactly what’s going to help a company get out of the doldrums. You couldn’t make up this stuff, it’s so incredibly stupid.

Your strategy: If your company implements Six Sigma, you’ll be paying a Six Sigma “tax” for about two years. Push out all activities by about 20 percent to account for the time wasted in pointless meetings. After two years, the managers who implemented it will either be fired or move on, in which case the Six Sigma process will fall by the wayside.

So, are these strategies fads then? Not necessarily. Motorola, the company that created Six Sigma seemed to be doing well still. On the other hand, Yahoo, under the leadership of CEO and founder Jerry Yang thought Matrix Management as a fab strategy, tried it, and failed. He was replaced by Carol Bartz in 2009.

Bottom line, go ahead and read up on management strategies but only select parts that will work for you. You do not have to blindly embrace one strategy over others. You do not have to be boxed in. You can pick and choose.

In the end, a strategy can only be fabulous if it works for you; not if it only works for others.

Is yours fab or fad? You tell me.

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SBMA Transition Woes?

by Prof Danny Piano; May 2011 Issue


I am of course referring to the latest headline of the Philippine Daily Inquirer—“Transition woes for Subic locators.” This is certainly an exaggeration from “a bit of apprehension” which was the actual statement I made. But, this is what newspapers do anyway. They need to have eye-grabbing headlines to sell papers. All is well and understood.

Not reading newspapers lately? Let me give the skinny.

Last week, I was asked by the Inquirer, “How is the SBFCC preparing for the imminent transition of the SBMA leadership? And what are the big ticket items that are foremost in the minds of the locators during this time.”

And my answer:

The Subic Bay Freeport Chamber of Commerce, while still having a bit of apprehension, feels that there will be a lot smoother transition this time around than in the past. We were informed that SBMA Administrator Armand Arreza will be staying until the end of May at the request of incoming Administrator Rafael Reyes to assist in the transition. This is an excellent sign! It instills confidence to investors.

There are still some concerns that the SBFCC have. First and foremost is the number of pending matters, almost half a year’s worth, that are still to be tackled by the recently appointed SBMA Board of Directors. The SBMA Board has been working intensely to resolve this, though, and the SBFCC really appreciates it.

Another major concern is the huge debt servicing that SBMA is currently facing for loans from the developments of the Subic Bay International Airport (SBIA) and the New Container Terminals 1 & 2. We hope SBMA’s request for debt payment restructuring will be approved. Otherwise, only very limited options are left remaining: work feverishly to encourage more investments, further streamline SBMA (they already closed FSC), or come up with other ways of generating additional income from existing locators. We obviously cannot agree with the latter.

All things considered, the SBFCC is expecting and is optimistic on the continuing growth of the Subic Bay Freeport.

When asked about the debt, I mentioned that the SBMA currently has to pay about P800 million a year. Also, that the reason why the debt ballooned was because the expected income from the airport and container terminals became very slow to materialize because of the global financial crisis. Further,

Its current income and operational expenses will not support full payment of the debt servicing. There are still a lot of benefits that the national government is getting, though, since there had been an increase in the income of Bureau of Customs and Bureau of Internal Revenue. None of these goes to the SBMA.

So there. Now, what should we expect from SBMA? I am actually encouraged that the transition will be this smooth. While it usually takes at least six months before a new leader of a large organization gets his bearing, a few things is expected to shortened the transition: 1) Rafael Reyes should be somewhat familiar with the workings of SBMA since he was a former deputy administrator of corporate planning during the early days of SBMA; 2) Roberto Garcia had a couple of months head start since he was previously appointed as a SBMA Board Director last February; 3) Rafael Reyes requested that Armand Arreza stay a few weeks more to further smoothen the transition.

But should we expect attempts by SBMA to generate additional income from existing locators? Frankly, I think this is a given. In fact, there were a few of these already: the Certificate of Ownership of Leasehold Rights registration and business license plates are good examples. As long as the costs to us locators are within reason and there are benefits derived therein, acceptability will not be a huge problem.

In the meantime, we are working hard with SBMA to try to encourage more investments. We are also lobbying with the national government—the ASEAN-India Free Trade Agreement is a good example—to expand the businesses of existing locators, primarily our manufacturers.

The SBFCC does hope to continue our close collaboration with SBMA and with its incoming leaders.

Transition woes? Not really. A bit of apprehension? Understandably so.

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Pocket Open Skies Policy – At Last!

by Prof Danny Piano; April 2011 Issue


Woohoo! You bet I’m excited! It was more than a decade ago when I last took a flight out of the Subic Bay International Airport (SBIA). Prior to that, I was even able to get a flight to Manila in the morning and back in the afternoon on the same day. There was no need to spend all eight hours on the road if I drove instead.

Yup, I missed those days, even if it did not last long. The lack of passengers later made it untenable for Air Philippines to operate. The closure of casinos also halted the flights by Mandarin Airlines. Further, the absence of the Fifth Freedom right for airlines, which does not allow connecting flights, limited the number of potential passengers and, thus, dampened their interests.

But there was FedEx. The operation of the SBIA was still economically feasible, therefore. With the increase in investments inside the Subic Bay Freeport, it was just a matter of time before commercial passenger airlines will again regularly operate.

But, FedEx left in 2009.

Anticipating that the SBIA might totally close in the absence of a replacement logistics airline, the SBFCC formed the SBIA Revival Committee.

It was composed of various organizations including representatives from the SBIA, the Taiwan Chamber of Commerce, and tourism-related companies. We had many meetings, even workshops, with the hope of encouraging airlines to set up shop here. But, we were grasping at straws. The continuous development of the Diosdado Macapagal International Airport (DMIA) and the recent completion of the Subic-Clark-Tarlac Expressway at that time made it conveniently possible to fly out from the Clark airport instead of Manila. Good for us.

But what about our airport?

While a few pilot training schools came in and Pacific Pearl Airways, these were not enough to sustain the airport’s operation, not to mention the payment for the huge debt that SBMA is still servicing for the reconstruction and upgrade of the airport during the early days.

We were desperate. The committee’s work seemed to be for naught and we were losing heart. We do not want the SBIA to close down.

Then a glimmer of hope—the open skies policy. On November 8, the SBFCC wrote President Aquino endorsing a pocket open skies policy for the SBIA.

Five days later, while at Subic, the President announced that the government “will start liberalizing its civil aviation industry as a means to increase tourist arrivals in the country.”

It took a while before anything was officially put on paper considering the opposition from the country’s flag carrier and other airlines who expect more competition and concerned about the absence of reciprocity.

This is not hard to understand. However, while a nationwide open skies policy may not be totally advantageous to all, pocket open skies for airports such as the SBIA, which are not regularly serviced by existing passenger airlines anyway, can be very beneficial.

On March 14, President Aquino at last signed two executive orders, EOs 28 and 29. EO 28 mandates the constitution of the Philippine Air Panels (PAP) to negotiate the Air Services Agreements while EO 29 grants the “third, fourth and fifth freedom rights and unrestricted capacities and frequencies to foreign air carriers, among others.” This is exactly what the Subic Airport need.

Obviously, these executive orders by themselves will not magically bring in airlines like flies on a piece of, well, pie. It is the market forces that dictate on any business undertaking after all. Any airline will only come in if there are enough passengers, inbound and outbound, period.

But, it is a good start. We now have a larger potential market. Like the SCTEx that brought in hundreds of thousands of tourists to the Freeport, we are hoping that the pocket open skies will do the same. It is up to us to make the Freeport worthy of a tourist visit. And yes, with a thriving airport, I may be able to fly in and out of the SBIA once again. That makes me excited!

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Opening Remarks During the State of the Freeport Address

by Prof Danny Piano; March 2011 Issue


SBMA Administrator Armand Arreza, the newly appointed members of the SBMA Board of Directors whom we will recognize later in the program; Senior Deputy Administrators, Deputy Administrators, and officers of SBMA; Olongapo City Mayor Bong Gordon, the City Council of Olongapo: Hons. Gina Perez, Tet Marzan, Bugsy Delos Reyes, Rodel Cerezo, Ellen Dabu, Edna Elane, Eduardo Piano, and recently awarded Most Outstanding Councilor of the Philippines Edwin Piano, both my brothers (I’m the eldest but not necessarily the oldest looking), City and Barangay officers of Olongapo City; Department of Labor & Employment Director for Region 3 Leopoldo De Jesus, representatives of the Bureau of Immigration; Greater Subic Bay Tourism Bureau Chairman George Lorenzana, Linda Lim and other GSBTB officers, Metro Olongapo Chamber of Commerce President Bong Pineda and MOCII officers; Subic Chamber directors, the elite members of the Chamber President Circle, Chamber members, members of the media, friends, ladies and gentlemen.

Good afternoon and welcome to the 6th State of the Freeport Address!

The Subic Bay Freeport Chamber of Commerce started the State of the Freeport Address, or SOFA for short, way back in 2006. Incidentally, that very first SOFA happened only a few months after Chairman Salonga and Administrator Arreza were appointed to their positions. We have been doing the SOFA yearly since then. It is a success every time, and obviously so. The SBMA wants a wide audience of major stakeholders to report its plans and accomplishments to. On the other hand, a Chamber of Commerce, representing locators and other stakeholders, wants to hear it straight from the leaders of SBMA. A perfect collaboration!

The past several years saw the tremendous growth of the Subic Freeport; this despite the global economic recession that started sometime around 2008, but has, fortunately, seemed to have bottomed out, at least in the Philippines. We now have the highest number of workers ever in Subic Bay’s history at close to 90,000; the total cumulative investments is at more than $7 billion US dollars with $5 billion in just the last six years!

Sure, one can look at these data one way or the other. The pessimists will compare the Freeport’s progress with other developed countries and will find it miniscule, trivial, and irrelevant. The optimists will compare where we are several years ago with where we are right now—and find progress! I belong to the latter.

The past few years saw increased collaboration between SBMA and the Subic Chamber. This has exponentially increased during the past several months. The Subic Chamber meets with SBMA almost on a weekly basis; with no less than Administrator Arreza himself. Sometimes, I even wonder how he is able to endure the Chamber’s constant barrage of complaints. Maybe one reason for the increased graying of his hair; but, we do provide suggestions and possible solutions to our grumblings, too. Obviously running a private business is a lot different than running a government agency. Many of the rules and regulations that SBMA has to implement are statutory in nature, which, only an act of Congress or an order by the President can amend.

A couple of years ago, on this same stage, I mentioned the importance of this same collaboration and the benefits of working together. We have made a lot more progress since then. We have been collaborating with SBMA to improve visa processing for one. A few weeks ago, SBMA launched the new process. It’s still not perfect but is an improved version of the previous one. We have been trying to make this process doable in a one-stop shop setting. Easier said than done because it entails close cooperation between SBMA’s Visa Processing Office, SBMA’s Labor Department, the Bureau of Immigration, and the Department of Labor & Employment, or DOLE, for short. Getting everybody in the same building is already a challenge in itself. DOLE representatives are here with us now, so are representatives from the Bureau of Immigration; I have no doubt that they will work with us to make it happen.

The CRTE processing, the accreditation of outside companies doing business in the Freeport, the GSIS insurance processing, are but some of the things the Subic Chamber have been working with SBMA to streamline. We have already met with GSIS and they will already set up shop here. In fact, the Subic Chamber offered an office space for GSIS and they accepted. Late next month, every locator here should be able to process GSIS insurance payments on a more timely manner and way more conveniently.

Finally, to make collaboration and working together more closely interwoven, Administrator Arreza offered the Subic Chamber an office within the Regulatory Building. The new building where we are going to move is beside the Subic International Hotel and will be fronting Ayala’s Harbor Point. We will be in the middle of where the action is. We will be setting up a locator’s lounge chock full of information about the Freeport. In fact, Administrator Arreza and I already signed a Memorandum of Agreement finalizing this arrangement. We will be moving to that office by the end of next month. This, of course, does not mean that we can no longer disagree, you can be certain that we will, but there will be more collaboration and cooperation to sort things out.

Not only has the Chamber been involved with SBMA, we have been more involved on a national level as well. Since last November alone, we have written President Noynoy Aquino three letters regarding issues facing us all. One was about the reconstitution of the SBMA Board of directors, which even made it on national newspapers. The other one requests an open skies policy for the Subic Bay International Airport, again, landing on newspapers. The last one was about the fast-tracking of the ASEAN-India Free Trade Agreement, or AI-FTA, which should open up a more than one billion potential consumer market for our manufacturers and service providers.

Well, we now have our SBMA Board of Directors so our batting rate is now one out of three. The open skies policy, on the other hand, even if not yet officially proclaimed, the President already said that he is for it. Regarding the ASEAN-India Free Trade Agreement, the Subic Chamber received a letter from the Department of Trade and Industry just last week that they are now accelerating the process for its approval. With just a bit of luck, we could soon have a 3 out of 3 batting average on national issues.

Not bad for an organization manned by three employees and a bunch of volunteers—and that’s what the Subic Chamber directors and committee groups are, in fact. We do not receive any compensation or honoraria. We are, for all intents and purposes, a bunch of volunteers wanting to make a difference!

It’s simple really, and everybody can do it; just volunteer and bear a tiny bit of burden of some of the tasks to making this place succeed—that’s it! That was how the Freeport was started in the first place—through volunteerism! Nothing trumps the hearts of volunteers after all.

A lot of good things have happened in and around the Subic Freeport. A lot more are in store for us, and I’m happy to say that the Subic Chamber has been a big part of it.

Sure, we’re not there yet. We still have a long way to go actually, before we can be at par with some of the more progressive countries in Asia. But bet on it, we are heading in that direction, politics regardless.

Sure, we will undoubtedly face challenges; we will have our trials and tribulations. But we will rise and continue to move forward.

A perpetual optimist I may be, but I have my reasons for being so. I was born here, I was raised here, I have seen the things that happened here. I should have a fairly accurate feel on what our prospects are, and you know what? I feel good about us. Yes, moving forward and up, we all are!

Thank you.

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The SBMA Board of Directors

by Prof Danny Piano; February 2011 Issue


Last issue, I presented on this same page the Subic Chamber’s letter to President Aquino requesting to reconstitute the SBMA Board of Directors. Looks like the President heeded our call. On January 10, we were treated to great news―the appointment of six new Board members! Together with two existing directors, it follows that there will now be a quorum to conduct business since the SBMA Board has a total of 15 members.

Here’s the official pronouncement during a press briefing by Deputy Presidential Spokesperson Abigail Valte:

As you may all know, the President mentioned last Thursday that there would reorganization in the Subic Bay Metropolitan Authority. And today, we would like to announce the appointees as members of the Board of Directors.

First, Benjamin Antonio III as a member of the Board of Directors representing the private sector; Philip G. Camara representing, again, the private sector, Ramon Sesdoyro representing the private sector; Norberto J. Sosa, again representing the private sector; Gerald Sam O. Del Rosario representing the business and investment sector; and lastly, Francisco H. Licuanan representing the business and investment sector in the Board of directors of the SBMA.

Briefing Room, 2/F New Executive Building, Malacañang, Manila
January 10, 2011; 12:00 hrs. EST

And so we celebrated the announcement and welcomed the new directors. Here’s a news clipping from the Philippine News Agency:

SUBIC BAY FREEPORT – Top executives of the Subic Bay Metropolitan Authority (SBMA) and the Subic Bay Freeport Chamber of Commerce (SBFCC) have expressed relief over the appointment by President Benigno Simeon Aquino III of new directors to the SBMA board, saying this would put the Subic agency back on track.

“This is good news. Now we can get back to work and resolve some unfinished business,” said SBMA administrator Armand Arreza after the appointments were announced by Malacañang recently.

Arreza said that a lot of pending matters have already accumulated before the SBMA board ever since Executive Order No. 2 (EO 2), which revoked the appointment of some directors, took effect in July 30 last year.

“But now, we have a quorum, so we can do business again,” Arreza added.

Following the new appointments, Arreza said that investors in the Subic Bay Freeport have likewise welcomed the arrival of the six new SBMA board members.

According to SBFCC president Danny Piano, business locators in Subic are thankful that President Aquino heeded their request to fill the void left by the unseated board members.

Piano said that the SBFCC wrote to President Aquino two months ago, requesting that the SBMA Board be reconstituted immediately. “We hope that the new directors can hit the ground running, and that they would help boost Subic’s status as a premier investment center,” Piano added.

The good news was quickly doused with cold water four days later, however. Former SBMA Chairman Francisco Licuanan did not accept the SBMA Board appointment. It was unfortunate that there seemed to be some miscommunication between Malacañang and Mr. Licuanan’s appointment to the SBMA Board. As it happened, Mr. Licuanan declined the position because he was not consulted about it and because he has other commitments.

The Subic Chamber is saddened by this turn of events. The SBMA Board again lacks the number to constitute a quorum and cannot, therefore, conduct valid business.

We are not expecting Malacañang to fill up the entire Board because of a pending case against EO 2. We are, however, hoping that President Aquino, busy as he is, will find the time to appoint one or two more directors.

Potential investors and current locators at the Subic Freeport, while dreadfully affected, do understand the situation and have been quietly patient since President Aquino’s EO 2 proclamation more than five months ago.

I really hope we don’t have to wait much longer.

UPDATE Feb 7: We sure did not wait that long. Three new directors were appointed, namely: Francis Garcia, Bienvenido Benitez, and Roberto Garcia.

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Requesting Pres. Aquino to Reconstitute the SBMA Board of Directors

by Prof Danny Piano; January 2011 Issue


First off, let me take this opportunity to wish everybody a happy and prosperous 2011.

Back to business. The recent letter of the Chamber to President Noynoy Aquino attracted a lot of media attention and actually landed on some newspapers including the Philippine Daily Inquirer. Not that we are asking for something radical or unreasonable, we just want business inside the Subic Bay Freeport to continue to function without lengthy interruptions.

At the moment, the Chamber is helping out locators by bringing issues up to the SBMA one at a time. Fortunately, the SBMA authorities, particularly Administrator Armand Arreza, have been very accommodating in trying to solve the problems, even with only stopgap measures for some. This, however, cannot continue for long.

As it is, many of us are still in survival mode due to the recent, and arguably over, global financial crisis. It would not help any if we are to endure another burden on our backs just as we are trying to haul ourselves up from a prone, knocked down, position. President Aquino is well intended, I am quite sure. With the many issues the country is facing, I am also pretty certain that we are nowhere near the top of presidential actionable items. So perhaps a little nudge or a tug on his shirt would give us a bit of attention. So here’s the letter.

---------- xxx ----------

PRESIDENT BENIGNO S. AQUINO III
Malacañang Palace
JP Laurel Street, San Miguel
Manila, NCR 1005, Philippines

Subj: SBMA Board of Directors

Dear President Aquino,

The Subic Bay Freeport Chamber of Commerce (SBFCC) respectfully requests that the Subic Bay Metropolitan Authority SBMA) Board of Directors be reconstituted, even on a temporary basis, to allow important Board decisions be acted upon especially on matters of urgent concern to existing and potential investors in the Subic Bay Freeport Zone.

It has been close to four months since the issuance of Executive Order No. 2 which revoked “midnight appointments” and affected the majority of the SBMA Board of Directors positions. Important matters requiring SBMA Board approval are all on pending status therefore. This is putting investments inside the Subic Bay Freeport on a stand still.

While we respect the order, we are also aware that it is currently being challenged in the court of law. However, absent a temporary restraining order (TRO), a reconstitution of a temporary Board of Directors, at least until after a final decision is made by the courts, should be an option worth pursuing. This is more importantly so if it meant additional investments and, therefore, additional jobs for our countrymen.

The SBFCC has always tried to be politically neutral and will, therefore, not endorse anybody for a SBMA Board of Directors position. We hope, however, that the law be followed.

Republic Act 7227, an important and visionary law created and approved during the term of the late President Corazon Aquino, under Section 13(c), stated that the Subic Bay Metropolitan Authority Board of Directors shall be composed of fifteen (15) members, to wit:

  1. Representatives of the local government units that concur to join the Subic Special Economic Zone;
  2. Two (2) representatives from the National Government;
  3. Five (5) representatives from the private sector coming from the present naval stations, public works center, ship repair facility, naval supply depot and naval air stations; and
  4. The remaining balance to complete the Board shall be composed to representatives from the business and investment sectors.

The composition of the previous SBMA Board of Directors was not in compliance with Sec 13(c) sub (3) and (4) of the aforementioned law. We sincerely hope the next one will be.

We trust that our request will be given consideration and we anticipate hearing from your good office soon.

Yours truly,

[signed]

Prof. DANNY J. PIANO
SBFCC President

---------- xxx ----------

Hopefully, something will happen soon; preferably, before the year is over. Far-fetched but the recent P740 million grand lotto winner must have the same thoughts when he made the bet. It’s the holiday season after all and during this time of the year, people just feel lucky. I do, too... as I did when I made a bet on the lotto. Obviously, I did not win. Go figure.

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Pocket Open Skies Policy in the Subic Bay Freeport

by Prof Danny Piano; December 2010 Issue


The open skies policy, while an old issue, has once again hugged the newspaper headlines, particularly because of the labor unrest in the country’s flag carrier—the Philippine Airlines.

Executive Order 253, issued by former President Gloria Macapagal-Arroyo in 2003, granted additional traffic rights to accelerate the development of the both the Subic Bay International Airport and the Clark Airport as major cargo hubs for the Asia-Pacific region. EOs 500 and 500A, on the other hand, granted passenger service rights to both airports with certain limitations. The limitations, particularly on connecting flights, are the reasons carriers have not taken advantage of the new rules.

The current media buzz on open skies seeks to grant open skies policy on many more airports. A nation-wide open skies policy may not be perfectly good for the country since it might put out of business our local carriers, especially if the policy is not reciprocal with other countries. I think, however, that having it in the Subic Freeport will invigorate the Subic Airport. A letter to President Aquino was, therefore, crafted and sent last November 8 (see below). Coincidentally, one week later, President Aquino announced that he will open up the Philippine skies during the opening of the public-private partnerships and infrastructure conference.

---------- xxx ----------

November 8, 2010

PRESIDENT BENIGNO S. AQUINO III
Malacañang Palace
JP Laurel Street, San Miguel
Manila, NCR 1005, Philippines

Subj: Support for Pocket Open Skies Policy in the Subic Bay Freeport

Dear President Aquino,

The Subic Bay Freeport Chamber of Commerce (SBFCC) fully supports, and endorses, a pocket open skies policy for the Subic Bay Freeport Zone (SBFZ).

Since FedEx’s AsiaOne hub discontinued its operations in the SBFZ and transferred to China almost two years ago, the Subic Bay International Airport (SBIA) became under-utilized and almost dormant. Even while the SBFCC formed the Subic Airport Revival Committee and collaborated with the Subic Bay Metropolitan Authority (SBMA) and many other organizations, our progress has been slow partly because of limited rights of budget carriers. The SBMA, on the other hand, continues to service the debt incurred from the airport’s modernization. By providing for a more liberalized air space, we would undoubtedly reinvigorate the SBIA faster.

While Executive Orders 253, 500, and 500A granted rights to foreign carriers operating at the DMIA and SBIA, the limitation on designated carriers and withdrawal of the 5th freedom right— the right to fly between two foreign countries, more popularly known as “connecting flights”—hampered the SBIA’s progress from taking off once more.

While there have been moves already in the House of Representatives to promote pocket open skies policy for secondary gateways including Subic, the SBFCC feels that an executive order amending EO 500A, previously issued by former President Gloria Macapagal-Arroyo, would be the quickest way to revive the Subic Bay International Airport.

The SBFZ is one of the major growth areas in Philippine tourism. Liberalizing our air space will enhance access to Subic Bay and surrounding destinations. We are a Freeport after all. Coupled with budget fares, this will certainly spur an increase in international and local tourist arrivals.

The Subic Bay Freeport Chamber of Commerce, representing the businesses, residents, and other stakeholders inside the SBFZ, supports your Excellency’s administration. We hope that by bringing to your attention our sentiments, by providing suggestions, by demonstrating our willingness to work with you, we can together bring the Subic Bay Freeport’s economic prosperity to greater heights.

Yours truly,

[signed]

Prof. DANNY J. PIANO
SBFCC President

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How Are You?

by Prof Danny Piano; November 2010 Issue


A couple of years back, I received as a gift a self-help book titled Attitude is Everything by Jeff Keller. Having been busy with a number of stuff, I scanned over it, thought that it was a bit too “dramatic,” and filed it away.

Recently, I ran into a blog mentioning a section from that same book, which, of course, I remember I have. Reading over that section, I still find it a bit dramatic, but hey, it seemed to be working for some people so I might as well share it and let you decide for yourself.

It’s about avoiding people who have a contagious negative attitude. You are familiar with them, they are usually colleagues, acquaintances, even friends or relatives. They are quick on dispensing criticisms but slow on compliments. They make you feel drained and tired, and lowers your enthusiasm in the process.

Let’s take something as innocuous as how we answer the question How are you? Sure, the question sounds trivial and harmless. But, it is something that we reply to many times in a day. In fact, we usually answer in one or a few words only. Yet, according to Keller, your response tells a lot about you—and your attitude. In fact, your response can literally shape your attitude. He proceeded in classifying your responses in three categories: negative, mediocre, and positive. So let’s go ahead and examine some common responses under each one.

Negative Responses: Lousy, Terrible, I’m tired, It’s not my day, Thank God it’s Friday, A day older and a dollar broker, Don’t ask. When someone responds with “Don’t ask,” you know you are in for trouble. That person is going to unleash a multitude of complaints and make you sorry for just asking How are you? in the first place.

Mediocre Responses: I’m okay, Not too bad, Could be worse, Same old, same old; Hangin’ in there, Fine. Obviously, mediocre responses are a step up from the Negatives—but they still have plenty of room for improvement. Do you really want to do business with someone who thinks that life is “not too bad”? When you use words like these, you also diminish your energy. Can you imagine someone saying “Could be worse” with a lot of enthusiasm? Of course not. These people sound like they haven’t slept in two days. There’s no getting around it. People who use mediocre words will develop a mediocre attitude... and get mediocre results.

Positive Responses: Terrific, Fantastic, Great, Excellent, Super, I’m on top of the world, It doesn’t get any better. These are usually enthusiastic people who have a bounce in their step and you feel a little better just by being around them. These are the people you would look forward to meeting. These are the people who have positive outlooks and full of life. These are the people who are more likely to get your business.

If you find yourself in the negative or mediocre group, Keller suggests you immediately consider revising your response and joining the ranks of the positive. Here’s why. When you’re asked How are you? and you say Horrible or Not too bad, your physiology is adversely affected. You tend to slump your shoulders and head and take on a depressed posture. What about your emotions? After saying that you feel lousy, do you feel better? Of course not. You feel even more down in the dumps because negative words and thoughts generate negative feelings, and eventually, negative results.

Even if real circumstances in your life persuaded you to state that you feel lousy, your gloomy attitude does nothing to improve the situation. To make matters worse, your mediocre or negative reply turns others off. They are dragged down just being around you and hearing your pessimism.

Break the habit. Sure, in the beginning it will be a little uncomfortable but stick with it and it will eventually come naturally. How we feel is very often a subjective matter. When we tell ourselves that we’re tired, we feel tired. When we tell ourselves that we feel terrific, we feel energized. We become what we think about.

So, how are you?

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Fighting Off an Unreasonable Minimum Wage Increase Petition

by Prof Danny Piano; October 2010 Issue


In our previous newsletter issue, I discussed the “Anatomy of a Minimum Wage Increase.” That was brought about by the P75.00 daily minimum wage increase petitioned to the Regional Tripartite Wages and Productivity Board (RTWPB) by the Mitsumi Philippines Workers Union (MPWU). Well, the fight for the magic number is now on! The result of the first public hearing in San Fernando, Pampanga last 20 September 2010, however, did not bode well for the employers sector. The petitioner came well prepared.

It is time for the big guns to come on board. On September 25, the presidents of all the Chambers in Region III, each bringing position papers against the proposed increase, met and consulted with the Philippine Chamber of Commerce & Industry (PCCI) and the Employer Confederation of the Philippines (ECOP).

It was agreed to adapt the position paper from the Subic Bay Freeport Chamber of Commerce as official position of the Region III employers sector with just very minor changes. Below are the salient points mentioned in our position paper (the full position paper and MPWU petition can both be viewed in our Online Forum).

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The SBFCC and its members recognize our obligation to our workers and understand that everyone should have the opportunity to earn a decent wage. We also believe that the minimum wage is not just about helping the less fortunate but is also about fairness, the value of work, and the opportunities that such work provides.

The SBFCC likewise believe, however, that admirable the intentions are of the petitioner in increasing the daily minimum wage may be, it should not work to the detriment of employers or companies who are providing the work in the first place.

Accordingly, we strongly believe that a P75.00 increase in daily minimum wage, as proposed by MPWU, cannot be financially supported by our members; that many of us will be forced to close down or move to other countries where we will at least have a reasonable return on our investments; and that instead of helping the less fortunate, jobs will actually become less available. We also believe that the data used by MPWU as basis for the petition was erroneous.

In the light of the foregoing, we present our opposition to the bases of MPWU’s petition as follows:

  1. Item 6 of MPWU’s petition states that “Between June 2008 and May 2010, the consumer Price Index or CPI in the region rose from 149.1 to 163.0 or the equivalent of 9%...” Further, item 10 of their petition states that this increase in CPI is equivalent to a P27.00 increase in minimum wage.

    2. The petition did not indicate from where the above CPI data came from. The SBFCC, therefore, thinks that it is without solid basis and could actually be erroneous. In fact, a quick research shows that data from the National Statistics Office (NSO), publicly posted on their website1, clearly indicates that for areas outside NCR, Region III included, the CPI in June 2008 was 157.5 and in May 2010 was 166.7. The increase in CPI is actually 5.84% [calculated as (166.7/157.5)-1], way below the 9% erroneously indicated in the petition.

  2. Item 7 of MPWU’s petition states that “Due to the continuing increases in deregulated oil prices, automatic adjustments in rates of utilities (electricity, water), and the resulting general increases in prices, among others, consumer prices between January and December 2010 are expected to rise further by another nine percent (9%).” Further, item 10 also estimates future increases in CPI for the next few months up to December as equivalent to another P27.00 daily minimum wage increase.

    3. Again, no basis from where the data came from was included in the petition. In any case, the SBFCC finds that introducing baseless data is pointless. The employers sector can also speculatively argue of an impending double-dip recession in the United States that will once again create havoc on the global financial system—but we will not. Besides, the effect of inflation is not only limited to the labor workforce but to companies more so.

    The SBFCC believes, therefore, that further adding P27.00 to the daily minimum wage cannot be justified by mere speculation.

  3. Item 9 of MPWU’s petition states that “The Central Luzon Region’s Gross Regional Domestic Product (GRDP) in constant Prices increased from P64,168 million in 1989 to P117,724 million in 2008, averaging a yearly 4.4% growth.” Further, that this growth rate should be equivalent to a P21.00 increase in the daily minimum wage.

    4. Once again, no reference was made where the petitioner’s data came from. Be that as it may, the SBFCC finds that introducing data from 1989 to 2008, for the purpose of substantiating a minimum wage increase in 2010 is not only anachronistic but is also unfair, given that there were already many wage increases since 1989, the latest being in 16 June 2008.

    Besides, because of the global financial crisis, the growth rate has actually decreased from 12.73% in 2008 to a very low 3.25% in 20092, according to data from the National Statistics office.

    In fact, just last year, the Trade Union Congress of the Philippines (TUCP), the mother group of MPWU, even identified 65 big companies as extremely vulnerable to worker lay-offs3 exactly because of the crisis.

    Further, there is currently an 8% unemployment rate4 in Region III which would be more than half million people who are looking for work but cannot find one.

    The SBFCC believes that whatever calculations the tripartite board will eventually come up with should be based from a time period since the latest minimum wage increase and not from some 22 years ago.

    We therefore find the petitioner’s proposal of yet another addition to the minimum wage as arbitrary, without merit, and unfair. Further, that since companies are still reeling from the effects of the global financial crisis, the P21.00 additional increase cannot be justified by most businesses to survive.

Aside from what was already expressed earlier, the SBFCC would like to further include the following reasons why a huge increase in minimum wage will destroy rather than increase or retain jobs:

  1. We would like to emphasize that the daily minimum wage in the Philippines is much higher than other countries in Asia5 including Cambodia, Vietnam, Indonesia, Thailand, and especially China, who we are competing with for foreign investments.

    2. For the same reason, manufacturing companies are starting to transfer to low labor rate countries, a recent example is the layoff of 700 employees of the manufacturing company Wistron (a subsidiary of Acer) in the Subic Freeport.

  2. There is no question that the labor force is affected by inflation; however, it would be wise to consider that inflation also affects companies and not just in terms of salary increases but from many other factors as well, like the increased cost of raw materials, appreciation of the peso, and increase in costs of utilities, among others.
  3. The majority of new investments to the Philippines, Region III included, are now more service-oriented than manufacturing such as Business Process Outsourcing (BPO) companies. These companies are already paying their employees much higher than minimum wage, therefore, will not be terribly affected by a huge increase in minimum wage. The manufacturing and other companies that are already struggling are, unfortunately, the same companies that normally hire minimum wage workers. Their closure or transfer to low-wage countries will mean loss of jobs primarily to minimum wage earners.
  4. The vast majority of textbooks on economics mention that increasing the minimum wage decreases the employment of minimum-wage workers6. This is because a greater number of workers are willing to work at the higher wage level. Companies, therefore, can be more selective in whom they employ, thus, the least skilled and least experienced will typically be excluded and will be pushed into the ranks of the unemployed.
  5. Minimum wage earners are usually inexperienced workers who are just entering the workforce. Through entry-level jobs that do not require prior experience, they are able to learn, train, and hone skills that are later used as credentials for higher-level or overseas work. Without this training ground, we might have fewer workers who will qualify for overseas work.

It is clear from the foregoing, therefore, that the petition not only lacks solid basis, but that the petition will likely hurt not only companies, but even also the minimum wage workers we are all trying to protect with more secure jobs.

While the SBFCC feels that there should be a freeze in minimum wage increase to give struggling companies some breathing room to get back on track, we are also aware that our workers, especially the minimum wage earners, are far more exposed to the difficulties of survival.

We therefore propose that we use as basis the 5.84% CPI increase. Further, that since companies and the labor workforce are similarly affected by inflation, that a compromised amount where employers will bear the bigger burden of the inflation rate be used. We feel that employers will be able to cope, difficult as it may be, with 70% of the inflationary rate. This would correspond to 4.10% or equivalent to an overall P12.00 increase to the existing daily minimum wage.

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Anatomy of a Minimum Wage Increase

by Prof Danny Piano; September 2010 Issue


P75.00 per day! This is the minimum wage increase the labor sector in the Central Luzon area petitioned more than a month ago. Too high! The employer sector countered. So what about it? How does the increase in minimum wage in the Philippines gets to be discussed, negotiated, and finalized?

In the grand scheme of things, the petition for a wage increase would normally be coming from the labor sector. This is not always the case, however. The government has initiated petitions on its own in the past. But the employer sector never did. Not that companies would avoid this like the plague; in fact, companies, especially those making money, do provide management-initiated salary increases to their workers. It is part of supply and demand after all. If you want to keep your talented workforce, you have to provide salaries and benefits that would prevent your competition from pirating them—within the bounds of your resources, of course.

The problem is more on the lower rungs of the labor force; like those working in assembly-line manufacturing, agriculture, construction, and retail/service establishments not requiring high-level skills. These are the areas where the minimum wage rate gets to have its greatest effect and where the wage fixing gets to be contentious.

The granting of minimum wage increases used to require, not acts of God, but acts of Congress or acts of the President. Since the enactment of RA 6727 also known as the Wage Rationalization Act, however, Regional Tripartite Wages and Productivity Boards (RTWPB) in each of the sixteen regions of the country became the wage-setting bodies. A petition would be submitted to the RTWPB. The Board is composed of one representative each from DOLE, NEDA, and DTI; and two representatives each from both the workers and employers sectors.

What are the criteria for a petition? There are ten, categorized into the needs of workers and their families, the capacity to pay by employers, comparable wages in other regions, and requirements for national development. From past years, it is almost always the consumer price index (CPI) that is used as the major basis for the increase.

What is a CPI? Simply put, it is an estimate of the average price of a specific list of consumer goods and services purchased by households. The same set of goods and services from two years ago would normally be more costly this time around. The CPI is usually the magic number that dictates the positions of the various parties. The labor sector wants a wage increase much higher than can be calculated from the CPI, the employer sector wants it lower.

Last July 21, the Mitsumi Workers Union submitted a petition for a P75.00 increase. The RTWPB, after reviewing the petition, then sent letters to various organizations, including the SBFCC, requesting participation in an employers’ consultative meeting. On August 24, various chambers of commerce and other organizations in Central Luzon met to discuss the appropriate minimum wage increase for the area. Through voting, the majority agreed to a P12.00 increase to the daily Cost of Living Allowance (COLA) but that the minimum wage rate, implemented last June 2008, will stay as is. A formal opposition paper from the employer sector will later be submitted to the RTWPB.

Understandably, many from the manufacturing sector, hit hard by the global economic crisis and reeling from lower labor rates of competition from other countries, want a lower increase—P5.00 specifically. They did not get the majority vote, however, so P12.00 it is. As an aside, other regions already approved P10.00 to P22.00 increases.

So, what happens to the companies that cannot afford the wage increase? Fortunately, there is an option. Exemption may be applied by distressed establishments, new business enterprises, retail/service establishments employing not more than ten workers, those adversely affected by natural calamities, and other establishments that can prove strong justifiable reasons for exemption; or companies who simply want to take a crack at it.

On September 20, a public hearing for the original labor sector petition will be conducted by the RTWPB. Depending if a compromise can be reached, more public hearings may be held. In the end, it will be the RTWPB who will make the final recommendation and it has to be done within 30 days from the date of the last public hearing. The resulting Wage Order can be appealed by any aggrieved party within 10 days; otherwise, the Wage Order becomes effective 15 days after it has been published in a newspaper of general circulation.

What happens next? Well, employers pay their workers more and employees get what is more or less higher wages that are more in line with the current peso purchasing power. It will likely be a range from P12.00 to P18.00.

One important thing to take note of is that the RTWPB’s wage-setting function is confined to minimum wage and only to the private sector (the government, using our tax money, gets to set their own salaries, see?). It does not have the power to grant across-the-board increases; not to those with salaries higher than minimum wage. Companies will be in compliance already as long as all their employees have wages equal or higher than the minimum wage, which could mean that they may give increases only to those below the minimum wage.

In practice, however, an increase in minimum wage creates wage distortions on salary levels within a company. Because of this, a wage distortion formula is used. The result is that everybody gets an increase but the higher the existing salary, the lesser the amount of the increase.

And so it will be… until the next petition for minimum wage increase, which cannot be earlier than a year out from the date of this year’s implementation.

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Robots, Spies, Viruses

by Prof Danny Piano; August 2010 Issue


Huh? What? Well, if you are an Internet-loving dude, you probably have an idea what these are and is worried. If not, and you are using a computer, especially one that is connected to a network, which is connected to the Internet-loving dude, then you should be too. Why so? It is because we are constantly under attack—by malware!

Bots, spyware, viruses, worms, and trojans, among others, are forms of self-propagating malware. Malware is short for malicious software, a class of program code that is designed to damage, disrupt, or steal data. Then there is phishing, whaling, and email spoofing which generally attempt or entice you to reveal confidential information. Finally, the ever annoying spam emails and ad pop-ups usually promising to make a Venus or Adonis out of you.

You are secured you said? Good if you are, but check again. The only truly secure system is one that is powered off. Recent studies by a number of Internet security firms show that as high as one in two computers is infected by malware. Prior to the year 2000, malware damage is about $3 billion according to Computer Economics; it is now at $13 billion. Google Research also reported that one in every 10 websites is infected with malware.

Also alarming is the fact that hackers, who used to be individuals creating malware for their own personal malicious purpose, are now mostly organized, therefore larger and more sophisticated. Although bots can be good like the Google web crawler, they can also be the most dangerous. A malicious bot is self-propagating and designed to infect your computer and connect back to central servers that act as command and control center for an entire network of compromised computers called botnet. The ultimate target? Your wallet, of course!

Broad-based remote-control attacks can also be performed by botnets against targets. The worst part is that you may not even know that you are part of it. Notice the spam mails that you are getting where the sender names look valid? They are, and from real people, too. They’re just not aware that they are sending spam mails. So, what to do?

There is no denying that the Internet provides more good than bad. The advantages from emails alone would trump the risks posed by malware. But all that we can do is lower the risks. So here are seven precautionary measures. There’s more but just this seven alone would make your computer safer by as much as 99% to malware attacks.

Make sure that you have an anti-virus software. Typically, anti-virus software that you pay for can provide more timely protection against fast-emerging vulnerabilities. But anti-virus software available for free is still better than none at all. If you don’t have an anti-virus software right now, chances are your computer is already infected.

Install real-time anti-spyware protection. For business, it would be worth it to get business-grade anti-spyware software. For personal use and if you don’t have the money, free anti-spyware programs would suffice.

Install a firewall or at least turn the built-in Windows Firewall On. A firewall blocks unauthorized communications between your computer and the Internet. It offers another layer of protection for your computer from viruses and spyware. Computers with high-speed Internet broadband connection are the main targets of hackers.

Do not click on email links or open attachments unless you are absolutely sure they are safe. Do not be fooled by a well-crafted email message or offers of free something. If it sounds too good to be true, it is. Be wary of links and attachments. They can infect and corrupt your computer and in the process destroy critical data in seconds. A safer option would be to, using your browser, manually navigate to the site where the link belongs.

Disable image previews in Outlook. An email message in which graphics code is used to enable the malware execution can already result in a virus infection. Prevent automatic infection by disabling automatic image previews (under the Tools menu in Outlook). You can always view the images later anyway if you are sure it is safe.

Disable the autorun feature. Many viruses replicate themselves through the popular USB thumb drives and other media. With autorun switched On, simply inserting an infected USB drive might already infect your computer. If it's got a virus, your data are fried. Disable the autorun feature.

Surf smart. Do not go to websites that look dicey (against your will, consider websites with half-naked sexy bodies as also dicey). Don’t blindly follow links in web pages. Say no to pop-ups. In fact, just say no unless you are sure it is safe.

The Internet not only contains a wealth of information and where ideas are freely exchanged, it is also a playground and a meeting area for friends. It is a place for business, a mall, and a market.

But, as you travel its highways, malice will always be afoot. Robots, spies, viruses, and other nasties abound. As the value of information steadily increases, so will sophisticated thievery. Paradoxically, something increasingly becoming valuable is also now seemingly more thief-accessible.

Protect your data. Protect yourself.

(Prof. Danny Piano is also a director of the Olongapo City IT & Telecommunication Board)

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Your Business, What is it?

by Prof Danny Piano; July 2010 Issue


Sure, you know the business you are in. How can you not? You had it all figured out when you started. If you have a hotel then you must be selling overnight stays, if you have a Mercedes Benz dealership then you must be selling luxury cars, if you bake cookies then you must be in the cookie business. Right?

Well, not exactly.

Marge Hefernan of Business Net tells a story about the Boston-based Dancing Deer Baking Company. The company, headed by Trish Karter, is famous for its unbelievably delicious and exquisitely presented cookies. Their molasses clove cookies is their best seller and the winner of the food industry’s Best Cookie Award in 2007. The bakery had become famous for fantastic indulgences and gorgeous packaging. But, like many entrepreneurs, Karter struggled with the company’s growth, especially with the markedly seasonal nature of her product — sales usually peaked between Thanksgiving and Valentine’s Day.

But, that pattern revealed a different truth: Dancing Deer isn’t a bakery — it is a gift shop. Most people bought their products as presents. Their famous and award winning cookies: the molasses clove, caramel pecan brownie, and strawberry shortcake are not only great eats but are seasonal gifts as well. But of course, if you give cookies one year, you probably don’t want to give the same gifts the following year to the same persons.

So, unless Dancing Deer offered a great variety, their customers would move on. This revelation was important. It meant that variety was key to the business and that the talent and effort Karter had always poured into packaging was crucial, not peripheral. It also identified partners and marketing channels previously invisible. In short, it changed the way the company thought about building customer loyalty. It adapted and continues to be successful.

So you see, what you might have originally thought your business was, might no longer be. You must, therefore, be always on your toes because what you think the business you are in, could be looked at as another business by your customers.

Dealerships of Mercedes Benz automobiles should know that their customers are not simply buying their cars because they are luxurious, comfortable, and safe. Their customers are also buying the enhanced image such cars confer. A high-end car, such as a Benz, is a status symbol and a sign of success — at least as perceived by many, most especially the buyer.

If you are in the hotel business, why do your customers come to you instead of the other hotels, cheaper even, beside you? What is that value that people see in your offering that they think they won’t be getting from others? If people who are not hotel guests eat in your restaurant, doesn’t that tell you something?

Many people don’t want Wrigley’s Doublemint gums just so they have something to chew on — they want a fresher breath. Pietro Ferrero, an Italian confectioner, probably saw the “product” that many people are buying and created the highly successful Tic-Tac. Not chewable as a gum but a breath freshener nevertheless.

As multi-awarded and legendary Harvard Business School marketing professor Theodore Levitt puts it, "People don't want to buy a quarter-inch drill; they want a quarter-inch hole!" In business, it is not always the product itself that is all-important, it is the benefit that the customer derives from the product. Remember, a customer will only buy the product or service if s/he thinks the value of what you offer is more than the value of the money s/he is parting away with.

Do not be blindsided by a competitor or by the waning interests of your customers. Know what they want and be aware of the “product” you are selling.

Know the business you are in.

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The Subic Freeport, the Aquino Administration: What’s in Store?

by Prof Danny Piano; June 2010 Issue


The developments of the Subic Bay Freeport Zone (SBFZ) and the Clark Special Economic Zone (CSEZ) are two prime achievements of the Philippine national government. Since their conversion from military bases to investment destinations, the two freeports were able to attract foreign and domestic investments and generated massive employment. The SBFZ, with its seaport infrastructure, and the CSEZ, with its airport infrastructure, are a perfect logistical and transshipment hub combination.

For all intents and purposes, the Philippine 2010 elections is over. As of this writing, with more than five million votes ahead of Erap Estrada, Senator Noynoy Aquino can now be presumed the next President of the Philippines. So what should we, residents, locators, employees, and other stakeholders of the Subic Freeport, expect from the incoming Aquino administration?

Hard to tell, unfortunately. But we can make assumptions.

We can try using his platform of government but I do not think that will help much. The platforms of all the candidates are basically the same anyway, just as the platforms of all other candidates, in all government positions, since time immemorial. Nothing enormously wrong with that—they are trying to win the election after all; and it is not as if they are lying intentionally, I don’t think. He has not held any executive position in the past so there is nothing there that we can unearth for our purpose either.

Sen. Aquino did serve nine years as congressman of Tarlac and three years as senator. Perhaps there is something there that we can use. Perhaps we can look at the senate bills he authored since those are national in scope.

Sen. Aquino was elected to the Senate in 2007. He authored nine bills and co-authored some 13 others. None of the bills he authored has passed yet but that’s beside the point; we are trying, after all, to determine what interests him and the issues close to his heart. So what are those bills? Two are about the labor workforce: SB2036 is an act increasing the penalties for non-compliance in the wage rates of workers, while SB1370 is an act granting an annual productivity incentive to all workers in the private sector.

Both are obviously pro labor—which is not a bad thing. The first one simply tries to increase penalty for non-compliance so there is nothing profound on that bill. The second one, however, will have a considerable impact on business. Businesses already have ways to provide incentives to its employees; there is no point in making that mandatory. What if business turns sour, can employers reduce the salaries of employees? Not so, says the Labor Code.

Two other bills are about appointments. Noynoy is not into re-appointments. Here are the bills: SB1710 bans the re-appointment of a regular member of the Judicial and Bar Council; SB1719, on the other hand, limits the re-appointment of presidential nominees. Does this mean that there is little chance current SBMA officials will be re-appointed?

A couple more tries to restrict the powers of the police and military to prevent human rights abuses: SB2978 is an act to further clarify the relationship between LGUs and their respective local police chiefs, while SB2159 is an act adopting the doctrine of superior responsibility to all actions involving military personnel and police.

The last three bills are about trying to prevent graft and corruption: SB2160 is an act to further restrict exemptions to the requirement of public bidding, SB2035 requires the regular maintenance of all public infrastructures, while SB3121 is the Budget Impoundment Control Act, an act that seeks to strengthen legislative oversight over executive spending.

The first one was obviously filed in light of the NBN-ZTE scandal where the Department of Justice declared the validity of the deal citing its international and executive agreement nature as reason for its exemption from the procurement process. The second one seeks to penalize defective infrastructures that are usually the result of cost undercutting by contractors (since a percentage of the budgeted cost goes “under the table”). The third one is not really Noynoy’s but was a bill originally authored by then Sen. Juan Flavier in 2004. This bill is not unique to the Philippines since the US already passed just about the same bill (and same title) in 1974.

Budget impoundment, to clarify, is the power of the President to refuse the release of funds appropriated by Congress. However, this power has been allegedly abused by presidents and in the process emasculating Congress’ authority to check the President’s authority to spend public funds.

Sen. Aquino filed the bill on March 4, 2009, at a time when he was not even entertaining thoughts of running for president. This might work against him now that he is the presumptive president-elect. This bill would constrain a president from influencing the crucial Senate and House leadership races, and ultimately his ability to advance his legislative agenda. Good if he is not concerned about it.

So there you are, looks like we have gathered and should expect that the Aquino administration is pro-labor, does not like re-appointing government officials, strict about human rights abuses by the police and military, and hates graft and corruption. You might want to add a few more items he frequently mentions during his sorties: he will lower taxes and would crack down on smuggling and tax evasion.

Will any of these translate to changes in the Subic Freeport? For the better?

We can hardly say that Noynoy is a man of action, there is nothing in his background and experience to demonstrate that. All we have are his words, but, acta non verba, is what we need. Right now, he is more of a symbol of the Filipino people—a symbol of change, much like his parents are symbols of freedom and democracy.

He is even initially reluctant to run for President. But history is not bereft of reluctant leaders: Moses, Gerald Ford, Colin Powell, among others. Perhaps Noynoy’s low profile and humble persona is what appealed to many of us.

We are a nation of hope and faith; we laugh when we are in despair; we aspire even in misery. Perhaps he is who we need after all. Shortly, we will see.

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The Hubs Subic and Clark: An Optimist’s View

by Prof Danny Piano; May 2010 Issue


The developments of the Subic Bay Freeport Zone (SBFZ) and the Clark Special Economic Zone (CSEZ) are two prime achievements of the Philippine national government. Since their conversion from military bases to investment destinations, the two freeports were able to attract foreign and domestic investments and generated massive employment. The SBFZ, with its seaport infrastructure, and the CSEZ, with its airport infrastructure, are a perfect logistical and transshipment hub combination.

When the Subic-Clark-Tarlac Expressway (SCTEx) started operating in 2008, the improved interconnection of Subic and Clark became the impetus that drove more investments, this despite the global financial crisis that gripped the world. With the SCTEx, it became obvious that aside from Subic and Clark’s logistical promise, the two hubs can also become drivers of tourism; Subic, with its virgin forests and beautiful bay, more so.

In fact, before the SCTEx, tourist arrivals in Subic is at 974,249; in 2008, after the SCTEx was built, it jumped to 2,902,666, about three times what it was a year ago. In 2009, this further jumped to 4,100,308. The first quarter of 2010 alone saw higher tourist numbers than all of 2007. Subic is fast becoming a major tourist destination!

When two of the biggest developers, Ayala Land and the SM Group are coming to this area at about the same time, when tourism-related companies are rushing their expansions, when you see long lines at gasoline stations where there used to be none, you know that business is definitely booming here!

But are we there yet? Not yet but we are on our way and the future’s looking good.

The past decade saw continuous growth in our economy in terms of GDP, and the hubs Subic and Clark are big contributors. Sure, there are problems and scandals that faced the government but not enough to put the country under. Say what you may, but foreign investors would not come to a place where the economy stinks.

The next 5-10 years we should see explosions of gargantuan proportions. The port development projects in Subic, while right now is in its infancy, are expected to grow rapidly. The airport expansion in Clark not only will continue to increase the logistical and transshipment capacity of the area but is expected to bring in more tourists, foreign and domestic both. And then there are two more road infrastructures that will further add to all the momentum.

The Tarlac-Pangasinan-La Union Expressway (TPLEx) is already in the works. While it will take a few more years to complete, it is something worth looking forward to. The TPLEx will interconnect with the SCTEx. Imagine driving from Subic to La Union without going out of the expressway? Baguio City will only be a mere 15 minutes from its tail end. Imagine more efficient delivery and distribution of goods between north and central Luzon? This infrastructure will substantially boost the Subic and Clark logistical hubs. Imagine the potential for domestic tourism? People from up north can now conveniently drive to Subic. We will be a major beneficiary of this infrastructure!

But that’s not all.

Have you heard of the Luzon Urban Beltway? Do you want to go south of the Philippines down to Batangas without the hassles of traffic gridlock? It is closer than you might think. Here’s the configuration: from the Subic Freeport Expressway (SFEx), otherwise known as the Tipo Road, to SCTEx; from SCTEx to the North Luzon Expressway (NLEx); then to the Circumferential Road 5 or C5 Extension (under construction) and then to C5 itself; from C5 to the South Luzon Expressway (SLEx) which now stretches up to Laguna; and then onto the SLEx Extension which takes you to the doors of Batangas; and finally, the Southern Tagalog Arterial Road Luzon Expressway (STARLEx) which can take you all the way to the Port of Batangas. Wow, is all I can say!

And again, imagine the potential for tourism. People from down south and everybody else in between can now conveniently come to Subic to enjoy our sites and experience the Subic adventures. At the same time, stay comfortably in our numerous hotels, or enjoy duty-free shopping.

Oh yes, the hubs Subic and Clark will be the primary catalyst for Philippine progress in the next few years. Combined, it has the potential to become multi-modal mega logistics and tourism hubs enabling efficient delivery of goods, services, people, and information to and from production, manufacturing, and trading centers not only in the Philippines but they can be the country’s gateway to the world as well.

The next few years would be very interesting for hubs Subic and Clark. Subic especially. Great things are in store for us and I would not want to miss what the next few years would bring forth. As a native of this area, my eyes are wide open and filled with great expectations!

Too optimistic? The next few years will tell.

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Musings: Technology’s Unintended Negative Consequences

by Prof Danny Piano; April 2010 Issue


Having been myself tethered largely to computer technology for almost three decades, it is both amazing and disturbing how technology affects our lives, both good and bad, in both work and personal, at present.

Connected yet separated – today’s technology can connect us to people from just about anywhere; heck, even from outer space. We now have the convenience of meeting somebody without moving our bodies. And this seems to be a major culprit in obesity. Who would have thought when the Internet was invented that it will make people fat? An unintended consequence for sure.

Anonymity – in the Internet, anyone can be anonymous and can as easily don a mask. Would you want to be talking online with somebody who is not, in reality, the person s/he really is? Alternatively, would the cover of anonymity bring the real person out of us? If so, would you want to talk physically to a person who, in reality, is not the person s/he really is? Looks like the societal effects of civility taught to us since we were young is now being turned on its head.

Information overload – how many emails, voicemails, and text messages do you get each day? The amount is out of hand and bordering on crazy — and I know it’s not just me. But is it? Not contented we watch TV, we listen to the radio, and we surf the web. Is it the natural tendency of humans to make their brains ever bigger? We look at everything but seldom focus on something.

Counter-productiveness – How many times have we been promised greater productivity at the hands of new technology? And how many times do we find ourselves spending more time learning the technology instead of productively using it? Unfortunately, new technology requires a learning curve. It is a tool that you can use to your advantage if you know how, much like using not the claw but the hammer head to drive down a nail.

News for and from everybody – before the advent of the Internet, news, before it hits the streets are factually checked and verified by people learned and studied in reporting. Now, just about anybody can report or blog away news but usually with less care and on a less thoughtful approach. While people usually acknowledge as truth what are aligned with our preconceived notions, do we simply take what we’re fed or should we read news with a grain of salt?

Plundering the environment – we have abused mother earth, and we all agree. But is the earth’s degradation due more to population or progress in technology? Sure, we are also using technology to improve the environment. But are we doing enough and are humans consuming the earth’s resources to live and survive, or to live comfortably? Is Agent Smith correct? Is humanity a virus that would replicate uncontrollably, eventually destroy their environment, and move on to other hosts? I hope not. For a technology to be successful, it must take the environment into consideration, for Nature cannot be fooled.

Culture eliminated – will the Internet enhance our individual cultures or will all cultures converge into one in the near future? Just as the European culture influenced the American culture, just as the Spaniards and later the Americans influenced the culture of the Filipinos, the social shifts introduced and assimilated through the Internet can alter social dynamics and can promote new cultural models. Is this not a possibility? Are our cultures, in the eyes of our elders, going extinct?

Technology drives progress. It drives our personal lives. It drives business. It is already changing our lives behaviorally, socially, and physically; politically, culturally, and environmentally. Although it has negative unintentional consequences, the progress derived from it more than makes for the drawbacks. For now. It is a tool and must only be our servant. If we must embrace it, we must not lose control. We must, therefore, make certain that we use it with more perspective and forethought; with wisdom and prudence. Otherwise, our servant may prove to be our executioner.

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Elections: Extract ‘Em Planks Out

by Prof Danny Piano; March 2010 Issue


With the Philippine elections just around the corner, we are bombarded with motherhood statements from candidates on a daily basis. Unfortunately, there were candidates in the past who have no idea what it meant to legislate or how to lead but were able to fake their way to public office anyway… and there are candidates now who will do the same thing.

Jobs for everybody, end to corruption, free education for all, affordable health care, we are destined for greatness, yada yada yada. Senseless “feel good” statements, iterated since time immemorial, uttered by many candidates, but unsupported by specific planks and almost always never realized.

Debates and forums should have been good occasions to compare candidates and find out what they stand for and what they are made of. Instead, they are just given yet another opportunity to blabber about their “visions.”

It is time to have a more sensible and better gauge in picking our leaders assuming that we do not know much about them in the first place.

We can start with the basics. We should determine what their planks are; you know, the core topics of their platforms or manifestos. Things are seldom black and white but we will have to opt for a binary answer to create a baseline. Here are a few questions I would ask to extract out their platform planks:

  • On pork barrel: Are you for the removal of pork barrel in Congress given that the primary job of a Congressman is to legislate in the first place?
  • On population control: With the poverty and population explosion problems in the Philippines, would you vote for a Reproductive Health Bill that encourages both modern and natural methods of family planning?
  • On education: To produce better graduates, would you want to extend elementary and high school to 12 years just like other developed countries?
  • On foreign direct investments: One reason why foreign companies would not do business in the Philippines is their inability to own land. To increase investments, would you be for 100% ownership of land by foreigners?
  • On service to countrymen: Given a scenario where death is imminent and you have only one choice, would you save 100 countrymen you do not know instead of a loved one?

There would also be questions about bureaucracy, corruption, economy, environment, infrastructure, foreign policy, security, freedom of speech, human development, health care, women and children’s issues, abortion, charter change, and many more.

Obviously, a yes/no answer on the above cannot be sufficient. We must also know how they intend to support such planks, but which are easily verified by their records of accomplishment, if any. With a baseline in place, it would be more difficult for candidates to boogie around issues.

Last, I would generalize the issues into ten or so categories, give each candidate, say presidentiables, a virtual 1,500 billion pesos budget (the 2010 Phil. Budget), and ask them to apply a nice round billion amount to each category. Because you see, they can have the grandest and noblest plans and yet not have the money to accomplish those anyway; then they fall right smack into earth and reality dawns.

At this point, we should already have a fairly good idea what each candidate stand for. Are they consistent, though, or would switch and take a side that is more popular in the blink of an eye? Are they smart enough to decide by themselves or are usually just taking cues from advisers? Are they firm in their convictions or do they just want us to dance with them?

At this point, we already have plank-supported platforms, not merely motherhood statements, laid out clearly before us. We add in diligence, integrity, and a few other sometimes subjective matters that are personally important to each one of us and, my friends, we are done.

At this point, we have what we need to know and, thus, can choose, with a semblance of intelligence, the leader who will try to march us to progress and have a reasonable chance of succeeding.

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Kalaklan Lighthouse Bridge Closure

by Prof Danny Piano; February 2010 Issue


A little more than two weeks from now, the Kalaklan Lighthouse Bridge will be closed to vehicular traffic. Are we ready to cope with the expected traffic congestion?

As early as May 2009, the Subic Chamber had started informing its members about the potential problems that the closure and construction of a new bridge will bring about. Albeit at that time, there were no specific dates yet, and the demolition and construction of the Main Gate Bridge was still in the equation.

Last December 8, 2009, SBMA provided information to the Chamber related to the “Milestones for the Implementation for the Construction of New Kalaklan Bridge and Security Plaza Project.” By end of the same day, the Chamber mass-emailed to its members the information.

With the fast approaching Christmas season, priorities are understandably into other things and the issue of traffic congestion due to the bridge closure has not surfaced over the entire span of the holidays.

It is not hard to comprehend the debilitating effects of traffic gridlock to business and individuals both. Something must be done, and soon. Right after the New Year, the Chamber sent invitation letters to various stakeholders for a multi-sector meeting. On January 12, during the meeting, things came to light, and collaborative planning developed.

The existing bridge is already more than 60 years old, is already a safety hazard because of weakened structural components, and needs to be replaced. The new bridge will be constructed offset from the old; the latter will be closed to vehicular traffic on 15 February and to pedestrians on March 1 [Note: recently updated to June 15]; and that the new bridge is expected to be completed by the first week of January in 2011. The new bridge will have two lanes and the span of the middle columns will be 22 meters and will have a height of 5-7 meters, depending on the tide — wide and high enough for a dredging boat and for basnigs (big bancas with outriggers) expected to ply the river when the Olongapo fish port in Banicain becomes operational.

To mitigate traffic congestion, SBMA will be posting additional traffic personnel near the two remaining “vehicle-capable” bridges — the Rizal and the 14th Street Bridge. Olongapo City will be distributing traffic volume through rerouting. They have also requested additional personnel from SBMA to help them manage the traffic situation. Directional signs will be posted in the appropriate places.

Businesses are requested to become familiar with the truck ban schedules (see Chamber Online Forum for details) so that the trucks they own, and the delivery trucks of their suppliers can schedule deliveries at times that will not cause additional traffic congestion.

Back to the original question: Are we ready to cope with the expected traffic congestion? Yes we are! Well, maybe not completely… but, the willingness of various sectors to work together is as good an indication that we can confront problems in the face and get the better of it.

In the March 2009 issue of the Chamber newsletter, I wrote an article entitled Freeportopia primarily discussing about working together and building relationships that are mutually beneficial. A little less than a year later, SBMA/SBFCC working groups were formed, there is now closer ties with the City of Olongapo, and we now have MOUs with other business groups around the area, particularly MOCCI and GSBTB. The collaboration between these organizations and agencies in the current issue that we are all facing — the Kalaklan Lighthouse Bridge closure — is proof-positive that a potential for joint action can be achieved by bringing people together.

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Looking Back, Looking Ahead

by Prof Danny Piano; January 2010 Issue


We are now again standing on a time divide where we can look back on what has happened in a full year and look ahead on what will and can possibly happen in the coming year. Funny thing is, vision is much clearer at the backside; hindsight, after all is 20/20. Where we are right now will be where the point of separation will be invariably cited — you know, 2009 as “last year” even if it’s separated only by a day or so from 2010.

Looking back, the past year had been an economic challenge, to say the least. Businesses around the world continued to struggle due to drastic upheavals of the global economy, seriously impacting both production and consumption. There were pockets of exclusion or at least of lesser effects, however. Fortunately, the Subic Bay Freeport is one. For although 2009’s foreign direct investments are much lesser than 2008, local investments are aplenty. In fact, SBMA posted a record income for 2009 triggered mostly by increased tourism and seaport-related activities. Unemployment is almost unheard of here. The workforce consists of 87,000 people, more than double the employment when the Freeport was still the largest US naval base outside of the continental US.

Looking ahead, although the faltering world economy is not expected to hit bottom until the second half of 2010 at the earliest, the Subic Bay Freeport will still be a bright spot for investments and business in general. We expect booming construction from various projects with Ayala Land, Ocean Nine, Neocove, and Hanafil at the forefront.

Looking back, social, political, and environmental issues also took the stage in 2009. The high cost of energy, food problems (the Philippines is now the biggest importer of rice), lack of confidence in the government, climate change, and environmental disasters are but a few that grabbed headlines.

Looking ahead, things will probably get worse in 2010. Population will continue its staggering increase; more commerce and industry that will mostly still rely on non-replenishable petroleum will inevitably add to pollution and, therefore, will have effects on the earth’s climate. Possibly more disasters due to climate change and not much we can do about it in the short term as evidenced by the failed Copenhagen climate summit.

The political climate up to the middle of this new year, on the other hand, should be, predictably, a circus of sorts. Note that the change in top national government positions will, most likely, effect a considerable change in the SBMA administration also — for better or worse, no one knows.

Looking back, the Chamber faced numerous challenges as well. An all-new staff, several changes in the composition of the Board of Directors, and numerous issues that we had to face kept us on our toes. In 12 months, we have organized various events including the locator’s congress, State of the Freeport Address, midyear and annual general membership meetings, golf tournament, blood drive, Christmas party, and several mixers and networking nights. We have attended and participated in more than two dozen various other events and forums. Together with SBMA, we have formed working groups dealing with marketing and promotions, the environment, workforce development, land use, regulatory, and change management.

We collaborated and had memorandums of understanding with various organizations including the Belaurus Chamber of Commerce, the Greater Subic Bay Tourism Bureau, the Metro Olongapo Chamber of Commerce, the Philippine Retirement Authority, and have become a member of the Philippine Chamber of Commerce. We have freshened up our newsletter and have set up an Online Forum to improve information dissemination and communication exchange between Chamber members. We have also penned no less than a dozen position papers regarding various issues facing us all including those for BIR, ERC, DENR, BOC, BCDA, BOI, and many for SBMA.

We were also at the forefront of donation gathering and distribution during the calamities that hit the country. We have distributed truckloads of relief goods to Manila, Pangasinan, Olongapo, and Botolan several times.

The year 2009 was indeed a busy year for the Chamber.

Looking ahead, the Chamber hopes to get more active participation from its members. We constantly have issues to face and have more projects than we have the manpower to accomplish. Some more volunteers joining our committees and working groups would be of tremendous help.

However, we need responsible men and women. People who are not only looking for an additional title attached to their names; people who would act rather than just comment; people who would act and not sit still.

Let us remind ourselves that looking back does not mean moving backwards; that moving forward is more effective done together; and that a collective is stronger and our voice louder.

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Merry Christmas?

by Prof Danny Piano; December 2009 Issue

As we near the holidays, it is not uncommon to hear statements like "The spirit of Christmas is gone, it is now so commercialized!" or "How can we possibly celebrate Christmas when many of our countrymen are suffering?" or "Our company is in survival mode due to the global economic downturn; we cannot afford to celebrate Christmas."

These are all legitimate statements and very easily understandable.

You see it in stores and malls as we approach Christmas - all stocked up to the brink with products in colorful galore - and consumers on shopping binges that extend their financial resources to the edge or over the limits.

Some would cancel Christmas celebrations and parties and would instead donate the money to victims of the recent typhoon disasters. A noble act indeed. Commendable?

Still others, companies affected by the global financial crisis mostly, are decreasing if not entirely eliminating their employees' Christmas bonuses, even cancelling the company Christmas parties because times are hard and they cannot afford it. Reasonable?

Commercialized Christmas is, indeed! The above statements are all based from the premise that a Christmas celebration can happen only in the presence of material goods.

Deep inside, we know better.

After all, the very first Christmas celebration was very simple and in a most humble venue - the stable. It is true, there are times when hopelessness seems to pervade the air; hardships surround us made more terrible by tragedies that have befallen many; frustrations in some of our institutions permeate in us for failure to provide a much-needed sense of hope and security.

But those are parts of life and always will be.

Perhaps on different levels but it is what it was 2009 years ago; it is what it is 2009 years after. Even with our heritage of faith and progress in science, trials will always be part of the essence of our existence - nothing is itself without everything else.

For those who have the resources, share, for there is only so much money a person would need, everything else is for vanity. For those who don't, make it simple.

Christmas is a time for friends and family; a time for communities to come together; a time to build respect and compassion for each other. Only then will our celebration be merry.

Merry Christmas and a Happy New Year!

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It's Halloween – Trick or Treat?

by Prof Danny Piano; November 2009 Issue

Halloween is just around the corner. In some countries, and so are in some parts of the "westernized" Philippines, including the Subic Freeport, children will soon be dressing up and chanting "trick or treat," their demand for candy backed by a light threat of a prank.

Have you ever found yourself, though, sometimes reflecting whether life itself is a Halloween? A mixed bag of tricks or treats perhaps? Probably so, for that is what life seems to be.

Let us go over some of the recent and not so recent tricks and treats we were recently dealt with:

  • The global economic meltdown – a big nasty trick; the Philippines doing relatively well in spite of it – a treat.
  • Pacquiao winning yet another title – a treat for the Filipino people; his entering politics – a trick, and not a funny one either.
  • The Subic-Clark-Tarlac Expressway (SCTEx) – a travel treat, more so for tourists and tourist-related establishments; potholes this early – a trick.
  • More flights at Clark – a treat; still no regular flights at Subic – a trick. Groups of people voluntarily doing something, anything, to revive the Subic Airport – a treat; other people yapping, not even suggesting, and basically doing nothing anyway – a trick.
  • Development of a commercial area by Ayala near the Freeport gates – a treat for many, a trick to businesses in Olongapo City that will be badly affected by it.
  • The proposed Certificate of Ownership of Leasehold Rights (COLR) – a trick for some and a treat to some; the associated fees and applicants shouldering survey costs – a trick to all; possible SBMA turn-around acquiescing to SBFCC's suggested solution – candy to all.
  • Flooding disasters in Botolan, Metro Manila, Pangasinan, and other areas – nature's big trick; SBFCC members giving donations – a heartwarming treat.
  • Withdrawal from Baguio the holding of the 21st Ad Congress – regrettable trick on Baguio; transfer to the Subic Freeport, "feel sorry" treat for Subic.
  • SBFCC Board of Directors elections – the high number of candidates is a treat; Philippine presidential elections – neither trick nor treat but more of a circus.
  • Thoughts of failure – a trick; promise of success – a treat.

Yes, it is easy to understand that life might be akin to a Halloween after all... but sometimes more so in our thoughts than reality. As the Roman poet and philosopher Titus Lucretius Carus wrote in De rerum natura (On the Nature of Things), "For as our children tremble and fear everything in the blinding darkness, us adults in the light of day sometimes fear what is no more to be feared than the things children in the dark hold in terror and imagine will come true."

And as yet again we prepare for our day and wait for it to unfold, we wonder, we fear, we doubt, we dream: will there be dark or light, horror or delight, trick or treat?

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Busy Time for the Chamber

by Prof Danny Piano; October 2009 Issue

The coming weeks will be very busy for the Chamber. By next newsletter after this, three major things would already have happened: the 5th Annual Golf Tournament, the nominations and official candidates' selection for the Election of SBFCC Officers, and the Annual Blood Drive.

Golf Tournament

This year's SBFCC Golf Tournament will be held on October 16 at the Mimosa Golf & Country Club in Clark Field, Pampanga. Tickets and sponsorship packages are now available from the Chamber office.

The Subic Bay International Terminal Corp (SBITC), a company who was very supportive during last month's Botolan disaster relief operations, represented by Reimond Silvestre, is a Golden Eagle Sponsor in this tournament. Overgaard Subic Inc, headed by Ross Bendix, is a Major Sponsor. Other companies that showed intention to sponsor are Bank of Commerce, Grain Pro, SBDMC, Subic Bay Garden Villas, Subic Gas, and Asian Tigers Lane Moving and Storage. We are waiting confirmation from a few more and would like to take this opportunity for others to support this annual event.

In the tradition of our past fund-raising activities, the proceeds of the tournament will be used for the Chamber's various programs aimed towards enhancing the quality of the business development in Subic Bay, as well as to fund socio-economic programs and initiatives.

Nominations and Candidates Selection for the SBFCC Officers Election

The nomination process for the elections has already started and will end by October 9. The official candidates selection would start on October 12 and will end on October 23. There is currently a good number of nominations and as of this writing, those who accepted the nominations include Reimond Silvestre of SBITC, Eloy Bermudes of Subic Drydock, Johnson Yang of Grand Pillar, and current officers who are re-running: Rose Baldeo of Global Terminals, Sung Il Cho of Subic Bay Christian Worship, Lawrence Lusung of the Bank of Commerce, and yours truly.

If you are interested in getting value for your investment in the Chamber, please participate either as a candidate and/or as a voter. Although the Chamber officers are basically unpaid volunteers, you should choose only those who will do something for you and the Freeport.

Annual Blood Drive

Blood cannot be manufactured by even the most advance and richest countries - it is a gift that can only come from a fellow human being, whatever his or her stature in life may be.

The Chamber has been doing blood drives for several years now. The previous years saw many volunteers from all walks of life donate precious blood that eventually went to the Red Cross. This year's Blood Drive will be held by the first week of November. Ocean Adventure and Camayan Resort will be providing free tickets to every blood donor.

Not everyone can save a life, but with your blood donation, you have the opportunity to.

More

Apart from the above-mentioned major events, a lot more are in our plate including the pursuit of positive outcome on the Chamber's position regarding the Certificate of Ownership of Leasehold Rights, follow-up on our position regarding the SBMA's new Housing Policy, the Memorandum of Understanding with the Greater Subic Bay Tourism Bureau where we are a partner in the upcoming Tourism Congress this November, the National Convention of the Philippine Chamber of Commerce where we are a member, the MOU with the Philippine Retirement Authority which we hoped would have been already signed but got side-tracked a bit, continuous updating of the new Chamber Forum website, participation in the upcoming Water Summit which will tackle the problems surrounding our bay, and a bunch of other things that will carry on to the existing and new Chamber officers who are going to be voted in.

Yes, these are busy times for your Chamber, but we can only be successful with your support. The more we are and the more support we get, the more we can do; the busier we are, the more we can achieve.

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2009-2010 SBFCC Election

by Prof Danny Piano; September 2009 Issue

All right, let us cut to the chase. Are you willing and interested to serve the Subic Freeport community, without compensation, and is your willingness matched by your commitment to set aside at least 15 hours a month for the Chamber? Yes? Great! Now the nitty-gritty. Please read on.

The Subic Bay Freeport Chamber of Commerce provides its members opportunities for significant degrees of active participation in the development of the Subic Bay Freeport. Foremost is the opportunity for any corporate member to serve as member of the Board of Directors. It is time of the year again when the election process begins.

If you are interested in getting value for your investment in the Chamber of Commerce, please consider participation in the Election of the Board of Directors, as a nominee or/and as a wise voter. Either way, choose only those who will do something for the Freeport, for you, and for other residents and investors.

Eligibility and Requirements

Nominees to the Board are required to exemplify and attest to being of sound moral character, must demonstrate the highest level of integrity, and are expected to conduct themselves with the utmost regard for business ethics at all times. Moreover, they are expected to demonstrate initiative, dedication, confidentiality, selfless willingness to serve, and above all, concern for the direction the Freeport and the Chamber will take in the future.

Bear in mind that elected Board members are requested to seriously commit to attend Board and General Meetings and mixers every month, to be involved in Committees, and to spearhead membership concerns. All these on a volunteer basis (without pay, allowance, or honorarium).

Only Corporate members in good standing are eligible for nomination. Members having past due membership fees will not be permitted to run. A directory of members in good standing will be sent to you. You may nominate yourself, provided you are the authorized representative.

Election Schedule

  • Sep 14-Oct 9 Nomination Process Begins. Members will receive Nomination Ballots where you can nominate Corporate members of your choice for next year's Board.
  • Oct 12-Oct 23 Candidate Selection. Nominees will sign commitments to serve on the Board at a minimum of 15 hours per month. If willing, they will be declared as official candidates in the voting process.
  • Nov 3-Nov 13 Voting Process Begins. Based on confirmed candidates, ballots are forwarded to all Corporate members who are asked to VOTE for the candidate(s) of their choice.
  • Nov 13-Nov 20 Tabulation. Votes are tabulated by the Election Committee.
  • Nov 24 Announcement of Results. Results are announced at the Annual Membership Meeting.
  • Dec 7 Officer Selection. The following year's officers (President, Vice President, Treasurer, and Corporate Secretary) are selected by the Board of Directors.

Remember, the Freeport Chamber is YOUR voice in the community. Please give careful consideration in nominating the candidate of your choice. Be involved - a single vote can do good by the same manner that a single non-vote might do harm - and choose wisely!

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Itching to be heard? Sound-off in our Forum!

by Prof Danny Piano; August 2009 Issue

The SBFCC Forum and Discussion Boards is now open!


And so you ask: What is it? The Chamber Forum is a great online place for you to share ideas, learn, and become up-to-date on matters about the Freeport. It is an excellent medium for interaction, discussion, and making friends with people who share your interests.

How do I get to it? Simply go to the Chamber's website and click on the Forum button. You can also go straight to it through this URL: http://sbfcc.com/DiscussionBoard (case-sensitive).

What's in it? It's designed to contain just about everything regarding the Subic Freeport including SBMA, the locators, residents, and matters and issues affecting all of us. Topics are generally categorized based from Chamber committees but new ones can be added easily as we go.

Do I need to pay? No, reading and posting messages are all free! At present, you don't even have to register to read the topics; you need to be registered to post messages, though. This is open to anybody - even for non-Chamber members, from people outside the Freeport, and even from overseas. Subic Chamber members, however, will have special privileges. Like what? Well, there are Boards that are accessible by members only. Members also get much higher priority when it comes to requests for information or answers to issues raised - the Chamber officers and staff work for you after all.

What benefit would I get from it when there are already a good number of blog sites about Subic? Like many sites about Subic, the Chamber also aggregates news, local and international, about the Freeport and posts these as new topics on a daily basis. New topics about current issues local to the Freeport, or just about anything can also be posted by registered users. What distinguishes this forum is that it is in real-time. You see something you do not agree with, you post a reply and it's there. The other party sees your reply, posts a rebuttal - it's there. By the same manner, if you have a question or wants to inquire about somebody else's products, just post it. You see somebody asking for information or inquiring about your business, you reply - you get a new customer or a thank you - done. No waiting. Your post becomes available for everybody to see a few seconds after you sent it. How cool is that?

Also, the forum is moderated by people who are very familiar with the Subic Freeport and are quite knowledgeable of SBMA and government rules and regulations. Although there are obvious exceptions, we are generally better-capable of getting the answers to your questions.

Another benefit is that you are allowed in your profile signature to create a link to your personal or company's website. This means you will have a back-link to your website every time you make a post; which further means that search engines like Google will boost the page ranking of your website during searches.

I am interested to know what's happening in the Freeport and even interested to know what other people have to say, but do not have time to browse through the forum; anything for me? Absolutely! We have what is called a Really Simple Syndication or RSS Feed. Go to the forum, register, and subscribe to our RSS feed. Every news item posted and new posts from members, at least those you have access rights, will be automatically sent to you every time you access your RSS. You get in the loop without going out of your loop!

I am interested but fearful of retribution; would I be identified? Fear not fellow member; you do not have to use your real name when registering; the Chamber Forum allows the use of pseudonyms or aliases. The use of pseudonyms usually creates more freedom of expression because of less accountability. However, anonymity often provides a platform for disruptive conversational behavior. The moderators of the Chamber will just have to work extra hard to check and possibly disallow or remove taboo posts.

So what are you waiting for, go ahead and register in OUR forum. Be an active member of the Subic Freeport community; contribute on a regular basis; try giving outstanding pieces of advice to fellow members while at the same time chastise those who are out of the straight and narrow. Let us add value to the place we all work, live, and love! As a result, we will be adding quality to our own lives as well.

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Death by PowerPoint

(how to give killer presentations instead)

by Prof Danny Piano; July 2009 Issue

PowerPoint presentations have become a common tool of business - sometimes enlightening and entertaining, many times uninteresting, boring, and fatigue-inducing. Great speakers seldom have a need for it but others will freeze to death without it.

For many of us not born with the right genes, giving effective presentations is a real struggle - and could be a mind-numbing experience for the audience, too. It does not have to be this way.

What follows is a brief compilation of tips that will hopefully help you, and me, give killer presentations.

Know your presentation. You should be familiar with your material backwards and forwards and should be able to carry on an intelligent conversation about it prior to the presentation. Try not to memorize. Preparation will give you the confidence to talk about your topic comfortably (so they say).

Present key points only. Have as few bullets per slide and avoid sub-entries altogether. Do not use the PowerPoint screen as your notebook and do not read from it except glancing for cues. The PowerPoint presentation is for the audience and not for you. Try to speak in your own words (if you're not choking yet). Use hardcopy notes that you can hold or put on a lectern and read from it, not the screen, if you must.

Utilize graphics. A picture, chart or photograph, is really worth a thousand words and can spice up your presentation. Animation is a nice touch also if used sensibly and not to the point of being distracting. However, do not show images just for the sake of it; explain how they relate to the topic being discussed.

Check readability and audio. Make sure your presentation is readable and your voice comprehensible up to the last row. The audience at the back will lose interest on a presentation that they cannot read or hear well enough. and they usually are not afraid to show their boredom by talking to each other or walking out instead (they are out of view after all; and no, you do not have the same option).

Interact with the audience. Relieve the feeling of isolation by interacting with the audience. Do not act bored. What you present has to be interesting and you have to be excited about it yourself.

Pause for effect and emphasis. It is the most dramatic way to make a point. Avoid ahs and ums; they are annoying and distract the audience.

Reiterate your point. The old axiom: "First tell the audience what you are going to tell them, then tell them, then tell them what you told them." usually helps in effectively conveying your point across.

So there - seven good tips to die for (pun intended).

What is also important to know is that nerves and anxiety are a universal part of giving presentations, especially for those who do not do this for a living. So what if you fail? Just pick yourself up, dust yourself off, and try again another day. Failing is part of life and business - this is not any different.

.and maybe, too, it is time for business and organizations to realize that not everyone can do presentations. Everyone should try to learn to communicate better but not everyone will be able to stand in front of, and engage, an audience effectively. It is a skill. Encourage those who can do it and stop torturing those who cannot (no pun intended).

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Save SCTEX from Billboards

by Prof Danny Piano; June 2009 Issue

"The thrill first time visitors get when they see the SCTEX - bounded by hills, trees, farms, and vast expanses of fields - is awesome! It makes us proud that, indeed, the Philippines is beautiful."


This was the theme that the Chamber emphasized in its position against construction of advertisement billboards along the SCTEX. The letter was submitted to BCDA President Narciso Abaya during the meeting conducted last May 6 at Clark between the Bases Conversion and Development Authority, the Subic Clark Alliance for Development Council, the Clark Development Corporation, and SBMA.

Below is more from the cover letter.

  • Beautiful landscapes are the foundation of the tourism industry. Most European countries prohibit billboards; among them Great Britain, Germany, France, Ireland, and Austria. It is one of the reasons these countries are so charming to tourists. Many US states have billboard limitations while some that are not are already starting to take their billboards down. Many tourist destinations disallow billboards: Williamsburg VA, Martha's Vineyard MA, Reno NV, Key West FL, Aspen CO, and many more. All of these states are major tourist destinations.
  • Subic Bay is also now becoming a major tourist destination. The past Lenten week saw more than 150 thousand tourists flocking to Subic who mostly used the SCTEX coming here. Everyone was impressed at how beautiful the sceneries along the SCTEX are. SCTEX, it looks like, has also become a tourist attraction itself.
  • The Subic Bay Freeport Chamber of Commerce (SBFCC) Board of Directors, on behalf not only of its members, but also of all the residents around this area, wants it to stay that way. We believe that it is in the best interests of the public to prohibit advertisement billboards from the SCTEX. and there is a brewing movement to make this so.
  • The City of Olongapo already passed a resolution for the abatement and dismantling of billboards along SCTEX. The Subic-Clark Alliance for Development Council (SCADC), last year, also started the movement for further greening of the SCTEX to enhance the road's aesthetic values - planting of more trees, not "planting" of billboards is the program's thrust.
  • The majority of motorists hate billboards. Each billboard that is erected blots out a little scenery, weakens the tourism foundation, and makes our country a little less beautiful. The purpose of roadways is transportation, not viewing huge advertisements. The government and ultimately, the people, have paid for the roadways and should not be subjected to unavoidable viewing of undesired advertising.
  • The public has a right to enjoy the beautiful terrain, expansive fields, and tranquil vistas along the SCTEX. In this spirit, we hope BCDA will take the lead to uphold Administrative Order No. 160 regulating the billboard industry and we trust BCDA will be at the forefront to protect the beautiful sceneries along our roads.

The letter, and copies of it sent to various heads of government agencies, was received with agreement and enthusiasm. The complete 5-page document is available at the Chamber website. Thanks to Susan Dudley for doing the research leg work.

The potential billboard problem at the SCTEX is not a current issue yet but as Sun Tzu in Art of War said, "Most battles are won before they are fought."

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Complicated? Keep It Simple!

by Prof Danny Piano; May 2009 Issue

Have you ever wished that things - managing and running an organization, dealing with others, dealing with information overload, decision making, running your life, whatever - are simpler? Of course you have - we all have! Unfortunately, in many cases, we did to ourselves the complications that we face. I can't tell you how to decide but I can give you what others who have come before us have to say about it.

  • William Ockham, 14th century logician and to whom Occam's Razor is attributed said that "all things being equal, the simplest solution is the best."
  • Albert Einstein's maxim states that "everything should be made as simple as possible, but no simpler."
  • Antoine de Saint Exupéry's "It seems that perfection is reached not when there is nothing left to add, but when there is nothing left to take away."
  • Elliott Sober's "The simplest theory is the more informative one, in the sense that less information is required in order to answer one's questions."
  • Isaac Newton's "We are to admit no more causes of natural things than such as are both true and sufficient to explain their appearances."
  • Thomas Aquinas argued that "if a thing can be done adequately by means of one, it is superfluous to do it by means of several."
  • Leonardo Da Vinci's "Simplicity is the ultimate sophistication."

You do not have to choose or make things more difficult than they need to be. Choose simple, but not simplistic, assumptions over complicated ones and you won't be entangled in a never-ending but futile struggle to prove yourself right.

Jerry Yang, founder and former CEO of Yahoo, employed the complicated matrix management system, embroiled the company in endless reorganizations, and produced not so pretty results. Jonathan Schwartz, CEO of Sun Microsystems, made a number of restructurings at the company and failed - the company was recently bought by Oracle.

For some folks, simplicity appears effortless. Lou Gerstner executed one of the most challenging turnarounds in business history by reversing the planned disaggregation of IBM and refocusing the company on IT services. His new vision for Big Blue was brilliant, but it was also simple and elegant, requiring far less restructuring than the previous plan (S.Tobac, BusinessNet).

Frustra fit per plura quod potest fieri per pauciora - it is futile to do with more things that which can be done with fewer. Next time, given a choice, but not to the point of inadequacy, choose the simpler path - it usually is the better choice.

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Facts and Timelines Regarding the Issues Surrounding the Supposed Cutting of Trees in an Alleged Urban Forest
Within the Subic Bay Freeport

by Prof Danny Piano; April 2009 Issue

A lot of times, diving head-on into an issue without knowing the facts behind it puts one into trouble or into an embarrassing position later, to say the least. The Chamber has been aware of reports regarding the alleged cutting down of trees in an area commonly known as the Mini-Golf Course and which is claimed to be within a forest reserve.

In order to be able to understand the facts behind these reports, the Chamber did a lot of leg work and independently gathered documents from various sources that provided factual information on the issue. On this basis, the following were established:

  1. On October 22, 2007, Kyung An Co. submitted a proposal to build a hotel-casino project in and around an area popularly known as the Mini-Golf Course;
  2. The Mini-Golf Course was originally reclaimed and developed by the U.S. Navy from swamplands in the 1960's;
  3. In 1992, under SBMA's Urban Design Guidelines, the Mini-Golf Course and adjacent areas were referred to as Parcel No. 35 and was designated as a resort, retail, and recreational area;
  4. In the 1996 SBMA-commissioned Kenzo Tange Master Plan, Parcel No. 35 was declared as a high-end tourism area;
  5. Kyung An Co. proposed a committed development amount of P2.5 billion over six years to develop the area;
  6. On December 7, 2007, the SBMA Board of Directors approved in principle Kyung An's proposal;
  7. On December 7, 2007, the SBMA Board of Directors also approved two other proposals: the MBK Grand Leisure Inc. expansion and Wonderpark Inc., beside the same area and subject to completion of the new CBD Master Plan, of which Kyung An's proposed project is also part of;

    Parenthetically, on September 30, 2007, invitations for eligibility for the development of the CBD Master Plan project was published and where five actually purchased bid documents; and where three: Berkman International, Design Science, and Palafox/Woodfield Consultants submitted Technical and Financial Proposals;

    Whereas, on January 25, 2008, after evaluation of the technical proposals, Design Science was found to be highest rank followed by Palafox/Woodfield Consultants.

  8. On June 6, 2008, the SBMA Board approved Kyung An's request to assign the leasehold rights to Grand Utopia, Inc.; the development was called the Ocean 9 Casino-Hotel project;
  9. Grand Utopia obtained the services of the Yamasaki Group to build the project; and around August 2008 the Yamasaki Group tapped Palafox Associates as its local partner (ref: PDI report dtd 1 Dec 08) to take charge of the ECC and the EIS (ref: PDI report dtd 5 Mar 08);
  10. On August 19, 2008, SBMA's Ecology Department inventoried Parcel No. 35 and found 366 live trees where 212 are less than 8 inches in diameter;
  11. On 5 September 2008, the SBMA Board approved the awarding of the SBF Master Plan Project to Design Science, Inc.
  12. On 11 September 2008, the Ecology Center, in a letter to Grand Utopia suggested that the trees be saved and incorporated in the development plan;
  13. On September 11 2008, Palafox Associates received a letter from Concerned SBMA Employees requesting to protect the trees (ref: Arch. Palafox DZMM interview dtd 7 Dec 2008);
  14. On 16 September 2008, during a SBMA/SBFCC Liaison Meeting, SBFCC raised the issue about the cutting of the trees;
  15. On 22 September 2008, according to Eric Park, executive manager of Grand Utopia, Palafox signed the subcontract with the Yamasaki Group (ref: PDI report dtd 5 Mar 09);
  16. On October 29 2008, Palafox Associates begged off from the Grand Utopia Hotel project;
  17. On 30 November 2008, newspaper report from the Philippine Daily Inquirer (PDI) came out alleging that 366 trees would be destroyed in Parcel No. 35, out of which 37 are century-old trees; this was followed by many more newspaper reports, radio and television interviews;
  18. On 5 December 2008, a consultancy group and non-government organization, Kanlugan, composed mostly of professors and experts from U.P.-Los Banos, submitted the IEER to SBMA, where it recommended that an equivalent reforestation of 8 hectares of land is a better option than balling the trees; also, that 51 of the trees should be retained on site;
  19. On 5 February 2009, the Council for the Built and Natural Environments (CBME), the biggest group of architects in the Philippines conducted a fact finding mission and validated that the proposed project site is in a commercial district, there is no natural forest in the proposed project site, and that no tree has been cut or felled; CBME also concluded that vegetation in the project site can neither be considered virgin forest, or a natural old-growth forest, and that there are no century-old trees in the area.

Based from the above, the Subic Chamber Board of Directors came out with a position paper. Now, you have to do a little bit of leg work yourself and head on to our website, www.sbfcc.com/Issue_on_Cutting_of_Trees.pdf, to find out more about it.

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Freeportopia

by Prof Danny Piano; March 2009 Issue

When SBMA, business, and SBFCC work closely together to address problems affecting us all.


Historically, government, business, and non-governmental organizations (NGOs) have always been at odds with each other. "The business of business is business" as what the economist and Nobel Prize winner, Milton Friedman once said. NGOs want everyone to do good things - which cost money that people are reluctant to dole out in the first place. Governments, on the other hand, are seen by business as imposers of rules and taxes that they can do well without, and seen by NGOs as insufficiently moral and ridden with corruption. Although these three sectors have worked with each other, expediency rather than trust govern the relations.

Are the relations between the Subic Bay Metropolitan Authority (SBMA), business, and the Subic Bay Freeport Chamber of Commerce (SBFCC) any different? Yes, better than most but still at loggerheads with each other, collaborating but not as a team, there is regard for each other but not much trust.

Can something be done about it? Absolutely! How?

First, ask yourself this question: "Does it make sense to work together and will building the relationship be mutually beneficial?" If your answer is no, then you do not have any problem, can pursue your own agenda in isolation, and should stop whining (if you are). If yes, be prepared to make compromises - this is the only way working together is going to work. Trade-offs are necessary to produce results that will benefit us all.

Second, there needs to be a convenor; one that can bring the right people together in order to identify and understand the extent of shared interests and in the process, creates a potential for joint action. The SBFCC can, and is willing, to step up to this task. We are already doing this, as a matter of fact, but our resources are limited. With assistance from the other parties, we can do more.

Third, all parties need to understand and be prepared to work around the core requirements or "red lines" of other parties.

Fourth, solutions to problems must be co-created and where implementation procedures must be agreed upon by all.

In line with the above, SBMA and SBFCC are now actively discussing the mechanics in the formation of joint working groups. In the past, SBMA decisions are made based primarily on inputs from SBMA's own working groups. Arrangements are now being discussed where members of the Chamber are "embedded" in those working groups. The locators' voices can now be heard before crucial decisions are even made. A special locator's congress was also done last Feb 10 to gather issues that are of primary importance to locators. The collated issues will be used as basis for determining what working groups should be given priority.

Are we anywhere near Freeportopia then? Far from it. As all other utopias are, reaching that idyllic state is mostly mind feed. We just want to have a more or less safe, nice, productive, and friendly place where we can reasonably work and live in peace, quiet, and harmony. Right now, we are making another baby step towards attaining a semblance of it.

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A bright and prosperous 2009 to everybody!

by Prof Danny Piano; February 2009 Issue

Well, that is at least what I hope and wish for every company and organization, employer and employee alike, in and around the Subic Bay Freeport Zone. The Subic Freeport has been one of the most dynamic places for business in the Philippines and Southeast Asia but with the global financial crisis, the influx of new investors would most likely be reduced. One reason is because banks will try to improve liquidity and will try to limit credit availability; therefore, many companies, old and new, local and foreign, looking to raise capital, would be hard-pressed to get one. We can expect the availability of new jobs in the Freeport to be much less than it would have been, had not the crisis happened.

The initial effects would be felt more quickly in credit-driven sectors but will certainly spread beyond it. We will also generally see some slowing down in hiring from existing companies simply because more companies, local and foreign, will be competing for less available work. Since the Philippine wage level is higher than many other Asian countries (India, Bangladesh, China, Vietnam, etc.), we can expect lower volume of work coming in to the Philippines.

Other effects include consumers buying less. Less demand will mean lesser supply needed and, needless to say, fewer workers needed to produce the reduced market requirements. The International Labor Organization estimates that there would be an increase in unemployment by about 20 million men and women; a percentage of this would undoubtedly be from the Philippines.

But despite the expected general downturn of the economy in 2009, the Subic Bay Freeport will still be in a relatively strong position, at least compared to other areas. The recent 28 new investments in the Freeport would help in counteracting the slump and possible layoffs from some existing companies.

By and large, the 2009 economic outlook in the Subic Bay Freeport is certainly not gloomy but still bright, perhaps not as bright as previously forecasted, but still good enough to propel it forward and drive it to greater heights.

---x-x-x-O-x-x-x---

I am Prof. Danny Piano, President of the Subic Bay Freeport Chamber of Commerce for 2009. I hope to be able to continue the good work that former president John Corcoran did for the Chamber. Having worked with him since 2006, he is a tough act to follow, I can tell you. Fortunately for me and the rest of us, he decided to still be part of the Chamber Board of Directors even when he is very busy with his company. Together with the rest of the Board: Atty. Omy Duran as Vice-President, the angel-hearted Ms. Rose Baldeo as Corporate Secretary, Dante Pollescas as Treasurer, and Tom De Bruin and Jerry Hammond, along with the indefatigable Executive Director Susan Dudley and our Admin staff - we hope and we will try our best to serve you better!

There will be some changes in how the Chamber conducts business this year, two of which includes:

  1. The creation of seven standing committees: the Business Development Committee, Labor & Workforce Development Committee, Membership Committee, Security & Safety Committee, Environment Committee, Events & Ambassador Committee, and Government Affairs Committee. The chairmanship and preliminary description for these committees can be found in the SBFCC website. For members interested to join and willing to volunteer time and effort to these committees, please contact the Chamber office.
  2. A change in SBFCC-SBMA liaison procedures. Instead of the usual monthly liaison meetings with SBMA, Chamber committee chairs or proxies will now be joining SBMA committees so that possible issues on matters concerning the business community can be discussed right then and there instead of after the fact. This arrangement was already approved by SBMA Administrator Armand Arreza after a series of discussions with him.

We do have a number of events already lined up and is being finalized including socially responsible programs like the annual Blood Drive. The recent Up With People event was a huge success that the organizers, because of the overwhelming support and outpouring they received, even plan on doing it again here at Subic. Loads of donations from that event were already given out and distributed to the less fortunate around us.

---x-x-x-O-x-x-x---

Although the Subic Bay Freeport Chamber of Commerce is here to help you and the community, the Chamber, as a matter of forthrightness, also needs help. Perhaps because of the same global financial crisis or perhaps because some of our members do not find enough value in the service we provide or were not aware of the things we do, our membership has somewhat dwindled during the past year.

I would like to take this opportunity, therefore, to call on all our members
to recruit one - JUST ONE - non-member buddy of yours to join us!

On the Chamber's part, we will try to do more and will make sure that you know what we are doing for you. I admit that in some cases, we do things for and on behalf of the community, but never get to tell you about it - like a father who stands against an issue in defense of his family but takes it all in by himself. Just recently, the Chamber submitted two strongly-worded position papers against the 1) Bureau of Immigration's "Survey" of Foreign Nationals in the Freeport, and the 2) Department of Labor and Employment's (DOLE) Inspection Blitz of SBF companies. We will now be posting all our position papers on our website.

We hope that with your help, 2009 will also be a bright and prosperous year for your Chamber!

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