The Asian Manager, June 1991 Issue by Sherbet Manalili

A Publication of theAsianInstitute of Management andthe Federation of AIM AIumni Associations

M ER

Vol.lV No.2 JUNE- AUGUST 1991

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EDITORIAL FromtheMitor..

Asicfs Excellenl Corporcrlions /ryo- Over1,800Asianmanagers witnessed the awardingo[ 3()Manasement Awards. to 32 excellent A s i a n c o r p o r a t i o n si n s i x A s r a n countries- in Februaryand March.The Awards Dinnersmarkedlhe culrnination of the First Annual Managemont Awards Program organized by lVoid Execulive'sDrSest(WED) in cooperation with the Asian Instituteof Management, The program was sponsoredby Acer lncorporated. Our coverstoriesthis issueincludea special look at the rvinnersby AIM alumnusand WED executiveeditor Jet Magsaysayand remarksgiven by Dato Seri Rafidah Aziz, MalaysianMinlster of InternationalTradeandIndustry,and RadiusPrawiro,Indonesia'sCoordinating Ministerfor Economy,Finance,lndustryand Developmentat the Awards Dinners.Also thisissue,an exclusivc in' terview with FranciscoEizmendi. Jr.. presidentof SanMiguel Corporation,which rcceivedthe lnformationTechnologyAward in the Philippines. As a measureof the attentionand prestigethe program generated,WED ran an exlra8,000copiesofits April issue -due to uncxpecteddemandfor the magazine-in which the winnerswere profiled,and will providemore in-depth coverage ofthe winningorganizations in cachcategoryovor thc nextfivemonths.We'vealsobeenpleasedin our travels aroundthe regionthatthc Management Awardsis a consistent topic of conversation amongthc businesscommunity.

MANAGERarticlesinteresting,very interestingor extremelyinteresting.To do cvenbctter.we are planningto increasgour coverageofissuesrelatedto organizationaldynamics,corporate planning and management/leadership style- asyou suggest. Informal feedbackon lhe evolving a p p e a r a n c ea n d l a y o u t o f y o u r magazinehasalsobeenpositive.Here again,we hope to continuedoing better. To helpus alongin thistask,Ibarra C. Gutierrezjoins THE ASIAN MANAGER staff as managingeditor with this issue."Bombing"- as he is known to friends and colleaguesbrings 15 years'experienceas a journalist and editor for newspapersand internationalmagazines. Assisting Bombing are Pinky GallegosandKin Gatbonton,who in addition to their other responsibilitiesat A I M a n d t h e S c i e n t i f i cR e s c a r c h Foundation,are responsiblefor pulling the magazine together every cluarter,editing and proofing copy, and coordinatingad placementswith our marketingdirector, Delia Gutierrez.Yes,Delia and Bombingknow eachother quite well- and we-aiepleasedto havethis accomplished teamworkingwith us. There are otherswho havelong deserveda resounding ovationfor theircontribution to THE ASIAN MANAGER. They are associateeditorsSusieArroyo, SallyFlores and Annio Pundol-and our designdirector,Al Ballesca.All of whom haveother full-time responsibilitiesin addition to Developmenls cl THE ASTANMANAGER their work for thc magazine. reliminaryrcsultsfrom our roadorshipsurveyinIt is alsoproperto acknowledge the unwaveringsupport cludedin thc lastissuearo erlrenelyencouraging. for the magazinebv our AIM staff and the administration. Thoseresultssofar indicatethat89olc of our readers Like any new vonturc,THE ASIAN MANAGEB has rekeep their copies of THE ASIAN MANAGEB for future quircd substantialfinancialresources.Thanksto the supreferencc, and 56%' ol you share the magazinewith at least port of our late dcan GastonZ. Ortigas,Dean Felipe B. one or two other Asian managcrs another 437r, share it Alfonso and ChairmanWashingtonSyCip as well as our with three to more than six collcagues. readers,wc cxpectTHE ASIAN MANAGERto becomea "profit center" bv the end of the year- profits that will go And you spcnd a significantportion ol your valuable time reading the rn agazine-73Vo go through tbe magazine to improvingthe magazinefor Asian managers,and thc more than once.Scvcnty-onepercontspend 30 minutesto cducationof future managcrs. "thankyou" more than two hours readingthe articlcs. a resounding Finallyandmostimportantly, Pcrhaps most encovagingof all,90 oL (, /// rcspondcnts for your supportand to you,our readcrsand advertisers, consider the magazineprofessional,very professionalor confidencc. - I,L4H e x t r e m e l y p r o f c s s i o n a l , a n d 8 2 0 7 ,f i n d T H E A S I A N

4 rHEnstnru MANAGER . June-Auausr 1991

Even now, if you listen with your heart, you can hear the music. We need not wait for the future to find out what is in store for us. We need only look aheadwith faith and conviction that we can shapeour own tomorrow. Just as you can hear the music of a guitar that is yet unfinished, io can you see the vision of tomorrow. It is a vision we sharewith you.

5 l ! t o " M r G U â&#x201A;Ź L c o R p o R A T r oKNA r s A

sA pANGARAp NG BAyAN

CONTENTS-

2A U.l|tg ll ro $.y Ahc.d An inle iew with SMC| Eizmendi Sar Miguel Corporationwaschosen this year's ManagernentAwardee for InformationTechnology.In an interview with Kin Gatbonton,Francisco Eizmendi,Jr., SMC'spresidentand COO, explainshow this Philippinebasedfood conglomeratemakesuseof IT to maintain its market leadership.

The M dtaganent Awar& tropb Sitctr to Atia't owstondingcornpani8. btsct: Ashok K Nalh of wED, FelipeB, Alfottso ofAIM @td Sta,..Shihof Acer,Irra.

Cover Stories

Editorial

|gldg

Ixclcnt

25 lhc l{ccd lo? Excficncc fionogc|ncnt by Hot RadiusPrawiro In a speechdeliveredat the ManagementAwardsDinner in Jalarta,Hon. Prawiro talk about the impo anceof the privatesector'srole in developing local economies.

53 Ccnlcrr Thc lhc Ol|l$|' lfcklng of .l loom Tcwn In this specialreport, TAM focuseson the phenomenaltransitionofthe OrtigasCenterfrom a sleepybacklot to districtin the fastestgrowiDgbusiness the Philippinestoday.

Gor?ororlonr

THEASIANMANAGER

lru

Arcfidryrlcn lloncgcr florgkrg? W DatoSei RafrdahAziz As Malaysiancompanies increasingly compete in theinternational mark€tplace,Malaysian managers should thlnl Seyondnationalboundaries and adopta globalperspective, saysDato Rafidah.

SDecialReport

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Honodng nrrrcgdnart Exclcncc h lda W 14 Magtarsay Thirty-two Asian companiesmade up the first batch ofwinners of the M a n a g e m e n tA w a r d s P r o g r a m launched by the World Executive's D i g e s t i n c o o p e r a t i o nw i t h A I M and Acer Incorporated.Jet, WED executiveeditor, takes a look at the awardeesto find out what makes them so outstandins.

discussesthe various programsof Asian gov€rnmentsto financeand nurture this important sector.

A Publlcatlm of h. Asie lnslilulo ol Man!g!m..! ed tho Fadoratio. oflh. klan lnslilul. of Manag.h.nt

Features

32 ffenoghg FGopbr lerloac trom llof3u.hlh l(onocukc by Pmf. Euu Inaba In two-and-a-halfyearsof doing researchon companieswith Japaneseaffi liationsthroughoutSoutheastAsia, Etsu discoversthat Matsushitaaffiliates are held in high esteemall over the region.ln thisarticle,sbeidentifies the commonfeaturesof theseltellmanagedcompanies.

42 fino-W.ry Communhotlon 13 lhc KGy to Suaccts by @. RobertoH. Lint Communicalions- or the transmission of ideas- is vital to the successof every manager.Bobby givespointers on irnprovingcommunicationtechniques andwaxesromanticin the orocess.

4A Fundhg Adelr fhcdow E@romt/ by Pmf. Quittirt G. Tan The informal sectoris a hugeengineof srowth for mostAsian economies.QT

. June-Augusr 1991 6 rne astaNMANAGER

Publisher FslipeB.Altonso

Hamlin MichaelA.

ManagingEditor lbara C. Guiiefiez

Assoc/ateEdlfors

PiaJ€susaT. Artoyo AniiaE. Pundol SalomeRores-AldabaPinkyl. Gallegos KinGatbor*on

DesignDirector Al Ballesca

Ma etingDirector DeliaC. GutierrEz

Board Ed'rtotiat GabinoA. Mendoza HoracioM. Borromeo,Jr. SonnvB.Coloma uontrDulng Eot@rs MM'88) MilonBikashPaul(Bangladesh, (HongKong,MDP'80) PetorKwokYiu-Kee '75) JuzarKhorakiwala {lndia,MBM '79) ABIdP RobbyDjohan(lndonesia, AMirP'82) ChristinaF. Fene,os(lndonesia, Boo-HoRho(Korea,MBM'74) MBM'78) EftieT. H. Goh (Malaysia, lroharnrnad$leem Ou€€hi(PakiEian,BMP Z MBM'70) Alejandro Z. Gaston(Philippines, '82) MBM GanCheongEng (Singapore, HsiehLaiFa (Taiwan,TMP'82)'81) SomnukJetiiravatffhailand,BMP copvrloht 199r bvTllEASlAl| MAllaGEn.Atr nghrs l.s; iaJ. R. Fodklo. in any mMm r in whot. d pad 'n E.glish or olh.r languag!3 prohlbit.d. THE ASlAtl ANAqEF is publbh.d quad. y by lh. Asian Instllul. or Mdao.m.nl. Ediloial and Advcdbino Oftice:AlM. 123 P6.;d. Roxls, Marat, M.U., PhilippTE!. T.l: {6}2) 87'4o11 FAX: (6}2} 417-92-40 Pholog€phs 3dJrced by lhs AIM LibEry Prinl.d byAlM P rnhg

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\ T E L C O M EA B O A R DT H E A I R L I N ET H A T F L I E SD I R E C T T O T H E M O S T C I T I E SI N E U R O P E . $Trroi This is how you'll be welcomedaboardwhen we fly you direct from Australiato any one of fourteenEuropeancities,many of them reached with just one stop lt s the traditionalThai greeting,a mark of respect, friendshipand hospitality.Thesequalitieslie at the heart of our RoyalOrchid Servrce'and come as naturallyto the Thais as smiling. Thai departsfrom sydney,Melbourne,Brrsbane, cair.s and perth. THAI lNTERNATIONAt.,CountrySpacelBldg.,S Ce, rnJl . p u y a t A v e . , N l a k a t i . M N T le l 8 1 5 _ 8 4 3 1 r o . t 0 o N l a n i l aO f f r c c ,J . P L a u r e lF o u n d a t r o n B l d g , P c d r o( , i l c o r n e rM . H , d eI p i l a r ,E r m r t a M , a n i l a. T c l 5 7 ., 6 - 7 1t o 7 7 o F o r r e s e * a t i o n s , c a i l T8 c rr 5 - 8 4 , 2 r t o 2 7 . c s A C e b u T i r . 7 3 0 t 4 c s A C a r g o T e r 83r-2686to87

FEEDBACK Witlt tttis issrc, THE ASIAN MANAGER is iwuguratitg o ttew section called, FEEDBACK. ,iie would like to tnvite ow rcaders to send itr tlrcb conlnretts attd suglestiotrs to: Feedback, The Asiart Manager, P.0. Box E98, Makati, Metro Monila.

Errsl w. Wesl I am fortunateto haveread Del|rl "The Multiple Mendoza'sarticle, Paternityof AsianManagement,"at a time when I still have the luxury of decidingwhereto takemy MBA. His article has helpedme seethe importanceandrelevanceofthe cultureand environmentin whichonereceiveshis professionalmanagementtraining. Score another point for the local favoritein the annualWhat-BusinessWorld Series: SchoolShould-l-GoTo AIM rn.Harvard,Wharto\,et ql. ThoughI believethat in termsof eftheory fectivity,Westernmanagement andpracticehashada muchmorecritical and far-reachingimpacton Asian management thanthatrelatedin thearMr Mendoza doessucceedin ticle, presentingan invaluablediscourseon thecomplexmaniageofthe contrasting Westernand Easternschoolsof management herein theAsia-PacficRrm. He evenmanages to articulatethe underlyingtheoriesand conceptsof both framesof mind- accuratelydifferentiating Westem rationality, specialization, andvaluesrootedon abstraclness from Easternflexibility,frugality,and valuesrooted in therealitiesof day-todayliving I believethat there can neverbe too mary managementschoolsof thought in the world. In the increasinglycompetitiveenvironmentin which prospective managerswill haveto meet objectivesand makeoptimaldecisions,the ability to adapt and use any managementmethodwill be of vital concemto all,whethertheseschoolsbe from the West,theEast,theNort[ theSout\ or whichewr point on the compass.This kind ofbroadmindedness is what I hopc practitionerslike Mr. management Mendozawill write about and further expoundon in the near future, I am

sure that suchan article will be another of the indispensablecontributions to managementliterature which I have grown acrustomedto readingin THEASIANMANAGER. PatricioPinedaIII Infonnatiott SystentsDirectorute San Mi&&l Corporution Metro Manila

Jopanese Work Erhic In 1984,I wasfortunateenoughto be with a group of Aseanrepresentatives to go on a month-longtour of Japan to examiosfirst-handthe Japanesemiracls.Your article,"The Evolutionof Businessin Asia: The Not-So-Inscrutable Japanese"(Vol. III, No. 4) managesto summarlze everyhingwe learnedin that tour in very conciselanguageand brought back to me the ]essonswe learned then. L e t m ec i t ca s n r a liln ti d e n tw h i c h , for me, showsjust why the Japanese are so successfulin business.We visiteda Nissanauto factory,ther already quite automated,and we saw f i r s t - h a n d , t h e m a n u f a c t u rni g process.It wasnot the robotics,howit ever,lhat madeNissansuccessfulwas their people.Once a car left the assemblyline, a Nissan employee car to would drive the newly-finished the parking lot, then run, not walk, backinsideto takethe nextcar. That samopatternof determination, of gettingwork donerigbt away, anddoneright,wasrepeatedin every factory we went to, from a Yamaha factory producinggrand pianosto a Mitsubishi factory making electnc fans.Now whetheryou can attribute that work ethicto their morningcalisthenics,their nightlydrinkingsprees. their lifetime employmentschemeor their qualitycircle meetingsis not so m u c h { h e m y s t e r yt o b e s o l v e d . Rather,it is whetheryou can develop that samework ethic amongFilipinos at all. That I feel,shouldbe the more pressrngconcern. DickieSoriano PasottgTarno,Makati Metro Mattila

. June-August 1991 8 rxe astaruMANAGER

A Lilerory PensPeclive Vol. IV, No. 1 readlike a hurriedlY edited issue.I noticed severalqpog r a p h i c a le r r o r s a n d m i s t a k e si n grammar. The graphicsand laYoutare much too familiar,but then,the temperand the times,alsothe tone and tint, must havesomethingto do with that. Get the magazinemore AIMFUL. The articles do not reflect' in the round, the institutional fervor. The realities do not alwaysmatch the dreams.Writing about management or eveneconomicscanbe asinteresting aspoetryandjust asexacting.The editors though need not just sit and mope. Asian Managers (if AIM's TAM gets them writing like GabY Mendoza)canget lhc placegrowling like onewholetiger or lion. AndresCristobal Cruz Ofrce of SenatorWghc,lo Taisda Serwteof tlrc Pltilippines

Relevonl Reoding I have been readingTHE ASIAN MANAGERsincelastJulywhenI first enrollcdat the Institute.I havefound the articlesin it veryusefuland interesting. I especiallyenjoyedreading your last issueon Japanesemanagement, What has particularlyinterested me most is its relevanceto the Aslan contexl.There are not too manymanagementmagazinesthat focus on Asian managementstyles and companies.Thc dearthofmaterialprobably explainswhywe ha\â&#x201A;Ź adapted-to our - Wester n- orient ed madetriment nagementtenetsand failed to evolve someof our own. O n e o f t h e I n s t i t u t e ' ss e l f proclaimed goals is to develop the Asian manager;onewho is well-versed in Westernmanagementmncâ&#x201A;Źpts,but who at the sametime, is awareof the subtletiesof the Asian environment. The rnagazinevastly supplementsthe learnirg processhere at AIM. Ashok Regmi MBM I Asiatt Institute of Managenrcnt

Nothinq qujte compares to the excitement

of watching

a live telecast, Moments spent In tense antrcipation as worLd records a.e broken and llttle vlctories .elebrated in a variety of sportrng arenas.

We Keep ANationGlued To Their Seats With This

Little Gadget. In Malaysia. live telecasts wouldn t be possible without Telekor. Ma aysia s vast telecornmun cations network. A network

that spans the

9lobe to provide for the telecommunrcations needs of an

Employing the rnost sophisticated resources to give Malaysians the convenience of services as varied as direct international

calLs.Total access

to markets overseas. And vrtal data at the push of a button. Keeping a nation constantly

updated

and

always in touch. wherever

.art

tlrTEIEK9)44 ANSWERING

TOMORROWS

CALL TODAY

-COVERSTORYManngeme ntAwails hogmm lawrched..

HongJing l{lclnqgemenl

Errcellendein Asicr FircfArnunl

entrepreneurial and organizationbuilding skills with aaalytical market research,innovative promotional campaigns,computer-aided distribution and customer service, and wellplannedbrandimage-building. This unique and effectivecombination of entrepreneurial flair and a technicalapproachto marketinghas carried the companyto the top. For that achievement, Fuji Photo ProductsCo., Ltd. waspresentedthe Award for MarketingManagementin Hong Kong. Drawing as it doesfrom rwo influences,Western and Eastern, the companyis a testimonyto the univer-

them into outstandingcompanies. To seek out, recognizeand honor those companies,llorU Executive's Digesl launched the Management Awards Program in cooperation with the Asian Institute of Management. byJet Magsaysa!MM'89 The program, which was principally ExecutiveEditor sponsoredby Acer Incorporated, culWo d Eftcutive's Digest minatedwith the presentationof ManagementAwards to 32 outstatrding companies in the six participating countries.These companieswere un ChiehYeh couldbe your typichosenfrom more than a thousand cal Hong Kong entrepreneur. nomineesby leaders in businessand Like many who migratedfrom the academein eachcountryaccordmainlandChinato seeknew fortunss ing to criteria formulated by AIM in the colony, Sun started his own Drolessors. company.In 1968he openeda For the Marketing Masmall shop in Central District nagementAward winners, that sold black-and-whitefilm the main criaerion was for cameras.Like the most marketing innovationleadenterprisingof the overseas ing to customersatisfaction. Chinese,Sunsucceededin his Peter Drucker's definition venture.From that smallshop of the purpose of business with 10 people, Sun's com- t o c r e a t e , s a t i s f y ,a n d pany,Fuji PhotoProductsCo. keep customers- has not Ltd., grew rapidly.Today,the beenimproveduponfor five companyoccupies sprawling decades.And, as marketing officesin the New Territories, guru Theodore l-evitt conemploys more than 300 c l u d e s ,i n a c o m p e t i t i v e p e o p l e ,a n d i s t h e m a r k e t world where somebodywill leader in the photo filrn and always try to serve people photoprocessingindustries. better, getting and keeping Twelve years ago, the comcustomersrequires innovapany enteredthe China martron. ket andhasbecomethe leader The Marketing Managein that marketaswell. ment Award winners can PhilippinePrcsidentCorazonC. Aquinoat the Unlike most Hong Kong certainly be called innovaManagementAwards Dinner,Manila companies, Fuji Photo tive.JollibeeFood Products ProductsCo. Ltd. succeededthroush salityofthat disciplinecalledmanage- gaveWesternfastfoodproductsa disa uniquecombination of Chinesea-id ment.ThroughoutAsia,managersare tinctly Filipho flavor. PT Astra InrerWesternmanagement methods.Sun,s practicing this disciplineeffectively, nationalmarketedthe Kli'an&a utility son, Dennis,who today is the growing their companiesand estab- vehicleuniquelysuitedto lndonesian managingdirector of the company, lishing them in strategicpositions roads. NTUC Fairprice Cooperative h a s s u p p l e m e n t e dh i s f a t h e r ' s within their industries,tr aasforming Ltd. brought retailing down to the

10 rneqslan MANAGER o June-August1991

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l.'rcl ol thc man in thc SingaPore \rrcct. Thc Dusit Thani CbrP.Ltd built thc first Thai hotcl opcratcd acc o r d i n g t o i n t e r n a t i o n a ls t a n c l a r l l s ' \ t a l av s i a ' s E d a r a n O t ( ) ) m o b i l Nasional Bhd. rnarketsd the Proton Saga.the first Asean-madecar'

Generol llllonogemenf Awords ankingis an inhcrentlycomPetttivo industry, and with advances in information tcchnolog-. it has become oven morl: comPotltlvs, as banking products increasinglybe-

c a m c c o m m o d i t i c s .[ n J a k a r t a ,t h e lcvcl oI comPetition rosc to ncw hcights as the govornment deregulated banking in 1986. This now environmentis Provingto bo a true test of character for the country's banks, calling for a profcs-

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For every mill we put uD, you can be ture dozens of housing proiectr are being built elrewhere. You see.these mills Drovide the steel that hciusesmillions of people. From rhe reinforcing sreel bars to the G.I. roofing ro the pipes. Even the nails that hold it all together.

Housing is one of those things our country will always need. And that's why we're doing the best we can. We want our people to livJand our country to g,row. Thar's something you can build your hopes on.

.Sr-E'RE BUILDING A COLINTRY @

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stcel corPoration

sionalapproachto bank management that promotesmarketingaggressiveness,operatingefficiency,and ethical funds management.Bank Niaga has shown that it has professional managementexpertisein all three areas. The bank combinesfirst-rate people development,the applicationof advancedinformation and communicationstechnolog, and a strongmarketing thrust to educate,win, satisf, and keep thousandsof Indonesia'snew banking customers,thereby establishing for itself a strong strategic positionin the industry. Success in strategicallypositioning the companywithin the industry was the essenceof the GeneralManagement Award criterion, and is indicative of the strong influence that MichaelPorter'stheorieson competitive strategyand competitiveadvantagehaveon modernmanagement thinking, Achievinglong-termprofi tability in the volatile airline industry,which demandscareful long-term planning andfaultlessexecution,is a significant managementachievement.It was therefote no surprisethat three airlines- SingaporeAirlines Ltd., Cathay Pacific Airways Ltd. and MalaysiaAirlines- were honored with General ManagementAwards; The ShellCompany-Thailand'scentury-longleaderin the petroleumindustry-was also recogrized.Ayala Corporation was honored for developing a managementstyle that consistentlyproducesPhilippine industryleadersin real estate,banking insuranceand food processing.

several factors that contribute to those figures can in fact be attributed to effective management in other areas. Profitability, for instance, is as much a result of marketing and operations management as it is of financial management. However, when we looked deeper into the operations of the companies and learned their stories. it became easierto choosethe winners - confirming that effective financial managementdoes play a big part in producing good financial ratios.

One of those companiesis St. Luke's Medical Center. In L975,St. Luke's,locatedin QuezonCity in the Philippines, was almost bankrupt. The dilapidated 150-bedhospital was experiencingnegative cash flow and generating revenuesof only P5 million. Desperatelywantingto keepthe hospital going, the owners surrenderedcontrol to an all-voltrnteer boardof trustees,led byAt$. William H. Quasha,who immediatelystarted an innovative donation-soliciting campaig!andappliedstringentfinan-

Sir David Robert Ford, Chief'Secretary of Hong Kong

Representativesfrom Hong Kong'sbest-managed companies with SirDavid RbbertFord

Flncnclol tcnogemenl Awordg 4 h o o s i n g t h e w i n n e r so f t h e I Awards for FinancialManage- ment wasmore difficult than expected.The criterionusedwasdeceptively simple: outstanding managem e n t o f t h e c o m p a n y ' sa s s e t s , liabilitiesand equities,with the main indicatorsbeingprofitability,liquidity andsolvencyratios.All thejudgeshad to do wascomparethe numbers,or so it seemed.The difficulty was that

President Corazon C. Aquino with the winners of the Management Awards, Manila

. June-August 1991 14 rne ASIANMANAGER

THE INSTITUTE OF RADIOLOGY ANNOUNCES THE SUPERIORMRI The Elscint Gyrex S 5000 is now Gyrex V 5OOO. I ne mo$ advancedsystem upgraded. DECIDEDLY CLEARER.MOREPRECISE. St. Luke'sElscintGyrexS 5000has beenthe latest In MagneticResonancelmaging(MRl). Meeting world-classstandards,St. [uk]e"sMHI svstem utilizesa 5,000Gauss(0.5Tesla)superc6nducrive magnetfar superiorto the 650 ahd 2,000Gauss permanent.magnets of other MRI systems in lhe Philippines.ll deliversextremelvcl6ar 3-dimensionalimagesvia the only'laserfilm and colorprrntersin the country. Result:muchbetter imagesthan lhoseproduc6dby olher MRI systems, ena.9rrng.doctors to make stunningly accurate and ean|erOtagnosisof sicknessand disease. SAFE,COMFORTABLE AND FAST Examinationthrough the Elscint GyrexS 5000 MRI is comfortable and radiation-free. patientscan relaxand feel at ease with piped-inmusicin the machine'swideoantlv-tunnel. Doctorand patientcan talk with each othdr durino the examination.The-wholeproceduretakesonly 30 to 45 minutes,whileotherMRI sysiemsrequireone toiwo nours. WIDERANGEOF APPLICATIONS The ElscintGyrexS 5000MRI is the machinebest suitedfor dragnostng diseasesof the CentralNervousand-skeletal Systems,particularly the spineand the biq ioints. lt also proclucesexcellentimagesof the thoraciCandabdominal organs,as well as of many other parts of the body. The machineis.capableof detectingahatomicalOisblO'ers wnre oervenngcttagnostac data simultaneously. AND NOW MADEEVENMORESUPERIOR New Capabilities havebeen added: waterlioidseoaration. slrce_localizer, and bloodflow imaging. All tiese niake up' the Elscint Gyrex V 5000. The ElscintGyrexV 5000MRI complements other well-established and advancedimadinqmodalitieslike the most sophisticated CT Scannerand N-uclearMedicine Scanntng.Syslems, each of whichproducesthe most 1gc.yrgtgi.qagepin the countryin their respectivemodalities; u.0[al SubtractionAngiography;Ultrasonography and Mamnpgraphy ail available at St.-Lrikd'sMedical Center.

EXPERTSUPERVISION TheMRISystemis operatedunderthedirection of the facultyof U.5;.- trainedspecialists of St. Luke'sMeciical of Radiology: Center'sInstitute

For moreinformationand professionaladvice on the MRISystem,pleasecallSt.Luke's MedicaI Cenler at 722-0901,722-4811 and78 -09-71 locals3152,1005and5502.

@fi'l*.L.v[s;,

DEDICATEDTO EXCELLENCE

CathedralHeights,279 E. Flodriguez Sr. Blvd.,1002 QuezonCitylTel. nos.722-4811, 722-O9O1, 780-971 MedicalArts Bldg.(Doctors'Offices): 722-6161 - 80

cial controls.Todav. thc hospitalhas -170beds, rcvcnucsof P3lJ0million, and is rvcll on its wav towarci longtorm grou.th. A turnarrrund that is what St. L u k e ' s a c h i e v e ds o d r a m a t i c a l l y and what gained for thc non-stock, non-profitorganizationthc votc of thc

j u d g e s .T r a c t u r sM a l a v s i aH o l d i n g s B h d . a l s o c o m p l o t e da r e m a r k a b l e turnaroundto bccomethe diyersifiecl conslomcratethat it is today..lardine Fleming Holdings Ltd. and Thai Investmentand SecuritiesClo..leaders i n t h e f i n a n c i a li n d u s t r i e si n H o n g Kong and Thailand,respectivclv, both

d i s p l u v e c lt r u l v o u t s t a n d i n g n u m h c r s .

Both haverecordsoffinancialinnovat i o n u n m r r t c h ehdy t h c i r c o m p c t i t o r s . PT Indosatalsoreturnedphenomenal numbers,displayingfi nancial strcngth that has allowedthc companyto sustain the rapid rato of expansionof l n d o n c s i a ' st c l c c o m m u n i c ai ot n s s e r -

The Aursrde Progrrlm: A ferendipifous ftsrt FirlslArnncrl Munagemenl

hear Ashok Nath and Felipe B. Alfonso tell it, the Management Awards was a brainchild marked by fortuitous beginnings. A fricndly chat and a chance meeting along one of AIM's hallways revealed that Nath, Alfonso and several of their colleagues at trl/ttrld Etea$it,c's Drgcst (WED) and thc Asian Institutc of Management were exploring wavs to dcvclop soparatc awards pr{Jgramsrocognizingthc rcsion'smost cxccllent comDanics. After scveralinformal mcctings a n d b r a i n s t r ) r m i n gs e s i o n sp, r o p o salswt:rr:painstakinglydrawn up for a joint progranr.Within a feu' rvseks, N a t h b e g a n s h o p p i n ga r o u n d i n earnestlor a sponsor to fund the awards'significantlinancialrcquirem en t s * c V c r y t h i nfgr c l mc o r r i c r s er vicos to rgsearchand data tabulation. Twelve companies wcro approached,of theseone of the first to I r c p l yw a sA c c r I n c . ,a m u l t i n a t i o n a l tcchnology conglomeratc and onc

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o f T a i w a n ' s p r i z e p c r f o r m er s i n growth and revenuegeneration. Regardedas somethingeifa folkhero in his own country, Acer's CEO, the boyish-lookingStan Shih, has proven himself a consummate global businessman. Startingvirtually frorn scratch less than 15 ycars

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Acer intc a leading-edge,high-technology firm capable of meeting global compctition head-on.Acer designs custom computsr chips for Texas Instru$ents and has established joint ventures with Japan's Sumitomoand Nippon Investmenfs. Alfonso, Nath. and Shih had mct each other long before any of thcm dreamed of an unclcrtakingas ambitious as the h{anagemcnt Awards P r o g r a m .A s p u b l i s h e r o f W E D , Nath and his staff lrad several occasionsto inlerviervShih for featurc storics;Accr rvas also a regular tidvcrtisor.tr"athand Alfonso had met throughAlNl pr<lfcssr)r iind lirrnrcr c l c a n ,( i a b y l \ { c n d o z a r v h o i s a c o l u l n n i s tl o r t h e n r a g a z i n ca n d c h a i r n r a no l W E D ' s E x c c u t i v c ( ' o n r n r i t t e rA ' . n o t h cr p r o n r i n c n t W E D f i g u r o , J c t 1 \ I a g s a l ' s a yt h, c publication'scxecutivceclitor,is an A I M a l u m n u st;h oI n s t i t u t c ' C s areer M a n a s em c n t O f f i c c h a s p l a c c c l sevcralgraduatcswith the magazinc. Alfonso and Shih'slricndship is alsobolstcredby a long-standing relationship al the institutional level. Shihsits on AIM's 24-manBoard of {iovernors and visitsManila at least 0nce a year for boarclmectings. With Shih and Acer's arrival, the triumvirate was completc.Work t h c n b c g a n t l n g : r t h e r i n gn o m i n a tions and clovisingthe criteria for the six catcgoriesin rvhichthe comcrtcgor;cs Frnicswouldcrrnrpctc.Thc arc generalmanagcment,markcting managemâ&#x201A;Źnt,information technolOgy managcm()nt,po0ple devclopmsnt and managemsntand opcrationsmanagcrnent. WE,D anclAIM rcccivecla stas-

1 6 f n e A S I A NM A N A G E Ro J u n e - A u g u s1t9 9 ' l

geriug 1,006nominationsfrom v a r i o u s A s i a n s x e c u t i v e s ,i n dustrialisfs,financial analysts,and informationspecialists. The nominaticns covered 534 companies and more than 10 industry groups. The criteria, jointly conceptualized by WED executives and AIM professors, sought to look beyond the convcntional criteria of well-managcclcompanies such as sustaincdgro*th records and annual fi rst-ratc relurns to shareholdcrs. As thc ncw century approachcs, says Allonso. rrnterprisemanagernont faccs challengesunlike anyt h i n g c x p c r i c n c e db c f o r c . I n t h o P a c : i f i cR i m , . l a p a n , T a i w a n a n d Koreir art' illrcadvccon(rmi(p{)\\' crhouscs."Wc hopc that the Managcmcnt Awards rvill encourageAsian c o r n p a n i c s - p a r t i c u i a r l tvh o s c i n S o u ( h c a sA t sia-to take the grcat lcap lirrrvnrdin compctitivcquality ancl manageof proclucts,service.s ment proccsscs,"suysAlfbnso. "As AlM, Accr and WED well know,in t o d a ! ' ' s m a r k e t s ,c o n s u m e r sh a v e thc right to rcfuseanythinglsssthan world classservicesand products." Winning the first Management Awards are 32 of Asia's most d y n a m i c c o m p a n i e s .N o t a l l t h e c o m p a n i e s a r e a g g r e s s i v c ,f a s t brcaking conglomerates such as Singapore,\irlines.The Philippincs' St,Luke'sHospilal,for instancc,is a nor-profit organization,and a numL'rcraro rclalivoly small ancl nimble vcntures.What thcse32 do havc in comm0n, horvever,is that thcy are all prolitable,thrivinuanclguidcdby promiscs c()nlitrrled a Sslratcgv d L r a r r S _ Y rthat rrd! lrt\rrrr,5u growth anclgrcaterrcgionalrcach.

Thefivepilars ofthefuidnBank Group. rfrCorpornrio n 8I,,,{, iouBo Thefull-service bankwiththemostimpressive set0f stockholders private among Philippine financial institutions. Behind it arethemindsandresources 0f theSoriano, Benguet andPHINMAgroups, andrhePhilippines Long-Term EquityFund. -f

Corporotion Ejl ,48 CapitalaildInuestment Oneofthelargest investment houses inthecountry, witharecord unmatched in Philippine underwriting.

Inc. EI ru*, Hagerloru,serurities, Consistently thelargest stockbrokerage house, in volume of business, 0nthe ManilaStockExchanse.

Serairc Inc. E sr* Tian.rfer With34years 0f solidexperience, oneof thefirststocktransfer agencies withan on-line computer system facilitating delivery of service. -f

Finrtnrc Coeomtion Al lB Leasingand Expertise in leasing andwholesale financing.

vices.Singapore Airlines' outstanding managementof its assets,liabilities, and equities allows it to maintain the youngest and most modern fleet of aircraft in the world.

HRD Awnrds eople: Many companies regard them as their most important asset,but there are only a select few enterprises that go all-out to prove it. These companiesinvestsubstantial amounts of funds in the training and development of their staff, enriching their jobs, and providing generous benefits to enhance the quality of their lives. In return, their staffs exhibit productivity levels that are above industry standards. Shell's staff development programs are regarded as a model of human resource managementthroughout the world. Its personnel evaluation sys[em, for instance,was adopted by the Singapore government. While other companies have human resource programs, Shell starts with a human resource strategy.SarawakShell Bhd. (SSB) built its people development prograrns on that strong foundation. Aware of the need to stay competitive in the uncertain climate of the petroleum industry, SSB conducts scenario planning to train its managers in decision-making and started a multi-skilling program which frains each member of the organization to becomecapableof performing multiple functions. And, true to Shell's worldwide policy of acting as a responsible corporate citizen, SSB is committed to pursuing "Malaysianization" and is actively involved in community developmentproj ects. The other winners also strike a healthy balance bet*een a scientific approachto people developmentand a genuine caring for employees. Singapore's The Westin Stamford and The Westin Plaza use a labor productivity model that is the only one of its kind in the industry; the productivity level of their staff is double the industry standard. Padaeng Industry Ltd. offers some of the highest benefitsin Thai industry. China Light

Despite a coup, the show went on: winnerc of the Management Awards, Thailand

B.G. Lee Hsien Loong, Hon. Pote Sarasin, Srngapore's Deputy Prime Minister former Thai Prime Minister

Deputy Prime Minister B.G. Lee with the SingaporeManagement Awardswinners & Power delivers 24-hour service to more than four million customers in Hong Kong at a price that has remained unchangedfor sevenyears; a testament to the productivity and skill of its workforce. National Steel

o June-Augusr 1991 18 rne ASIANMANAGER

Corporation takes in engineers and trains them to become some of the m o s t w e l l -r o u n d e d i n d u s t r i a l managersin the Philippines.PTAstra International trains both its managers and its staff in its own school.

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xa 2 oelr Pe'|. Bldn., J,P. Laurel Ave., Bshsdr, D.vro clty ' Tel. B21O

lT frlonagernent Awnrds J ust a few years ago, information technologymanagementwas not yet regarded as a management discipline. Such has been the gowth in importance of this area that today, it is regarded as a distinct and important managementdiscipline. The winners in this category realized the importance of information technology management early in the game and reaped the benefits of that insight. Singapore Airlines has relentlessly pursued computerization in every facet of its operations, from the time when computers were twice the sizeof a room and had a total memory capacity of four megabytes.In 1973, they were already linking their customers to their computers, which by then were built around transistors.In one of the largest computer centers in SoutheastAsia, SIA now runs two mainframes with a combined processing power of 82 million instructions per second.This is the nerve center of a worldwide network that links 4,000 terminalsin 1-L0cities, processinginformation on virtually all facets of the company'soperations, and managed in a wholly integrated manner as Harvard professorsJamesMcKenney and F. Warren McFarlan predicted would eventually happen. In the airline industry, advancedinformation technology is a necessify. The sameis true in banking, and bank such as Thai Farmers Bank. and the Hong Kong and Shanghai Banking Corporation are at the forefront of IT application. In the Philippines, San Miguel Corporation's market leadership in beer is sustained in part by computerized production and distribution that enables them to bring the product to the customer where and when he wants it. Faced with the task of improving telecommunications in its country, Telekom Malaysia responds with new technology, coming up with a specific application for each opportunity and operational problem. PT USI/IBM not only marketsIT equipmentin Indonesia,it leadsin the use of IT in management as well, which is ironically,frequently I -

not the casewith industry vendors.

Opererlions ftlancgemenl Awords there is operations maIinally, f 1 n g s 6 s n t . .I t i s a r g u a b l y t h e r oldest of management disciplines. After all, didn't the science of management start with Frederick Taylor's efforts to find the best ways of doing particular jobs? At the present stage in the evolution of operations managementthinking, the goal is not necessarilyfinding the best ways of doing jobs .- which focuseson processes-but in productiviry in the production and delivery of quality goods and services-which shifts the focus to results, For many of Asia's fast-growing companies,the desired result is the production and delivery of quality goods for export. Four of the winners in this category are at different stages in that value chain.SahaUnion Corp. Ltd., for example, is the largest exporter of products manufactured in Thailand, and also the world's largest producer of sewingthread. The company also produces and exports international-qualityfootwear, plastic products, textiles, garments and electronics. In the Philippines, Integrated Microelectronics,Inc., an Ayala company, operates in the very competitive electronics industry, producing integrated circuitd with world-class manufacturing techniques. Representingthe next stagein the value chain, Neptune Orient Lines Ltd. in Singapore and Maersk Hong Kong Ltd. in Hong Kong ship products from Asia to markets all over the world, and bring back raw materials for Asia's manufacturers and products for Asian markets. Maersk Hong Kong is the largest shipping line in the colony, and, aided by computerization, it also has one of the highest service levels. Neptune Orient Lines is the owner of a perfect on-time record, and its productivity is more than five times the industry average. The two other winners, PT Astra

20 rHe ASIANMANAGER o June-August 1991

International and Globe Silk Store, while also into export, primarily serve local markets. PT Astra moved quickly from assemblingimported vehicles to designing and manufacturing vehicles on their own, using CAD/CAM technology. Globe Silk Store applies operations management techniques and principles-such as JIT and TQC-which they had learned in manufacturing to retailing, optimizing customer flow and store productivity, thereby lowering operating costs and strengthening competitivenessin the saturated, lowmargin Malaysian retailing industry. The phrase Plus Ultra (Latin for "There is More Beyond") is emblazoned across the Management Awards trophy, symbolizing the achievement of and the continuing challenge for each winning company. For, to Asia's outstandingcompanies, there is no limit to what they can achieve.There are more lands that lie beyond. Management excellencewill take them there.

Jet Magsaysay Iet Magsaysayis tlte executive editor of World Exeative's Digest. He is a Distinctiott gradttate of AIM's Master in ManagemerttProgrant.Beforejoining World,Executive'sDigest,he was a senior tnanogerof an investntent battkirtgfimt dealing irt bortds and equitiesin the intenwtional capital marketsand desigrrirtg and lead-rnanagingsecuities issuedby the Philippine goventt1rctxt.

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PHINMA: Over 30 yearsof Service in Professional Management. In 1956,Phinmastartedout with cement,Bacnotan Consolidated IndustriesInc.,as its first and management. In the last3 decades of Phinma'smanagement, _ventureinto projectpackaging Phinmaexpanded this initialenterprise, translating the forceof synergyto relatedoperations in pulp and paper'agriculture, mining.steelfabricating. tradingand exportmarketing, andotherventures engagedin oil exploratton,propertydevelopment and fundsmanagem;ntwith over 30 managedor affiliatedcompanies

PHINMA GROUP Phlllpplne Invcatm.nr - Mrnalcmcnt Consultrnts, Inc. 7thFloor,PhinmrBldt.,Srlccdo Villqc, Mrkrti,MctroMinile,Philippincs; St.,Lcaespi p.O.BoxI t7t MCpO; Tcl.El0-9Jl6l Tclcx22368 PHI PH/66956 PHINMAPNI Cabtc: PHINMAMsnila;FAX(632)Eii-9602 PHINMA: Cemcnt: BecnotanConsoliCltedhdustries,Inc. . CentralCementCorporatim. Davro Urion Cment Corporrtion. HI Cement Corponrion' Rizel CamentCompany,lnc. . Solid CementCorpontion . PhilipprnePrving Company,lnc. . Union AggregrtesCorponl1qrr. P-apcr & Prckaglng: United Pulp & PaperCmprny, Inc... Luzm Bag Corporuion . Luzon Prcducrs,Inc. . Urured-f,rdisrriel Bai Comprny. . Coal Mining Company,Inc. A[rlculfuri: Krbgrkr6n lncrgy: Tnns-Asir oil & Mineral DeveloptrentCorporetion Filmag(Phili.),Inc. . Cetanduanes . Phimr_Fisheries,Inc. . G-JanFish Fem, Inc. ltading: U.i."r trojing Corp. . Unimer SugarCompury,Inc. ' Filagrc Dcvelopmenr ' . -Corp. Compeny,lnc. . Asian BrorhersIntemadonalGimcnrs, Inc. . ptri. 6Lt Craftsrnd lxpon Corp. Union Pejking Corporrtion Uni-Producers Consullsncy: PhrnmrAtchisonConsultants.,-Inc. PrcpenyDcvelopnent:PhinmaPrcpenylloldings Corponuon. 'lnns-occmic ,G_.-Tat-9.f".trm lnsurence: Insurancc Agencies, lnc. Investmcntsl lrhinmrVinturecapitil corp.

COVERSTORY Sustainingdarcbpment..

Are Mcllcrysicrn Mcrnclgeri Mcrndging? ffi iae.) iid !)i4 !l14 s.li{ i$.ri

;; Firsl Arnucrl

by Hon. Dato Seri RaJidahAziz Mitister of Intemational Trade utd Industry, Maloysia

(This paperwas deliveredat the Asian Institute of ManagementlWorld Executive's Di gest Management Awards Dirtrter, Marclz72, 199I - Eds. )

tinent question, namely "Are Malaysian managersmanaging?" This question is relevant in the context of the challenging times faced in the L990s.Do our managershave the capacity to harness the country's resources for the national good, be it in the public or the private sector? It is important that our managers have the necessaryingredients in terms of the right motivation, knowledge, skills and capacities to bring forth the optimum output from the country's wealth of natural and human resources. Malaysian Prime Minister Mahathir Mohamad has set out a 3O-yeartime frame for achieving developed nation statusfor Malaysia. This requires that the country's managers,in all sectors, assistin making that objective a reality by being pro-active in drawing up the

necessaryagendafor the nation over a 30-year period. We now have the path for the future laid out before us, with the main course chartered out. It is important that the nation's managers comprehend our long-term national goals and that they understand and appreciate their own roles in achieving those goals. They must come on board to get the country's vital economic sectors going full steamahead.

Sustaining fhc ftlomenlum

last three yearshave seenthe Ihe I economy experiencing robust r srowth. With care and effort, there- is every possibility that the or some years now, there has momentum can be sustained.Howbeen a clear recognition of the fact that, for any country to sucever,lessonsofthe past have shown us that there are those ceed, there must be w ho have become enough managers in during complacent p u b l i c both ths and the good times and private sectors who can have forgotten, too help steer the economy quickly, the difficult and nation ahead. periods. These are the inThis complacency dividuals who are asshould not allow us signed the responto fall into a rut. in sibility of harnessing which the euphoria resources at their disof successmakes us posal to meet specific succumb all too goals and objectives. quickly to many Certainly all these weaknesses. managers are expected While we are to do well what they h a ppy with the havebeen designatedto e c o nomic achievedo: to manage. ments of the past few Thus, when we disy e a r s , there is still cuss the question of m u c h to be done. managers and manageWe have to sustain i t w o u l d ment, be Rafidah: Managers should keep sight of long-term national goals that growth momenrelevant to ask one per-

r June-August 1991 22 faeASlAN MANAGER

The ins and outs i of document handlingi have just been drastically shortened.

fu; M Introduclng the Phlllpr Documan, thc unlque electronlc folder roftwarc that le revolutlonlzlng document handltng for greater efflclency. ;

The Philips Docma alo providcs infomation security, allowing ca* rcrken enain degrecs of ams to thc folder's contents. It also has a scurity feturc that makes it impossiblc for umuthorized partics to destrcy dcments.

Every yar, m office prcesses thousmds of d@ments, most of them on papcr. Prccssing is slow md labor-intcnsive. Somctimes dmtsrenot asily leted, misplaccd, wen lost. As a result, opcmtional efficiency drops.

Just as imprcssivc is thc Philips Docmm's built-in intelligcncc that allows asicr muagement of office prucdrc. Work is allaatcd to qualified w workere who have thc lcast led. One a speific job is finished, e* workers are the ncxt task on the todo list.

Philips has dweloped a radical new apprmch to automated clerical prcedures elled thc Philips elled Philips Docman. Docman. A first in the 'tware â&#x201A;Źtegory "cro software etetorv knom as "groupware", it works like m eletronic folder. The Philips Docmm costâ&#x201A;Źffetively milages esc data ud dcmcnts, resulting in faster distribution ad retriwal of ssc folders.

The Philips Docmm is m idcal tol for pressing orgmiations with large dament requirmmts, likc bmls, fimce md inswc compaics, md govemment agencics. It ro also be applied to l(m hmdling, credit erd scrvices, md persomel, mong others.

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The Philips Docm crates a single electronic folder :ontaining all infomation related to a case. It m store md deliver infomation irrespective of its origins, be generated. they paper.based or eletrcnielly Casc workers cu sharc thc folder. Any data input is automtielly included in the folder,

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tum so that we can aim for long-term economic expansion and development. There is the question of internal price stability to contend with, so that the country can experience growth without infl ation. All along the line, managers must assist in instilling the kind of trade and industry discipline that can strengthen the nation's economic resilience.

All -.Uleeither lUl.rn crge rrr a have often talked about the need ! for Malaysia to have successive - generations of what I call "allwea-ther" managers. These are Winners of the Management Awards, Malaysia, managers who can weather all kinds display their trophies of situations successfully-they are the ones who can convert a hard-core problems and those with good track Malaysian managers must begin to group of anti-establishmentshopfloor records. think globally- or at least beyond the workers into the most motivated and Today the government has set up parameters of the domestic market. diligent team. They are also the ones the University Utara to concentrate Events that are occurring all over who can succeed in managing during onthe training of the future managers the world dictate that we cannot afthe good as well as the bad times. of the country particularly to meet ford to have a narrow perception of In short, they have the essential the needs of the private sector. In things. Nor can we afford to have a leadership qualities that can mobilize order to benefit from the experiences closed mind to innovation and others positively to act in consonance of successful managers in various change. Very often, we allow ourselto reach common objectives.Such ineconomic sectors,the government has ves the luxury of procrastination and dividuals learn from past experience directed the University Utara to esas such, economic opportunities are and seefar into the future for exploittablish the Adjunct Professorial lost to others who are more receptive ing positively any potential. Scheme, in which prominent memto changing situations. These are the breed of managers bers from the managerial fraternity that Malaysia requires to see her Acid lest are appointed adjunct professor5and through the year 2000 and beyond. invited to give lectures to the students a n fact the acid test of good maThey are the managers undaunted by and staff. This will provide the prqctinaeement is to see how best the -I manager managesin a fluid situachallenges,who thrive on the pursuit cal experience inputs to the course of excellence.While textbook theories and will inject the necessaryreal life tion. can give them the necessarymanagesituations into what would otherwise The Malaysian government will ment tools and operating guidelines, be merely textbook information. continue to work at providing the they are guided more by a high sense It is hoped that the government can right kind of conducive environment of pragmatism and a good measure of count on members of the private secfor a more rapid pace of industrial deold-fashioned common sense.They tor, particularly those who have sucvelopment. Certainly, in such an enalso gain more satisfaction (and percessfully gone through the grindmill, vironment there should be the minihaps more success)by avoiding trekto come forward to assistin the trainmum of constraints for Malaysian king along the securebeaten path and ing of Malaysian managers;in parmanagersto prove their mettle. letting innovativeness and the ticular to assist in nurturing in them Today we are presenting awards to pioneering spirit open up a new the right kind of attitudes, values and those whose outstanding managerial horizon and a new vista of opporperceptions that can make them qualities have been recognized. In tunities. resilient managers in their own orconclusion, I would like to emphasize While training institutions can ganizations. the fact that managerswork neither in churn out any number of managers,it As Malaysia continues to make her isolation nor in a vacuum. This means is seldom easy to get a good crop of mark in the international marketplace that the managers receiving the Mathe right kind of managers. More so and as she continues to be a favored nagement Awards for 1990 must the managers with hands-on exlocation for manufacturing and inrecognize the roles of others in conperience in dealing with management dustrial operations, it is clear that tributine to their success.

24 tneASlAN MANAGER r June-August 1991

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COVERSTORY Stimulntingprivate initintive...

fhe Need for Mclnclgement Fr(cellence til

FinslArnuql

by Hon. Radius Pruwiro Coordinating Mirtister for Finance, Econonry, Industry and Developntent Supewision,Irtdottesia

strong mechanismsfor the organized management of production, distribution, infrastructural upgrading trade and monetarycontrol. l,ooking back, it is impossible to judge where we would be today without enjoying the sustained and formidable foreign exchangeearnings brought in by oil during this period. There is no question that the prudent recycling of petro dollars into our economy enabled us to achieve economic expansion- through industrial and infrastructural srowth-

(Tltis paper was deliveredat the Asian Institute of ManagernentlWorld Executive'sDigestMarrugenrctil Awards Dinner, Marchl,1991- Eds.)

at levels that would otherwise have been unattainable.

Divercificeition I n the early 1980s,however, InI donesia began a period of rgradual, then accelerated, deregulation aimed at diversifying its economy. I would like to tell you that this transformation came as a result of calm deliberation, but as you know, evolution- whether biological or economic - rarely comes about in a vacuum. It is usually the result of a change in the environment. In our case it was the sudden and steep drop in the price of oil-our main source of income - that forced us to take a hard look at our economic policies and make a seriesof critical and difficult decisions. Faced with a scarcity of government financial resources due to the collapseof oil prices,we realizedthat the main thrust for diversification and renewed growth could only come from the private sector. By way of illustratingthe magnitude of resources required, Indonesia's curr enl Repelita

a would like to sketch briefly the Inf broad economiccrosscurrents - donesia has weathered over the past 25 years to provide a context for understanding where we are today. After a turbulent decade, Indonesiain 1969began a rational and Prawiro: planned approach to economic deveProspectstor development lopment with the start of our Repelita lie with the privatesector system of economrc tl";;T ,"]*'-' stabilization. Until 1983, this period was characterized by a reliance on c o m m o d i t i e s- m a i n l y oil - and the government as the main engine of economicgrowth. Given the chaotic state of our economic affairs, it was absolutely essentialthat the govemment move with a strong hand to impose order and discipline to establish clear development Hon. Prawiro with the winners of the Management Awards,lndonesia priorities and to develop

1991 o June-August 26 rne ASIANMANAGER

to 1993 has targeted an annual real growth rate of 5Vo, a rate we see as being necessaryto provide meaningful employment for the 2.3 million people entering the workforce each year. That growth rate calls for a total investment of some $150 billion of which 55%- some $80 billion-is projected to come from the private sector. We can date the beginning of Indonesia's new age of deregulation with the reform of our tax laws in 1983.Following this, we can trace its progress through a series of rigorous steps ever since. Ports and customs, the removal of non-tariff barriers, duty drawbacks, relaxed investment laws, licensing simplification, banking reform, revitalized capitai marks, and so on. The list is well known to you all. Combined, these measures have resulted in the fundamental restructuring of our nation's economy. In the spaceofjust over five years,Indonesia has transformed itself from an essentially agricultural and commoditydriven economy into one substantially geared towards manufactured exports. Perhaps more fal-reaching still, we have moved from an economy circumscribed by interventionist policies to one driven by the demands of the international marketplace.Indonesia's income-and its prospects for sustained development-is now largely in the'precinct of the private sector. This is not to say that we either encourageor endorsea complete private sector free-for-all without regard to the consequences for the well-being of our nation as a whole or our individual citizens. As government we will continue to be directly involved in investing in such areas as basic infrastructure and social services.Even so,we havemoved further and further away from active control and intervention in many areas of our economy. Now we see our role as much more: one of setting the medium and longer term frameworks for the achievement of our development goals and-within those frameworks - permitting, guiding and stimulating the creative powers of the marketplace and private initiative.

Private Sector's Role brief recitation of our recent this history underscores economic I r the reasons for my pleasure in participating in this celebration. Government can set the policies, devise incentives. create the environment for economic growth-but the private sector has to respond, to take up the challenge. And that requires companies with excellent management, companies that value productivity and encourage efficiency. That demands companies who put a premium on developing human resources. who nruture and foster financial and organizationalmanagers. Frankly, change in Indonesia happened so quickly that there is a lack of fully-trained personnel. As a result, companieshave to be efficient and innovative in cultivating their own management teams, people who are capable of international vision and local action. Only then will companies

have the flexibility to respond to the changing needs of the marketPlace and prosper in a far-from-certain global economy. I think you will agree with me that all the honorees share these qualities. By the criteria set up for the awards, they have achieved excellence in the marketing, financial, operational, information technology and personnel development aspectsof management. While they are by no means the onlY good companies in Indonesia, theY are a fair representation of what is best in the Indonesian corporate sector. Together they form a core group around which other talents cangrow. Please join me in congratulating once again the management and workers of Bank Niaga; P.T. Astra International; P.T. Indosat; and P.T. I.B.M. Usaha Sistem Informasi Jaya. We entrust a part of Indonesia's future development to their verY capable hands.

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THEASIANMANAGERo June'August1991 27

COVERSTORY Anirueruiewwilh SMC'sEizmendi-..

Using lr to gfcryAheqd fil

FinrlAnnucll Ithough not as higltly visible as tlte San Miguel Corporatiort's

hairman snd CEO Andres Soriano III, Francisco Eiznrcndi, Ir. overseesmuch of SMC's day-to-day operationsand alongwith Soiano, sets the course and tone of the company's progress.A chemical engineerby trainirtg Eizmendi joined SMC in 1956 as a quality control engineer at the contpany's Farola glass plant in Tondo, Manila. In 1974, lte was appointed the cornpany'sattontey-in-fact. Tltreeyearslater, lrc becanrcvice-president and nlanoger of the Managenrcnt ServicesDivisiott ortd irt 1978,lte was pronxoted to executive vice-president for Wsayasattd Mindanao opcraliorts. The breadtlt of his resportsibilitiesextended to Lttzon and by 1982,he was nanted executive vice-president for natiottwide operatiorts. In famtaryt 1987, Eiunendi was prontoted to senior executive vice-president attd chief operuting fficer. Four nrcnths later, he was appointed SMC's president and COO, a position lrc continttes to ltold today. SMC, a food and beveragegiant, is tlte Philippirtes' largest cortglonrcrate and one of the nation's largest employers,generating nearly 4Vo of the cowilry's gross national product. It is highly regardedin botlt local qnd international businesscircles itt tenrts of eanirtgs growtlt, prodttc t irtttovatiott artd quality, nwrket leodershipand anr bitious lortg-temt operating goals. Suffeing front tlrc contbined effects of tlrc contro,tersiol"beertax," escolatirtg costs and a faltering econonry, 1990 was a dfficult year for SMC. Altltottglt netprofit declinedby 267o,San Migtel

managed to eant a respectableP1.79 billion. One bigltt spot in an otherwise bleak yearfor Satt Migrcl was winning tlrc award for infunnatiort technolog) in the first annttal Ma.nagentent Awqrds. Irt thefollowirtg interview witlt THE ASIAN MANAGER's Kin Gatbonton, Eizntendi shares his thougltts on lrcw SMC's IT systenthelpskeepthe compony ahead. QUESTION; In what ways has information technology made significant contributions to SMC's goals?

Francisco Eizmendi, Jr-, ANSWEk Let's begin with an overviewof the scope and spread of SMC's operations.San Miguel has five operating divisions (Beer, Packaging Products,Magnolia, Feeds and Livestock, and Agribusiness)operating a total of 67 plants and facilities (breweries;glass,plastic case, metal closure and carton plants; ice cream plants; feed mills; meat processing plants; chicken,hog and cattle farms; shrimp processingplants; and many others) located in 16 provinces throughout the archipelago,in addition to Metro Manila.

28 fne ASIANMANAGERr June-August1991

These facilities are supported by a nationwide network of some 220 sales offices and buying stations, a transport and handling fleet of 3,300 units and an interisland product and materials delivery system, research and experimental stations, storage facilitiesand transport depots. Any operation of this magnitude generates a tremendous amount of information, and the quality of our decision-making rests on the speed, accuracyand timeliness of the information that reaches our managers. Our computer infrastructure includes five mainframes and 21 minicomputers. Cost-effective information technology has helped us make the right decisions, and enhanced efficiency and productivity, in such areasasfinancial applications, payroll and human resourceinformation systems, physical distribution, salesand inventory management,and shareholder services. Q: Do you know of many other Filipino companieswhich regularly and visibly use information technologras a managementtool? A While computers are fast becoming an indispensable feature of the businesslandscape,the use of information technology as a management tool is probably still in the development stagein this country. I would expect, however, that with the rising costs of doing businessand competition from multinational companies, more and more Philippine corporations will find themselvesusing every available resource for survival and growth. One of these resourcesis information technology. Q: When was SMC's IT system developedand bywhom? A: The decision to take advantage ofIT solutionswas a corporate direc-

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tion and not an individual's idea. The information technologli can truly have corporation acquired its first batch of a major impact. computers in 1,954,mostly for data For examplg at our head office in processing applications, such as Mandaluyong, Metro Manila, our payroll and inventory. The 1970ssaw chief finance officer has the capability us using mainframes in more applicato access and analsze a summarized tions in finance, stockholder informadisplay of the financial transactionsof tion, and operations research. a particular SMC plant anywhere in Desktop PCs became the basic the Philippines, or an integrated sumworktool in the 1980s.At present, we mary of the transactions of all SMC use Unix-based minicomputers and plants nationwide. Analyzing the workstations. We will be concentratresults and trends acrossplants within ing on distributed processing, and a business,or for one businessagainst focus on strengthening our networkanother, is vital to the managementof ing capabilities and enhancing our our strategicportfolio. nationwide data communications inIn operational management,an exfrastructure. ample would be Beer Division's Q: It has been said that older, Physical Distribution Information senior executivesare wary of the uses System. One of its features is that it ofIT. They seeit as an expenseto be can feed division headquarters the controlled rather than as an oppordaily stock requirements per product tunity for profit. Did Mf. Soriano or per sales office based on that office's his father have any trouble convincforecast and desired ending invening the older executivesabout the virtory, and help ensure that those retues of IT? quirementsare met. Ac It was Mr. Soriano's father, Mr. Q: How extensiveis SMC's use of Andy, who realized that San Miguel IT and computer-based systems to could not be managed the way Don retain its competitiveposition? Andres Soriano had manased it. A: From the planning of a parRapid growth and diversificationhad ticular businessto the construction of made the corporation too complexfor facilities, to manning the plant, to the centric type of management that product development,and on to every was still effective in the time of Don aspectof operations- manufacturing, Andres. The more modern managepackaging, shipping, warehousing, ment concepts and practices-longmarketing, distribution to dealersrange and strategic planning, capital we use IT and computer-basedsysbudgeting,,HR management systems, tems, and information technology-were The Beer Division is even going brought in during Mr. Andy's time, into "paperless routes" by supplying and have developed further since Metro Manila route salesmenwith then. hand-held computers (HHCs) and The imperatives of business comprinters linked to a rnulti-user petition have a way of convincing our microcomputer in their sales office. executivesthat this is the way to go. In The HHC will eventually eliminate SMC, executiveshave been very open the salesmen'sneed to keep written to innovative ideas and technology records of their daily activities, from that improve our businessoperations. schedulingdeliveries to invoicing, colIn what ways does IT have a l ection and updating their route Q: measurable impact on management books. effectiveness? San Miguel's Information Systems Ac There are probably two major Directorate used to be only a single standards to gauge management efcorporate unit. Today, each operating fectiveness:sound strategic planning division has a Computer Systems and optimal decision-making.It is Group to better serveits own specialcritical that information is available ized needs. when and where needed to affect Since 1-987,ISD has continually decisionsand actions. This is where conducted trainins coursesfor our

30 rne ASIANMANAGER o June-Augusr 1991

employees, ranging from basic microcomputer operation to more advanced minicomputer and mainframe technical applications. In L990, nearly 100 such courses were conducted for a total of 1,281 SMC participants. Q: Some people like to say that when a computer system is introduced, a companyts life becomes more complex,not lessso. Is this true in SMC's case?Do the benefits of implementing information systems outweigh the disadvantages? A: Complexity is inherent in the introduction and usage of any new element, and this is true in SMC's case.A company that manufactures more than 70 different products, or exports products to 30 countries, is naturally more complex than a company that sells only one product in only one country. In the long run, however, information technology simplifies decision-making by enabling management to focus on critical issues. IT solutions have benefitted our people by enabling them to work more productively and intelligently and by providing them the environment that promotes the full development of their individual talents. The use of appropriate software has improved the quality of the reports that our staff prepares for management. Benefits such as these far outweigh the disadvantages of implementing the system. Q: What forms of IT does SMC use? How advanced are these systems? Are they used more for purposes of operational control, managementcontrol, or strategic planning? A We have always tried to choose the most appropriate and cost-bffective form of IT from among the IT solutions available to us. and use that solution for the intended businessapplication. Information technology in SMC is emerging from its secondary support role of yesterday, that of a mere data processing function. Now, it is an essentialsupport to our sales, distribution, and manufacturing operations, and helps ensure the soundnessof our strategicplans.

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FEATURE Gainingerlpl oyeeIq olly throughftwutgemelrtpafticipatinn...

Meinoging People: Lessons from Mcrtsushitcl Konosuke

by Prof.Etsu Inuba MBM'86 Don Marurcl Elizalde Professor of BusinessMarrugenrcnt

or the last two-and-a-halfyearsI havebeen doing researchon man a g e m e n tp r a c t i c e s i n c o m p a n i e s w i t h J a p a n e s ea f f i l i a t i o n s , either joint venturesor wholly owned firms operating in various Asean countries.During the courseof my research,I must have visited more than 60 companies in four countries, the Philippines, Thailand, Malaysia and Indonesia,and have interviewedover 200people.My ultimate objectivewas to determine what constituted effective managementsystemsand practicesin thesecountries. In order to answer this question,I decidedto do in-depth casestudieson selectedcompaniesin each country. These "well-established"companies, mainly from the manufacturing sector, wers selectedbased on such criteria as:1) stabilitymeasuredin the number of years of operation; i.e., 10 yearsor more; 2) industry leadership; and, 3) reputation within the community. I started my researchin the Philippines and went on to Thailand and Malaysia.In each of thesecountries, the local community recommended that I visit Matsushita'saffiliated companies, as these were among the "well-establishedand well-managed" companies.By the time I went to Indonesia last November, I thought I had had enough of Matsushita's " g o o d " m a n a g e m e n t e x a m p l e s .I deliberatelyexcludedMatsushita'saffiliates from my list of companiesto

visit. However, once in Jakarta, people there again urged me to visit National Gobel, the Matsushita af-

r June-Augusr 1991 32 rne ASIANMANAGER

filiate, as one of the model joint venture companies with a Bumiputra partner.

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In all those visits to Matsushita affiliates, I found that workers were disciplined, company premises were clean, employee morale was high* witl very little problem with absenteeism, tardiness or industrial disputes,from which other companiesin the vicinity were suffering.Of course, no companyis perfect. The managers I interviewed were not fully satisfied with their own performance and said there was a lot of room for improvement. But compared with the other companiesin the immediate neighborhood, which sharedthe samecond i t i o n s ,t h e M a t s u s h i t ao p c r a t i o n s were among the most outstanding. And that makesyou wonder: horvdid

scious?" In place of answersto these questions, let me share with you,some common features I found in wellmanaged companies in Asia, including but not limiting my discussion to Matsushita. I will start with what is most visibleof all. Gleonllness ou may haveheard of3-S or 5-S (i.c.,scii, seilort,scikctsu,seisou and shitxtke), which in general mean to maintain clean, well-organized work areas and disciplined workers. Invariably, reputable companicstry to kecp their premiscs clean, with well-maintained equip-

NCERIry rl II ...while other comperniesin the community laid off or fired their employees relafively

quickf, rhe compeinies I studied tried to provide secure employmenl as besf os they could. ,,

this come about; what is Matsushita's secret?

Gommon Feeilures of Well-ftlonoged Gomponies hile I wason the road visiting v a r i o u s c o m p a n i e s ,m a n y "How do people askedme: you gain employee loyalty? How do you make them work hard? How do you make them more qualitYcon-

mcnt, clean floors, a clear demarcation of work areas,not only inside the factory, but outside.This does not, however,necessarilyrequire an additional cost for cleaning.Most of the time, cleaningthe work area is part of the operator'sjob, and is not left to the janitors. Garbage and waste are not scattcred around but placedin designated areas.A certain companyeven saved a great deal by managing their garbageand wastematerials.And just by

1991 r June-August 34 rne ASIANMANAGER

organizing tools and spare parts in designated places, the time saved by not having to search for them contributed to higher efficiency. A wellorganized work area also makes it easyfor managementto detect abnormal conditions. Cleanlinessalso has another positive side-effect. Once the premises are clean, people do not dare dirty them by throwing garbagearound indiscriminately.That controls the need for cleaning as well. And a clean environment itself contributesto the disciplining of people simply by its distinction from the outside environment. (Unfortunately, in most of the Asean countries,with the except i o n o f S i n g a p o r e ,t h e o u t s i d e e n vironment is not very clean or orderly.) A distinct changeof environment changespeople'sattitudes. Hand in hand with cleanlinessis an emphasison safety.All of us know horv expensiveit is when accidents occur in the work area. And yet simple measuresto prevent accidents are oflen ncglected.The 5-Sframework mentioned abovehelps idcntify areas to improvc safety.Oil and water leaks can easilybe spotted.Loosewiresare n o t a l l o r v e dt o l i e o n t h e g r o u n d . Floors should haveno gapsor holes. Other more costly measuresare also taken. Automatic safetyswitches may be installed on machines.Welllighted work areas are usually made breezy, so that the workers perspire less. The 5-S framework and safety make the work area more pleasant. Constantimprovementsin theseareas make the workers aware of management's commitment to their welfare. Employment

tecurlty

ost of the companiesoperating for long periods in the region have experienced hard times due to the external environment.But whilc other companies in the community laid off or fired their employeesrelativelyquickly, the companiesI studied tried to provide secureemploymentas best as they could. Here, I haveto give the exampleof Precision Electronics Corporation

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The list is not necessary.But it's just to give you an idea of what we, as an insurance.company,have gone through. Today, Insular Life continues its commitment to offer dependable protection and security for generations of Filipinos. $fith an unbroken servicerecord of 81 years,it remains the country's first and largest Filipino life insurancecompany. In 1990 alone, it reachedF/ billion rn total assets. So, expect us to still be around, whatever happens in the coming years.Becauseno war or upheaval can simply make us pass from this world.

INSTJLARLIFE THE ASSURANCECOMPANY,LTD . Somethingpermanent in a passingworld.

(PEC) of the Philippines. You will recall the hard times that we had after the Aquino assassination.No imported materials were coming in. Products were not moving. There was no work to be done for months. But even in that crisis situation. PEC management tried very hard to maintain their workforce with various mcasures. Only after all conceivablemeasures were exhaustedand as the last resort di{ they decide to solicit voluntary resignations.The employeesand the community appreciated management's efforts. Peoplejudge management by the way it behaves,not by the way it talks. lrclnlng raining is another area in which well-managed companies place great emphasis.The content of the training is not limited to skills and knowledge,but is geared more toward attitudesand waysof thinking. Let me share an example, this time from a service industry. One companyin a retail businessI visited in Malaysia gives a week-lcng initial training program to new hires which is intented to provide them a new outlook on life. "Happiness is a frame of mind," they are told. If you are happy, you make other people happy. If you are unhappy, it is reflected in your work. T h e t r a i n i n g a l s o s t r e s s e st h e potential of individual employees. "Nobody is perfect. But at the same time, nothing is impossible.You can try to improve yourselfeachday." What are they trying to do by emphasizingthesesteps?They are building confidence in each of the employees at the earliest stage of their employnent. The result of this training is the very attentive and pleasant service delivered by the employees. The harmonynurtured amongthem is somethingthat other Malaysiancompanies envy. This is a big contrast from other retail outlets where store attendants engage in small talk (or eating) even while the customers are there. This kind of training can only be carried out if top management

Lobo4 surprisingly, does nol meike unfecsonable demeinds once they know thert the rnetnqgemenl is

willing fo provide for them wifh sinceritlr. ,,

believes in developing people. Skills training is given by all companies as it is necessaryto carry out operal"ions. But the so-called"spiritual training" or training to changeattitudesis carried out only in organizations that believe in people, becauseit is "costly" and the results are not alwaysimmediate and tangible.

ftlon:rqemenl

Porticl-polion, Rertherthqn Pcrticipotive llcnogemenl ou may have heard that the Japanesemanagementstyle is participative, which is often taken to mean that decisionsare made by the employees.I would have to disagree.Decisions are made by management in Japanese organizations. Then what is participative? I would say that the differenceis that the man a g e m e n l "o f e x c e l l e n I c o m p a n i e s makes an extra effort to know the needs of the operations people. It is the managementthat tries to unders t a n d i s s u e sa n d p r o b l e m s . T h e opinions of the rank and file or the people at the operations level are

1991 o June-August 36 rxe ASIANMANAGER

reflected in management decisions. Then you will jump to the conclusion that, "I must institute a suggestion system." Again I would have [o disagree.Before you can institul"ea suggestion system, you as management have to know what is happening on the shop floor. In the course of my research I found a majority of the local managers sitting in their comfortable offices with a secretary, who lrst has to be dealt with before a visitor can see the manager. The managers "manage"by reading reports from the supervisor, who in turn only collects data without going to the field. Engineers are also housed in an airconditioned room. They draw new designsor changeprocedures without getting to know the operations.As they go higher up the corporate ladder, they become "too important" to dirty their hands in operations. In such an environment,how do you expect your workers to suggestnew ideas to you? Their opinions would sound like grievances. Therefore, before a suggestionsystem is put in place, I would say that management should make regular rounds of the shop floor and seewith their own eyes

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what is happening there and start implementing improvements. You would be surprised how much improvement can be made without spending a centavo. I might add that I have witnessed a visible changein the morale of employeesonce all the directors of a big corporation in Indonesia started to make weekly rounds of the factory floor. Until then only the Japanesetechnical advisorsmade the rounds and tried to act as coordinators for the different sectionsof the plant operation. When all the directors, Indonesian and Japanesetogether, made it a point to go around and make improvements, the communication became two-way as the workers saw that their problems become management'sconcern and their voices were heard.

Amlcoble Lerbor ftlcncgemenl Relotions have also witnessedsome unfortunateincidentsof poor labor-management relations. In those instancei, management feared that any information about the company's performance given to the labor union would be used againstmanagementto win higher wages and better benefits. When the atmosphere is like this, management tends to make everything secret. They try not to educate their employees,as they fear that the more educated labor becomes, the more demands it will seek. They try to wait until the next collective bargaining agreement negotiation before improving working conditions and make this one of the bargaining chips. The well-managed companies, on the other hand, disclose a great amount of information to the employees. They even provide additional benefitsbefore labor officially demands them. In some instancesthe employees roceive a bonus in the form of profit sharing when the company performs well. Labor, surprisingly, does n o t m a k e u n r e a s o n a b l ed e m a n d s once they know that the management is willing to provide for them with sincerity. t I -

Qucliry nce the trust of the employees a|, r ris obtained it is not too difV ficult to solicit their cooperation in producing quality products and improving the production procsss. Here again,managementneedsto provide knowledge, proper equipment and constant encouragement to ensure quality since, more often than not, people do not know what quality means or how to measureit.

A fomily-conlrolled corporction moy hinder fair evolualion of the metnetgels/

per{ormetnce ond fuilher developmenl ln the corporeile hierorchy. ,,

In Japan where the demand for quality is so great, there is a plethora of measuring equipment to assure quality. This equipment is very costly. When you do not have this sophisticated equipment, more emphasis on educating your employees in ways to securequality becomesessential. So far I have given you the good news. All of these examplesI cited prove that whatever philosophy you as a manager come up with, the day-today application and operationalization of such philosophy can and shouldbe initiated by you. Now the bad news!

1991 o June-August 38 rne ASIANMANAGER

Whqt is Hcppening in the Asean Countries? 1 n eachofthese countriesI studied, I I found that the compani'es r selected were undergsing adjustments to major changes in the environment. As you are well aware, all Asean countries are experiencing a shift in their economies. In the 1960s and '70s, industry, particularly manufacturing, was introduced to this part of the world through import-substitution policies. In order to protect local industries, high tariff walls were placed around them. During this period, management concern was more on "who you know" rather than "what you know." This, of course, was not a monopoly of the Philippines. It was also observed elsewhere. Starting in the L980s,however, the second wave of industrialization was felt around the Asian region. Most of the Asean countries which had formerly built their economies mainly on exporting commodities began to feel the pinch of lower commodity prices. All the governments in the Asean countries implemented a new policy of industrialization geared toward export. Exporting manufactured goods to the international market requires meeting quality standards, meeting promised delivery dates and implementing continuous cost-cutting m e a s u r e s .T h e i n d u s t r i e s e a r l i e r protected by thick tariff walls were stripped of that protection and exposed to severe competitive market pressurosto supply goods of higher quality, at a better price and within shorter delivery times than their competitors. Under these circumstances, your competition is not only within your boundaries, but also comes from all other countries in the Asian region, and now possibly even in the Eastern bloc as new developmentsin that part of the world are fast unfolding. What does this mean to us? This meansthat the product life cycle becomes shorter and that production runs become more varied at smaller

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quantities, requiring more flexibility in operation. This means that the pressure to improve quality becomes greaterto the extentthat no, absolutely no, defect can be shippedout of the operation. This means that delivery time hasto be strictlymet. This means that the operationhasto run smoothly without interruption. This meansthat coordination between the different functional areas needs to be strengthened. This means greater investmentneedsfor better equipment, R & D and technology. If you do not meet these new demands, you will lose to your competitors not only your sales but more importantly your workforce. That is what is happening in the Asean countries. Many companies are losing to their competitors, and to new investors, the people they have trained, particularly the skilled workers and middle managers. They are losing them at a time when they need them most.

In Seruch olo Beller Oprion h at canyou do in a situation l i k e t h i s ?D o y o u t r y t o matchtheoffer of yourcompetitors by giving higher salaries to these employeesand middle managers?Or will you let them go and train new ones? Can you afford either option? In quest of a third option, I conducted a survey of middle managers who are in this situation. All of them were receiving salaries slightly higher than the industry average.'But the competition could offer them as much as30Voto 50Vohigher. I asked these managers: "What would make you stay with the company you are workingwith now?" Their replies were: o Clear growth potential for the company; o A career development plan for the managers;and, o Professionalismin management. Please remember that the respondents of these surveyswere from the

four Asean countries I studied and were working for the companies reputed to be well-managed in the community. All of them took pride in working for their respective companies.They believed that the company produced high-qualityproducts. They had proof that managementwas committed to the development of its employees.Under such circumstances,money did not seemto be the only concern for them, The respondents were eager to learn what the company was trying to do to meet the challenges of the future. New productS and new technologieswere of higher value to them. O f c o u r s e , t h e c o m p a n y ' sg r o w t h alone was not enough. They were seriously asking if further developmental efforts for their own growth were being considered by top management.Finally, and probably most important to them, was whether the company would be "professionally'' managedor not. This last concern is probably quite common in the region as the ownership of the company is very often concentrated in a family or a group. A family-controlled corporation may hinder fair evaluation of the managers' performance and further developmentin the corporate hierarchy. Thesesurveyresults,althou$h from a very selectedgroup ofpeople, seem to indicate that the employeeSwere searchingfor a purpose in life in their work. The question now is whether the company can respond to them and provide them with a purpose in life.

Relevonce atsushitaKonosuke's management philosophy seems to stress the very point that the young professional managers wanted to see happen in their company. If it is true, practicing his philosophy may be the most appropriate option for us in order to retain our preciouspeople. Matsushita'smanagement philosophy was born out of his long experience in businessmanagement.It is time-tested.The operationaliza-

40 rne ASIANMANAGER r June-Augusr 1991

tion of the philosophy, therefore, has to be patiently and diligently carried out over a long period of time. You may have some quick results. But very often, after one new wave, the results may not come for a long time. That is the time when managementis being tested. The employeesare watching carefully for any fumble that management may make. I have not been able to cite all the common features of the "wellmanaged" companiesI studied. I have concentratedon the human resource aspectof their managementpractices. As I have mentioned, this is an attempt to bring out some issuesI have observed during the course of my research in the Asean region. I hope that the observationsI made will help you relate to yourselves the management philosophy of Matsushita Konosuke in more specific terms.

Etsu Inaba Professorhmbais AIM's Don Manuel Elizalde Professor of BusirrcssManagementand teacItes Japanese tn qn&genrcnt practices. She also lrcads the f apanesesocio-economicmanagement systemsand practices reseorchproject which focuses on cross-cultural ntanagementissues in joittt-veyture companies in the Asean countries. A holder of a Mqster in Business Manogentent degreefrom AIM, Professorltrcba also sttrdiedat the Tsuda Scltool of Busirrcss, Sophia Uriversity and Hanard Uriversity.

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Ihro -Wqy Communiceition is the Key lo Success by Prof.RobertoH. Lim SGVFoundationProfessorfor BusinessManagement

fhen I speakof communication. I mean the transfer of id"u.. And by transfer,I mean receivingas well as transmit-

1l lllJ rr

\isg.Csssrssis.ntiss.sts. be the flip of the eyelash, the twinkle of the eye or the swish of the skirt. It can be the color of a rose. The aroma of dangor. The taste of a well prepared dinner. The sound of a sigh. The contact of the hands. For those of you who have never fallen in love, the above examplesmay be empty words, but you must believe me that the variations of communication are powerful Ind numberless. For the past 20 odd yearsI have devoted mylife to teaching. In the 25 years prior to that I was a manager in industry. For the 20 years prior, I was a student on the receivins end of ideas. Let me tell you that the successof a manager depends on his ability to transfer ideas - especially to himself. What is communication useful for? To assembleideas and regroup them into auseful course of action. But they must be transmitted to others in the process so others, in turn, can carry out the ideas or benefit from the idea. How do we improve our techniques of communication? I want to pass on to other teachers

some of the techniques of communication that I have learned from experience over the past half century. Those ofyou who have studied education can also learn from one's mistakes. o Start with an idea that is to be transferred to someoneelse. e Establish a communication channel. o Select the media, tuae in on the

o o o r o o o o o

right frequency. Adjust the volume - set the mood. Transmit. Listen for feedback. Use the feedback to get more ideas to perfect the transfer ofthe idea. Establish consensus,summarize, conclude. Take action on the idea. Follow through. Revise. Succeed. I have gathered a bouquet of

1991 r June-August 42 "rneAslANMANAGER

stories that may illustrate the spectrum of the mystiqueof communication.The storieswill seemunrelated,but I have chosenthem becausethey illustrate the many facets of transmittingideasand information. Theyrelateto our abilityto receiveinformation through our five senses, and the difficulty o1 1t6s6i11inginformationand ideasto others.

Bnhies ln the Womb y children tell me that there is a theory now that the mother can communlcate with the fetus when it is still in the womb. More and more scientific data are being gathered to prove this. I believe in it. I think that a mother can start communicating with her child even before childbirth. The transfer of ideas and values need not wait until the child can answer back in spoken words. I do know that my grandchildren, who have been given attention in full adult language rather than baby talk, acquired an ^^nzingfacility for speaking at a very early age.

Ghildren lflho Speok Itno or lhree Longuoges r I iren the Americans took over the Philippines, they were tllt r r amateursat being colonizers. But they did know that if they were to rule the little brown brothers, they would have to communicate with them. The decisionwas made to force the natives to learn English. We were

penalized if we spoke Tagalog during school hours. Some families bought the American line so much that they prohibited their families from speaking any language except English even at home.What a mistake. A Dutchman on the other hand, has found it a great assetto be able to speak four or five languages.The point that I want to make is that it is easy for a child to learn several languages.You will see the Japanese mothers bringing their children with them to the supermarketto read the labels on the goods that they want to buy. The children are more adept at the second language. Take our own children. If they have had Visayan yayas,they speak to them in Visayan. They speak to us in Tagalog, and I remember when my daughter Pia spoketo her grandmotherin Spanish. At a tender age, words are ways of naming objects and communicating. They are not different languages.You used different words to speak to different persons. The point that I want to make is that we should accept and take advantage of the facility of chil-

dren with languages,and encourage them to speakin as many languagesas possible.

measuretheir distancefrom the walls of the cave.In that way, they avoid flyinginto thewallsevenin total darkNCSS.

Blind illon ond Color

Now some of you will insist that there are only five senses.How can you be sure? My certainty has been well shaken by "women's intuition" that my wife used to display about some of my intentions. You may laugh now, but it was not always very funny. We must be conscious of the five senses.Our audience is more receptive when the room temperature is about 70 degrees.They are distracted when the temperature rises above 80 degrees. They are uncomfortable when the temporature is in the lower 60s. We Filipinos are sensitive to body odors of other people. We take a bath daily. We are annoyed when we are seatednext to persons who have lower hygienic standards. Then there is the sense of touch. What a wonderfirl way to communicate. It is very private, very sensuous, with a wide range of meanings totally dependent on the relations between

Illrtn:.J,:llrHr$1tri::H A story I read in Cosmopolitan magazine many decades ago has fascinated me ever since: A man was blind from birth. Fortunately, when he was already an adult, he underwent a successfuleye operation that restored his sight. He observed, "It is impossible to explain to a'blind man what color is." I supposethat if we had more than five senseswe would experiencemore things, and communicate better. So we must maximize the tools at hand and use all five sensesin the process of communications. What would you do if you had more than five senses?Bats have a radar mechanism. They send out a shrill sound that travels to the walls of the cave and is reflected back. They hear the reflected sound and therebv

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the feeler and the one being felt. I highly recommend the further exercise of this form of communications. Practice is necessaryjust like practice is needed to perfect the production of music. But practice can also be delighttul. Equally delightful is communication by the senseoftaste. It is not very often used as a form of communication, but when and if all five sensesare used simultaneously then you will have achieved the full impact of total communication. You say it never happens.I beg to disagree.It doesn'thappen often enough, yes.

municate to my students that there is more than one way to think.I had observed that Professor Melitpn V. Salazar was such a good teacher that after students took his course on businesspolicy, they were ingrained in the manner in which they analyzed and thought. He did a wonderful job in indoctrinating them to his method of thinking. Now that is not alwaysan advantage. How many of you play poker? You will always study the manner of play used by your opponent. If you are able to detect a consistent manner of play in your op-

Study Good Lilercture time in our life we have flome the question, whar is the Jasked value of eood literature. I heard the answer t6 that question when Professor William Lyon Phelps of Yale University visited us in Annapolis in 1940.He said that we must study the masters because they have proven their success in expressing ideas and descriptions.We should copy them and the way they express themselves.ff you want to test how difficult it is to surpassa masterpiece, try paraphrasing Lincoln's Gettysburg address.Which words can be eliminated or substituted? I wish you good luck if you want to try.

jj Ihere ore alternaiive ways of thinking ond lhe person who heisfhe greolesl varielr

of wcys of thinking hos lhe best odvcntage in life's gorne. ,,

Sfudy the ftlcrsters rofessor Phelps said he envied the great orchestraconductors. They could never be bored. They have memorized the music of every instrument in the orchestra.At will, they could play the great symphoniesall by themselves.They could be the first violin or the drummer. Are you ever lonely? It is a sign of an educated man that he is never bored. There are more things that are of interest to him than time to enjoy each and everyoneof them.

lhe Verrictions of the Wrys of Thinking

ponent,you can forecasthis next play a n d t h u s , t a k e a d v a n t a g eo f t h a t k n o w l e d g e a n d w i n a g a i n s th i m . There are alternativewaysof thinking and the person who has the greatest varietyof waysof thinking hasthe best advantagein life'sgame. The lawyer, for example, takes a case and takes it apart, analyzeseach ofthe facts and scattersthem around. He does not find it necessaryto put the facts togetherin an orderly working manner. The engineer, on the other hand, does not start working until he has gathered all the facts and the materials, then he puts them all together to build whatever structure he has decided to construct.

tltr"id;yd;15.";::# 44 tneAslAN MANAGER o June-August 1991

Procedure for SUPRGlass can give you another example by explaining the steps I use in teaching "Sources and Uses of Power" atAIM. The principal objective of the classis to make the students think during the class session.Not regurgitate what they have read. 1. The students are required to read the case in preparation for the classroom session. 2. Tbere is roll call, just a quarter page quiz that refers to the case. 3. I select one student and force him to state what selfish motive he has for attending the class.What does he expect to gain in the next hour. 4. I ask him to select a fellow student who will start the discussionthat will achieve the objective he has formulated. 5. I move the discussion around to get different views on the issuesunder discussion. I do blackboard work to highlight ideas worth pursuing, or ideas that have to be disproven. I encourage one-on-one arguments. I reward and punish the participants as deserved.Only one studentcan speak at a time. He getsmy undivided attention; sometimes,uncomfortablyso. A student is not allowed to give up. He must pursue hls logic to its conclusion - good or bad. 6. A studentis askedto summarize at the end. 7. The student who stated his selfish objectivesis asked if he attained them or not. If not, he is askedto explain why not. From the above steps you can see the stepsinvolvedin communications. The purpose is to make the student think. I have to get their attention.By asking one student to state his personal objective for that one hour of class,I get every student to decide on his personal objective.The members of the classunderstandwhat learning experience is to be achieved. The m e d i u m i s t h e c l a s s d i s c u s s i o n .I retain their concentration and attention by giving each speaker my undivided attention. It is eyeballto eyeball. From time to time, I place notations on the blackboard to emI ! r

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phasize key words that have been used. The other participants are forced to wonder about the logic or reasonfor each notation forcing them tr.rbe alert and to think. They expect to be called on to participate because I call on them at random. They may be asked to summarize the arguments that have been given.

Winking ln the Derrk I

notherlittle storvI like to tell is

a wagon. He wore a long pigtail which was an insulting depiction of the proud Chinese. The offended Chinese community said nothing. They simply stopped returning the empties to Pepsi Cola. Within two weeks, the company was forced to publicly apologize for its error. Pepsi had no bottles to refill. How often have you been the recipient of the silent treatrnent? If you are a husband, it must have been more than once.

A:*:1,-;fif:t:Bfl:';: Slf,C ond that if others thought of the idea it would be great for everyone.But how do you transmit it? By keeping silent? That is like winking in the dark. You know what you iue doing but nobody else does.

Euclifg Geonetry will remember that vou l17u geometryasa mathsubstudied fr ject. It is not really a mathematicsscience.It is properly a study of logig a way of thinking. It starts with a theorem,stateswhat are the givens,then usesEuclid's logic to arrive at a conclusion.Q.E.D.

Compuler Progrtrmming the war, a new method of llince has been developed.It is Stni"fog in the form of computer programming. It is the adoption of logic revised so it can be translatedinto the language of the computer which understands only yes and no signals,or positive and negative signals. It is a very disciplined logic, and many of the younger people havelearned to use it. They then apply it with the aid of computerswith amazing results.We now have the ability to multiply the productivity of the mind. The Industrial Revolution multiplied the productivity of production of goods.Nowthe Computer Revolution has multiplied the productivity of ideas.

9ilent flessoges: Pepsi Colo and the Seisitive Chinese ^Qome

time in the decade of the

PepsiCola ran a carl.oonad f,50r, which showed a Chinese pulling

frlike Unson ike Unson of SMC was once guest of my classin AIM. was there to explain the effect of the creation of a new corporate culture in San Miguel. Andy Soriano realized that the resources of San Miguel could not be harnessed for further growth if the corporate cufture of the San Miguel in the 1960s was not revised. They set out to make the change.It is now effective and the result is the massiveincrease in productivity and strength of San Miguel in its chosenfields of competition. He said that in the last analysis, the greatest benefit they achievedwas the improvement of corporate communications within the corporation. The flow of information and ideas in the company is now in two dirdctions. From below, upwards and from above, downwards.Before it was mostly from above downwards. This now makes it possible for the brains and ideas from many levels of managementand employeesto work and be part of the production process. Think about it. I think he is tellins the truth. I

ftlthe - r rl{e

36V ond Wosh have a great story about W a s h i n g t o nS y C i p t h a t i s a l s o about communications.He was my guest speaker in class on the "Sourcesand Uses of Power". In my introduction, I explained that during the war, Wash had been a combat intelligence man responsiblefor interrogating prisoners of war. He did a I I -

46 fne ASIANMANAGERr June-August1991

great job of explaining what SGV as an organization was trying to ashieve. One of my students, who was getting only a passinggrade at that time, was a military intelligence officer in "In orthe army. He asked Wash, gqnizing SGV did you use a military intelligence organization model?" At that time, SGV was being identified in the coffee circles as being a branch of the CIA. Wash tried to talk around the question until I intervened and asked him whether SGV was not in f.act a great store of information. It was their function to make senseof all that gathered information and convert it into ideas that could be used for action. The grade of that student rose two steps by just that one question.

Roberto H. Lim Capt. Lim holds the SGV Foundation Chair for BusinessMa' nagementin AIM and is president of the Management Corporatiort of the Oient. He is progra,n director of the Air Transport Course.In 1985,he retired front the presidency of the Philippine AerospaceDevelopment Coryoratiort.Pior to this, he was executivevice-president of Pltilippine Airlines before retiing irt 1969 after 24 yearc in the ittdustry. A gradltate of the US Naval Academy, Capt. Lim also trained irt the US Army Air Corps and the Philippine Military Acaderny. He also attendedHarvard's 49thAdvanced Monagement Program in 1967.

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FEATURE Hiddenwealtll..

Funding Asicfs ShcrdowEconomy Table1: GrowthRateof GrossDomesticProduct ( percent perannum)

by Prof.Quintin G. Tan Canadian Professor of Business Management

Overvlew of Agio ts huge size distinguishesAsia from other regionsof thc world. It is home to almost three billion people, more than haH of the world's population. Within Asia lie diverse economic, political and cultural dispensations. Levels of economic development range from the industrialized and newly industrializing countries of East Asia to the agriculture-dependent nations of South and Southeast Asia. Average per capita incomes are extreme: more than $1-6,000 for Japan at the high end and $170 in some of the poorest nations. Political systemsvary from democratic to authoritarian to socialist. The political environment can be very fluid in one nation, yet rock stable in a neighboring country. Natural resources abound in Indonesia, Malaysia, Thailand and the Philippines. Many countries have a large pool oftrainable and evenhighly skilled labor. All told, Asia is a giant market of relatively ine4pensivemanpower and monied consumersas well. Compared to other regions, Asian economieshave been growing at a fast rate. Investors around the world are strongly investing in Asia. Such interest comes from the expectation of accelerated development of Asian countries, recognillsn of resurgentindigenousentrepreneurship among its peoples and appreciation of the innovative, socially oriented initiatives being pursued by various governments. ; I -

il:[?J,f

Average t971{o 9.t 9.5 4.7 s.0 9.7

'sr'rALrz NG couN rRrEs

Korea,Reprblicof Singapore Taipei,Ctrina SOTJTHEASTASLA lndonesia Laos, PeoplesDemocratbHegrbliccf Nhlaysia Philippires Thailard Vietnam,Sochlis ffepuHiccf

;##ffi^

7.4 7.9 ; 6.2 7.2

1987 12.1 13.8 11.8 8.8 12.3

1988 9.4 7.3 1.3 11.0 7.3

5.8 8.0 7.8 4.8 5.7 6.5 2.4 2.1 4.0 5.3 8.7 7.6 4.7 6.2 6.0 8.4 12.0 10.8 2.6 5.9 8.2

3.7 5.9 3.3 *.9 2,3, 4.8 5,5 110

4.3 4.0 4.4 4.2 2:.7 6.5 1.6 65

8-5 2.6 9,5 0.2 9] 7.0 2.8 10.9

Papua NqryGuirya

2S 4.8 1,t

2.5 0.4 3.1

Tctaf

s.4

2.8 6.3 6.0 8.4

lff5r*.,@urnn)

I;m"

Sril-anka Chiru,Peoples ffepuHicof

;fu*

PActFrc

1989 6.4 3.6 5.9 9.2 7.7

4.4 Z4 4.5 3.4 1.5 5.S 2.0 4.0 2.8 12.1 0.1

9,3, s.4

Source:AsianDevdopnEntO,rtook 1W

Table2: Performanceindicators,developingregion,selectedperiods Region

Growthof realpercapitaGDP(",6) 196$73' t97$8r) 1980-89 3,2 41 ,0,1 4-7 5'1 6.7 ,t.7 1.? fi"$

Sub-Saharan Afrba EastAsia EastemEurope MlddleEa$,NorthAfrica& CIherEurope 5.5 latin Arnerica& Cafibbean 37 Source:AcianDewlofrnnt Ordook 1gS

48 THEASIANMANAGER o June-Augusr1991

2,1 e6

o8 o6

lhe Scope of thc lilormol

Sector

a nformality generallyrefers to Ir economicactivities that are unreported and unregistered and, therefore,untaxed.The informal sector, also sometimescalled the underground or shadoweconomy,provides goodsandservices that arenot formally reflected in the accounting of a country's gross nationalproduct (GNP). These informal activities rangein nature and scalefrom subsisprojectsto tence,income-generating small commercial ventures; from livelihood to businessventures.The informal sector is, in fact, a wide spectrumof enterprisesrangrngfrom the tiny unstable undertakingsnormally associatedwith the poor to fairly established companies which should be part of the formal sector. The significanceof the informal sector in the context of the national economyhas been previously illustrated. Studiesin a number of developing countriesshow that between30Voto 60Vo of the workforce and the gross domestic product (GDP) are accountedfor by the informal or underground market. The informal sector in Argentina is 607o of its GNP. In the Philippines,the relative size of the sectorin 1987wasestimatedat ?bVoto 49Voof.GNP; it was only L2Vo to 24Von L967.In Pakistan,informal activitiesare estimatedto be 30Voto 60Voof.GDP. It is widely recopized that most microbusinessesbegan as very small tradesin the informalsector.Someof thesemicrobusinesses wouldgo on to becomestable,well-knownenterprisesthat maybe attractedto theformalsector.Its potentialandsizemake the informal sector an important economicresource.

Chareicterlsrlccof rhe lnforncl Scctor enerallv.informal trades arise ir the requirementsfor Alwhen entrv into the formal sector act as disincentivesdue to a number of factors. For one,the income-generatingactivityis verysmall-scale.Inthe Philippines, a borrower gets a loan of P50 (approximately$1.CI) to engagein lsleifing of.balut(sdted duckeggs),a nativedelicacy. In addition, a typical informal occupation servesan unstable or seasonaldemand.,Itgrabs opportunities at hand to turn a profit and the activity exists only for the given perceivedmarket.Once the season-

not evenbe sufficient to tide the fanily over the day. Such very small activitiescannotbe a sourceof personal savings. A more recent phenomenonis the prevalenceof informal activitiesin the e4portindustries.Fiprode noted that this sectorproducesmostof Pakistan's major eryorts of carpets,surgical instruments,sporting goodsand leather goods,anong others.In my own study in 1[s philippines,I of subcontracting also observeda parallel situationin which the capacityof large elporters depends,in turn, on the capacity of many primary subcontractors.Each of these subcontractorshas the features of formal enterprisesbeing registeredbut providing merely labor

ality of the product has passed the micro-enterprise will move on to cater to whatever new product a fickle market is willing to purchase. Given the minimal investment and the peculiarity of markets, most informal businessesrealize very marginal incomes. Considering that the activity is likely to be set up in a poor neighborhood, thereby catering to a poor clientele, mark-ups will not be substantial. If one even puts in a minimum "salary" for the time and effort of the proprietor, the earnings may

to an exporter (i.e., a market) whose demand varies from time to time. While the subcontracting enterpfse is registered,its labor force is essentially composed of informals. Moreover, the subcontractor often has secondary or even tertiary subcontractors that are home-based and unregistered. A more thorough study may even show that labor-intensive industries engaged in the export of non-traditional commodities, such as garments and handicrafts, in developing

THE ASIANMANAGERo June-August 1991 49

countriesofAsia aresupportedlargely by informals. Subcontractingitself is widely practiced :rmongAsian nations. Thailand subcontractsjobs to Bangladeshin the samemennsl g[n1 Hong Kong firms enter into similar arrangementswith Filipind subcontractors.Some of theseinformal subcontractorshave shownremarkable growth and have attained significant sizethat canonlybe attributed to their acquiredentrepreneurial,managementskills.

Perccfuod llceds of the Hormcl Sector overnments have always intervened in economic and social development in the form of

programsand projectsaddressingthe needs of the poor. In developing countriesof Asia, asmuch ds40Voof thepopulationlive in absoluteor relative poverty and up to 80% can be found"in rural communities.Their povertycanbe tracedto low productivity and low agriculturalyields. Development programs have naturallyfocusedon creatingoff-farm opportunitiesfor employmentandincomegenerationfor a large number of people. The introduction of nonfarm activitiesaimsto providesecondaryincomesourcesfor farm families

in betweenthe planting and harvest period duringwhich the farmer would otherwisebe idle. This strateg5r has been central to almost all efforts at rural industrializationof the agrobasedsectorin developingcountries. Most of thesenon-farm activities tap existingresorucesin the villages and employtraditional technologies. And to start and expandthesesmall rural enterprisesgenerallyrequires accessto working capital.To this end, many assistanceprograms invariably extendfinancing.

Progro ns/l nstitutions/ Schemesfor the lnformal Sector

havepotential impact on the informal sector. Theseinclude livelihood support funds, rural financing venture capital, enterprise promotion and food production and guaranty progrems.Non-governmentorganizations havetheir own initiatives for the sector providing separateassistance for urban and rural clientele. The extentof the schemesis indicative of the distinct concernfor specific target groups. There are programs directedonly at fishermen.Othersinvolvefarmers'organizations. And still others assist primarily market vendors.

Greimeen Bonk study of selectedprograms Istablished lr-1976,the Grameen I (Rural) Bank in Bangladeshasthe world revealsthat Ilaround ! -sists mav have any one or a 4nev in financinglivelihood uncombinationofihe followiogservices: dertakingsof landlesspeasants.Its financial, technical, training and/or specific clientele are the rural poor promotion. social Overall though, who have practically nothing'with financingis anessentialcomponentof whichto secluetheir loans.The bank the programsconsideredto be comoperatesmore than 300 branches parably successful,as discussed covering 5,400villagesand nearly below. 300,000participants. Average loans are small, about Flncnchl tichcmes lor thc $100,yet, the bank showsimpressive Gountryslde loanrecovery.About 97Voof allloans Philippine government are repaid within one year after supIhe I portsat least43enterprisedeve- releaseand almost 99% within two - lopmentfinancialprogramsthat years.

50 THEASIANMANAGER o June-Augusr1991

Grameen Bank has a unique approach in dealing with its "high-risk" customers.Potential customersmust organize in groups of five and each member should make regular weekly savings before the group may apply for a loan. The lrst fwo borrowers in a goup must meet their weeklyrepayment schedulebefore other members can apply for a loan.

standingloans at an effectiveinterest rate of 7.5Voper month. Ninety percent of theseloans were for lessthan $60. From this portfolio, it earned return. $L.4million in profits or a1,4Vo A prospectiveborrower hasonly to complete a simple one-pageapplication form and secure the approval of his village leader. No securiry is required. BKK takes only one week to decide on the application. Once the monevis disbursed.the client is on his

ilurlured ploperly, the inlolmal seclor hcrs provided lhe environmenl for lhe developmenl of enhepreneurc in developing counlries. ,,

The bank attributes its excellent performance to a number of factors; among them, close supervisionof the borrowers, lending for activities that generate regular income and each borrower's understandingthat access to future loans hinges on the repayment of current borrowings. The costs to maintain such operationsare quite high and they are partially offset by low-cost funds from international aid agencies. BKK ol lndoncclo he Badan Kredit Kecamatan is a financing project of the Indonesiansovernmentin Central Java that eKends small loans to rural women. Actual repayment of the loans is 95Vo makrngBKK one of the most successfulbanking operationsof its kind anywherein the world.

own as BKK does not monitor the loans. The monthly interest charge is significantly lower than that of moneyl e n d e r s .T o m i n i m i z e r i s k s , B K K provides initial, very small short-term loans of about $5. Upon repayment, the borrower may avail of higher amounts.This step-ladderincreasein borrowings servesas an incentive to repay on time in expectation of getting another loan.

Table3: Shareof InformalUrbanand RuralCredit, in SelectedAsianCountries County

% Shareof lnformal Sector

Remarts

Rural

33€7

Shareof totalvdume of ruraiborrowings.

CHINA Rural

33€7

Shareof borrowings, mid-1980s.

INDIA Rural

JtJ

Shareof outstanding househdddebt owedto informalsector,lgS2. Shareof otttstanding househdddebt cnrved to informalsector,1982.

ffi

Urban

KOREA Rural

Shareof average outstarding Iiabilities held byfarm househdd.

Shareof borrcx,vings.

Proportionof farm familyborrowingfrorn informalsector,l97&Z/.

MAI.AYSIA Rural NEPAL Rural

PAKISTAN Rural 6S PHIUPPINES Rural 70 Urban 45 SRIISNKA Hural 45 THAII-AND

Shareof borrowirgs,1985. Shareof borrowings,1987. Share.of borrowings,1987. Shareof borrcnvings among paddyfarmers,'l 975-76. Shareof debt outstarding, 1987.

Source:AsianD€veloornent Ouflook1990

In 1987,the BKK had 516,000 out-

THEASIANMANAGERo June-August 1991 51

Rorcrlng Scnhrgt ond loanrArodotlonr

successfulbusinessdevelopment.Insteadof credit, inputs and materials are provided to subcontractops by the contractorswho constitutethe assuredmarket for the produce of t h e s u b c o n t r a c t o r s .I t i s t h i s presenceof a sure market that has attracted the subcontractorsto work. The practiceofsubcontractinghas its roots in the informal seclor and continuesto be a predominantbusiness relationship among informal producers and sellers.Nurtured properly, the informal sector has provided the environmentfor the development of entrepreneurs in developingcountries.This resurgent entrepreneurship hasbeenidentified as a key factor of Asia's long-term prospects. Most governmentsrecognizethe potentialsandopportunitiesin the informalsector.Differentinitiativesare now being pursued.In the end, the government'sresponsewill influence the character,sizeand dynamigssf 115 informalsector. The Philippineshas opted to borrow certainfeaturesof an Italian law which grants formal status to enterprisesemployinga prescribed number of workers, calTedKalakslan ng20 (Business of 20).The Philippine law exemptsfrom businesstaxes registeredcountrysideenterprises with 20 or lessemployees. Moqt other Asiancountries- astheimpacton national development becomes clearer- are evolvingtheir own modelsof developmentfor the unregulatedand unattendedsectorof their economies.

Rtrt:dtf##ffi

It comesunder different namessuch as the paluwagan in the Philippines, cftit fund in India, lsusu in Nigeria, hui in China,fto in Japan,commitlssg in Pakistan,aisan n Indonesia and chocr(or share)in Thailand. In a typical Rosca, a group of six people (to as many as 4{) in someinstances)organizethemselvesinto an informal associationand each member regularlygivesa fixed amountto a selectedleader. The pooled fund is then givenby turns to eachmember. The rotation period canbe weeklyor monthly. In the Philippines,the practiceof establishingRosca is particularly popular among school teachers.It permitsthem to buy,saya household appliance,on a cashbasisand actually payon installmenttbroughthe Rosca. Collectionis normallyrimed to coincidewith payday.

Oenctol Obgernrtlons I nformal financeconstitutesa sigI nificant portion of rural credit. It - accountsfor 33Voto 6Vo of total rural financing in Bangladeshand China, approximatelyalVo in India, Sri Lanka and Thailand, and66Voto 75% in,Nepal, Malaysia and the Philippines. Therearetwo distinctcategoriesof informalfinanceavailable,tied credit and untied credit. The latter is often viewedas "pure" credit. In contrast, tied credit links bomowingwith marketingand other transactions. Tied (or interlinked)credit is particularlyinterestingbecausemost assistanceprogramsdo not havesuch featuresor regardit with minsl 61e1est. However,in some countries,interlinkedcredit may be more important than untied credit. Moreover, linking credit and markets or buyers and producershasprovidedcontinuing operationsand growth for many small operators.A similar arrangement operates in subcontracting which has proven to be a model for

References: Alonzo, Ruperto F.Informality

in Develop-

ment: The Philipprnes. Monograph submitted to the USAID, 190. Asian Development Bank. Infomul Finance in Asia. 1990. Asian Developmmt Outlook Manila: ADB, 1990. Business International Corporation. /L & T Asia Introduction, 1989. Shamshad Ali, Ceng. Fiprode. The Informal Sector in Pakistan: A Case for Policy Refonn Monograph submitted to the Asian Conference on Micro and Informal Sector, lahore, Pakis-

r June-August1991 52 THEASIANMANAGER

tan, 1989. Tan, Quintin G. and ReneDomingo..Sub contacting in the Philipphes and. Japan Researchpapcr and seminar proceedings,1988. The World Bank. DivergingTrendsin the Ilorld. Economy.World Development Report. Washington D.C.: Odord Press,1990. Timberg, Thomas A.Compoative Expericncewith Microenterprisehojects. World Conferenceon Sr4tportfor Microenterprises,1988. United NationsIndustrialDevelopment Organization.Infustrialization and Rural DevelopmenrNew York, 1978. Villanueva.Maria U. and Antonio de Attemp* at Social Credit Jestl.u,s. Manila: Bookmark.1981.

Quintin G. Tan Professor Tan is A-IM's Canadian Professor of BusinessManagemenL He is cunently involved in the development of a course on Entrepreneurship and Export Management and is conducting on-going researchon subcontracting and the informal sector relqted to his long-standing interest in successfulsmall and medium business enterpisesht the Philippines. Professor Tan waspreviously director of the Bureau of Small and Medium Industries of the former Ministry of Trade qnd Industry. A Mechanical Engineeing and MBA graduate of the Univercity of the Philippines he has also sened as an exthange professor at the Korea Univenity.

PECIALREPORT OtigasCenterhit thejaclqot...

fhe illsking of ei Boorn Town rtigas Center, a 95-hectare area located right where Pasig, Mandaluyong and QuezonCity meet,is now emergingas M e t r o M a n i l a ' sm o s t s o u g h t - a f t e r businesssiteafter Makati. "If Makati is the past and the present,then the OrtigasCenteris the present and the future," saysJuan Miguel Llamas, a real estate d e v e l o p e r ,o w n e r o f J . M . Llamas Realty Services,Inc., and a long-timeassociateand spokesman of the Ortigas family. As earlyasthe 1980s,when the OrtigasCenterwasmostly openspacewith but a handful of office buildings,Llamas was already calling the area "the land of the giants."

lhe Gionts

foresight,the "giants"haveindeedarrived. One of the biggest conglomeratesin the Philippines,San MiguelCorporation, basbuiltitsmain offices at the Ortisas Center. Asia's

The OftigasCentera decade ago

oday,a mere 10 yearslater, the area is a bustling business,commercial and residentialdistrict, rivaling Singapore'sOrchard Road or Jakarta's Kuningan district. And proving the accuracy of Llamas'

biggest financing institution, the Asian DevelopmentBank, is now in the processof transferring to its headquartersin the ar€a.Costing$100million to build, the new ADB headquarters,with a total lahd area of

6 0 . 0 0 0s q u a r e m e t e r s . w a s i n auguratedon May 31 after five years of construction. Nearby, the SM Megamall, the centerpieceof the chainofShoeMart shoppingcentersowned by FilipinoChinesebusinessman Henry Sy, is nearing completion. Occupyinga two-hectaresite alons the historic E p i f a n i o d e l o s Sa n to s Avenue (EDSA) on the westernfringe of Ortigas Center, the SM Megamall is reputedto becom€the largest shoppingcomplorin Southeast Asia. It is scheduledto start op€rationsn€xtyear. Aside from the SM Megamall, Ortigas Center boasts of two other major shoppingmalls. Robinson's Galleria, owned by Sy's archriral John Gokongwei,Jr., is now open at the corner of EDSA and Ortigas Avenue. However, its twin residential and office condominiums which are connectedto the shoppingmall,are still under construction.

.,-, .J , . '.1 i

The Onigas Center's changing stryline 53 rne ASIANMANAGER. June-Augusr 1991

-SPECIALREPOR

popular attentionduring the "EDSA Revolution"of February1986.Camp Crameand CampAguinaldo,the two military campswhich sawthe birth of "PeoplePower,"arewithin easywalking distancefrom Ortigas Center.In fact,the Our Lady of EDSA Shrine. the churchbuilt to commemoratelhe bloodlessrevolutionwhichcatapulted Corazon Aquino to the presidency, lieson the northwestcornerofthe OrtigasCenter. The ongoingconstructionboom, however,did not start in earnestuntil 1987.Many rcal estateanalystssay ADB's decisionto move its headquartersto tbe OrligasCentcrtriggereda real estateboomin the area. "While this may be true," Llamas "it cannotbe deniedthat emphasizes, OrtigasCenterhasmanyfeaturesthat Juan Miguel Llamas make it an attractivcsite for busrhills shoppingcenter,which hasnow n(jss." becomethc hub of a largercommer(But not wanting to appear uncial complex. grateful,Ortigas & Co. has acknowThe successof Greenhillsspurred ledgedthe tremendousboost ADB's o t h e r r e a l e s t a t e d e v e l o p m e n t transfergaveto the centerby renamprojectsin thearca.Soonaftcr.officc ing the portion of SanMiguel Avenue b u i l d i n g s a n d r e s i d e n t i a lc o n - between Ortigas Avenue and Dona dominiumswere rising alongOrtigas Juliana Vargas Avenue the ADB Avenue,westof EDSA. Anotherelite Avenue.) s u b d i v i s i o nW , a c k - W a c kV i l l a g e , OrtigasCenter'scentrallocationis built arounda golf courseand country definitelyone of its chief attractions. club bearingthe samename,wasalso hcated alongEDSA, Metro Manila's A Plonned Cornmunily developed.The openingof De La maincircumferentialroad,it is accesy e a r s w h a t Salle University in Greenhills coma g o , i s n o w siblefrorn practicallyanylvherein the fhirtV knownasthe OrtigasCenter.was pletedthe Ortigases'plan of building metropolis. -I part of a biggerpiece of land a self-contained conmunity. The roads within the center itself owned by the Ortigas fan:'ily.Alaccording are alsoprime atlractions, lhe Sile's though commonly referred to as the to Llamas. "Even before the first Mandaluyong Estate, this piece of Atlroclions buildingwasconstructedin the area," land actuallyfell within the adfiigas Center, which was first he says,"Ortigas & Co. made it a m i u i s t r a t i v ej u r i s d i c t i o no f M a n point to build a road networkmadeof called the Ortigas Complex daluyong,San Juan, Pasig and and later the Ortigas Business concrete for the simple reasonthat Center, is bound by four major concrete is more solid and durable QuezonCity. From the start,the Ortigasfamily, thoroughfares:EDSA on the west, than asphalt." through the Ortigas & Company, OrtigasAvenueon the north, MeralThe Ortigases' commitment to Limited Partnership,wantedto build co Avenue on the east, and Shaw communityplanningis yet anotherata well-planned,self-containedcomBoulevardon the south. traction. In line with the Ortigas & munity in the area. Development Although there were already a Co. blueprint for the area,the devestarted at the San Juan part of the numberofimpressivebuildingsin the lopmentand maintenanceof the Orpropertyin what is now Greenhills,a area by the middle of the 1980s, tigas Center is closelysupervisedby plush residentialdistrict. Ortigas & notablythe San Miguel Corporation the Ortigas Center Association,lnc. Co. subdividedthe areainto residen- a n d B e n g u e tC o r p o r a t i o n h e a d - (OCAI). The provision of security, tial lots which it then sold to quarters,Sfata 100 and Strata 200, water,eleclricandtelephone facilities. postal Philcomcen buildgarbage homeowners. In line with its planned thc Ortigasand collection, and ser'communityidea,it built the Green- ings, OrtigasCenter first attracted vicesare only a few of OCAI's funcE D S A P l a z ao f t h e S h a n g r i - l a Hotelgroup.on the otberhand.is expectedto be completedin 1992.This shoppingcomplex,whidr will cct approxi-mate ly P1.8billion, was designedby the Hong Kong architectural firm of KNW and Associates. W h e n c o m p l e t e di t w i l l h a v en i n e levelsof shoppingarea,an atrium full of trees,a 4O-foothigh wall of reflective glass,air bridges,and a parking l o t t h a t c a n a c c o m m o d a t e1 , 6 0 0 vehicles.It will also featurethree off i c e t o w e r s ,t w o r e s i d e n t i a lc o n dominiumsand the Shangrila Hotel itself,all costinganotherP1.7billion. Another project that hasattractcd muchattentionis the JMT Building,a 23-storeycorporate condominium.Its architect,Francisco "Bobby" Manosa,designerof the Our Lady of E D S A S h r i n e ,e n v i s i o n sa n a l l aluminumhigh-risebuilding "suited to the local climate."With construction now on the 16thfloor, the building is expectedto be completedby June1992. All in all, there are at present,47 buildingswitbin the Ortigas Center, 18 of which are in variousstagesof construction.Roughly 407oof thc buildingsis ownedby foreign- mostly Asian- interests.

THEASIANMANAGER. June-Augusttggt 54

Infioducing

The TELECHARGE

lhe FirstTelephone CreditCard

Irts youhaveyourcallsin theU.S. chargedto youi PLDT numbr Whenyou'rein the U.S.A.- especiallyon businessyou have to make a lot of calls and pay in dollars. But here'sgood news from PLDT. Now you can pay for your overseasand domesticlong distancecalls in the U.S. in pesos.How? By chargingthosecallsto your TELECHARGE Card. With your TELECHARGE Card, all calls you placeon the AT&T network in the U.S. are chargedto your PI ,DT accountand are includedin your monthly pLDT bill. So,insteadof spendingdollarsfor your calls in the U.S., you pay in pesosin the Philippines.A big dollar saverfor frequenttravellersto the U.S. Act now! You can apply for the TELECHARGE Card at any Metro Manila PLDT BusinessOffice. Or call 812-67-'17, our 24-hourservicenumber. Our TELECHARGE Card Specialistswill be glad ro answeryour questionsaboutthe TELECHARGE Card.

'# PI.DT Thefelecommun icotions Company

PECIALREPOR tions. Street diggings are also strictly monitored by the association. In addition, Llamas says,Ortigas Center has a solid foundation of adobe. "In an e arthquake-prone country like the Philippine5, Ortigas Center is one of the safestplaces for putting up high-rise buildings," he points out. However, despite the area's adobe foundation,most of tbe buildingsin the center, with the exception of the newly rising skyscrapers,are mediurnsized in terms of heigbt. The reason for this is simple, saysLlanas. " T h e s m a l l e s tl o t i n t h e a r e a mea;lues some 1,750 square meters as opposed to 800 and 900 square neters in Makati," he explains."This gives the landowner enough spaceto grow horizontally rather than vertically. In addition, there is open space available for environmental concerns as well as for the smoother flow of vehicular traffic." (Before the 1980s,buildings at the Ortigas Center were limited to 10 Iloors. The only exemption to this

estate value at the Ortigas Center is restriction was granted to the Manila still lower than Makati's P55,000-permid-1980s, By the Electric Company. was square-meteraverage. restriction height however,the However, becauseof the bigger lot buildings taller scrappedand, thus, a prospective buyer will find a sizes, started to be constructed.) parcel of land at the Ortigas Center to be more expensive than in Makati's Coslt hvesl|ncnl financial district in terms of total crsh perhaps biggest attracthe ut 1 is the outlay. The smallest-sizedlot at the Center tion of the Ortigas !f, t Ortigas Center, measuringsome1,750 land cost. rapid appreciation of square meters,will cost about P69.96 Landowners who acquired their million at P,10,000a squaremeter. In made properties in the 1960shave lot in growth contrast,an 800-square-meter millions with the phenomenal priced P55,000 a square Makati, at of real estatevaluesin the area. During the 1960suntil the 1970s, meter, will only entail a cashoutlay of P,l4 million. land at the Ortigas Center wasselling The higher price tag notwithstandat around P350a squaremeter. By the ing, Llamas believes locating at the whopping late 1970s,prices leaped a Center is well worth the cost. At Ortigas 6(nVol.oP?,s$ asquaremeter. the P320-millionEDSA-Ortigas Once the onset of the 1980sbut before the "EDSA Revolution," the price per interchangenow being constructedis finished, he said, the Ortigas Center squaremeterroseby a\oaherzmVab will truly become the câ&#x201A;Źnter of trade P8,000.At present, according to L l a m a s a n d o t h e r r e a l e s t a t e and businessin Metro Manila. "We are definitely building the fudevelopers,land at the OrtigasCenter ture here," he says. a squaremeter. sellsfor P,10,000 Despite the gargantuanprice jump, - Loida C Papilb Llamas is quick to point out that real

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'The glubmltlton Asian Deyeloqrnent Bantft new headquafter'

tset 56 . June-August THEASIANMANAGER

SPECIAL REPORT AssrxiatioryInc... OrtigasCenter

Keeping the Boom Booming

ufl;1il#,*":fi.iil* it becameclearto Centerin the 1980s, a group of businessmenwho pioneered the real estate development in the area that somethinghad [o bedouetokeeptheareawellmaintained, as well as safe and orderly. Thus,Rafael Ortigas,Jr., Manuel C. Lozano,Jr., Narciso Padilla,Ramon F . C u e r v o ,J r . a n d E u l o g i o R . Rodriguezformedthe OrtigasCenter Association,Inc. Registeredwith the Securitiesand ExchangeCommissionon October 22,1982asa non-stockandnon-profit corporation, OCAI was organized to assistin "the oromotionandadvance-

association,a police detachment has alsobeenstationedinsidethe center. "To safeguard the safety of the owners as well as their buildings, we also maintain and repair sheet lights within the area,"Ang says. mentof the bestinterest,generalwelOCAI also draws up and implefare and prosperityof its membersin ments rules and regulations on the the OrtigasCenter." c o n s t r u c t i o n , m a i n t e n a n c ea n d Since its incorporation until the sanitation of buildingsand other rmpresent,the association has faithfully provements in the area.The assocjaservedits members- consistingof lot is in tion also charge of garbage colowners,lesseesand occupants now lection as well as street sweepingin numbering78.One of its major functhe Ortigas Center. tions, accor.dingto OCAI manager Beautificationis another major JimmyY. Ang, is the maintenanceof function of OCAI. In this connection, s e c u r i t yi n t h e O r t i g a s C e n t e r . t h e a s s o c i a t i o sn u p e r v i s etsh e i m Securityguardshired by the associaprovement. maintenance and repair tion support security in the various pedestrian malls of streets, sidewalks, buildings.Through the efforts of the

O R T I G A S& C O .L T D ,. P A R T N E R S H I P

gthFLOOR, ORTIGAS AVENUE, PASIG. METROMANILA

57 rne AstANMANAGER. June-Augusr !99i

-SPECIALREPORTand gardens."Our beautificationactivities range from grasscutting to the repaintingofgutters,"Ang says.

loslc gcrvlcet he associationalso provides some basic servicesto its members. For instance,it has built a modern post office located on the ground floor of its headquarters. "Our post office hasthe most number of post office boxes, totaling 5,030." Ang proudly claims. The Bureau of Customshas recentlyput up a small ofnco at the post office to serveOCAI members. In answerto the request of the association,the Philippine Long Distance TelephoneCompanyrecently startedinstallingadditionaltelephone lines to servicethe growing numberof tenantsat the OrtigasCenter. The OCAI continuesto expandthe range of servicesit provides its rnembers.Recently,it inaugurateda shuttle bus service for the employeesof the many offrce buildings in the area. Charging only "a minirhal fee," the busesstart from its terminalstationat the Robinson'sGalleriaat the corngr of EDSA and OrtigasAvenue,travels aroundthe OrtigasCenterand finally endsat EDSA Central at the cornsr

Geo/ge S. Lee, president ol the OCAI of EDSA andShawBoulevard. To finance its operations,the association collects monthly dues from its members.The dues,Ang says,are very small with the membersoccupying the smallestoffices "paying less thanP1,000a month." For 1990-1991,OCAI has the fol- , lowingofficers:GeorgeS. Lre, president and chairman of the board; Carolina T. Young, vice-president;

Louise Y. Gochan,secretary Alvin Y. Chen& treasurer;RommelS. Duran, auditor; and Jimrny Y. Ang manager. The association'sboard of directors is made up of Cezar de Leon, Eulogio Rodriguez, Wilfredo Vergar4 Antonio Cumagun, Herbert T. Sy and Pura Kalaw-Ledesma. ---Gran C. Sison

Keeping the place in order: Otticers ot the Ortigas Centet Association, lnc. THEASIANMANAGER. June-Augusttgst 58

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SPECIALREPORT of a trend-setter.. Reminiscences

An Ortigos Genler Pioneer

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NarcisoPadilla,presidentof PrcsconPhilippines,tnc.and pioneerof the Otligas Cenler o Narciso Padilla, a structural e n g i n e e rt u r n e d r e a l e s t a t e developer,it was a decision made partly becauseof a business hunchandpartly out of friendship. "We were friends of the Ortigas (Philippine CommunicationsCen"and we thoughtwe ter)." family,"he says, His decisionto build the 10-storey could start somethingin that areaby Padilla Building in the area was a puttingup a buildingthere." gamble,but he did not go into it simpThat areais. of course.what is now ly becauseof his friendshipwith the known as the Ortigas Center,site of "The area is right m Ortigasfamily. t h e r e g i o n a lh e a d q u a r t e r so f t h e "It Asian DevelopmentBank, home of the centerof things,"Padillasays. from Pasig,QuezooCity, is accessible the San Miguel Corporation,future SanJuan,Mandaluyongand Makati. location of what is expectedto become SoutheastAsia's biggestshop- SoI thoughtthat ifI build there,some peoplewouldbewillingto buyrealesping complex- the SM Megamalltate in the areatoo. But I knew I was andthe placewherethe ragingPhilippine constructionfever is at its hottaking'a risk. I was a pioneer developer,andwhenyou'rea pioneer, test. But in the 1970s,Ortigas Center no matter how many project studies wasjust a flat and empty 95-hectare you make, you are still taking a big pieceof land. "At that time," Padilla risk." Padilla, however,was not Just a recalls,"it wasbarrEn.You couldsee risk-takerlhewasa majorJeagueriskseveralhundred meters around you taker. After putting up the Padilla andtherâ&#x201A;Źwasnothingthere.The only . buildine around was the Philcomccn Building,he wentaheadandbuilt wo

1991 . June-August 60 rxenstaH MANAGER

more -the Strata 100and the Strata 200,both high-risecondominiums.

Logicol tove up these buildings' acLutting E"nrdin,' to Padilla-was a "naturali'movefor him. "I went t into this becauseit was a related "I field,"he explains. wasalreadyin the constructionbusiness,sellingprestressedconcrete,so it was a logical movefor me to go into the construction ofbuildings." Padillais the presidentof Prescon Philippines,Inc., one of the biggest suppliersof pre-stressedconcreteto the local construction industry. His c o m p a n yh a s p r o v i d e d t h e P r e stressedconcreterequirementsof some of the country'sbiggestshoppingcenters,suchasEver Emporium, andShoeMart, including Robinson's the SM Megamall now under constructionat the OrtigasCenter.Prescon also counts among its clients a number of condominiums like the Palladium and the Summit.

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OEPOSITINSURANCEFOR EACH OEPOSITOR?4O,OOO)

-SPECIALREPORT"Beingin the business ofconstructing buildings ourselveshas given us the advantageof knowingwho needs materialsfor construction,particularly pre-stressedconcrete," Fadilla says."While putting up buildings remainsa sort of a part-timejob for me, it hashelpedmy main businessa lot." Part-timeor not, puttingup the Ortigas Center buildings,however,has alsoprovento be a profitableactivity for Padilla. To begin with, as a pioneer,Padilla was able to buy the buildingsitesfrom Ortigas& Co. at a verylow price. "I paid lessthan P1,000per square meter," he says."Now, the price at Ortigas Center is about P40,000a squaremeter,So, as a pioneer,I was ableto takeadvantageof the relatively lowervalueofthe land at that time." To put up Strata100in 1975,Padilla spent betweenP90 million and P100million.Due to the higherprices of constructionmaterials,Strata200, built in 1980,costaboutP130million. For both projects, Padilla sayshis companyusedits own funds."We did not borrow from the bank," he points out. "There was no outside filancing"' Padillahasalreadysold the Padilla Building, except for the basement

units. Thesc are being usedby the Tulay sa Pag-w ad, a non-government organization(NGO) that lends moneyto the poor. Padillais chairman of this NGO. Meanwhile,the two Stratasare being leasedout to variousorganizations at an averagemonthly rate of P200a squaremeter.Strata100with its 120units,Padillasays,is fully occupied,whileStrata200still hassome units availablefrom its total of 80 unlts. Reminiscingabout the gamblehe took in the 1970s-a gamblethat had paid off handsomely-Padillabearns: "We were aheadof everybody,so we werethe first onesto benefitfrom the construclionboom and we are still benefittingfrom it. Actually,whenwe s t a r t c d ,I n c v c r t h o u g h t t h e a r e a would developas rapidly as it did. Right now, manyare trying to follow whatwe started."

Gontinuing Growth a d i l l a b e l i e v e sm a n y m o r e buildingswill be constructedat the Ortigas Center, following the exampleestablishby someof the country's biggest corporations that havedecidedto establishtheir headquartersthere. The EDSA-Ortigas Avenueinterchangethat the govern-

ment is now constructingwill make the OrtigasCenter an evenmore athe adds. tractivesitefor business, "There will be more businesses locatingat the OrtigasCenter,especially now that there are shopping centers and residential cond o m i n i u m sb e i n g b u i l t , " h e s a y s . "There will be a whole new communitythat will rise there." Ever the visionary,Padillasaysdevelopmentwill go eastwardfrom OrtigasCenter."Grov.thwouldbe atong "The OrtigasAvenue,"he elaborates. governmentis widening thc road towardsAntipolo and Teresa.I think that is the area where investments shouldbe made." Regardinghis own plans, Padilla s a y sh e w i l l b u i l d t w o m o r e c o n dominiumsat the Ortigas Centcr."l will put up Strata 300 and 400," he pointsout. "That wasmy originalplan whenI pioneeredthe area." Asked when he would start building, Padilla smiles:"I'm still waiting for the right time. You see,in real estate development,timing is very important." Timing, the willingnessto take risks,and the Ortigas Center-these are the secretsof Padilla'ssuccess. -Alona Marie Dayrit

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