The Asian Manager, November 1998 Issue by Sherbet Manalili

SUBSCRIBER'SCOPY NOVEMBER-OECEMBER1998

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"7beenirc pnt of a ciali stitutictns islol dn eulfonellsesedats...lbelieLelbatuhilesone .fi theteston othetsu'ill pass nn.)'neetlatt ettrabelpinghantlin orderto stotit e thedillicult settiltg. theitou\ and etnerye.lj on sh gqleas sttongeritstilLlio slhatharc lrcennnde notefit fu healtht' e\e,ra"...."(,{]{,1981) GoY.JoseB. fernandez,Jr. t s n r " .Br lr r k ' i r h rP h r l r p l r n t '

Join the gurus and practitionersto find out -

w H *afraid o ' S. , of financing? Howfo overcome

FearofFinancialRl S KS ? and FinanceLectureScriesis a monrhly gatheringofthe AIM The Gov JoseB. Fernandez,Jr. Center for B:rnkinS; 'I'he Center as a marketplace of innovative thinking on banking and famil,v-social invesrors, alurnni and friends. finance sarisfiesthe concern ofthe late Gov. Fernandezthat the task ofmanaging financial insrirutionstoday demands nental alertnessand vigilancc. Its programs and projects are designed to improve the capabiliry ofpractitioners ro srrike a balance bccveen satisfuing clients and observing classicalcredit principles. The dialogue round rs spearheaded by rhe Asian Institute of Management'sArea ofExcellence Finance& Economicsfaculry. .

Corporate Governance Public and Private Sector

November26, 1998 Credit

Finance

Local Government Unit (LGU) Financing

Scheduledevcrl' lastThursday ofthe month from 6100pm to 8:00 pm ar the Philippine ConferenccHall, 3/R Asian Insrituteof Management, l 2 J P a r " J c R o x : ' .M ; k . r r (i i r ' . fbr complimentaryseatsshouldbe adtlrcsscdto the Asian Institute of Management,Itl. No. 892401l -25 - Scientific Jnquiriesanclreservations ResearchFoundation,Ext. l5l, 344: Public Affairs Oftlce, Lrt. 387, 113; Pl.rcementand Alurnni RelarionsOffice, Ext. f60; JBF Center for or , mrirona@aim.edu.ph Tel. No. 7501010,Fxt. 2100,2101; FAX: 893-3341/893-7562;Ernail:scarino@aim.edu.ph Banking& Finance, obisnar@aim.cJu.oh. 'This public serrice is sponsor€dbythe Gor.lose B- F€rnandez.J'.centerfor Banknsdnd Fin ccand theAsian Instnute ofM in oider to plovide continuing €du.atio. oppodunnics in financial managemerr'

asem€nt

SAIM THE ASIAN MANAGER Publishedbimonthly by theAsianInstituteof Management. MITA (P) 042/ 1A/SBKDNPPfSi1076/s/97 rSSN0116" 77901EditorialandAdvertising Olfice:AsianIn' stituteof Management, 123 Paseode Roxas, Makati City, Philipplnes. Tel: (632) 892 40112 5 ; 8 9 2 0 4 3 5 - 4 3B ; a 3 3 3 4 l F a x :$ 3 2 ) 8 1 7

s240. Intemet Addr€$s:tam@aim.edu.ph Selectionsffom past and current issuesfound in http:,//www.aim.edu.ph CopyrightO1998 TheAsianManager.All rights Reproduction in anymannerin whole reserved. or in partin Engiishor otherlanguages without prior written pefmissionprohibited.Printedby TimesPrintersPte.Lrd.,Singapore. Opinionsexpressed in thispublicationdo not reflectthe official vlewsof the AsianInstituteof Management. Eotronrlr Bomn: Chairman:JesusG. Gallegos Jr VictorS.Limlingan, Members:ReneT. Domingo, PatriciaL. Lontoc.Eduardo A. Moratd. AshokK. Nath Eonom.lLDrplnrvrNt: Editor-in-ChieftPatdciaL. Lontoc Editorial Director: GertieAmpil Tirona ManagingEditor:Jocelyn deJesus F€atutesEditor: Peaches S. Castillo Art Editor MannyL. Espinola M. Villalba €ontibudqgAdst Sahsah BusrrursDrplnnrwr: Publisher:FelipeB. AJfonso Co-publisher:PatficiaL. Lontoc OperationsDirector: Millie C. Ferrer Marketing Manager: EdytheL. Bautista Advertising Officer: Vanessa M. laballas Circulation Officer: EdenS. Cardenas Mpon RnpnnsrNratwE OFHcEs: Philippines:DeiiaGutierrez, 1632)Ba44809 AlumniAssociation of AIM Inc. (632\ 8937 408 Hong Kong: PamelaCtroy,(852)834 5980 Singapore:TeddyTan,{65) 440 8760 Indonesia:RamaSlamet,(6221|7Sq2W0 (62211757 3784 Malaysia:ConnieNg, (603\717 5370 India Subcontinent MediaSouthAsla{PiLtd. 19771t23 23 70 Pakistan:S.l.Salahuddin, {522115682271 Korea:Y.K. Chun,102)7387970 Japan:TokujiNiinuma,{B13)35 829 104 Thailand: Dr.AnthonyShama,(662)3319303 LJnitedKingdom: BrianTaplinAssociation {0442}24603/ Ftance:St€phane de Rdmusat, {331)3S896341

No(h) Way! l)r:m:tir t h p u i : r r l h p r ^ r r r r p n . i p c urgency of regional economic integration. havebeengyrating. Businesses big,small Japanemerges Ihe shite,keepingAsialn and mediumhaveeitherstoppedshoot- suspense likeallmaincharacters do,in this i n g f r o m t h e h i p . o r s i m p l ys r o p p e d . drawn-outNoh Doioieof an Aslanmirapoliticaland c l e s p u r n e dw. h e n y o u r e a dt h r o u g h stunnedat the economic, socialrepertoire thatneedsto bemastered "Managingthe Yen",with references to andstage-managed. Andyoustillcan'ttell Musashi's Wayof the Sword,in caseyou t h e n e r f o r m ehre h i n dt h e N o h m a s k . wantto slaytheserpent. Thedenouement Shakespearean theatre wasneverlikethis. is do-it-yourself, aswhenthisNohplayed Nor wasthe theatreof operations of the outvarlousendlngs atvarioustimes,with globalstrategsts untiltheAsiancdsiscame its variousoriginsfrom the Asianmainalong. land-Chinese. Korean. evenThal. " N o t v e r y n i c e , " w r i t e sI n s t r t u t when But Noh eventsareno-events d EtudesdesPolitique's David Camroux, thereareno kyogen,the comicreliefbe hadfinallyachieved con- tweenacts.Sothislssue,in keeping with iustwhenEurope sensus fortheEuro.in rhefirsttriptychof the season, bringsin Elmer Soriano's coverstories onAsia-Europe management "Giftsfor the Workaholic" in a new secsilategies in thisissue.Witty but wisein tion, The Asian Monger. Junbo waysof bothAsiaandEurope,Camroux Borromeobeginsanothernew seclion, nrec lhp "mis-hp:rino" nf rhp Frrrnnp:n Management Mentors,withfondhopefor voicein thecrisis. Asinsightfulis theAsian happyendings unfoldswithasChristmas voiceof Nihon Univerctty's Morimitsu outJimDonelan. Bob Chandranreturns Inaba,who wasformerlywith theAsian with "Entrepreneur's Corner",an almost Development Bank,with hts LookEurope indefatlgable optimlst. Policy,as Asia'sstrategicoption for the are Oh yes.justwhentheEuropeans beckoningcentury.Even Phtlippine morepessimistic nowofAsia.Butisn't"life President Erap's reflectlonsintimate a stage. players"? Thesense andallmerely openness to European exemplars, butlike of lightness in balletcontrasted with the the aesthetics of Noh, he is understated Noh stanceof tensetorso,slightlytilted andsrrpeestivp as hp advocates for true forward,armscurveddownwardand ASEANcommunity. kneesflexedgivesinsightintodifferences Nohdancing mayseemgeneraily slow in AsianandEuropean management styles. byballetstandards, butleapsandtumsdo Well,Asiansaren'taspessimlstic of Asia occur.AsAsia'srecoveffis almostimper- now asthe Europeans. No way will the ceptible,QT Tan's"GlobalTrendsand restof Asiawantthelandof thedsingsun Philippine SMEs"proposes organizational or anythingcatchthemcrying.They'renot toolingthat maybe slow in the coming asoptimistic of theEuroastheEuropeans but couldjumpstart SMEs.Asln theNoh areeither.AndNohis two centuries older wheretechniques arehiddenby theirper t h r n S h e k p c n p a r p fection,thosein theknowwill appreciate MerryChristmas to allandleta happy TakaoOgawa's"When GreedTurnsTo newyearbea self-fulfilling prophecy! Green"wherehe shares how ISO14001 canmakebusiness smoothflowing,asis idealin Noh dancing.EnterMyla Fabre fromstage right:anAsiantouroftheEuro, focused on thetourismindustrylikeNoh chanters urgingmarching to the drummets. Nieves Confesor comesunAssocinteDann Lttntoctaaclrs Ttrittatization,and masked, the wakiintheNoh,arguingthe internationalrr:lntionsin MBM anLiCDM.

tun# Emai I : <plontoc@a im.edu.yth>.

November-December 1998 | TheAsianManaper 3

Atty. Jose Gerardo A. Alampay <gigo@mnl.sequel.ne> Partnerof the AlampayGatchalianMawis Curanza& AlampayLaw OfficeandPrincipaiResearcher for SecurityConcerns in theAsiaPacific Regionof theUniversityof thePhilippines Instituteof International Legal Studies, GigoAlampayholdsa Masterof Laws( Unlversityof SanDiego) anda Mastersof PacificandInternational Affairs(University of California at SanDiego)where he receivedthe AllisonAwardfor Outstanding privatization Achievement. He teaches law sessions in AIM.

TakaoOgawa <okda@iaco.cojo> nominatedexpertto theAPECInternatlonal OuaiityAssurance Japan's System(IOAS)SME Workshopon Standards BasedManagement organizedby AIM, TakaoOgawais the SeniorChiefEngineerfor the Environmental Certification Divisionof theJapanAuditandCertification for Environmentand Ouality0ACO). He workedwith Organization SumitomoChemicalCo.Ltd.'sTechnical Department of Nagoya Works, andwasinvolved. in the productionof highpurity aluminummetaiat the EhimeWorksof the company.He then becamemanagerof the Prof. Horacio M. Borromeorlr., MM'77 <junbo@aim.edu.ph> Environmental& SafetyDepartmentof EhimeWorks of Sumitomo of Business Management, movingon to becomeits GeneralManager.He represents JunboBorromeo,AIM's USIPHILProfessor Japanin joinedthe facultyin 1977.CunennyAssociate Deanfor the Masterin variousconferences on ISO14001. program,he alsoservedasAssociate Business Management Deanfor the Masterin ManagementProgram,Progam Directorof the Top Dr. Morimitsu Inaba Management Programand TAM EditorialBoardMember.He taught Formerlywith the AsianDevelopment BankasSeniorProiectEconoTotalOualityin the Universityof SouthemCaliforniaMBA, andwas mist and SeniorInvestmentOfficer,MorimitsuInabais cunentlyProvisitingmemberof theAustralian Administrative StaffCollege.Hiswork fessorof Development Financeat the Graduate Schoolfor International experiences rangefrombeingIBM faineeto beingpresident of a Filipino- Relations of NihonUniversityin Japan.HealsoservedasSeniorAssocijoint venture in the manufactureand sale of stringed ateMemberof St.Antony'sCoilegein Oxford. He holdsa Ph.D.ftom Japanese instruments. andconducts trainingandseminars Hedesigns alloverAiia the Department of PoliticalEconomyof the Universityof Toronto,and andis directorof PaclficDynamicsPte.Ltd.,Singapore. hasdonepost-doctoral studyin economics at HarvardUniversity.He is a Japanese national. Dr. David Camroux programmeat the Institut d'Etudes Dr. Patricia L. Lontoc Directorof the Asia-Europe <plontoc@aim.edu.ph> (lEP)in Paris,DavidCamrouxteaches Polltiques. contemporary South- AIM's DonAndresSorianoProfessor in Business History PattLontocis eastAsiansociety, recentlyco-authoingL'Asieretrouvee (AsiaRebound, Associate Deanfor InternationalRelations, overseeing AIM's activities LeSeuil,Paris,1997).'He hasbeentheEuropean Conesponding Editor in ASEM,APEC,ASEANand UN. After beinggeneralmanagerof a of ThePacificReviewand, continuesto be a popularregularcommenta- wire manufacturing corporatlon,and investorand contributingeditor tor on Southeast AsianandPaciflcaffairsfor the Frenchpress,radioand for an international fashionmagazine, sheworkedwith four Philippine (Marcos,Aquino,Ramos,Estrada) in seniorpostslike Social television.Of AustalianandFrenchparentage, he is a Frenchnational. presidents ReformCouncil Secretary-General and PresidentialAssistant rank);Commissioner for CultureandtheArts;Economic RobertV. Chandran,MBM'74 <RVC@chemoil.com> (Undersecretary Founderandpresidentof ChemoilCorporailon, BobChandranteaches DMsionDirector, Ofice ofASEANAffairs,Departmentof ForeignAffairs; focusedon crisismanagement. entrepreneurship uound the world. ImmediatePastChairmanof the andNationalSecurityCouncilSecretary Federation andTripleA Awardee, heserved QfAIM AlumniAssociatlons on the AIM Boardof Governors.He is alsomemberof the Finance Dr. Elmer S. Soriano,MDM'97 hospitalsalloverthe Philippines, with Committeeof the WorcesterCollegeof OxfordUniversity.He com- After workingwith cooperative headquarters pletedanM.Sc.in Chemistry(MadrasUniversity), basedin Davao,ElmerSoriano,the medicaldocto4debeforegoingto AIM pro$am at cidedto takethe Master'sin Development Management andHarvard.Bornin India.he is a naturalized American. AIM to enrichhis field of expertise:healthcarefinancing.He is now NGOsandgovernment agenProf. Ma. Nieves R. Confesor <nconfeso@aim.edu.ph> heavilyinto consultingfor cooperatives, Healsoco-founded theinteruniversity kmpus MagaThe flrst Asianand first womanto everserveas Chairperson of the ciesandhospitals. IntemationalLaborOrgan2ation(lLO)GoverningBody,NievesConfesor zine,wherche continuesto serveasChairmanof the BoardandGenalsoservedasPresidential Adviseron fluman Resources Development eralManaqer. and InternationalLabor Affairs, With the rank of Ambassador <qtan@alm.edu.ph> Extraordinaryand Plenipotentiaryand Secretaryof Labor and Prof. Ouintin G. Tan Chair of Business Empioyment in the RamosGovernment. Curenfly, sheis corefaculty OT Tan,who holds AIM's CanadianProfessorial speclalizes in Business Entrepreneurship, andCorporate of theAIM Masterin Management ProgramandChairperson of Kybernan Management, Group,internationaiconsultants for institutionalreformandgovernance. andrecentlyco-authoredSubcontractingin the PhilippinesandJapan. He represents the academein the Smalland Medium Enterprises Development Councilof the Philippines.FordFoundationgranteeto Myla Ll. Fabre <mfabre@dataserve.aip. edu.ph> Teachers Program at HarvudUniversity,heisrecipient Holderof anM.A. in International Relations(University of Wollongong, theInternationai in Educationaward.Currently Australia), Myla Fabrerecentlycompletedthe Sciences PoAsia-Europe of the 1988 ProductivityExcellence EminentPersonln the Boardof Advisorsof the PhilippineNetworkof Programmeat Institut d'EtudesPolitiquesdes Paris,graduatingwith Sma1l andMediumEnterprises, he servedthe Government asDirecto! Honors.CunentlyAIM InternationalRelationsOfficer,sheservedin MinisWof TradeandIndustry. the diplomaticserviceasTechnical Assistant to 1996APEC Meetings. Bureauof SmallandMediumIndustries,

4 TheAsianMan4g'er I NovemberDecember1998

TI{EASIAN

IVTAI\TAGER VOL.XI, NO. 6

1998 November-December

ESfER STORIES

BUSINESSOPTIONS

The "AsianMiracle"Revisited By David Camroux

SMEs GlobalTrendsandPhilippine -By QuintinTan,AIM SMEs play a large and vital role in the global schemeof things

A European expert on Asia shows how the colonial experiencehas colored the perceptions-and misconcePti of one about the other

Towarda TrueASEANCommunitv By H.E. Joseph Eiercito Estratla

UPDATE MANAGEMENT 26

ISO 14001catchesfire among smalland medium-enterprisesworldwide

The Philippine President urges China and Japan to lead the way to Asian integration in the wake of the crisis

Look EuropePolicv:StrategicOption for Asia in the 2l"tentuni By Morimitsu Inaba

Greed WhenGreenReplaces By TakaoOgawa

THE ASIA-PACIFIC 28

WhenWar is Goodfor Business By Gigo Alampay

Local and international government and private groups try their hand "war game" in an info-tech

A Japaneseprofessor challengesAsia to look more closely at how EuroPe is redefining its presencein the next century

CORNER ENTREPRENEUR'S

Demandx Supply=Regional EconomicIntegration By Ma. Nieve"sConfesor,AIM

Learning Optimism

MBM'74 By RobiertGhandran,

Why the optimist will always win-.and possibly save-the daY

Governments' willingness to compete for hurrtan resourceson a worldwide basiscan be a sourceof competitive advantage

MENTOR MANAGEMENT

lf,l$,lGHT

The spirit of Fr. Jim Donelan will warm Christmas'98

Manaeing the Yen

withoutIim Christmas By HoracioBorr6meoJr.,AIM 17

By Pdtt Lontoc, AIM

strategist'slessons A 16tn-century might actually contain priceless gems for the 21"'-centurymanager

The euro brings both good and not-so-greatnews for the European and Asian tourism industries

AIMLINK

THEASIANMONGER Giftsfor theWorkaholic '97 By ElmerSoriano,MD,MDM

The most practical Christmas presents for the world's busiestworkers

lN&lIsTaYUFF{-re An Asian Tourof the Euro By Myla Ll. Fabre,AIM

TALKABOUT

TALKBACK

November December 1998 | TheAsianManager

with TheAsianManager C,earning Enjoying TAM Justto tell you I greatlyenjoyedyour 1998in TheAsian editorialofJuly-August Manager. Youdo carefor your readers. Youstriveto givevaluefor thelr time. Cordially, N.H. Atthreya India

Trust Talk It was interestingto watch you turn into thinkers.Analyticalmindsare readers whatwe needin thesedifficulttimes.The turbulencein the environmenthas becomequitecommonplace. I madea handfulof copiesof.theLearning with TAM for my managels. who arein MIASCORhas 17 managers traininganddeveiopneedof managerial on the articleuntil ment. I forgotpassing the PhilippineAlrlines(PAL)oisis. One meaboutMr. approached of my managers Ayala'sarticleand saidthat shewas$ad "goodwil1trust". our companyhad the of a longdisThiswasjustthe beginning managers brought cussion whereinseveral trust. trustandcompetence up contractual Y e s , w e b e l i e v et h a t a k e y t o is all of these and success sustainability trusts.Now thatI amgettingthefeedback I am interestedln from the managers, moreof thesearticles.I am lookingforissuesof wardto readingthe succeeding TheAsianManager.

T}IBASIAN

MANAGER

Address lettersto: TALKBACK TheAsianManager AsianInstituteof Management deRoxas 123Paseo MakatiCity 1260Philippines Or e-mailus at: <tam@aim.edu.ph> fiom pastand curSelections rent issuesfoundat: http://www.aim.edu.ph

on your excellent Congratulations in I attended anAIM program magazine. 1994andhaveenjoyedTheAsianManin conagereversince.I amalsointerested giveme Please tributingto the magazinâ&#x201A;Ź. yourfeedback abouttheseandtheirsuitabilityto your readers. Thankyou,

yours, Sincerely Ms. Evelyn del Rosario Manager andGeneral Vice-President AirportServices ManilaIntegrated (MIASCOR) Corporation Philippines

Lettersto the editormustincludewriterfsfuil name,address andmaybe andhometeiephone, of clarityand editedfor purposes space.

TheAsianManaeerI NovemberDecember 1998

ScottArbuthnot ArbuthnotandAssociates Australia Oueensland,

To influence management thought and practice in Asia from the Mission Statementof Tpa Astaa MeNncsn

and philippine

SMEs Organizational models reveal the strengths and development needs of globalizing Philippine firms

that pos Growingmarketeconomies thatkeep is upon mationandfastcommunication he era of globalization 'can affotd'buyers,largeniche updatedwith what is seslarge us,suchthat eachcountry,large peopleeverywhere products andmore'customized' ormall,will affectand be affected new everywhereelsein the world. This markets, Advances in technoiconve- thatarein demand. a conditionof buy-and-sell by eventseverywhereelsein the creates allowedpeopleevon nience,one in which productspecifica- ogyhaveincreasingly world.Globaltrendshaveimplications global-products in erywhereto knowanddesireproductsthat developed businesses worldwideandwill influence tionswi11be of profoundchanges in society.Thesetrends onecountrymaybe immedlatelyknown wouidimprovetheirwelfare,standards These to opportunities. living,andaccess by othercountries. anddesired andsorqeevidentimplicationsinclude: A BorderlessWorld, wherc tradepolicieshavepermittedthe removalof trade barriers.As suchthere'san easierentryof andservices intodomesforeignproducts tic markets, more productchoicesfor of personcustomers, andmoreproviders domestic alizedproduct.Consequently, f\ J producers do not havemuch of choice: \ o theymust Sobalize,asa foreignproduct o J maysimplytaketheirmarketaway. Community-Based Material Specialized ' o Firm Firm whichcuts, FastChangingTechnologlt, hasprogressed allfie1ds ofsciences, across ^, fromelectronics, fiberoptics, dramatically, = new 1aser, to clones.Thishasintroduced o: Livelihood Larqe Small Medium products,spawnedan infinite variefyof Cottaoe ts FirFr Firm Firm cl possible productsadapting new technolMic16 .E ogy,which in tuln, ploducesnew or imF provedmodelsthat shortenproductlife items. of displaced Global conrpanies are defixid e$thore that havâ&#x201A;Ź pfesâ&#x201A;Źnce in more than one country 4rld i]4n deltver quatitY good$ and.sertiees at lower costs than can be ping rmation k c hno lFastDevelo I nfo .provided by domestic companioc in the countrywhere tlrey operate. provides to inforeasyaccess og1t,which

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November-December1998 | TheAsianManager

significantdevelopments may havecontributedmoreto the earlydismantlingof restrictivegovernments andthegrowthof the marketdriveneconomies. Complementationand collaboration, ratherthan competition,will thus characterize the strategies of globalplayersfor introducing newandinnovativeproductsto satisfythe realor perceived needsof specificor focusedmalketsworldwide. Theseemergingglobaltrendshaveprovidedinsightson the natureandrule and role of globalfirms,aswell ashow they relateto eachother Validatedby experi ences atthelocalsetting(Philippines), and usingthe traditionallydefinedcottage, micro,small,medium,andlargefirmsas thebasisfordesign, modelsof globalcompanles- the CB (community-based) firm, S(specialized) firm,M (material) firm,and the L (logistics) firm - canbe developed. Globalcompanies havebeendefinedas thosethathavepresence in morethanone counfiyandcandeliverqualitygoodsand seryicesat lower coststhan be provided by domesticcompanies in the country wheretheyoperate.

Companiesthat can sustain global oporations are those whoae prcducts are stamped with the three seals of entrepreneurialexcellence:

fiHighestQuality fiLowerCost fiFastestDetivery

HIGHEST QUALITY can be suppliedby specializedand high tech companies

S,M,L

LOWERCOST can be achievedby high technologyfirms in continuous flow or mass production

M,L

CBFirms TheCBs,or Community-Based Firms, arematerial-based with simpleequipment and high laborinputs.Thesefirms draw upon naturalmaterialsand indigenous skillsand offer the biggestpotentiaisto producelabor-intensive products.Some enterprises, suchas thosein garments production, andin wire harness caneven be considered largeexporters.These industriesimport the textile materials, as v/ell as someof the eiectricalwires and connectorsrequiredin harness making. Thefull potentialof the CBsectorcan berealized if M firmscansupplytheirhightech,lowercostmaterialneeds,suchas synthetic leatherforbags,belts,shoes, etc., synthetictexlile for garments,undergarments,umbrellas, etc. madeof ny1on, rayon,polyester, andglass,metal,or plastic for containersfor food productsthat includeprocessed fruitsandmarineproducts.For exampie,Thailandexportsgarments,bags,andshoes,jewelrycanned food,etc.muchof whichwereproduced by their cottageindustries. In the Philippines, more than 80 percent of the enterprises are communitybasedfirms.Thesefirmsshould.therefore. 8

FASTDELIVERY can be made by logistics firms

The companiesthat fit the global model would be L flrms which have wcrld clsss logistics capability and whose product$ aro sourd, asaembled,andmass producedfrom highly specializedfirrps with competitively low cost, high technology materialsfrom M firms

Somesuccessfulexport aggregationmodelsare: o o o o

TheAsianMan4g,erI NovembenDecember1998

Contractor-Subcontractor linked firms Confederation offirms Center Satellite Cluster

Japan USA Taiwan

proposed forthePhilippines

Ss,or Specialized Firms,providethe distinctiveadvantageof globalfirms, as theygenerate new productsandquickto adaptto new technologies in theiroperations. Their flexibilityin operationsand specializalizations allowsthemto focuson productmanucustomized or personalized profitable facturefor marketniches. Theirtechnicalskillsarederlvedfrom theirequipment. Forinstance, no amount oftechnical experience can duplicate the precisioncuttingthat a lasermachineis capable of. Access to modern,high-precision equipment and the meansto acquiringthem would be the key to developing highly specialized S firms. A goodexampleof how to help the S firmswasmadeby Japanduringits modernizationera,duringwhich the governpurchased ment essentially the old and antiquated equipment in thepossession of smallfirmsso theycouldbuy "modeln" machineriesand upgradethe quality of theil operations.

in a smallerplace,hasrenderedobsolete a numberof old established Polyester plantswhosecostof producilonis higher thanthe landedcostof an importfroma modernpiant. Selectingthe appropriate technology andprovidingincentivesfor the establish mentof M firmswouldbethekeytowards encouraging business entrantsto this essential$obalrequirement.

L Firms

TheL, or Logistics Firm,is not merely largerthanM firmsnor is it simplymade up of S andM firms.TheL firmsaredistinguishedby theil automatedassembly operations capable of massproductionas well asstronglogisticscapabililies anddis tributionnetworks.For instance,while sma1l operations canproducebeer,which is anM product,it takesa firm with logis tical capabilityto deliverit to storesnationwide.Many L flrmsoperateon threeshiftbasiswith highproductivityandoutput. Logistics hasbeendefinedas "getting M Firms the right goodsto the partiesin the right M, or MaterialFirms,arenot merely amountand specifications, at the right largerS firms.M fitms arehightechnol- time,to therightp1ace." processfirms that ogy,continuous-flow An L fim would be capableof marketprovidethe materialneedsof the CB,S, ing globally,and thus would have a L, andevenotherM firms. very significantrole in exportingand naA criticalfactorin the establishment of tion development.Realizing that M firmsis the choiceof process technol- exportingwas its route to development, ogyanditssourceof equipment. Bothcan Koreaimmediately developed itsownship involveconsiderable investmentfor the patentor licensingrightsand type of equipment, whlchmaydependon output capacities. An immediate beneflclary of established M firmswouldbetheSBsector.However, manyS firms can be developed so that morevalue-adding canbeincorporated in themanufacture of exportproducts. Currently,M products,suchascoconutoil, malble,carrageenan, and sugar,are directlyexportedratherthanusedasinputs productsof S firms to highervalue-added like detergents, cosmetics, candies, food fl^,,^-i-^

ping industryafter the war. Its exports couldnot be dependent on but arecompetitivein, costsanddeliveriesto that of Japan. An L fim that is mereiya groupingof SandM firmsisvulnerable to lowercosts, and higherqualityproductsof outside competitors. The fast-changing technologiesthatspawned the independent Sand products M firmscapable of producing of superiorqualityandlowercostssuggests outsourcing or subcontracting asa viable alternative to in-house SandM operations oflargeandhighoverhead-burdened companies. Notethat eachof thesecategories of firms requiredifferentspecificneedsor criticaineeds.TheCBswouldrequirelow, costmaterial,the S firmswould require modernandhighlyspecialized equipment, the M firmswouldrequirethe latestprocesstechnology, while the L firmswould requireautomation technology, aswell as supportfor exportmarketingandfor de jointventures. velopingstrategic Distinction, Exceptions and Overlaps Thecommonfeatureamongthe S,M and L firms is that they are technologybased firms,whereas theCBisnot.There aremoreopportunities for the products of the S, M, and L to enjoyhighermarginsbyvirtueof themanydiscreet, valueaddingoperations involvedin theirmanu-

^r^

udvur lrlti, trLL.

The cost-competitiveness of manyexport productsis derivedfrom the inputs of M firms.High-technology, continuousflow processoperationsoften resultin lower unit costof output.For instance, theiatesttechnology in producing Polyesteryamfor garment, whichbypasses three previousoperationsand can be installed

Community-based industries offer the biggest potentials to produce

November-December1998 | TheAsianManaser

MODELSFORGLOBALPLAYERS i.li::iti:.,j:1i

l;,r,r:'a i]i:,ttr1: ,lrr::lraii:

nffn

Livelihood Cottage Micro

SMALL FIRMS

MEDIUM FIRMS

LARGE FIRMS

Traditionallv defined accordino tb Assetan[ LaborForceSize

= Assets lessthanP1.5M

Assets= P 1 . 5 - 1M5i l l i o n

= Assets P15-60 Million

= Assets than oreater PooMiltion

Finaneial Resources

Smallsavinos Material/Cre"diV Informalcredit

Personal Capital/Loans

Coroorate stockholders

Publicofferinos sharesof stodk

Assels/Plant Equipment

Handtools,Generalpurpose equipment, Appliances Hand-made equipment Precision tools

T o o l s / D i e sM a c h i n e shopequipment urngre-purpose equrpmenv Speciatized equipment

plant Process Rawmaterialinventorv Materials handlino Transportation vehicles Technical Brand/ Licensing agreement

Specialized. hiohcApacity autom?ted equrpment / roots, dies,fixtures Assemblv lines BrandndmeiPatent

Operations

Intermittent Seasonal Made-to-order

Joblot Piecework Sample/Prototypes

Continuous processflow Materials handlino Warehousing

Automated Assemblv Looistics Supplysourcing

Manpower Skilts

Indioenous skills Man-ual

Technicalskills Tool& Diedesign

ProcessEnqineers Laboratorv iechnicians QualityControl technicians

Machine operators Qualitvcontrol technibians ProductR & D Highly specialized skills

Ftrm

Categories

Managqment

FamilyHead

Operations Manager

ShiftEngineer

Functional Manaoers ProductDevelooftent Looistics Exbortmarketino Neiworkino HRD/Multi6ultural

Output

Hand-processed Indigenous materials

Durable, functional composite materials Multi-oroducts' Multi-technologies

Technical oroduct Specific technology

Hiqhvolume Mrilti-technoloov Massoroduced'

Product Standards

Material-based Standards

Government Standards International technical Standard-s Product Standards Countrvof entrv standards Buyerspecifications Total-in-cludingpackag-

Globallv-accepted

Ing,Insurance, etc.

Loqistics

KeySuccess Factors Lowcostmaterial

Customized work value-adding rHigh

Continuous operation Hij'hproductivity Capacity to meet Lowcost oemano Fastdeliverv QuickChangeover

CriiiealNeeds

Regular demand Materialsupply

TheAsianManagerI November-December1998

Modernequipment Technical trainino Technology available

Accessto latest technology Incenlrves

Export marketinq subport Incentiv6s foroutsourcino Support & oud'rantees for'ioint ven-tures

NATIONAL GLOBALEXPORTMODEL

FOREIGN COUNTRIES

FOREIGN BUYERS

prod- egortzed asa CBfirm. It is a material-defacture.The nontechnology-based pendent firm, and is not a technologyhave those feauctsof CB fims do not canproducts' Thistypesof operations based firm. margins CB tures.Simplystated, global will and not sustain competitiveness cost-plus. arebasically in low-cost labor couniind shelter overlaps. always and Therewill beexceptions For instance,a garmentfactoryplocess- tries. Somelargefirmsthatarebuta conglomingyarnor textilemateriallikea CBfirm, general purpose and mediumoperations equipment erationof sma11 but utillzing andlolack automation capability the andis therefore and suchassewingmachines, gistical from may benefit yet clout to export, has continuous-flow like an S firm, that may usher venture arangements likeM firms.shouldstillbecat- ioint ooerations

The the mergedfirmsinto globalization. providedby massproduccostadyantage in $obal tion anda distinctcompetence marketingprovidean L firm competitive overS andM firmsthat may advantages ventureinto exports. a theglobalmodelsuggests In general, and mindsetgearedtowardinterlinkages amongthenetworked interdependencies firms,eachof which hasa specialization It suggests and a distinctcompetence.

November-December1998 | TheAsianManager

EXPORTFIRMS NON-GLOBAL operation of a Parent Firmis an off-shore 1) Electronics Firmin anothercountry. of a foreignfirm Firmis a Subcontractor 2) Electronics (material, supplied byContractor) technology equipment,

PARENTFIRM (abroad)

Materials Technology

=O"rr^y

' ,/

)

Parts Components Products

Off-shoreoperations CONTRACTOR fabroadl

Materials Technology Equipment

Subcontractor Technically, the abovefirmsare notGlobalExporters similarto a cluster, interlinkedoperations wheretheultimateproductis of thehigh est quality,lower cost,and can be delivthat a couneredveryquickly.It suggests neednot compete try like the Philippines asthe marketsarethere,andit canestablish nichesgloballywhue Philippineexportproductscanexcel. the adventof In order to accelerate 12

in its core competence, thesekindsof S,M, andL flrms,it is nec- specialized essaryto addresstheir developmental addingvalueto a part of a productor needsand providethe environmentthat systemthat is deliveredto a focusedmarencourages themto developinto thekinds ket that will allow marginsof profit. will be measuredin by the Ultimately,success demanded of firmsandaggregation globalmodel. their abilityto grow.Growthcanonly be Thesuccess of aneconomywilldepend providedby an expandingmarketbase of S,M, and can only be achievedby exporting on the numberandcomposition I and L firms in clustermodes.each or globalizing.

TheAslanManagerI November.December1998

WhenSreen REPLACES GREED As the globally surging tide of ISO 14001 reachesJapan and SMEs, consumer conscience censures environmentally unhealthy business

At thispoint,oneis convincedthatcorI t nasbeenthreeyearssincethe ment Is GettingUnderWay."At last,the International Organization globally for Stanporate surging tide of environmental leadersat last recognizethat the I (lSO)'s environmenrai standard, management hasreached Thisim- envlronment is a keymanagement issue. Japan. I dards f ISOI 4001, cameinto being.Con pression is keenbecause Japanhasbeen Theyhavethrown awaytheir traditional formingto theISOenvironmentai standard laggingbehindthe UnitedStatesandthe notion that environmentis of secondary hasnow becomea globaltrend,andhas European nationsafterparticipating coun- consideration as comparedto corporate gown into an importanteiementof pro- triesreachedan agreementat the 1992 management or revenuegeneration. moting,corporate achievements.The Brazilgiobalenvironmental The newspaperarticlesaysin part, summitto numberof enterprises thathaveobtained cooperate with oneanotherin addressing "Consumers, local residentsand sharetherelevantenvironmental certificate now environmental issues. hoidershavebeguncallingon enterprises standsat more than 5,000 worldwide. to impiementenvironmental controlmeaManyof theseenterprises areoflargesca1e, "Environment" Wins suresthroughthe marketwithout wait whilesmall-andmedium-sized enterprises TheJapanese government hastightened ing for scientificverificationor juridical havegenerallybeenunawareof the mer- legal environmentalcontrol by en- verdict."It maybe not too muchto say its of conforming to the ISO14001stan- actingthe BasicLaw for Environmental that to appropriately understand the condard.Theacquisition ofthe ISOenviron- Pollution Control; the Law for tent of this passage is a requirementfor mentalcertificate, however,offersa smail- Promotionof SortedCoilectionand any corporationto survivethrough the and medium-sized (SME)a Recycling enterprise of Containers and Packaging; nexl cenrury. greatchanceof obtaininga competitive and revisingthe WasteDisposaland In thepast,Japanese enterprises made edgeandhighersales. PublicCieansingLaw.Concurrently, the decisionson key policyissuesonly after New environmental information is in- governmenthas encouraged voluntary gettingguidancefrom the relevantminiscreasing daily,callingupon corporations corporate activitiessuchastheimplemen- tries and other governmentoffices.But to meetrapidlygrowingenvironmental tation of environmentalprogramsand lookingmorecloseiyinto environmental needsof the society. Environmental the developmentof environmentally issuessuchas illegaldisposalof wastes, awareness is alsogainingmomentum friendlyproducts.However,corporate dioxin contamination, environmental esamonga gowing numberof citizens. On environmental consciousness still appears Uogens(chemicals that,when takeninto August16, 1998,the Nikkeinewspaper to show "traits attributableto the humanbody,disturbthe normalfunction publisheda fiont-pageserialized article traditionalpracticeof followingthe path of humanhormones), a corporation that entitled" Environment-Oriented Manage laiddown by the government." takesno actionuntil the essentials of adNovember-December1998 l TheAsianManaser

ministrativeguidanceon theseissuesate determinedwill no doubtfail to takeeffectivecountermeasures againsthatmful effects. Takethe dioxin issue,for instance.In advancedcountries the environmentally in Americaand Europe,strictlegalcontrol of the exhaustgasfiom incinerators haslongbeenapplied(since1993in Germany).It was only in December1997, however,whencontrolon thedioxinwas enforced in Japan. As clearlyindicated in this case,it is too latefor enterprises to policiesare takeactionwhengovernment in suchformsaslegislative conannounced guidance. trol andadministrative In thisageof rigorous competition, it is for anyenterprise essential to acquirethe capability of makinga decision on the directionit wantsto takeby collectinginformationfrom a wide areaand the farseeingwisdom. In Japanthe casesof conformance to theEMScertification cameto 1,01B asof inJune1998.Thisshowsa phenomenai of morethanthreefoldascompared crease figure to the pastyear.Thecorresponding in theworldstoodat 5,742asofJune30, 1998,of whichJapanenjoysthe largest share.Rapidgrowth is alsoobservedin

variouscountriesin America,Europe, i& iial:4, Southeast Asiaandotherpartsof Asia. lilra'ir In termsof the kindsof business, con- ii:i]: formanceto the ISOenvironmental standardhasmorefrequentlyintegratedinto corporateactivitiesin the electric,mechanical andchemical industries. It isnoteworthy that the areasin which the InternationalStandardhas beenintroduced now includeslocal government,fi5ding houses, andthe distribution, retail,food andinsurance industries. :L:::a,a 9itr,ial

TheTC2OT

Systematizationof enviranmentalmanagement lmprovingemployee'senvironmentatawareness Cost reduction by improving business pertormance "lnfiltration"of top management policy

Externalmerits . r o r o o

lmprovementin the imageof the enterprise Acquisition of lavorable administrativetreatment lmprovementin credencefrom the local communities Discriminationagaidst competitors in the same industry Reductionof environmentalrisks Easieracoessto financingfrom banks

Satespromotion effects

o Greaterchanceof conformingto "Greenprocurement" o Easiercomplianceto consumers'environmental concems o Explorationof new environmentalbusinesses

Intern ati o n aI Stand ard has been introduced now includes local government, trading houses, and the distribution, retail, food and insurance industries.

The sixth meetingof.the 207 Techni cal Committee(TC207)washeldin San yet beestablished to avoidpossible redunFrancisco in June1998,in which535rep- dancyandconfusion. participated. In addition,a workshopon SMEswas resentatives of 51 countries in the meeting.Of these,54 camefrom heldto probeinto problems fromtheSME sizeof thepar- standpoint.A commonproblempointed Japan.Theunprecedented ticipantsunderscored the growinginter- out by SMErepresentatives was the acestshowngloballyin theISOenvironmen- quisitionof administrative (huresources tal standard. man resources, fundsand information). Specialmentionhasto be madeabout TheInternational itselfposesno Standard the issueof establishing a standardfor majorproblems to SMEs. (SME),an smallandmediumenterprises Onenotabletrendtodayis theincrease issuecarriedovetfromthepreviousmeet- in the privateenterprises' voluntarypracing.Theconclusion wasthat no standard ticeof environmental management-a sigindependent of ISO14001andexclusive nificantshift fiom the traditionalimplefor small"and-medium enterorises could mentation of environmental controlmeasuresunderthe guidanceof government standard offices.The ISOenvironmental modcanbe calledoneof the exemplary e1sof suchpracticein thateachenterprise is requlredto detidewhetheror not it Stanshouldconformto the International dard.

In-companymeritg a o . o

The areas in which the

TheAsianManaperI November-December1998

GovernmentMeasures The ministersand other government officeshavealsobeenchangingtheirmeawith theISOenvironmensuresassociated Variouskindsof activitiesare ta1standard. beingcarriedout by them. o Support by means of financing and environmental know-how. The Ministry of Tradeand Industry(MITI) plansto start offeringby April 1, 7999, in envilow-interi:st loansfor investments ronmentalcontrolfacilitiesto corporations grantedor to be ganted the EMScertification.MITI'sAgencyof IndustrialScience andTechnoiogy extendssupportto enterprisesbypublishingamanualenltrJedaOA aboutAchievingConformanceto InternationalStandardization. The Tokyometropoiitangovernment inaugurated a subsidiary systemthisfiscal

Bringingwith themalmosta centuryof accumulated yearsof experience and expertisein quality,environment, and humanresourcesmanagement, 26 expertsfromthe13economies of Brunei Darussalam, ehile,P.R.China,Chinese Taipei, lndonesia, Japan, Malaysia, PapuaNewGuinea,Philippines, Singapore, Thailand, UniledStates,and Vietnamworkedtogetherconqueringa new frontierin the designand conductof the APECSME Executives Workshop on Standards-Based Management Systems. Theworkshop,heldfromSeptember 28-October 2,1998at theACCEED Conference Centerin MakatiCity,Philippines, aimedat equipping executives fromSmallandMediumEnterprises (SMEs)withskills necessaryfor implementing standards-based management systemsin the workplace.Highlighted was the importance of establishingthesemanagement systemsin pursuinginternationalcertilicationsuchas the ISO 9000and ISO 14000. AIM Professors FranciscoP. Bernardo,Jr. and GloriaM. de Guzmanwere lead facilitators, whileAlMVisitingProfessor Etsulnabaof the Institute of lnternational StudiesandTraining(llST),Japan,addedherexpertiseas the APECBusinessManagementN'etworkprojectcoovergeer'srepresentative. Theprojectis an offshootof thesuccessfulAPEC Workshopon Inlernational QualityAssuranceSystemsI (APECIQASl) in December1997andprecedes theAPECIQASll whichfindstheimpleprogramindifferentAPEC mentation ofthetraining membereconomies.TheAsianInstituteof Management actsas projectorganizersfor allthe phases.DirectorJesusMotoomull (MBM'84)of the (BPS),Philippines Bureauof ProductsStandards andDr.Norihiko Maedaof theInstitute for International StudiesandTraining(llST), Japantakethe roleof projectoverseers. Highlights of the workshopcouldnowbe accessedthroughthe lnternet at this address: <http:/lwww. aim.edu.ph/alliancelapec/ interim.html> . The Websitealsofeaturesthe presentation of Mr. \Go KekKoon,expertfromSingapore, on ISO'14001. Forcommentsand suggestions, the workshoptechnicalsecretariat may b e r e a c h e dt h r o u g h< a p e c i q a s @ d a t a s e r v e . a i m . e d u . p h > .

thework of promotingthelocalresidents' environmentalawareness and efficiently offer informationand supportto 1oca1 SMEs. o Feedback to administrative measures. prefectural government TheKanagawa introduceda new systemwhich recognizesISO14001certifiedcorporations as a "business of due management with an environmental management systemat or abovea certainlevel."Any corporation with suchrecognitionis entitledto follow procedure a simplifiedapplication at the time of remodelingits facilities. The Joetsumunicipalofflce,the first localautonomous bodyhavingacquired the EMScertification,hascommittedto offerbetterchances to businesses with the sameISO 14001statusanddiscriminate againstthosewithout it.

o Residents'and Consumers' Power. Anotherprerequisite for corporatesurvival in the next centuryis the localresidents'environmentai awareness andthe power.At thistime consumers' bargaining of mountingenvironmental concerns, any corporationmust standin fear of such awareness andpower. In the absence of the relevantinformation, residents in the neighborhood near piantsandbusinesses havehadalmostno way of knowingwhat chemicals werebeing usedby thesebusinesses.However, legislation isbeingprepared to implement a systemfor PollutantRelease andTrans(PRTR) fer Registration which requiresa plantor business to determineandreport on chemicaisreleasedinto the environment. The PRTRsystemis in forcein the UnitedStatesandvariousEuropean countries.In the UnitedStates,the "1awguaranteeingthe people'sright to know", which requirescorporations to reporton yeaxto coverthe half of the total cost tlficationso it could useits own experi- to the EnvironmentProtectionAgency (EPA)on 650relevantchemicalpollutants un[withtheceilingofY1.3 million)needed encein advisingprivatecorporations for anyenterprise to acquiretheEMScer- dertaking theprocess of ISO14001certi- releasedinto the environemnt,was entification.Otherloca1governments such fication. actedrirorethana yearago.Disclosure by prefectural astheHiroshima government The Joetsumunicipalofficeand the suchreportsismadein termsofenterprises andtheJoetsu municipalofficein Niigata Shiraitownofficein ChibaPrefecture have andchemicals, contributinggreatlyto the Prefecture arealsoofferingfinancialas- alreadyfinishedthe EMS certification. reductionof emissionsof chemical sistance to aspirants to ISo 14001. While no sma1lenthusiasm in following pollutants. o Takingthe Leadin Conformingto suiihasbeendemonsffated bytheSaitama ThejapanFederation of EconomicOrthe ISOEnvironment Standard. TheEn and Oita prefecturalgovernments (Keidanren) and ganizations disclosed in June vironmentAgencyis thefirstministerial- Fukuokaand Kita-Kyushumunicipalof1998the resultsof a trial surveyit conlevelbranchof government thathasde- fices.By first settinga precedent, the,se ductedon 174 chemicals over1,500busicidedto acquire theISO14001EMScer- localgovernmentofficesaim to facilitate nessesin the chemicaland electric November-December1998 | TheAs[anManaper

industries.According to the report,106 mentto replacethe substance :.: When a problem of with alter of all chemicals checked werereleased to natives. the environment.Tolueneled the other Concernsaboutenvironmental estro". impact on the chemicals with 40,000tons. Benzen,a gens,a groupof chemlcals suspected to carcinogen, wasreleased into theenviron- mimicthereproduction system andcause ", environment is mentat 4,000tonsa year. deformities.are likelv to causesimiiar ',.: If a 1awon PRTRis enacted. evervcor- changes possibility on themarket.The of llftcovâ&#x201A;Źred, consumers porationis obligedto getholdof theemis- replacing polystyrene and polycarbonate sionof eachof the chemicals it handles. beingusedfor "cup noodle"containers :r.. may rise to their feet to Thisrequirement, however,overlaps with anddishes respectivelywith othermateri- :,', drive the commodities the work of determining environmental alsis now beingstudiedbecause of suspit::; ottt of the market aspects andassessing theirimpactson the cionsof thesebeingenvironmental estroenvironment, a procedure lncludedin the gens.When the inclusionof organlctin requirements for conformance to ISO compounds suchasffibufyltin (TBT),sus 14001. Thismeansthatfor a company pectedto be oneof environmental estroconformingto theISOenvironmental stan- gens,wasfoundrecentlyin theprocessed dardit is quiteeasyto meetthisPRTRre- cookingsheet,its manufacturer choseto trolof chemicais, conditionofmechanical orrirpm pn f discontinue its sale. packaging equipment, materials, demonAs shownin theseexamples, environ- strationof materialquality(or labeling), Consumers' Rights mentalimpactsof products havenow be- environmentalmanagement assessment, An exampleof a substance with an comeoneof themaiorfactors thatcontroi andenvironmental auditing. impactlargeenoughto changethe mar- themarket.Whena problemof makinga As suggested in this case,corporate ket is vinyl chlorideresin. Controversy serious impacton theenvironment is un- management is likely to face growing overthis chemicalwaskickedoff by an covered, consumers mayriseto thefufeet needsto consider envitonmental impacts environmental reportof Greenpeace, a to drivethe commodities concerned out of purchases to minimizetheloadits own European-based organization workingfor of themarket.Moreover, the "GreenPro- business activitieshaveon the environprotection.Greenpeace curement,"a practiceof usingenviron- ment. environmental labeledavinylchlorideresinmanufacturer mentalcriteriaasthe basefor determinAsshownin recentsituations explained as "a plantfor dioxin",a carcinogenicing consumers' selection of purchases is above,corporate survivalin the 21" cenchemical.At present,the vinyl chloride likelyto gainmomentumin the futureas tury would not be achievedunlessa corindustryis in a criticalconditionasits ex- theconsumers' environmental awateness porationconformsto the globalstandards istenceis beingendangered afterindus- is enhanced.Onemanufacturer haspre- while renovating its own corporate contriessuchasfoodpackaging, electrlcwir- sented"GreenPurchase Regulations" to stitution.Oniy by so doingcouldit ride ing, stationeryand blke manufacturing, some5,000businesses, definingsixcrite- out thisdifficulttime of changeby outdoandotherindustries havemadea commit- ria for its Drocurement. Thesix arecon- ing its competitors and achievingsales growth. It is moreeffectiveto systematize the corporate management itselfso that the resultingsystemcan copewith various situations appropriately thanto copewith ever changingenvironmentaiissuesone byonewithoutsuchsystem. An environmental management system (EMS)conforming to ISO14001contributesto reconsffucting the whole corporate businessperformance from a viewpointof achievlng efficientcorporate management. Substantial improvements in the entirecorpotate management maybe effectedby realizingthe systematization of environmental lmpactassessment, the frameworkof conformingto regulatory control,externalcommunications, andthe likein conformance with theISOenvironmentstandard.It ls needless to addthat suchsystemization entailsno smallimDrovementin cotoorateenvironmental Ogawa (right) was Japan's expert to APEC IAAS, actively advocating greening the SMEs. management. I 16

TheAsianManagerI November-December1998

MANAGING *UEN

Jumpstart Japan, and the rest of Asiahy grounding on fundamentals: "lt is difficult to realize the true way just through sword-fencing. Know the smallestthings and the biggest things, the shallowest things and the deepest things." -Miyamoto Musashi

eaKeconomy,weaKcurrency. Developments in this debilitated close,andthe closethingsasif theywere This is a loadedstatementif economyis crucialto Asianrecoveryfrom distanced."GoRin No Sho,his Bookof madein referenceto Japanand thecurrencyturmoil- if onlyin thecriti- Five Rings,captureshis reflectionson the yen. A powerhouseacross calshort-term. It provides liquidityformost kendo,the way of the sword,in sucha Asia,theworld'ssecondlargesteconomy, of theregion'seconomies, andits partners way that beginnerscan learnthe basics, Japanis not only the biggestlenderbut in the other continentsare buyingJapa- while the masterscan continuelearning aisothelargestcontributorto IMF-backed neseproductsin exchange. For the past at the higherlevel.It hasbeenusedby programsin Asia.Theyen hasalsobeen 25 years,japanhasbeenthe enginefor Japanese businessmen. Kendomay yet seenasthedefactoequivalent of theemu, Asia'smiracle.The 1985 PiazaAccord helpin shapingJapan's"cando" sffategy probable precursor of anAsianEuro.But triggered thesteepappreciation of theyen, in thesetimes. quovadisJapan's yenwhentheJapanese which in turn ied to massiveshiftsin For the signssaythe economicrecesGovernment conceded manufacturing Junethisyearthat Japanese investmentin sioncanslideto depression, ifJapandoes it hassunkintorecession. theworstin the Asiancountries.But five yearslater,the not demonstrate effectivecontrolof the post-warera? propertyand portfoliobubbiesbeganto economy. Inacliondueto inabilityof poburst:GNPbeganto moveat snail'space, litical partiesand politiciansand bureauOvercastForecasts rarelyexceeding onepercent.Fallingde- cratswith parochialintereststo get their Evenif the yen hassprungfrom 150 mand,risingdebt,excesscapacity,drop- acttogetheron the natureandpaceof reyento 110yento the USdollarby Octo- ping profits,reducedhouseholdsavings. forms multipliesfearsfrom Japanese berthisyear,the forecastfor Japan's GDP Even executivesare pessimistic, the business to theregion's othereconomies. is still gioomy.TheDaiwaInstituteof Re- Tankanreports,citing'asurveyof 10,000 When Japan sneezestoday, Asia predicted search a contraction of 1.8per- Japanese businesses. Decliningconfidence suffersfrom acuteasthma,and America centby year-end March 1999.Likewise, in the Japanese economycontributedto andtherestof thedeveloped world might MitsubishiResearch Institute- at 1.9 the USdollarrisingmorethan 1 percent aswell catchnaggingcolds.Considerthat percent.It will bean incrediblyshrinking againstthe yen. The Group of Seven evenwhen the Japanese Parliament inyear,too, as the InternationalMonetary (G-7)haswarnedJapanthat exportingis jected$361billionintoitsbankingsector, Fundforecasted a contraction of 2.5 per- no escape hatch.Ofwhatstuff,then,must Tokyostocksstill plummeted,Singapore, centthisyear,with nearzerogrowthonly "favorabledevelopments" be madeof? SouthKoreaandTaiwanall slumped,and at 0.5 percentnextyear.ThelatestGlobal What strategicinterventionscan signifi- evendown under,Australia,saw stocks Overviewby SalomonSmithBarneysays cantiyjumpstartJapananditsAsianneigh- losing0.52 percentof their value.The continueto deterio- bors? lapan'sfundamentals wbeezingand the coughingderivefrom rateandhasdowngraded its estimates for Japan'seconomicsize.This is more its GDPthisyearandnextto-2.4percent Kdndo,CanDo visiblenow asemergingmarketscollapse, "ln strategy," and-0.4percent.Bankuptcies haverisen writes Japanese and America'sdeflationflirts with 20 percentover lastyear.Salesare pre- swordsaintand strategistMiyamoto recession, andtheintroductionofthe Euro dictedto continuesiipping,in Japanand Musashiin the 16thcentury "it is impor- in 1999 might cajoleEuropeto follow throughoutAsia,its largestmarket. tant to seedistantthingsasif theywere in tow. November'December1998 | TheAsianManaser

government will not tolerate"an efit fromtheboostin globalliquidity.This Japanese crunch.Coupled yen". OtherJapa- wouidpreventa globa1 excessively undervalued neseofficialsechoedthis,specificaliy, the with a decisive Japanto cleanup its bank i!11:: haveno way prolonged depreciationbeyond 140to the ing mess,Asiawouldrea1ly go to but up. pledged They have not to USdollar. also i];l:,i But will investors chooseto investin usethe yen to spurexportsin a bid to lift :tt1ti Deutsche Mark, and nextyear,in the the thecountryfromthe sludgeof recession. ;iiat:i yen? Euro, rather than in the Evenif they Tothatend,Japan hasadopted a$122 yen, yen invest in the and the stabilizes, package billion economic to stimulateits l1ita, will be their next steps? what programs public economythrough works 'tiir:ia, :'lrlllirll Fire Ring: Tacticswith Fund Manandpermanent taxcutsof $45billionand :ll;l:il Investorsand Consumers"What agers, package 'ir':,1: anotherexpenditure of $70 bil ]i.]tr: is big is easyto perceive: whatis smallis lion,according to WorldBank. :a1tal perceive. to It is difficult for large difficult yen Grounding themanagement of the :ar:91 :-u:,: position, men to change so numbers of ln economic fundamentals wouldbeastep :ilii. rt:lttif predicted. be their movement can easily in therightdirection.In otherwords,JaW|ND R|NG: Synchronizing with :iS!' "lt is hismind, ;*t1l other Strategies. difficult to panis managing its recoverythroughres- An individualcaneasilychange :g!1. know yourself if you do not know predict." so his movements are difficult to rlL:iil cue in the bankingsectorin the context others. To all Ways, there are :i' Right noq virtually all foreign invesof bankreformand the comblnation of Irili lf you are following the .;c;;ti sidetracks. is have fled fiom Asia. Risk aversion tors monetaryandflscalpoliciesto revivedotrue Way and diverge a little, this ggr w i l l l a t e r b e c o m e a l a r g e the rise. The Institute of International on mesticdemand. Unliketraditional theory t;5i: divergence." hasbegunfingerpolntlng at it, as whereexchange ratemanagement lsdone Finance for malaise in the culprit the continuing purelythroughmbnetarypolicyinterventhe rest of Asia. After all, the tions,in Japanwe seea veryactiveroleof Japanand gpationsof theyenagainstthedoliarmay the Statein managingtheyen. loudpromises of notbebecause ofJapan's Tocutthroughthedebrisof devastated fixingits bankingsystemandthe simultaandeconomies, letusjuxtapose Wind Ring: Synchronizing with businesses weakeningof the US Musashi's Wayof the Swordin five rings other Strategies."lt is difficultto know neousperceived It maybethemirroringof hedge to managing theyen. yourselfifyoudo not knowothers.Toall economy. with fiveapproaches to bringtheirbooksdown Ways,therearesidetracks. If you arefol- fundspressured "reasonable" levelsandcloseout.Most The Ground Ring: Grounding on lowingthe true Wayand divergea 1itt1e, to a largedivergence." of theyengains- to 116.68to thedollar Fundamentals."lt is difficult to realize thiswill laterbecome the truewayjustthroughsword-fencing. In this deliberate,evenpainfullyslow intomanaging we seeglimpses Knowthe smailestthingsandthe biggest approach, FIRE R|NG: Tactics with Fund thingsandthedeep- within the globalfinanclalmarket.Even things,theshallowest Managers, lnvestors and "What is Consumers. big is easy with theapestthings." Japancannotbe complacent perceive: what is small is to oftheglobaleconomy. TheecoIt maybe apparent that the rescueof preciation difficult to perceive. lt is diff icult interven- nomicinterventionwill haveto beagainst thebankingsectorisa necessary for large numbers of men to tion, but thisis swordfencing.Consider the backdropof otherplayerswith other change position, so their movement can easily be ifthe USandEurope stockmarket to agendas. Specifically, the fall of the Japanese predicted. An individual can 13,597,the lowestin fwelveyears,asa areto contributeanythingto the process, easily change his mind, so his thatthe current all eyesmust tum to the US FederalRe signalto the marketplace movements are difficult to banksrescueplanmaycollapse. predict." Justlook serveBoard.Whatis theirstrategyin this What stepswill the Fedtake, at the failureof the bailoutcompromise situation? betweenthe two leadingpoliticalparties and they in turn, to prolongand sustain 1eg the momentumof economicexpansion? of Japan. lowerhousepassed Japan's to spend How will the FedadiustUSinterestrates islationallowingthegovernment B)to revive in the next few months? up to 60 Uillionyen(US$510 recession Concernwith the spreading its moribundbankingsystem.Thelegisladon,asof thiswriting,is certainto be ap- and slowingglobalgrowthwill ptobably provedby the upperhouseand that will pushtheFedto cutits FedFundRatefrom enablethe governmentto impactpublic 5.5 percentto 5 percent,inspiteof the Lowet effecton the USeconomy. moneyinto bankswith capitaiadequacy adverse interestrateswould, ceterisparibus, ratiosof morethanB percent. But this will take the It maybe truethatJapan's StateSeffe- weakenthe do11ar. Tanigakitold pressureoff currenciesthat arelinkedto tary for Finance,Sadakazu the InterimCommittee,an advisorybody it. Thiswill cut emergingnations'costs to the IMF'sBoardof Governorsthat the on foreigndebt,andenablethemto ben:1,:i1: at:ii:i: uiat:tia

:riatiitl itqii,tr tt:8:ir i':ii:ii. ':i.llli,

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TheAsianManagerI NovemberDecember 1998

tiit!:1: iu:taui :lia:llaa

lltitiil tt:!tlit; 'il'l::llil ilttiti 'liil.lilri .i:1,:ilrll

RING: F/uid Learning. r,,,,, WATER '-ri:i "The spirit of defeating a man is :';,..:.. the same for ten million men. The strategist makessmall things into .t', f big things."

in the closeof the secondweekof Octoberfrom 135.50in thefirstweek- may well havebeencausedby hedgefund managers buyingyen to repayloans.In anycase,not quitethe waveof optimism that Japanor the rest of Asiaare poised for economic recovery. Toeffectively managethe yen,Japanmustbe ableto track andact anddecideswiftlyanddecisively in thefiont lineswherethehedgefunders andtheinvestots are. Considerthe movesof Japan's Ministry of InternationalTradeand Industry. Departing fioma precedent, MITI became a lenderof latetoJapanese expatriate companies.Therallyingcry is recapitalization of firms.Gettinginto the loanbusiness is unique,'butthey'reapparently making surethe companies don'tleavethe market. Forthisreformto succeed, consumerswill justhaveto beginspending- and heav\ - again.Rememberthat Japan accounts for fwo-thirdsof Asia'seconomy. A radicalrethinkingof the Asianethicto save(ratherthanspend),will haveto be inducedbyrestoring consumer confidence to startspendingagain. Water Ring: Fluid Learning. "The spirit of defeatinga man is the samefor ten million men. The strategistmakes sma11 thingsinto big things." Whileit is truethatthe historyculture andeconomic features ofJapan is atypical of the rest of Asia (andindividualAsian countries havenuances of theirown).the movesin the next few months Japanese to shakeit out of the slumpwill be critical,not onlyto jumpstart therestof Asia, but for all othersufferingeconomles. Al-

ready,Japanis showingthat the crisisof meeting,but the G-7is now alreadyalso thismagnitude cannotbesolvedby econo- concerned thattheweakyenwili putpresmistsor thewashingtonconsensus on the alone; sute Chinese YuanandotherAsian neithershallit be solvedby traditional currencies. WeakyenmakesJapanese exgivingthem a competitive thinkingusingthe Keynesian or monetar- portscheaper, ist schools. Theway to a soiutionis nei- edgeagainstproductsfiom Asianneightherneatnor bite-sized, like sushi.Inno- bors.Thereisthetemptation fortheother vationsin straightening out the economic Asiancurrencies to devalue aswel1.Yuan fundamentals maybe urgentnow for the devaluation would dentworldwideconlongerhaul,but mobiiizingpoliticalwill sumerdemandsinceit wouldreducethe powerof the world'smost at home,andcompetitive intelligence to purchasing populous synchronize with the agendaof the other country.And what aboutthe stakeholders, aresinequanon to getthe Euro,asit facilitatesand simplifiestrade process moving.Evenif "negotiated solu- with Europe? tions"mayhave,atfirstblush,internalinMoody'shas alreadyput Chinaand consistencies, timing is essential, along HongKongonthewatch,leadingto specuwith a tolerancefor risksthat canresolve lationsthat Chinamaybe forcedto leave practice.If currency exchange thesein day-to-day controlsandclamup. Already marketsdo not sleep,thepoliticalplayers Malaysiais swingingto a differenttypeof cannotaffordto either.For practicewill economywith its capitalcontols, trying guard- not to rely who11y meanmoreandmore,man-to-man on marketforces.Gloing of stakeholders in andout ofJapan. bal marketsmayyet be in for a counterThe otherplayersin othereconomies Ieaction,and go backwards. Insteadof mayaswell learnfromJapan's fluid expe- moreopenness to globaicapitalflows,the rience.Shouldthe regionrise up again volatilitymaybe paralyzing,and causea jumpstart, giobalshutdown. fiom the impending Japanese then,a thousand othertremorsfromthe Whichwaywill thefends go?Manageconomicearthquake in Asiawill be no ersof the yen - and thosestakeholders causefor fear."Theprincipleofstrategyls in a positionto influencethem- have havingone thing, lo know ten thousand no choicebut to be acuteiysensitive to things." theseemergingpattems.And turn the Sf DonaldTsang,HongKong'sFinance cacophony of voicesin the marketinto a Secretary told CNN, "The whole Asian rhythmof response, recoveryreformand region, from Japanright down to eventuallyeconomicrenewalfor the Singapore, hasbeendevastated oneway region. t or anotherso we just cannotgo further down- theonlyway to gois up...Japan isthekeyissue."Hehadjustattended the annualmeetingof the IMF and World Bankwith centralbankersandtopeconomistsfromtheworld."Wehopethereis a VOID FING: Rhvthms of resolutionof the bankingcrisisthere.It Response, Recovery and Reform. "Know the rhythm of any will thenunlockthesituation,thenliquidsituation." ity will retuln to the region." It is the fluidity of the Asiansituation thatis probabiyits greatest strength:managingtheyenhasa lot of roomto maneuver,especially if the othereconomies begin learningnow, and get backto their economicprogramsand bankreformsas we11. Void Ring: Rhythms of Response, Recovery and Reform. "Know the rhvthmof anvsituation." More than a yearinto the crisis,with il'..:'l its tremorsrockingeven the Russian :.ll. rubble,the rhythmsare becomingclear. ...i.l1 Japanmay haveearlieraskedfor a G-7 ::l:l. November-December1998 | TheAsianManaper

Eearning

OPTIMISM The optimrbf ,b a lot better golf companion, to say nothing of his or her blood pressure

Somemen seethingsas they are and say,"Why?" I dreamthingsthat never were andsay"Why not?" -George Bernard Shaw

omeyearsagoan insurancecompanyin the EastCoastof United States spent $30,000 pel employeefor hiringandtrainingfor They had an elabo3,000 employees. rate processof testingand interviews and later on trainingthem to be salesmen. At the end of the vear they had more than a third of the employees hired left them and by the end of three yearshalf was gonebecauseof nonperformance or theydid not fit. Thus$9 Miliion budgetwas not achievingthe a Professor of target.They approached Martin Seligman,and Psychoiogy, a s k e df o r h e i p . H e t o l d t h e m t h e y shouldhire 100 peopieby his method

and seehow it works.The resultswere the 90 percentretention.Thenhe'tested candidates reiectedby the insurance companytestingsystemand hired another100. The resultswer? equally good.When askedwhat he is testing for, Seligmansaid he is testingfor the degreeof optimism.He was so successful, he wrote a book called LearnedOptimism. Thereare two waysto look at things in life. Optimismand Pessimism. When someonecomplimentsyou on your success, an optimistsays"Thankyou," anddescribes how goodit feelsto besuccessfui.A pessimistwouid say "l am lucky." When thingsgo wrong and the business is in difficulties,an optimistsays, I tried hard and thingswent out of control. I'will try to salvagethe situation.A pessimistwill say,I cannotdo anything right. I am cursedto fail. It is the regular viewpoint whether the glassis half emptyor half fu1l.

TheAsianManagerI November-December1998

Optimism is a way to look at things.It providessuchpositiveforces in you to try the impossibleand above all is the seatof your self-motivation. many We are alwaysat the crossroads times to make a predictionwhen we don't have information.In the businessworld, in the name of conservatism we try to be pessimisticor elseyou would be lookedupon as a dreamer.I startall my projectideaswith the conceptthat they are going to materializeand iook at what are the potential possibilltiesand get very excitedat the prospect of it. This makesme try harder and may be indirectly I inoease the chances of its success.I have to agree I have high fatalitlesin theseventures becomingrealities.Everyonethat does nothappengivesmea greatlessonon how to do the next projectbetter. I am alwaysamazedat how I am able

to pull rabbitsout of my hat when I doingthetubest.I find it difflcultto flnd g*! Amaze yourself I readin thepressfor theAsian r3:s am facedwith impossiblesituations. thereasons rCii:i with how your'e I neverunderstoodthe sourceof such Crisis.It lookstoosimplistic to a complex t:{al '.qi uiiritti: wisdom.I think it is my degreeof problemof confidence. "iiliar able to pull rabbits .:ait: :liali optimismandmy beliefthereis a solution :il1li out of your hat out there and I iust have to find it. The Crisis in Perspective ;e;t:: ,lirf titr* My past successis a great1evelof Confidence is the feelingof optimism. ,:%l when faced with confidencebuilder in this process. It looksone fine day in the middle of i'':'i1 ':::9! I now know, I cannotstandpessimists. 1996, the sun cameup and the smart :9t9:t truly impossible By imaginingthe impossibleperil are businessmen of the tiger economiesfor- :i{s i3t:t: situations you any more prepaled?I have seen got how to run the basicbusinesses. Americanlawyerstake a simplecon- From that day onwardsthey cannot ilact andconvertthemto 30 to 40 pages do anythingright. Thereis something of documentto iist what you can do if missinginthepuzzle. Is there a way to build optimism? any of the perilshappento you. When you are in troubleand ask them if I Seligmanthinksso. On everyday basis, am covered,they will tell you that whetheryou areplayrngGolf or you are issuewas not coveredin the contract.I in your office,practicethe conceptof am convincedthat it is impossible to optimism.On the golf coursewhen you coverail contingencies and thus you hit the ball into the woods,you are might as well go aboutthinking there facedwith the choiceof coveringthe is no safetynet andbe carefulgenerally. embarrassment with self-deprivation I think in theworld thereis morethan or as an optifnist,you stop to analyze 60 percentaspessimists, andanother20 why you sentthe ball there.As an optinguithtis\t percentwhatI callasneutralandonly20 mist, you are a lot bettercompanionto *it$:H;**t** percentasoptimists. If youareone,cher- playgolf with and aboveall your blood ish the goodfortuneand let anyonetalk pressure is lot morenormal.As I practice you out of your optimisilcdisposition. this everydayI am ableto seevirtuesin In the middleof Asiancrisis,when theerrorsof othersandI endthedaywith everyoneis iosing their head and lot of energyinsteadof tiredoutlook. Youtendto live longerasyou livewith blaming it on you, you can askyourself one question:Wili a countrygo bank- less stressand you will enjoy the rupt? Thingsare not as bad as they beautiesof this earth and life around feel, life goeson. Everyonearound you. I would love to hearyour views you includingthe PoliticiansfAlasfor on thissubject. I the first time in their life!) thev are :iit*l

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"An optimistis a manwhogetsheedby a lion butenjoysthescenery' uAnoptimistis a fellowwhobelieves wtat'sgoingto happenwill be -KinHubbard postponed' "It'snotthepoints,it'sthepoise"-Sportsweu designer "I'm notlate,everyone is

iustin a hunyi-MarilynMonroe

"In anygrvenparty someone will lookworsethanyoun -Muphy'sSecond Law "Whenyou'vehit rock-hottom, theonlywayto gois up"-Traditional "Quesera,sera"-Song November-December1998 | TheAsianManaper

THE

AsianflArracle REVISITED

Asia is many fertile placesto many enterprising Europeans but what the scenicmaps did not show is that Asiacould alsohe an economic blackhole where investments disappear from view I

who havehad a long nomic miraclehad leanedmore toward l- uropeans, experience of socialcapitalism or economicratherthanculturalterms. lliberal socialism, can empathize Therehasaisobeenthismisguided tenI L with theso-called Asianmiracleas dencyto seeAsiaasa homogenous bloc. havingbeenachievedthroughcomplicity It is quiteirrationalto lump all the Asian betweengovernmentand business. This countries, especialiy if onelookedat ecocomplicity.had alsobeenpointedout as nomicpractice, wheresituations varyfiom oneof thereasons for theAsianeconomic countryto country. The specificaspects crisis,and that sucha link betweengov- of theMalaysian crisis,for example,differ ernmentandbusiness needsto bebroken. from thoseof Thailand.Theproblemin But Europeans do not generally sharethat Malaysiais not overseas debtbut domesview sincethe Europeantraditionde- tic debt,which comesto,something like mandsthingsof thestate,andexpectsthe 140 percentof GrossDomesticProduct stateto playa strongrole in termsof so- (GDP),whichmakesit an essential intercial protectionand in coordinating the nalproblemratherthanonerelatedto the economy. outsideworld. Thailand,on the other Also,the European experience colors hand,sufferedfrom indebtedness ln dolperceptions of theAsianeconomic miracle lars as relatedto internalpractice. Of placeon coulse,all of thosedifferences throughtheemphasis Europeans aresomethe culturalfactorsof the miracle.Euro- how beingglossed overby theboysworkp e a n s ,p a r t l y b e c a u s eo f t h e l o n g ing in the hedgefarmswho seeAsiaas OrientalisttraditionaboutAsia,put more homogenous. "Asia"itselfis aninvenemphasis on culturalfactors-hardwork, Theexpression 'Asians discipline, loyalty, acceptance of hierarchy, tion." existasAsiansbecause they educationandthe state'srole in assurlng are perceivedby outsidersas such.One a basiclevelof education-as importantto sawthatin EuropeduringtheAsia-Europe theAsianeconomicmiracle.On theother Meeting(ASEM).WhichAsiaarewe in hand.mostexplanalions of theAsianeco- facttalkingabout?Therehavebeenmoves 22

TheAsianManagerI NovemberDecember 1998

to expandASEMmembership.At the moment,it is ASEANplusChina,Japan, andKorea.But evenifyou talkto the personin thestreetin Britainandask"Where is Asia?"You'dbe toldAsiabeginssomewhereat the KhyberPass.Theirview of Asiais essentially SouthAsia.

Whereis Asia? If onetalksof Asiain GreatBritain,one is primarilytalkingaboutIndiansandPakistanis, andonlyafterwardaboutChinese andJapanese or otherAsians.If oneswims over the channel,and comesto France, theirview ofAsiais onecoloredby a colonialexperience, andsothecenterofAsia for peoplein Franceis a partof the world that no longerexists-lndochina, that is, Cambodia, LaosandVietnam.And only thenChinaandJapan.Whenonegoesto Germany andtalksaboutAsia,we aretalking essentially of ChinaandJapan.That is not all that far becolonialexperience hindus,andit hascoloredtheperception of theAsianeconomic crisis. perception In sum,theEuropean of the economic miracleis coloredby the colonialexperience, andtheEuropean experi-

enceltse1fof capitalism andthestrongrole of the state.Therecentpoliticaldevelopmentsin Europe, with the electionof social democratsin Germany,show that Europeans basically like to be governed perhapsto the center-1eft andstill like the stateto playa strongroie. And so, the realdebatethatis goingto beginoncethe Europeancurrencycomesinto play is: Which kind of capitalismis most appropriateand mostacceptable in the Europeancontext?I think it is onewhich is not of the Americanlaissez-faire model, but oneof socialcapitalism at whichthe marketis at the serviceof a socialgood andnot themarketasanendin itself.This partlyexplainsthe European sensitivityto theneedfor moresocialsafetynets.

againJapan,Germany,and France.In ',.t EuroPe was busy short,Europeanbanks'indebtedness is getting its act greaterthanthatof]apanese andUSbanks ,,' together to form a combined.Althoughto someextent,Brit- ,11:] ish banksarefar lessindebtedthanthose ,.',,.common currencY of FranceandGermany. when Asia decided The Europeans have actuallybeen ,l heavilyexposed.Within the crisis,there :i,' to have a crisis. That were manycomplaints that the Europe- .1r:,' wasn't very nice. answereabsent, thattherewasanabsence of a European voice.But if you actually lookat the figures,the roleof Europeans in packages for Korea,Thailand,and In- groupslendingto eachother,resultingin donesia wasgreaterthanthatof theUnited absurdlevelsof indebtedness. In Europe, we talkaboutan equityin States.So,we havea paradoxof Europedebtedness ratio of 70 percentatmost,but ansputtingmoneyinto the packages but more appropriately 30 percent.In some their politicalvoicebeingunheardin the Korean cases, we'le talking about400percontextof theeconomic crisis. cent indebtedness ratio. So we getlevels Mthin the crisis,the contagioneffect indebtedness of based on the fictional EuropeanExposure has a senseof absurdity.Why was the value of the companies' related assets European banksbeganinvestingln Asia Philippines affectedwhen the problems partly prices to real estate and to intanlaterthanthe Americanbanks,but they identifiedin Thailand, for example, were gibles goodwill. like But the Korean crisis startedto investwith massive amountsof not oneof the characteristics of the Philis different fiom the Thai. the Indonesian. money.Thefigureson outstanding claims ippine economy?The factorsthat may of banksasof Decembet 31, 1997, aspub- havefunctioned in theothereconomies- andthe Malaysiancrisis,andyet the conspread. lishedby Ihe Asian WallStreetJournal, speculation, a bankingsystem thatdidnot tagionhasobviously showthat in Indonesia we havetheJapa look at who it waslendingmoneyto-did neseexposed at $22billionbutwith Ger- not applyto the Philippines, which, after Containing Contagion Thosenuanceswere not necessarily manyimmediately followingat $6.2bil- all, had lust undergone 30 yearsof IMF appreciated in theEuropean context.The lion andFranceat $4.8billion.In South tutorship.Yet,the Philippinepesofal1sto Europeans, to someextent,were taken Korea,Japanis againnumberone with the sameextentasthe Thaibaht. There $20.3billionbutwith Franceclosebywith is somethingirrationalaboutthe way the abackevenmorethanthe investorsfrom with $9 billion contagion $11 billionandGermany effectsgo. Consider the prob the UnitedStates.As mentionedearlier, from Europecamelater in andthe UStrailingcloselybehindthem. lemsin Korea,which areessentially be- investments 'B0sandonwardand, In Malaysia andThailand. theorderisonce causeof this nepotisticsystemof trader largeamountsin the with the benefitof hindsight, onecanargue that therewas an unreasonable explosionin creditgivento Asiancounilies in relationto the realeconomy. Europehasbeentherebefore.There wasa crisisin Francesomelimein 19BB when the linkagesbetweenthe financial sectorandtheneedsof therealeconomy weresomehowbroken.Oneof the things thathadto bedonein the European context was to somehowbringthis backtogether-sothatthefinancialsectorbefully relatedto the leal economy. Bu! the situationin Asiatodayis not of the hedgedfund andnot lustbecause simplybecauseof the disparitybetween levelsof indebtedness andthe enormous capitalflows.When onelooksat the foreign currencyexchange,we're taiking about$1.3 trilliona day. We'retalking aboutfiguresthat havemultipliedby 50 overthe last20 years;it is estimatedthat Pros and cons: Despite internal disagrrements and the Asian crisis,Europe edges onlyabout3 percentof thosecapitalflows closer to a monetary union or foreigncurrencyexchangeis actually November-December1998 | TheAstanManaper

for the tradein goodsand sernecessary with Dr.Mahathir. vices.I do sympathize He doeshavea pointaboutthe absurdity of theselevelsof foreigncurrencyflows that were for the mostpart unrelatedto someextent to the needsof the real economy. ThecrisisalsotakesEuropeabackmore than the UnitedStatespartlybecauseof the lackof informationaboutAsiain Europe.Thisis particularlytruein my country, France.Thereis four timesmorereportingaboutAsiain the BtitishOuality Pressthanin France.Wenow havea situation wherewe've gonefrom blackto white; where the Asiaof the tigers,the Asiaof theboom,hasgoneto theextreme and where Asia optimistshave become Andthoseabsurdchanges Asiapessimists. of opinionareanindicationof inadequacy If we [Europeans]had been of information. informed,we wouid havebeenlesseuphoricaboutAsiaandwouldbelesspessi mistictoday.ButtheAsiaboombecomes prophecythat sort of a self-generating pushesevenfurtherandfurtherheavyinof and.with it. indebtedness vestments European banksin Asia. And of course, today,when onetalksto bankersandask "What happened?", they'Ilsay"Well, I knew therewere absurdlevelsof investmentsin reaiestatein ThailandandMalaysia,but what canI do? I havewarned " thembut theywill notlistento me. Now

everybody hasthe benefitof 20-20vision in hindsight. Theeffectsof theAsianeconomiccri sisin Europevary enotmouslyfrom sector to sector.Thereare sectorsthat are for example. heavilyhit-the luxurysector, of goodsof fuound50 percentof thesales companies like LouisVuitton havebeen hit especially since50 percentof theirrevenuesarederivedfromAsiaor Asians. Theeffectson theothersectorsaredifferent.Thosein thebuildingindustry,for example,havea senseof flexibility.They haveshiftedfrombuildingofficebuildings in Bangkokto moreactivityin publicinfrastructurework. Which makesthem perhaps lessexposed thanoneexpects. It is eslimatedthat the effectsof the crisiswasabout0.5 percentof European GDP gtowth. Only about4 percentof EuropeanGDPis actuallyrelatedto exportsto Asia.Thecontextthatis mostexposedis Australia: .around16 percentof is AustralianGDP directlyrelatedto exportsto Asia,includingexportsof educaTherefore, theeffecton the tionalservices. greater. Ausffalian economy is significantly general figurestend But of coursethose to focuson particularsectorsthat areparticularlyhit. Basically, the Europeans, up until a few monthsago,havebeenrathertoo complacentandtendedto minimizetheeffects of the oisis on their own economy.in a

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TheAsianManagerI

t998

ratherselflshway. In the last coupleof monthswhenit becameclearthatthecri siswas not goingawayand was instead ofpoliticalcrises, by a series compounded a realizationthat Europewill haveto becomemoreproactivein tryingto conffibute solutionswithin Asia. Also, thereseemsto havebeena degee of revengeespecially aboutsomeof theAsianvalues,rhetoricthat camefrom semidemocaticcountrieslike Singapore with and Malaysia.I recalla conference in Parisin which ASEANrepresentatives who wasruntherewasa Thaiacademic ning a bank who talkedaboutwhat he Europeasthe "NewlyDeclindescribed inn

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Mthin the crisis,too, the Europeans werealsomoresensitivethanthe United Statesto the way in which the political by the economic crisiswascompounded part of its resoiutionwas crisisand that political.The electionof an opposition presidentfor Koreawith the benefitof conditionfor Kohindsight,is a necessary get backon its feet. Simiiarly,one reato has to admirethe way the Thaistook of decisions-change rathercourageous government, changeof constitution,closing 53 financialinstitutions,reallybiting thebulletsoto speak-todealwith its own crisis.But againtherewasa greatersensi tivily in Europeto thispoliticalrevolution for ecoasbeingpart of this prerequisite nomicrecovery. But mindsarestill moreconcentrated now on ChinaandJapan.Thebigquestion is: "Wi1iChinadevalue?"A lot of articles on are beingwritten on speculations whetheror not Chinawill devaluerather than on a feelingof how the restcanbe of Thisis indicative somehowcontained. that misguidedview of the Asianreality. situationdidcontheIndonesian However, centratesomemindsandspurredthe reSuhartoueateda alizationthat President systemthatfunctionedextremelyweil for 30 years,a systemthat led to the reduction of povqrtyby 20 percent.Oneof the tragediesis that Suhartowill not be rememberedfor that but will be rememberedasthe despotwho triedto hangon for one of to powerandwas responsible ofhistory.Stili,Suharto themajorinjustices createda situationwhich waseitherhim or anarchyand one can seethat in the presentcontextof a weakened President under functioning in Indonesia [Habibe]

A common currency signals the end of nationalism in Europe and the beginning of a super nationalism, one which the entire world needs to look into for long-term effects

the sameregimebut without at all the sametoolsof controlthatSuhartohadand the depthof civil societysimilarto that presentin the Philippines.My optimism aboutMalaysiaandThailandis gounded in thisdepthofcivilsociety.Whatwe have on theotherhand,is a movein Indonesia, but Suharto against mentof coalescensce for something,which is not coalescing worrisome.One cannotseea political party emergingand the othel structures the regimein Indonesia.This replacing some Indonesia to concentrate hascaused European mindsbut againtheconcentration had still beenmore on Japanand ChinaandthatChinasofarhasbeenholding steady. Now, indicativeof that are the differMeetencesbetweenthetwo Asia-Europe ings(ASEM).Thefirstmeetingin Bangkok that in 1996wasbasedon theperception

Europewas missingout in the booming regionof the world, and that the weaknessof the Europeanpresencein Asia for by a more neededto be compensated politicaltypeof dialogue.So,if you like, AsiawasJulietand Europe in Bangkok, talk wasRomeo,andwe hadEuropeans balfor a third leg to lng aboutthe need relations and ancethe Europe-American relationswith a Euthe Asian-American access. rope-Asia TheLondonsummittwoyearslaterwas It wasfarmore a totallydifferentbal1game. murky.TheBritishPressonlyhadeyeson Chinawhile ai1the restof theAsianleaderswerebit playersin thisLondonASEM Meeting,which servedasan opportunity to turn the pageon Tiannanmenand allow Chinato emergeasa morerespectcreatingsomesenableplayer. Andbesides timentsof solidarifywith Asiansin their economicdifficulty,verylittle emergedof from the LondonSummit. substance Therewasa $50 millionfundsetup under the Britishinitiativeto offerAsian to iook in accountancy countriesexpertise at theirbooks,so to speak,but thereare now very setiousquestionsbeingraised in the next summitin Seoulandits usefulness.And I think Asianshavethe right behavwith European to be disappointed ior in that summil ThisAsiancrisiscameataverybadtime were The Europeans for the Europeans.

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busy doing other thingsand the Asians decidedat thispointto havea oisis. Now the Eurothat wasnot very nicebecause peansweregettingtheiracttogetherfor a whichwasnot aneasy commoncurrency, of it meanta harmonizing taskbecause budgetaryandfiscalpolicyin all of Europeancountries.So the Europeans were preoccupled with theirowninternaiaffairs when the crisishit them. currencyhadexistedat If a European the time of the Asiancrisis,the situation might havebeensomewhatdifferent. If currency therewasmorethanonereserue in the world, then the crisismay have playedup quite differently. If the crisis werenotin dollarsbutin euro,thenmaybe thingsmayhavegonedifferently. Where do we go from here? Priorto the crisisin a very unnoticed initiative,the Europeanfinanceminister wassendingenvoysto Asiato try andget Asiancountriesto usethe euroasa cutrency.In Asianow, Europeis startingto existbecauseof the eurocurrency.And isa symthesymbolofa commoncurrency bol of an end of nationalismanda beginand one of ning of a supernationaiism, which we havenot lookedinto the iongterm effects. Andwhereto fiom here?Europeisnow takingtheAsianeconomiccrisismoreseriouslythan a year ago.The concerns inabilifyto aboutjapanandtheJapanese dealwith their$600billioncrisisis causflnancial in European ing somediscomfort at the centers; andall of thesehappening apsamelime astheAmericanleadership pearsto beweakened.Butwhat is woris that what the rying for Europeans Lewinskyaffairmeansis theincrediblepa rochialismof theAmericanpoliticalscene wheretheattentionto a $obalcrisisis not givenimportance.Giventhiscontext,one canseein recentmonths,tentativeby Eua needto iook againat ropeansto suggest the machinerythat was setup at Breton Woodsandperhapssomedegreeof sympathyof conuols.But thereis a concern in Europeabouta returnto protectionism. tradeis Evenif 70 percentof European is an there countries, European between is a need that there increasing awareness for somethingto be done,the questionis nobodyhasdecidedquiteyetwhatexactiy I hasto be done.

November-December1998 | TheAsianManager

a true

ASEAN

QommunitA The crisis cannot but move Asia toward greater integration.

he globalvillageis uponus.Nailons ASEAN's resilience hasbeenputunder are so tightly interlinkedand so severestrainby theflnancialcrisissweepcloselyinterdependent that events ingacross Asia.Mothballedassembly lines in farawayplacesunleashnear-telm and padlocked factorydoorstell of real effectselsewhere. Yet,isolationthreatens sufferingafflictingour peoples. Millions survlval.And autarkyis a closedoption. havealreadylosttheirjobsandso many Today,no one countrycanfor longsur- moreare goinghungry.The pernicious vive,muchlessprosper, withoutweaving effectsof the crisisdo not stopat the ecoa web of effectiverelationships and em- nomic. bracingtheopportunities andovercoming thechallenges of theg1oba1 marketplace. Restoring Economic Stability TheroletheBrettonWoodsinstitutions ASEAN 2O2O playis verycrucialin containingthe crisis Thepastthreedecades ofASEANpart- andrestoring the economic healthof the nershipsaw unprecedented economic countriesmostsevereiyaffected.But it is gowth, expanded memberships, regional now clearthat the resources of theseinstability,andthebeginnings of a common stitutions,particularlythe International regionalidentity.ASEANcontinues to be MonetaryFund (lMF), are frighteningiy the fourth largesttradingentity in the insufficient. It is our hopethat countries world, achievingthis feat by prevailing which arein a positionto do so,especially overideological andpowerconflicts. the UnitedStates,will soonmakeavailASEANVtsion2020,our roadmapto abletheir sharein the recapitalization of the future,captures eloquently the com- the IMI and lend supportfor increasing monaspirations of ournationsfor a united thefundsof theWorldBankandtheAsian andoutward-looking Southeast Asia.One Development Bank. that livesin peace,stabiiityandprosperThe recoveryof the NortheastAsian ity,bondedtogetherin partnership, particularly in dy- economies, Japan,SouthKonamicdevelopment andin a community reaandHongKong,is crucialto ASEAN's of caringsocieties. Butthereareimmedi- own economic recovery. Thesemoreadateconcerns. vancedeconomies havebecomemaior 26

TheAsianManaserI November-December1998

marketsfor our productsand important soplces ofinvestment capitalforouryoung industrialsectors. Thesoonergrowthresumesin theseeconomies, thesoonerthey canreturnto theirimportantroleaslocomotivesof our region'sgrowth. Restoring Financial Stability Continued understanding andsupport fiom theUnitedStates, China,andEurope are likewlsevital to our efforts.China's steadfast commitmentnot to devalueits currencyis a $eat help.TheUnitedStates and Europe,beingprincipaloutletsfor ASEANexports, canspurourrecovery by providing$eateraccess to their markets, tradefinancingandothermeans. ASEANcountries themselves havebeen collaborating oninitiativesaddressing both therootcauses andeffectsof thecrisis.In particular,'we havebeenworkingwith partnersin boththeAsia-Pacific Economic (APEC) Cooperation andtheAsia-Europe Meeting(ASEM), andtheyhaveexpressed their supportfor the Manila Framework for EnhancedRegionalCooperation to PromoteFinancialStability.We havelob biedwith G-7countriesfor creditsupport and greatermarketaccessfor ASEAN goods.We bind ourselves more tightly

with our commonresolveto keepour targetdatesfor thecompletion of theASEAN (AFTA). We accelFreeTradeAgreement of the ASEAN eratethe implementation IndustrialCooperation Schemeand the establishment of the ASEANInvestment Area,Tohelpuscushiontheimpactof the sectors, we crisison our mostvulnerable havebeenseekingto reversethe declining trendsof officialdevelopment assisto tance(ODA)of majordonorcountries theASEANregion. Learning Our Lessons Because of thecrisis,ASEANwill surely movetowatdgreaterintegtation.Thelessonswe arelearningfrom thls common experience areclearenough. o Back to basics.We needto strengof eachof our econothenthe backbone mies.Forthe Philippines, thismeansrevitalizingour agriculturalsector,energizing ruralproductivity, channeling resources to irrigationsystems,farm-to-market roads, post-harvest facilitiesand rural credit. This meansintensifyingthe protection and preservation of our environmentto ensuresustainability and balancein our development efforts.This means focusingon human resources development to prepareour peoplefor

knowledgebasedindustriesof the future. o Growth with equity. High GNP gowth is brlttleandfleeting.Thepoorest of our masses will alwaysbe restive,and go rightlyso,if the fruitsof development mostlyto the alreadywell off. o Regionalsolidarity. Wemustbuild our collective strength. Theworld treats usasone;rewards andpenalizes usasone. We needto pushAFTAand alignour investment rules.Fragmented nationalmarketsareno longercompetitive. An integratedmarketis moreefficient, andmore attractiveto g1obalinvestors.Bilateral agreements in tradto uselocalcurrencies ingamongourselves arestepsin thetight direction. o Business-Government Relations. Doesgovernment haveanybusiness running buslness? Issueson the qualityof nationalgovemance, corruptionandcrony capitalism are now high in nationaldebates.The ensuingconvergence of ideas and resolvetowardgreatertlansparency and a morelevelplayingfield can only augurwell for our peoples andnations. o International FinancialArchitecture. ASEANasanassociation hasto participatemoreactivelyin the shaping of a new archltecture of the international financialsystem.Thecrisisunfurlsthestark

Erap reads TAM: Patt Lontoc, TAM editor in chief, shares the moment

It is time for Japan, China and Korea to talk and put the past behind them

truth thattheworld is dealingwlth a new phenomenon: massive amountsof capital nationalboundaries at light flowingacross into fiagningspeed, bioatingeconomies ile bubbles astheyrushin, shaking econoastheyarewithmiesto theirfoundations carry drawn.Thisaspectof globalization profoundexamiriskandperi1.It requires handling. An innationandmostdelicate on $obalization is ternational conference in order,andASEANmusttakethe intellectualleadership in it. Otherwise, others will onceagainshapeour destinyfor us. o Political stability. Thecrisismakes plainthat politicalstabilityls essential to success andto reourcountlies' economic gionalsecurity.The consolidation of all Southeast Asiawithin ASEAN.contributes to this. ASEAN and Europe ASEANintegationwill redoundto the in mutualbenefitof all:totalconvergence It is hapour economiclife andbeyond. peningin Europe;it canhappenin ourpart of thewor1d.Byreposing our trustin the we buiidin ASEAN, we make institutions permanent the tiesthatbindus.TheEu the world's ropeanUnion - arguably, mostsuccessful unionof erstwhilebitter - didsoandtriumphed. Wetoo enemies cansucceed. of gi ASEANlivesin a neighborhood antswherethe ghostsof historicconfllcts lurk and the debrisof greatwarsfought in EastAsiaconlitterthe gound. Peace tributesto peacein ASEAN.Stabilityin EastAsiahelpsstabilityin ASEAN.Prosperity in EastAsia spursprosperityin ASEAN.Trueandlastingpeaceis possible areput to rest, onlyif lingeringanimosities astheywerein Europe.It is time for Ja pan,ChinaandKoreato talkandput the pastbehindthem. T h e n m a y b e ,b i g g e rd r e a m sc a n One beckon.Onemarket.Onecurrency. I trueASEANcommunity.

November-December1998 | TheAsianManaper

â&#x201A;ŹookYurope POLICY

StrategicOptionfor Asia in the 21stCentury

,dL

Wt.,,.-"'

Asia continues the search for a zone'of stable currency and self-sustain abIe econ o mi c g rowth

any countriesin Asiaplunged into aneconomiccrisiswith vary ingdegeesof severityandmagnitudein the iatterhalf of the '90s. wasalmostasif theThaicurrency .lt crisisin July 1997were the flu virus, which spreadrapidlythroughoutAsia, financialcrisis. leadingto a severe in It will be recalledthat economies parts of the Asia,aswell asthoseof most world, becameincreasin$yinterdepen'80s.As a result,the dent earlyin the ASEANeconomiccrisisinevitablyhad economy. on theJapanese effects negative Similarly,when Japanfailedto solveits problems, therest owninternaleconomic of Asiawasaffected. 28

The world hasbeenintegratedinto a globaleconomynot only by a fiee-trade butmoreseof goodsandservice$ system Thesize riouslybythefieeflowof capital. g1obal teal sector is estimated economy's of whereas thesize to bearound$30tri1lion, at about sector is estimated of thefinancial become has increasin$y $70 trillionand liquidandmobile;capitalstartedto move fiom one countryto anotheracrossthe borderslookingfor highetreturns.This chainof eventscouldnotbut cleatesome formsof instability. 1and, laborand Economists considered primary inputsfor the produccapitalas tive activitiesof the real sectorsof a Products andservices country's economy.

TheAsianManagerI November-December1998

havebecomefreelytradablecommodities by negotiations spurredby the successive AgreeundertheGeneral thegovernments ment on Tariffsand TradeAVorldTrade (GATT/VVTO). AsianeconoOrganization miesparticularlybenefitedfiom the trade of goodswith theindustrialized expansion the latter'spolicyof ffadelibcountries'as eralizationopenedup the exportmarkets goodsfromAsianeconoforlabor-intensive mies.Export-ledgrowthmodelsandoutward{ookingeconomicpoliciesadopted Econoby theAsianNewlyIndustrialized of Korea,Taipei miesor NIEs (Republic were China,Hong Kongand Singapore) exultedby the WorldBankasthe endresultof marketfiiendlypoliciesadoptedby

thesegovernments.The Asianmiracles naldebtcrisisof the '80s. Mexicoloined The enemies of becamea realityin the NIEs. The great OECDandsigned NAFTAwiththeUnited "open society" of the Koreaneconomy hasbeen States success andCanada.Asa result,theMexi may reside within repeatedly citedasa modelby theWotld cancapitalmarketbecame veryattractive lendingpolicy forinstitutionalinvestors Bank'sstructural adjustrnent in thedeveloped the society fordeveloping countries.MiltonFriedman countries, who commanded morethan itself oftenreferredto the economyof Hong $ 10trillionin liquidfinancial assets. Fund economictheory managers Kongas a neoclassical of pensionand mutualfunds turned into a reality.Per capitaGNP of startedto diversifftheirportfoliointothe in 1996surpassed thoseofGer- "emerging Singapore markets" ofthemiddle-income France, Sweden developing many,the UnitedStates, countriesof Mexico,Brazil, andBritain.Ironically,onenow wonders Thailand, Indonesia, Malaysia andothers. whether a new term may have to be According theymadethe to IFC,theseemerging capital economies.In particular, ad- marketsin the developing rateregimesof thesecountries coinedto classiffsomeof industdally countries rap- exchange vancedcountriesas FACs(formerlyad idlygew in thelatterhalfof 'B0sin a size quiteunstable andactedasthedestabilizvancedcountries). for thesemacroeconomies. of capitalization amounting to $2 trillion, ingforces The ASEANeconomies of Malaysia, about10 percentof the totalcapitalmarMexico'spesocrisisspilledoverto the Thailand,Indonesia and the.Phillppines ket in theworld. restof theWestern hemisphere asthough were considered as little tigersquickly IMF estimatedthat total net private underthe influenceof Mexicantequila. catchingup with NIEs.Anothergroupof capitalflowsinto emelgingmarketshas Likewise, the currencycrisisthat started Asianeconomies ledbyJapanlookedlike tapidlyexpandedfrom $45.7 billion in in Thailandin july 1997hadripplingel "flyrngwild geese"rapidlymigratinginto 1990to $235.2billionin 1996,a quin- fectsto the rest of Asia,engulfingthe industriallyadvancedcountriesof the tuplegowth wjthinsix years.Cumula- economies of Korea,Malaysia and,more West.Everything appeared to goverywell tive net privatecapitalinflowsinto the seriously. Indonesia. in AsiauntilJuiy7997,whenpoliticalln emergrng marketsamounted to $ I .055 stabilityrockedAsiancountries. billionin 1990-96.A majorityof these Curing the Flu TheIMF andtheWorldBankpromptly wereportfolioinvestments andshort-term Tequila Crisis, Asian Flu to capitalflowsinto the middle-income de- acteduponthlscrisis,now fu11-b1own, policymeaThe problemsbeganwlth the velopingcountries in Asiaandthe West containits effects.Economic Mexicanpesocrisis,which eruptedlike a ern hemisphere. by the BrettonWoods Inflowsandoutflowsof suresprescribed 'institutions 1994.Mexicowas suchliquidcapitalmadeit difficultfor the volcanoin December of IMF/World Bankwere recovering in theearly'90sfromits exter- governments economictheory to managetheir macro- basedon neoclassical whichassumes thatif pricesweresetright in theseeconomies, marketmechanisms will cureailingAsianeconomies. However,many policy makersand in Asiadidnotfullyagree with economists theprescriptions of IMF/WorldBank.For example,MalaysianPrimeMinister MohamadMahathirarguedthatthe economiccrisisin Asiahadbeencausedby speculative attacks madeuponthecurrenandthatGeorge ciesof Asianeconomies, of AsianeconoSoroswasan archenemy mies.OthersarguedthatAsiancountries had,sincethe '80s, faithfullyenforced a policymeasures to libseriesof economic ffade,finaneralizeforeigninvestments, following cialsectors andcapitaiaccounts Somebelleved WBandIMFprescriptions. wasprimarily thatthef economic distress caused by thefactthatthepolicymeasures liberalization hadbeencarfor economic riedout withintooshorta dme. Asa result,thetimeandeffortsallowedfor instiandthe development of tutionalchanges It took human resources was lnsufficient. Europe to Asia: History is a developmental path of challenges and responses a much longertime for industriallyad,.,,rirtiat:,3tii1t:i1 :_a :{

November-December1998 ) TheAsianManaser

to liberalize theirecono- fromthepastgrowthratesof 7-8percent renciesandadoptthe euroastheircomvancedcountries perannum. It would alsobe difficult mon currency. mies. It wasonlyin the 1980sthatthey perannumto 4-5percent why the Euro However, so longasthe Asianecono- for Asiansto comprehend theircapitalaccounts. liberalized economies of the peanUnion wishesto expandits scope maooeconomists miesremainas do11ar IMF economistsare countriesand at BrettonWoodssystem,theywill be des- by invitingEastEuropean trainedand educatedby economists asthenew members. to therisksof Russia Harvardand MIT in the UnitedStates. tinedto subjectthemselves and The Asiansshouldlearnfrom British were extremevolatilityof theircurrencies World Bank'stop management performance. hlstorian ArnoldToynbee thathistoryis a of theireconomic bankson instability mainlydrawnfiom investment pathof "challenges and fo11ow the developmental Wa1lStreet.OnecansaythattheBretton Theymayhaveto continuously "conditionalities" WeshouldalsolearnfiomJo of the IMF policypre responses." arethe culturalprodWoodsinstitutions an Austrianeconomaybe- sephA. Schumpeter, thoughtheireconomies uctsof the politicaleconomycomplexof scriptions, policy with IMF. mist,that a societymustexercise WallStreetandWashington, comeworseif they consulted Cambridge, in orof "creativedestruction" may haveto look for measures DC.Thisculture,now beingformedinto Asianeconomies "Washington Con- someotheroptionsto enablethemto at- derto beinnovaflve.Wemayhaveto iearn a beliefsystemca11ed andselfsus- fiom HungarianeconomistKarl Polany that if the Asiancoun- taina zoneof stablecurrency believes sensus," itselfin orgowth. that a societymusttransform economic of tainable tdesfollowedthe policyprescriptlons Or from Karl der to remaincompetltive. Bankaccordingly, they are IMF,/Wor1d Popper,an Austrlanprofessorof social fiomthecurrenteconomic Learning Time sureto recover philosophy includeGeorge whosestudents have very little knowledge The Asians dlstresses. "opensociety" "Look of that the enemies nations have decided to Soros, East" of how European Minister Mahathir's Prime policymayhaveiostits credibilitysimply form a European Union in November mayresidewlthin the opensocietyitself. made We may haveto learnthe lessonsthat 1993 by agreeing to theprovisions Asian miracle melted down because the problems have socialism, a methodof socialengineering in Maastricht Treaty. The Asians also that enin faceof theeconomic gulfedJapanandthetestof flyinggeese of litt1einformation asto how theEuropean for humandignity,born in Europeand (EEC),formedin China,provedto be the "gteatfailute" in- Economic Community NIEsandASEANcountries.Japanese politicians,bureaucrats Mon- afterincurringthe enormoushuman and 1959,decided to forma European tellectuals, they de sacrificeand socialcosts.One wonders all seemto beconvinced that etarySystemin 1979andwhy businessmen Act economies and cidedto signa SingleEuropean in w h e t h e r W e s t e r n c a p i t a l i s mw i l l theAsianwayof managing to 1986.Asiansusuallyhavesomedifficulty survivein the 21st centuryand how mayhaveto be changed corporatlons canretaintheirsources nations Asianeconomies why theEuropean transparency understanding enhancetheir governance, I TheJapanese bureau- havedecidedto abandontheirown cur- of dynamism. andaccountability. corporations cracyhasto be streamlined, restructuredand the financialsector system lifetimeemplol'rnent strengthened; reassembled system modified; theKeiretsu educational systemreand the Japanese formed.'

LookEurope sizeof theAsianeconoThecombined theNIES, ASEANandChina miesofJapan, amounted to $7,347billionin 1996,more whose or lessthesizeof theUSeconomy GNPwasat $7,433billionin 1996. A concombinedtotalsizeof 15 countries Unionasa whole stitutlngthe European to $8,613billion. In termsof amounts population, arethe the Asianeconomies largestwith 7,744 mll]'ionfollowedby the European Unionwith 373 mi1lion,and the UnitedStateswith 265 million.No Unionand doubtthatAsia,the European the UnitedStateswill continueto play majorrolesasthe threegrowthpolesof the world economyin the 21stcentury. will continueto be a Asianeconomies a1dynamiccenterof theworldeconomy, thoughtheirgrowthratesmaydecelerate 30

Twenty-firstcentury challenge: Can Asian economies retain their sources of dynamism?

TheAsianManaperI NovembenDecember1998

I I

Labor seeks out opportunities for remunerative employment wherever itb available. Controls must thus respect the market's i'mpersonal behavior he International LaborOrganization doorpolicyto foreignlaborasthe threat available. immigration restrictions cannot (lLO)haspredicted thatthe econo- of jobdisplacements amonglessqualified be effectivelyenforcedif the desired micallyactivepopulation of the de nationals, environmental cannotbe availedof in the stresses andex- opportunities velopingworld is projectedto ternalinfluences rockinghardllnecultural homeeconomy. inctease,by 73 millionpeoplebetween traditlons becomerea1. Neithersocialistnor authoritarlan 1q902010.This20-year inueaseexceeds But while thesedisruptions had succeeded in suppressing areinevi- ideologies thetotalcutrenteconomically activepopu table,it is importantto rea\ize in thelong labor's naturaldrive to move freely. latlonof all industrialized countries taken n r n t h A t r h p v : r e l i k a l v i n h p m n r a Duringthe ColdWar,mostdefections to togetherwhere an inmeaseof only 50 c r e a t i v et h a n d e s t r u c t i v eA.n y o v e r - theWest,whilefoundedon humanrights millionis projected for the same20-year reactionto theseconstructive threatswill and politicalvalues,were economicaily period.This irreversible demographic be self-defeating in thiseraof a democra- motivated.Whencommunism fe11in the backdrop will bea bigsourceof complex tizing socialeconomy.The market's '90s,outmigration fiom the Eastern bloc dilemmasto facepublicmanagement of impersonal behaviorremainsthekeychal- was clearlyinducedby the desireto Jho )lsre onlttnr lenge.Anymeasure thattendsto grossly addresspoverty,find livelihoodand . Decisions will notbeeasyforlabor-short disrespect Thus,while 1egalfallacies the objectiveeffectsof the empioyment. economies to ailow a control-fiee labor relationship of demandand supplywill servethe purposeof respondingto emigrationas they sufferfiom skillsand only give rise to the blackmarketof sociopoiitical pressures, the economic braindrain.The migrants'heightened migration to facilitate whatbureaumacies forcesultimatelybear down on the exposure to socialconflicts or employment makedifficultto achieve. marketandits players. "The demandof laboris there,"said disputes as a naturalconsequence of Unlikecommodities, humanresources labormarketinternationalizatlon will havethe inherentfacultyto definetheir Universityof Adelaideprofessor Grame slmilarlyinvite greaterpublic pressure hierarchyof needsand formulatetheir Hugo. The systemis in placeto supply on governments to moderate laborflows. independent decisions to satisfythem. labor.It is unfortunatethat the system will continueto think Thuslaborseeksout opportunities lob-richeconomies to]isil1ega1. No amount for [widelyresorted twiceoverthe longrun to adopta wide remunerative emplovment whereverit is o f c r a c k d o w n o n t h e i r r e g u l a r The author appreciates discussions with Ricardo Casco that enriched ideas and insights in this paper. November-December1998 ) TheAsianManaser

if themarket's placestandards will accelerate thesemar- , While the social migrantworkercansucceed ket-based responses. Already, EC councharacter isnotacknowledged. impersonal disruptions caused ,:::,,': globalization The of laboris inevitable. trieshavedrafteda singlesetof rulesto ',,:,.., bf migrant workers of Europe,coverThe economicbenefitsfrom applying governthe workplaces tn lob-rrcn economres most productively ingsuchareasaswageandhourstandards, humanresources rights,andworkersafety. aretoo greatto be resisted.Mote likely, employment are inevitable, they are In June 1998 the memberGovernwill bedrawnto makeimmanycountries in the long run likely andWorker ' and moreworkerswill mentsaswill astheemployer migrationeasier, to be more creative LaborOrgaof theInternational moveaoossthe barriers.It is projected members "''' than destructive a declaration reaffirming that,by thebeginningof thenextcentury nizationadopted of the countries that haveeducated theirsupportfortheimplementation developing market-oriented "core"laborstandards relatingto prohi cationalsystems thefuyoungandadopted thatproducecompetent policieswill haveadvancedfasterthan bitlonof forcedlabor,right to collective workersfasterthantheir economies can fieedomof association, and absorbthem (Philippines, countries bargaining, thosethathavenot. Developed fugentina,PoNos.29,87, land). However,like the processof that have acceptedor soughtforeign minimumage(Convention for havingdone 9 B ,1 0 0 ,1 0 5 ,1 1 1a n dt 3 B ) . workerswill be stronger globalization of productand capital,the Discussions amongthememberecono- globalization so. As the benefitsbecomemoreobviof laborwili be unevenand Coop- uncertain. Governments, ous,the movementof workerswill be- miesof the AsiaPacificEconomic motivatedby eration(APEC) aswe11as thegrowthpoly- factorsotherthaneconomic comefreer. gain,will play As a result,laborbecomesgradually gonof theBrunei-lndonesia-Malaysia-Phi1 a greaterrolein world labormarketsthan will ippines-East AsianGrowthfuea (BIMP- in othermarkets. international.Nationaldifferences possible will become EAGA)haveincluded agreements Themagnitudes fade. Needsand concerns of migrationwillbethe aswell as resultof the effectsof globalizationand universal, andwork rulesandpersonnel on the fieerflow of nationals pollcies As equivalency in theassessment 0f training regionalization andpractices willstandardize. on the lessadvanced countries absorb motewomen andeducation. developing andthe flow of bothproduct economies forexample, theyare In the comingdecades, the world's andcapital.Globalization, intotheworkforce, it wouldseem, world's workforcewill increasingly more marginalizes likelyto sharethe industriaiized become economies thelessdeveloped concernaboutchildcareanddemandfor mobile,and employers will increasin$y from the mainstreamof benefits. reachacossborders to findtheskillsthey Regionalization, conveniences. however, hasbeenshown need.Thesemovements of workerswill to counteract thef beingcrowdedout of bepropelled bythewideninggapbetween tradein goods,capital,andtechnology. Global Forces TWoforceswill drivethe "standardiza- the world'ssupplies of laborandthe detion" of the workplace:the companies mandsfor it. Whilemuchof theworld's Mutual Appreciation to thegloballabormarkets; and newjobsarebeinggenerated bythecities responding to maximize ecoForcountries seeking tradeand,/ of the indusftializedworld, much of the nomicgrowth,strategies thegovernmentsnegotiating thatdevelopand Forthe globa1 cor skilledandunskilled humantesources are attracthumancaoitalcanbecomepoweror laboragreements. 's poration,the ideaof a singlesetof work beingproducedbythedeveloping world ful toolsin operating in theglobalmarket. andtraininginstitutions. rules,a si4g1e work ethic,will be asirre- educational Willingnessto competefor human reThe growthof the worKorcewill be sourceson a worldwidebasiscan be a of doingbusisistibleasa singlelanguage uneven. From 1985 to 2000, the source NESS. advantage. of competitive effortsto harmonize work- workforceis expectedto grow by some Government Government dilemmas shouldthusbe 600mi11ion, or 27 percent, versus mutually appreciated.Both host and 36 percentbetween1975 and sourceeconomies will haveto help one 1985.Thevastmajoritywill come anotherto beeffective. Thereisalsoa need fiom the developing world. Paki for greatervigilanceon how muchregUlawill tion must be givento privateplacement stanandMexico,for example, gow annually percent. at about3 systemsresponsibiefor job and skilis and matching. FortheUnitedStates, Canada regulalion andlaxity Excessive Spain,thegrowthratesarecloset tendto breedpapercompliance transacto one pel cent. Germany's tionsin thedocumentation of laborflows workforcewill eventuallydecllne. and accountingfor responsibility.A syspublicpolicies Despite thatseekto tem of rewardsand incentives must ac"plotect"theirnationals, the cit- company everybookof rules. ies of the developed world {the Oneofthepressingconcernsamongall increase of theservicelobs,rather) advanced is the industrialized economies will become magnets formigration broadercrisisof governmentlegitimacy. of personsfrom work forcesof Unwanted contributes to the immigration Fact: Unlike commodities. human resources hierarchyof needs deflnetheir orazn

develoPlngeconomieswith edu-

difficulty of governmentto understandand

Theauthor appreciatesdiscussionswith RicardoCascothat enrichedideasand insightsin this paper. 32

1998 TheAsianManaperI November-December

respondmoreeffectivelyto the objective forcesof globaleconomicrestructuring. While the antimigrationfeelinghas becomea key issuein electionsand publicdebates in manyOECDaswell as in newlyindustrialized countries,a parallelbehavioramongsending economies can benoted.It is thusof extremeimportance thatnationalgovernments strikea balance in managingmigrationfrom bothits economicandpoliticalperspective. It is equallyimportantto note that migrationproblemshavebecomethreats to bothnationalandregionalsecurity.Job displacements, cultural distortions, peaceand orderproblemsand environmentalpressures inducedby migration are amongthe greatestconcernsof host economies. Racism,discrimination and incidences ofcrimehaveoftenbecome diplomaticirritants.The effectsof labormiglation should be an essentialreferenceto strengthening regionalcooperation.

programs in this aspectwill haveto be Despite improvements w o r k e d o u t t o h a n d l em i g r a t i o n ' s in labor market and complexdynamics. trade information Because migrantlaborservesthe mutualeconomicand foreignpolicy systems, many host interestsof both the sourceand host countries remain economies, the responsibilities toward highly averse to migrantlaborshouldbeequitably shared. bilateral agreements Employers areincreasingly expected to developan "investmentparadigm"in the for fear of being treatmentof foreignworkers. dragged into a Hosteconomies not onlyimposeentry collective pressure criteriafor migrantlabor,a numberof over sovereign them haveasserted their policydomain on their employersdesiringto employ labor issues foreigners. Fora decade now,SaudiArabia, Bahrainand the UnitedArab Emirates have engagedin bilateraiarrange- communicating realcostsandbenefits for mentswith the Philippines statingthat labormigration.Thepolicyentailsa proauthentication of employerdocuments gramof empowerment throughinformahp handlpd hrr thpir rpqna.tionandpubliceducation andthecreation tive Interior and ForeignMinisters of an environment of honestyandnegoand Chambers of Commerce and Indus- tiationbefween andamongemployers, retry insteadof.the PhilippineEmbassies cruitersand workersas a way to attack in theseposts.Malaysiarecentlyraised migrationproblems at its roots. MoreJointPrograms the levy imposedon its nationals Sincethe migrationsystemcovers employinghouseholdserviceproviders Toward Global Standards movements acrossinternational bound- fromthe Philippines. Shouldglobalization then be left to ariesthat are systematic, organizedand States andgovernments cannotbe un- its own devices? The 1997annualInterpolicy that concernedabout the needsof their nationalLaborConference legal, no state-directed in Geneva m e r e l ys e t sn u m e r i c a lp, r o c e d u r a l , citizensfor protectionagainstfiaud in a p t l y a d o p t e dt h i s c h a l l e n g e on its andqualitativetermsfor a foreigner's stay Iecruitrnent, abusive conditions of employ- agenda.Globalization doesnot necessarin the countrycan effectivelymanage mentabroad, andviolations of theirbasic i1y achievehomogeneity of governall its elements. Actionswithin areshaped humanrights.Recruitmentfraud has ment policyresponse, despitethe call by domesticpoliticalconsiderations not only beendetrimentalto workers for lessergovernmentintervention uniqueto eachcountry(Papademetrionbuthasalsocaused business disturbancesin globalization. Nation-states continueto andHamilton,1995). amongemployers who arerhetedadmin- asserttheir respective sovereignfy while As nationai boundariesare fast istrativepenalties ftomtheirauthorities for realizingthat the rulesof the game disappearing towardthe globaivillage, suchinfractionasvisawastage. havetremendously transformed into systems of checksandbalances neednot Abusiveemploymentconditionsand a "stakeholders persuasion system" be compromised. Instead,more joint humanrightsviolations arein themselves in which marketplayershave to execonomically disastrous to mi- p l o r e m u t u a l s t a k e sa n d w o r k o u t grant workprs who spend partnerships. investiblesumsin their deployThevisionof a stablepostglobalization ment.Authoritiesshouldcon- society,the GlobalVillage2050, will tinueto strategize to containthe onlybe realizedwhennationscanadhere escalation ofplacement coststhat to somestandards, a sharedlanguage makemigant employment avery of principles, lawsandmodesof transaccostlygamble. tions. Thiswill not, however,eradicate In 1996thePhilippine Depart- sociocultural and politicaldiversities; mentof Laborand Employment instead, it will harmonize thesediversities introducedthe "full disclosure and bridgeresidualgapsto form new policy,"a dimension in migration creativesynergies that will rule the m a n a g e m e ntth a t s e e k st o $obaleconomy. achievemarkettransparency, Towardthisstate,a ladderlikeapproach obligingthedifferentmarketplay for the effectivedevelopmentand ersto partakeof the responsibil- eventualadoptionof globalstandards Fact: Migrant labor serves both source and host ity in levelingtheplayrng fieldand may be an elementary requirement. economies |

! r P ! !

The author appreciates discussions with Ricardo Casco that enriched ideas and insights in this paper. November-December1998 | TheAsianManaper

attemptedto forge Following aresomeimportantsteps: toward o Improving Labor Market and somealliances common Trade Information System.Everything discussing andtheethistartswith information.No one canac- problems curatelydefinehis or her stakein labor cal conductof their migationwithout fair and adequate ac- practice. While a smallstep information. cessto Accessto informain the ladder,these tionw111 assure animproved sharing ofreforms of bilateral gionalperspectives. haveconIn this Internetgeneration, the need agreements tributed considerable for centraldatabases on iob and investin makingthe mentopportunities becomes moreachiev- benefits labor market moreefable. This requiresglobalaccessand ficient while allowing willingnessof highly computer-literate to helpmodernize societies the informa- mutualstatecontrolof t i o n s y s t e mo f l e s se q u i p p e do n e s . t h a c \ / c t o m Websitesare now clusteringuseful planningwillalwaysbein Experiments in form:Regional Integfating a information,fromwherepatternsof marglobal the context HRD Framework ket behaviorcanbe observed. A parallelundertakingis fastprogress- and RegionalPlanning.APEC,ASEAN Global Governance Themaingoalof anymarketplayerin zealous ing in APEC.APEC's LaborMarketInfor andBIMPEAGAhavedisplayed globalizedeconomyis to participate the efforts towarddefiningandfine-tuningremation[LMI) systemneedsto hasten gional in fair competition. Proponents HRDFramework. of labor TheAsiancrlsis its data-setbuildupby conclusively points guidellnes growth standards argue that minimum out that anddevelopment addressing the issueof data comparability.This shouldchallengenational in the regionhaveoutpacedthe accom- shouldat leastbe set and adheredto. in HRD seriouslyenoughto Thosewho disageearguethatstandards systemsto work double-time on their plishments interventions maintaina sharpcontrastamongAsian arecounterproductive repshare. protectlonism disguised or misor labor-surplusresenting Labormarkettrendsandbehavior will nationsinto labor-deficit have to be observedfrom the buildup economies.APEChasflghtfullyraised placedcompassion. Globalstandards,in their essence, through of cenffaldatabases at a subregional theconcernat the highest1evel, or regionaileve1.Thiswill be concretely its HRD MinisterialMeetings.The host are the embodimentof a commitment in the APECHRDWork- lo levelthe playingfield in the universal usefulin the development of standards, of undertakings internaaswell as a "language" of job and busi- ing Groupalsorevealsa wide rangeof desireto maintainharmonious and contagious enthusiasm tionalrelations.Theyaretoolsto redisnesstermsof its own,in manyaspects of approaches to palnta clearpictureof the region's tribute excessesactossthe regional migrationmanagement asa whole. o Bilateral Agreements.TWo-coun- HRD vision.APECcan be uedlted for economyas one nationdefinesits comstrengths andweaknesses. or parative try a$eementsservethe advantage of the birth of regionallearning'centers Today,standardsettingwili have to meaningful in the bridgingpâ&#x201A;Źrsistent conflictof lawsand1a- centersof excellence in at differentmuitilateral bormarketpractices, withoutnecessarily developmentof global standardsof be engaged venuesand in different forms. Subsurrendering one'spolicydomainwhen learningandcompetency. the samepulposecannotbe achieved Mutual recognitionof skill qualifi regionaland regionalworks to define a mustasAsiahas visionaryftamework,modesof cooperamoreefficientlyon a multilateralsetting. cationsnow becomes equivaDespitethis, manyhost economies for acceptedits diversltiesin its over- tion in labormarketoperations, trainingand certifi- lency systemsand bilateral, submigrantlaborremainhighlyaverseto bi- all educational, equiva- regionalor regional arrangements lateralagreements forfearofbeingdragged cationsystems.Establishing into a collectivepressure oversovereign lency systemsin practicallyall types would suffice to moderatethe tide laborissues. Whereit works,bilateral1a- andlevelsof technicalwork and profes- of $obaiizationto levelsthat can allow adjustments of unprepared economies. in prin (BLAs)taketheformof a sionalpracticeis acceptable bora[reements standards generalcommitmentto universallabor ciple, but the tediousprocesscannot It is importantto guardagainst proceed at higher gear becauseof set forth,atrestrictive levelssincethey principles andprotective clauses. boundto beviolated. Governments often preferlessformal protectionistmotivesfrom antilabor areeventually governance G1oba1 will phasein as bilateralagreements focusedon specific mobiliryforces. Natiohswill increasin$y findtheneed governmentsbecomeready to accept itemsor operations.A mutuallyagreed employmentcontractfor household to undertakeformsof regionalHRDplan- the factthat anyglobaleconomicsetting helpers was,for instance, thesubjectof a ning. Nationalplanswili not onlyhaveto playsupon impersonalmarket forces bilateral arrangement betweenthePhilip containa globalviewbut shouldalsopro- in a societyof men who will neverbe on a reglonal independentfrom the rule of order pinesandSaudifuabiain 1988. Private posejointactionprograms piacement andsocialjustice. I andrecruitment firmshavealso context. The author appreciates discussionswith Ricardo Casco that enriched ideas and insights in this paper. 34

TheAsianManagerI November-December1998

I : i

t A 4

LI N t \ r .

A Publication of the Federationof Asian Instituteof Management Alumni AssociationsI n c .

V o l .V l l l N o . 4 November1998

AIM Club of Thailand GearsUp for 1998-1999 'l'he

AIM Clr-rbof Thailancl (ACT). Standing, fi<xn left to right: IrrancisB. Puno, MUM'91, Prakarn I)herpratuangkul, MBM'91. Chevr' Carnon Mak (husband of P<trntip),S0'ictrai Tr,ur-rtaweetikul, MBM'it1,.fessRallesteros, MtlM'77, Stn:rcle1 [3c>r,c>nasan'ak<xrl, Ml]M' ql, ancl Vito<>nPuripunl,avanicli. MBM'91. Seatecl.fiom left to right: Mrs. Lizzie Ann Ptrmr.Mr-.;..[ulie I )her:rpr:rtuangkul, Sorntlxrng Srisudhivong,I{l )M'90. Porntip Iyimaprrn, MI]A'l'92, Kuk-Kanang Kijsr,nvan.UMP'94. Nc>tshon'n in phot<>is Augie I'alisoc. X,IIIM'UO, the nen estmenrl'rr cf the club rl'4t<r recentll'nxnecl to Thailancltc>join Bcrli.|trcker.

Not even the harcl irnpacl of the Asian economic crisis can stop theAIM Club ofThailzurcl(ACI) thargortogether to chart ils yearlongactir,'ities.Frfteen(15) alr-rmnianencled the meeting on Au14.rst19 at the Imperial QueensPark Hotel leclbyACT Presiclent P()mtiplyimapr-rn(MBM'92). Alter reviewing their past achicvernents,the Clnlr enthusiasticallyplanneclseveialalurnni activitiesfor the conring months, with the end objectives of building a stronger AIM family in Thailand, maximizing ACT's network for the benefit of its members, sharing lifb and lusiness experienc'esamcrngAlM friendsand heightening members' involvement. Among these activitresare:

C.omparry Visit and Family Field Trip to Rayong (October 3G31 as of presstirne). The ovemight trip will allow alumni and their farnilies to visit Banpu's electrical power plant at Rayong. Winchai Tumtaweetikr-rl (MBM'81) frorn Banpu leadsthis project. l

ACT Golf Tournament (J'an.12, 1999). All alurnni golfers (especiallythose who have not showed up f<rrso long) arc encouraged to participate in this cvent which will also serve as a firncl-r;risingactivity for the ch-rb.ACT's tirelessgolf'er,-JessS. Ballesteros (MIIM'77), is the tournamentrsproject leader. Ieatning Enrichment in ACT Bimonthly Meetings. Recentlyadded to the agend:rofACT's reg.rlarbimcnthly clinnermeetingsis a sprcial discnssionon ceftaintopics. An allrmnun,/alurma is clesignatecla preassignedtopic and is expected to leaclthe di.scussionby sharing hisAer bnsiness knowledge and experience. Members are encrruraged to exchange insiglrrs with felkrw alumni, fust like the many casediscussionszrtAIM during their sntdentchys.

What's Inside... ACT Farnily New Year's Party (November 28). Schecluledearlier to acconmrxlate membersr vacation plans in Decembeq the partywill lr held on a leisure boat which will cntise the Chao Phruya River Khun Nong is assignedas project leadcr for this acrtiviry.

30th AnniversaryFund \7SPFSymposium A[unni in Government Partyfor Streetchildren

AIM CEO Clulr CTRPBriefing Alumni Privileges Alumni Profile

CampusNews 30thAnnivetsary Fund C,ampaign

personal computers to the Student Study Center,and Globe Telecom'sdonation of a new PABXsystem. ReutersLimited generously sponsored a scholarship program to the Masterin BusinessManagementprogram.

AIM has recently launched its 30th Anniversary Social Investor Campaign, afive-year project of the Scientific Should you wish to support the Institute through your ResearchFoundation (SRF)that intends to support AIM's participation in the 30th Anniversary SocialInvestor long-term objectiveof enhancingmanagementeducation Campaign, please contact AIM-SRFat telefax number in the region. 632)817 2852. Sincethen, generousbenefactomhave conveyed support to the Institute in its commitment towards "making a difference in sustaining the growth of Asian societiesby developing professional,entrepreneurial,and socially responsibleleadersandmanagers."As of presstime, fourteencompanies,alumni,and two esteemedindividtrals have generously donated to the capital campaignforthe AIM Center for Continuing Executive Education (ACCEED)ConferenceCenter. AIM Co-ChairJoseL. Cuisia,Jr.atteslsto the generosity of the Institr-rte's scrial investorsin spite of the hard times. He said: "In these times of turmoil, when the criteria for action can be ea.silyreducedtoa choice betweenfearand greed, it is inspiring that you have createda third choice, awise choice - the choice to give generously." Thus, their gifu (bear) even more special meaning because it signals to all the world that in times of crisis,there is still room for hope." Associations,companies and individuals that recently donated to ACCEED were Klub AIM Malaysia, InternationalContainerTerminal Services,Inc. (ICTSI), Merrill Lynch & Co. Foundation, Astra Pharmaceuticals (Phils.), Inc., Bechtel Foundation, H&Q Asia Pacific Limited, Solidbank and Scotiabank, Eli Lilly and Company, Edison Mission Energy,Avon Cosmetics,Inc., Compaq-Digital Equipment Filipinas, Inc., Philippine Computer AssociatesIntemational, IBM Philippines,Inc., Globe Telecom, LeverageSystemsTechnologies,Inc., Wilfred Uytengsu, Sr.,and AIM Founding Chairman WashingtonSyCip. Two ResearchChairs,the Fidel V. RamosResearchChair in Poliry Studiesand the Petron Corporation Research Chair in Petroleum Industry, have also been established as part of the campaign. Improvements in the Institute's facilities were made possible through the generous contributions of Mr. SyCip and Yupangco Music Corporation, Equitlble Cardnetwork Inc.'s donation of

International Container Terminal ServicesInc. (ICTSI) Signing Ceremony. Left to right, ICTSI SVPfor Finance Roberto B. Jayme, ICTSI Chairman Enrique K. Razon,Jr., AIM President Felipe B. Alfonso and AIM-SRFExecutive Director Marvee Celi. MBM'95.

Uy'tengsudonates to Executive IT Development Center From left to ripfit: Alaska Milk Corp. Vilfred Steven Ultengsu,Jr., Ala-skaMilk Corp. Chairman and CEO Vilfred Uyengsu, Sr.,AIM CoChairman Jose L. Cuisia,Jr and AIM President Felipe B. Alfonso.

Washington Sycip Policy Forum Symposium on ttre Asian Crisis

panelislsand a packed audience. Left photo shows (left to riglrt) Mr. Aurelio R. Montinola III, Dr. Cielito F. Habito, Mr. Vinay Sympc.rsium K. Bhargava and Proi Chito Salazar,Executive Director of WashingtonSyCip Policy Fomm.

The Washington SyCip Policy Forum conducted a symposium on "The Asian Crisis:The Continuing Saga" on August 1.2atthe AIM campus. The forum invited three renowned speakemwho sharedtheirexprtise and analysison the topic. Mr. Vinay K. Bhargava,Country Director of the World Bank, talked about the regional impact of the crisis, its causes,projection and possible

scenarios. Dr. Cielito F. Habito, former SecretaryGeneral of the Philippine National Economic Development Authority, discussed the Philippine scenario. Mr. Aurelio R. Montinola III. Presidentof tsPl Family Bank reacted to the presentations of the other speakersand shared some insights from the banking sector.

Knowledge Workets inthe Firm Knowledge workers are central to good information system (IS) planning within an orgarizatton as a means of establishingan elaboratecommunication infrastructure linking all stakeholdersacrossthe value chain. Armed with the information technology tools (IT) needed to becomemore prcxfurctive, employeesorworkers cancreate or take advantage of growing opportunities in the globalized economy. But the changing business environment posesa set of ranagement i.ssuesinvolving IS/IT in firrns. Prof. Peter Fernandez elaboratedthese IS/IT manasement challenges in his talk on "The Changing Role of IT in Organizations" before members of the ExecutiveClub Inc. lastJune: - How can we improve the businesspKrcesses in today's competitive wodd - How can we benefit from technicaltrendsand irrnovations? - How can we achieve maximum benefit from information? - How can we extend our human skills and motivate ourpreople? - How can we recognize and rbspond to communication system-relatedrisks? - What are the best business processesfor building and maintaining our systems?

AIMLink ConimurricationsBoard Banglaclestr Hong Kong India Indcnesia Korea Nepal Malaysia Pakisum I'hilippines I'hilippines Singagre Taiwan Thailand U.S,A,

MilonB. Paui Lucius Lai King Pui JuzarKhorakiwala lconardTanubrata Chul-JinLee BimalChapagain Tan Sri Dato'irTalha Haji Mohd. Hashim M, Farooq Raia JoseMaria Femandez Dulce P.Casaclang Gan Cheong Eng Christopher L.F Lin I,orntip Iyimapun RobertV. Chandran

MM'fl8 MBM'80 MBM'75 MBM'77 MM-76 MDM'96 MBM'76 BMP'78 MBM'73 MBM'73 MBM'82 BMP'77 MBM'92 MBM'74

EditoridBoard Editor-in-Chief ManagingEclitor .................... Ofel Odilac.rBisnar FeaturesEditor............... Dandy Claudio AsscriateEditor.......................... MichelleUwanag RoseCastro Copy Editor.... layout Eclitor Amei Ferrer ...... Mark Bagatsing, Contributorc:... Yvette Bautista,Mitch Cabebe,SahleeCariio, Lourdes Co,'W'engCornodaz and Alexandra Eva.

AlumniNews

Construction Corporation for 6years. At one time he was also Presidentof Air Philippines, the third biggest domestic airline in the country. Mon also devoted time MBM'73 FetesNewty-Appointed to teachingfrom7974 to 1980in some of the leading Classmatesin Crovernrnerrt universities and colleges in Metro ManiIa. Of course, A testimonialdinner was hostedby members of MBM'73 Mon is well remembered at AIM for having served as to honor their classmateswho were either promoted or Director of Marketing, Alumni and Placement of the newly-appointed in government. They likewise gave Institute from 1981to 7987. He is also much in demand recognition to the accomplishmentsof another cla-ssnute asspeakerand erncee. His wit and senseof humor, never who has rendered serviceto the govemment and is now fail to entertain and liven anygathering. goingbackto the private sector. Dioscoro "Coroy" Pacis was given an impromptu Jesli'Jing" Lapus is the newly elected congressmanof recognition when the class found out he was newly the 3rd district of Tarlac. After his outstanding appointed SpecialAssistantto the Mayor of Parafraque. performance as Iand Bank President,Jing is taking up Since a good number of the classwere residentsof another challenging job-that of a legislator. It must be Parafraque,he assumedinstant popularity among the remembered ttntJing was at various times also President group. He described the unique position that he has to and CEO of a paint company, Managing Director and the amusement of his classmates.Coroy is a licensed COO of Triumph Intemational Phils.,Vice-Presidentand Chemical Engineer from De La Salle University and Chief Finance Officer of Ramcar, Inc. Group of worked for Chowking Food Corporation as Chief Companies, Undersecretary of the Department of Customer Service Officer and was later promoted to AgrananReform and Consultant, Sycip, Gorres Velayo CorporateRelationsMarager. He was aLsoFood Division & Company. Itis amazing howJing has shifted from Manager at SM Intemation l. He devotes much of his time to socio-civic activities particularly with the Rotary one field to another and excelled in all of them. andJaycees. "Angie" Reyeswas recently promoted to Gen. Angelo "Popoy'' EllaJuico,who hasrrved the govemment three stargeneral. When askedto deliver a short talk, he Philip reminisced about how his training atAIM helped him in in various positions since his graduation from AIM, is the outgoing chairman of the Philippine Sports his job to reach his present position. Commission. His involvement in govefflment service Nelly Favis-Villafuerte-the lady lawyer of the class has started immediately after graduafingfrom AIM when he just asspmedthe position of UndersecretaryforTrade served as consultant to the Depafiment of Agriculture Group, Department of Trade & Industry. Nelly, a and Nanrral Resources.Sincethen, Popoywas engaged consistentvaledictorian since her elementary dayswas a in rural development and agri-businessconsulting. He topnotcher in the 1959bar exalrls. Sheis a tirelqssworker was the youngest Secretary of Agrarian Reform, a and prolific writer. Shewrites regular columns in daily position he attained after serving at various times as newspapers and until recently was the editor of assistantMinister of the Ministry of Agriculn:re and Food, PANORAMA magazine. She is a much sought after Undersecretaryfor planning and foreign-assistedproiects lectureron exports,entrepreneurshipand livelihoocl. For of the Department of Environment and Natural sometime shewas a professorof Intemational Marketing Resources. For having devoted much of his time to ManagementatAIM, Ateneo and De Ia Salle. Shealso serving the government and country, his MBM'73 served as Chairman of the Marketing Departrnent of De classmatesgave him due recognition. Ia SalleGraduate School of Business. In addition to her 'Q.T." Tan was on hand to celebratethe business concerns, Nelly is also very much involved in Prof. Quintin various socio-civicactivitieszuch asthe PrisonFellowship successof his studens. He taught the classProduction Intemational (Phils.) Inc. , NGOs helping children and Management. He was roundly applauded for his "timeless" :r::r;geand they were one in saying "he looks disastervictims during calamities,etc. exactly the same" after 25 years. "Mon" Abad is the newly appointed Chairman Ramon of the Development Bank of the Philippines (DBP). He This significant eventto celebratethe successof I\/BM'73 was Presidentand Director of the Philippine National classmemberswas hostedby Bobby Garcia,Ely Barretto,

[

, Chris Goangco and Boy Diego at the Metro Pacificroom of theAIM-ACCEED Building. The classtakes pride in having donated to the naming grantsof severalroorns at the ACCEEDBuilding andAIM.

Newly elected Congressman of the 3rd District of Tarlac RepresentativeJesli A. I^apus,one of the honorees of the MBM'73 classgives a short speech acknowledging the compliments of his clmsmates.

Realtors' Night and Marry More In spite of theirhectic schedule,members of the CEOs Club found time to attend the ',RealtorsNight,' held on March 18 at the AIM-ACCEED Building. Mr. Sid Consunji, President and CEO of DMCI Holdings and former Prof. Prim de Guzman, presently a realestate broker, kept the participants abreastwith the latest developments in the real estateindustry. It proved to be an interesting topic that engaged the participants in a lively discussionwith eachone imparting their own views andexperiences. In this regmd,the club will continue organizing informal gatheringsamong its member:sto provide them a breather, so to speak, taking them away from the tension of their officeseven jr-stfor an evening. Suggestiorswill be aken from the samegroup regardingthe topic that is of interest to them and resource person to be invited.

CEO Club PresidentEdmundo Casarleda(l4BM'7) and Executive Director Alexandra Eva have been meeting AAAIM Holds Partvfor Sfteetchildrcn with the AIM Alumni Association Board members and the other alumni clubs of AIM. Thesemonthly meetings In honor of the late AIM no.rrraing Father, f r. James are gearedtowards the goal of uniting all these groups, Donelan, SJ.,AAAIM organizedap rty on May 27 for repoting their own activitiesand vowing to give a helping the streetchildren of the Laura Vicuia Foundation, Fr. hand in every endgavorundertakenby eachof them. For Jim's favorite charitable organizationof which he was instance, each and everyone of these clubs will have a one of the directors. AIM alumni and the companies hand in this October's Oathtaking of AAAIM Board of they represented donated cash, food, entertainment, Directorrs celebration. Also on October, the AIM school supplies,etc. Somealumni have even committed Information Technology Group will introduce AIM to help the streetchildren on a continuous basis Online servicesto the different alumni through their throughout the year. The childrenrsresponseto the onalumni clubs. The participants will then see the thq-spot drawing contest'stheme "My Heart's'Wish'r, advantagesthatAIM Online can give to the alumni and conducted by Petron Foundation,was very touching and their respectivecompanies.The CEOsClub haveI'kewise heartwarming. PeffonFoundation ChairmanMonico have worked to lend ahandto the AIM Information Jacob, himself graced the occasion and ensured the Technology Group on this occasion. project'ssuccess. To those who might not yet know, the club Secretariatis now housed, together with the AIM Alumni Association Office, atAIM-ACCEED with telephone number 7517153. The Club welcomesalumni who arenow presently the CEO of their company ro join. It provides an infomal forumforthe membersto be reunitedwith otheralumni in activitiesof common interestto them.

Formoreupdateson clmpusnews,browsethrough thefollowing: Willy Parayno, formerAAAIM Chairman, delivers an inspirational talk to the streetchildren during the party held in their honor at the AIM Sunken garden. He encouraged them to study hard and do their best in order to be successful.

AIM Homepage bttp//uutw,abnedu"plt E-mail alamni@ aim edu"p lt

Alumni Profile: Christopher Lin Jih-Fung, BMP|77 Vice-Chairman. Federation of AIM Alumni Associations Inc. (FAIM Chairman, Taiwan Alumni Chapter Cuiosiry about the Philippines causedhis visit to an unc/eand cousinin the coantryin | 977, thel earChistE herI)n J ih-F ung "I was acceptedat AIM. felt (that) AIM and its facul4t were worth.lof m1 respertand deuotion to learn and interacl witb," sals the FAIM aice chairman and Taiwan alanni chapter head. His BasicManagementProgram (BMP) stadies haae, in Chis' "serued asthekry fto the)doorof knoiledgeof unknited ownwords, cpociA @bout)dffirent countiesand indu$ies in (theAsian) region."He ispruently tbePruident of Enlighnn Commanication. While spending the first ten years of my career climbing the corporate ladder, I obtained a master's degree in accountancy from Taiwan National Cheng Chi Unir.'ersity and taught accounting on part-time basis. I started as a cost accountant and rose the ranks until I became senior vice ptesident of a chemical manufacturer, now a listed company in Taiwan. That was fuom 1974 to 1983.

the Chinese edition of Forbu Magaqine,which won the first national outstanding award for business magazines in 1,991,. We at Forbes also hosted many imPortant seminars, including one with Premier Hau Pei-Tsun for 200 business leaders. I also ran four other successful magazines (Exce//enceMagaqine,Aao antingfu searcbMoilh !, Golf DrgestCtrtnese edition and Finanrial ConsaltantMontbfr) and a securities company to meet the increasing demand of investors. After winning the Triple A (AIM Alumni Achievement Award) in L992,I was honored and gratefirl since AIM treats its members as a fantlly of equals and is responsive to modern society and community needs. But no matter how good things can go for you, there is always a pitfall or tr^p for your weak points. Unfortunately and inevitabl,v,in 1995, I had to swallow the bitter consequencesof overexpansion, ovet-leverage, overconfidence and over-trust. These cost me more than I could afford. Hence, I learned to face the downfall of a oflce powerful mechanism I built day and night with my colleagrresfrom 1983. I was forced to learn how to deal with new difficulties, face new challenges and cope with the siruation of transferring the operations to others. In other words, I had to put aside my achievements of the past thirteen yeats and start all over again. During these times, I truly rcahzed that family support is vital. My wife Vickie's support made it much easier for me to overcome the difficulues.

Three years has passed since then. I now have a new "virtual patterns" of consulting company dealing in Then I took a year and a half leave for the United States, businesi practices for various proiects, including land where,I got my CPA license and studied fot an MBA. development, crisis management,emotional managemeng My study experience coupled with the knowledge I E-Commerce, TV programming, and venture capital. I acquired there about capital markets benefited me as a am now in the process of integrating the resources to young advisor of Taiwan's Securities and Exchange launch a new business media that will have regional Commission. I made suggestions to the government coverage of the post-Asian financial crisis situation and about strengtherung the Taiwanese capital market system heip businessmen move their enterprises into the 21st in the atea of operational practices. Later I traveled to Japan, the Philippines and South I{orea to gather facts for a report to the Minister of Finance. During the prbcess, Mr. Washington SvCip and the SGV Group Passion fot cateer development is helped tremendously. Then entrepreneurship beckoned. To me, this concept describes a process of rising, falling and coming back. Eady successin my career and accessibility to contacts in government opened up more opporrurunes than I ever dreamed of. I founded Excalibur (in partnership with PA, the biggest European consulting company) which had GM, Philips, Flonda, Dupont, Taiwan Power, DHL and Tuntex among its clients. Moreover, I co-published

one thing. But the zncf- for sociel contribution is at least es imPortant Since 19S2, I have denoted myself to different social responsibilities, of the period even during I nelver ganâ&#x201A;Ź up any difficulties: oPPortunity to servie.

Why have, all of a sudden, values of Asians been set back so much, arrd the worth of the AsiaR business community been appeafing to be vulnetable? Finding the solution is the task of our generation. century. I am also helping the business community through virtual networking in areas like smart cards, security printing, biotech products, creative land development, financial packages, training and media management. In the coming digtal age - to borrow the tide of Andrew Grove's book - only the paranoid survive. However, my limited knowledge tells me that innovative ideas can also save your career and make you an optimal winner. Entrepreneurship needs passion, professionalism and practice. Passion for career development is one thing. But the zeal fot social contribution is at least as important. Since 1982, I have devoted myself to different social responsibilities, even during the period of difficulties. I never gave up any opportunity to serve. Currendy I am honorable chairman of the E-Commerce Association and the Chung Hsing University Accountancy department, advisor of K.T. Li Scientific Development Foundation, secretary general of the Supporting Committee of Art Appreciation Llb:z:y, and director of the Chinese Maqagement Association, Financial Executive Institute, China Productivity Center, and the AIM Scientific Research Foundation. Sometimes when I look back, I feel that time flies so fast. In this fast-changingwodd, Asian managers should equip themselves with more information and better concepts about the new economy. Nflhy have, aJl.of a sudden, values of Asians been set back so much, and the worth of the Asian business community been appearing to be vulnerable? Finding the solution is tlle task of our generation. AIM faculty and alumni should face the challenge of showing the wodd that their wisdom and courage can help Asians overcome their weaknessesand utilize the capabilities God gives them to build a better wodd each day. I still believe that the coming century will be a time for ordinary peoplb to perform extraordinary work. AIM is a wonderful training gtound for Asian managefs that can make a difference.

Alumnus Assumes Directorship for AIM India Rep Office Vivek Jaiswal, MBM'92, has taken over the post of Director for the AIM Rep Office in India effective on May 7. Vivek has planned out programs and activities aimed to boost AIM that will also benefit the Alumni Association in India. His operations plan is focused on three broad aspects: a\ilarenessand publicity for AIM and its alumni in India, revenue-generating, and coorganization of alumni-telated activities in India. To increase public awareness of AIM in India, Vivek will either hire a public relations company or cultivate good relationships with media people. Stories of successfirl AIM alumni will be featured in media to boost their image and careerfbusinesses. Contacts with companies for possible placement will be established starting with companies of alumni. Vivek will support the initiative of the AIM Alumni Association of India to drum up scholarship funds. A conference in India will be planned for next year.

Briefing on'the Comprehensive Tax Reform Program The tax filing rush did not deter alumni from attending the "Comprehensive Tax Reform Program" briefing on April 4 at the ACCEED Conference Center. Coorgarized by AIM Alumni Relations, Public Affairs and the Scientific Research Foundation in cooperation with the Rotary Club of Makati-Dasmarifras, the discussion is part of a series of continuing education activities for hlumni. Former Bureau of Internal Revenue CommissionerJose U. Ong presented the salient and significant features and amendments of Republic Act 8424, the third and last component of the CTRP covering individual and corporate taxation and tax administration that took effect on January 1 this year, with the end goal of improving tax revenue collection for the Philippine government. The full passage of the CTRP into law was that only requirement for the Philippines to exit from International Monetary Fund (IMF) supervision. Atty. Tirso Tejada, director of Tax Counseling, Inc. joined Atty. Ong in answering questions from the floor, while Prof. Marte Dizon served as moderator.

Do you know your alumni privileges? Your presentation of the alumni pov/er card entitles You to the following privileges: 1. Access to AIM's Library Facilities. 2. Access to AIM's IT Facilities. Free use of computer facilities at the Computer Room for resume writing and AIM course requirements. A mrnimal fee will be charged for other purposes, including surfing the internet. 3. Discount on AIM Conference Center in Baguio City. 50n/o- 60%odiscount for alumni are valid during low periods (when occupancy is below 50%). The discount is not transferrable therefore alumni must accompany family members. (AIM Center for 4. Discount on ACCEED Continuing Executive Education) Conference Center, Makati City (within AIM Campus). - Executive Rooms 55o/ooff published rates - Function Rooms 25oh off published rates (For # 3 & 4, contactACCEED at tel. no. 750-1010 loc. 2036 and 2007.) 5. Placement Services. Alumni interested in iob piacement may submit his/her resume for inclusion in the current talent bank. On the other hand, alumni looking for prospective employeesmay avail of the various PlacementC)ffice'sjob recruitment services. 6. The Asian Manager. The official publ,ication of the institute. Free 1 vear subscription for Executive Education graduates and 5 years subscription for degree program graduares. The official newsletter of the Federation 7. AIMLink. of Asian Institute of Management Alumni Associations Inc. f-A.II$. Free subscription to all alumni. 8. Class Directory. Free alumni class directory. 50o/o discount on current maiiing list for direct mailing campaigrr for commercial purposes. Special discount (and 9. Continuing Education. sometimes ftee) on certain AIM sponsored conferences. (Philippine based alumni only) 10. AIM-Visa-Card. Membership and annual fees are waived for the first year. All applications are subiect to the approval of Equitable Card Network Inc. Contact AIM-SRF at tel. no. 8924011,local 275. 11.Mini-Class Reunions. AIM Alumni Relations Office hosts cocktails for iubilarian classes(5, 10, 15, etc. years anniversary celebration). 12. AIM Faculty Books. 5-10% discount. 13. Discounts on Some Establishments. The list of establishments depend on each country. Should you want to extend speciai discounts/privileges of your respective establishments to your fellow alumni, pleasecontact your local chapter representative.

Alumni Trivia AIM DistinctionGraduates By Mark BapatsinR,MBM'96 First Distinction Graduates Philippines MBM70 L. Conrado Cuesta Philippines MBM70 JesusB. Galang Philippines MBM70 Alan V. Jazmines ,Alex Lim Kim Ian Malaysiax MM75 Philippines* MDM90 CelesteV. Mendoza *MM and MDM programs started in 1974 and 1989 respective\,.

First DistinctionGraduatesfrom other Countries RameshGelli JamesPaul Neelankavil Liaw Ah Boo Ahmad SaeedSiddiqui CharlesChun Ho Knut A. Benckendorff William Bradberry Lin Ying Hang Ian David Williarns Tran Quang Hung

India India Malaysia Pakistan Taiwan MBM74 Singapore MM76 USA l.i4}dJ{{'77 MBM'8I Hong Kong MDM96 New Zealand Vietnam MM97

MBM72 MBM72 MBM'72 MBM72

High Distinction Graduates ' Philippines MBM72 Eduardo A. Morato Philippines MBM76 Benjamin Palma-Gil Singapore MBM'81 Yeo Ah Kiang Philippines MBM92 JohnsonL. Sia Philippines MBM94 Carlos M. Borromeo Distinction Graduates with a D+ grade for their MRR None Distinction Graduates with a D for their MRR MBM78 David Ding Wew Miu MBM78 Mario I. Alba Herminio B. Coloma, Jr. l@M78 MBM78 Danila ReginaI. Fojas EdmundA. Go MBM78 MBM78 JesusR. Montemayor MBM79 Myra B. Chan MBM80 Leow Kee Peng MBM82 RaymundoL. Roberto MBM83 RamonG. Opulencia MBM84 Austin FrancisGomes

grade SingaPore PhilipPines Philippines Philippines Philippines Philippines PhiliPPines PhiliPPines Philippines Philippines Philippines

* Passor Fail grading systemwas implemented.from 1973 to 1975.

Trsian tour 'f' heEURO With the monetary union, Europe will become not onty the world's biggest economy but also the worldb biggest tourist destination

n January1, 1999,the singlecur- working cuffency.The monetaryunion tourismsector:itsadvantages, itsprospects rencyin the European Union,or entailsreplacing bankingsystems in Eu- andchallenges for the industryaswell as in elevenEU membercountries ropeandwidelyknownin the world. It itsAsiancounterparts. Therearealsogenwill be introducedin what could wouldincludechanging practices eralimpiications business of theEMUon European verywellbethemostambitious monetary across the regionandsoappingsomeal- economies, secondby examining the ad reformof the modernage.Althoughac- readyverystablenationalcurfencies, some vantages anddisadvantages of theEuroon tualEuronotesandcoinswill onlvbein- of which arewidelyaccepted in interna- theEuropean tourismindustry;andfinally troduced in threeto foury.urr,,h. pun tional transactions suchas the deutsch by comparingthe Europeantourism ticipatingEU countrlesnamely,Austria, mark.Thelaunching of the eurohasalso industry'ssituationto its AsiancounterBelgium,Finland,France,Germany, Ire- beenassociated with somanycontrover- parts. land,Italy,Luxembourg, theNetherlands, sialissues suchasthelossof thestatesovPortugalandSpaincanalreadystartuti ereigntyoverits monetarypoliclesto an Implication on Tourism Iizing the singlecurrencyin January institutionthat hasneverbeentestedin Firstof all, to determinethe effectsof throughthe noncashpaymentinstru- the pastor ls doomedto fail. Eurosup- theeuroon European particubusinesses, ments.But what is the purposeof the portels,on the otherhand,believethat larly the toufismindustryit is necessary European MonetaryUnion?Isit necessary the monetaryunion will createa single andhelptulto lookintothegeneral implifor the EU? currencystrongenoughto competewith cationsof the EMU on European econoProponents of the eurowould argue theUSdollmandtheJapanese yen.More- mies. that monetaryunionis necessary to end over,someinternational economistbeThe EuropeanUnion represents the barriersto intra-European Uniontradeand lieve that EMU could bring the curtain world'slargestmarket,evenlargerthan thuscompietethe Sln$eEuropean Mar- down on the dollarasthe world'sdomi thatof theUnitedStates, with morethan ket.It is envisioned to makeEuropemore nant ciirrency.But how far canthe euro 370millionpotential consumers. TheEucompetitivein the world. But will the goandwhat sort of impactwill it haveon ropeanUnion has a combinedGDP of EMU benefitthe economiesof the the European economies? US$8.5trillion while the EurozoneacEurozone, in fact,will it improvebusiness Because the EMUis a verybroadsub- countfor 19.4percentof theworldtotal. conditions within the EU? notonlyEuropean economies The EU as a whole alsohasthe largest iectaffecting Introducing theeurowill notbeaneasy butEuropean businesses andtheEuropean shareof international tradein whichtwo task.It is morethanjustthephysical con- way of life, the singlecurrencywill im- thirds of the economicactivityoccur versionof I 1nationalcurrencies to asinsle pacton eurobusiness particularly on the within the Unionor areintra-EuloDean. November-December1998 | TheAs[anManaper

supporters say iffiEuro the common currency

ffi

will spur regionwide through t# currency transaotion savings. Skeptics say :3i: the euro will result in loss of flexibility and ,$ri control over national ;$1 fiscal policies

ili$ &* growth

;ffi

ffi f

How will the EMU impacton the EuProponents of the ropeaneconomies? the introduction of the EMU believethat greatly EU will benefit singlecurrency increasing Europe's competiby economies the UnitedStates, tivenessvis-a-vis Japan TheUnionis also andtheAsianeconomic. to fostereconomicgrowthin the expected and in the regionas a whole economies throughthe benefitsit will gainfrom the resources thatwill be increase in available madeavailableto them asa resultof the thatwill beincurredfromthemini savings mizationof transactioncostsacrossthe Suchsavings will alloweconoEurozone. for more miesto useavailableresources productiveusesor inveslments suchasinwhich will in turn directly frastructures, benefittoulism. Aithoughit is true that manybelieve that the EMU will bring largeefficiency gainsand variousadvantages to the EU, Euroskepticsbelievethat EMUwill bring both short-termand long-termrisks.Acthegreatest short-term cordingto skeptics, risksunderthe EMUwouldbethelackof flexibility or lack of control of national governments in their fiscalpoliciesunder the systemdue to the uniformmonetary policythat will be imposedby the EuropeanCentralBank.This conditionwill makeit difficult for the Eurozonecounshockthatcould triesto reactto economic everpothenleadto extremeeconomic, litical,tensionsduringtimesof crisis.-On the other hand,a long-termrisk forseen underEMUby euroskepticsis the uncertaintyof the EMU'sfutureasa whole. andwill it Will the eurobe successful last?Thereis no doubtthat the EMU beundertheEuingtotallynewanduntested ropeanconditionsis a very ambitiousen44

still beingplannedor arecunentlyin process,we can only makelimited conclusionsbasedon the opinionsof expertsin consequences theindustryon thepossible of the euroin the tourismindustry: The Convenienceof a Single Cun rency. Many tour operatorsbelievethat of travelingwithin the the convenience TourismIndustryin Eurozone (which Eurozone will be broughtabout The Europeantourismindustryis one "switch" to a singie by the infioductionof a sin$e currency) sectorin which the the influx of touristsnot currencyby manycountriesof the Euro- will encourage positive buttourpeanUnionis expectedto havea onlywithintheregion'scountries wel1. The impact,at leastaccordingto Francesco istsfrom ail overthe world as European Frangialli, Secretary Generalof the World increasein the mobilityof the Franguialli saidthe citizenswithin the EU plusthe expected TourismOrganization. Euroactuallylepresentsa plusfor Euro- influx of touristsfrom outsidethe Europeantourism,but reallya revolution.Up peancontinentstandto benefittheindusto this date,no extensivestudyhasbeen try by the expectedincreasein the total to moreplaces madeabouttheimpactof the Euroon the volumeofincomingvisitors EuropeanTourismindustry. In-fact the within lhe Eurozone.This would mean airlines, for tour operators, inquirymadeon this morebusiriess only European-wide organized carrentals,hotelsandotherrelatedtoursubtectmatterwasa conference Thereishoweveronesecin May ismbusinesses. bytheWorldTouiismOrganization tackledthe ef- tor in theindustrywhichis boundto loose in Greece.Theconference fectof theeuroon European tourism.The fromtheeliminationof foreigrcurrencies. especiallysmallonesas reporton thisconference will beavailable Moneychangers businesses well aslargeforeignexchange by mid-August. to theeuro.And Freshdataon the Eurozonefrom the wiii losetheirbusinesses World TourismOrganizationrevealthat becauseforeign exchangehas a dimension,the removalof the Eurozonerepresents the mostattrac- transnational will within theEurozone in theworld.In 1996,for forelgnexchange tivedestination basedin example,the tourismreceiptsfrom the not only affectmoneychangers Eurozone amounted to a staggering US$72 the Eurozone,but alsoforeigr exchange that have outsidetheEurozone billion,or 72 percentof theworld totaias businesses with countriesin the comparedto that of the UnitedStates, largetransactions Eurozoneor arelinkedto and,/ordepenwhich hadtourismreceiptsof US$64bif market.(Thiscould iion, or only 16 percentof the world to- denton theEurozone tal. In the sameyear,tourist arrival in mean foreigrrexchangeand remittance within the Eurozoneor even Eurozone counttieswas 84 million,which businesses was 14percentof theworld totalascom- from otherpartsof the world will be di paredto that of the UnitedStateswhich rectlyaffectedby the EMU.) One very goodexampleis the United was46 million,or only 7.7 percentof the ThomasCook,whichcunently world total.Othertourismactivitiessuch Kingdom's coun- holds20 percentof the BritishtravelforasoutboundtxipsfromtheEurozone marketandacknowledges trieswas72 mllhon,while it wasonly 66 eignexchange that the EMU will havea significantimmillionfor the UnitedStates. pack UKisthelargest The big questionat this point is how pacton itsbusiness. muchwill the euroimpacton this trend? ageholidaymarketin all of Europeandit European tourismseemsto be doingvery is boundio losea largeportionof its busialone.With the well sowhy risk the statusquo?Will the nessin foreignexchange introductionof the euroenhanceor cur- adventof theeuro,it will alsohaveto deal tail the presentconditionof the industry? with costsof adjustingto the new busi How shouldtheindustryreactto the out- nesssystemsand practices,such as in computersystemor pricingto changes comeof the EMU? be able to compete.Smallforeignexin the Eurozonecounchangebusinesses Anticipated Impacts Sincestudiesandinquirieson the sub- tries are alsoboundto losemore, espejectmatterareeilherveryminimalor are ciallyif their businesses areconcentrated deavorAlthoughmanycompare theEMU union, to theUnitedStates' euly monetary manyarguethat,unliketheUnitedStates, thereis thelackof theelementof political unionin thecaseof Europe.As such,successcannotreallybe guaranteed.

TheAsianManaperI NovembenDecember1998

The Elimination of ExchangeRate ting togethertouristpackages 0n Iorelgnexcnange. wherethe of the elimination tour operator Greater Competition. The creation Risks. Theadvantage /travel agentscanfor lower rateriskscanbeseenin dally pricedproducts of greatercompelitionbroughtaboutby of exchange andservices to includein of tour operators. the eurohasa positiveandnegativeside. transactions For ex- the tour packages they sell. Of course, raterisks,tour- theultimateeffectof pricetransparency First,theincrease in competition expected ample,wlthoutexchange is businesses like, say,travel inoeasein competition fiom the influx of morevlsitorscanlead ism-related and loweringof wouldhavethe pricesacross to a declinein pricesin holidayproducts agentsandtouroperators, the Eurozone. andusinga single andservices. In thisscenario, the tourist securityof determining Changesin the Conduct of Busigainsfromcheaper goodsandservices. rate acrossthe Eurozoneln ness. Thewholesystemandconductof On conversion theotherhand,theindustrylosesbecause quotingpricesof travelproductsandser- business isexpected to havemajorchanges although businesses wouldgainln volume, vices.It will alsoallowthemto closetrans- with the removalof 11 differentcurrentheywouldonlybeableto accommodate actionsaheadof timewithoutthe riskof ciesandthe inffoduction of a sin$eone. due to fluctuatingcurren- Theforseenadvantage somuchdemandunlesstheyexpandtheir pricechanges of the euroin the businesses, whichwouldbetoocostlyfor cies.The fact is that largeamountsof dailyconductof business will be evident smalltourismbusinesses like small-scale moneyareat riskeverytime that conver- in the minimization of banktransactions or family-owned travelagencies, will haveto make.Thiswould tour op- sionfiom onecurrencyto anotherhasto companies ln exchange meanloweringof transaction erators, hotels,lnns.Expansion isriskybe- be made. Suddenchanges cost and causethetourismindustry,aswe a1lknow, ratesmayeithergiveinstantprofitor make greatersavingsfor companies in this asfor businesses is seasonal. whichrequire pect.Moreover, Sothe only optionfor the in- instantiosses a consolidation of bankcurrencies. Theinstitutionof ingrelationships dustryis to takeadvantage of volumedur- converting will enablecompanies to ing peakseason but with low prices,in the eurowill removethis risk in the in- placefundsmoreefficiently on a Europewhichcasetheindustrycaniose.Themain dustry.) widebasissoasto secure thebestreturns. Price Transparency.With the EMU reasongivenfor this is that the tour opAs mentioned above,thedisadvantage eratorsand relatedbusinesses of onlyoneprice will be the lossof one business (foreign would be in placeandtheexistence peoplewill be exchange) for consumers, unableto competewith verylow prices reference which in the iong-termmay because of the alreadyexistinglow profit betterableto comparepricesand make leadto lay offsor evenclosure. marginsin the industry.In this way,the moreinformedchoices.Althoughthiscan The ChangeoverProcedure. An intourismindustrywill loseout on custom- be seenonlyasa benefitfor the consum- terestingitemwith the Eurois theroadto will gainfrom this factor, the singlecurrency.Preparations ersdueto greatercompetition in prices. ers,buslnesses for the too,especially if the business entailsput- , EMUhaveinvolveda complexprocedure for countriesand is alsoexpectedto involvesubstantial changes in accountancy andfinancialandcomputersystems for the tourismindustry.With the euro,tourism businesses would haveadaptto new airfare, tariff, taxesratesand computation andcomputerresewation systems. Forexample,theairline,/reservation systemused in Europe istheAMADEUS. Majoradjustmentsmighthaveto be madein thissystem to adaptto the euro. Travelagents haveto beretainedto learnnewcomputer systemsand this could be costlyfor the industry especially for smailtour operatorsandtravelagencies. For the tourismindustry changeover costis estimated to be between1.8 per centand 3 percentof a company's turnover.Thisrepresents a significantcostfor the low-marginindustry,which makes grossprofttmargins of 10percentin a good year.Similarly,the World TourismOrga nizationreportsthat transitioncostswill be of greatsignificance for small-andmedium businesses becauseof their frequentlyminimalmargins.The smalland Eurotourism ponders changeover costs: 1.8per cent to 3 per cent of company turnover medium-slzed hotel and tourismbusi-

November-Eecemberl99E I TheAsianManaper

Savingsfrom lower overseastransactions and remittance costs will motivate Asian tour operators to promote and sell Europe as a destination

margins,which are benesses-average tween0.5 and 1 percentfor smalltravel agencies and0.9 percentfor hotels,must be takeninto account.This will make themtemporarily cancelbenefitsresulting from the euro'sintroduction. The low grossprofit marginof the industryis a main reasonwhy sometourism expertsbelievethat EMU will not lower packageholidaypricesdespite greatercompetition. Expanded Market. Tour operators, travelagents,hotel chains,car rentals, businesses are and other tourism-reiated generailyexpectedto benefitfrom a broadermarket.Butnot all eurocounffies will benefitfiom the euro. Althoughit may be true that the Euro 11 countries togetherwill constitutethenumberof one of what destinationin the world because it can offer as a singleentity,individual countrieswithin the Eurozonemight actuallylosein the set-up.This may be explainedby the fact that someEuro countriesthat previouslyhad weak mayfind themselves at a price currencies disadvantagecompared to nonEurozonecountriessuch as Turkeyor Greece. Internally,becausethe Euro countries belongto a sin$ecunencyzone, they"will be ableto competeby price within thezone.Thustheyhaveno choice but to restrate$zeby heighteningtheir quality,by improvingtheir standards, and by innovatingon their products to combat the intense internal competition. Growth. Thelow levelof interestrates expectedas a resultof the monetary in the union will increaseinvestments Eurozone.This will, in turn, generate tourism infrastructureand improvethe internationalcompetitivityand thus 46

underpineconomicgrowth. Tourism Labor Market. The transfer to the ECB of nalionalcontroi over monetarypolicywill havesignificantimplications onthewagespoliciesof theEuro countries.For example,someeconomic mayno shockssuchasoil priceincrease longerbe absorbed by a shiftin exchange rate of a country and may thus lead to unemployment.This will raisemany problemsin thetourismindustryin which servicesare personalized and quantitativelyof low productivity.

tries,Francefor example.No doubt the EMUwill affectthis sectorin oneway or the other. Positiveandnegativeeffectsof the euro are expectedto impacton the industryin both the shorttermand the longterm. The biggestadvantagethat the EMU will bringto theindustryis thecrealionof a singlecurrencytourismareain a scale so giganlicthat an estimated40 percent of cross-frontier or internationaltourism Europeas is expected.Thiswili reinforce the touristdestinationin the world, this Impacton AsianCounterparts time on anevergranderscale.Generally, Because the tourismindustryis an in- an expandedmarketmeansgreatercomternationalized sector,theeurowill decid- petition,and greatercompeiltionmeans but for edlyhaveanimpactonAsiantourism.The lowerpricesnot oniyfor European aswell. Forthe suppliers EMU/Eurowiil definitelyencourage Asian non-Europeans geatercompetition to mar- andserviceproviders, tour operators andtravelagencies ket Europeantour packages. First,iike meansnot only loweringtheir pricesbut raisingtheir productexEurobusiness Asiantour- most especially establishments, of price cellenceand givingqualityserviceto ciiism will havethe convenience packaging computation, ffansaclions, and ents. In the long run this will heighten marketingEuropean tourismproductsand the tourismindustry'soverallstandards. services.Simiiarly,the increasein profit Winners,Losers As in any other gamble,thereare gotheywill earnfrom lower overseas transaclion or remittancecost will motivate ing to be winnersand therearegoingto themto promoteandsellEuropeasa des- be losersin the industry.That is to say, tination. On the otherside,moreand someplayerswill losein their business; moreAsianswould be ableto affordEu- qomewill losein the shorttermthrough andsomewill ropeasa hoiidaydestination shouldgreater the processof adjustment, Thisall depends competition causethepricesof European losetheirentirebusiness. goodsandservices on the scaleand natureof the tourism to deciine. how- business oneownsor runs. LiketheirEuropean counterparts, (linkedto Europe) Asianbusinesscounterpartsare exever,theAsianoperators especially shouldexpectlossesin foreignexchange pectedto sharethatexpedence, rely heavilyon Euroand remittancebusinesses. They should if their businesses alsoexpectlossesin the coststhey have peantourismproductsandservices.They to shoulderto adaptto the euro system will haveto adiustto the Europeansysespecially if Europemakesmajorchanges tem if they want to keepthis portionof intact. Certainlytherewill farecompu- theirbusiness in their reservation systems, set-ups. bb costsfor the Asiantour operatorsand tationratesanddailytransaction directlyinvolvedwith Euwill travelagencies Shouldthis happen,companies shouldercostssendingpersonnel to train- rope,but this is not expectedto be as ing in the new systemoccasioned by heavy as those of their European counterparts. the euro. The eurocurrencywill not be an easy Theimplications of themonetaryunion muchless economies, on Europeaneconomiessuggestthat al- taskfor European but Euroseemspromising, thoughthereis a certaindegeeof lossof to indusuies. andcomprotherateof employment in realitymanyadjustments sovereigntywhere mightbeatrisk.Somepositiveeffectssuch miseshave'tobemadeby Eurocountries, growthandstabilityareex- by the economies, by the governments, asregion-wide by the pectedwith thesuccessful by thebusinesses, implementation bytheindustrles, most especially, by Union and, European of the monetaryunion. it will sucpresent, to ensure that inthe Europeans At the Europeantourism will sec- ceed.Whetherthe euro advantages dustryis a big and highlysuccesstul plays remains to be its disadvantages in econooutweigh tor.It a significant role the I counseen. miesof a largenumberof European

TheAsianManagerI NovernberDecember1998

WHEN FOR

BUSINESS GIGOALAMPAY ne officein the PhilippineSenateis computerthroughtheInternetandputici currently at war with Japan's pantsreceiveinformationby downloading Minisuy of Trade and Industry reportsandjournalsfrom the IB SIM web (MITI).Caughtinthecrossflre are12 site <www.ibsim.com>,participationin corporations operating in threecountries, and the simulationalsoprovidesmanagers the theyshouldall be so lucky. In the wonderopportunityto useinformationtechnology. ful woridof theInternet,14teamscomposed For the peopleof the officeof Philipof governmentandcorporateexecutives from pine SenatorJuan M. Flavier,IB SIM theUnitedStates, JapanandthePhilippines, representsa unique opportunity. Atfy. includingteamsfrom the Masterin DevelRudyOuimbo,the Senator's chiefof staff, "We are opmentManagement Programof the Asian admitsto somenervousness. Inslituteof Management (AIM),Federation very excitedwith this chanceto inof AIM Alumni Associations, Itochu'sMateractnot onlywith corporateexecutives, chineryDivision,a groupof consultants spebut more so to competewith and learn cializingin EnterpriseResource Planning fromthepeopleatMITI who areour com(ERP), and the Executive Education Program of petitorsin the game,"he says."We are leuning a greatdeal Universityof Californiaat LosAngeles(UCLA)'sSchoolof Man- aboutsomecriticalaspects of govemance andbusiness, including agement,arecompetingin a high-techeducationprogramthat fiscal,monetary,industrial,and evenenvironmental policy.By promises hands-on management ftainingfortheparticipants, and enhancing 0ur underpriceless braggingrightsto the eventualwinners. standingof business,theselessonsshouldserveus well Themanagementprogram,lntemationalBusinessSimulations in our work at the Senate.I only hope we can learn fast (lB SIM),combinesthe latestcomputertechnology with the enoughto acquit ourselves,and our country well in this latestbusinessconcepts,and takesadvantageof the Internet friendlywar." to allow'teamsfrom aroundthe world to collaborate and comHostilitiesbeganon October15, 1998,andwill end on Nopetewith oneanotherfor an eight-weekperiod.Aroundan ad- vember23, 1998.Fortunately, lastingpeaceis unlikely.IB SIM vancedcomputersimulationof a multinationaleconomy, IB SIM sources revealedthatanother"war" will breakoutinJanuary 1999. allowsparticipatingteamsof five to eightexecutivesto create BesidesItochu,otherparticipatingcorporations includeSan andimplementanarrayof management strategies at thehelmof DiegoGasandElectronicCo.,andAT&T.IB SIM hasbeenused governments andmultinational corporalions. Thesimulationcan 6y UCLAs AndersonGraduateSchoolof Management,the accommodate up to 12 corporate teamsand two government Harvard BusinessSchool, the Harvard KennedySchool teamsduringeachrun. In this "learningby doing"environment of Government,and the Universityof California'sGraduate therearefew limitationson the activitiesof participating teams, Schoolof InternationalRelationsand PacificStudies.It has anditistheinteractionamongparticipantsthatultimatelydrives alsobeenseiected for useby the USAID,which introducedit the directionof the simulation. in Peruthisfall. KazuhitoEndo,generalmanagerof the human resources Formoreinformation,visitits website<www.ibsim.com> or developmentand marketingdivisionof Itochu Academy,says contactthefollowing:UnitedStates: International Business Simuthat "casestudiesare a greatway to learnaboutbusiness lations,14850 FisherCove,Del Mar, CA 92014.E-mail management, but theyrequiremanyhoursin the classroom. IB <info@ibsim.com> Techretary Co. Japan:ElizabethShoemaker, SIM, on the otherhand,offersflexible,hands-ontrainingin Ltd.KotobukiBldg.8/F 1-3-5KandaJinbocho, Chiyoda-ku, Toareassuchasfinance,technology, assetmanagement, manufac- kyo, 101-0051,Japan, Tel813-3296-1750, Fax813-3296-1755 turing,inventorymanagement, andeconomicforecasting, andit E-mail<techretary@butaman.ne.jp> Philippines: GigoAlampay, allowsJapaneseparticipantstotesttheirskillsagainstteamsfrom 5/F Dominion Bldg,833 Arnaiz Ave., Makati City, theUnitedStates andothercountries." Also,sincecorporate de- Metro Manila. Tel (632) 892-0301.Fax (632.;rBIB-2220. cisions Rrrsiness aresentto the International host F-mail<grgo@mnl.seqrrel.netSimrrlations I Tobetter appreciate emerging Asia-Pacific management through infotech, thissection wassponsored /nternafionalBffi.;l;"X;;ftfiB by I TheAsian Manaper 47

ByHoracioBonomeoJr.

ehristWf.llM

I startedthinkingwhat Christmas Jimisthe I wouldbelikewithoutJim. passed who SJ. Donelan, I lateFr.lames ravthe battling I awayin April,after years. for many Disease agesof Parkinson's butmore Hewasourfiiend,ourcolleague, priest. And asour than that, he was our gave priest,he always Christmas,for us meaning. a trulyspecial Catholics, Unlikeshoppingmallsand radiostations,Jim beganthe Adventseasonno fourth earlierthanthe Chutch-prescribed SundaybeforeChristmas.Hewouidwrite his sisterin New Yorkand askaboutthe with Christpeoplehe shouldtemember Hewouldinstruct masgiftsandgteetings. LarryLontocto takeout the decorations, cleanthemandtransformthe chapelwith 48

them.In earlieryearshehadreliedon Gon Perezto do this.Untll Crondied.It was December1989,and the wakewas in Jim'schapel.Theeveningof the dayJim hostileto Pres. buriedGon,rebelsoldiers government launcheda Aquino's Cory reason, unexplained For some coupd'etat. AIM the who occupied troops theloyalist headquaras their the chapel campusused forJim. ters.Thatwasa sadAdventseason of habit, year he, out when after And the Christthe ask about Gon to tried to call masdecorations. Jim would alwayshave a beautiful wreath readyfor the Advent ceremony, and his homilieswould begintakingon themes,to remindus all [who Christmas may have beendistractedbY our own

TheAsianManagerI November-December1998

preparationfor the holidays,the trip to Hong Kong,the guestlist for Christmas dinner,what to get the wife) of the true meaningof Christmas. Jesuitswrite goodhomilies,but Jim's thoughtnone was his loyal parishioners equal.At leastoneof hisJesuitfriendshas told me that for their own homiliesthey havebonowedthemes,if not wholepastheydidn't fiom Jim's.Sometimes sages, havethetimeto produceanoriginalwork, oftenthey simplyfoundJim'swdting so profoundand powerfulthey didn't think Mass, they coulddo better.ForChristmas produce masterpiece. a always would Jim It probablywould be fair to saythat manypeoplewho heardSundayMassat AIM went thereinsteadof their parish

churches because ofJim'shomilies.ChristmasMass,especially when it was held outdoors in AIM's"sunkengarden",was anSRO(standing-room-only) affair.SoJim alwaysworkedextrahard on homiliesfor Christmasday. I tried to tell him once,jokinglyof course,thattherealreasonpeopleflocked to hisChristmas Masswasbecause hegave generai absolution. He didn'tbelieveme. I alsopointedout one time that he had forgottento givethe absolutionafterasking everyoneto recitethe act of contrition. He didn't believethat one either. Yearslater,it occurredto me that mental Iapsemayhavebeenan earlysignof the afflictionthatwouldtesthis courage,and forgehis faith, over the few remaining yearsof his life. A Life for Others For us in the AIM faculty,the Christmasseason meant,amongotherthings, our annualconference,for which we all droveup to Baguioduringthe Christmasbreak.In thedewy,pine-scented early mornings,Jim, an Oxford don, former President of AteneoUniversity,a founder of AIM, a professor of ethics,andbusi nesscommunication, our chaplain, would sayMassfor us. I oftenthoughtthat the chill mountainair wasa morefitting ambiencefor his Adventhomiliesthan the air-conditioned AIM chapel. The'91earthquakeforcedus to seekothervenuesfor our annualconfetence. Soon,Jim'sworseningillflesswould makeit increasingly difficuitfor him to ffavelandbewith us. But this didn't stophim from his Christmaspreparations. Whilewe wouldbeout of town for our conference, and he in Makati,Jim would spendthosedays makingsure Christmas wouldbea happy occasionfor others.He alwaysmanaged to finda more-than-adequate choirto sing for the midnightMass,sometimesscholasticsfrom the LoyolaHouseof Studies, sometimes firstyearstudentsof AIM. He wouldwrite Christmas cardsandredistribute the many gifts he got from his rich fiiendsto his not-so-rich friends.(l will alwaystreasure thelastChristmas cardhe sentme.Hecouldbarelyscrawlthewords Fatherlim Sl.) And he would craft (henevermerelydrafted),his Christmas homily. Perhaps themostimportantactivityfor Jim on christmaswas preparingthe dls-

tributionof cashfor the waiters,janitors, andsecurityguardsofAIM, andgoodsand giftsfor the streetchildren that he had adoptedashis final apostolate. As Christmasapproached, we knewwe wouldget a little note from Jim remindingus to rememberthosewho had servedand waitedon us, andthoselessfortunatein life.Jim carefullydividedthe moneyhe collectedfrom us amongall the waiters andjanitorsandsecurityguards. It is ironicthathe with thedisease that attackedthememoryce11s alwayslemembered thosewhom otherseasilyforgot. For Jim this meantthosewho served

others,whom otherstook for granted throughoutthe year.Little wonder that the waitersand janitorsand security guardswould alwaysrememberhim. And who can ever forgetthe grateful smileson thosemanynameiess facesof streetchildren long abandoned by their parentsandthosewho shouldhaveloved andcaredfor them? Perhaps thisis how we, who will miss cankeephis memory Jim this Christmas, aliveandunfading.Not by regettingthe manythingshewill neverdo for usagain, but by gladlydoing for otherswhat he alwaysdid,andnotjuston Christmas. I

We who will miss Jim this Christmas can keep his memory alive not by regretting the he will never but hy

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November-December1998 | TheAsianManaser

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GIFTSFORTHEWORKAHOLIC M.D.,MDM'97 ElmerS.Soriano,

is ln. If you don'thavetime for familyandfriends,you'remismanaging is fastfading.Smartworking Workaholism 'emworkaholics with thesegifts at theworkplace yourofficeandyourlife.Dareto glareat thelastof For the heavy-smoking CEO and his disciples: playson thebodyof thecigaJuicyOptions.A quartetof poisons monoxideand acetaldecarbon carcinogens, nicotine, rette-smoker: thattheydon'twantto diein perfecthealthso hyde.Theymayprofess anemia lungcanceris okay.Buttheymayhaveto livewith pernicious vitamins81, B12 and C toxiceffects, and blindness.To neutralize mustcometo the rescue.This meansat least100 gramsof acerola cherryjuicedaily,whichyieldssome3390mgofMtaminC.Thenthere orange camupulp,calamansi arethe runners-up: iuice,unsweetened juice juice, guavas. basA Christmas pineapple currants and black and ket is a goodstarter- andlighteron the wallet.If you want them to pig-out,try pig'sliverandpig'skidneywhichbothhaveveryhighB12. yeast? Or if youwantto g0 theway of B1, how aboutdriedbrewer's

For the balding CEO and his followers: Oysters.Whata fittingway to integrateAIM'sPeatlYearfor your andlossof or baldness with alopecia treatfor thoseplagued Christmas hair.While thewholegamutof vitaminsandmineralsfromA to Z is in dosesof zinc.Medisupplementary order,you canfocuson suggesting haveshownthat an additional15 mg of zincmayhelprecalstudies Oysters- evenjust storehair growth(althoughnot instantaneously). ytelds70 mg.! 100g. - afready For the Young and the Restless: arguaggressive, The Moon goddessSelene.The ambitious, yuppytendsto beTrueimpatientandrestless competitive, mentative, - the coronaryprone.TheymayalreadyhavehypertenA managers pressure, arthritisandhair'nail angina, evenpremature sion,high-blood Selene, problems. afterthe moongoddess named Selenium, andskln maybehelpful,foundin organmeats,musclemeatsandfishandshellfoodsareservedto themmeetingafter fish.If refinedandprocessed a "vissosuggest deficiency, chances aretheyhaveselenium meeting, ceral"savoirfaire.

TheAsianManaperI November-December1998

For the Burn-Out: Burn Offl Wherethereishardlyroomor protocolin theworkplace there situations, physical response to emotionally-charged thattolerates Thebodyhasa quickresponse stalksexecutives. theburnoutsyndrome tigersreadyto pounceanattackin theface system akinto saber-toothed andnoreoinephrine epinephrine Two hormones of danger. Iadrenaline) - shootthroughthe sympathetic nervoussystemin (noradrenaline) bloodflow to speeding up theheartrate,inoeasing stressful situations, the musclesandawayfromthe skin,lungswork fasterto ensurecircuto the blood arereleased of sugars lationof oxygen,andthe reserves streamto providethe muscleswith the fuel for physicalcombator esthroughflst-flghts, arguments can'tresolve executive cape.Thedistressed jam and traffic middle of the in the leave the car or iog to work, or throw foldersandfilesaroundgumbling.Thus,the unusedfuelsupsituapliesstayin the body'scirculationsystemway afterthe stressful increas' becomes cyclebegins:the executive tion is over.A miserable andweigheddown by the world:burn-outsetsin. inglyoverweight A gift cardwith an expirationdatet0 What to givehim for Christmas? thatyou'lltakecare0f the danceinbaliroomdancingandassurance cardto a golfclubthatisbegina membership or honorarium, structor's budget,a mapfor a walking ner-friendly, or, if you havea shoestring tour of the mallsin the financialdistrict.Anythingto givethe burn-out madeto look try a sackcloth fatsimmediately: reason to burnoffexcess andgethim on the sportsfest, a Christmas bag,organize likea punching is notworkingsohe'Ilhave squad,or makesuretheelevator cheering to c1lmbthe stairs.

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