Windows

No, this is not an article on Microsoft. Much as I enjoy bashing monopolies, Microsoft continues to be an aggressive company that gives consumers more services for the same price. Then again maybe, I should write about its "big brother" type product called "passport."

The Windows I want to talk about are windows of opportunities.

India vs. Pakistan. There is border unrest between the two countries of South Asia over Kashmir. (Unfortunately, the only Kashmir I know is the restaurant along Pasay Road serving good Chicken Tandoori). Both countries have proven that they have weapons of mass destruction, nuclear to be exact. The threat that one of them might use this in this dispute is a real one. This could be a window of opportunity for the Philippines. India has been a really strong player in the world market for software development and now, business process outsourcing. The Philippines is catching up but not fast enough. Could we use this border dispute as a window of opportunity to catch up? Even Indian companies are in town establishing hedging strategies.

Animation. My friend Marilyn of Holy Cow just came home from Annecy Animation Festival in Annecy, France. (She was very grateful to Josie Gonzales of CITEM for putting up the Philippine booth and other logistical assistance.) Not one to participate in a junket trip, she was actually encouraged that the Philippine animator has a chance but a slim one. Marilyn thinks there is demand for an integrated service for 2D and 3D. The Philippines is up there in 2D animation but needs skills and infrastructure to compete in 3D. China continues to be the Achilles heel. China is bidding for a one-third discount off our cost.

Senate battles. I have to admit that most of what goes on in the halls of our lawmaking bodies is hazy to me. From what I have read, I posit that the Philippines has its own form of weapon of mass destruction, unfortunately self-destruction (politics). The Senate battles can only have one result: delay in the game. In this era of global competition, our lawmakers need to move at the speed of thought as the rest of the world to do battle on the economic front. This game has no referee, only winners and losers. A delay in the game, we lose.

For example, the SPAV (Special Purpose Asset Vehicle) bill has been in the pipeline for about six to eight months. When the asset management concept was tossed around, several global players in the asset management (their common name is "vulture investors") were ready to invest billions of dollars to help the financial markets. Asset management is not a new concept. The concept is to isolate the bad loans into a special purpose company and the good bank can continue lending because its NPL (non-performing loans) ratio is now lower. The US went through this with the RTC (Resolution Trust Corporation) and the savings and loan crisis of the mid-80s. Clearly we could have patterned a lot of the laws after the RTC laws in the US and fast-track the changes. Upshot: I know of one group that has pulled out its $600 million earmarked for the Philippines and diverted it to invest in Korea and Thailand. Imagine how much liquidity our economy could have had. Liquidity is fuel for growth.

Some new bills are also in the pipeline with similar pump-priming qualities. The PERA bill, an IRA (individual retirement account) look-alike to augment the SSS and GSIS programs, has been in the pipeline for a few years. The individual deposits a certain amount in pre-tax pesos into a pension management firm. These deposits are taxed only upon withdrawal which is when the individual retires. This helps the individual plan for his future. This increases liquidity and financial intermediation from the people with surplus money to people who can make better use of the funds. Think about the number of pension fund managers like Citi, Fidelity and Vanguard that would be interested in setting up shop in the Philippines.

Another bill will make mortgage interest deductible. This addresses the need for people to invest in their own homes. Rent is still financially more palatable than owning. Once the cost of ownership is at par or better than renting, more people will want to own. Which means increased demand for housing, a major pump-primer in any economy. In fact, the US’ recent recovery was on the back of consumer demand and housing. There is also the wealth factor that happens when housing prices go up. People tend to spend more.

My Two Cents: These are all windows of opportunities. Let’s get our act together!

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Dickson Co is CFO (C is for Cheap) for both Dfnn and HatchAsia.com. For comments or suggestions, e-mail [email protected].