CORPORATE PHILANTHROPY: CAN IT SURVIVE THE COMING ‘TECHNOTRONIC’ CAPITALISM?

CORPORATE PHILANTHROPY: CAN IT SURVIVE THE COMING ‘TECHNOTRONIC’ CAPITALISM?
Erle Frayne D. Argonza

‘Late’ capitalism, this current phase that replaced the ‘monopoly’ capitalism of the pre-war era, is now DEAD. As elucidated by Jurgen Habermas, thinker of the Frankfurt school, capitalism was able to move to its present state but only with massive state planning/intervention. State intervention had since the early 70s been relaxed, via globalization, but this only created monstrous predatory finance that hastened the collapse of the system.

As already elaborated in previous articles, the system is now DEAD. In the late 1990s yet, we Fellows of the Independent Review (a circle of economists and experts in Manila) were of the opinion that the system will be dead in couples of years. The ‘virtual economy’ based on magical statistics, speculation, fictitiously valued investments, and conspicuous consumption, can never be sustained, and is bound to crash and die. It was just a matter of time, as we all noted in 2000 (the last time I met the Fellows), before the bubble will burst somewhere (we forecast it will the USA) and the global economy will come crashing down…And it did, beginning last 2007 yet. That descent to the marshes of death is still going on today.

As I also declared in some previous articles, capitalism can still survive, though no longer the ‘late’ capitalism of state planning-to-globalization era. It will be a capitalism in an era of state terror heretofore unparalleled: ‘technotronic’ capitalism in the aegis of global police-state. Nation-states are enemies of the global oligarchy which will re-engineer the world by destroying nations (aftermath of atrocious World War III and global synarchy) and replacing them with city-states and region-states.

If corporate social responsibility or CSR will survive the times, it must be re-tooled at this juncture when the tumultuous changes are gathering winds. Failure to do so, many CSR pursuits will disappear in time, while only those CSR platforms of the most powerful and wealthy oligarchs can survive. All the CSR formats of today can last in relevance maybe till 2040 at the most, after which my forecast is their relevance will have reached its end.

By the year 2050, when populations will have leveled down to a census target of 2 Billion warm bodies, a figure that will be more manageable to the global elites, every member of society will be chipped and provided for. By that time, there will be no further need for ideological movements as Pied Pipers of the new system. Everyone else will be programmed by the system, from cradle to grave the chipped Manchurian Candidate or MC will be provided for. Poverty will end by then, the Millenium Development Goal of the UN will be finally met (the UN will be transformed into the tyrannical global state headed by a global Bonaparte, armed with its own police/military forces), and then will end the ‘sustainable development’ or ‘social development’ pursuits of ‘late’ capitalism.

The chipped Manchurian Candidate or MC will be half-human half-machine hybrid, and will be well provided for as mentioned. Population will be totally controlled, weak and senior members of the population will be ‘oven-baked’ or eliminated, natality will be controlled following China’s pattern of today, criminality will be almost nil, and no one will ever be poor again. Hybrid-human behavior can be easily modified using those advanced cybernetic prototype programs past 2050, and so nobody can fool around with the system.

Tell me, fellows, in a situation such as that coming context of advanced cybernetics or ‘technotronics’ (machine-controlled humans), what need will there be for CSR? Maybe CSR will go back to Victorian Era philanthropy practices, whereby wealthy sponsors will fund the theaters and chipped performers whose performances will be perfected all the more by cybernetics. The staff of the CSR formats of that era, if indeed applicable, will be chipped as well, like those outfits that will be funded because they will perform before the oligarchic-intellectual crowd by then.

When that next capitalist system comes, there will be no more activists or revolutionaries save for those who will proclaim Hallelujah forever to the radically altered, new system. Libertarian activists will be the species of yesteryears, the CSR proto-activism of today will be consigned to history, and anybody who will go against the system will be easily eliminated by sentinel robots of the most advanced prototypes.

Let me end with the challenge: CSR better retool now and reshape its image if it desires to exceed its institutional career. Now is the time.

[Philippines, 28 August 2008]
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ASEAN’S 160 MILLION MIDDLE CLASS ENSURES BULLISH PROSPERITY

ASEAN’S 160 MILLION MIDDLE CLASS ENSURES BULLISH PROSPERITY

 

Erle Frayne D. Argonza

 

Good day to you fellow global citizens!

 

ASEAN’s planned economic integration next year is getting too near for comfort. Excitement from diverse quarters concerning the unification in ASEAN and across the globe is growing, so let me share a note on the subject by focusing on its middle class.

 

Association of Southeast Asian Nations or ASEAN comprises a total population approaching 670 million as of end of 2013. Of that total, approximately 160 million belong to the Middle Income classification. Since the middle income families comprise the consumer base of a developing country, it is normally extendable to an entire region such as ASEAN to evaluate whether that region possesses the demand base for a truly prosperous and economically powerful region.

 

Middle Income classification for developing countries or DCs is pegged at U.S. $6,000-$30,000 annual family income. Earning beyond the $30,000 annual income in a DC is considered a fortune, qualifying the family thus for a ‘wealthy family’ status. While this middle income bracket is lower than those in the OECD countries, it is crucial for testing the future waters and catapulting a region to an economic power.

 

The approximate middle income composition of each member country of ASEAN is as follows:

 

Country                      Middle Income Persons (In Millions)

Singapore                                  5

Thailand                                     35

Malaysia                                    20

Philippines                                  20

Indonesia                                   60

Brunei                                       0.7

Vietnam                                     12

Myanmar/Burma                         5

Kampuchea                                1

Laos                                          0.5

TOTAL:                                      159.2 Million      

 

That total of 159.2 million is just rough, conservative estimate, based on my stock knowledge of previous reports about the region from the Asian Development Bank, UNDP, and thinktanks. Let’s round off the figure to 160 million for simplification.

 

The totality can actually easily move to 165 million with updated data on the subject. The 160 million alone suffices ASEAN’s middle class to be numerically at par with the USA’s middle class that stood at 160 million when the last presidential electoral campaign raged there.

 

The big challenges for the ASEAN and its member nations are (1) to increase the per capita or per family income of the middle income persons, and (2) to increase the number of middle income persons and/or families across the coming years, until at least half of the region’s population turns Middle Class. 

 

160 million is indeed large enough already as an aggregation of all the 10-member nations’ prosperous middle income earners. However, that is merely 1 out of every 4 ASEANian persons. Which means there are still vast numbers of families and persons down the income pyramid, hundreds of millions in the D & E classes in particular.

 

The good news is that ASEAN comprises of 1 Dragon Economy (Singapore), 1 Tiger Economy (Malaysia), and 4 Emerging Markets (Indonesia, Philippines, Thailand, Vietnam). Such dynamic economies more than offset the laggards in the region, namely Myanmar, Laos, and Kampuchea. Brunei is a special class that belongs to the wealthy Petro-dollar economies, with almost its entire people sufficiently provided for by the ruling dynasty.

 

Meeting the target of the Millenium Development Goal or MDG for poverty alleviation is indubitably the most urgent thing to accomplish. The neighboring countries can compare notes and share experiences on how to redistribute wealth equitably in vast quantities to the poor, a departure from the ‘trickle down’ approach that breeds more paradoxes of mass poverty amidst prospering economies.  

 

I will not hazard a recommendation such as adoption of Philippine’s Cash Transfer Program in the region. Such a strategy worked well in Brazil which now has over 50% of its families above the middle income threshold, but whether it will indeed work for the ASEAN poor is another thing.

 

Meantime, what is less risky a forecast is that the 160 million middle class will be a sustained base for consumption in the region. Sustained consumption at this juncture equates to Big Opportunity for any market interest group or person to surf the ‘economic sea’ here.

 

Direct Foreign Investments from all over the globe can surely be poured now in even colossal amounts with lesser risk and surefire gains. The ASEAN’s high levels of foreign exchange, banking & finance resources, and big middle class altogether comprise a formidable fortress that can easily hedge against volatilities in the North & West that cause capital flight from short-term capital, which should all the more magnetize investors from elsewhere.

 

[Manila, 20 January 2014]

EMERGING MARKETS: GLOBAL GROWTH DRIVERS, FIREWALL ECONOMIES

EMERGING MARKETS: GLOBAL GROWTH DRIVERS, FIREWALL ECONOMIES

 

Erle Frayne D. Argonza

 

Global economic growth has shown a sputtering pattern over the last couples of years. The EU-USA-Japan 1^st World corridor has particularly been the lackluster topguns, mired as they are in vicious cycles of recession, near zero growth, and ‘virtual economy’ strategies that only deepened their entrapment in the cul de sac they’re in.

 

Salving the global economic health since the opening yet of the new millennium are the Emerging Markets. Learning the lessons from the 1^st World’s mistakes, the Emerging Markets instituted regulatory measures and related strategies that enabled them to build ‘firewall’ economies.

 

A ‘firewall’ economy is sealed from the global economic turmoils emanating from the 1^st World countries. Remaining unaffected as such, they are able to sustain growth patterns that are impeccable manifestations of their trajectories of ‘virtuous circle’ of growth & development. Growing in unison, though at variance in total aggregate growth, they altogether keep the global economy afloat, thus saving many workers in the developing world from the devastating blows of market conflagrations which the 1^st World countries are tragically situated.

 

Emerging Markets are largely 2^nd World or Middle Income economies, a fact that many blind simpletons in their own backyards and the 1^st World fail to see nor understand. Once an economy breaches the U.S. $1,000 per capita, it qualifies as 2^nd World economy. Another criterion is the population composition: over half are in services and industries. Industrialization is, of course, rapid.

 

Emerging Markets are unique in that (a) each one of them has large populations and (b) very significantly large percentage of Middle Income earners among their people (i.e. family earning $6,000-$30,000). Large populations fulfill their labor needs at all times, and the total aggregate values of goods produced by such large populations make total national income consistently large, assuming sustained significant-to-high-level growth.

 

Top qualifiers that are recognized as ‘lead countries’ of the Emerging Markets are the BRIC:

• Brazil
• Russia
• India
• China

 

Following closely behind the BRIC are the Next 11, namely:

• Bangladesh
• Egypt
• Indonesia
• Iran
• Mexico
• Nigeria
• Pakistan
• Philippines
• South Korea
• Turkey
• Vietnam

 

South Korea is the only odd one out, as it’s economy is already 1^st World or ‘overdeveloped’ in stage. It is one of the Dragon Economies of East Asia that includes, to recall, Hong Kong, Taiwan, and Singapore. It’s close ties to the Developing Countries or DCs, from which it came from, remains though, as exhibited by trade and cultural interactions with the DCs.

 

Other DCs that are smaller in populations, though nonetheless part of the developing world and contributors to global growth, are the Malaysia, Thailand, Singapore, South Africa, Argentina, and Chile. Malaysia, Thailand, and Singapore are engaged members of ASEAN that will unify into a common market next year, which will make the entire region a gigantic growth corridor that is indubitably among the world’s topguns.

 

To sum up the broad strategies of the Emerging Markets + Tiger & Dragon Economies that enabled ‘firewall’ against global turbulence, these are:

• Putting breaks on predatory finance via monetary and capital controls.
• Consistent, persistent, yet resilient reliance on the ‘physical economy’ as basis for wealth production—agriculture, manufacturing, infrastructure, transport & communications, science & technology—that are their domestic economic drivers.
• Shoring up their Foreign Exchange Reserves at levels sufficient to effect elasticity against global turmoils and buy several months worth of imports.

 

Needless to say, the Emerging Markets will be graduating to 1^st World economy status one by one across the coming decades. By 2030, their collective wealth put together will more than surpass the combined wealth of the EU-USA-Japan. Enabled to aid other developing countries move up the ladder of success, they are exemplars of ‘inclusive growth’ that hopefully will eradicate poverty across the globe well before 2050.

 

Contrast that to the ‘exclusive growth’ of the North 1^st World (EU-USA-Japan) powers that industrialized and enriched themselves at the expense of the developing countries or DCs that the former encumbered via investments, trade, and aid. The Northern powers in particular have histories of destroying nations and populations via two (2) world wars and many more conflicts, or using coercive instruments disguised as “soft power” or maintaining “peace”.

 

As the Emerging Markets have been showing the way, new models of development are now available for the poorer DCs which the West/North just can’t destroy any longer via IMF austerity programs (IMF is a stooge institution of predatory financiers). Rest assured there will be wider breathing spaces for comfort & prosperity in the long run by the working peoples of both Emerging Markets (& DC allies) and those of the 1^st World as well who seems to have been excluded from prosperity by their own greedy politicians and elites.

 

[Manila, 08 January 2014]

POWER SHIFT FROM WEST TO EAST NOW COMPLETE

POWER SHIFT FROM WEST TO EAST NOW COMPLETE

 

Erle Frayne D. Argonza

 

Gracious Day to you fellow global citizens!

 

“Young Man, Go East!” was John Naisbitt’s challenging call unto the youth of the west who are eager to search for opportunities in life. In the late 90s yet, he released his social forecast book Megatrends Asia, which sums up macro- trends happening in Asia that all point out to the compass of economic and cultural growth of the 21^st millennium: East will be center of global development.

 

Futurologists or social forecasters from the West, beginning with Oswald Spengler and Arnold Toynbee a century ago, forewarned the West of the eventual decline in the future. Toynbee used a cyclical wave model to show that a civilization or ‘high culture’ lasts only for 2,000 years, after which it will decline rapidly.

 

Indo-European ‘high cultures’ were nearing the end of that 2000-year cycle in the early 1900s, which prompted futurologists to write daring forecasts of what’s in store for the West in general. Though accordingly the West will sustain the momentum towards high levels of technological development, the overall civilizational maturity has been reached as was nearing the terminal end phase.

 

The American sociologist Daniel Bell followed up on the social forecasts in his brilliant discourses on the Post-Industrial society. Writing in the 1950s yet, upon seeing some Asian economies jettison their amazing industrial growth, predicted that the end of the Western prominence, both techno-economically and culturally, is already at hand. He daringly registered that the year 2013 will be the precise year of the civilizational shift.

 

It took yet younger social forecasters, notably Alvin Toffler and John Naisbitt, to follow up on the emerging global developments and observe the amazing rise of Asian ‘dragons’ and ‘tigers’. By the 1990s, both thinkers held the convergent opinion that Asia will be the trend-setter techno-economically and culturally in the forthcoming 21^st century.

  

To complete the picture of global rise to prominence of Asia, Immanuel Wallerstein, then president of the American Sociological Society, explained in the late 1990s that civilization was actually moving towards the East by the 16^th century yet. Tragically, the Western powers intervened to undercut that process, colonized the East via imperious methods of encumbrances, and ended what could have been a gargantuan awesome experience of East-led global development.

 

As Western imperialism, colonialism, and hegemonism considerably declined by the latter part of the 20^th century, so was the momentum of techno-economic, political, and cultural development propelled in the East.  By the latter years of the 1990s, there was no more doubting the predictions made by social forecasters that indeed the compass of civilization will soon move to the East.

 

Upon the catastrophic entrapment of the economies of Europe, USA, and Japan in short recessions that congealed into a Great Recession in 2007, the momentum was finally lost on the West. Japan was only partly saved due to its Asian location and trade positioning strategies, though its economy was flat since 1994 yet. By early 2008, Western global observers released their consensual evaluation that Asia already overtook the West in cutting edge technologies by the end of 2007.

 

By global observers I mean those coming from international magazines, thinktanks, and academe. The economic analysts of the Time Magazine, Far Eastern Economic Review, The Guardian, and Newsweek, for instance, came up with that very upbeat observation, as Asia was growing while the West was stagnating technologically and crashing down economically.

 

It’s now 2014 and many developments that boggle the mind did happen since 2007. As far as wealth production from the ‘physical economy’ is concerned, Asia is leading and showing the way towards keeping the global economy afloat. The West, on the other hand, is mired in ‘bubble economy’ or ‘virtual economy’ cul de sac, which promises only short-cycle growths that can burst again in the near future.

 

The power shift is now complete, though the shift doesn’t mean that the East will supplant the West in global importance. The Eastern mind thinks in terms of inclusive development, in contradistinction from the Western mind that is binary/dichotomous, zero-sum in practice, and pursues development at the expense of the small nations of East and South.

 

Western peoples better accustom themselves to the emerging reality and cease to be bellicose and hostile towards the Eastern peoples whom they pejoratively condescended upon for centuries as “monkeys” or “halfway between man and ape.” Civilization’s root word is ‘civility’, and that means if some nations become prosperous, so must all nations be some day, all marching together in a global ethos of goodwill and cooperation rather than destroying the weaker ones.

 

[Manila, 01 January, 2014]

SOCIAL CAPITAL FOR MINING

Erle Frayne D. Argonza

[Note: The author is a political economist and social development consultant. The paper was delivered in a panel lecture at the Kamayan Forum, Kamayan Restaurant, Manila, 12 noon-2 pm, 19 November, 2004. See also: http://raefdargon.blogspot.com]

This paper advocates for an alternative framework regarding mineral resource extraction. It begins with the contention that mining must be considered as primarily a community undertaking, whether the community be national or local. As such, mining must necessarily depart from market-driven models of extraction, or from state-centered models of development, and proceed to a community-oriented or constituency-based engagement.

To be able to comprehend the theme of this paper, let me begin with a story. About four (4) years ago, a former university student of mine at the University of the Philippines Manila informed me that a mining engineer wished to establish a (mining) foothold in the Cordillera. Accordingly, the engineer heard about my mystical background, and was interested to know if there are indeed precious metals in the proposed project site. That is, the engineer expected me to communicate directly to the invisible elemental entities in the area and ask their permission to establish a mining project.

Not only that. Having heard about my background as a political economist, with diversified interest and studies in indigenous culture, the mining firm he represented wanted to know what acceptable methods to employ in flushing out the indigenous people residing in the area.

To cut the story short, I declined the offer, even as I registered my vehement opposition to the sordidly profit-oriented venture of this engineer. If mining has to prosper at all, it must begin with the reality that there are people who have been settled for many epochs in the area of extraction. A win-win solution to the mining problem must be executed, not by expelling the local residents but precisely by involving them in the venture.

Let me now share to you another story. In 1998, at the height of the Asian financial crisis, my consulting firm then, the Phoenixkonsult, contracted a project with a client. The project was about yellow clay extraction, with Bicol as the project site. In a small town in Bicol is found yellow clay, a rare material that has various industrial applications as well as aesthetic uses. Incidentally, the area also has some Aeta-related residents as well as marginal peasants.

Being then the board chair of the corporation, or being in a central position to direct the developmental strategies of the firm, I strongly proposed that the project involve the residents in a number of ways.

First of all, in the feasibility study preparation, the residents can be tapped as eco-scanners to identify possible sites where the material was highly concentrated. Also, the same residents will be constituted into a cooperative, properly trained in social entrepreneurship, and invited to be co-investors in the mining project through their cooperative. A third involvement would be to tap those residents who are physically capable enough as human resource for the extraction and production activities.

Such a scheme is what social scientists and development practitioners like myself refer to as tapping ‘social capital’. Mining should not just be regarded as investment capital, but should also consider the vast wealth of social networks—‘social capital’—that can wield tremendous powers of production. Studies in comparative political economy have shown that developmental pursuits that tapped ‘social capital’ ended up more appreciably better than those that failed to do so.

The development experiences of Brazil are particularly instructive. As documented by such social science luminaries as Peter Evans (see Evans’ works on ‘state-society synergy’), those projects in agriculture, irrigation and urban-based infrastructure and housing in Brazil where a state-civil society partnership was consistently used, turned out really good in results. On the other hand, those projects that were largely state-centered or market-driven and insulated from the community networks eventually faltered, as indicated by typical experiences in most Third World economies.

In today’s evolving global context, state-centered development has become ridiculously passé. In this old framework, the state performs the role of a ‘provider state’—giving out everything such as candies and shelter units to helpless people waiting for the ‘Santa Claus’ dole outs. Such a framework had proved to be disastrous in results. Not only did it reinforce a strong dependency syndrome among the people, it also led to vicious poverty instead of eradicating this malaise. It need not be stressed that much money went to the pocket of state officials and contracting firms’ managers through this old framework.

The new framework delimits the state’s role to that of an ‘enabler state’. In this framework, development efforts are properly the tasks of market players, who possess the investment capital, and civil society players, who possess the vast social networks of ‘social capital’. The state then builds the policy environment and strong institutions that can support and sustain various developmental efforts.

I strongly contend for a ‘social capital’ approach to mining. In this approach, the first thing to do is to recognize the institutional capacity building efforts of people who live in the areas of resource extraction. Stewardship agreements must be concurred between market players and community or social enterprises of the folks, with the state serving as a mediator or facilitator. I am very optimistic about the positive results of this scheme, compared to market-driven and state-centered approaches.

You see, when people, through their social enterprise groups, are motivated to co-direct development projects, the people themselves will do so much to zealously guard and monitor the entire project or enterprise venture. The bonus for indigenous peoples is that they have easy access to the spirit world, to the nature beings in the area (called ‘elementals’ by mystics), beings that can also be tapped to guard the project.

Now, go back to the cranky old models (market-driven and state-centered), and remove the indigenous peoples from the scene of a gargantuan development effort. What will you have?

It would be instructive to recall the Celophil and Chico dam projects, both Cordillera-based, that proceeded from the old frameworks. The disastrous offshoots of the projects became the fuel for insurgent groups, largely peopled by the I.P.s, to wage zealously bloody campaigns against the colossal projects.

There is no further reason today for the likes of the Celophil and Chico projects to be repeated. We must have learned lessons from their failures at this juncture. But it seems that those who now wish to revive a mining sector that has been in the doldrums for two (2) decades to go the route of Celophil and Chico.

I wish not to further highlight the folly of any idea today that wishes to pursue development by expelling people like they were deadly toxins. Many advocates of win/lose pursuits are well placed in government even as they dominate the corporate sector. They simply couldn’t see the folly behind their antiquated approaches, blinded as they are by greed.

As a final statement, let me declare that the framework elaborated in this brief paper is not an official policy framework of state. Rather, it is a policy framework that should be discussed among various quarters and social sectors, the state included. The state after all comprises of a plurality of framework trends operating in a vast array of bureaucratic mechanisms. There is no such thing today as a monolithic state with a singular framework dominating the policy environment. Rather, the state is a fluid field for contestation by various interest groups that are all aiming to influence the shaping of the policy environment.

But this I am optimistic about: if given a chance to prosper, a ‘social capital’ framework for mining will sell like very hot cake. I am very sure about this forecast. And may the communications enclaves allow this idea of ‘social capital’ for mining to germinate and percolate, because whether we like it or not this will be the direction of resource extraction in the foreseeable future. Bar it from crystallizing, and the result will be more resentments leading to more vicious insurgencies. Permit it to galvanize, and the whole nation becomes heroic in the eyes of the international community for setting new precedents. So, which option is the better choice?

 

PHILIPPINES’ CAMPOS GROUP BUYS U.S. DEL MONTE CORP, NEW INVESTING HISTORY BEGINS

PHILIPPINES’ CAMPOS GROUP BUYS U.S. DEL MONTE CORP, NEW INVESTING HISTORY BEGINS

 

Erle Frayne D. Argonza

 

Good day to you, global citizens!

 

For the good news coming from Asia: the Philippines’ Campos group, majority owner of NutriAsia, just bought the Del Monte Pacific Ltd., a US-based company that has been operating a large subsidiary in the Philippines. This is a milestone event for Filipino business investments in the USA, which could be followed up by other Philippine-based conglomerates buying into other American-owned big businesses inside the USA.

 

This experience isn’t exactly precedent setting. Couples of years ago, the San Miguel Corporation, PH’s largest Food & Beverage conglomerate, bought the NatFood of Australia. NatFood is Australia’s biggest F&B firm by the way, so that negotiation marks a precedence to show the maturity and advanced systems of economic enterprises constituted in the Philippines.

 

Though it isn’t precedent-setting on a regional-global setting, it is milestone for U.S. engagements by Filipino businessmen & entrepreneurs. Since F&B companies in the Philippines have attained a maturity and advanced development, expect the purchase by other Filipino F&B giants, such as Jollibee Group, of large F&B companies owned by American business tycoons.

 

It may not be long when the big realty mall-makers of the Philippines will set foot in the USA. SM Group, Gokongwei Group, and Ayala Group are the top players so far, besides being recognized as among Asia’s topguns in the terrain of mall-making. Not only do these conglomerates make big malls, they also produce architectural marvels that are among the world’s top mall architectural wonders.

 

I would credit the maturation of the Filipino companies to good measures of corporate governance, update organizational culture, and best practices put into place across the decades. Re-engineered to pass the test of time and resilience, the same Filipino firms have become global and have invested in other regions and continents as well.

 

It is merely the ‘planting season’ for Filipino investments overseas as of the moment. At a certain juncture in the foreseeable future, when the pattern attains maturity, the repatriation of profits from such business concerns to the Philippines will exceed those of remittances from overseas workers. I’ve been forecasting this trend since the start of the new millennium yet, and I’m optimistic of its coming to fruition timed with the maturation of the Philippine economy to a 1^st world rich economy by the latter part of next decade.

 

[Manila, 19 October 2013]

 

Source: http://www.philstar.com/business/2013/10/12/1244140/campos-firm-buys-del-monte-us-1.7-b

Campos firm buys Del Monte US for $1.7 B

By Neil Jerome C. Morales (The Philippine Star) | Updated October 12, 2013 – 12:00am

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MANILA, Philippines – Del Monte Pacific Ltd. (DMPL), majority owned by the NutriAsia Group of Campos family, is buying the consumer food business of US-based Del Monte Foods (DMF) for nearly $1.7 billion.

The move will give DMPL access to the profitable US and South American markets while boosting its net sales by around $1.8 billion, the company said in a disclosure to the Philippine Stock Exchange.

The Singapore and Philippine-listed DMPL said it entered into a definitive agreement for subsidiary Del Monte Foods Consumer Products Inc. to acquire privately-owned DMF for $1.675 billion.

“This landmark transaction offers DMPL greater access to a well-established, attractive and profitable branded consumer food business in the world’s biggest market,” said DMPL chairman Rolando Gapud.

“Prior to this acquisition, the US was one of few key markets where our company did not have a direct presence nor have its own brands,” Gapud said.

Shares of DMPL in the local bourse surged to as much as P39.50 yesterday before closing 11.11 percent higher at P30 apiece from P27 on Thursday.

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DMF owns the Del Monte brand rights for processed food products in the US and South America. Its consumer business has a strong portfolio of leading brands, with seasoned employees, healthy cash flows and $1.8 billion in sales in the fiscal year that ended last April.

DMF owns the iconic Del Monte brand, along with Contadina, S&W and College Inn brands. The company claims to  be number one in major canned fruit and vegetable categories in th US and top two in canned tomato and broth categories.

“This leading branded market position in the canned fruit and vegetable segments provides DMPL with significant scale and reach and, the company believes, an opportunity to unlock meaningful potential synergies,” the firm said.

Under the agreement, DMPL will buy the brands and certain assets and liabilities of DMF, including equity interests in certain South American subsidiaries.

DMPL said it will finance the acquisition through a combination of $745 million of equity in the new acquisition subsidiary as well as $390 million in long-term debt financing from BDO Capital and Investment Corp. and Bank of the Philippine Islands.

“As part of the equity financing, the company plans to issue common and preferred shares in the market,” DMPL said, adding that the acquisition will be finalized not later than the first quarter next year.

Moving forward, DMPL plans to launch new product offerings to the US catering to the growing Hispanic and AsianAmerican markets.

“The company expects to generate significant value creation opportunities in the US market through the expansion of DMF’s current product offering to include beverage and culinary products,” Gapud said. 

DMF’s consumer food business is also an attractive platform to offer certain products appealing to the large Hispanic and Asian American population in the US, he added.

DMPL’s 23,000-hectare plantation in Mindanao is the world’s largest fully integrated pineapple operation with a 750,000-metric ton processing capacity. It was set up in 1926 by the US government because of the widespread pineapple disease in Hawaii.

DMPL produces, markets and distributes food, beverages and related products in the Asia-Pacific region and the Indian subcontinent, and has supply deals with Del Monte Pacific trademark owners and licensees around the world.

In the first half, DMPL’s sales gained 14 percent to $208.4 million while net income inched up two percent to $10.6 million.

DMPL’s principal shareholder NutriAsia leads the Philippine market for condiments (Datu Puti and UFC), specialty sauces (Jufran and Mang Tomas) and cooking oil (Golden Fiesta).

IS DEGLOBALIZATION POSSIBLE?

IS DEGLOBALIZATION POSSIBLE?

 

Erle Frayne D. Argonza

 

Globalization has traversed a historic track that is considerably long and expansive in impact at this juncture. Curiously, certain forces are working hard to de-globalize the world, so let me raise the question: is deglobalization possible?

 

Before anything else, a reflection on the meaning of the ‘globalization’ term. Globalization is delimited to the integration of national economies into a seamless planet-wide borderless economy, as this was the original meaning of the term.

 

There are so many insurgent voices around the globe today that are agitated by their own painful experiences in the aftermath of the official effectuation of the 1994-signed treaty called the GATT-UR. That fiat was largely binding on the states that forged and signed it, binding thereof on the economic life of member nations of the World Trade Organization that the treaty created.

 

The core principle behind globalization is free trade which in turn is based on laissez faire doctrine. Already rotting in the dustbins of archives for some time, as an obsolete stinking doctrine, laissez faire was suddenly revived and revved up globally to forge free trade. Largely British in origin (recall the Scottish physiocrats), free trade soon caught the obsessive attention of predatory financiers and technocratic subalterns who then transformed it into a global phenomenon.

 

Japanese technocrats then picked up the free trade resonance and concocted the term globalization. Kenichi Ohmae is the topgun Japanese thinker of globalization, which was then copycat by other Japanese thinkers. By the 1980s, the Japanese economic diplomacy corps then convinced their Americans and Western counterparts to accept the term and build up on the core principles of global free trade in order to forge a seamless, borderless planetary economy.

 

I’ve writ too many articles already about the subject, and spoke in many occasions about globalization and free trade from the 1990s to the past decade. I was among the insurgent voices then, being among nationalist ideological blocs in Manila that opposed the PH Senate’s signing of the GATT-Uruguay Rounds. I kept on drumming up the threat side of globalization till last decade.

 

Beginning this decade though, I shifted mode to a silent observer. I witnessed the win/win impact of globalization on developing economies. Fact is, the very world powers that arm-twisted small countries to sign open up their economic borders to free trade, and later to arm-twist small nations to sign the globalization treaty, were hit so badly by depression (i.e. Great Recession), which I did forecast to happen using a long-wave Kondratieff model.

 

Now my very own country, the “sick man of Asia” in the years ’83 through ’86, is the ‘economic wellness’ model of Asia today. Should I still care to yield to the herd trend of insurgent voices and declare “down with globalization?”… Philippine economy had developed a ‘firewall’ against globalization’s harsh effects, and so had our neighbors in Asia, amazing grace! See how we in Ph swim along the globalization ocean?

 

Not only that, my very own country’s domestic economy had forged a ‘firewall’ against the damaging effects of political crises and fall-outs. I remember well, in my studies on international political economy, that Italy was among the first to build such a firewall, if my analysis serves me right, whereby its economy kept on running amidst the perpetual political squabbles in the legislature and constant changes of prime minister and cabinet composition. So the Philippines has become the “Italy of Asia” (smile!).

 

Well, folks out there, I am not going to advance my own answers to the ‘deglobalization thesis’ or challenge. What I can say is this: I am getting more at home with globalization today. It had even spread to other areas of life: culture, society, civil society, and so on, such as the ‘globalization of Christmas’ which I find as a very positive event.

 

[Manila, 14 October 2013]   

$67.8 BILLION FOREIGN EXCHANGE BY PH STILL RISING

$67.8 BILLION FOREIGN EXCHANGE BY PH STILL RISING

Erle Frayne D. Argonza

A truly good news, making PH as an endeared country for investments by both domestic and foreign stakeholders. $67.8 Billions—end of Apri 2011 Forex—is equivalent to nearly 14 months of imports, a fact that should make Filipinos happy a bit, more so that the forex reserves is coupled with a strong peso that is among the darling currencies of Asia.

The forex reserves is still rising by the way, and is following the general trend in East Asia. There is no better choice for PH to go then to continue to shore up its forex reserves, as the level of international trade, which surpassed the $100 Billion mark couples of years back, will breach the $200 Billion level of two-way trade (imports & exports) by 2015.

PH good performance in forex is for me a cause for celebration, amid the cacophonies of bad political news circulating on a daily basis. Economics had already sealed itself off from bad politics through a firewall, and so no matter what political fires there are, the economy will continue to grow and prosper. The ancient malaise of poverty hopefully would benefit from the sustained growth going on.

PH came from a very long history of lackluster performance as far as the forex level is concerned. Always short of the foreign monies, the International Monetary Fund found every reason to discourage foreign financiers, bankers, and investors from getting into the country. Low forex reserves also became part of the rationale for imposing austerity measures on PH, the effects of which are still felt today even if the country already graduated from the IMF program.

Low forex reserves also went hand in hand with Balance of Payments or BOP deficits. And may we add to the downgrading list the lingering low current accounts deficits. Add to the list the high level of public debts, which at one time threatened to bring back the economy to the stone age.

Those list of ailments have been addressed, thanks to the critique raised by patriotic economists on the present monetary and fiscal policies. The Bangko Sentral (central bank) also continued to strengthen its institutional capacities and regulatory grid, thus ensuring better inflows and reserves of foreign exchange.

By and large, exports comprise the biggest chunk of forex, at past $50 Billions per annum. Overseas remittances (workers & business profits), tourism, foreign investments (FDIs & portfolios), new money from external loans comprise, and ODA comprise the other gross sources. Minus the payments for imports, loans/credit, FDI repatriation of remittances to mother countries, and that gives you the net balance at any given time.

Converting the impressive forex reserves to loan-ready credit is a problem of the Bangko Sentral. The availability of low-interest credit for the poor folks, through micro-finance and cottage industries, is a challenge. Fat purses shouldn’t be made idle for long, as that would mean the high forex reserves is contributing to mass poverty which is a gloomy paradox if that will indeed happen.

[Philippines, 16 May 2011]

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