March 17, 1991, BusinessWeek, Philippines,
October 2, 1994, BusinessWeek, New Broom Sweeps Philippine Banking; Ramos Takes Aim At Oligarchy
October 30, 1994, BusinessWeek, The Philippines' Impassioned Pitchman,
October 30, 1994, BusinessWeek, Shaking Manila Out Of Its Slumber,
November 13, 1994, BusinessWeek, Asia Breaking Down The Barriers,
November 20, 1994, BusinessWeek, One Big Randy Global Village,
October 8, 1995, BusinessWeek, Asia Needs To Build, Not Bicker (Int'l Edition),
September 24, 1995, BusinessWeek, Table: Life's Cheaper At Subic,
March 17, 1996, BusinessWeek, The Mideast: Peace May Mean Economic Separation,
March 31, 1996, BusinessWeek, The Philippines' New Face,
April 28, 1996, BusinessWeek, A Bad Case Of Nerves In Asia (Int'l Edition),March 31, 1996, BusinessWeek, The Philippines' New Face,
September 8, 1996, BusinessWeek, Airlines: Is Faulty Maintenance A Greater Threat Than Terrorism?,
October 27, 1996, BusinessWeek, The Road After Ramos,
October 27, 1996, BusinessWeek, Ramos Should Exit Gracefully,
November 17, 1996, BusinessWeek, Competitive Intelligence Is For Everybody,
November 24, 1996, BusinessWeek, Now, Philippinos Don't Have To Wait Six Years For A Phone,
December 22, 1996, BusinessWeek, 'Picking Up The Pace' At Ayala (Int'l Edition),
April 27, 1997, BusinessWeek, Tremors In Manila (Int'l Edition),
June 15, 1997, BusinessWeek, Is Metrobank Generous To A Fault? (Int'l Edition),
December 14, 1997, BusinessWeek, The Philippines' Ramos: 'We Have To Go Through This' (Int'l Edition),
February 1, 1998, BusinessWeek, Battling Over An Ocean Of Suds In The Philippines (Int'l Edition)
April 19, 1998, BusinessWeek, The Philippines' Perilous Open Skies (Int'l Edition),
May 10, 1998, BusinessWeek, The Philippine Populist Who's Making Business Nervous (Int'l Edition)
June 28, 1998, BusinessWeek, The Philippines' Tony Tan (Int'l Edition),
June 13, 1999, BusinessWeek, Gabriel C. Singson, Governor, Central Bank, Philippines (Int'l Edition),
March 26, 2000, BusinessWeek, Murky In Manila (Int'l Edition),
July 2, 2000, BusinessWeek, Jaime Augusto Zobel De Ayala Ii (Int'l Edition),
July 9, 2000, BusinessWeek, Southeast Asia: A Surge From Electronics,
August 6, 2000, BusinessWeek, The Philippines Needs New Leadership (Int'l Edition),
January 28, 2001, BusinessWeek, Ecstatic about Arroyo's Arrival,
February 4, 2001, BusinessWeek, Making Good On The Thriller In Manila (Int'l Edition),
June 28, 1998, BusinessWeek, The Philippines' Jose Concepcion Iii (Int'l Edition),
June 28, 1998, BusinessWeek, The Philippines' Gabby Lopez (Int'l Edition),
June 28, 1998, BusinessWeek, The Philippines' Gabby Lopez (Int'l Edition),
July 12, 1998, BusinessWeek, Baalbek Has No Truck With Terrorism (Int'l Edition),
September 13, 1998, BusinessWeek, The Philippines Needs An Action Hero, But Estrada May Not Be It,
June 13, 1999, BusinessWeek, Henry Sy, Founder, Sm Prime Holdings, Philippines (Int'l Edition),
June 13, 1999, BusinessWeek, Tony Tan Caktiong, Ceo, Jollibee Foods, Philippines (Int'l Edition),
September 12, 1999, BusinessWeek, Playing It By Ear In The Philippines,
September 26, 1999, BusinessWeek, Russia: How Terrorism Could Boost Yeltsin's Rivals,
July 2, 2000, BusinessWeek, Jaime Augusto Zobel De Ayala Ii (Int'l Edition),
July 9, 2000, BusinessWeek, Southeast Asia: A Surge From Electronics,
August 6, 2000, BusinessWeek, The Philippines Needs New Leadership (Int'l Edition),
October 29, 2000, BusinessWeek, A Power Vacuum Could Engulf The Philippines,
November 26, 2000, BusinessWeek, The Philippine President Who Won't Go Away (Int'l Edition),
February 4, 2001, BusinessWeek, Making Good On The Thriller In Manila (Int'l Edition),
February 17, 2002, BusinessWeek, Table: Bush's Delicate Agenda,
March 18, 2001, BusinessWeek, Online Extra: Q&A with Former President Fidel Ramos,
March 18, 2001, BusinessWeek, Online Extra: Q&A with the Philippine Finance Minister,
March 18, 2001, BusinessWeek, Online Extra: Q&A with the Philippine Finance Minister,
March 18, 2001, BusinessWeek, Getting Back to Business in Manila,
September 12, 2001, BusinessWeek, The Costs of Fighting Terrorism,
September 23, 2001, BusinessWeek, In Times Like These, Security Trumps Privacy,
September 24, 2001, BusinessWeek, Hackers Face Life Imprisonment under Anti-Terrorism Act,
February 3, 2002, BusinessWeek, Southeast Asia: Terror's New Front,
November 3, 2002, BusinessWeek, The Philippines: The Price of Terror,
The threat seemed remote, however, until September 11 brought the disaffected out of the shadows. Nur Ahmad, 20, unable to earn a living selling plastic sandals on the street, signed up with the Islamic Youth Movement on Oct. 2. "I dreamed a man in a black Arabian robe and a white beard told me: `Let's go for jihad. Let's go for jihad."' he says. As tension mounts, U.S. companies are keeping a low profile. Fearing an incident that would provoke more violence, Caltex Corp. has decided not to give guns to its guards. "We'd rather have something stolen than have somebody killed," says Bob Galbraith, managing director of Caltex in Pekanbaru, Riau province. While that may not sound reassuring, it's an apt expression of the U.S. corporate mood in Indonesia these days: Make no sudden moves. By Michael Shari in Jakarta
October 28, 2001, BusinessWeek, Investment May Be the Answer to Terrorism,
Your coverage of the economic impact of the September 11 attack will be required reading in my economics principles class now under way ("Rethinking the economy," Special Report, Oct. 1). The histories of many countries, e.g., Ireland, provide ample evidence that young people will continue to heed calls to political radicalism, terrorism, or crime in places where no hope for economic or political betterment exists at the economic bottom.
After we take the revenge we feel we must and build the electronic security Maginot Line we naively think will protect us, the U.S. government and/or the global business community should fund, set up, and actually run a global network of Small Business Administration-style venture-capital organizations with branches in the cities of impoverished countries. Staffing might come from specially trained Peace Corps-style volunteers [drawn from] the ranks of experienced retired managers. If we really believe that capitalism is the best long-run answer, let's provide some capital.
Thomas P. Egan
Moravian College
Bethlehem, Pa. There is no intrusion upon a person's privacy from government records of fingerprints or similar biometric data or from the requirement of a national identity card ("Security vs. civil liberties," Special Report, Oct. 1).
By contrast, dossiers of nonbiometric data do pose a threat to privacy and civil liberties--such facts as a person's religious or political beliefs, organizational memberships, familial relationships, sources of income, or expenditure patterns, etc. If such dossiers must be maintained on a very limited portion of the population, [we need] the most stringent safeguards to assure confidentiality and that the information is never used in an improper or illegal manner.
Benjamin D. Sherman
Saddle Brook, N.J.
Your statement that "Japanese civilians were interned during World War II" is misleading. The people interned were Americans, not Japanese. Americans of Japanese descent were rounded up on the West Coast and sent to internment camps solely on the basis of their ancestry.
T. Tokiyama
Los Angeles "The roots of resentment" (Special Report, Oct. 1) should also include the resentment that Americans feel toward the rest of the world. This resentment has its roots in the way America is treated by its "allies" and countries that are the beneficiaries of billions of dollars in U.S. aid. It is increasingly clear that only one country will stand with the U.S. in times of conflict: Britain. The rest of the world wants the U.S. to mind its own business. We should do exactly that. If we have made the rest of the world hate us by giving them aid and supporting them in their times of need, what do we have to lose?
Michael Laudon
San Jose, Calif.
"The roots of resentment" left out one important point: America has often developed partnerships with oppressive dictators and regimes, giving them weapons, training, intelligence, and money through covert operations. These partners have committed horrible crimes against their own people and, when we no longer had a use for them, we've fashioned these temporary "friends" into enemies. As a result, the U.S. is often perceived as being a capricious, unfair bully that makes rules, treaties, and friendships, only to break them when we feel it is in our best interests.
Douglas Reed
Morrisville, N.C. "Bush's fragile coalition" (Special Report, Oct. 1) need not be fragile if the so-called friendly Arab nations decide to do themselves a favor by working with us to remove the "terrorist cancer" that they have been harboring for some time.
This will be the beginning of the end of their own regimes unless they act now with us as true partners for their own safety. The Bush Administration's task is to hammer this point over and over. (They may still choose to dislike our way of life if they so desire.)
Zaven S. Touloukian
Camden, S.C. Whereas drug users in the U.S. are treated as criminals who should be locked up, drug users in Europe are more likely to be invited to participate in society ("It's time to give up the war on drugs," Economic Viewpoint, Sept. 17). Heavy users are helped through treatment rather than penalties. Results appear to be overwhelmingly good and include reduced crime rates.
Stefan Hultberg
Roskilde, Denmark
I can't believe how governments all over the world are willing to forfeit billions of dollars of potential drug-tax income to the mafia. Meanwhile, they have no objections to selling alcohol--not to mention weapons!
Vera Schmidt
Vienna
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October 28, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears,
November 19, 2002, BusinessWeek, Singapore's Surprise Pact with Uncle Sam,
Washington has decided to cut Singapore some slack in perilous times. After a sleepless night of marathon negotiations, visiting U.S. Trade Representative Robert B. Zoellick and Singapore Trade & Industry Minister George Yeo announced on Nov. 19 that they had "completed the substance" of Washington's first bilateral free-trade agreement (FTA) with an Asian nation.
Sources familiar with the negotiations see the U.S. trying to accomplish two goals with the surprise agreement: Reward Singapore for its assistance in the war against terror since September 11 and use bilateral agreements to advance global free trade, instead of waiting for a multilateral accord under the World Trade Organization.
In the final push, negotiators appear to have cleared away several issues that had been stumbling blocks over two years of talks. Zoellick says the FTA would ensure that "steps" will be taken to allow foreign lawyers an unspecified degree of access to Singapore's courts and would promise "improvements" in retail banking as well as "special provisions" for foreign companies in government procurement. He declined to go into detail.
BEYOND TRADE. The one issue that Zoellick says the two countries "have still to work on" is Singapore's reluctance to allow foreigners to transfer capital freely out of the country in the event of a crisis. Still, declared Yeo: "Both sides have hammered out an agreement that we can be proud of."
The deal has more to it than trade economics, however. The Bush Administration wants to reward Singapore for supporting worldwide anti-terrorism efforts, especially since a car bomb in nearby Bali killed nearly 200 people in mid-October. Singapore authorities reacted swiftly to a videotape discovered in Kabul by Allied troops in December, 2001, that exposed an al Qaeda-linked terror cell in the city-state. The government arrested 32 alleged terrorists in January and August. It has also thwarted several planned terrorist attacks, including one to bomb the U.S., British, Australian, and Israeli embassies in Singapore.
In October, Senior Minister Lee Kuan Yew paid an unofficial visit to Paris and met with Jacques Chirac -- after which the French leader voiced support for U.S. and U.N. efforts to disarm Iraq. Plus U.S. aircraft carriers use a giant berth that Singapore built in 1999 to forge closer defense ties with the Pentagon. The bottom line: Washington now considers Singapore "a strong friend" -- though still technically not an ally -- at a time when investigators are turning up new evidence of al Qaeda-linked terror cells in nearby Philippines, Indonesia, and Malaysia, says a Western diplomat.
TOO AMBITIOUS? The agreement, which both sides are calling "comprehensive," would give Singapore the undisputed moniker of free trader -- and do so at a time when the WTO runs the risk of faltering on a new round of talks aimed at reducing global trade barriers. Sources familiar with the U.S.-Singapore negotiations fear that the WTO set an overly broad agenda at its ministerial meeting in Doha, Qatar, earlier in 2002 with a three-year deadline for reaching a new global accord that could prove difficult to meet.
While widely perceived as a tough bargainer, Zoellick sees bilateral agreements as a means of advancing global free trade if a new round of talks bogs down. Immediately before his arrival in Singapore, he visited Canberra to officially commence negotiations for a bilateral U.S.-Australia FTA. "They [the U.S.] have given up on Doha being successful, and they're cherry-picking," says a management consultant in Singapore.
Singapore gets one more bonus: An FTA could give its sputtering economy a boost. On Nov. 18, the government announced that gross domestic product will grow only 2.5% this year -- a full percentage point less than predicted -- thanks to weak demand for Singapore's all-important electronics exports in the U.S. Implementing a free-trade zone could add 0.7 of a percentage point to economic growth, according to some studies -- saving Singapore companies nearly $100 million annually on U.S. tariffs.
FAST PASSAGE. Plus, it will be easier for Singapore to continue to present itself, as it has for decades, as a regional hub for free trade and financial services.
What a difference from a few weeks ago, when U.S. trade negotiators told economists in Singapore that they would be opposed to a "symbolic" accord. They were critical of previous FTAs that Singapore has negotiated with Japan and New Zealand as "not ambitious." Now, Zoellick is calling the U.S.-Singapore deal "comprehensive" -- and saying it could be signed by yearend, go before Congress in early 2003, and take effect in early 2004. All in all, a surprising turn with a promising ending. By Michael Shari in Singapore
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December 29, 2002, BusinessWeek, Is Democracy Dangerous?,
WORLD ON FIRE
September 24, 2001, BusinessWeek, Hackers Face Life Imprisonment under Anti-Terrorism Act,
September 30, 2001, BusinessWeek, What Terrorism Means for the Economy,
October 2, 2001, BusinessWeek, Alternative Anti-Terror Bill Rejects Life Sentence For Hackers,
October 7, 2001, BusinessWeek, Table: The Anti-Terrorism Deal,
October 7, 2001, BusinessWeek, Rethinking America's Place in the World,
October 11, 2001, BusinessWeek, Terrorism and the Global Economy,
October 14, 2001, BusinessWeek, Terrorism Jitters Throw Europe Stocks Off Course,
October 14, 2001, BusinessWeek, Bio-Terrorism under the Microscope,
October 14, 2001, BusinessWeek, Investment May Be the Right Antidote to Terrorism,
October 14, 2001, BusinessWeek, Is a Holy War Brewing?,
October 22, 2001, BusinessWeek, A Tourist Paradise Shadowed by Terror,
October 23, 2001, BusinessWeek, A Tourist Paradise Shadowed by Terror, by Mark L. Clifford,
October 28, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears,
October 28, 2001, BusinessWeek, Investment May Be the Answer to Terrorism,
October 28, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears,
October 28, 2001, BusinessWeek, Map: The Philippines,
October 29, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears, Mark L. Clifford,
November 4, 2001, BusinessWeek, Sniffing Out Bombs,
November 11, 2001, BusinessWeek, Malaysians Condemn the September 11 Attacks,
November 25, 2001, BusinessWeek, Is Privacy, Too, a Victim of Terrorism?,
December 02, 2001, BusinessWeek, Now, "A Different Kind of War",
December 9, 2001, BusinessWeek, Table: Covering Terrorism,
December 9, 2001, BusinessWeek, Commentary: Terror Insurance: How to Stop the Coming Crisis,
December 18, 2001, BusinessWeek, Making Foreign Aid Pay Off,
December 30, 2001, BusinessWeek, Israel: Terrorism Zaps the Economy,
February 3, 2002, BusinessWeek, Southeast Asia: Terror's New Front,
February 20, 2002, BusinessWeek, Terrorism Talks Open RSA Conference,
February 25, 2002, BusinessWeek, Small Biz vs. Terrorism,
March 17, 2002, BusinessWeek, Is Washington Fighting Terrorism on Too Many Fronts?,
March 24, 2002, BusinessWeek, Jakarta Crackdown,
May 9, 2002, BusinessWeek, Megawati Turns Tougher on Terrorism,
June 2, 2002, BusinessWeek, Anti-Terror Pact in Asia,
June 9, 2002, BusinessWeek, The Myth That Poverty Breeds Terrorism,
June 30, 2002, BusinessWeek, What Southeast Asia Needs Now,
August 5, 2002, BusinessWeek, Return of the Imperial Presidency,
September 10, 2002, BusinessWeek, The Cost of Fighting Terrorism,
September 15, 2002, BusinessWeek, The Cost of Fighting Terrorism,
September 15, 2002, BusinessWeek, Graphic: A Report Card on Counter-Terrorism Technologies,
October 27, 2002, BusinessWeek, Bali's Heavy Damage,
October 27, 2002, BusinessWeek, Fallout from Bali May Clobber Southeast Asia,
October 27, 2002, BusinessWeek, The Philippines: The Price of Terror,
October 29, 2002, BusinessWeek, Steering the Philippines through a Storm,November 3, 2002, BusinessWeek, The Philippines: The Price of Terror,
November 19, 2002, BusinessWeek, Singapore's Surprise Pact with Uncle Sam,
December 29, 2002, BusinessWeek, Is Democracy Dangerous?,
January 15, 2003, BusinessWeek, Terrorism: A Gulf Between Fear and Fact,
January 15, 2003, BusinessWeek, Terrorism: A Gulf Between Fear and Fact,
February 2, 2003, BusinessWeek, The Way, Way Back Office,
February 6, 2003, BusinessWeek, Treasuries Finish Higher on Terrorism Alert,
February 19, 2003, BusinessWeek, Modeling Terrorism Risks for Business,
February 6, 2003, BusinessWeek, Treasuries Finish Higher on Terrorism Alert,
February 19, 2003, BusinessWeek, Modeling Terrorism Risks for Business,
February 19, 2003, BusinessWeek, The Profits of Doom,
March 23, 2003, BusinessWeek, Indonesia: Consumer Heaven?,
April 13, 2003, BusinessWeek, Commentary: Terrorism: Put the Money Where the Danger Is,
April 23, 2003, BusinessWeek, The Philippines: The Ayala Touch,
April 27, 2003, BusinessWeek, The Philippines: The Ayala Touch,
May 27, 2003, BusinessWeek, A Philippine Foothold in Iraq,
June 3, 2003, BusinessWeek, A Realistic Reformer in the Philippines,
July 27, 2003, BusinessWeek, What the Failed Manila Coup Left Behind,
August 24, 2003, BusinessWeek, Online Extra: Jakarta: "We're Going to Fight" Terror,
September 14, 2003, BusinessWeek, Southeast Asia: Look for a Double-Digit Turnaround,
September 23, 2001, BusinessWeek, The Costs of Fighting Terrorism,
September 23, 2003, BusinessWeek, A Talk with the Philippine's Camacho,
September 28, 2003, BusinessWeek, The Philippines' Camacho: "Less Contagion Effect",
December 7, 2003, BusinessWeek, Election Tensions In The Philippines,
December 28, 2003, BusinessWeek, Q&A: Ajay Kapur,
March 28, 2004, BusinessWeek, War On Terror: New Lessons,
May 9, 2004, BusinessWeek, No Quick Fixes For Terrorism,
July 28, 2004, BusinessWeek, On the War Against Terrorism and the Struggle for Womens Rights,
August 2, 2004, BusinessWeek, Are the Markets Steeled to Terror?,
October 10, 2004, BusinessWeek, What It Takes To Fight Terrorism,
November 14, 2004, BusinessWeek, The Philippines: Getting the Message,
June 12, 2005, BusinessWeek, Decades Of Terror Blunders,
July 17, 2005, BusinessWeek, Arroyo: Fighting On Two Fronts,
July 26, 2005, BusinessWeek, How Arroyo Is Dodging Impeachment,
December 27, 2005, BusinessWeek, The Philippines' New Gold Rush,
January 29, 2006, BusinessWeek, Online Extra: Answering the Call in Manila,
February 20, 2006, BusinessWeek, Economics and ecological disasters in the Philippines,
August 9, 2006, BusinessWeek, Anti-terrorism portfolio rises on British plot news,
August 13, 2006, BusinessWeek, Terrorism Is Changing The Dynamic of Air Travel. Take The Halo, Not...,
September 18, 2006, BusinessWeek, The Philippines' Awesome Outsourcing Opportunity,
November 22, 2006, BusinessWeek, President Arroyo's Vision for the Philippines,
March 7, 2007, BusinessWeek, Venture Capital in Asia? Think Philippines,
April 7, 2008, BusinessWeek, Intel Prepares to Close Philippine Plant,
June 16, 2008, BusinessWeek, Philippine Pirates Still Trouble,
July 27, 2003, BusinessWeek, What the Failed Manila Coup Left Behind,
August 24, 2003, BusinessWeek, Online Extra: Jakarta: "We're Going to Fight" Terror,
September 14, 2003, BusinessWeek, Southeast Asia: Look for a Double-Digit Turnaround,
September 23, 2001, BusinessWeek, The Costs of Fighting Terrorism,
September 23, 2003, BusinessWeek, A Talk with the Philippine's Camacho,
September 28, 2003, BusinessWeek, The Philippines' Camacho: "Less Contagion Effect",
December 7, 2003, BusinessWeek, Election Tensions In The Philippines,
December 28, 2003, BusinessWeek, Q&A: Ajay Kapur,
March 28, 2004, BusinessWeek, War On Terror: New Lessons,
May 9, 2004, BusinessWeek, No Quick Fixes For Terrorism,
July 28, 2004, BusinessWeek, On the War Against Terrorism and the Struggle for Womens Rights,
August 2, 2004, BusinessWeek, Are the Markets Steeled to Terror?,
October 10, 2004, BusinessWeek, What It Takes To Fight Terrorism,
November 14, 2004, BusinessWeek, The Philippines: Getting the Message,
June 12, 2005, BusinessWeek, Decades Of Terror Blunders,
July 17, 2005, BusinessWeek, Arroyo: Fighting On Two Fronts,
July 26, 2005, BusinessWeek, How Arroyo Is Dodging Impeachment,
December 27, 2005, BusinessWeek, The Philippines' New Gold Rush,
January 29, 2006, BusinessWeek, Online Extra: Answering the Call in Manila,
February 20, 2006, BusinessWeek, Economics and ecological disasters in the Philippines,
August 9, 2006, BusinessWeek, Anti-terrorism portfolio rises on British plot news,
August 13, 2006, BusinessWeek, Terrorism Is Changing The Dynamic of Air Travel. Take The Halo, Not...,
September 18, 2006, BusinessWeek, The Philippines' Awesome Outsourcing Opportunity,
November 22, 2006, BusinessWeek, President Arroyo's Vision for the Philippines,
March 7, 2007, BusinessWeek, Venture Capital in Asia? Think Philippines,
April 7, 2008, BusinessWeek, Intel Prepares to Close Philippine Plant,
June 16, 2008, BusinessWeek, Philippine Pirates Still Trouble,
July 29, 2008, BusinessWeek, Recession to Boost Outsourcers in Philippines,
August 5, 2008, BusinessWeek, The Philippines: Competing with China and Vietnam,
October 13, 2008, BusinessWeek, Inflation Poses Big Challenge for Philippine Outsourcers,
October 27, 2008, BusinessWeek, Battle for AIG's Philippine Assets Intensifies
April 1, 2009, BusinessWeek, Indian Outsourcer Plans More Philippines Deals,
October 13, 2009, BusinessWeek, IBM to Apply Analytics to War on Terror,
December 1, 2010, BusinessWeek, Philippine Call Centers Overtake India,
September 1, 2011, BusinessWeek, The God Clause and the Reinsurance Industry,
September 1, 2011, BusinessWeek, Political Violence: How Insurers Measure the Risk,
September 7, 2011, BusinessWeek, It’s Time to Rethink Counterterrorism Spending,
May 10, 2012, BusinessWeek, Top Headlines: China Issues Philippine Warning,
May 17, 2012, BusinessWeek, Manny Pacquiao denounces anti-gay allegations
May 23, 2012, BusinessWeek, Philippines accuses China anew of flaring tensions,
May 29, 2012, BusinessWeek, Top Philippine judge fired for not declaring $2.4M,
April 20, 2012, BusinessWeek, Philippines says new China ship aggravates sea row,
April 25, 2012, BusinessWeek, Philippines arrests 12 Vietnamese fishermen,
April 27, 2012, BusinessWeek, Philippines accepts bids for 5 energy contracts,
June 5, 2012, BusinessWeek, 2 Chinese traders abducted in southern Philippines,
June 15, 2012, BusinessWeek, Veteran Mideast TV reporter missing in Philippines,
June 18, 2012, BusinessWeek, After Philippines, China leaves disputed shoal,
June 21, 2012, BusinessWeek, Indonesian court gives Bali bomber 20-year term,
June 25, 2012, BusinessWeek, Philippines: Chinese boats leave disputed lagoon,
June 27, 2012, BusinessWeek, Ford to close assembly plant in Philippines,
July 4, 2012, BusinessWeek, Philippine official dismissed after Facebook photo,
July 4, 2012, BusinessWeek, Philippines says S&P upgrade nod to fiscal policy,
July 20, 2012, BusinessWeek, Philippines says boy had deadly virus but recovers,
July 31, 2012, BusinessWeek, Cebu Pacific to sell A319 jets to US airline,
August 5, 2008, BusinessWeek, The Philippines: Competing with China and Vietnam,
October 13, 2008, BusinessWeek, Inflation Poses Big Challenge for Philippine Outsourcers,
October 27, 2008, BusinessWeek, Battle for AIG's Philippine Assets Intensifies
April 1, 2009, BusinessWeek, Indian Outsourcer Plans More Philippines Deals,
October 13, 2009, BusinessWeek, IBM to Apply Analytics to War on Terror,
December 1, 2010, BusinessWeek, Philippine Call Centers Overtake India,
September 1, 2011, BusinessWeek, The God Clause and the Reinsurance Industry,
September 1, 2011, BusinessWeek, Political Violence: How Insurers Measure the Risk,
September 7, 2011, BusinessWeek, It’s Time to Rethink Counterterrorism Spending,
May 10, 2012, BusinessWeek, Top Headlines: China Issues Philippine Warning,
May 17, 2012, BusinessWeek, Manny Pacquiao denounces anti-gay allegations
May 23, 2012, BusinessWeek, Philippines accuses China anew of flaring tensions,
May 29, 2012, BusinessWeek, Top Philippine judge fired for not declaring $2.4M,
April 20, 2012, BusinessWeek, Philippines says new China ship aggravates sea row,
April 25, 2012, BusinessWeek, Philippines arrests 12 Vietnamese fishermen,
April 27, 2012, BusinessWeek, Philippines accepts bids for 5 energy contracts,
June 5, 2012, BusinessWeek, 2 Chinese traders abducted in southern Philippines,
June 15, 2012, BusinessWeek, Veteran Mideast TV reporter missing in Philippines,
June 18, 2012, BusinessWeek, After Philippines, China leaves disputed shoal,
June 21, 2012, BusinessWeek, Indonesian court gives Bali bomber 20-year term,
June 25, 2012, BusinessWeek, Philippines: Chinese boats leave disputed lagoon,
June 27, 2012, BusinessWeek, Ford to close assembly plant in Philippines,
July 4, 2012, BusinessWeek, Philippine official dismissed after Facebook photo,
July 4, 2012, BusinessWeek, Philippines says S&P upgrade nod to fiscal policy,
July 20, 2012, BusinessWeek, Philippines says boy had deadly virus but recovers,
July 31, 2012, BusinessWeek, Cebu Pacific to sell A319 jets to US airline,
August 17, 2012, BusinessWeek, US blogger accuses Filipino senator of plagiarism,
August 30, 2012, BusinessWeek, Philippines eyeing joint sea patrol with neighbors,
September 4, 2012, BusinessWeek, Philippine police boost security after bomb scare,
September 6, 2012, BusinessWeek, American Eagle to open stores in the Philippines,
September 7, 2012, BusinessWeek, Gunmen kill 1, wound 35 workers in Philippines,
September 18, 2012, BusinessWeek, Philippines deports 279 Taiwanese in online fraud,
September 20, 2012, BusinessWeek, University of Philippines bans anti-Islam film,
September 28, 2012, BusinessWeek, US Embassy warns Americans under threat in Manila,
October 2, 2012, BusinessWeek, Philippines, Muslim rebels close to peace deal,
October 7, 2012, BusinessWeek, Philippines, Muslim rebels agree on peace pact,
August 30, 2012, BusinessWeek, Philippine tycoon plans to build new airport,
August 31, 2012, BusinessWeek, Tsunami Alert Cancelled After Quake in Philippines,
August 31, 2012, BusinessWeek, Twitter Breaks News on 7.6 Quake in Philippines,
September 4, 2012, BusinessWeek, Philippine police boost security after bomb scare,
September 6, 2012, BusinessWeek, American Eagle to open stores in the Philippines,
September 7, 2012, BusinessWeek, Gunmen kill 1, wound 35 workers in Philippines,
September 18, 2012, BusinessWeek, Philippines deports 279 Taiwanese in online fraud,
September 20, 2012, BusinessWeek, University of Philippines bans anti-Islam film,
September 28, 2012, BusinessWeek, US Embassy warns Americans under threat in Manila,
October 2, 2012, BusinessWeek, Philippines, Muslim rebels close to peace deal,
October 3, 2012, BusinessWeek, Intelligence effort named citizens, not terrorists,
October 3, 2012, BusinessWeek, Media groups, Filipinos protest tough cyber law,
October 4, 2012, BusinessWeek, Ex-Philippine president arrested in plunder case
October 8, 2012, BusinessWeek, Philippine Fin Min: Rebel Deal 'Historic',
October 8, 2012, BusinessWeek, Benefits outweigh risks in Philippines peace deal,
October 8, 2012, BusinessWeek, Philippines, Muslim rebels agree on peace pactOctober 8, 2012, BusinessWeek, Benefits outweigh risks in Philippines peace deal,
October 9, 2012, BusinessWeek, Philippine Supreme Court suspends cybercrime law,
October 11, 2012, BusinessWeek, Drones: The Morality of War From the Sky,
October 13, 2012, BusinessWeek, Philippine peace deal seen as blow to terrorists,
October 15, 2012, BusinessWeek, ND soybean group hosting visitors from Philippines,
October 15, 2012, BusinessWeek, Muslim rebels ink Philippine pact as step to peace,
October 15, 2012, BusinessWeek, Europeans hoping to fight in Syria raise new fears,October 15, 2012, BusinessWeek, Muslim rebels ink Philippine pact as step to peace,
October 17, 2012, BusinessWeek, Stocks shine as Thais, Filipinos nurture stability,
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March 17, 1991, BusinessWeek, Philippines,
The military coup plotters who beset President Corazon Aquino during much of her presidency appear to have given up. Now, she seems likely to turn over the presidency to an elected successor next year.
The last attempt to topple Aquino took place in December, 1989. Since then, Defense Secretary Fidel Ramos has succeeded in rebuilding solidarity among loyal military officers. Now, the betting is that Aquino will back Ramos to succeed her in May, 1992, elections. Part of her legacy will be an accord, which is nearing completion, to extend U. S. rights at military bases.
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August 4, 1991, BusinessWeek, Southeast Asia,
Southeast Asia should be reveling in peace and prosperity. Yet, anxiety is rippling through the region. As Washington cuts back its military presence in the Pacific and forges a North American trade bloc, the leaders of Southeast Asia are hotly debating whether to form an economic bloc and security alliance of their own.
America's clout already is slipping. That was the message coming from the July 19-22 meeting in Kuala Lumpur of foreign ministers from the Association of Southeast Asian Nations (ASEAN) and attended by Secretary of State James Baker. To demonstrate their own economic might, the ministers endorsed a proposal to make ASEAN a "free-trade zone" within a decade. They also promised to study schemes for further economic integration, including a plan by Malaysian Premier Datu Seri Mahathir Mohammad, the firebrand of this new Asian self-assertiveness. He is calling for an East Asia Economic Group that excludes the U.S. It's not quite Fortress Asia, but the tone of the talks gave a U. S. observer reason to fear that this may lead to "a unified front against the U.S."
Talk of a new security alliance that may include the Soviet Union and China makes the U. S. even more jumpy. Baker assured the group that the U. S. military commitment is firm and that the Pacific is safeguarded by bilateral treaties and regional alliances. But after announcements of U. S. troop withdrawals and the closing of volcano-stricken Clark Air Base in the Philippines, the Asians are moving to fill the vacuum, amassing their own high-tech arsenals. They are worried about potential flashpoints, such as the oil-rich and heavily fortified Spratly Islands contested by China, Vietnam, Malaysia, the Philippines, and Taiwan. As Southeast Asia flexes its new political muscle, Washington can no longer expect to call all the shots.
Pete Engardio Kuala Lumpur
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September 8, 1991, BusinessWeek, Philippines,
A handful of "nationalist" legislators is threatening to push the U. S. Navy out of its Subic Bay base, despite wide public support for the American military presence there. The two countries signed an agreement on Aug. 27 allowing the Navy to use the base for an additional 10 years. But so far, political insiders say, backers of the accord have been able to line up only 14 firm yes votes of the 16 needed for ratification by the 23-member Philippine Senate. If the pact is rejected, the U. S. will have to pull out of Subic and smaller military facilities within a year after Sept. 16, when current leases expire. Washington is giving up Clark Air Base, now buried under volcanic ash from erupting Mt. Pinatubo.
Opponents led by Senate President Jovito Salonga argue that U. S. bases have perpetuated a "colonial mentality"--or that the $203 million annual payment offered by the U. S. isn't enough. They reflect opposition to the bases in the Manila media, influenced by vocal leftists and intellectuals.
But U. S. Representative Stephen J. Solarz (D-N. Y.), chairman of the House Asian & Pacific Affairs subcommittee, has a blunt message for the Filipino legislators. He will tell them, aides say, that "this is the best deal the Philippines is likely to get, and they'd be fools not to accept it." Solarz was scheduled to arrive in Manila at the end of August to reinforce a massive lobbying campaign by Aquino, the Philippine armed forces, and business groups in support of the pact.
So far, the Senate hasn't scheduled a debate on the agreement. If it doesn't act by Sept. 16, the U. S. Navy is likely to start at least preliminary steps to withdraw. A pullout could eventually weaken other ties between the two countries--including special trade benefits for the Philippines. On Manila's two stock exchanges, a yes vote by the Senate is expected to touch off a strong rally, while a no should trigger a steep plunge. EDITED BY JOHN PEARSON
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October 2, 1994, BusinessWeek, New Broom Sweeps Philippine Banking; Ramos Takes Aim At Oligarchy
Romeo Canlas, a mechanic in his late 40s, has discovered the hard way just how strong a cartel dominates the Philippine banking system. Since he started saving to pay his son's tuition bills, the interest rate paid by Bank of the Philippine Islands has amounted to about 4% a year--despite double-digit inflation. "When I started saving, I was sure I'd have enough," recalls Canlas, staring in disbelief at his passbook. "But the tuition went up, and the interest [on my savings] didn't."
For decades, a group of elite families has dominated the Filipino banking system and other industries. They have benefited mightily from government protectionism and political connections, getting rich at the expense of people such as Canlas. Most of the nation's 26 commercial banks were more interested in funding affiliated businesses, such as property development and agriculture, than in paying a decent rate of return to depositors.
"SHOT ACROSS THE BOW." Now those days seem numbered. President Fidel V. Ramos has vowed to break up the family monopolies and end their closed markets. With the approval this summer of banking-reform legislation, government authorities are now considering applications from several major foreign banks to open Philippine operations. Ramos also has attacked monopolies in shipping and telecommunications. His next target is likely to be insurance. "Ramos has put a shot across the bow," says David Bouckley, head of institutional sales for Philippine Asia Equity Inc. in Manila.
If the battle over banking reform is any indication, Ramos may succeed in ending the oligarchy's gravy train. This summer, he was able to push a bill through Congress clearing the way for the entry of up to 10 new foreign banks. Chase Manhattan, Deutsche Bank, Bank of Tokyo, Fuji Bank, American Express Bank International, and Bankers Trust are among the 20 banks that have expressed interest. Winners will have to commit about $8 million and be restricted to three branches. But their presence, however limited, will generate much-needed competition. "This is definitely a step in the right direction," says Scott Latham, vice-president for emerging markets at Bear, Stearns & Co.
Local banks claim they aren't threatened by foreigners. With reforms, though, analysts say spreads will narrow and mergers will increase. Says Topper Coronel, executive director of the Bankers Association of the Philippines: "We view [reforms] with positive ap-
prehension."
The ultimate goal is a system that channels savings toward nation-building. Fed up with banks that offer negative real-savings rates, millions of Filipinos have long spirited their money out of the country or stashed it under their mattresses. The country's savings rate is only 16%, compared with Malaysia's 34% and Thailand's 33%. So it's no coincidence that the Philippines has lagged in economic development, says Alex Magno, political scientist at the University of the Philippines. "Our banking system has failed to accomplish its twin social functions of mobilizing savings and providing loans to the most effective users of capital."
The banking reforms are part of Ramos' attempt to break up the cartels that benefited under former presidents Ferdinand Marcos and Corazon Aquino. Now that the wall around banking has cracked, it seems only a matter of time before other industries follow. Insurance may be the first, as foreigners will soon be allowed to own 100% of local companies. Other Ramos initiatives to perk up the economy also are on track. For instance, nearly a dozen companies have entered the telecommunications business, previously the monopoly of the powerful Cojuangco family. In early September, an initial public offering of Petron Corp., the former state-owned oil company, broke local stock-market records.
While they haven't thrown in the towel, the controlling families aren't likely to mount much of a fight. "They see the writing on the wall," says P.J. Garcia, an economist at the Center for Research & Communication, a Manila think tank. "There is a growing realization that you have to be able to compete in a borderless world."
The families also may be wondering whether it is wise to take on President Ramos. Banking reform passed despite their furious lobbying. The fight has left Ramos politically strong heading into congressional elections next spring. While the opposition once dominated Congress, Ramos has been able to build coalitions that put the legislature under his control. That should allow him to move forward with more reforms.
EDITED BY BRUCE EINHORN By Teresa Albor in Manila
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November 20, 1994, BusinessWeek, One Big Randy Global Village,
EVEN PHONE SEX IS UP against cheaper foreign competition. Americans are dialing up 15 million minutes a month for dirty talk from overseas, according to a new study by TeleGeography, a Washington-based consulting group. That makes the U.S. the No.2 foreign phone-sex user, behind Germany. About 1.5% of the world's international telephone calls now are placed to offshore phone-sex services.
Caribbean countries such as the Netherlands Antilles and the Dominican Republic are big providers, raking in millions in fees. So are Hong Kong and the Philippines. Long-distance carriers bill the caller but must pay a fee to the foreign phone companies, which split it with the sex services.
Unlike the costly ($5-plus per minute) 900 numbers in the U.S., callers to foreign sex lines can pay less than $1 per minute for an international call. And these calls aren't as conspicuous on phone bills to spouses and others. Catherine Arnst
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April 27, 1997, BusinessWeek, Tremors In Manila (Int'l Edition),
Is its real estate boom about to collapse as Bangkok's did?
On the most expensive plot of land in Manila, an office tower is going up. A group of well-heeled investors paid $15,000 a square meter for the 2-hectare site, a record for the Makati business district, where prices have soared 180% in two years. Construction workers are razing the old Philippine National Bank building and expect to finish the new tower by early next decade. "Demolition is going on," a sign warns passersby. "Watch out for falling debris."
Across Manila, developers and financiers are watching for fallout, but not necessarily a few wayward chunks of concrete. Instead, they fear a real estate collapse similar to the one that has just rocked Bangkok. With Thailand's banking and property markets in a tailspin, and Malaysia's showing similar signs of wear, investors are asking who will crack next. Many think it's Manila, where there soon will be a glut of commercial and luxury residential properties. In April, worries about the stability of developers helped push the Manila exchange's property index down 20% from its February high (chart).
IMPORT BINGE. There are more than enough similarities between Manila and Bangkok to spook investors. Both cities have had a building boom. Manila shares with Bangkok some of the worst traffic snarls in Asia. "It takes 45 minutes to go one kilometer," laments a local property executive. Like Thailand, the Philippines has been on an import binge, with its trade deficit hitting 14% of gross national product.
These are all signs of an economy that may be overheating, and overheated economies often have real estate crashes. Now, as jackhammers and cranes continue work on about 80 projects in Manila, supply suddenly threatens to far outpace demand. It once took developers in Makati just two months to pre-sell a commercial building to finance construction, says analyst Ivy Cayayan at Philippine Asia Equity Securities. "Now, even after six months, only half [the units] are pre-sold," she says. "There's obviously a glut."
Bangko Sentral, the central bank, is determined to avoid Thailand's mistakes. While insisting that "there is no cause for alarm," bank exec Diwa C. Guinigundo says officials soon will announce measures to make sure banks limit their exposure to the property market. In case property loans go sour, the central bank is working on ways to salvage them. "We want to be more cautious," says Guinigundo.
That message is getting through to Filipino bankers. The Philippine Commercial International Bank, one of the country's largest, has lowered its loan ratio, the amount of a property's appraised value that it uses as collateral, from 70% to 60%, because prices are escalating so much. Only 7% of the bank's loan portfolio is in property, says Rafael B. Buenaventura, PCI's president and CEO. Other big banks are moving carefully, he adds. Unlike Thailand, where some 30% of bank loans have been in property, Philippine commercial banks have an exposure of just 10% of their loan portfolios. "We better watch it so we don't fall into the same trap," says Buenaventura.
One thing working in the Philippines' favor is its late start. While Thailand and Malaysia have enjoyed torrid growth rates for nearly a decade, the country has endured coups, power outages, volcanic eruptions, and earthquakes. Only in the past two years has the economy been strong enough to create a real estate bubble. The extent of the problem is therefore smaller. "The Philippines has never been the flavor of the month," says Victor A. Abola, executive director of the Philippine Research Center in Hong Kong.
And real estate still has strength in places. In the low and medium sectors of the residential market, demand exists for about 1 million dwellings, says Guinigundo of Bangko Sentral. "A lot of players are moving to the countryside," says Florencio S. Santa Maria, vice-president of Guoco Property Development, which is building houses in the Manila suburbs. "The middle class is coming of age."
Meanwhile, developers are pushing ahead with other projects. Belle Bay Plaza, a 500,000-sq.-meter complex of hotels, shops, offices, and one of the world's largest casinos, is being built on land reclaimed from Manila Bay. Gregorio T. Yu, president and CEO of Belle Corp., is confident that developers can make Manila a hub for gamblers from Taiwan, Hong Kong, Japan, and other countries where betting is illegal.
Ironically, the situation could get scary if the economy picks up much more. Exports grew 17.7% last year, one of the best performances regionally. That wasn't enough to dent the trade gap, but overseas Filipinos sent home $7 billion in remittances, which kept the deficit from widening. If the economy creates enough jobs to attract more workers home, the Philippines would lose a precious source of foreign exchange.
All the more reason, then, for local bankers and developers to be careful. Thailand has served as "a useful early warning," says Buenaventura of PCI Bank. The danger signs in Manila are easy to spot. The question now is whether there is enough time, and will, to heed them.By Bruce Einhorn in ManilaReturn to top
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October 14, 2001, BusinessWeek, Is a Holy War Brewing?,
Nauful Dunggio lives thousands of miles from the seat of Islamic terror in the Middle East. But Indonesia's self-styled Islamic leader claims to be as outraged by U.S. hubris as Osama bin Laden himself--and swears that if the U.S. mounts an attack on Afghanistan, Americans in Indonesia will pay. The 32-year-old chief of the Hizbulloh Front--which claims no link with the Middle East's notorious Hezbollah--runs what he calls a training camp for prospective mujahideen (holy warriors) outside Jakarta. At one recent session in the living room of a safe house on the outskirts of Jakarta, Dunggio, with a severe crew cut and a baseball cap, watched with pride as an Islamic cleric trained 50 recruits to use their "inner spiritual power" in hand-to-hand combat. The highlight of the evening came when one recruit followed orders to grind a fluorescent bulb into a salad bowl until his hand bled. He then ate a handful of the fragments.
When his men are ready, says Dunggio, they'll fan out across the Indonesian archipelago and "sweep" all the Americans out of office buildings, five-star hotels, and gold mines. Then they'll deliver the infidels to local airports and tell them: "Because of your government's arrogance, you cannot live safely in Indonesia." If the infidels resist, Dunggio says, they'll be beaten.MALL BOMBS. Are these guys for real? Are militant groups such as the Hizbulloh Front a real threat to American interests? The fear that they may be is sending jitters through the diplomatic and corporate compounds of Jakarta. After all, Indonesia is an unstable nation of more than 220 million Muslims, where hundreds of thousands of unemployed youths seem ripe for recruitment to the fundamentalist cause. But Indonesian Muslims have relatively little history of religious extremism, with much of the violence that erupts in the country keyed to political and ethnic grievances.
Still, in August and September, two explosions ripped through the Atrium, a glitzy Jakarta shopping center owned by Chinese-Indonesian tycoon Sofian Wanandi. A suspect in the first attack was a Malaysian trained in Afghanistan, says Wanandi, citing a report prepared by Indonesian investigators. Meanwhile, in breakaway regions such as Aceh province, secessionists have mounted attacks on U.S. oil and mining facilities. In late September, Islamic militants, dressed in black and wielding farm tools, raided hotels in the Javanese city of Solo in a fruitless search for American guests.
So far, there is little hard evidence that Islamic terrorists have made serious inroads into Indonesia--as they appear to have done in the Philippines, where a relation of bin Laden is accused of founding Abu Sayyaf, a violent group dedicated to carving out a Muslim state there. "There are only 9 or 10 of these groups, and they're very small," says Anthony Smith, an expert on Indonesian politics at the Institute of Southeast Asian Studies in Singapore. But, adds Smith, "Indonesia really needs to take it seriously and nip it in the bud."
Instead, some powerful people seem intent on inflaming matters. Late last month, Vice-President Hamzah Haz, a hard-line Muslim leader, said the September 11 attacks had "cleansed" America of its "sins." Such comments are bound to complicate matters for Indonesian President Megawati Sukarnoputri, who has put her job on the line by backing George W. Bush's war on terrorism. Megawati is in a real bind. She can't protect Americans in Indonesia without angering Islamic militants, and she can't warm up to the militants without jeopardizing Bush's offer of an additional $350 million in economic aid. And that aid is crucial for an economy that is expected to grow an anemic 1% this year.
American expatriates are plenty spooked, too--even those who have endured previous Indonesian tumult. While no attacks on U.S. investments have taken place since September 11, the potential for trouble remains. The Hizbulloh Front's Dunggio leads hundreds of students in rallies every day in front of the U.S. Embassy in Jakarta, with some demonstrators threatening to trash the building the way their "Afghan brothers" did in Kabul in late September. When Ambassador Robert S. Gelbard asked the national police chief on Sept. 27 to disperse the protesters, the chief refused on grounds that Indonesia is now a democracy. A short walk from the ambassador's residence, young unemployed men line up to join the Islamic Youth Movement, another militant group, which says it will train them at a "secret" location on Java to fight in Afghanistan.
Americans are preparing for the worst. On Sept. 28, the embassy announced that all nonessential staff were free to leave the country. Nike Inc. ordered a "precautionary" evacuation of dependents of expatriate employees. Spokesmen for ExxonMobil, Newmont Mining, and Caltex say they're adding new guards and procedures to their security details. A representative of Freeport-McMoRan Copper & Gold says it is instituting anti-hijacking procedures aboard its internal airline, Airfast, which traverses the archipelago daily. "There have been some vague and not-so-vague threats to the American community," says a U.S. businessman in Jakarta. "That causes a lot of nervousness."GUERRILLAS. What the oil and mining companies fear is that secessionist struggles in the remote regions where they operate will morph into a holy war. By one account, bin Laden associates have sought to influence the Free Aceh Movement. Al Chaidar, an Acehnese author of Islamic books, told BusinessWeek that in early 1999 a Jordanian man calling himself a "surveyor" for bin Laden invited him to a secret meeting in Malaysia's Sabah state. The Jordanian asked if the guerrillas of the Free Aceh Movement, some of whom fought against the Soviet occupation of Afghanistan in the 1980s, were fighting a "true holy war" against ExxonMobil. He also asked if they were worthy of aid from bin Laden. Chaidar, who has described himself as a "nonviolent fundamentalist," replied that the Aceh conflict was secessionist and not religious in nature. The Jordanian left without funding the guerrillas.
Chaidar has also been contacted by the "military" wing of Darul Islam, an Islamic group that boasts 18 million members. Last year on Christmas Eve, this group was blamed when bombs exploded at churches in 18 cities. "There are real Islamic terrorists in Indonesia," Chaidar warns. "And they're very dangerous."
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October 23, 2001, BusinessWeek Online, A Tourist Paradise Shadowed by Terror, by Mark L. Clifford,
The Muslim island of Mindanao was turbulent even before September 11, now, foreigners are steering clear. But peace may be possible.
From the serenity of the Marco Polo Hotel in Davao City, Mindanao sure doesn't look like an island that's caught up in the web of international terrorism. From my room overlooking this low-rise city of 1.4 million people, I can see the ocean and across a bay to resort-dotted Samal Island.
Yet sleepy Mindanao has been caught up in the whirlwind of terrorism and its aftermath (see BW, 10/29/01, "The Philippines: An Island Shaken by Terror"). Pentagon consultants have just arrived to help train Philippine soldiers, who are looking for guerrillas -- most people call them bandits -- from the notorious Abu Sayyaf group. Abu Sayyaf (the name means "Bearer of the Sword") kidnapped 20 people, including three Americans, from a diving resort in May. The decapitated body of one of the Americans was found earlier this month. An American missionary couple is still being held.
Abu Sayyaf claims links with Osama bin Laden, whose brother-in-law visited the group in the early and mid-1990s. Another local guerrilla group, the Moro Islamic Liberation Front (MILF), in the past has sent fighters to Afghanistan to fight alongside the mujahideen. Now, supporters in the area claim to have signed up 100,000 fighters to join bin Laden after the U.S.-led assault on Afghanistan began.
BAD HABITS. Even before the September 11 attacks, it was pretty easy to get spooked by Mindanao. Fighting has been going on since the Spaniards tried to colonize this Muslim outpost more than four centuries ago. Two Muslim guerrilla groups (the MILF and the Moro National Liberation Front, or MNLF) have fought the government on and off for three decades. In the past two years, Abu Sayyaf -- seemingly more interested in cash than politics -- has kidnapped scores of people, including a slew of foreign journalists who had come to check out the action last year. Close to where I'm staying, two security guards were killed in May when the most exclusive resort on idyllic Samal Island, Pearl Farm Beach Resort, was approached by a boatful of gunslingers.
The U.S. has a travel advisory on much of Mindanao, warning that travelers could face "crime and insurgent activity" in a number of provinces. More generally, the U.S. State Dept. warns that "the threat of terrorist action by extremists, both domestic and foreign, does exist in the Philippines. There are periodic reports of plans for possible kidnapping or terrorist acts aimed at U.S. government installations, public and private institutions, and transportation carriers." And on Oct. 17, an Italian priest who had lived on Mindanao for three years was abducted while saying Mass.
Yet the unrest I found had very little to do with international terrorism and a lot to do with local grievances and the habit of using guns and grenades to solve problems. Some of these problems are stubborn legacies of centuries of underdevelopment and colonization. Others are just personal grudges.
LOST AT SEA? Take the Oct. 17 rocket-grenade attack on the port of Cotabato City, about 90 miles east of the city itself, which the U.S. embassy advises people to stay away from. Sounds alarming. But it seems, according to local papers, the acting port head suspects his recently ousted predecessor of being behind the attacks. So the problems probably boil down to a squabble between two men -- both former guerrillas -- who each wanted to run the port.
And that attack on Pearl Farm? Reports at the time blamed Abu Sayyaf for the gun battle at the famed resort. But locals now say they aren't so sure. One plausible theory lays it on a gunrunning operation gone wrong. Gunrunners (who may have been Abu Sayyaf members, but probably weren't), trying to move their muscle across the bay south of Davao City, ran into high seas and the crew got lost. They pulled up to Pearl Farm to ask for directions. Security guards at the resort figured, reasonably enough, that a boat filled with gunslingers approaching in the middle of the night meant an assault designed to snatch some foreign tourists. The guards started firing, the pirates started firing back, and at the end two guards were dead.
The September 11 terrorists attacks in New York and Washington have battered Mindanao's tourist economy. Not because Mindanao is really the focus of a new war on terror -- but because nervous tourists have crossed this lovely island off their list. The Japanese government slapped a ban on travel companies offering tours to the island. Though the crime rate in Davao City is lower than in Manila, even people from the capital are afraid to come. Rooms at the deluxe Marco Polo, which at 18 stories is Mindanao's tallest building, are going for just $65 a night. The hotel's staff of 300 will have to worry about their jobs if the slump continues.
HOPEFUL SIGNS. Mindanao could use a break -- and may actually be getting one. The first elections for the Autonomous Region of Muslim Mindanao are set for Nov. 26. One of the major guerrilla groups, the MNLF, signed for peace five years ago. The other, the MILF, has agreed to a ceasefire and started peace talks in the Malaysian capital of Kuala Lumpur on Oct. 16.
Hopeful signs abound that peace, given a chance, could flourish in Mindanao. One of the candidates for governor of the new Muslim region, Ibrahim P. Paglas III, or "Datu Paglas" as he is popularly known, comes from an influential family in an MILF-dominated area about 90 miles southwest of Davao City. At 24, Paglas took over as mayor of the town named for his family, the eponymous Datu Paglas, after his father was maimed and a younger brother killed in a grenade attack in the mid-1980s. (Datu is a hereditary honorific.) Back in those days, a dump truck filled with nearly 50 armed men provided security. (Dump trucks, Paglas and an aide explain, were good because they were high off the ground and offered his men a clear shot, yet their walls provided protection from return fire.)
In the 1990s, Datu Paglas invited some foreign investors, including Chiquita Brands International and a Saudi and Italian group, to build a banana plantation on family lands. The U.S. Agency for International Development has chipped in with technical assistance. So, too, have Israeli agricultural experts, even taking some of the plantation workers to Israel for training. The $26 million plantation now employs 2,000 people, mostly MILF cadres or supporters, and exports $15 million annually. Datu Paglas says his is the only Muslim town in Mindanao (and probably the whole country) with its own bank. Rural bank of Datu Paglas, soon to be the country's first Private Islamic Bank.
Is this venture at odds with the aims of the MILF? Not at all. Datu Paglas' uncle, who is the guerrilla group's chairman, has given his blessings to the project and to the Israeli assistance. And the dump truck full of armed soldiers? No more. Datu Paglas now travels unprotected, or with just one or two bodyguards, putting his faith in Allah to keep him safe. If Mindanao is to thrive, it needs a lot more places like Datu Paglas. That would give peace a chance.
From the serenity of the Marco Polo Hotel in Davao City, Mindanao sure doesn't look like an island that's caught up in the web of international terrorism. From my room overlooking this low-rise city of 1.4 million people, I can see the ocean and across a bay to resort-dotted Samal Island.
Yet sleepy Mindanao has been caught up in the whirlwind of terrorism and its aftermath (see BW, 10/29/01, "The Philippines: An Island Shaken by Terror"). Pentagon consultants have just arrived to help train Philippine soldiers, who are looking for guerrillas -- most people call them bandits -- from the notorious Abu Sayyaf group. Abu Sayyaf (the name means "Bearer of the Sword") kidnapped 20 people, including three Americans, from a diving resort in May. The decapitated body of one of the Americans was found earlier this month. An American missionary couple is still being held.
Abu Sayyaf claims links with Osama bin Laden, whose brother-in-law visited the group in the early and mid-1990s. Another local guerrilla group, the Moro Islamic Liberation Front (MILF), in the past has sent fighters to Afghanistan to fight alongside the mujahideen. Now, supporters in the area claim to have signed up 100,000 fighters to join bin Laden after the U.S.-led assault on Afghanistan began.
BAD HABITS. Even before the September 11 attacks, it was pretty easy to get spooked by Mindanao. Fighting has been going on since the Spaniards tried to colonize this Muslim outpost more than four centuries ago. Two Muslim guerrilla groups (the MILF and the Moro National Liberation Front, or MNLF) have fought the government on and off for three decades. In the past two years, Abu Sayyaf -- seemingly more interested in cash than politics -- has kidnapped scores of people, including a slew of foreign journalists who had come to check out the action last year. Close to where I'm staying, two security guards were killed in May when the most exclusive resort on idyllic Samal Island, Pearl Farm Beach Resort, was approached by a boatful of gunslingers.
The U.S. has a travel advisory on much of Mindanao, warning that travelers could face "crime and insurgent activity" in a number of provinces. More generally, the U.S. State Dept. warns that "the threat of terrorist action by extremists, both domestic and foreign, does exist in the Philippines. There are periodic reports of plans for possible kidnapping or terrorist acts aimed at U.S. government installations, public and private institutions, and transportation carriers." And on Oct. 17, an Italian priest who had lived on Mindanao for three years was abducted while saying Mass.
Yet the unrest I found had very little to do with international terrorism and a lot to do with local grievances and the habit of using guns and grenades to solve problems. Some of these problems are stubborn legacies of centuries of underdevelopment and colonization. Others are just personal grudges.
LOST AT SEA? Take the Oct. 17 rocket-grenade attack on the port of Cotabato City, about 90 miles east of the city itself, which the U.S. embassy advises people to stay away from. Sounds alarming. But it seems, according to local papers, the acting port head suspects his recently ousted predecessor of being behind the attacks. So the problems probably boil down to a squabble between two men -- both former guerrillas -- who each wanted to run the port.
And that attack on Pearl Farm? Reports at the time blamed Abu Sayyaf for the gun battle at the famed resort. But locals now say they aren't so sure. One plausible theory lays it on a gunrunning operation gone wrong. Gunrunners (who may have been Abu Sayyaf members, but probably weren't), trying to move their muscle across the bay south of Davao City, ran into high seas and the crew got lost. They pulled up to Pearl Farm to ask for directions. Security guards at the resort figured, reasonably enough, that a boat filled with gunslingers approaching in the middle of the night meant an assault designed to snatch some foreign tourists. The guards started firing, the pirates started firing back, and at the end two guards were dead.
The September 11 terrorists attacks in New York and Washington have battered Mindanao's tourist economy. Not because Mindanao is really the focus of a new war on terror -- but because nervous tourists have crossed this lovely island off their list. The Japanese government slapped a ban on travel companies offering tours to the island. Though the crime rate in Davao City is lower than in Manila, even people from the capital are afraid to come. Rooms at the deluxe Marco Polo, which at 18 stories is Mindanao's tallest building, are going for just $65 a night. The hotel's staff of 300 will have to worry about their jobs if the slump continues.
HOPEFUL SIGNS. Mindanao could use a break -- and may actually be getting one. The first elections for the Autonomous Region of Muslim Mindanao are set for Nov. 26. One of the major guerrilla groups, the MNLF, signed for peace five years ago. The other, the MILF, has agreed to a ceasefire and started peace talks in the Malaysian capital of Kuala Lumpur on Oct. 16.
Hopeful signs abound that peace, given a chance, could flourish in Mindanao. One of the candidates for governor of the new Muslim region, Ibrahim P. Paglas III, or "Datu Paglas" as he is popularly known, comes from an influential family in an MILF-dominated area about 90 miles southwest of Davao City. At 24, Paglas took over as mayor of the town named for his family, the eponymous Datu Paglas, after his father was maimed and a younger brother killed in a grenade attack in the mid-1980s. (Datu is a hereditary honorific.) Back in those days, a dump truck filled with nearly 50 armed men provided security. (Dump trucks, Paglas and an aide explain, were good because they were high off the ground and offered his men a clear shot, yet their walls provided protection from return fire.)
In the 1990s, Datu Paglas invited some foreign investors, including Chiquita Brands International and a Saudi and Italian group, to build a banana plantation on family lands. The U.S. Agency for International Development has chipped in with technical assistance. So, too, have Israeli agricultural experts, even taking some of the plantation workers to Israel for training. The $26 million plantation now employs 2,000 people, mostly MILF cadres or supporters, and exports $15 million annually. Datu Paglas says his is the only Muslim town in Mindanao (and probably the whole country) with its own bank. Rural bank of Datu Paglas, soon to be the country's first Private Islamic Bank.
Is this venture at odds with the aims of the MILF? Not at all. Datu Paglas' uncle, who is the guerrilla group's chairman, has given his blessings to the project and to the Israeli assistance. And the dump truck full of armed soldiers? No more. Datu Paglas now travels unprotected, or with just one or two bodyguards, putting his faith in Allah to keep him safe. If Mindanao is to thrive, it needs a lot more places like Datu Paglas. That would give peace a chance.
_________________________________________________________________________
October 29, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears, Mark L. Clifford, in Davao City,
In Mindanao, business struggles to survive as tension mounts
From afar, the lush island of Mindanao in the Philippines looks destined to become a new hot spot in the
U.S.-led war on terrorism. For 18 months, the Philippine military has been chasing members of Abu Sayyaf ("bearer of the sword"), a kidnapping ring that has had past contacts with Osama bin Laden's terrorist network and that has killed a string of hostages--including a U.S. tourist whose headless remains were identified in early October. The group is still holding an American missionary couple. Members of a larger radical group, the pro-independence Moro Islamic Liberation Front (MILF), fought with Afghanistan mujahideen a decade ago. A team of U.S. military personnel is about to arrive in the Philippines to advise the country's army on how to eradicate the extremists.
October 29, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears, Mark L. Clifford, in Davao City,
In Mindanao, business struggles to survive as tension mounts
From afar, the lush island of Mindanao in the Philippines looks destined to become a new hot spot in the
U.S.-led war on terrorism. For 18 months, the Philippine military has been chasing members of Abu Sayyaf ("bearer of the sword"), a kidnapping ring that has had past contacts with Osama bin Laden's terrorist network and that has killed a string of hostages--including a U.S. tourist whose headless remains were identified in early October. The group is still holding an American missionary couple. Members of a larger radical group, the pro-independence Moro Islamic Liberation Front (MILF), fought with Afghanistan mujahideen a decade ago. A team of U.S. military personnel is about to arrive in the Philippines to advise the country's army on how to eradicate the extremists.
On the ground, however, fears that Mindanao is about to erupt in jihad appear very overblown. Rallies in support of bin Laden and the Taliban have been surprisingly small. Philippine and Western security experts say assistance from international terrorist groups has actually dwindled in recent years to groups such as Abu Sayyaf-- whose main interest seems to be extracting ransom from hostages, rather than politics.
LOFTY GOAL. The big news in Mindanao is that the government and Islamic leaders have called a cease-fire and are trying to make peace. On Oct. 16, both sides met in Kuala Lumpur in hopes of negotiating a treaty within a year. Another faction, the Moro National Liberation Front (MNLF), laid down its arms five years ago. Now, the groups are gearing up for landmark elections on Nov. 26 to choose a government for the new Autonomous Region of Muslim Mindanao, comprising four provinces and 7 million of Mindanao's 18 million people. That doesn't mean lawlessness won't remain a problem. But if the peace holds, a decades-long dream of self-rule in one of Southeast Asia's most volatile regions could come true.
It's an ambitious goal. Few places in Asia need peace more desperately than Mindanao, whose deep-rooted malaise makes it a case study of how poverty and political desperation can foster violence. While East Asia boomed from the 1970s to the mid-'90s, Mindanao, 800 km south of Manila, was in upheaval. At the root of the unrest: grinding poverty, especially among the Muslim majority. There are pockets of wealth in major cities, but the money is largely in the hands of old Spanish families or the ethnic Chinese. Overall, 44% of the population lives on less than $400 a year, according to the Asian Development Bank. Of the Philippines' 24 most impoverished provinces, 16 are in Mindanao. "The basic problem is socioeconomic," says Faroq Hussain, a former guerrilla leader and now a candidate for governor of the autonomous region. In Davao City, business consultant Cesar B. Cuyugan Jr. agrees. "As long as there is discontent among Muslims in Mindanao," he says, "there will be Abu Sayyaf or groups like it. The best business in Mindanao will be kidnapping and gun-running."
HAPPIER DAYS. For a period after the 1996 peace accord, forged by former President Fidel V. Ramos, there was optimism: USAID and other development agencies began building highways and airports. Investment in everything from palm-oil plantations to tuna-processing plants rose sharply. Jumbo jets filled with sashimi roared off to Japan. New air routes and high-speed ferries opened to Malaysia and Indonesia.
Then came the Asian financial crisis, which caused a sharp currency devaluation and squelched property investment. El Niño and the worst drought in two decades hit at about the same time. Political tensions boiled over in April, 2000, when Abu Sayyaf kidnapped a group of tourists from a diving resort in nearby Malaysia. Two months later, then-President Joseph Estrada--on bad advice from military hawks--launched a campaign against the MILF, even as the army skirmished with the Abu Sayyaf to free hostages. In May, Abu Sayyaf snatched a group of tourists from the island of Palawan. That savaged the burgeoning convention business in Davao City, even though it is hundreds of kilometers from Abu Sayyaf redoubts and relatively safe.
The instability also has caused investment to plummet. A $26 million banana plantation in Magindanao, a stronghold of the MILF, is a case in point. Owned by Paglas Corp., it is regarded as a model of development, employing 2,000 people, most of them MILF members or sympathizers. It exports $15 million in fruit annually to markets from Japan to the Middle East. Investors include U.S. agribusiness giant Chiquita Brands International Inc. But due to the military attacks on the MILF last year, Paglas postponed plans to double capacity. Because of economic uncertainty, another large banana grower, Lapanday Foods, froze plans to convert a banana plantation into an industrial park.
Fallout from the September 11 attacks on the U.S. has worsened the island's pain. For safety reasons, the Japanese government now prohibits tour operators from selling packages to Mindanao. Occupancy at Davao City's deluxe 245-room Marco Polo Hotel--which had finally begun to recover from the 1999 kidnapping scare--has suddenly dropped from nearly 60% to about 50%. "The problem is the perception that Mindanao is torn by war," says Charles E. Feibel, who runs the USAID-funded Growth with Equity in Mindanao program and has lived on the island for a decade. "Investors won't come and take a look."
GOOD FISH. If peace somehow can be achieved, however, Mindanao's prospects could brighten. The success of the island's tuna industry, the result of steady investments in the 1990s in the city of General Santos, illustrates the potential. The industry employs 80,000 people and generates $1 billion a year in local income. Plans by a Malaysian business group for a $56 million palm-oil plantation and mill that would employ 50,000 are on the drawing boards. A $125 million international airport capable of handling 1.3 million passengers a year will open in Davao City in 2002. Tourism officials are trying to get Japanese and Chinese carriers to start service. "If we can push ahead with economic development, we can solve our problems," says plantation founder Ibrahim P. Paglas III, now a candidate for governor of the autonomous region.
None of this will happen, however, as long as Mindanao is viewed as a hotbed of radical, violent Islam. It's impossible to say how long the recent burst of goodwill will last--especially given the U.S. military assault on Afghanistan. The MILF "will be more sympathetic to the Taliban, especially if thousands of innocent civilians are killed," says a senior Philippine government official. However, the MILF is not pulling out of peace talks. It still is possible to bring stability and prosperity to this troubled island.
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Your coverage of the economic impact of the September 11 attack will be required reading in my economics principles class now under way ("Rethinking the economy," Special Report, Oct. 1). The histories of many countries, e.g., Ireland, provide ample evidence that young people will continue to heed calls to political radicalism, terrorism, or crime in places where no hope for economic or political betterment exists at the economic bottom.
After we take the revenge we feel we must and build the electronic security Maginot Line we naively think will protect us, the U.S. government and/or the global business community should fund, set up, and actually run a global network of Small Business Administration-style venture-capital organizations with branches in the cities of impoverished countries. Staffing might come from specially trained Peace Corps-style volunteers [drawn from] the ranks of experienced retired managers. If we really believe that capitalism is the best long-run answer, let's provide some capital.
Thomas P. Egan
Moravian College
Bethlehem, Pa. There is no intrusion upon a person's privacy from government records of fingerprints or similar biometric data or from the requirement of a national identity card ("Security vs. civil liberties," Special Report, Oct. 1).
By contrast, dossiers of nonbiometric data do pose a threat to privacy and civil liberties--such facts as a person's religious or political beliefs, organizational memberships, familial relationships, sources of income, or expenditure patterns, etc. If such dossiers must be maintained on a very limited portion of the population, [we need] the most stringent safeguards to assure confidentiality and that the information is never used in an improper or illegal manner.
Benjamin D. Sherman
Saddle Brook, N.J.
Your statement that "Japanese civilians were interned during World War II" is misleading. The people interned were Americans, not Japanese. Americans of Japanese descent were rounded up on the West Coast and sent to internment camps solely on the basis of their ancestry.
T. Tokiyama
Los Angeles "The roots of resentment" (Special Report, Oct. 1) should also include the resentment that Americans feel toward the rest of the world. This resentment has its roots in the way America is treated by its "allies" and countries that are the beneficiaries of billions of dollars in U.S. aid. It is increasingly clear that only one country will stand with the U.S. in times of conflict: Britain. The rest of the world wants the U.S. to mind its own business. We should do exactly that. If we have made the rest of the world hate us by giving them aid and supporting them in their times of need, what do we have to lose?
Michael Laudon
San Jose, Calif.
"The roots of resentment" left out one important point: America has often developed partnerships with oppressive dictators and regimes, giving them weapons, training, intelligence, and money through covert operations. These partners have committed horrible crimes against their own people and, when we no longer had a use for them, we've fashioned these temporary "friends" into enemies. As a result, the U.S. is often perceived as being a capricious, unfair bully that makes rules, treaties, and friendships, only to break them when we feel it is in our best interests.
Douglas Reed
Morrisville, N.C. "Bush's fragile coalition" (Special Report, Oct. 1) need not be fragile if the so-called friendly Arab nations decide to do themselves a favor by working with us to remove the "terrorist cancer" that they have been harboring for some time.
This will be the beginning of the end of their own regimes unless they act now with us as true partners for their own safety. The Bush Administration's task is to hammer this point over and over. (They may still choose to dislike our way of life if they so desire.)
Zaven S. Touloukian
Camden, S.C. Whereas drug users in the U.S. are treated as criminals who should be locked up, drug users in Europe are more likely to be invited to participate in society ("It's time to give up the war on drugs," Economic Viewpoint, Sept. 17). Heavy users are helped through treatment rather than penalties. Results appear to be overwhelmingly good and include reduced crime rates.
Stefan Hultberg
Roskilde, Denmark
I can't believe how governments all over the world are willing to forfeit billions of dollars of potential drug-tax income to the mafia. Meanwhile, they have no objections to selling alcohol--not to mention weapons!
Vera Schmidt
Vienna
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October 28, 2001, BusinessWeek, The Philippines: An Island Shaken by Terrorist Fears,
From afar, the lush island of Mindanao in the Philippines looks destined to become a new hot spot in the U.S.-led war on terrorism. For 18 months, the Philippine military has been chasing members of Abu Sayyaf ("bearer of the sword"), a kidnapping ring that has had past contacts with Osama bin Laden's terrorist network and that has killed a string of hostages--including a U.S. tourist whose headless remains were identified in early October. The group is still holding an American missionary couple. Members of a larger radical group, the pro-independence Moro Islamic Liberation Front (MILF), fought with Afghanistan mujahideen a decade ago. A team of U.S. military personnel is about to arrive in the Philippines to advise the country's army on how to eradicate the extremists.
On the ground, however, fears that Mindanao is about to erupt in jihad appear very overblown. Rallies in support of bin Laden and the Taliban have been surprisingly small. Philippine and Western security experts say assistance from international terrorist groups has actually dwindled in recent years to groups such as Abu Sayyaf-- whose main interest seems to be extracting ransom from hostages, rather than politics.
LOFTY GOAL.
The big news in Mindanao is that the government and Islamic leaders have called a cease-fire and are trying to make peace. On Oct. 16, both sides met in Kuala Lumpur in hopes of negotiating a treaty within a year. Another faction, the Moro National Liberation Front (MNLF), laid down its arms five years ago. Now, the groups are gearing up for landmark elections on Nov. 26 to choose a government for the new Autonomous Region of Muslim Mindanao, comprising four provinces and 7 million of Mindanao's 18 million people. That doesn't mean lawlessness won't remain a problem. But if the peace holds, a decades-long dream of self-rule in one of Southeast Asia's most volatile regions could come true.
It's an ambitious goal. Few places in Asia need peace more desperately than Mindanao, whose deep-rooted malaise makes it a case study of how poverty and political desperation can foster violence. While East Asia boomed from the 1970s to the mid-'90s, Mindanao, 800 km south of Manila, was in upheaval. At the root of the unrest: grinding poverty, especially among the Muslim majority. There are pockets of wealth in major cities, but the money is largely in the hands of old Spanish families or the ethnic Chinese. Overall, 44% of the population lives on less than $400 a year, according to the Asian Development Bank. Of the Philippines' 24 most impoverished provinces, 16 are in Mindanao. "The basic problem is socioeconomic," says Faroq Hussain, a former guerrilla leader and now a candidate for governor of the autonomous region. In Davao City, business consultant Cesar B. Cuyugan Jr. agrees. "As long as there is discontent among Muslims in Mindanao," he says, "there will be Abu Sayyaf or groups like it. The best business in Mindanao will be kidnapping and gun-running."
HAPPIER DAYS.
For a period after the 1996 peace accord, forged by former President Fidel V. Ramos, there was optimism: USAID and other development agencies began building highways and airports. Investment in everything from palm-oil plantations to tuna-processing plants rose sharply. Jumbo jets filled with sashimi roared off to Japan. New air routes and high-speed ferries opened to Malaysia and Indonesia.
Then came the Asian financial crisis, which caused a sharp currency devaluation and squelched property investment. El Ni?o and the worst drought in two decades hit at about the same time. Political tensions boiled over in April, 2000, when Abu Sayyaf kidnapped a group of tourists from a diving resort in nearby Malaysia. Two months later, then-President Joseph Estrada--on bad advice from military hawks--launched a campaign against the MILF, even as the army skirmished with the Abu Sayyaf to free hostages. In May, Abu Sayyaf snatched a group of tourists from the island of Palawan. That savaged the burgeoning convention business in Davao City, even though it is hundreds of kilometers from Abu Sayyaf redoubts and relatively safe.
The instability also has caused investment to plummet. A $26 million banana plantation in Magindanao, a stronghold of the MILF, is a case in point. Owned by Paglas Corp., it is regarded as a model of development, employing 2,000 people, most of them MILF members or sympathizers. It exports $15 million in fruit annually to markets from Japan to the Middle East. Investors include U.S. agribusiness giant Chiquita Brands International Inc. But due to the military attacks on the MILF last year, Paglas postponed plans to double capacity. Because of economic uncertainty, another large banana grower, Lapanday Foods, froze plans to convert a banana plantation into an industrial park.
Fallout from the September 11 attacks on the U.S. has worsened the island's pain. For safety reasons, the Japanese government now prohibits tour operators from selling packages to Mindanao. Occupancy at Davao City's deluxe 245-room Marco Polo Hotel--which had finally begun to recover from the 1999 kidnapping scare--has suddenly dropped from nearly 60% to about 50%. "The problem is the perception that Mindanao is torn by war," says Charles E. Feibel, who runs the USAID-funded Growth with Equity in Mindanao program and has lived on the island for a decade. "Investors won't come and take a look."
GOOD FISH.
If peace somehow can be achieved, however, Mindanao's prospects could brighten. The success of the island's tuna industry, the result of steady investments in the 1990s in the city of General Santos, illustrates the potential. The industry employs 80,000 people and generates $1 billion a year in local income. Plans by a Malaysian business group for a $56 million palm-oil plantation and mill that would employ 50,000 are on the drawing boards. A $125 million international airport capable of handling 1.3 million passengers a year will open in Davao City in 2002. Tourism officials are trying to get Japanese and Chinese carriers to start service. "If we can push ahead with economic development, we can solve our problems," says plantation founder Ibrahim P. Paglas III, now a candidate for governor of the autonomous region.
None of this will happen, however, as long as Mindanao is viewed as a hotbed of radical, violent Islam. It's impossible to say how long the recent burst of goodwill will last--especially given the U.S. military assault on Afghanistan. The MILF "will be more sympathetic to the Taliban, especially if thousands of innocent civilians are killed," says a senior Philippine government official. However, the MILF is not pulling out of peace talks. It still is possible to bring stability and prosperity to this troubled island. By Mark L. Clifford in Davao City
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February 3, 2002, BusinessWeek, Southeast Asia: Terror's New Front,
Heavily armed U.S. troops conducting maneuvers in the jungles of the southern Philippines. Dramatic arrests in Singapore and Malaysia, where in recent weeks security forces have nabbed dozens of Muslim men allegedly planning attacks on U.S. targets. In Indonesia, ethnic and religious violence, some of it possibly related to al Qaeda, some the fallout from long-smoldering grievances.
Not since the mid-1960s, when many regional governments were still battling communist insurgencies, has Southeast Asia faced such a potentially wide-ranging security threat. It couldn't come at a worse time. Well before the events of September 11, the region was enduring a slump in exports and a falloff in foreign investment as Western firms headed to China. Even Singapore's economy, the region's strongest, probably contracted by 2% in 2001, while Indonesia, the weakest player, is struggling to avert a new foreign debt crisis.
Now the region is being seen overseas as a breeding ground for international terrorists. The connections with Osama bin Laden may not be as strong as feared. But what's real and what isn't may not matter. Prevailing perceptions will "accelerate a trend of business turning away from Southeast Asia," says Robert Broadfoot, managing director of Political & Economic Risk Consultancy Ltd. in Hong Kong. Already, foreign businesses have stopped sending execs to the region to explore new opportunities, while companies are beefing up security at their offices and homes.
Clearly, the region's governments need to show the world they can keep the peace. That requires achieving a tricky balancing act: Authorities must provide adequate security to foreign firms without being alarmist and scaring them off completely. When Singaporean authorities invited foreign execs to a briefing on Jan. 18, they clearly hoped to calm nerves following the shocking revelation that the militant group Jemaah Islamiyah had infiltrated what is widely regarded as the most secure nation in the region. But when one exec asked whether his company was on a list of 200 potential targets, he was told: "This is on a need-to-know basis."
Also vexing for Southeast Asian governments is how to deal with U.S. offers of military assistance. Apart from the Philippines, which solicited American aid, other nations, especially those with large Muslim populations, cannot afford to make open appeals to the U.S. for help. Nowhere is this more true than in Indonesia, the most likely spot for al Qaeda to operate. Jakarta is resisting pressure from the Pentagon because it can ill afford a nationalist backlash. "Many national governments silently might condone the U.S. presence in the Philippines," says Victor Savage, head of the department of geography at the National University of Singapore. "But publicly they have a problem as the Muslim opposition will be very critical."
That said, Southeast Asia's ailing economies won't easily weather another round of investor disenchantment. As it is, foreign businesspeople are becoming increasingly jittery--even in Singapore and Malaysia, where authorities keep a tight lid on extremism. In Singapore, the American Club has barred parking out front and requested police patrols. At Kuala Lumpur's Petronas Towers, Southeast Asia's tallest buildings, McKinsey & Co. staff have done evacuation drills, while building management has installed X-ray scanners and metal detectors in the lobby.
Singapore and Malaysia at least have strong reputations with foreign investors to build on. That's not the case with the Philippines, where fragile government and endemic corruption have already been big investor turnoffs. In recent years, the investment climate has worsened with the rise of Abu Sayaaf, which has kidnapped and murdered foreign tourists and continues to hold an American missionary couple. "Until they take care of Abu Sayaaf," says Robert Sears, executive director of the Manila chapter of the American Chamber of Commerce, "the image of the Philippines will remain tarnished."
While Philippine President Gloria Macapagal Arroyo can afford to take a tough line with Abu Sayaaf, the administration of Indonesian President Megawati Sukarnoputri has no such luxury. Already beset with economic and political problems, Megawati is not in a position to order a crackdown. Nor is the army, still living down charges of human rights abuses committed in East Timor, keen to take the rap for breaking the heads of Muslim radicals.
Yet the perceived growth of radical Islam is clearly having a deleterious impact on the Indonesian economy. Citing growing instability, garment, footwear, and textiles importers in the U.S. and Europe are shifting their sourcing to safer nations. Says Sofjan Wanandi, tycoon and chairman of the private-sector Committee for Economic Rehabilitation: "They say: `We're not certain you can deliver because there's all these demonstrations and unrest."' Wanandi adds that a major U.S. footwear company is cutting orders from Indonesian factories by half this year to $500 million. He also estimates that the loss of orders at export-oriented plants will throw half a million people out of work in 2002.
To be sure, the weak global economy is responsible for some of the dropoff in orders. But the numbers make grim reading. Indonesian exports fell from $3.6 billion in October to $3 billion in November, a drop of 16% in one month, according to the Central Bureau of Statistics. Foreign direct investment plunged from $1.9 billion in November to $630 million in December.
Meanwhile, Indonesia's ethnic Chinese business community is feeling increasingly vulnerable. Shortly after the Singapore and Malaysian arrests this month, says Wanandi, the CEO of an auto assembling company was on the line shouting: "The radicals are growing! The government is not doing enough!" Like most Indonesians, Wanandi agrees that inviting in U.S. troops is politically impossible. He is calling instead for the Indonesian military to be given greater powers to crack down on militant groups. "There is a lot of competition between the army and the police," he says. "That's why a lot of bombing is going on. No one is being punished."
The trouble is, the foe is maddeningly elusive. But until the threat fades, Southeast Asia will have to deal with declining foreign investment, jittery expats, and, in Indonesia, rising poverty and instability--the very environment in which terror groups thrive. By Frederik Balfour in Hong Kong and Michael Shari in Jakarta
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October 29, 2002, BusinessWeek, Steering the Philippines through a Storm,
Violence and corruption have plagued the Philippines for years, but a recent spate of terrorist bombings have left investors and tourists more skittish than usual, while a yawning fiscal deficit poses a serious challenge to the economy.
Finance Secretary Jose Isidro Camacho, a former country manager for Deutschebank who has been in his government post for 20 months, recently spoke with BusinessWeek Asia Correspondent Frederik Balfour in Manila about the attacks, the economy, and other challenges facing President Gloria Macapagal-Arroyo. Edited excerpts follow:
Q: The Philippines was recently ranked as the 11th most-corrupt country by anti-corruption group Transparency International. Is the President dealing with corruption?
A: Of course it exists, that cannot be denied, but President Arroyo has set up an internal affairs monitoring unit in the Ministry of Finance specifically to address this issue.
The Bureau of Revenues and Bureau of Customs are the two agencies with the worst reputation, but the two commissioners now heading them are very competent. Slowly and surely, we will be able to reduce this corruption. Also, that survey was based on 2000 results, when Joseph Estrada was still President.
Q: Haven't the country's security problems distracted President Arroyo from her economic programs?
A: Peace and order are fundamental for economic development. We can't have a healthy investment climate without peace.
Focusing on security doesn't mean she can't attend to other things -- she's very involved. The Special Asset Management Vehicle Bill has progressed [which would make it possible for banks to sell off bad loans]. Also, the President has been able to push along the Transco Franchise Bill [which would pave the way for privatization of the National Power Corp.].
Q: How's the Philippine economy doing overall?
A: Our export growth came as a pleasant surprise, [especially] within Asia, and China in particular. We were expecting zero growth [this year,] and have raised that to 4% at midyear.
Q: What would you say to claims that the President isn't in control and doesn't have the full cooperation of the police and the military?
A: That's not a fair comment. She's working with the military and police in a more systematic way. If anything, the President has established a very healthy relationship with the military and police. I know. I sit next to [Defense Secretary] Angelo Reyes at Cabinet meetings, and they have an excellent working relationship.
But even if you can improve peace and order, there is still kidnapping. Unless it's completely eliminated, the problem still exists.... However, you have to put it in perspective.... I was talking to a Filipino-Chinese businessman who said that the perception is that kidnapping has been reduced, [and] the general feeling is that [the situation is] improving.
Q: But kidnapping has been going on for years in the Philippines. What about the latest wave of terrorist attacks?
A: The world is now faced with a threat of terrorism that is new in nature. It's widespread [and affects] the Philippines, the U.S., and Indonesia, and the threat will continue. The Philippines has not been exempted. What has happened here [reflects that].
We've had more experience [with terrorism than other countries], and we will be in a better position to address this as we have done with [Islamic terrorist group] Abu Sayyaf. They have been significantly neutralized.
We've had terrorism before...and given that its ugly head has emerged in the region, it's not a surprise that it would emerge in the Philippines. The President is handling it as intelligently and as competently as any leader can. She understands the problem and the solution. I'm not sure anybody could have done better.
Q: What's the solution?
A: Focusing on intelligence. Next year's budget will allocate more spending on the police force and strengthening forces of intelligence. Jemaah Islamiya [a militant Muslim group that wants to create an pan-Southeast Asian Islamic state] poses new threats in the region, and we need to continue working with other countries. The President is taking the lead in trying to form alliances with other countries in the region that are affected, such as Indonesia, Malaysia, and Singapore, and also with the U.S., so we can all be efficient in combating this.
Q: Do you see China as a threat?
A: It may be a competitor for foreign direct investment, since there's no way you can compete with 1.2 billion people. But I expect opportunities for Chinese investment in the Philippines and for aid from China. The Philippines is still competitive for semiconductors and other related products, but over time it has to move into something else.
One of our big focuses is in services, especially in information technology, where we have the edge because of availability of culturally adaptable English speakers.
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November 3, 2002, BusinessWeek, The Philippines: The Price of Terror,
Call it overconfidence. To celebrate a series of strikes against crime and terror, Philippine President Gloria Macapagal-Arroyo and four Cabinet members appeared on the cover of glossy Philippine Tatler magazine in September, sporting sunglasses and black suits inspired by the hit film Men in Black. The tough-woman pose came after soldiers in June had killed Abu Sabaya, the notorious commander of the Islamic extremist Abu Sayyaf Group, and his ragtag followers appeared to be on the run. Arroyo had also concluded a ceasefire with the rebel Moro Islamic Liberation Front after decades of war, and the President's popularity was at an all-time high.
Arroyo declared victory too soon. Since the beginning of October, the nation has been shaken by four separate terrorist bombings, leaving 14 people dead. Three of those attacks took place in the city of Zamboanga--a comfortable 800 kilometers from the capital. But on Oct. 18, a blast ripped through a public bus in Manila, killing two and shattering the illusion that the security problem was confined to the south. On Oct. 23, police arrested five members of Abu Sayyaf in the Zamboanga attacks, but no one has yet been charged in the Manila bombing. "This brings things a lot closer to home," says a Manila-based Western diplomat.
The attacks make it that much harder for Arroyo to focus on the Philippines' economic problems. Swept into office in January, 2001, after President Joseph Estrada was ousted in a corruption scandal, Arroyo promised to repair chronic budget deficits, relaunch government privatization and infrastructure projects, and bring back fleeing foreign investment. Bright, well-educated--the 55-year-old former vice-president has a PhD in economics--and considered squeaky clean, Arroyo presented a welcome change from Estrada, a womanizing former movie heartthrob known for cronyism and lax management.
Instead, the President has been forced to devote her energies to security. In the spring of 2001, Abu Sayyaf kidnapped an American missionary couple and dozens of others. In November, a separatist group on the southern island of Jolo launched an insurgency. Then the U.S.--focusing on the Philippines as a suspected center of al Qaeda-inspired terrorism--sent 1,000 troops to help track terrorists. And now Arroyo must face the bombings.
While she battles the terrorist monsters, economic problems have festered. Unemployment today stands at 11.2%, virtually unchanged from her inauguration. Although Arroyo promised to fight poverty, 44% of Filipinos still live on less than $2 a day--the same level as when she took office. And she has failed to reverse a five-year slide in foreign direct investment.
True, the economy is expected to grow 4% this year, thanks to a strong rebound in exports of electronics. But that growth masks the spreading rot underneath. More than 17% of loans by Filipino banks were listed as nonperforming in August, up from 14.9% when Arroyo took office. And by July, the fiscal deficit had exceeded Arroyo's target for the entire year. Rampant tax evasion is part of the problem, but critics say that tax receipts won't increase so long as graft pervades everything from customs to motor vehicle registration. Corruption "is incredibly widespread," says Edgardo J. Angara, leader of the opposition Laban Ng Demokratikong Pilipino party. Jose Isidro N. Camacho, Arroyo's Finance Secretary, counters that tax collection was nearly on target in September, although he concedes there has been a shortfall for most of the year. "We are continuously improving the [tax] agency's performance," he says.
Plans for privatization have also bogged down. The proposed sales of Philippine National Bank, Manila Electric Co., and the state monopoly National Power Co. are all stalled. And even if the sales were to go forward, buyers might be scarce. "In the wake of Bali and the local bombings, who is going to want to buy them?" asks Robert Broadfoot, managing director of Political & Economic Risk Consultancy Ltd. in Hong Kong.
One sector that's already suffering: tourism. The Makati Shangri-La luxury hotel in Manila's business district has seen 450 cancellations just in the last two weeks. "We've definitely lost a lot of bookings, and it's directly linked to the bombings," says general manager Richard W. Riley. Japan has warned its citizens to avoid bars, and concerts by touring Western music groups have been cancelled.
To be sure, most business execs with experience in the Philippines aren't packing their bags yet. "Everybody is in a heightened state of alert, but I don't see anybody panicking," says George Henefeld, president of the American Chamber of Commerce. Foreigners have been living under the threat of kidnappings and bombings for years. Indeed, Manila is no stranger to terrorism. In December, 2000, an Islamic group killed 20 people with a series of bombs. Since then, body searches at malls and building entrances have become routine, and many middle-class homes have 24-hour guards. "We have been here for 22 years and gone through so many calamities," says Norberto Viera, managing director of Texas Instruments Philippines, which has invested $700 million in the country and employs 1,400 at its semiconductor plant. "So far we have confidence in the country."
Still, anxiety in Manila is at a high pitch. "This is different given what happened in Bali," says Lance Gokongwei, chairman of Cebu Pacific Air Inc. "People are jumpier now and talking about [the Manila bus bombing] much more than previous ones."
Arroyo's failure to identify the culprits in the Manila attack is only adding to the unease. "It shows that she is not in control and doesn't know what to do," says Benito Lim, retired professor of political science at the University of the Philippines. "This is the lowest point since she took office." Indeed, even before the latest explosions, opinion polls placed her well behind former Education Secretary Raul Roco and film star Fernando Poe Jr. as the favorite to win the 2004 presidential elections. Since it is clearly her ambition to stay around a while, Arroyo will have to wage her war against terrorism, and her fight for economic reform, as tenaciously as those Men in Black battled their own demons. By Frederik Balfour in Manila
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November 19, 2002, BusinessWeek, Singapore's Surprise Pact with Uncle Sam,
Washington has decided to cut Singapore some slack in perilous times. After a sleepless night of marathon negotiations, visiting U.S. Trade Representative Robert B. Zoellick and Singapore Trade & Industry Minister George Yeo announced on Nov. 19 that they had "completed the substance" of Washington's first bilateral free-trade agreement (FTA) with an Asian nation.
Sources familiar with the negotiations see the U.S. trying to accomplish two goals with the surprise agreement: Reward Singapore for its assistance in the war against terror since September 11 and use bilateral agreements to advance global free trade, instead of waiting for a multilateral accord under the World Trade Organization.
In the final push, negotiators appear to have cleared away several issues that had been stumbling blocks over two years of talks. Zoellick says the FTA would ensure that "steps" will be taken to allow foreign lawyers an unspecified degree of access to Singapore's courts and would promise "improvements" in retail banking as well as "special provisions" for foreign companies in government procurement. He declined to go into detail.
BEYOND TRADE. The one issue that Zoellick says the two countries "have still to work on" is Singapore's reluctance to allow foreigners to transfer capital freely out of the country in the event of a crisis. Still, declared Yeo: "Both sides have hammered out an agreement that we can be proud of."
The deal has more to it than trade economics, however. The Bush Administration wants to reward Singapore for supporting worldwide anti-terrorism efforts, especially since a car bomb in nearby Bali killed nearly 200 people in mid-October. Singapore authorities reacted swiftly to a videotape discovered in Kabul by Allied troops in December, 2001, that exposed an al Qaeda-linked terror cell in the city-state. The government arrested 32 alleged terrorists in January and August. It has also thwarted several planned terrorist attacks, including one to bomb the U.S., British, Australian, and Israeli embassies in Singapore.
In October, Senior Minister Lee Kuan Yew paid an unofficial visit to Paris and met with Jacques Chirac -- after which the French leader voiced support for U.S. and U.N. efforts to disarm Iraq. Plus U.S. aircraft carriers use a giant berth that Singapore built in 1999 to forge closer defense ties with the Pentagon. The bottom line: Washington now considers Singapore "a strong friend" -- though still technically not an ally -- at a time when investigators are turning up new evidence of al Qaeda-linked terror cells in nearby Philippines, Indonesia, and Malaysia, says a Western diplomat.
TOO AMBITIOUS? The agreement, which both sides are calling "comprehensive," would give Singapore the undisputed moniker of free trader -- and do so at a time when the WTO runs the risk of faltering on a new round of talks aimed at reducing global trade barriers. Sources familiar with the U.S.-Singapore negotiations fear that the WTO set an overly broad agenda at its ministerial meeting in Doha, Qatar, earlier in 2002 with a three-year deadline for reaching a new global accord that could prove difficult to meet.
While widely perceived as a tough bargainer, Zoellick sees bilateral agreements as a means of advancing global free trade if a new round of talks bogs down. Immediately before his arrival in Singapore, he visited Canberra to officially commence negotiations for a bilateral U.S.-Australia FTA. "They [the U.S.] have given up on Doha being successful, and they're cherry-picking," says a management consultant in Singapore.
Singapore gets one more bonus: An FTA could give its sputtering economy a boost. On Nov. 18, the government announced that gross domestic product will grow only 2.5% this year -- a full percentage point less than predicted -- thanks to weak demand for Singapore's all-important electronics exports in the U.S. Implementing a free-trade zone could add 0.7 of a percentage point to economic growth, according to some studies -- saving Singapore companies nearly $100 million annually on U.S. tariffs.
FAST PASSAGE. Plus, it will be easier for Singapore to continue to present itself, as it has for decades, as a regional hub for free trade and financial services.
What a difference from a few weeks ago, when U.S. trade negotiators told economists in Singapore that they would be opposed to a "symbolic" accord. They were critical of previous FTAs that Singapore has negotiated with Japan and New Zealand as "not ambitious." Now, Zoellick is calling the U.S.-Singapore deal "comprehensive" -- and saying it could be signed by yearend, go before Congress in early 2003, and take effect in early 2004. All in all, a surprising turn with a promising ending. By Michael Shari in Singapore
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December 29, 2002, BusinessWeek, Is Democracy Dangerous?,
WORLD ON FIRE
How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability
By Amy Chua
Doubleday -- 340pp -- $26
America's prescription for developing nations is simple: democracy and free-market capitalism. But what if these ideas turn out to be like medicines that produce nasty side effects when taken in combination? There you have the theme of the fascinating and disturbing World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.
It would be easy to dismiss this as yet another attack on globalization. But this book is hardly that. Author Amy Chua understands the economics of developing nations: The 40-year-old Yale Law School professor served a stint at the World Bank, worked for four years on Wall Street, and helped privatize the state-owned Telefonos de Mexico. Chua sees no inherent evil in capitalism, thinks representative democracy is a good thing, and writes with an authority born of rigorous research.
Yet Chua warns that the phenomenon of "market-dominant minorities"--taken in combination with globalization and democracy--can cause huge strains in the developing world. Chua chillingly describes how, in 1994, her Aunt Leona, a Chinese businesswoman in the Philippines, was stabbed to death by her chauffeur. Despite eyewitness accounts by other servants, there were no arrests. Why not? Ethnic Chinese, at just 1% of the Philippines population, control 60% of its wealth. Meanwhile, two-thirds of the 80 million ethnic Filipinos live on less than $2 a day. Chua shows how her aunt's murder was part of a pattern of violence against Chinese, noting that police in such cases are "notoriously unmotivated" to seek justice.
In fact, in the police report of the case, under the section on motive, is written: "revenge." But as Chua makes clear, when economic inequality is laced with other factors, existing hostilities are exacerbated. Free-market policies often concentrate wealth in the hands of the tiny business elites that dominate many developing nations. Toss democracy into the fermenting brew, and the oppressed majority is emboldened to strike the rich few, particularly if they are an easily identified ethnic group. That's what occurred in the Philippines after the alliance between the ethnic Chinese and dictator Ferdinand Marcos was broken by Marcos' exile and the arrival of democracy. In Indonesia, the end of Suharto's dictatorship in 1998 saw the looting and burning of 5,000 shops and houses of ethnic Chinese in Jakarta. The Lebanese in West Africa, Asian Indians in East Africa, Jews in Russia, and whites in Zimbabwe have all suffered after democratic rule arrived. "The competition for votes fosters the emergence of demagogues who scapegoat the resented minority, demanding an end to humiliation, and insisting that the nation's wealth be reclaimed by its `true owners,"' says Chua.
No two countries are precisely the same, of course. But it's remarkable how many developing nations are affected by the perilous mixture the author describes. In Nigeria--a free-market country that is constantly experimenting with (and failing at) democratic rule--tens of thousands of the indigenous Ibo tribe have been slaughtered by their poorer but more numerous tribal rivals. In Rwanda, the Tutsi tribe held the political and economic reins until far-more-numerous Hutus murdered hundreds of thousands of them in the '90s.
In Zimbabwe, a regime set up by European colonialists gave way to democratic institutions in 1980. Today, Zimbabwean President Robert Mugabe maintains his political power by urging his fellow veterans of the liberation struggle to throw whites off their land by force. In Kenya, a tiny Indian elite hangs on, "uncomfortably dependent on the corrupt and increasingly authoritarian President [Daniel Arap] Moi...as African opposition leaders intensify their ethnic hatemongering," says Chua.
The pattern of market-dominant ethnic minorities holds true in much of South America as well as in Southeast Asia, Africa, the former Yugoslavia, and Russia, although not in China or--thanks to intermarriage between Thais and Chinese--in Thailand. Similarly, Argentina, Uruguay, and Chile have been spared. (Their troubles occurred early on: Indigenous Amerindian people were killed off by the Conquistadors.) And the phenomenon is almost entirely absent in Arab nations.
Chua was writing her book when terrorists slammed planes into the World Trade Center and the Pentagon on September 11, 2001. Americans were shocked at the number of those in poorer nations who rejoiced. Chua's partial explanation: "America today has become the world's market-dominant minority...seen (not incorrectly) as the engine and principal beneficiary of global marketization." September 11 was "an act of revenge by the weak against the powerful, motivated by tremendous feelings of humiliation and inferiority."
Mercifully, Chua doesn't try to solve all the world's problems in a glib "solutions" chapter, nor does she think that more democracy is the solution. Her best suggestions: Cushion the impact of globalization with progressive government tax and transfer programs, encourage greater small-business growth and wider stock ownership, and, above all, go slow, and respect local customs. The U.S. didn't become a free-market democracy overnight, and it shouldn't expect the same of others. By Paul Magnusson
________________________________________________________________________
By Amy Chua
Doubleday -- 340pp -- $26
America's prescription for developing nations is simple: democracy and free-market capitalism. But what if these ideas turn out to be like medicines that produce nasty side effects when taken in combination? There you have the theme of the fascinating and disturbing World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.
It would be easy to dismiss this as yet another attack on globalization. But this book is hardly that. Author Amy Chua understands the economics of developing nations: The 40-year-old Yale Law School professor served a stint at the World Bank, worked for four years on Wall Street, and helped privatize the state-owned Telefonos de Mexico. Chua sees no inherent evil in capitalism, thinks representative democracy is a good thing, and writes with an authority born of rigorous research.
Yet Chua warns that the phenomenon of "market-dominant minorities"--taken in combination with globalization and democracy--can cause huge strains in the developing world. Chua chillingly describes how, in 1994, her Aunt Leona, a Chinese businesswoman in the Philippines, was stabbed to death by her chauffeur. Despite eyewitness accounts by other servants, there were no arrests. Why not? Ethnic Chinese, at just 1% of the Philippines population, control 60% of its wealth. Meanwhile, two-thirds of the 80 million ethnic Filipinos live on less than $2 a day. Chua shows how her aunt's murder was part of a pattern of violence against Chinese, noting that police in such cases are "notoriously unmotivated" to seek justice.
In fact, in the police report of the case, under the section on motive, is written: "revenge." But as Chua makes clear, when economic inequality is laced with other factors, existing hostilities are exacerbated. Free-market policies often concentrate wealth in the hands of the tiny business elites that dominate many developing nations. Toss democracy into the fermenting brew, and the oppressed majority is emboldened to strike the rich few, particularly if they are an easily identified ethnic group. That's what occurred in the Philippines after the alliance between the ethnic Chinese and dictator Ferdinand Marcos was broken by Marcos' exile and the arrival of democracy. In Indonesia, the end of Suharto's dictatorship in 1998 saw the looting and burning of 5,000 shops and houses of ethnic Chinese in Jakarta. The Lebanese in West Africa, Asian Indians in East Africa, Jews in Russia, and whites in Zimbabwe have all suffered after democratic rule arrived. "The competition for votes fosters the emergence of demagogues who scapegoat the resented minority, demanding an end to humiliation, and insisting that the nation's wealth be reclaimed by its `true owners,"' says Chua.
No two countries are precisely the same, of course. But it's remarkable how many developing nations are affected by the perilous mixture the author describes. In Nigeria--a free-market country that is constantly experimenting with (and failing at) democratic rule--tens of thousands of the indigenous Ibo tribe have been slaughtered by their poorer but more numerous tribal rivals. In Rwanda, the Tutsi tribe held the political and economic reins until far-more-numerous Hutus murdered hundreds of thousands of them in the '90s.
In Zimbabwe, a regime set up by European colonialists gave way to democratic institutions in 1980. Today, Zimbabwean President Robert Mugabe maintains his political power by urging his fellow veterans of the liberation struggle to throw whites off their land by force. In Kenya, a tiny Indian elite hangs on, "uncomfortably dependent on the corrupt and increasingly authoritarian President [Daniel Arap] Moi...as African opposition leaders intensify their ethnic hatemongering," says Chua.
The pattern of market-dominant ethnic minorities holds true in much of South America as well as in Southeast Asia, Africa, the former Yugoslavia, and Russia, although not in China or--thanks to intermarriage between Thais and Chinese--in Thailand. Similarly, Argentina, Uruguay, and Chile have been spared. (Their troubles occurred early on: Indigenous Amerindian people were killed off by the Conquistadors.) And the phenomenon is almost entirely absent in Arab nations.
Chua was writing her book when terrorists slammed planes into the World Trade Center and the Pentagon on September 11, 2001. Americans were shocked at the number of those in poorer nations who rejoiced. Chua's partial explanation: "America today has become the world's market-dominant minority...seen (not incorrectly) as the engine and principal beneficiary of global marketization." September 11 was "an act of revenge by the weak against the powerful, motivated by tremendous feelings of humiliation and inferiority."
Mercifully, Chua doesn't try to solve all the world's problems in a glib "solutions" chapter, nor does she think that more democracy is the solution. Her best suggestions: Cushion the impact of globalization with progressive government tax and transfer programs, encourage greater small-business growth and wider stock ownership, and, above all, go slow, and respect local customs. The U.S. didn't become a free-market democracy overnight, and it shouldn't expect the same of others. By Paul Magnusson
________________________________________________________________________
April 13, 2003, BusinessWeek, Commentary: Terrorism: Put the Money Where the Danger Is,
Seattle's landmark Smith Tower may have once been the world's tallest building outside Manhattan, but that doesn't mean William Justen wants to spend $30,000 a year to insure it against terrorism. Though forced by his bankers to buy coverage, the managing director of Samis Land Co. doesn't think al Qaeda is coming to Seattle anytime soon. He says: "We don't have the density or world image that Manhattan has."
With the U.S. at a heightened state of alert, executives across the nation are grappling with the same issue: whether to buy terror coverage, which by law insurers must now offer. Risk modelers have concluded that, despite al Qaeda's fluid nature, high-profile cities such as New York are more likely than others to be struck -- which means companies in those areas should pay many times more for coverage. As a result, most companies are declining such insurance -- some because they deem it unnecessary, others because it's too expensive. Insurers also say that some companies are simply counting on the government to bail them out if another attack occurs.
The risk models raise another question: Should taxpayers ante up billions for beefed-up security in low-risk regions? As New York Mayor Michael R. Bloomberg noted in a Mar. 31 speech to a national commission on terrorism: "To argue that most other cities have comparable threats is just ridiculous."
So how do catastrophe modelers, who have years of experience assessing risk for insurers and government, figure where and how terrorists are most likely to strike? First they collect data and analysis from terror experts, who study the strategies and capabilities of al Qaeda and other groups. They then use mathematical models to assess the probable frequency, location, and aftermath of an attack. That data can be very specific: Newark (Calif.)-based Risk Management Solutions Inc., for example, estimates that a two-ton truck bomb in Lower Manhattan could cause serious damage within a quarter-mile radius of the blast.
Insurers, which have long relied on such modeling, are now using the data to assess terror risk across the nation. AIR Worldwide Corp., a subsidiary of Insurance Services Office Inc. (ISO) -- the company that sets rate guidelines for the industry -- has helped ISO establish three tiers of risk. They range from high-risk city centers in New York and Chicago to low-risk places like Cleveland. ISO suggests that insurers charge clients in high-risk business districts up to 30 times as much for terror coverage as in, say, Miami. Says Michael W. Reid, chief operating officer of SL Green Realty Corp., which paid a high premium to insure its Manhattan properties: "As long as fear is in the air, they're underwriting it as if it's the Titanic."
With RMS calculating that only 2% of the country's Zip Codes face more than 90% of the risk, it's easy to see why companies in low-profile places are not keen to buy terrorism insurance. "People are acting instinctively in rejecting coverage," says John Morrison, Montana's insurance commissioner. "They're saying: 'I know risk when I see it, and this isn't it."'
All of which also raises the question of why a low-risk state like Ohio, for example, receives 10% more in homeland security funds per capita than do New York and California. A Homeland Security Dept. spokesman admits the existing funding formula fails to consider the "special needs of certain parts of the country." Of course, al Qaeda could confound experts' predictions -- and no government official wants to stand accused of inadequately protecting a region. "You can't ignore Des Moines," says Richard L. Clinton, president of Oakland (Calif.)-based risk modeling agency EQECAT Inc. So whether the risks to many regions are real or not, the stepped-up security spending likely will be. By Diane Brady
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April 23, 2003, BusinessWeek, The Philippines: The Ayala Touch,
April 27, 2003, BusinessWeek, The Philippines: The Ayala Touch,
It was the kind of deal that gives a business leader a lasting reputation for shrewdness. Back in 1995, a bidding war broke out for tracts of one of the hottest properties in the Philippines -- Fort Bonifacio, a 440-hectare former U.S. military base not far from downtown Manila. The winning bid for the largest tract available, measuring 150 hectares, was $1.6 billion, and it came from a consortium led by First Pacific Co., a Hong Kong holding company headed at the time by Filipino Manuel Pangilinan. One of the losing bidders was Ayala Corp., a smaller conglomerate controlled by one of the oldest families in the Philippines.
First Pacific and its partners -- local property developers and the Philippine government -- spent an additional $300 million developing the land before First Pacific was laid low by the Asian financial crisis of 1997-98. In the ensuing years, cash-hungry First Pacific repeatedly made it known to the Ayalas that a nicely landscaped 54 hectares could be had for a low price. But the figure was never low enough. Finally, Jaime Augusto Zobel de Ayala II, the urbane, Harvard-educated CEO of Ayala Corp., wore First Pacific down. Last November, he grabbed a controlling stake in First Pacific's consortium for a paltry $90 million.
The original Fort Bonifacio deal is just one of the bets that the Ayalas didn't make in the roaring 1990s. The conservative clan, which started as a 19th century Spanish colonial trading house, rejected megadeal after megadeal as too expensive or speculative. "We were actually criticized for being behind the ball," recalls Zobel de Ayala, 44. That has allowed Ayala Corp., the family holding company, to maintain its position as the premier business group of the archipelago. It has long been a dominant force in real estate, construction, banking, and electronics and is a rising power in telecommunications. When multinationals J.P. Morgan Chase, Burger King, and Deutsche Telekom came to Manila looking for joint-venture partners, Ayala was their hands-down choice. Ayala Corp. and its various offshoots took in $1.6 billion in revenue in 2002, earning a profit of $300 million. The Ayalas plan to develop Fort Bonifacio, now a bustling construction site, into a new business center that they hope will help reverse the flight of foreign investment from the Philippines.
The Ayala balance sheet is not blemish free. Ayala Corp. is burdened with $630 million in debt. Unfortunately, 87% of it is denominated in U.S. dollars, at a time when the Philippine peso has lost 34% of its value in six years. Concern over the debt has helped push the share price of Ayala Corp. down 37% since February, 2002. And it will drive up the cost of raising financing to develop Fort Bonifacio for Ayala Land Inc.
Still, few observers of Philippine business have any worries about the viability of the Ayala empire. Zobel de Ayala has run the business with a deft hand since 1995, after the firm's now 68-year-old patriarch, Jaime Augusto Zobel de Ayala, or Don Jaime, retired (he still attends board meetings as the nonexecutive chairman). Jaime's brother, Fernando, holds the title of executive managing director at Ayala Corp., and the two run the conglomerate as partners.
The family's cash cow is Globe Telecom Inc., the first Philippine cellular network to employ digital GSM technology, now the industry standard worldwide. Globe, after a hefty investment of at least $1.8 billion by the Ayalas and other shareholders, has grabbed a 43% share of the cellular market from former monopoly Philippine Long Distance Telephone Co. (PLDT), part of the First Pacific empire and now run by Pangilinan. Zobel de Ayala boasts that Globe has a 51% revenue share because of its more upmarket clientele. "Globe gets more out of its customers than PLDT," says Jojo Gonzales, head of research at Philippine Equity Partners Inc., the local affiliate of Merrill Lynch & Co. Last year, Globe's net income surged 59% on a 43% increase in its subscriber base, to 6.6 million customers. Its profit margin is a fat 60%, says Zobel de Ayala.
In other sectors, the Ayalas appear to be succeeding by not setting their sights too high in a market with per capita income of less than $1,000 a year. In real estate, Ayala Land's profits grew 10% last year on a strategic shift downmarket from ultrachic malls and apartment blocs to working class housing and hypermarts. The Columns, a novel twin-tower development of affordable one-bedroom and studio apartments in Manila, is 80% presold, even though it's still just a muddy crater at the northwest end of Ayala Avenue.
Meanwhile, the Ayalas' Bank of the Philippine Islands is a profitable pillar of the financial community, while Ayala Land has maintained a steady revenue stream even in this sour economic climate by, for instance, charging stores a nominal rent plus a percentage of sales. Other Ayala companies are also doing well. Manila Water Co. tripled profits by bringing 500,000 new homes into its network, and it announced plans to invest $1 billion in further expansion. Integrated Microelectronics Inc., a contract manufacturer, increased earnings 9% on an increase in orders from Japanese customers. Ayala Automotive Holdings Corp., which assembles and sells Honda cars and Isuzu trucks, registered a 45% increase in retail sales.
As a result, profits at Ayala Corp. grew 13% last year, on a 10% increase in revenues. Ayala Corp. got a leg up on its debt in April when Ayala Land, Globe, and Bank of the Philippine Islands returned a total of $49 million in dividends to the parent company, an increase of 77% from a year earlier, estimates UBS Warburg.
Ayala Corp. is pinning part of its future growth on the success of Fort Bonifacio, on which the Ayalas plan to build a mix of office blocks, medium-density housing, and retail stores. Many hope the addition of new offices and homes to the area will give the real estate market a long-overdue reality check. "At least this will bring down Manila property prices to more realistic levels," says Richard Raymundo, research manager at the Manila office of Colliers International, a real estate brokerage. UBS Warburg estimates that after Bonifacio is developed, it will fetch Ayala Land a gross rental yield of 15%, more than most Manila landlords earn.
It may take some time for the Ayalas to see a return on their investment in Bonifacio. Zobel de Ayala says the project will be developed in phases over several years after the original blueprint is "cleaned up." Analysts say the project could be a decade away from a substantial revenue stream, and Zobel de Ayala admits that foreign investors haven't shown an interest yet.
Nevertheless, especially given its bargain price, no one expects the investment to fail. "It's very rare to find an Ayala project that isn't doing well," says Romina Magno, senior research manager at the Manila office of international real estate brokerage Jones Lang LaSalle LLP. Chalk that up to a lot of clout, a dollop of patience, and no small amount of shrewd dealmaking. By Michael Shari in Manila
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