Among the heads of state, international tycoons and corporate bosses invited to address the ASEAN and other Asian business leaders, one of the most interesting speakers was Asia-Pacific CEO of the world’s biggest logistics firm, DHL Express, Scott Price. He used the occasion to publicly present a special research paper prepared by The Economist Intelligence Unit and sponsored by DHL Express Asia-Pacific.
On December 9, President GMA met with Scott Price after DHL offered to support future disaster relief efforts during typhoons or other calamities as part of its socio-civic commitment to the Philippines. After the US, our country is where DHL started its global operations, which now encompass 220 countries and territories.
Here are some of his views from The Philippine STAR’s exclusive interview and also from his company-sponsored briefing paper:
• The 10-nation ASEAN is now the No. 3 biggest exporter in Asia next to China and Japan, but it risks falling to No. 4 if reforms are not quickly implemented to improve lower costs in manufacturing and to improve the ability to move goods seamlessly. ASEAN political leaders should remove trade barriers for a free flow of trade and services in order to attract more foreign direct investments (FDIs).
• Scott Price doesn’t believe other Western experts’ view that the future of ASEAN lies mainly as a supplier of minerals, raw materials, agriculture, and commodities to the rising economic superpower of China, but he hopes the ASEAN can maximize the region’s huge potential to become the producer and exporter of high-value products. He also classifies textiles and garments as low-value goods. He also stressed that high-value goods don’t always mean high-tech.
• Price pointed out that unlike the US, the Philippines enjoys a trade surplus in its bilateral trade with export dynamo China, mainly because our economy exports a lot of semi-conductor products for computer and high-tech manufacturing industries of south China. He points to this as evidence of the Philippines’ good potential in further developing high-value industries and proof of the good, well-educated workforce here.
• ASEAN as a whole, and also the Philippines, should make more bold initiatives and reforms to attract foreign direct investments. ASEAN attracted US$20 billion in FDIs in 2004 and $37 billion in 2005, but China successfully wooed $70 billion in FDIs in 2005 and FDIs are expected to reach a record $75 billion by the end of this year.
• ASEAN average economic growth of 5 to 6 percent per year is described as "decent," and "the region is not slipping off since it is still a formidable market and at the center of the world’s fastest-growing economic region," but economic growth should be accelerated to higher rates if the ASEAN hopes to reduce mass poverty in the same way China has been doing in recent years.
• ASEAN entrepreneurs should export more to remain globally competitive. In 2004, China started to eclipse the whole ASEAN region as the biggest exporter in Asia. From 2000 to 2005, the 10 nations of ASEAN increased total exports by an annual average growth of 8 percent, but China registered 25 percent annual average growth in exports in the same period. In contrast, India "remains Asia’s laggard in terms of export performance." But if India can follow China’s economic liberalization and other reforms, experts warn ASEAN that India might rival ASEAN in attracting foreign investments into export-based industries.
• DHL bosses refuse to directly comment on archrival Federal Express recently transferring its hub in Subic Bay Freeport to China, but Scott Price said they have a reason for doing so. He said DHL doesn’t have plans to move into Subic to replace FedEx, because they are now finalizing plans on whether to open a new super-hub for direct intercontinental planes in either Shanghai or Inchon City, South Korea. The final choice will be announced in the first quarter of 2007. He said DHL’s China business has experienced "massive growth" of 35 to 45 percent per year in the last five years due to its having the world’s fastest-growing major economy and the government’s pro-business policies. He hopes ASEAN can quickly become a single and integrated common market like the European Union or the North American Free Trade Agreement (NAFTA) region. He pointed out that China is not only amazing in economic growth, its 1.3 billion people and huge land mass make it the world’s biggest common market.
• Price said that today, China is still more of an export leader, but he foresees this society of increasingly affluent people soon becoming a huge market of consumers. He said that this has been the dream of the world’s multinationals for years, and the moment the Chinese masses start becoming top consumers like the Americans or Europeans, China will become even more attractive to foreign direct investments. He urges ASEAN not to waste time on political, cultural, emotional and other obstacles and instead remove trade barriers so that a huge and attractive common market can be created.
• Price urges the Philippines and other ASEAN countries to hopefully view themselves like private corporations competing with each other and the world. The best way to be globally competitive and progressive is to examine our strengths and weaknesses, look at our ASEAN neighbors/competitors and what they’re doing, study the success experiences of other developing nations, and muster the political will to adopt progressive policies and reforms.
• Price expressed high hopes for the opening of the controversial NAIA 3 airport next year, pointing out that our ASEAN competitors Thailand, Singapore and other Asian neighbors have invested heavily in world-class new airports. He refuses to comment on the headline-making political battles and issues in the Philippines. He said he sincerely admires President Gloria Macapagal-Arroyo, because his mother Katherine Price Fink was a strong-willed businesswoman in finance and real estate ever since he was a kid. He said he hopes GMA will lead the Philippines towards continued economic and other reforms.
It is frustrating that our politicians are oblivious to the massive economic tidal waves now irreversibly changing the rules of global trade. It’s shocking to realize that a lot of our entrepreneurs are actually so insular in outlook, timid about exploring overseas trade and investment opportunities beyond our shores.
Hopefully, the ASEAN summit now rescheduled for January in Cebu will vigorously shake up our Philippine political and business leaders as well as urge small and medium-scale entrepreneurs to wake up – we need less talk and more work, less politics and more economic growth. We must go global or perish!