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AIMLEADER

December 2014 Issue

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ASEAN Insights

ASEAN-China Free Trade: An Even Larger and More Competitive Global Workshop? In a SEA of Nations, We’re the Bullseye Countdown to 2015: Creating ASEAN Champions PH Retail Industry beyond “Brick and Mortars”

AIM News

ASEAN Day Celebration On ASEAN’s 47th Birthday

Cover Story

Dr. Andrew L. Tan: Visionary and Innovative ASEAN Business Leader

ASEAN LeaderSpeak

Readiness of ASEAN for Tourism Integration Big Data: How Analytics Has Changed The Landscapes of Business and Development

AIM News

Department of Finance’s Joselito Almario on providing Financial Services to the Poor Geeks On A Plane Companies with Social Responsibility Integrated in Business Philosophy, Strategy, and Operations, Recognized at the Asian CSR Awards The Story of AIM Accelerate No Boundaries: The Diffusion of Talent in ASEAN 2015

Alumni News

Reunion of Celebrating Classes for Homecoming 2015 SJD Visits Alumni

AIM News

AIM Honors First Vic Lim Awardee Security Bank Donates 8M to Renovate Case Room

Class Notes

AIMLEADER

EDITORIAL TEAM Bernardino Jiao EDITOR-IN-CHIEF

Karen Cabuyao MANAGING EDITOR

Benjamin Barretto Maritess Aniago-Espiritu Annaliza Alegre

ALUMNI RELATIONS OFFICE STAFF

EDITORIAL ADVISORY BOARD John Paolo R. Rivera Prof. Federico Macaranas Necy Gacilo Eloisa Barbin Jade Galvan Tertiana Tupas Prof. Ron Mendoza Bernardino Jiao Regine Sevilla Randy Torrecampo CONTRIBUTORS

Dr. Steven DeKrey

PRESIDENT OF THE INSTITUTE

Dr. Ricardo Lim

DEAN OF THE INSTITUTE

Romeo Catap, Jr.

DESIGN AND ART DIRECTION

Lexmedia Digital

Dennis Firmansjah

CHAIRMAN, FEDERATION OF AIM ALUMNI ASSOCIATIONS, INC.

Marianne Quebral

VICE PRESIDENT FOR INSTITUTIONAL ADVANCEMENT

Perpilili Vivienne Tiongson

EXECUTIVE MANAGING DIRECTOR FOR FUND RAISING AND DEVELOPMENT

PRINTING

The AIM Alumni Leadership Magazine (AIM Leader) is a semi-annual publication of the Asian Institute of Management with editorial office at the Alumni Relations Office, Asian Institute of Management, 123 Paseo de Roxas, Makati City, 1260, Philippines. Telephone No: 8924011 Telefax: 8937410 Email: aimalumni@aim.edu. Online version is available at http://issuu.com/aimleadermagazine. Copyright 2014, AIM Leader. All rights reserved. Reproduction in any manner, in whole or in print, in English or other languages, without written permission is prohibited. ISSN 1908-1081

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CARPE DIEM! We live in exciting times part deux. In the last issue of the AIM Leader, I talked about the fast approaching establishment of the ASEAN Economic Community (AEC) where a single market and production base will be the new playground and where the free flow of capital, goods, labor and services will impact competition. To generate awareness for the AEC, AIM got the ball rolling in a big way through the 2nd Asian Business Conference where captains of industry, thought leaders, diplomats and academicians convened for two days to discuss issues, threats, and opportunities posed by the coming integration. This was immediately followed by the ASEAN Day Celebration where we promoted awareness for One ASEAN. We have countless other projects, including new cases that leverage our ASEAN vision and expertise. Today, we seek to consolidate the gains and continue forward with the momentum created by the concerted efforts within the AIM community in generating awareness for the AEC. We continue to look at how the AEC will affect large and small corporations in terms of brand building, retailing, and finance, among others. We also see tourism playing a big part in driving growth for ASEAN economies as barriers go down and cooperation becomes the battle cry. Recently, you may have noticed that we have been featuring Philippine business leaders as cover stories. This is not a coincidence. We are very fortunate to have these business leaders, such as Dr. Stephen Zuellig, as big supporters of AIM. In this issue, we are very excited to feature Dr. Andrew Tan, one of the Philippines’ most prominent businessmen, as our cover story. Andrew, through his well-regarded companies and innovative products has put the Philippines in the international business map. His recent acquisitions and mergers have gained international coverage for their breadth and savvy. With the AEC, Andrew will have new markets to conquer and new customers to acquire. But more than that, Andrew’s passion and desire to help the Philippines gain a foothold in the burgeoning tourism industry has led him to establish the AIM-Andrew L. Tan Center for Tourism. AIM envisions his center of excellence as a hub for developing high-quality information and professional education in tourism management. I would also like to bring to light the recently concluded Top Management Program. Harvard Business School’s Steve Rogers and Santa Clara University’s Dr. Barry Posner joined me and our esteemed AIM Professors Frankie Roman and Poch Macaranas in discussing leadership and entrepreneurship in corporations and family firms. We are delighted that the program was wellreceived, and all participants got the chance to share their experiences with one another, and learn from an outstanding group of experts.

MESSAGE FROM THE PRESIDENT Dr. Steven J. DeKrey

We also want to share with you news of Professor Matthew Escobido’s recognition as the first recipient of the Prof. Vic Lim Award for Professorial Excellence. Matthew is one of the youngest and most enthusiastic professors I have the pleasure of getting to know, and his passion speaks volumes about why he is an exceptional choice for the award. He and the late Vic Lim not only shared the same alma mater in MIT, but also the same reverence for the transformative power of education. To round off this issue, we have also prepared a summary of my visits to alumni in Taipei, Malaysia, Beijing, and Bangalore. I was thrilled with their warm reception and generosity towards the Institute. My most sincere thanks to all those who made my stay in each city a pleasurable one. Together with our network of generous supporters, our alumni form an integral part of our community. I am glad to see them making waves in their respective industries around the ASEAN. It is with their gracious support that we are able to move our vision of becoming the global source of ASEAN talent, insights, and wisdom, forward into 2015.

Steve

Dr. Stephen Zuellig shown reading the June 2014 issue of the AIM Leader where he graced the cover as a pioneer ASEAN business leader.

President

Photo taken by Dr. Kenneth Hartigan-Go.

Cheers,

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ASEAN

I N SI G HTS

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ive years since the implementation of the ASEAN-China Free Trade Area (ACFTA) in January 2010, trade and investment patterns in the region point to strengthening production and trade linkages in what is perhaps the most competitive trading bloc in the world. According to the UN, ACFTA accounted for 18.5% of total global exports in 2013, and it is home to some of the fastest growing emerging economies.

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Figure 1. Exports of China and ASEAN as a Share of World Exports to the United States, EU, ASEAN and Japan Note: For each label, the first percentage refers to the time period of 2006-2009 and the second percentage refers to the period of 2010-2013. These percentages are based on averages of exports from both time periods. Source: AIM Policy Center staff calculations based on data from UNCTAD (2013)

While there are still lingering concerns as to the impact of Chinese trade on ASEAN’s exports, analysts expect that, over time, individual ASEAN economies could develop their own niches in their economic relations with China and the rest of the world. If China pursues its own structural adjustment by moving up the value chain, gradually phasing out part of the lowskill, labor intensive and resource-based industries that compete with ASEAN, then more complementarities could be pursued within the region. After the formation of the ACFTA in 2010, Chinese exports to the US, the EU and Japan grew both in volume and as a percentage of global exports. Meanwhile, the volume of ASEAN trade with the aforementioned partners also grew, but their shares of overall global exports were generally maintained (see Figure 1). These broad trade flows, illustrated in Figure 1, do not yet reveal much about the underlying realignment of production chains taking place during this period. Such a realignment can be gleaned from an examination of the decline in Chinese exports of goods in labor-intensive or low-skill manufacturing as a share of Chinese exports to the world from 1995 to 2013 and from the simultaneous growth in the export of high-skill products (specifically electronics) for the same period (see Figure 2). The production of low-value inputs has been increasingly offshored from

production sites in China to cheaper sites in ASEAN. Such goods accounted for nearly 15% of all ASEAN exports to the world in 2013. Taking the specific case of the electronics industry, it is evident from Table 1 that ASEAN exports of parts and components of electrical and electronic goods grew from 6% of all exports to China in 1995 to 23.4% in 2013. ASEAN exports of the same goods to the rest of the world (outside China) meanwhile declined from 22.6% to 17.3% of all ASEAN exported goods outside China. Similarly, ASEAN exports of high skill electronics and their corresponding components grew as a share of all exports to China (from 7.3% in 1995 to 26.5% in 2013) while declining as a share of all exports to the rest of the world (from 35% to 20.6% for the same time period) (see Table 1, next page). Trade within the region could be more reciprocal if regional production chains adjust to enhance each country’s competitiveness. Product fragmentation and specialization, for instance, are becoming dominant so that bilateral trade now involves more trade in parts and components. Vertical specialization is particularly visible in the manufacturing of electronics where each country produces based on its technological capability. Moreover, utilizing sophisticated forecasting models, a few recent studies not only predict trade creation, but also project a positive growth trajectory in trade between the ASEAN economies and China. next page, please

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ASEAN-CHINA FREE TRADE AREA continued form page 5

Figure 2. Chinese exports in labor-intensive goods and high-skill electronics as a share of all Chinese exports to the world, 1995-2013 Source: AIM Policy Center staff calculations based on data from UNCTAD (2013)

Table 1. ASEAN Exports of Parts and Components for Electrical and Electronic Goods and High Skill Electronics, 1995 and 2013 Source: AIM Policy Center staff calculations based on data from UNCTAD (2013)

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How important is China to ASEAN? The total volume of trade between ASEAN and China has been growing steadily in the past decade. From 2000 to 2013, Sino-ASEAN trade has expanded by US$322 billion or equivalent to a compounded annual growth rate of 19.2%, reaching nearly US$360 billion in 2013 (see Figure 3). This growth figure has even outstripped the annual growth of China’s global trade in the same period, calculated at 18.2%. While the steady growth was temporarily tempered during the global financial crisis, the 11% decline of Sino-ASEAN trade from 2008 to 2009 was smaller than the 14% decrease in China’s total global trade. Moreover, bilateral trade quickly rebounded the following year registering a substantial 34% year-on-year increase. China has now emerged as ASEAN’s second largest trading partner, constituting 14% of total ASEAN trade, valued at over US$2.5 trillion in 2013. Its volume was second only to intra-ASEAN trade, comprising a quarter of overall trade. Primary commodities (about 41%) and manufactured goods (about 59%) comprise the bulk of ASEAN exports to China. The primary commodities exported to China are made up of fuels (17.1%), followed by food items (9.2%), agricultural materials (8.3%), ores and metals (6.5%). Of the manufactured goods, parts and components of electrical and electronic goods dominate with a share of 22.8%, followed by chemical products (14.5%) and other manufactured goods (10.2%). Among ASEAN’s top exports to China are goods that are largely intermediate and used in the production of Chinese exports to third countries. Of these, cathode valves and tubes comprise 18.3%, natural rubber and similar gums account for 5.1%, and parts and accessories for machines account for 2.1%. Petroleum oils and bituminous minerals also appear prominently among exports, and are meant to satisfy China’s large (and still growing) energy demand. How important is ASEAN to China? ASEAN, on the other hand, is China’s third largest trading partner in the world and its largest trading partner among clusters of developing countries. The region accounts for 10.3% of China’s overall trade in 2012 and 11.1% in 2013. It closely follows the European Union which corners 14% and the United States which corners 12.8% of Chinese total trade. In the past 13 years, ASEAN trade relations with China grew the fastest among China’s major partners, outpacing China’s average growth in overall trade volume by 2.7%.

ASEAN INSIGHTS

ASEAN has gained increasing importance within China’s economic model, which is underpinned by manufacturing intensive industries.

ASEAN has gained increasing importance within China’s economic model, which is underpinned by manufacturing intensive industries. China’s middle class is expected to grow from approximately 250 million at present to around 600 million by 2020, so China could increasingly serve as an export market for ASEAN primary and manufactured products (Devonshire-Ellis, 2014b). Re-aligning Production Chains

The stage has been set for another round of expansion of regional production chains in the ASEAN region. The ACFTA has effectively lowered tariffs on imported goods between China and major ASEAN countries in 2010, and with the entire region in 2015. Multinational companies will, as a result, view China and ASEAN as a single market and restructure their production networks and supply chains to take advantage of low cost opportunities in the free trade area. Manufacturing of certain product lines or product components may have to shift from one country to another. Moreover, China is driving the integration in regional production as it structurally shifts from an export-oriented to a consumption-driven economy. Such structural transition necessitates that the purchasing power and wages of the Chinese public rise. Manufacturing will have to move up the valueadded ladder, away from low-value to high-value added, skill-intensive operations. This shift does not mean that China abandons low-value manufacturing but that it will rationally outsource or offshore the production to cheaper locations either inland or to next page, please

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ASEAN-CHINA FREE TRADE AREA continued form page 7

Figure 3. Growth in Volume of Sino-ASEAN Trade, 2000-2013 (In US$ Billions) Source: UNCTAD (2013).

neighboring countries. Some manufacturing firms have, in fact, already shifted locations, with firms such as Unilever Plc, Samsung Electronics Co. Ltd and Dell Inc. relocating to less expensive regions. This fits into China’s strategy of shifting low-skill manufacturing to less developed areas in order to allow the manufacturing centers on the coasts to do more advanced, value-added activity. Still, some evidence has also shown that as labor costs increase in the coastal manufacturing hubs and as tax exemptions have been scaled back, China-based firms are also increasingly looking to relocate manufacturing to nearby ASEAN countries. The textiles and garments industry recorded nearly a third of manufacturers moving all or part of their production outside China, according to a statement by a Chinese Ministry of Commerce official. Zhongshan Liancheng Co. is one such company, relocating its operations to Cambodia at a quarter of the labor costs. Multinational corporations have likewise transferred with Adidas closing its factory in Suzhou and Nike closing its only Chinese footwear factory also based in Suzhou in 2009. Of the 16,000 Hong Kong-owned factories at risk of closure in 2011, about 30% ceased operations while the figures of closures of Taiwaneseowned factories are similar with many relocating to ASEAN. Vietnam has already begun to reap the benefits of relocation with a US$3.2 billion Samsung mobile plant recently erected in Thai Nguyen; while Indonesia is expecting a major investment boost as Taiwan’s Foxconn Technology Group, the major supplier of Apple products, relocates from China and into Indonesia. The push factors associated with relocating manufacturing elsewhere can be seen as part and parcel of China’s gradual economic transition. A rapidly expanding consumer middle class is also fueling

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demand for higher end products and nearby manufacturing hubs in Vietnam and Indonesia are being tapped to satisfy these requirements. Rising wages and comparatively high mandatory social welfare contributions reinforce moves to set up factories elsewhere in Southeast Asia as Chinese labor costs are becoming less competitive (see Table 2). Such relocations are largely industry-specific with lower-value and traditional, labor-intensive industries such as shoes, textiles, garments and leather being most vulnerable to competition from low labor costs elsewhere. The pull factors drawing China-based companies to relocate some or all of their operations to ASEAN include abundant and relatively cheaper labor, a predominantly young demographic, tax breaks and other investment incentives offered to foreign companies – the kind previously offered by China during an earlier stage in its rapid industrialization during the 1980s and 1990s. Corporate income tax rates, for instance, have been varied across the region but countries such as Thailand and Viet Nam offer investors competitively low rates (see Table 3). Improved manufacturing capabilities in the region have moreover been cited as a reason for increased foreign investment, underpinned by the ASEAN’s “four C’s”, namely: consumption (growth), cost (low), commodities (abundant) and community (single ASEAN trade bloc) (FSG 2014). And while a production gap exists between China and neighboring ASEAN, analysts note that it makes economic sense to build manufacturing capacity in an external location if the facility can achieve 70% of China’s existing production levels; and that the production gap will likely decrease as regional infrastructure improves. Under what has been labeled a “China Plus One” framework, companies maintain the bulk of their operations in China but shift the additional manufacturing capacity needed to service increasing regional demand to at least one other country. Take, for instance, the case of Volkswagen which shifted the base of its Asian production to Thailand, geared toward the ASEAN market, while holding operations in China to service Chinese clients. In another aspect of the framework, low-end manufacturing is undertaken in nearby Southeast Asia and final assembly and supply chain management takes place in China.


ASEAN INSIGHTS

Table 2. Labor Costs of Selected Chinese and ASEAN Cities Notes: Guangzhou welfare can vary depending upon amount of housing fund contribution. Shown is the mean average. All other country welfare figures can vary depending on a number of circumstances. Shown are the typical contribution rates paid. Source: Devonshire-Ellis (2014a).

Such an approach is motivated by the need for diversification and the lessening of overdependence on China, as well as the ability to capitalize on free trade agreements and better tap into regional markets. This strategy undertaken by foreign firms suggests that China and ASEAN have production areas and industries marked more by complementarity rather than competition. More and more China-based companies are seeking to shift lower value production to neighboring ASEAN countries while simultaneously maintaining a production base in China. If the difficulties that accompany integration are overcome and stronger regional cooperation realized, China and ASEAN will form a powerful trade agglomeration that could serve as a catalyst for enhanced global trade growth for decades to come. It is therefore important to better understand the nature of the underpinning trade linkages, particularly as international production chains in Asia begin to adjust to China’s rise in income and wages, coupled with ASEAN’s ongoing economic integration. Managing the competition and enhancing the region’s complementarities constitute perhaps two of the possible responses to facilitate the emergence of a more robust ASEAN-China economic partnership. *The full references to this article are available in the full paper by Chua, K, R.U.Mendoza and M.Melchor. 2014. “An Analysis of the Evolving ASEAN-China Trade Linkages.” AIM Working Paper.

The pull factors drawing China-based companies to relocate some or all of their operations to ASEAN include abundant and relatively cheaper labor, a predominantly young demographic, tax breaks and other investment incentives offered to foreign companies

Table 3. Corporate Tax Rates in China and Selected ASEAN Countries Notes: Vietnam to further reduce its CIT rate to 20% in 2016. Source: Devonshire-Ellis (2014a).

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ASEAN

INSIGHTS

I

n June 26 and 27, thought leaders, political economists, entrepreneurs and magnates, diplomats and academicians converged at the Makati Shangri-la and the AIM Case rooms for a series of exchanges on the impending ASEAN Integration.

It is inevitable. Whether governments, public offices, private entities, and citizens alike know of it or not, 10 countries in the Southeast Asian region will unite. For two days, AIM’s chosen experts from the region and shores beyond shot arrows trying to hit the bulls eye on what makes ASEAN tick. Poised to take on the world, ASEAN has its many rabid supporters, and idealistic detractors. It has its many pragmatic fence-sitters, and cautious caretakers. On role of governments and independent units Where we want ASEAN to be a prime mover is in facilitating infrastructure. Anything that encourages collaboration, anything that makes easy movement for goods and people, and anything that brings costs down is a massive catalyst for innovation, change and productivity. There is a limit to what can be done by independent units. One big role, among many is for infrastructure to grow at the pace of the countries. What you can see in the ASEAN is that growth-what drives the way we live, the way we move, the way we fly, the way we connect- has been unprecedented in the last decade. By its very nature, growth results in modernity, movement and productivity of its people. That creates a whole set of pressures of the existing systems, Governments must always be ahead of the curve in order to facilitate all that is needed in order for that growth to breathe comfortably. When it comes to super cities, ASEAN concentrates on large urban centers. Growth means we have to be able to plan ahead, and continue in what makes lives easier and pleasant. That needs massive amounts of planning and commitment. Role of governments in helping infrastructure is to stay ahead of the curve, not behind it. I’m not saying it’s easy.” This will be difficult for both private sector and government. It is a challenge for the people to make growth sustainable. The Philippines not poor The Philippines is far more capable of moving forward than we give ourselves credit for. I am constantly amazed how, in many cases in general, we still consider ourselves a poor country. We are not a poor country.

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An SME, an Entrepreneur, can aspire to be big, and succeed in a couple of decades from absolutely nothing. Why can’t countries do the same? The Philippines is now investment-grade. We have access to credit, where there is liquidity in the system. Any technology that is needed to build infrastructure and get things done is available to us. A small country that aspires to be bigger needs to have ambition, discipline, and it needs a plan. Other countries have done this in the past. Two decades ago Singapore was a small country with no resources. Absolutely, it’s possible. A country of talent and service Frankly, I lose my patience when people talk as if we’re a country of poor people. We are a country of very gifted individuals, with tremendous capability. Philippine workers are all over the world that provide absolutely first- rate services across a variety of industries. What it takes is some determination.

The graph of economies and corruption

A poor country with a low per capita income has high corruption, that’s the general trend. I would argue that it is hard to eliminate corruption, and of course, that is

ASEAN INSIGHTS JAZA on ASEAN 2015 From Ayala Corporation, one of the country’s pioneer conglomerates, Jaime Augusto Zobel de Ayala, Chairman and CEO, came one of the more vibrant discussions. On “Building Innovation and Creativity”, JAZA, as he is called, gave an honest assessment of ASEAN, and where the Philippines lies in a sea of neighbor nations.

“These are exciting times, what has to change in our mentality” what we aspire to. The more important point is to take the country up that curve. We have to keep encouraging growth, and we have to keep encouraging our people to be educated. When people become wealthier, as the middle class grows, as people reach whole new standards, by that very nature, they will accept corruption less and less. The more important point is to take the country up that curve. We have to keep encouraging growth and we have to keep encouraging our people to be educated.

When people become wealthier, as the middle class grows, as people reach whole new standards, by that very nature, they will accept corruption less and less.

INSURANCE AND THE AEC

THE ‘UNPROTECTED’ 96.65% READY FOR COVERAGE by Margaux Ortiz Multinational life insurance companies continue to dominate the ASEAN region, but the secretary general of the ASEAN lnsurance Council is optimistic that the creation of an integrated ASEAN Economic Community (AEC) will ultimately benefit the region’s consumers. “For the financial services sector, customers will be the big winners of the free flow of goods and services in an integrated ASEAN”, Evelina Petruschka, ASEAN lnsurance Council Secretary-General, said in an opinion piece that came out in a number of Asian publications such as the Jakarta Post and The Philippine Star. “We in the ASEAN insurance industry, for one, expect the AEC to foster more innovation in insurance product development and distribution, which will lead to a greater variety of insurance products and means of distributing them,” Petruschka said. Multinational life insurers Prudential UK, AIA and Ageas remain to be the market leaders in key Southeast Asian countries such as Thailand, Vietnam, Philippines, Malaysia, Singapore and lndonesia. But while foreign players dominate in the Philippines and Vietnam, they face local competition in other Southeast Asian countries. These were revealed in a presentation made by ING Corporate Finance, Asia during the Asian lnstitute of

Management’s 2nd Asian Business Conference held on June 26 and 27. The presentation also disclosed what Vietnam, Indonesia, Thailand and the Philippines have demonstrated robust life insurance premium growth. The life insurance sector, according to ING Corporate Finance, continues to outperform the non-life sector. This could, however, change with AEC’s open borders, according to Petruschka. Products that are not widely offered in parts of the region, including various types of annuities, mortgage life insurance, and homeowners’ insurance, can be made more available, Petruschka explained. “Having a wider array of insurance policies will give ASEAN customers more choices in deciding the products that best suit their changing needs, as many of them join the middle class and seek more wealth and protection products,” Petruschka said. Beyond mere variety, Petruschka explained that “the greater competition the AEC will promote as economic borders open up will encourage insurers to come up with better products and to boost the quality of services they offer customers.” She added that enhanced benefits and better service “will be to the advantage of the customers.”The ASEAN next page, please

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IN A SEA OF NATIONS, WE’RE THE BULLSEYE INSURANCE AND THE AEC

continued from page 11

Insurance Council is hopeful that AEC will pave the way for a greater take-up of insurance products, especially in a region where most of the countries have very low insurance penetration (with the ASEAN insurance penetration rate standing at only 3.35% in 2013) and most of the region’s residents have no basic form of insurance protection. Petruschka also said that the lowering of trade barriers would

most likely urge member countries to look into and potentially adopt the practices of more developed member markets. “If insurers from other markets could offer more transparent transactions, better quality standards and higher professionalism, local insurers will have to pass muster with them in these areas in order to remain competitive,” Petruschka stressed.

THE IMPORTANCE OF HUMAN CAPITAL Former Ambassador Delia D. Albert Senior Adviser, SGV & Co. Opening Remarks, “Realizing ASEAN’s Full Human Capital Potential”

Ambassador Delia D. Albert (right) with Pam Garcia

ln 2017, the ASEAN will celebrate its golden anniversary. Created in 1967 with just the five countries of lndonesia, Malaysia, Philippines, Singapore and Thailand, it has since grown to 10 nations. Reeling from the effects of World War ll, the region was concerned with issues on security and border problems, among others. “Some felt real threats with Mao Tse Tung’s China, the Vietnam War, the Cold War, and the fortress that was Europe,” remarked Albert. Initially, ASEAN was only about cooperation. But after two decades, the group of nations started to use the word “integration”. “Integration means giving up something,” Albert stated. It is important to stress the importance of human capital innovation and excellence in the ASEAN lntegration. As Albert sees it, these will be the drivers of the ASEAN shift. For the ASEAN integration to succeed, the coalition must grow talent internally, providing employees training and development. ASEAN must hire talent in open market, continuously improving performance management processes and accountability.

AIbert also shared that in the recent World Economic Forum held in the Philippines, global political economists pounded the idea that “the key to the future of any country and institution lies in the skills and talents of its people. This is the most important type of capital. ‘Depressing’ numbers The numbers are depressing. Two million Filipino students drop out every year. “The personal goal of Washington Sycip is zero dropouts,” revealed Albert, pertaining to the aim of founder of SGV & Co. and the Asian lnstitute of Management. However, the Philippines outperforms its Asian neighbors in the 2013 global Gender Gap lndex where there are more educated women, college graduates in professional fields, and holding high positions in big companies. Investing in health, wealth and talent Healthy, educated and capable workers will make ASEAN vibrant with talent in 2015, propelled by the competition for jobs,” said Albert. “Start early on the Philippines’ productive skills and capacities that are the important factors that determine economic success. lnvesting in people is not just nice. lt is imperative to growth, prosperity and progress. “To develop the potential power of ASEAN, it has to set its sights on human capital. It must invest in proving the quality of education, especially in increasing enrollment rate in secondary and tertiary levels.”

2015 NOT A HARD-AND-FAST TARGET Steve DeKrey President, Asian Institute of Management

One of the main questions about the AEC is whether it will even be achievable by 2015 or not. I believe that everyone understands it’s not going to be instantly established in 2015. Despite that, the 2015 deadline is meaningful. To paraphrase the head of the ASEAN Studies Centre and former ASEAN Secretary-General, Rodolfo Severino, “the plan to realize the ASEAN Economic Community by 2015 should be reconsidered as not a hard-and-fast target. It should be regarded as a benchmark to help measure ASEAN’s progress toward regional economic Integration”.

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ASEAN INSIGHTS

WE MUST BE BOTH OPTIMISTIC AND REALISTIC Dr. Nalinee Taveesin Former Thailand Trade Representative ASEAN Economic Community: What Does This Mean For Its People?

By establishing the AEC in 2015, 10 ASEAN member states collectively transform themselves into a single market and production base with free flow of goods, services, investment, skilled labor, a freer flow of capital, as well as harmonized rules, regulations and procedures. Moreover, ASEAN also wants this single market and production base of also integrate itself into the global economy and supply chain” What does this mean to its people then? First and foremost, this means opportunities. For businesspeople and investors, AEC offers opportunities for growth and expansion. Zero or minimal tariff mean lower production cost. Harmonized and simplified procedures mean lower transaction cost. Convergence in terms of rules and regulations makes it easier for business partnership building and relocation. Bigger market means more lucrative chances to take advantage of the economy of scale of the production.

For consumers, AEC offers them greater access to wider range of products and services and opportunities to benefit from competition among the provider of goods and services. And when problems and, ASEAN’s mechanism for consumer redress will help them ease difficulties and resolve conflicts. It’s essential that the business community be optimistic about the ASEAN Economic Community yet realistic about what to do to benefit from it and live with it. AEC is indeed a very meaningful initiative and the part of the governments of all ASEAN member states, but it is equally important that the people of ASEAN, including foreign businesses and investors who have long been well established in the region, recognize the importance of their participation and contribution to the ASEAN integration process.

LEAVING HOME, BUT LEAVING A RATIONAL INTEGRITY INTACT Dato Timothy Ong Chairman and Founder, Asia Inc. Forum

ASEAN lntegration cannot take the place of national integrity. ln an ideal world, no one should have to leave home. But, this is not a real world. People do have to look around for better opportunities, as is how the world has developed.

PLANNING FOR RESILIENCY Ambassador Roberto R. Romulo

ASEAN has had almost two decades experience in building resilience to economic crisis since the 1997 Asian crisis. Attention to macroeconomic fundamentals, sound banking system, improved governance; regulatory reforms have enabled ASEAN economies to weather the 2008 global financial crisis and its aftermath. As ASEAN progresses towards an ASEAN Community there is expectation of closer economic policy coordination among its members and joint effort to deal with economic shocks of which the Chiang Mai Initiative is seen as a portent of things to come. By contrast, embedding resilience to natural disaster in policy making is of recent vintage. Yet it is increasingly recognized that the economic consequences of natural disasters last longer and disproportionately affect the poor and disadvantaged community.

They exacerbate poverty and inequality. For economies like the Philippines, the challenge of planning for resiliency requires most of all, as we know, a transformation in thinking and attitude from planning to execution at community, local government and national government levels. For governments faced with many competing priorities for not limitless resources, it requires a sea change in thinking to allocate funds otherwise spent on critical social spending or infrastructure for measures to respond to an event which may or may not happen for a while. This, despite the fact that for every dollar invested in prevention and resilience, between $4 and $7 are saved in disaster response, according to UNDP and the California Emergency Management Agency. next page, please

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ASEAN INSIGHTS

PLANNING FOR RESILIENCY continued from page 13

The fact that natural disasters draw international attention and therefore more financial resources makes it even more tempting to take a wait-and-see attitude. This is why I believe it is critical to develop a comprehensive disaster database to assist evidence-based-policy-making for contingencies, risk reduction, insurance, self-insurance and disaster response. Likewise, working with international donors and funders before disaster strikes could mobilize

external assistance for risk reduction, which is likely to earn a higher return than emergency help after the fact. As a high-risk country, the Philippines have taken a number of positive steps to mitigate the impact of natural disasters. And we have a number of best practices to share at the community and local government level. But the challenge is enormous particularly when it comes to transformative thinking.

BANKING AND THE AEC Foreign Ownership Issues Dampen Banks Appetite to Grow By Margaux Ortiz

There is a need to overcome the hurdles to regional consolidation order for ASEAN banks to move forward. These hurdles include foreign ownership rules and disparity in economic standing and culture, according to a presentation made by ING Corporate Finance, Asia during the the Asian lnstitute of Management’s 2nd Asian Business Conference held on June 26 and 27. “With foreign ownership limits on Asian banks, the acquisition of banks in Asia are likely to be minority stake transaction, ING Corporate Finance said, adding that minority holdings are required to be fully deducted against capital under Basel lll. Basel lll is a global standard that aims to strengthen bank capital requirements to enable banks to withstand stress and shocks. “Consequently, full deductibility of non-majority shareholdings under Basel lll, in conjunction with foreign ownership restrictions in place in Southeast Asian countries, are likely to dampen the appetite of banks to acquire non-majority stakes in other banks within the region,” ING Corporate Finance added. In Malaysia, the foreign ownership cap is 70%, followed by Indonesia (40%), Thailand (25%), Vietnam (20%) and Singapore (5%,12%, 20% thresholds on foreign ownership). The Philippines used to rank 2nd with a 60% foreign ownership cap, but President Benigno Aquino lll has recently signed into law a bill allowing the “full entry of foreign banks into the Philippines. The new law, Republic Act No. 10641 or An Act Allowing the Full Entry of Foreign Banks in the Philippines”, allows foreigners is own up to 100% of domestic banks and facilitate the entry of established, reputable and financially sound foreign banks in the Philippines. The law will also grant locally incorporated subsidiaries of foreign banks the same banking privileges as domestic banks of the same category.

However, even with this new development, the Philippines and its fellow ASEAN member states still have to deal with cultural differences as another hurdle to regional consolidation. Filipino consumers, for example, have a higher preference for branches more than self-services channels (40%o per week) compared to their Southeast Asian peers (20% per week). ING Corporate Finance also revealed that Southeast Asian consumers use ATMs as a channel (60% per week) more than their Filipino counterparts (40% per week). Southeast Asian consumers also have differing levels of sophistication, with Filipino consumers owning an average of 2.5 products per customer, in contrast to the average Southeast Asian consumer who owns 3.5 products. ING Corporate Finance’s presentation showed that the largest banks in each country are generally controlled by local family groups. It also disclosed that Indonesian banks continue to outperform regional peers due to their home country’s high local GDP growth and low product penetration rates. The presentation also showed that a few ASEAN-based banks such as DBS, OCBC, UOB, Maybank and CIMB have emerged and established their presence in the region. But according to a report by the Asian Development Bank (ADB) titled “The Road to ASEAN Financial Integration”, ASEAN banks still have a long way to go. “Over the past 2 decades, ASEAN member states have made great strides in improving the efficiency and soundness of their financial institutions and in developing money and capital markets the ADB report said. The report added, “Yet, compared with their counterparts in advanced countries, ASEAN banks and other financial institutions are not large enough in asset size to compete effectively against global players in international financial markets.” ADB stressed that ASEAN must place a high priority on –speeding up and deepening regional financial integration to realize its continuing commitment to community building.

In a SEA of Nations, we’re the Bullseye, is reprinted with permission from AdEdge Magazine

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TAL_2_122014_TR50

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ASEAN

I N SIG HT S

Countdown to 2015:

Creating ASEAN

Champions

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W

ith a new economic community around the corner, Southeast Asia is poised for massive growth. A solid brand and regional game plan will be vital.

The Association of Southeast Asian Nations (ASEAN) encompasses 600 million people across 10 countries, with a combined GDP of $2.3 trillion. In two years, the ASEAN Economic Community (AEC) will come into effect to form a single market and production base with a free flow of goods, services, investment, and skilled labor. The AEC will be the fourth most populous bloc in the world behind China, India, and the European Union. The AEC will be a game changer. The region’s companies will face unprecedented access to markets—and unprecedented competition. Organizations that do not have a regional game plan, or understand how to build brands, will fall behind. Everyone wants a piece of ASEAN. With limited growth opportunities elsewhere, Southeast Asia remains one of the world’s few unsullied growth stories. ASEAN’s population is projected to reach more than 650 million people by 2020, with half under the age of 30. By 2030, 51 percent of the population (not including Myanmar, Laos, and Brunei) will be in the middle class, according to the Brookings Institute. This young population is educated and technology savvy. And as its members move into the middle class, they will continue to want more products and services and will demand more from the brands they buy. They are also among the world’s most optimistic consumers. JWT and A.T. Kearney recently conducted an in-depth study of the AEC bloc and its impact. Our conversations with 50 corporate leaders, most from domestic companies across Southeast Asia, and leaders of key Asian and Western multinationals that operate here, show the AEC is high on their radar screens. Sixty-four percent say their organizations plan to enter new markets in the region once the AEC kicks in; 60 percent say they will expand their existing brands or product lines; and 24 percent say they will add completely new ones to their portfolio after 2015. The big players are already scaling up their presence to capture new opportunities, as indicated by U.S. multinationals’ plans for the region. In a recent American Chamber of Commerce survey, 90 percent of respondents expect their trade and investment to rise in ASEAN by 2015, and 73 percent say ASEAN’s contribution to global profits will rise over the same period. 1One big reason: Growth is slow back home, and ASEAN remains one of the brightest sparks. Southeast Asian companies that plan ahead can emerge as regional champions. Years of growth have left many of the region’s companies cash rich compared to their Northeast Asian or Western peers. Forward-thinking Southeast Asian CEOs are putting that cash to good use, snatching up competitors at home and across the region. The first half of 2013 saw 183 merger and acquisition (M&A) deals worth $27.1 billion, up 10 percent by volume and 6 percent by value over the same period in 2012, according to Mergermarket. Most of these were in-country acquisitions, and the bulk of the cross-border activity consisted of outbound deals initiated by Southeast Asian companies expanding outside their home market. next page, please

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COUNTDOWN TO 2015

Note: ASEAN is the Association of Southeast Asian Nations; percentages are rounded. Source: Organisation for Economic Co-operation and Development (OECD) Development Centre’s medium-term projection framework in the Southeast Asian Economic Outlook

continued from page 19

Companies across Southeast Asia are going to have to work harder to defend their home turf against a growing number of global and regional competitors. Many domestic players in this region have historically focused on their home markets, where they often enjoyed minimal competition. Many more have created scale through mass production of low-cost goods, with little thought to building real brands. Of the companies we looked at with annual revenue under $100 million, nearly 40 percent of leaders concede that their topselling product does not have a clear brand idea—or has no brand idea at all. To succeed beyond 2015, forward-thinking players will change gears now, adopting a regional mindset and making the switch from selling products to managing brands as they enter new markets, engage new consumers and tackle new competition. The game is about to change—and soon. With the AEC just two years away, organizations that have built solid brands with a regional reach will be best positioned to emerge as winners in ASEAN’s new era. The ASEAN Growth Story Countries in the Association of Southeast Asian Nations (ASEAN) have enjoyed robust growth for more than a decade, marred only by a short-lived blip during the global financial crisis (see figure 1). The current cloudy economic outlook in the United States and Europe will have an impact here, but ASEAN countries are still expected to continue to

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perform well, supported by high consumer confidence, domestic consumption, urbanization, and growing intra-regional trade. Domestic demand will continue to be buoyed by the burgeoning middle class. Consumption accounted for 53 percent of GDP in ASEAN countries in 2012, which is higher than the 44 percent in the BRIC countries (Brazil, Russia, India, and China). This demand helped sustain growth and will continue to help counter sluggish exports as the global economy slows. The region’s population is notably young. Generation Y consumers, ages 15 to 29, account for 27 percent of the ASEAN population—higher than China or Russia. 2These young consumers are also wired and highly connected. Indonesia’s mobile-phone penetration is 109 percent, and 81 percent of the Vietnamese use social media to make purchasing decisions. Bangkok is the Facebook capital of the world. There are 50 million Facebook users in Indonesia and 30 million in the Philippines, ranking these countries fourth and eighth in the world. This has changed the way the region’s consumers learn, share, and interact with brands, creating endless opportunities for local champions to connect with local consumers. ASEAN’s consumers are among the world’s most optimistic. The Nielsen Global Consumer Confidence Survey released in October 2013 found that Indonesia and the Philippines (pre-typhoon) were the most optimistic countries in the world; Thailand and Malaysia also rank in the top 10. And they are happy to spend on higher-value items. A rise in the minimum wage in


ASEAN INSIGHTS

Sources: ASEAN Economic Community: Opportunities or Threats? by the Bank of Thailand; A.T. Kearney analysis

Indonesia has boosted disposable income, prompting consumers to trade up to premium brands, according to Nielsen. The long-term outlook is upbeat. Standard Chartered believes urbanization alone could triple ASEAN’s per capita GDP and help it outpace global growth for years to come. Historically, the regional opportunity has been confusing because of the large number of countries with different cultures at different stages of development with different needs. The AEC will go a long way toward making the ASEAN opportunity a more viable and interesting story. The AEC’s bold vision is to form a single market where movement of goods, services, skilled labor, and capital across the ASEAN countries are unhindered and free of tariff and non-tariff barriers (see figure 2). The AEC will help ASEAN become more dynamic and competitive by creating a single market and production base with an open, market-driven economy. The AEC is underpinned by a number of agreements, including the ASEAN Free Trade Agreement, which has been reducing tariffs in stages since 1992. ASEAN has also ratified free trade agreements with China, Australia and New Zealand, South Korea, Japan, and India. More will come. And the ASEAN Banking Integration Framework is scheduled to come into effect in 2020, liberalizing the region’s stillprotected banking sector. From our conversations with corporate leaders, we know that the AEC is high on the agendas of

companies across the region (see sidebar: About the Study). Sixty percent of those interviewed for our study say their organizations plan to enter new markets in the region once the AEC kicks in. Most (58 percent) believe the AEC will have a moderate to high impact on their business, while 20 percent believe it will have a significant impact. And they are optimistic about the changes it will bring, with 97 percent saying the impact will be positive. Increased demand for products and services, a larger talent pool, and reduced tariffs and restrictions to trade are driving this optimism. Most believe that the impact of the AEC and its free-trade initiatives will be felt by 2018, especially for supplier networks, distribution channels, and outbound logistics (see figure 3). Some executives doubted that all the facets of the AEC will kick in exactly on deadline in 2015. Whether or not the AEC comes into full effect and precisely on schedule is beside the point. Economic integration is inevitable. Firms that want to capitalize on this new opportunity need to adopt an international mindset and move their goalposts, from winning within national boundaries to winning within regional boundaries. Preparing for 2015: Early Movers Expand Regional Reach Competition is heating up. Smart Southeast Asian companies are jockeying for position as regional players by snapping up competitors on their own turf next page, please

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COUNTDOWN TO 2015

“Our products will be distributed across borders more easily. Therefore, we have opportunities to sell our product everywhere.” - Marketing director, Asian fast-moving consumer goods company About the Study Between July 14 and September 22, 2013, A.T. Kearney and JWT surveyed 50 C-suite executives using SONAR, JWT’s online research tool, and conducted in-depth interviews with key respondents to learn what they think of the ASEAN Economic Community and how it will impact their business. Participants include chief executive officers (32 percent) and chief marketing officers (18 percent). About a third of the companies are fast-moving consumer goods firms, and 14 percent are from other retail industries. A variety of other industries are also represented, including telecommunications, media, and technology (8 percent), and financial institutions (6 percent). Three-quarters of the participants work for companies headquartered in Southeast Asia, with the remainder coming from Europe, North Asia, North America, and South Asia. Gross annual revenue of the companies ranges from less than $50 million (31 percent) to just under $20 billion (3 percent).

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Note: AEC is the ASEAN Economic Community. Source: A.T. Kearney and JWT Association of Southeast Asian Nations (ASEAN) Leadership Study,

continued from page 19

and across the region. They are not waiting for the AEC to kick in to get a piece of the ASEAN growth pie. They’re moving fast now. Hello Axiata, the Cambodian subsidiary of Malaysian company Axiata Group, acquired Latelz Co.’s Smart Mobile phone brand in Cambodia in December 2012, merging the two to create the nation’s second-largest mobile operator. The market had nine mobile companies. Axiata’s CEO said the market was primed for consolidation and wanted to be an early mover, creating scale and scope to secure market leadership. Thai billionaire Charoen Sirivadhanabhakdi kicked off 2013 with Southeast Asia’s biggest takeover, acquiring Fraser and Neave Limited, the leader of Singapore and Malaysia’s soft drinks market, for $11.2 billion. The deal adds popular brands and distribution networks to Charoen’s Thai Beverage Public Company Limited, which also brews Chang beer and makes spirits, instant coffee, and energy drinks. In June, CP ALL, controlled by the Charoen Pokphand Group, bought Bangkok retailer Siam Makro for $6.1 billion, the largest domestic takeover. Companies such as Maybank and CIMB Group of Malaysia, Bangkok Bank of Thailand, DBS Group, OCBC Bank, and United Overseas Bank of Singapore are already making headway regionally even though the ASEAN Banking Integration Framework is yet to be ratified. ASEAN companies are on the prowl. In 2011, they were on a regional shopping spree with more than half the M&A deals being cross-border transactions. Last year, however, they shopped closer to home. The M&A activities across all major ASEAN markets in 2012 were driven by intracountry deals, except for Vietnam, with Malaysia remaining as the most active market (see figure 4). Energy, utilities, and mining have seen the most consolidations, followed by the financial industry (see figure 5). They are also investing heavily in their regional operations. Overseas foreign direct investment (FDI) from within the region increased by fivefold from $84.5 billion in 2000 to $495.7 billion in 2011, according to the ASEAN Investment Report. In addition, some ASEAN countries’ annual outward FDIs have consistently exceeded inward FDI in recent years. The gap in the flow of outward FDI is also narrowing between the largest


ASEAN INSIGHTS

Note: ASEAN is the Association of Southeast Asian Nations. *Others includes Cambodia, Laos, Brunei, and Myanmar. Source: Dealogic

regional investor (Singapore) and the other ASEAN countries—a sign of increasing cross-border play by ASEAN companies. Are Southeast Asian Brands Ready for AEC? Sixty percent of executives in our survey say they plan to enter new markets in the region once the AEC kicks in, and 60 percent plan to expand existing brand or product lines after 2015. An additional 24 percent say they’ll create new products once the AEC is implemented. Companies are going to need solid brands to both enter new markets and defend against all this fresh competition. Quite a few Southeast Asian companies successfully embrace the competitive value of a brand. AirAsia pioneered affordable air travel in Asia, Singapore Airlines sets the bar for the world’s full-service carriers, and CIMB Bank aims to be ASEAN’s bank (see sidebar: Malaysian Bank Aims to Come Out on Top). In every market, local champions understand that a brand idea creates an emotional connection and long-term relationship between a product and a consumer—and it sets their product apart. For many more Southeast Asian companies, branding has not been top of mind. While all of the big players in our study (with more than $1 billion in revenue) think their top-selling product has a clear brand proposition, nearly 40 percent with revenue under $100 million concede that their top-selling products do not have a clear brand idea—or have no brand idea at all. Southeast Asian manufacturers have historically focused on mass-market production, creating scale with low-priced products. Many executives still don’t appreciate the power of branding and, as a result,

don’t hold the brand up as the best way to connect with consumers. When it comes to advertising, domestic companies tend to spend the bulk of their marketing budgets on tactical ads to drive sales, investing less on brand campaigns to build emotional connections and affinity with consumers. This is particularly true for mid-sized and smaller companies. The larger companies spend more than half of their budgets on brand campaigns, but the companies under $100 million spend 70 percent of their marketing budgets on tactical ads and less than one-third on brand campaigns. Southeast Asian CEOs and chief marketing officers want immediate business results but sometimes fail to grasp the bigger picture. Low prices and tactical ads can drive sales and even scale—until the next guy comes along with a lower-priced product. Indofood, the world’s largest instant noodle manufacturer, knows this all too well. Indofood’s popular Indomie brand of instant noodles had a lock on its home market in Indonesia for years—until Wing’s Group, a local conglomerate, decided to get in on the noodle game in 2009. Wing’s launched Mie Sedaap, a competing product, at a lower price point and promoted the brand with extensive marketing campaigns. Indofood lost 15 percent market share virtually overnight. The company commands 70 percent of the market, but still has not won back the share it lost to Wing’s. In a recent report on Indofood, HSBC Global Research attributed the loss to “low customer brand loyalty.” Companies across the region face fresh competition from both younger, marketing-savvy local competitors and international brands. Consider the fate of Komix, an Indonesian cough syrup brand that created a turn to page 26

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ASEAN INSIGHTS

season to be jolly! This is indeed true as in the case of the Philippine ‘ Tisretailthe industry when revenues are up by simply capitalizing on the

consumers’ favorite time of the year. While this December takeoff could make for assured and confident business, could this be shaken off by the ASEAN Economic Community, given the more stringent market competition?

PH RETAIL INDUSTRY BEYOND “BRICK AND MORTARS” As competition heightens, retailers are eager to take advantage of the industry trends and revamp their retailing beyond the confines of brick and mortars. And as tech developments are pushing frontiers of businesses, malls could not exempt themselves from riding these trends with a consequence of losing market grip. The entry of much anticipated brands such from Indonesia, Singapore, and the most recent entry of youth oriented fashion line from Sweden have been pressuring domestic retailers to rethink the way they are being built, designed and do business. From one side, we are assured of the growing middleincome class, confident consumers and rising disposable incomes, partly beefed by foreign remittances and BPO industry. Meanwhile, supply-side analysis dictates that retail spaces and malls have graduated into third places – apart from the first two usual social environments of home and workplace. They are no longer serving purely commercial functions but have evolved into a recreational place filling social and psychological needs. Philippine retailers are responding proactively to this imperative. A recent contest by one large mall developer encouraged the youth to throw in their ideas of how the future malls would look like. There is another retail giant in the domestic scene which is an interesting case to consider. From its traditional closed indoors design, it has now revolutionized customer experience by exploiting integrated functionalism of modernist architecture. Since lifestyle is the underpinning element of consumer behavior, malls have followed these patterns by simplifying processes and innovating experience apart from the mundane carts. This is in line with new urban development paradigms such as the recreation of “intimate villages”, where all lifestyle components are woven strategically into a single ecosystem underpinning a stylistic eclecticism.

In terms of simplifying processes, technology is leading revolutions in the retail landscape especially in US, Europe, and in many more advanced countries in the world. Customers have gone mobile through smart phones, tablets and other portable computers. Then e-commerce ushered business models which understood the consumer continuum; this ranges from browsing product reviews in social media, to snooping promos, selection, payments and delivery systems. Much later, retailers hailed the dawn of the mobile payment revolution, where every merchant receives payment no longer in a face-to-face transaction. Various Philippine e-commerce sites in the internet have triumphed in this aspect such as OLX, AyosDito, ebay, Lazada and even aviation firm Cebu Pacific. Philippine retail stores in China are likely to be shaken by e-commerce as the country yields frontrunners in e-commerce, of which Alibaba is most striking. This is expected to be fueled as well by sale surges in smart phones for the gadget-savvy consumers. Recognizing the blurring of distance, these developments present opportunities especially when tapping overseas Filipino workers who are considered as treasure troves. Rather than have costly branches follow the trail of sales, it is more efficient to tap the OFW latent demand by building the necessary infrastructure, similar to the mobile remittance businesses in the country. Instead of money, goods could instead be sent and delivered. In fact, geotargeted marketing is already present in the retail scene. There are also existing delivery systems that address this such as international flower delivery and international gift baskets. Here enters big data analytics. For example, extracting information from many data sources will shape marketing techniques by profiling consumers turn to page 25

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AIM NEWS World- renowned Banda Kawayan entertained the guests with lively folk songs.

T

he Asian Institute of Management’s ASEAN 2015 Project staged an ASEAN Day Celebration 2014 with the theme: “AIM Celebrates ASEAN Day 2014: Promoting Awareness of One ASEAN Community”, 8th August 2014 at Stephen Fuller Hall, 3rd Floor, Asian Institute of Management, Makati City.

Hon. Sec. Coloma delivering the Keynote Address to the ASEAN Day 2014.

“Promoting Awareness of One ASEAN Community”

ASEAN DAY CELEBRATION 2014 By the AIM ASEAN 2015 Project

The event was a showcase of ASEAN culture and identity in commemoration of the 47th anniversary founding of ASEAN (the Association of South East Asian Nations), and attended by around 355 participants and guests from various communities: from the diplomatic corps, government, business, academe, and AIM alumni, members of the institute, and students. Profs. Vernie Caparas and Richard Cruz were the Masters of Ceremonies. Anchored on the theme “Promoting Awareness of One ASEAN Community”, the event was a celebration of culture through festivities expressed in music, dances, food, fashion, and most of all words of unity and peace in ASEAN as we take a step further towards integration. The celebration began with the parade of ASEAN flags by the UST Golden Corps Cadets, followed by musical performances of Banda Kawayan Pilipinas and the Himig AIM, video presentations on ASEAN advocacy and video messages from

AIM President Dr. Steven J. DeKrey, Ms. Elaine Tan, Executive Director of the ASEAN Foundation, Mr. Yasushi Iwata, General Manager, Economic Research Institute for ASEAN and East Asia (ERIA). The welcome remarks was given by Prof. Federico M. Macaranas, AIM ASEAN 2015 Project Co-Director and the AIM Alumni message was carried out by Ms. Rowena Palmiery-Bayoneta, Chair of the Alumni Association of AIM. This was followed by the showing of video clips from the 2nd Asian Business Conference and the keynote speech of Secretary Herminio “Sonny” Coloma, Jr. Presidential Communications Operations Office, Philippine Representative, ASEAN Ministers Responsible for Information. There was a Ceremonial Toast for ASEAN led by Sec. Coloma and Ambassador Delia Albert together with WSGSB Dean Horacio ‘Jun’ Borromeo, various representatives of the diplomatic corps headed by Patricia Barerra, Usec. Coratec turn to page 25

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P

eople celebrate birthdays by reminding themselves of the good things that have happened in their lives. So should institutions.

ON ASEAN’S 47TH BIRTHDAY Prof. Federico M. Macaranas ASEAN 2015 Project Leader, Asian Institute of Management

The Association of Southeast Asian Nations (ASEAN) is indeed fortunate that since August 8 1967, it has outgrown the birth pains of political uncertainties, survived the economic difficulties of a restructuring world, and is heading towards a more conscious social order for the peace, prosperity and welfare of its diverse peoples. It is in the economic realm that ASEAN has much to celebrate about. The big picture story is that after the 2008 global financial crisis, Southeast Asia remains very dynamic compared to the developed countries. As the 7th largest in the global economy today, it is projected to be the 4th by mid-21st century. In the knowledge era, as the second largest Facebook-using region in the world today, it has much potential in transforming social media into productive forces even among the poorer communities. Of course, it is far from being a single market and production base where all goods and services can move freely within the ten member states – after all it took longer for other groups to achieve the same outside political unions ; some skilled workers can now move more easily and ASEAN qualified banks are being discussed in capitals today. The member states can increase trade more effectively with each other as tariff rates have been reduced to zero; their openness to former colonial export-import partners is a reason why ASEAN’s intraregional trade is around half of USA-CanadaMexico trading within NAFTA, and European Union’s own. As a major contributor to the world’s supply chain in many industries, however, it has room for more indigenous globally-branded products and companies. The region is still a major agricultural powerhouse, serving markets far and near (especially the Dialogue Partners Australia, China, EU, India, Japan, Korea, New Zealand, Russia, USA). While touted as the Detroit of the region with its automotive industry prowess, Thailand is keeping to its promise of being the world’s kitchen: it is the number one world producer of pineapple, rubber, shrimp, processed chicken and canned tuna. Myanmar is the largest global producer of sesame seeds and sugar crops, while Vietnam is the world leader in production of cashew nuts and pepper commodities, the Philippines in abaca, and Indonesia in coconuts. Even small countries like Lao PDR rank 8th largest in ramie production, and Cambodia 21st in fiber crops and 25th in cassava. Malaysia is the 6th largest producer of palm kernels and 7th in natural rubber. Thailand, Vietnam and Myanmar remain as major rice exporters in a region that houses the International Rice Research Institute (IRRI) which helped both India and China with their famine situations as local scientists developed their local varieties from the science and technology of IRRI.

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Blessed with natural resources, ASEAN is also home to vast fields that make it a major liquefied natural gas producer and exporter -- Malaysia is the world’s number 2, while Brunei, rated as fifth richest economy in the world by Forbes magazine, is 9th in LNG. Indonesia has the world’s largest geothermal reserves, and the Philippines is among the key players in this energy area. The Coral Triangle, an area embracing the Philippines, Malaysia, Indonesia and other neighboring countries, is a vast fisheries and marine resource base for the world; the Verde Island Passage between Batangas and Mindoro provinces in the Philippines has been discovered to be the center of the center of global marine biodiversity, a boon to the pharmaceutical industry. Even more blessed with resilient people that survive challenges of their own kind and mother nature, ASEAN member states look at market forces to nurture sunrise industries. The Philippines is among the top outsourcing destination of the world, thanks to its much touted English versatility and less noticed trainability that give it number one exporter status in seafaring and nursing. Singapore, the second most competitive nation in the planet, is focusing on biotechnology, among others to support its 21st century vision; Malaysia and Thailand are also quite engaged in research and development networks in the health field, as the Philippines attempts to advance those in neglected tropical diseases through ASEAN, and fears that the next pandemic will originate from this part of the mobile world. Tourism professionals are being trained around the region to keep up with a key driver in many local economies, e.g., eco-tourism in Lao PDR. Cross-border education is growing although not to the extent that ERASMUS impacts in Europe. ASEAN has no peacekeeping force and no concrete mechanism for enforcing human rights, but it has kept the peace in the region. Global attention on regional conflicts is more directed at other places today. The ASEAN Secretariat is thankfully around a tenth of that of the European Commission; it is being reinvented to give more attention to the private sector whose partnerships with governments is making possible new sources of dynamism. A post-2015 scenario is being discussed in many countries in ASEAN today as crafted by the Economic Research Institute for ASEAN and Northeast Asia (ERIA). As the Philippines anticipates the 50th celebration of ASEAN when it hosts the Summit in 2017, we should raise our glasses to wish it well and the region an even better future. Maligayang Kaarawan, ASEAN. Selamat Ulang Tahun! Selamat Hari Jadi! Mingalar Mwe Ne Ba! Souksaan van Kheud! Suk San Wan Gert! Chuc Mung Sinh Nhat!


AIM NEWS

PH RETAIL INDUSTRY BEYOND “BRICK AND MORTARS” continued from page 23

abroad who want to have birthday, graduation and other holiday gifts sent to their loved ones in the Philippines. Effective pricing and product offerings could be strategically designed. Indeed, IBM, a tech titan and pioneer of big data analytics, has chosen the Philippines as its location for its analytics crusade, poising the country to be the world’s analytical hub. It is setting up data analytics centers in the Philippines; and the first supply of

graduates in some local colleges and universities will be available for the analytics industry by 2016. There is clearly great potential for technology to change retail growth trajectories, but it hinges on whether the industry can build out an active strategy for capitalizing on them. With these opportunities, sales and company growth are likely to be the gifts of the Santa Claus of Big Data. Does this mean that we will have more people expecting more presents under their Christmas trees in 2014? It might just be too ridiculous to get these gifts through the chimney! Guests in front of the ONE ASEAN Arc during the Registration.

Professsor Federico Macaranas and Hon. Sec. Sonny Coloma during the Ceremonial Launch of the AIM ASEAN Website and Presentation of ASEAN Cases

“Promoting Awareness of One ASEAN Community”

ASEAN DAY CELEBRATION 2014

Jimenez, Ms. Bayoneta and Prof. Macaranas. A pledge to promote ASEAN awareness was signed by the participants after the toast. As AIM’s gift for ASEAN, the AIM ASEAN website was launched and the 20 ASEAN Cases were presented for ASEAN’s 47th birthday. Dinner were served soon after with mouthwatering cuisines from various ASEAN countries, a parade of national costumes from Southeast Asia by students, guests and faculty members, and prizes were given to the winners of the best in national costumes. There were also prizes for the winners of the raffle draw The celebration was a huge success as it had the immense support of AIM Office of the President, Office of Institutional Advancement, Office of Strategic

continued from page 23

Initiatives, Dr. Andrew L. Tan Center for Tourism, Washington SyCip Graduate School of Business, Alumni Relations Office, AIM Policy Center, and Stephen Zuellig Graduate School of Development Management. Likewise, the event was made possible with our Gold Sponsors namely Cebu Pacific Air.com, Community Health Education Emergency Rescue Services (CHEERS) Corp., John Robert Powers, The Buffet, Pilipinas Shell Petroleum Corporation, AIR21 and MX3; Silver sponsors, AIM Alumni, Honda Cars Pasig, C2, Magic Chips, Great Taste White Coffee and San Miguel Lifestyle Brews; Bronze sponsors, Shirt Happens, San Miguel Corporation, The Heritage Hotel, PANA and the Asia Society-Philippines.

Winners of the Best ASEAN Costumes Awards together with Ambassador Delia Albert, USEC Corazon T. Jimenez, Dean Juan Miguel Luz, and Professor Federico Macaranas.

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COUNTDOWN TO 2015 continued from page 21

Malaysian Bank Aims to Come Out on Top When Malaysia’s CIMB looks to the future, it is betting on strong growth within ASEAN and the steady move toward integrated markets. The banking group, currently the fifth-largest lender in Southeast Asia, hopes to be one of the top three by 2015. After many successful mergers and acquisitions, the company plans to continue on this path to become an ASEAN champion. CIMB has also made many moves beyond its borders to Australia, China, Taiwan, and even the United Kingdom, among other countries, with its recent Royal Bank of Scotland corporate finance businesses acquisition in 2012. CIMB was a relatively minor bank until 2005, when it acquired BumiputraCommerce Group, a large Malaysian lender. In 2008, it grew its presence in core regional markets through two back-to-back moves, merging its Indonesian unit with PT Bank Lippo and acquiring Bank Thai PCL. Today, CIMB has operations in Malaysia, Indonesia, Cambodia, Thailand, Singapore, and Brunei with 1,105 branches throughout ASEAN. The company has applied for banking licenses in Laos and Vietnam and has its eyes on acquiring more businesses in Thailand and especially in the Philippines, the only major regional market that remains untouched by the CIMB footprint. CIMB is focused on becoming a panASEAN bank and is busy building up its businesses to hold strong against its competitors and meet the needs of the post-AEC consumer base. There will likely be more deals in the works during the lead-up to the 2015 economic community—and for good reason. To date, about 30 percent of CIMB’s earnings come from non-Malaysian operations, according to Citigroup. The bank has posted record profits in several of the past five years, and its market capitalization surged to $14 billion from $3.3 billion between 2005 and 2010, making it one of the region’s fastest- growing banks.

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new market when it released a line of inexpensive cough syrup in dose-size packets with ads focused on price and practicality. When Vick’s, a better-known global brand, released a competing product, Komix’s sales plummeted. Thailand’s Coca Suki restaurant chain, which introduced a distinctly Thai version of hotpot-style sukiyaki to the market in 1957, has been overtaken in the past few years by a slew of new local competitors that invest more in marketing to woo consumers. MK Suki, known for its quirky, upbeat television commercials and Internet viral videos, has trammeled Coca Suki, which doesn’t really advertise. In fact, Coca Suki only has a few branches left and is virtually unknown among young Thais. Being the first, the cheapest, or even the most innovative often doesn’t make you number one, and even more rarely does it keep you there. No Southeast Asian brand knows that better than Singapore’s Creative Technologies. The company invented the MP3 player in 1999, more than two years before Apple launched the iPod. Creative Technologies later successfully sued Apple, cementing its place in history as the inventor of iPod’s famous user interface. Yet being first off the block didn’t matter. Creative Technologies invested little in marketing and failed to build its brand, creating ads mainly for trade magazines that were, for many years, designed in-house. Apple, a branding expert, set the pace, and the rest is history. Many executives in the region continue to focus on product and pricing, failing to understand that product differences and price promotions are not unique. Brands are. They are also missing an opportunity to create value. On average, brands contribute more than one third of the shareholder value and companies that boast strong brands outperform the stock market, grow faster during boom times and are better protected from the adverse effects of an economic downturn. WPP’s annual BrandZ study, carried out by Millward Brown Optimor, examines the impact of brand-building on the financial health of companies. The BrandZ Top 100 Strong Brands Portfolio, with a diverse set of companies that have brand contributions of more than 30 percent, shows that these companies appreciated an impressive 58 percent between 2006 and 2013, substantially outperforming the S&P 500, which gained only 23 percent over the same period. And during the 2008 global financial crisis, BrandZ’s Top 100 Strong Brands suffered significantly less and recovered faster than the S&P 500. If companies want to move up the value chain, having a strong brand is crucial, particularly in an age of commodities, fierce competition, and rapidly advancing technologies where tangible product differences can be replicated within a brief time frame. As marketing guru Philip Kotler says, “The art of marketing is the art of brand building. If you are not a brand, you are a commodity. Then price is everything, and the low-cost producer is the only winner.”


ASEAN INSIGHTS An Action Plan for ASEAN Southeast Asia has three kinds of companies: • Those that get it. These firms grasp the opportunity the AEC presents and are doing something about it. • Those that are indecisive. These are generally the local champions that understand change is afoot but don’t know how to protect themselves or how to make the most of the AEC. • Those that lack ambition. These companies don’t grasp the changes that are coming. They will be crushed by the competition or become targets for acquisition.

Note: AEC is the ASEAN Economic Community. Source: A.T. Kearney and JWT Association of Southeast Asian Nations (ASEAN)Leadership Study,

When asked how they expect to grow their business once the AEC is implemented, executives cite organic growth as the main strategy, along with an increased sales force in new markets and partnerships and joint ventures. However, about four in 10 companies are considering M&A as a way to expand regionally in order to deal with more intense future competition (see figure 6). Indeed, we expect interest in M&A to spike once the AEC kicks in, both among acquisitive Southeast Asian companies and Western companies looking to ASEAN as a new source of growth. It will soon be an eat-or-be-eaten world. The indecisive local champions will need to accept and embrace change, as they will face stiff competition from a growing number of new regional players over the next few years. The old strategy of simply appointing a distributor will no longer be enough. What’s needed is a presence in these new markets with expertise on the ground to make complex choices on brands, products, manufacturing, supply chain, and distribution. And with competition comes consolidation, particularly in the region’s more fragmented, emerging markets that are crowded with players. Capitalizing on the AEC will require having a regional strategy, and M&A should be a core part of the game plan to leapfrog competitors and gain access to new markets, technologies, brands, and resources. M&A is also a good part of a defense plan. Acquiring attractive local targets not only speeds up growth but also prevents competitors from gaining a similar foothold.

Most CEOs in our study cite “the need for scale to deal with more intense competition” as the main reason for increased M&A activities in their industry. Four in 10 plan to engage in some consolidation post-AEC. Regional and international multinational corporations seeking to enter the region expect to carry out more M&A activities in Indonesia, Thailand, Vietnam, and Myanmar. However, it’s not enough to simply expand. Those with regional ambitions would be wise to invest in building strong brands to woo consumers, stave off competitors, and move up the value chain. Those that plan to remain domestic players might need to rethink their strategies to defend their home turf against regional and multinational rivals eyeing ASEAN. It is not too late. There is still a window to review strategies ahead of 2015. In particular, we recommend two moves: Have a growth strategy that includes M&A Southeast Asian companies are positioned to carve out a place as regional champions. ASEAN is home to a diverse set of consumer markets with a wide range of income levels. The variety of ethnicities, languages, and cultures impacts consumer tastes and preferences. We believe the region’s fragmented markets will give rise to a series of subsegments at different price points. Global cola brands, for example, could dominate national or regional soft drink sales, but local soft drinks that cost less and come in flavors that appeal to local tastes next page, please

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COUNTDOWN TO 2015

Source: A.T. Kearney global study of successful mergers and acquisitions

continued from page 27

will dominate specific segments. Local brands can be tailored to suit different swathes of the region, with a brand idea that provides variations on a core theme. Southeast Asian companies with strong consumer insight have an edge in ASEAN’s segmented markets. Consolidation will play out along these segmented lines, giving rise to local champions that dominate different price points or subcategories. Southeast Asian companies that start planning now can make tactical moves that will put them ahead of the curve. M&A is a risky business, particularly in this region. Previous A.T. Kearney studies indicate that only 29 percent of companies worldwide see an increase in aggregate profitability while 57 percent see a decline after an M&A event. That figure drops even lower in Asia: only 24 percent of Southeast Asian mergers delivered the expected benefits. The risk increases as companies venture across borders. Cross-border M&A are hard to pull off because of a host of factors, including culture clashes, poor communication, and lack of local market know-how. Reaping the full benefits of M&A will require a plan for how to do it better. Many companies go into M&A without any preparation, resulting in botched deals or expensive and chaotic acquisitions. In an A.T. Kearney global study of successful M&A, a clear upfront strategy is cited as one of the two most important drivers of M&A success; 47 percent of respondents cite the need to be more thorough beforehand as opposed to just 4 percent who rate “negotiating a much lower price” as a factor behind success (see figure 7). The other important element is successfully managing the postmerger integration.

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Few companies in ASEAN have the experience to execute M&A. But executives new to the game have time before the AEC kicks in—and planning ahead in three areas will increase the chances for success. • Build a sound strategy and plan for M&A. Many executives think about M&A only after an investment banker has thrown an opportunistic deal their way. We advocate a more methodical approach. Put a framework in place to determine whether M&A is right for the company, and create a mechanism to track and screen candidates methodically. Determine which of several merger strategies will best achieve the goals, and then build expertise in that area. • Scrutinize the risks, and conduct proper due diligence. Performing a thorough due diligence before an acquisition is crucial to clarify strategy and synergy expectations and uncover hidden issues. • Establish a post-merger integration plan. Integration doesn’t happen by itself. It requires detailed planning every step of the way. From insights gained performing post-merger integration for major Southeast Asian companies, A.T. Kearney has identified best practices that drive successful integrations, including communicating, focusing on customers, and addressing cultural issues. It is a good idea to map a step-by-step post-merger plan to take advantage of synergies during the first year. Focus on marketing and branding as a point of differentiation A brand is a long-term relationship between the consumer and the product. Successful brand ideas are a fusion between a consumer insight and a unique


ASEAN INSIGHTS brand offer, and they define the long-term identity of the brand. Products are easy to replicate, but brands are not. A brand idea represents what your product stands for, sets it apart from competitors, and makes consumers think of it as a distinctly different kind of product. The brand idea has the power to build an emotional connection that goes beyond the functional benefits of a product (see sidebar: Insurance Company Tackles Grave Topic with Humor). It’s not a tagline or a campaign idea. Kit Kat’s brand idea is “Champion of Breaks.” It’s simple, powerful, differentiates the brand from other chocolate bars, and demonstrates the unique value Kit Kat brings to the table. It also sparks creativity and consistency; the brand’s marketing communications can take many different forms, and campaigns can be tailored to appeal to different kinds of consumers— but the brand idea remains consistent. If you can’t define your brand idea simply and succinctly, you probably don’t have one. While most executives we interviewed say they have a clear brand proposition, a notable number were not able to state what it was. Others gave a reply that isn’t exactly a brand idea, such as “provide nutrition,” “good value,” and “friendly service.” These qualities could be part of a brand offer, but it’s not a clear statement that differentiates the product from competitors. These conversations indicate that many companies across the region don’t have a true grasp of branding. Becoming market leaders will require amping up your marketing muscle in the lead-up to the AEC, both to better deal with competitors and to better connect with the region’s fast-changing consumers. The leaders

will make the strategic shift from selling a product to marketing a brand, which requires a shift in thinking from selling merchandise and reducing costs to creating and managing brands. Consider how the Malaysian household appliance market is evolving: GfK reported recently that the 21 percent rise in small domestic appliance sales over the first seven months of 2013 was largely driven by a surge in demand for higher-end models. As Southeast Asia’s economies continue to mature, more consumers will move into the middle class and start to buy higher value-added products and near-premium brands. Consumers buy commodity items because they are cheap; but when it comes to spending real money or buying products that matter, they will go for a known brand. The time is ripe for Southeast Asian companies to create regional brands. A separate survey of 2,400 Southeast Asian consumers conducted in July by JWT finds that Southeast Asian consumers believe it’s “their time.” Most believe Southeast Asia is about to peak and is on the precipice of a new era. There’s an overwhelmingly positive feeling about the region and about ASEAN. What’s more, consumers are open to buying local brands. About one-third of Southeast Asian consumers prefer to buy products made in their home markets, while a surprisingly small number (10 percent) think imported products are more reliable. Although only 20 percent feel “very positive” about Southeast Asian brands and products, 63 percent say they feel “somewhat positive”—an open window for aspiring regional brands.

next page, please

Insurance Company Tackles Grave Topic with Humor When building a brand, the first step is to find an insight that sheds light on a gap in consumers’ lives that your product can help resolve and then crystallize what makes your product unique or special. A brand idea is born from the confluence of a consumer insight and a unique brand offer.

and way of life in Thailand. Thai people are buying more insurance, but they find the whole subject depressing. Many prefer to avoid the topic altogether.

Muang Thai Smile Club, providing policyholders with reward points for fun activities from movies and spa treatments to sports and family events.

JWT created a brand idea for Muang Thai Life Assurance that helped this upstart challenger break the lock that the two dominant Thai and global insurance companies had in Thailand:

• Unique brand offer: life insurance that provides security for tomorrow and supports joyful living today • Brand idea: insurance that makes you happy

Funny ads that promote the Smile Club juxtapose the idea of owning life insurance with having a good time. The brand and its ads stand apart in a market where most insurance campaigns talk about security, reliability, and caring for loved ones in a serious or emotional tone. By staking new ground, the company has dramatically increased its market share and won awards for its advertising.

• Insight: The sayings “sabai, sabai” (be happy) and “mai pen rai” (take it easy) are both a philosophy

Muang Thai launched quirky ads that use humor to tackle the somber topics of critical illness care and planning for your family’s security after your death. The company also created the

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COUNTDOWN TO 2015

Notes: These responses were derived from participants who selected “New thinking and strategy on the brand.” This does not re lect the complete pool of survey participants. CSR is corporate social responsibility. Source: A.T. Kearney and JWT Association of Southeast Asian Nations (ASEAN) Leadership Study

“Our brand is a key asset. It allows us to charge a premium price and makes it easier to introduce or cross-sell new and more innovative products. This is a huge advantage over competitors.” - CEO, Thai retailer continued from page 29

Although the region is home to different cultures, religions, and levels of affluence, the JWT survey reveals a strong sense of shared values. While consumers do not necessarily feel “Southeast Asian,” they do feel they have much in common with their ASEAN neighbors. Six in 10 Indonesians, for example, think Thailand has a similar culture, seven in 10 Filipinos say the same of Malaysia, and six in 10 Thais say Singapore is culturally similar. The figures are higher for countries that share borders. Companies can capitalize on these common motivators to build a brand idea that travels across the region and create communications that resonate with consumers across ASEAN. Yet, most Southeast Asian companies with regional ambitions have a lot of work to do. JWT’s consumer survey finds that awareness of Southeast Asian brands outside their home markets is low, apart from a few brands such as Singapore Airlines, Air Asia, PETRONAS, Tiger, Proton, and some of the region’s bigger banks. And many consumers worry about the quality of products from neighboring markets. What’s more, many domestic brands are developed with purely

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the local market in mind. Their brand idea, and even the name, might not travel across borders. Executives in our study, both local and global, know this is something they need to work on. One-third say they will need to change their marketing and branding strategy post-AEC to better engage with consumers in other Southeast Asian markets. Those who say a rethink is in the cards believe they need to change their brand ideas to better connect with consumers from other cultures and demographics (see figure 8 on page 15). “One proposition might not suit different markets,” explains one CEO. Others cite the need to stand out against the competition and be “relevant on a regional level.” Southeast Asian brands that capture the region will be primed to go global. They have a historic opportunity to develop their brand’s identity and build up regional scale—both are crucial for aspiring multinationals. There is a lesson to be learned from Chinese companies that built scale with low-cost products but fell short on branding. They failed in global markets, and in some cases, are even struggling back home. Consider Li Ning, the footwear brand started by one of China’s most famous athletes. Li Ning’s mass-market strategy made it a market leader in China, and Li Ning aimed to topple Nike at home and overseas. The company expanded rapidly after the 2008 Olympics in a bid to cash in on the fresh interest in sports and opened a store in Portland, Oregon, in 2010 as a U.S. entry point. But branding and strategy proved to be stumbling blocks. Li Ning’s “L” logo looked remarkably like Nike’s swoosh, and its slogan “Anything is Possible” was similar to Adidas’ “Impossible is Nothing.” In 2010, Li Ning tweaked its logo and changed its slogan to “Make the Change.” But


ASEAN INSIGHTS

“Significantly larger firms with greater resources that establish a presence in countries we operate in will pose a significant competitive challenge for local outfits like us.” - CEO, Malaysian marketing company American consumers didn’t know what Li Ning was or what the brand stood for. Meanwhile, many Chinese consumers perceived Li Ning as an imitator. Poor branding, excess inventory, and a declining economy took a toll. The company posted a $318 million loss in 2012 and shut down its Portland shop that year. Asian companies that have become globally recognized—Toyota, Honda, Samsung, and Uniqlo— tackled foreign markets both with an expansion plan and a clear brand position.

A New Age for Southeast Asia Southeast Asia is entering a new era, and ASEAN companies are poised to take their place as regional champions. As the region continues to grow, opportunities abound. The AEC will boost the ASEAN growth story, and those that have an international mindset and are ready for change will not only stand to benefit from the opportunities, but will also be able to defend against new foreign competitors.

10 WAYS TO CAPTURE AN IMMEDIATE IMPACT The most crucial considerations in the countdown to the launch of the AEC are the following: 1. Recognize the larger market. The region’s economies are growing, and the population is becoming more affluent thanks to rising income, greater employment, and more credit. Collectively, ASEAN countries have more than $2 trillion GDP, making it the fifth largest market in the world. Consumers, although diverse, are connected by culture and values and take pride in local products. Create a clear brand proposition and deliver on quality, and there will be plenty of scope to build a strong following across the region’s consumers. 2. Appreciate and embrace change. The push toward the AEC will only hasten progress toward a more open and unhindered market, which will increase integration in the region. The focus so far has largely been on home markets, where many have enjoyed minimal competition, years of profits, and rapid growth—and are cash rich. Now the push to expand beyond national boundaries is inciting strong regional players. (Outward FDI from the region increased more than fivefold from $84.5 billion in 2000 to $495.7 billion in 2011.) 3. Understand that regional champions will rule. The writing is on the wall. More than half of the M&A deals in 2011 were cross-border transactions. With a level playing field, it will soon be an eat-or-be-eaten world. In our ASEAN study, most leaders cited the “need for scale to deal with intensified competition” as the main reason to engage in M&A. Build solid brands with regional reach to be in the best position to grab a dominant share of this newly enlarged market. 4. Prepare a regional game plan. The old world of simply appointing a distribution line will not be

enough to become a regional player. Operating in new countries will require making complex choices on marketing and branding, products, supply chain, and manufacturing. 5. Increase scale through M&A. Integration will happen. Companies will move fast to acquire competitors to gain access to new markets, technologies, brands, and resources or as a defensive maneuver. To build scale through M&A, adopt a methodical approach. 6. Build marketing muscle. Now is the time to create a regional brand, as consumption is about to surge and local consumers are feeling positive about the region’s outlook and about ASEAN. Being first or selling cheaply doesn’t mean you’ll remain a market leader. Become more savvy and sophisticated in your marketing and branding. 7. Move up the value chain. ASEAN consumers are spending more on higher value item. Products cannot command a higher premium unless they have a clear brand idea. 8. Take a page from the winner’s book. Global companies and big regional players spend half of their communications budget—if not more—on brand campaigns. Start investing more in brand communication, and stop focusing solely on tactical ads. 9. Don’t get lost in translation. As we head toward the AEC, approach product innovation and brand development from a wider perspective, beyond your own territory. 10. Next stop, the world. Forward-thinking players that capture the region will have a strong foothold to go global.

“Countdown to 2015: Creating ASEAN Champions,” Copyright A.T. Kearney, 2013. All rights reserved. Reprinted with permission Note: This study was published in 2013 and generally references that time frame. As such, readers are advised to take this into consideration when reading some date-related sections of the article.

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Andrew as a budding entrepreneur, mixing Emperador Brandy

COVER STORY

Dr. Andrew L.Tan Visionary and Innovative ASEAN Business Leader

John Paolo R. Rivera, Asian Institute of Management December 2014, Manila, Philippines

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I. The brand builder, the innovator From an ordinary son of modest immigrants from the Fujian province in the People’s Republic of China, who grew up in downtown Manila, Dr. Andrew L. Tan has transformed himself to become one of the most esteemed entrepreneurs, prominent innovators, and remarkable brand builders of Southeast Asia. However, the roads to his prominence are not paved. Being an employee for an extended period of time is not the long-run course for Andrew. Through hard work and determination, he was able to build an impressive portfolio of companies through the holding company Alliance Global Group, Inc. (AGI) that includes Megaworld Corporation, Travellers International Hotel Group, Inc., Emperador Distillers, Inc., and Golden Arches Development Corporation. Despite all of these feats, he chose to stay away from the limelight. However, his outstanding successes did not go unnoticed. How did he do it? It was in 1977 when Andrew marked the start of his business career. Still a bachelor at the prime age of 25, he became a partner in a wholesale trading firm that imported home appliances and sold them to local stores. Although his dream of opening his own grocery store did not materialize, he still pursued his vision with a passion. He began establishing his own enterprises. The year 1979 changed the course of Andrew’s life. In this year, he ventured into the distillery business by acquiring a small liquor factory that he named Consolidated Distillers of the Far East and earned his first million. Initially, it was not smooth sailing, as he competed head on against liquor giants that had lorded over the business for decades. His first attempts to produce gin and rum failed. For three years, he lost money, but he did not stop until he made profits. Although Andrew produced and sold his own brands of whisky and rum with moderate success, he went on to introduce Emperador Brandy in 1990. He envisioned it to be the toast of Filipinos. After more than a decade of patience and hard work, Emperador finally got positioned as the top alcoholic drink in the Philippines and the largest-selling brandy in the world. For years, Andrew kept this business under the radar of his competitors which have been in the business long before Emperador and which are already become iconic household brands

COVER STORY throughout Philippine history. The success of his liquor brand can be ascribed to its innovative advertising campaign that capitalized on the concept of success and Filipino values associated with hard work, drive, ambition, and professionalism – qualities that enabled Andrew to reach overwhelming success. While Andrew was steering in the liquor industry, he saw the sudden appreciation of land prices after the 1986 People Power Revolution . This gave him the impression that real estate could be a new frontier to venture. So, he began to observe and analyze the industry earnestly. In 1989, he set up his own property firm – the now stalwart Megaworld Corporation (MEG). Through hard work, MEG rose to become the country’s top property developer – an industry leader in mid-income residential, business process outsourcing (BPO) office, and integrated tourism markets.

{ } “Whatever your work, always do it as best as you can. Never complain even if you are given a lot of work. When you are young, you have nothing to lose and everything to gain if you work hard.”

MEG entered the real estate scene in 1989, a newbie with limited resources going up against the giants in the industry. During this period, the Philippine property market consisted of only two segments – (1) high-end housing and (2) low-end housing. MEG’s competitors then catered mainly to high-end homebuyers. With the “me-first” rather than “metoo mindset,” MEG turned to the overlooked but broad middle-income housing market in a bid to make headway in the industry. In 1996, Andrew saw a new trend towards office projects designed for the BPO sector. This gave rise to the development of the Eastwood City, an 18-hectare cyber city that combines high-rise homes and hightech offices in the same location. MEG also pioneered the “live-work-play-learn” concept in community development, which became the focus of the business and a testament to passion for value creation. next page, please

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COVER STORY

Dr. Andrew L.Tan Visionary and Innovative ASEAN Business Leader continued from page 33

MEG’s housing projects in only the finest neighborhoods in Metro Manila hinged on the availability of raw land. As such, one of the early obstacles Andrew hurdled was acquiring well-located real estate with a goal of building up an extensive land bank. His solution was a joint venture model for land banking that required tapping some of the country’s richest land-owning families to engage as joint venture partners. Luckily, the rich land-owning families provided the land and what MEG did was to provide the development knowhow. This innovation would later become an industry norm. These strategies of MEG paid off and catapulted them to become the first Filipino developer to dominate two of the property industry’s fastest-growing submarkets: the mid-income condominium housing and BPO-oriented offices. Despite these early wins, Andrew confronted a much bigger and complicated challenge, which was global in scale– the 1997 Asian Financial Crisis. It threatened the viability of MEG. The collapse of the Thai baht and the bursting of the economic bubble resulted in the value of the real estate industry to plummet, generating excessive monetary losses. To make the situation worse, financing became difficult as monetary institutions became very averse to lending. According to Andrew, “(the 1997 Asian Financial Crisis) was one big mess that no one in my generation had ever experienced before. No textbook case had prepared us for it or taught us how to cope with it. The old ways of doing things no longer worked – we were forced to examine ourselves, to look for where we were strong and how we could put those strengths to work for us.” Since Andrew is a man of innovation, and has learned from difficult times, he was compelled to search for ways to manage resources prudently to rise from the crisis. While many in the industry stopped operating, MEG kept itself in the public eye by continuing to launch several innovative projects. Andrew ventured heavily into “townships.” While the crisis was ongoing, MEG finally launched in 1999 Eastwood City – the birthplace of MEG’s pioneering “live-work-play-learn” concept of urban development. This allowed MEG to emerge as the country’s foremost

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property developer with Eastwood City as the pioneering “township” model. It was the first local project of its kind to bring together residential condominiums and high-tech offices, along with restaurants, cinemas, and shops, all in one place. It addressed people’s longing of having a home close to where they work. This is now far from how Andrew was when he was still studying – going to school on foot from his home in Sta. Cruz to the UE campus along Claro M. Recto Avenue. Now, people would not need to travel long distances to go to work – an embodiment of a comfortable and convenient urban lifestyle. Afterwards, the Eastwood City Cyberpark was developed and was named as the top IT park employing 40,000 individuals. Here, condominium residents enjoy their living space, shoppers flock to the new Eastwood Mall, and businessmen and leisure travelers now patronize Eastwood Richmonde Hotel. Other prime examples of Megaworld’s successful urban township projects are Newport City, McKinley Hill, McKinley West and Uptown Bonifacio, The Mactan Newtown, and Iloilo Business Park. To date, MEG’s trend-setting “live-work-playlearn” communities have continued to enjoy a vote of confidence from the market that is boosting the long-term growth prospects of the business. Due to MEG’s tried-and-tested first-to-do-new-things know-how, the company is firmly entrenched as the country’s foremost property firm. Aside from leading in mid-income residential condominiums and BPO-oriented offices, MEG is also dominating on the area of integrated tourism. Specifically, Newport City is the first of a new wave of tourist cities to follow MEG’s cyber cities (Eastwood City and McKinley Hill). Andrew recognizes and believes in the long-term growth potential of the Philippine tourism industry. As a testament to his firm commitment to be a first-mover and leader in the development of integrated tourism estates (ITEs), MEG recently broke ground for its second ITE under the Resorts World brand – the 31-hectare Bayshore City Resorts World located at the 120-hectare Bagong Nayong Pilipino Entertainment City Manila. Not only this, Andrew is also undertaking a number of largescale tourist-oriented projects outside Metro Manila. He intends to create a synergy that will help catapult the Philippines to a premier status among the top tourist destinations in the Southeast Asian region.


COVER STORY

Alliance Global Group Inc. (AGI) was presented the #1 Most Admired ASEAN Enterprise award for large-size enterprises under the growth category during the 2008 ASEAN Business Awards rites held on 27 February 2009 in Bangkok, Thailand. AGI Chairman Dr. Andrew L. Tan received the award from former Thai Prime Minister Anand Panyarachun. The ASEAN Business Awards, which recognizes yearly the achievements of ASEAN’s small and large-size businesses, paid tribute to AGI’s growth initiatives in food and beverage, property development and recently, tourism.

II. The Visionary From how Andrew charted the course of his life, it is evident that he has a peculiar passion that sees beyond the superficial. Visionaries like him possess an unusually large degree of openness to new information. He constantly searches for additional information. He knows that each new piece of information yields an insight that helps solve a problem or create a breakthrough. Market Trends. Since MEG started, Andrew has revolutionized the concept of residential property development from stand-alone condominium buildings to clusters of condominium buildings to integrated, “live-work-play-learn” communities. In 2014, after completing more than 340 buildings, MEG remains on the lookout for new ways to give its patrons more value for their money. Andrew advises the youth that whether you go into business or pursue other things, “never rest on your laurels, keep on improving yourselves, keep on learning new skills, keep on finding new ways to do things better and better to stay on top of a changing world. Life is uncertain. An opportunity or a threat can come. What is important is an opportunity must be seized and a threat must be mitigated.” Roadmap for Megaworld. Evidently, MEG has come a long way since it launched its first urban residential condominium project, One Beverly Place, 25 years ago. According to Andrew, “modesty aside, I must say the company today is head and shoulders

above the rest in the property industry. For all that it has gone through; the MEG team has stood squarely behind my credo that the Filipino deserves the best value for his real estate investment.” Today, MEG’s self-contained, sustainable townships not only enhance the market value of the various properties within their boundaries but also spur economic activity in neighboring areas. And while MEG has grown from a lowly player to a leader and trendsetter in the industry, “we continue to honor our roots, namely, to create innovative products for our customers.” After successfully putting its imprint on the landscape of Metro Manila, MEG has set its sights on Cebu, Iloilo, and Davao where the pioneering “livework-play-learn” townships will be replicated. Andrew’s humble beginnings were indeed instrumental in shaping his vision for MEG. According to him, “as a self-made entrepreneur, I have an ingrained appreciation and understanding of every Filipino’s dream, that is, to be able to provide for, and build a home for, one’s family.” Regional Integration. Andrew is also keen on the upcoming ASEAN Economic Community (AEC) of 2015, and the many windows of opportunity that it will bring for the Philippines. This will also be an exciting opportunity for AGI, given that the AEC seeks to create a 600-million-strong market that can rival next page, please

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COVER STORY

Dr. Andrew L.Tan Visionary and Innovative ASEAN Business Leader continued from page 35

{ } “A good businessman knows that what is successful today may not be so tomorrow. That’s because as time and technology change, so do people’s needs and wants.

Therefore, a good businessman is one who always adapts to change.”

those of the North American Free Trade Agreement (NAFTA) and the European Union (EU), not to mention India and the People’s Republic of China. The prospects of free trade in the ASEAN region, that is, the free flow of capital, investments, goods, labor, professionals, and tourists, bode well for AGI and MEG. It is worth noting that as the property arm of AGI, MEG, through its overseas marketing division, Megaworld International, counts itself among the Philippine companies that are well positioned to take on the challenges of economic integration in the region. As early as the 1999, Andrew set up Megaworld International to expand sales and marketing operations to cover overseas Filipinos, along with their families and friends. Today, it has a worldwide reach that extends to some 42 countries in North America, Europe, the Middle East, and Southeast Asia. “Our long-term objective, simply put, is to be present anywhere and everywhere there is a community of overseas Filipinos so that we can share with them the idea of investing their hard-earned money in something that will provide the best value to their loved ones back home.” On the marketing side, this means that setting up Megaworld International sales offices in key ASEAN cities may be easier than ever. With every new office that is opened, the company will be able to reach and convince many more Filipinos and foreigners to invest in the Philippines.

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According to Andrew, “in Southeast Asia, we currently have offices in Singapore, Malaysia, and Indonesia. We are eagerly looking forward to the prospect of expanding our sales network to include all other member countries of the ASEAN.” On the corporate side, “an integrated ASEAN community means that we can readily tap the capital markets in the region when we float new stocks or warrants as well as the debt markets for securities. With many ASEAN economies now booming, the prospect for a freer flow of investments among ASEAN countries may exponentially enlarge the pool of foreign investors for MEG and its sister firms.” On the tourism side, “the single-visa policy will likely serve as an invitation for Europeans and North Americans alike to visit Southeast Asian destinations to escape harsh winters in their own countries. Furthermore, Resorts World Manila (RWM) and the upcoming Bayshore City Resorts World projects are part of the highly successful and expanding Resorts World chain of integrated resorts not only in the region but also worldwide. This puts us in an advantageous position to create synergies with our partner, the Genting Group, to cross-sell RWM to, say, Resorts World Sentosa and Resorts World Langkawi visitors and vice-versa.” Andrew is also on the lookout for expansion opportunities in the ASEAN markets for the other member companies of AGI. In this regard, Andrew noted “that in the case of Emperador Brandy, a product of our conglomerate that is slowly but surely making inroads in overseas markets, the coming AEC may spur us to grow our business in the region faster than ever.” Tourism. Besides his businesses, Andrew also sees lucrative opportunities in the tourism industry of the Philippines. He believes that tourism will help deliver all-inclusive growth to the Philippines. As such, he is helping to make a booming tourism industry happen by bringing long years of business experience to bear on the tourism-oriented ventures of AGI. According to Andrew, “in all modesty, that through Alliance Global, we are an initiator and innovator in establishing the country as the ‘Broadway of Asia.’ Our 12-hectare Resorts World Manila at Newport City, in particular, is home to the Newport Performing Arts Theater, an imposing


Dr. Andrew L. Tan’s Boracay Newcoast project, through Global-Estate Resorts Inc., will bolster Boracay as an international tourist destination by offering 1,500 new hotel suites across four international hotel brands and one local hotel chain. Boracay Newcoast boasts four private beach coves with pristine white sand.

COVER STORY

venue for exclusive musical productions that have attracted thousands of local and international tourists.”

theater facilities and hotels that will support the influx of theater talent/crew and audiences.

Since 2010, the 1,500-seat Newport Theater has staged successful shows such as the groundbreaking Kaos, which combines musical theater and Las Vegasstyle entertainment, as well as three Rodgers and Hammerstein musicals, namely, The Sound of Music, The King and I, and Cinderella. After a well-received three-month run, an eight-show rerun of the musical Priscilla: Queen of the Desert is slated. All of these productions have showcased world-class Filipino talent.

Andrew saw the increased demand for hotel infrastructure well in advance. That is why from AGI’s current total of about 1,900 hotel rooms, the company is looking to increase further to around 12,000 hotel rooms by the year 2020. This will enable AGI to be the largest hotel owner and developer in the Philippines. Resorts World Manila and Bayshore City Resorts World alone will account for approximately 5,100 hotel rooms under mostly global hotel brands such as Marriott, Maxims, Hilton, Sheraton, Westin, and Okura.

In 2011, the Newport Theater was cited as the “Best Theatrical Venue” by the Philippine arm of BroadwayWorld.com. Considered the largest and most comprehensive theater website, BroadwayWorld.com covers news in Broadway, the West End and other theater venues in 100 US cities and 35 countries worldwide. Moreover, a new, large-scale theater following the success of the first one in Newport has been envisioned. This will be the Grand Opera House at the 31-hectare Bayshore City Resorts World, which broke ground in October. This upcoming opera house is inspired by the luxurious Palais Garnier in Paris, France, and will feature 3,000 seats. Indeed, the growth of Philippine theater-driven tourism depends on the presence of world-class

As Andrew puts it, “I firmly believe that tourism is the next sunshine industry in the Philippines. It is the one industry that can best showcase the worldfamous hospitality of the Filipino and the amazing natural beauty of our islands.” His involvement in tourism ventures that seek to put the Philippines on the regional and global radars of tourists led to the founding of the AIM-Dr. Andrew L. Tan Center for Tourism. Truly, Andrew’s vision, his passion, and his malleability to circumstances allowed him to generate a fortune of USD 5 billion and become next page, please

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Dr. Andrew L.Tan Visionary and Innovative ASEAN Business Leader continued from page 37

plans. Most of his peers then had parents who owned grocery and hardware stores, if not small textile businesses. He, too, dreamed of making his own fortune as a businessman. He often told his mother that “if I saved enough money, I would open a grocery store.” She was always there to give Andrew her encouragement and guidance. In her gentle, quiet ways, she spurred Andrew to pursue his dreams with a passion. The Wife. When Andrew got married, his wife Katherine took on the added responsibility of being his major inspiration and influence. According to Andrew, “the two of us make a perfect team – she is the yin to my yang. I can always talk to her about anything related to business, and she is always there to listen and offer advice, especially when I have to make important decisions.”

Andrew’s parents – Tan Ha and Soonti Lim

the third richest man in the Philippines. According to Forbes Magazine – this is way far from his simple dream of owning a small grocery store. Learning from Andrew, “if you want to excel at something, you must know what you want to do and you must have a passion for it.” III. The source of innovation and vision The Father. It was Andrew’s father who taught him the values of discipline, perseverance and hard work early on in life. His father may have lacked formal schooling, but as a parent, he did everything to send Andrew to college even if he had to go through a lot of sacrifices for it. Years later, Andrew would tell each of his four children to follow their grandfather’s advice: “Finish your studies and always work hard.”

The Children. Andrew also sources his ideas or inspiration by talking to his children as well. He discovered early on that you learn something from the people you meet. From the start, he has been very fortunate “to meet the right people who have inspired me to try new avenues of opportunity and growth.” The Business. When a business has reached a significant level of growth, it must be run strictly as a professional organization. This makes the services of a professional management team essential. At this point, it is no longer possible for just one person to do everything as before. Now, running

The Five O’clock Rule. Andrew’s father instilled in him gems of wisdom that he would later share with his children. About a week after arriving in Manila, for instance, he woke up one day at seven o’clock in the morning. His father did not let this incident pass without scolding him. His father said, “As a newcomer here, I had to work harder than other people. You cannot wake up at seven o’clock. You must wake up at five o’clock.” The Mother. Another person who inspired Andrew to work hard for a better life was his mother, who was a plain housewife. As a young man, Andrew could always speak with her about his dreams and future

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Family photo with wife Katherine and sons Kendrick, Kester and Kevin (the eldest on the right)


COVER STORY such a business requires a collaborative effort involving a good number of people. I believe, in this regard, that the ability to get really good people and inspire them to give their best for the company is a key to corporate success.” IV. A management style that inspires. Life is full of opportunities that lead to a much better life. If aspirants know how to look for those opportunities and make the most of them, they will find themselves advancing in their respective fields. To make the most out of all the opportunities that Andrew was able to tap, entrepreneurship and professional management serve as his twin facets of managing his organizations. That is, the Chief Executive Officer (CEO) provides the vision for the company as he looks at the big picture while the professional managers under the CEO take charge of the small details of operation. For beginners in the field of business, it is best to adopt a basic management principle that Andrew also practiced – being hands on with the businesses. Just like Andrew, businessmen should devote a lot of time running the company’s day-to-day operations. It is also essential to value the lessons that experience brings. It is only through the combination of grasping and transforming of experiences that knowledge is created. With the crisis that confronted Andrew, he said, “My experience of this crisis will be important lessons to my children in the future.” Thinking of a bigger purpose other than profit generation is also a good practice every businessman should consider. According to Andrew, “My philosophy as a businessman is really quite simple: Just keep working and investing whatever profit you make in new businesses. That way, you generate more jobs and help the country’s economy grow.” One specific way Andrew gives back to society is through education. He believes that education is the key to lead people out of poverty – “(You) give a person of modest means the opportunity to be educated, and you give him the chance to improve his life,” he said. This is the reason why Andrew’s Megaworld Foundation offers college scholarships to bright and deserving young people as a top priority. Of equal importance is the value for time and money. Andrew revealed that he spends most of his time working and because of that, he does not get to spend money that much. For him, spending money also consumes time.

Andrew with his son, Kevin

Dr. Tan’s recipe for

SUCCESS 1. Work hard from day one. 2. Have a vision and pursue it with a passion. 3. Be innovative. 4. Be prepared for the unexpected. 5. Don’t give up. 6. Share your blessings. Culled from Dr. Andrew L. Tan’s message to University of the East graduates of 2011.

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COVER STORY Tycoon Dr. Andrew L. Tan drew inspiration from his recent visit to Santorini to plan for his world-class tourism estate project, Boracay Newcoast in Boracay Island, Philippines.

occupied a 20-square-meter apartment. He is now the pioneering developer of decent homes for the Filipino people.

Dr. Andrew L.Tan Visionary and Innovative ASEAN Business Leader continued from page 39

Andrew gave a piece of advice to the youth – “When you receive your first paycheck, be sure to share it NOT with your girlfriends or boyfriends, BUT with your parents. Remember, your parents should ALWAYS come first.” According to Andrew, “as a CEO, I believe it is my duty to provide vision and direction, to lead and inspire the workforce, to guide and motivate my people so that Megaworld continues to maintain its standing and competitive edge in the property market. On the other hand, under the concept of leadership by example, I insist that my executives conduct themselves with professionalism and integrity so that their subordinates will perceive them as good role models. Everyone in the company knows the premium we put on honesty as much as hard work in the workplace.” As a CEO, Andrew sees that the success of MEG rests on its ability to recognize the individual skills of each officer and employee and to efficiently harness these skills when people work together as a team. In the spirit of innovation and excellence that underlies their corporate culture, he does not just assign specific tasks to individuals. He challenges them to work outside their comfort zone in order to develop their creativity and resourcefulness. Likewise, Andrew shares that his recipe for success was simple: “Do not expect everything to turn out the way you want it to. Be ready for disappointments. You should have extra bullets left to help you fight another battle.” V. The way forward Andrew has, indeed, gone far from the time his family was still residing in Hong Kong where they used to live in a cramped tenement apartment and in Sta. Cruz, Manila, Philippines where they

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As MEG celebrates its 25th anniversary, the company has completed more than 340 residential and office buildings including world-class hotels with a total floor area of more than 5.8 million square meters. Indeed, these projects have helped numerous Filipino families in Metro Manila to experience a modern, well-balanced lifestyle. Other than the “live-work-play-learn” concept applied in Metro Manila, Cebu, Iloilo, and Davao, Andrew is also engaging in world-class tourism estate projects in Boracay. MEG is committed to do more than just pioneer mega-projects such as integrated communities that give people the best value for their money along with a top-notch lifestyle. Above all, it aims to serve not just a few, but the society at large as well. Through the Megaworld Foundation, they are giving back to society by encouraging both personal development and community growth. “We do so by offering hundreds of college scholarship grants to underprivileged students in 26 universities and colleges in Metro Manila. This goes hand in hand with the monetary support we give to a long list of charitable causes.” Today, the MEG team under Andrew’s leadership works harder than ever, with a staunch commitment to bring the blessings of a better life within the reach of many more Filipinos. That said, Andrew feels that “there is so much more that we can do when it comes to raising the living standards of our people and making the country a better, more pleasant place to live in. More than anything else, creating real estate value that will benefit generations of our countrymen will be my true legacy to society.” Sources: A.L. Tan. (personal communication through R. Orbigo, October 29, 2014). Flores, W.L. (2008). Andrew Tan: The new billionaire on the block. People Asia. Retrieved from http://www.philstar.com/ feature/37727/andrew-tan-new-billionaire-block Tan, A.L. (2011, December 8). Message to UE graduates. Manuscript.


“[

“ ][

“As they say in social media, don’t take away the social. We have to market our humanity when it comes to Southeast Asia.” – Ms. Aileen C. Clemente, Rajah Travel Corporation; ASEAN Tourism Association

ASEAN LEADERSPEAK

]

“ASEAN Member States should complement rather than compete to prevent losses in less-developed and less-competitive countries.” – Hon. R. Toto Waspodo, Embassy of the Republic of Indonesia.

READINESS OF ASEAN FOR TOURISM INTEGRATION John Paolo R. Rivera, Asian Institute of Management December 2014, Manila, Philippines

I. ASEAN Tourism Integration The Association of Southeast Asian Nations (ASEAN) has evolved transformed from being a forum for exchanging official views to an organization with a distinct identity underpinned by the distinctive “ASEAN” way (Medalla & Yap, 2008). Each ASEAN Member States (AMS) contributes to regional efforts towards a more unified and open community. According to the ASEAN Secretariat (2014), the ASEAN represents “the collective will of the nations of Southeast Asia to unite themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity.” As such, the ASEAN has ventured to further deepen and broaden economic

integration. One of which is the establishment of an ASEAN Economic Community (AEC) by 2015. Note that the AEC is just one of the three facets of an ASEAN Community – the other pillars include the ASEAN Security Community and the ASEAN Socio-cultural Community. In addition, as per the ASEAN Blueprint, four pillars characterize the AEC namely: (1) single market and production base, (2) highly competitive economic region, (3) a region of equitable economic development, and (4) a region fully integrated into the global economy. These pillars will have an impact on the tourism industry, which has been deemed to boost economic resilience and job creation, with environmental sustainability remaining a key concern for the future (Cann, 2013). next page, please

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READINESS OF ASEAN FOR TOURISM INTEGRATION

continued from page 41

The World Economic Forum estimated that the travel and tourism (T&T) sector accounts for around 4.6 percent of growth in the ASEAN, which could be as much as 10.9 percent if indirect contributions are included (Geiger, 2012). Here, we emphasize on tourism integration and the Plan of Action on ASEAN Cooperation in Tourism. The ASEAN Cooperation in Tourism was formalized in 1976 following the formation of the Sub-Committee on Tourism (SCOT) under the ASEAN Committee on Trade and Tourism. The ASEAN SCOT had been effective in initiating regional tourism projects in the functional areas of promotion, marketing and research. The objectives, therefore, of ASEAN cooperation in the tourism sector are: (a) To develop and promote ASEAN as a single and collective tourism destination with world class standards, facilities and attractions; (b) To enhance cooperation in the tourism sector among AMS, involving both public and private sectors, in order to achieve facilitation of intra-ASEAN travel and free trade and investment in tourism services; and (c) To provide a common forum for discussion of major issues and developments in travel and tourism. II. The ASEAN vision for tourism The T&T sector has become an important driver of growth and prosperity for many economies. As a primary source of income for the booming economies in the ASEAN region, it cannot be underestimated. It contributes

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Source: ASEAN Secretariat (2014) Exhibit 1. ASEAN International Tourist Arrivals (in millions), 2013

to development by creating jobs and enterprises through direct activities and backward linkages. It also provides additional incentives for infrastructure development, and allows earnings of foreign exchange. It is estimated that the sector accounts for about 9 percent of world Gross Domestic Product (GDP) and employment (World Travel & Tourism Council [WTTC], 2013). Yet, despite its economic weight and the numerous benefits it provides, many obstacles hinder its development. The ASEAN region has many resources to pull in visitors. It boasts some of the world’s most spectacular landscapes and attractions, vast ecosystems with impressive wildlife, and rich culture and history (Clemente, 2013). In 2013, ASEAN remained to be an attractive destination for both regional and international tourists with the total number of tourists visiting ASEAN in 2013 is 99.2 million, an increase of 11.73 percent from 2012 (Exhibit 1). According to Wilson (2013),

this allowed the T&T sector to account for approximately 4.6 percent of ASEAN GDP and 10.9 percent when taking into account all indirect contributions. It directly employs 9.3 million people (3.2% of total employment), and indirectly supports some 25 million jobs. Indeed, indicators show that the region is entering an exciting period of development in the ongoing evolution of the regional community. There is a wide range of issues to be considered within the community. Thus, the ASEAN Tourism Strategic Plan (ATSP) 2011-2015 was designed to emphasize tourism as an important element of an integrated community (Sunalai, 2012). According to the ASEAN Secretariat (2013), the implementation of the ATSP 2011-2015 has been progressing, where 75 percent measures for 2013 have been duly completed. Furthermore, promoting sustainable tourism to support timely realization of the AEC, measures under ATSP were


ASEAN LEADERSPEAK

updated to ensure its relevance to its on-going efforts. The potentials of tourism to become a tool for economic growth and development are now evident. With the increased sophistication of the AMS, it is now possible for tourism to address poverty and social issues, as well as act as a strong supporter of heritage and natural conservation. In some cases, tourism is viewed as transformative in its capacity to bring change and to achieve a wide range of social, cultural, and economic goals. This has been recognized by the United Nations World Tourism Organization. Therefore, it is essential that the ATSP be seen not as a document concerned with increasing international arrivals, but one that seeks to meet societal goals (Sunalai, 2012). Despite the attractiveness of ASEAN as a tourist destination, the tourism picture is not uniform across the region, with some economies doing better than others (Exhibit 2). For instance, Malaysia, Thailand, and Singapore are the top three well visited economies with about 25 million, 19 million, and 10 million visitors per year respectively. On the other hand the Philippines attracts six times less visitors than Malaysia. As a share of GDP, tourism remains varied across ASEAN – 15.0 percent in Cambodia, 1.1 percent in Indonesia, and 5.4 percent in Vietnam. These discrepancies show how diverse ASEAN is. Each region can potentially offer

Source: World Economic Forum; UNWTO 2012; IMF World Economic Outlook (April 2012); Geiger (2012) Note: *2010; ^2009 Exhibit 2. Selected tourism and economic indicators for AMS, 2011

diverse and complementary experiences that can appeal to visitors of all ages and types (Geiger, 2012). Singapore is 80 times richer than Myanmar, the least developed economy in the region. Meanwhile, Indonesia is 600 times more populous than Brunei Darussalam. The coasts of the Philippines stretch over 36,000 kilometers, while Lao PDR is landlocked. Despite the inevitable diversity, according to Cesar Cruz, the President of the Philippine Tour Operators’ Association (PHILTOA), as cited in Calleja (2014), said that “they [tourists] can choose Boracay and Bali or Cebu and Singapore” – in support of the idea of the “borderless” travel. Truly, ASEAN

is a tangible example of a social, political, and geographical patchwork that binds diverse economies. Additionally, noteworthy progress has been made in facilitating free flow of services and skilled labor within ASEAN. According to Sunalai (2012) and the ASEAN Secretariat (2014), the implementation of the ASEAN Mutual Recognition Arrangement (MRA) on Tourism Professionals and the ASEAN Tourism Qualifications Equivalent Matrix as key references for tourism industry and training institutions facilitated the delivery of the program under the said MRA. According to the ASEAN Secretariat (2014), critical next page, please

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READINESS OF ASEAN FOR TOURISM INTEGRATION continued from page 43

progresses were also made in developing comprehensive tourism standards for green hotel, homestay, spa services, public toilet, clean tourist city, and community-based tourism. These would help enhance the quality of tourism human resources, services, and facilities in the region. In facilitating full implementation of those standards by 2015, capacity building for auditors and pilot testing are now being carried out. Indeed, according to Clemente (2013), the AEC of 2015 can be construed as free flow of services, investments, labor, and infrastructure development. These are all aligned with the ASEAN Tourism Association’s (ASEANTA) Marketing Campaign – Southeast Asia: Feel the Warmth, which intends to promote the region as a single-destination. Aside from this, it would be beneficial for AMS to have unity in diversity as mentioned by Waspodo (2013). AMS should consider complementation rather than competition to mitigate losses in less-developed and lesscompetitive economies. As per Waspodo (2013), “each country in the region has diverse product portfolios, offering tourism destinations that range from the ubiquitous beaches, to colorful festivals, snow-capped mountains, virgin jungles, modern, and efficient infrastructure. It wouldn’t be surprising for these destinations to compete with each other. However, this will undermine the very concept of integration. To flourish, the ASEAN community must be viewed as one tourism destination.” If unity and

44

Source: Sunalai (2012) Exhibit 3. Regional vision and strategic directions

cooperation are the main recipe of the upcoming ASEAN Integration it is therefore easy to assume that it will boost and strengthen the four pillars (Geiger, 2012). III. The way forward To hasten integration goals, the ASEAN drew up blueprints for three communities to serve as the foundation of regional integration: the ASEAN PoliticalSecurity, Economic, and SocioCultural Communities. Of these three, the Economic Community is of the biggest concern to the tourism industry. It is described by ASEAN as “the goal of regional economic integration by 2015. The future of ASEAN integration by 2015 is yet to

come. Changes in the economy, society, political, and cultural is approaching that people cannot determine as to what forces it drives. One thing is for sure, tourism will always be part of it as T&T is one of the standout success stories in the region. This is due to the increased number of Asians traveling, as a consequence of rising wealth and expanding middle class (Wilson, 2013). Forecasts from the World Travel & Tourism Council show a steady increase in tourism’s weight over the next few decades as an outcome of the strong support the sector has received and will continue to receive in the future. The region can and will overtake the United States of America to become the world’s largest travel


ASEAN LEADERSPEAK and tourism economy by the next decade. As mentioned by Frederic Neumann, HSBC’s co-head of economic research in Asia, as cited by Wilson (2013), “promoting tourism is a way to bring revenue directly to people who live in some of Asia’s more underdeveloped areas, because relatively little migration and upheaval are required.” According to the ASEAN Secretariat and Purnajaya (2011), the AEC areas of cooperation include: (1) human resources development and capacity building; (2) recognition of professional qualifications; (3) closer consultation on economic policies; (4) trade financing measures; (5) enhanced infrastructure and communications connectivity; (6) development of electronic transactions through e-ASEAN; (7) integrating industries to promote regional sourcing; and (8) enhancing private sector involvement. This will liberalize the movement of goods, services, investment, capital, and labor within ASEAN. Generally, to further enhance the performance of T&T in ASEAN,

AMS can do joint promotion and marketing of ASEAN-tourism activities through the social media, with the private sector, with the enhancement of the ASEAN Tourism website (www. aseantourism.travel). Undeniably, AMS differ in terms of their readiness for regional economic integration. Hence, stakeholders from different areas must be united despite the apparent diversity in the region. Likewise, the ASEAN must also minimize comparison with the European Union (EU) because the mechanics for both regional trading blocs are different. Although the EU and the ASEAN share the same vision of socioeconomic advancement for their member economies, there are significant differences in circumstances. With the ATSP in place, according to Sunalai (2012), the following strategic directions have paved the way for the AEC of 2015 – (1) development of experiential and innovative regional products and creative marketing and investment strategies; (2) improvement of the quality of

Sources: ASEAN Secretariat. (2013). ASEAN Tourism Ministers Meeting. Retrieved from http://www.asean.org/communities/asean-economic-community/category/asean-tourismministers-meeting-m-atm Cann, O. (2013). Travel & tourism report focuses on reducing barriers to economic growth and job creation. Retrieved from http://www.weforum.org/news/travel-tourism-report-focuses-reducingbarriers-economic-growth-and-job-creation Calleja, N.P. (2014, September 06). PH tourism sector bullish on 2015 ASEAN integration. Inquirer.net. Retrieved from http://business.inquirer.net/178240/ph-tourism-sector-bullish-on2015-asean-integration Clemente, A. (2013). Plan of action on ASEAN cooperation in tourism. A presentation for the Dr. Andrew L. Tan Center for Tourism forum on Leaderspeak – ASEAN Tourism Integration: Plan of action on ASEAN cooperation in tourism. Held 20 November 2013 in Asian Institute of Management, Makati City, Philippines. Dy Quiangco, V.C.O., & Rivera, J.P.R. (2014). Development strategy for ASEAN in the age of tourism integration: One heart, one mind, one vision. Dr. Andrew L. Tan Center for Tourism Industry Outlook, 1(4). Geiger, T. (2012). Fulfilling the promises of travel and tourism in ASEAN. The ASEAN Travel & Tourism Competitiveness Report. Retrieved from http://www3.weforum.org/docs/WEF_TTCR_ ASEAN_Report_2012.pdf Medalla, E.M., & Yap, J.T. (2008). Policy issues for the ASEAN Economic Community: The rules of origin (Discussion Paper Series No. 2008-18). Makati: Philippine Institute for Development Studies. Purnajaya, T. (2011). Implementation of ASEAN economic community blue print. Indonesia: Ministry of Foreign Affairs.

human resources, services, and facilities in the region; and (3) enhancement and acceleration of travel facilitation and ASEAN connectivity (Exhibit 3). According to Calleja (2014), it would be advantageous for the tourism sector to include in its marketing initiatives the neighboring AMS. As emphasized by Philippine Department of Tourism Secretary, Ramon Jimenez, “the world doesn’t just travel in just one specific place. The people go to a region, especially if they have come from a far place. What is good for Philippine tourism is good for ASEAN tourism.” ASEAN readiness for tourism integration is conditional on enabling ASEAN citizens’ sense of identifying with other people in the region – one community. There is a need to raise awareness among ASEAN citizens that they integral parts of the region – one mind. This will allow ASEAN citizens to work together harmoniously in making ASEAN, as a whole, a destination to visit – one vision.

Sunalai, P. (2012). ASEAN Tourism Strategic Plan: 2011-2015. CITU Review. Retrieved from http://articles.citu.tu.ac.th/wp-content/uploads/2013/04/Research05new1.pdf Waspodo, R.T. (2013). Plan of action: Promoting unity in diversity. A presentation for the Dr. Andrew L. Tan Center for Tourism forum on Leaderspeak – ASEAN Tourism Integration: Plan of action on ASEAN cooperation in tourism. Held 20 November 2013 in Asian Institute of Management, Makati City, Philippines. Wilson, K. (2013, October 21). Tourism driving growth of the developing Asia. China Daily Europe. Retrieved from http://europe.chinadaily.com.cn/business/2013-10/21/ content_17048007.htm World Travel & Tourism Council (WTTC). (2013). Global travel & tourism industry defies economic uncertainty by outperforming the global economy in 2012 – and predicted to do it again in 2013. The Authority on World Travel & Tourism. Retrieved from http://www.wttc.org/ news-media/news-archive/2013/global-travel-tourism-industry-defies-economic-uncertaintyoutpe/. This is culled from Dy Quiangco and Rivera (2014). Disclaimer: The views expressed in this article are the views of the author(s) and do not necessarily represent or reflect the views or policies of the Asian Institute of Management (AIM), the AIM Scientific Research Foundation (AIM SRF), or its Board of Trustees. AIM and AIM SRF make no representation concerning the views in this brief and do not assume any legal liability, responsibility nor guarantee the source, originality, accuracy, completeness, or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented. The ASEAN member states are Negara Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Viet Nam.

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ASEAN LEADERSPEAK

BIG DATA How analytics has changed the landscapes of business and development

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Image from gerard79 of http://www.freeimages.com/


Analytics Arrives at AIM

There is a tidal wave of data that is at our disposal at the click of a finger. This data can mean increased productivity rates and profitability for businesses, governments, and civil societies, but the question of how to effectively manage and contextualize these data to useful information is the most crucial one yet. In fact, the International Data Corporation reports that from 2.8 trillion gigabytes in 2012, the total worldwide data will expand to 40 trillion gigabytes by 2020. The need to curate and analyze information and data requires an urgent need for skilled manpower and sophisticated technology to create tangible and profitable business results. Business schools like New York University and University of Texas at Austin, for example, have run successful analytics certificate programs with highly advanced analytics labs. More schools are following suit with Babson College launching undergraduate and graduate concentrations in business analytics, the Massachusetts Institute of Technology offering its first online professional course called “Tackling the Challenges of Data”, and a number of others like London Business School, Fordham University, George Washington University, Northwestern University, Illinois Institute of Technology, and the University of Virginia recently adding big data to their curriculum. The Asian Institute of Management, as the pioneer in international management education in Asia, is sensitive to these emerging needs in the global market. AIM took on analytics from two sides of the spectrum: one from business, and one from the development angle. For analytics in the business sector, The Washington SyCip Graduate Business School, together with IBM,

Setting the Groundwork. The Philippines as a Global Center for Analytics Starting off the Transforming Business with Analytics forum were opening remarks from Mariels Almeda-Winhoffer wherein she focused on how the Philippines could be poised to become the global center for analytics. “What we’re forging here, as IBM, and in partnership with the academe and government, is not how to teach how to use the tools, but how to build the competencies so that our country and our people are prepared for what’s to come,” she said to the packed Meralco Caseroom. Analytics, she said, is something that is yet to come in the Institution, and is something to look forward to. The research firm Gartner predicts that smart analytics will create 4.4 million jobs by 2015, but only a meager 30% can be filled because of the lack

held the Transforming Business with Analytics forum at the Meralco Caseroom last July 10, 2014. The two subtopics highlighted were Digital Reinvention: Trust, Transparency and Technology in the World of Tomorrow, and Becoming Data Driven – Transforming Industries with Data Analytics. The speakers included AIM Trustee and IBM Philippines’ President and Country General Manager, Mariels Almeda-Winhoffer; IBM Partner and Vice President for Strategy and Analytics and Leader for Asia-Pacific, Simon Thomas; IBM Technical Lead for Big Data and Chief Technology Officer, Chris Howard; IBM Vice President for Big Data, Aurelio Ricart; and IBM Philippines’ R&D Executive, Delfin “Jay” Sabido IX. For analytics in the development sector, the Stephen Zuellig Graduate School of Development Management hosted the Big Data for Development forum last July 14, 2014 at the First Philippine Holdings Caseroom. Leading the discourse on analytics in development was speaker Dr. Erik Wetter, Assistant Professor at the Stockholm School of Economics and Co-founder and Chairman of Flowminder Foundation, a non-profit entity based in Sweden that seeks to improve public health outcomes by working with governments and NGOs in collecting, aggregating, and analyzing data through anonymous mobile phone and satellite data.

of skilled workers. The Philippines is well positioned to capture about 10% of the $232 billion global analytics industry by 2015. To address this need, IBM, together with eight founding members, created the new consortium ANALITIKA which will pave the way for the Philippines to become the prime destination for smarter analytics by 2015. ANALITIKA is comprised of members from leading industry players, with advisory support from government and academe. The founding members are IBM, Bank of the Philippine Islands, ABS-CBN Corp., Smart Communications Inc. Pilipinas Shell Petroleum Corp., Sun Life Financial, Inc., SM Retail Inc., Integrated Microelectronics, Inc., and Manila Electric Co. The government advisors are The Department of Trade and Industry, The Department next page, please

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of Science and Technology, and the Commission on Higher Education. ANALITIKA positions itself as the institutional body that would develop, enhance, and monitor analytics as an industry in the country. Moreover, ANALITIKA is also planning to create a Smarter Education Consortium that will act as an advisory council for elementary school through college. AIM is a proud member of the consortium, and is dedicated to creating leaders who are adept at the changing waves of new technologies. How Has Big Data Changed Businesses? According to IBM, big data is “the digital convergence of structured data found inside databases, and unstructured data flowing from new sources like social networks, mobile devices, sensors, RFID, smart meters and financial systems.

IBM Vice President for Big Data, Aurelio Ricart, stresses that industries are shifting. Today, organizations capture and analyze any data, regardless of what type, how much, or how fast it is moving, and make more informed decisions based on that information.” The annual growth rate of big data, both structured and unstructured, is at 60%. In social media alone, every 60 seconds there are 600 newly published blog posts, and around 34,000 tweets sent into cyberspace. The proliferation of big data, then, would cause ripples in the business world. Before the influx of big data, for instance, industries used to be separated into three segments: agricultural, industrial, and services. While agriculture is landdriven, industrial is asset-driven, and services are human capital-driven. “But now there are those that do not fit within these criteria,” IBM’s Aurelio Ricart explained. Industries are shifting, he emphasized, and data appears to be the fourth segment “A bank used to be an institution that loaned and managed assets, but today, everything is virtual,” he said, “It’s about risk management and how you control the information.” The same goes for retailers

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“What we’re forging here, as IBM, and in partnership with the academe and government, is not how to teach how to use the tools, but how to build the competencies so that our country and our people are prepared for what’s to come.” Mariels Almeda-Winhoffer AIM Trustee and Country General Manager, IBM Philippines whose business 20 years ago used to revolve around a physical store and its management of inventory; today, however, a retailer is an entity that manages information. It’s important for businesses these days to not only realize the importance of big data, but also to take advantage of it. Ricart addressed four major trends that have unfolded in the past few years in the business sector. “We’ve been managing businesses thinking that they are lineal, that they are fragmented,” Ricart said. But these days, the lines between industries are being blurred. Second, business is not fixed and 80% is moving. There will be no single formulaic solution to sustain long-term growth – it is integral to constantly innovate and be one step ahead of the curve. Third, opportunities for industries are hidden; to not properly use data is to only see the tip of the iceberg. People have often misconstrued data and business as two different things, but business process is just a different type of data, or a “metadata of the other.” The last trend is that industries are shifting, especially with banking entering telco, or banking entering retail. “If you don’t do it,” Ricart cautioned, “You are isolated.” Insights from IBM’s C-Suite Study: The Disruptive Force of Technology. Because of big data, there is a new space that opened up for technology to help ease a seamless transition for industry shifts, or to help businesses in being proactive in the changes to come. It would seem that the C-suite have caught on, as well. In Simon Thomas’ presentation, he explained the results from IBM’s latest global C-suite study where they culled data from 884 Chief Executive Officers, 576 Chief Finance Officers, 342 Chief Human Resources Officers, 1,656 Chief Information Officers, 524 Chief Marketing Officers, and 201 Chief Supply Chain Officers from both public and private sectors across 67 countries. He noted that CEOs considered technology as the single most important external force affecting their companies in both 2012 and 2013. It is the disruptive


ASEAN LEADERSPEAK impact of new technologies that now challenge the way businesses are being run. “You cannot expect that your competition is going to come from within your own industry,” Thomas said, noting that the study reveals that 41% of CEOs expect new competitors to come from other industries. For example, Amazon now finds itself in the Top 10 of all retailers in the United States, along with Wal- Mart, Costco, and Target. “An online operator with no physical structure is now a major competitor,” Thomas said. With a heightening sense of competition, it becomes even more important for businesses to understand what their consumers want . Thomas further stated that the area in which CEOs expect to see customer influence grow most is business strategy development. Today, it’s at 43% but it will climb to 60% in three to five years. It is all about creating a “segment of one,” the identification of one customer at the right time, and giving them an offer that they would purchase. But how are CEOs supposed to make sense of the vast amount of data to create this “segment of one”? This is where IBM Watson comes into the picture. Boasting a win against Jeopardy’s top champions Ken Jennings and Brad Rutter, IBM Watson defeated the show’s top runners by a wide margin ($77,147 as opposed to $21,600 and $24,000). Cognitive computing, as Ricart explained, “is similar to how our brains work. It makes decisions based on hypotheses, not on statistical methods.” In short, these are analytic systems that can learn. The supercomputer IBM Watson can collate massive amounts of data and give quick answers. By using cognitive computing, CEOs can find out what the customers want even before they create the products. How Data Transforms Industries In his presentation, Chris Howard explained how analytics has transformed industries spanning from healthcare, insurance, telco, and the government. In healthcare, for instance, from having persistent interruptions, analytics is able to transform that into proactive intervention. In insurance, retroactive analysis is changed to predictive behavior. “[Analytics] democratizes the information,” Howard said, and noted that proper analytics of big data gives businesses “the ability to make better decisions.” Among many things, analytics can spur transformation by redefining the business experience and deepening business relevance. But it is important to stress that it is not merely big data that can make industries leaner

and more efficient. “It’s all about the technique, or the analytics that we apply to the data,” Howard emphasized. Having a plethora of data, he said, does not necessarily equate to having the solutions at hand. He also discussed the Four Vs of big data: volume, variety, velocity, and veracity. Big data is first of all, is all about volume. According to an IBM infographic online, the digital universe will swell to 8zb in 2015. Big data is also about variety because 80% of data is not structured – they come in audio, video, and textual formats. Most companies only make use of 20% of the data present, which is akin to using only one of our five senses in our daily lives. Big data is about velocity in the sense that it moves very quickly and that the responses that businesses need to give to it is equally as urgent. The fourth V is about veracity, or being certain that the data is free from untruthfulness or errors. It poses the question of whether or not businesses can act upon the data at hand. All this being said, Howard emphasized the importance of putting security and governance systems in place as well. Leveraging Big Data in the Philippines To shed light on the use of big data in the Philippines, IBM Philippines’ Delfin “Jay” Sabido spoke about the ongoing analytics projects in the country, in weather forecasting, agriculture, and healthcare. The main focus of his talk, however, was on the use of analytics in weather forecasting with subtopics on wind speed forecast and rain occurrence, especially during typhoons. The importance of weather research, according to his presentation, was that there are about 20 typhoons that enter the country each year. Typhoon deaths are prevalent because of wind debris, floods, storm surges, and landslides. At the moment, it’s currently about asking how the government can be better prepared, or how it can improve its use of analytics in order to prevent another Yolanda disaster. As Sabido said, it is about “addressing the gaps” that are currently in the system so that the government can respond quicker and altogether be more efficient. Sabido also discussed about recommendations on how to use analytics. The first recommendation is that businesses should focus on the biggest and highest value opportunities. It is about maximizing what a business already has. The second recommendation is that within each opportunity, it is acceptable to start with questions, and not data. “You can’t afford to wait turn to page 52

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AIM NEWS 24 July 2014 - Director Joselito S. Almario, Director at the Department of Finance and Deputy Executive Director of the National Credit Council (NCC), was the guest speaker at the Development-at-Work Forum held last 23 July 2014 at AIM, Makati City. He shared the story of how the government and the private sector are working together to provide financial services, particularly credit, savings and insurance to the poor.

DEPARTMENT OF FINANCE’S JOSELITO ALMARIO ON PROVIDING FINANCIAL SERVICES TO THE POOR In the early 1970s, the main challenge was providing credit to the poor; there were market imperfections most experts concluded. If the private service, particularly private banks, didn’t want to provide credit to the poor, could the government do it then? Thus, the government implemented many credit programs for the poor. Even government agencies that were not financial institutions were implementing credit programs to address what was perceived as market imperfections: there was Masagana 99 (Bountiful Harvest 99) which provided loans to help farmers harvest 99 canvas of rice per hectare; there was Biyayang Dagat (Ocean’s Gift), a credit program for the fisherfolks, and Tulong sa Tao (Help for the People), loans for livelihood projects. But all these government-managed credit programs experienced very low repayment rate among the borrowers, even if government agencies were offering subsidized credit programs with minimal or no interest rates. There was also the mindset among those borrowers that what the government agencies were offering were dole-outs. Government credit programs failed. Director Almario teased, “Masagana 99 became Masamang 99, and Biyayang Dagat became Buwayang Dagat.” So many looked at the private sector for help. But the private sector then was afraid to provide credit to the poor. Why? Because there was this fear and perception that the poor could not re-pay, Director Almario explained. The private banks thus required cumbersome requirements from borrowers for security and to ensure that the poor they were lending to can pay. As a result, many became intimidated by these requirements and did not access the financial services being offered by the private sector. When the poor didn’t have any access to credit, where did they go aside from the government credit programs? They went to informal lenders, loan sharks, 5-6. Director Almario explained, “They are not

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generally not bad because they are providing access to credit to the poor.” But here’s the problem. The most common form of informal lending is the five-six (5-6) wherein clients pay six pesos for every five-peso loan. Daily interest rate for this lendind scheme is 20 percent; weekly is 140 percent; monthly 560 percent; and 7,200 percent per annum. Director Almario asked the audience, “If you need a loan today, would you get a loan at 7,200 percent per annum interest rate? No, right? But why is the poor accessing this loan? We have been saying that the poor cannot pay, but they are accessing 5-6 with interest rates of 7,200 percent per annum. Who says the poor cannot pay?” The director posed this question, “Maybe we just didn’t have the policy to address this (lack of credit for the poor). Maybe we just don’t know how to attack this problem. Even with also those subsidized credit programs, the problem worsened. The programs did not answer the lack of access to credit; outreach was still low, and worse they increased dependence among the borrowers and resulted in the prevalence of “doleout mentality.” How then can we convince the private sector to come in and lend to the poor? In 1993, then President Ramos asked various government agencies to sit down and address this problem. Thus, the National Credit Council was created, a body composed of both government and private sector representatives including civil society tasked with creating an enabling credit policy environment in the Philippines. The Council was put under the wings of the Department of Finance, with Landbank of the Philippines as the Secretariat. The Council was created to address the decades-long problem of the poor’s lack of access to credit. Director Almario summarized the conclusions of the Council: “Maybe it is not the cost of credit that is the problem, maybe it is the thinking that the poor cannot pay. If the government gets into the role of


providing access, will the private sector come in? Or will they just see the government as another competitor, giving out low interest rates? It is not cost that matters, it is the access.” In 1997, National Strategy and Regulatory Framework for Micro-credit was formulated. Director Almario pointed out some flaws in this framework, particularly its title, “Why micro-credit, why not microfinance? Do the poor only need credit? How about other financial services? How do we involve the private sector?” In 1999, there was the nationalization of all government credit programs. This calls for the phase-out of subsidized credit programs and prohibits the involvement of non-credit-granting government agencies in any credit program. Director Almario recalled that everybody was against this move because all government agencies will loose their “pogi points” if they stopped providing credit to their constituents. There was a lot of resistance. With the nationalization of the government credit programs, profit-oriented microcredit programs were left solely to authorized credit-granting organizations while the delivery of credit-related public support services was exclusive responsibility of not-forprofit organizations. Director Almario then presented the basic principles that guided the strategies of the government after the nationalization of credit programs. • The private sector should have a greater role in increasing access to credit for the poor. But again, this faced resistance among many sectors, even the civil society did not agree with this fearing that the private sector would charge high interest rates. • If the private sector would be the lead, what would the government do? The Government would concentrate in coming up with policies to encourage private sector to provide access to credit. The government created market-oriented financial and credit policies, which pushed the private sector to provide financial services. Director Almario explained, “If we give a cap of 12 percent on the interest rate that the private sector could charge, nobody would lend.” • Aside from providing loan and guarantee programs, the government started providing capacitybuilding to their constituents The above principles became the backbone of microfinance in the Philippines. In 1997, the National Strategy for Microfinance (NSM) was formulated by the National Credit Council (NCC). The Strategy recognizes the importance of marketbased microfinance and of creating a hospitable policy environment. Director Almario then presented the gains of this strategy after more than 10 years of

implementation There are now 1,410 institutions all over the country providing microfinance, of which 200 are rural, cooperative and thrift banks, 800 are cooperatives, and 400 are non-government organizations. A decade ago, the director recalled, commercial banks did not want to enter this arena, now they are acting as wholesaler of microfinance funds,and are now actively engaged in providing the poor greater access to micro credit to finance their livelihood and small business activities. Average repayment rate is 95 percent, some MFIs report 99 percent re-payment. This is proof that the poor can pay if they were given access to credit. To build on these gains, more micro-finance services were provided to the poor. Aside from credit, other finance services were also provided such as savings, payment service and remittance services. What remains to be a challenge is providing insurance to the low-income groups. Without any risk protection, the poor are very vulnerable and susceptible to unforeseen circumstances. Director Almario enjoined the audience to reflect on this challenge: How can we provide insurance to the poor? If poor people do not have disposable income, how can they buy insurance? And we have the same old problem of private sector hesitant to provide insurance to the poor. They don’t want to touch the poor. The director added, “Maybe we have been looking at it the same way we have looked at the lack of access to credit. Maybe insurance products are not designed for the poor. Maybe there is just no policy direction to guide where insurance is going. For example, insurance contracts are laden with legal jargons; there are many fine prints. Is this kind of contract applicable to the low-income sector? There are cumbersome requirements for applying for insurance and benefit availment. In 2010, the Philippine government outlined its policy thrusts and direction for the establishment of a policy and regulatory environment that will encourage, enhance and facilitate the safe and sound provision of microinsurance products and services by the private sector. Thus, the micro-insurance framework came to be. The framework outlined the following strategies: 1. Increased participation of the private sector in the provision of microinsurance services; 2. Establishment of an appropriate policy and regulatory environment for the safe and sound provision of microinsurance by the private sector; turn to page 57

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for the perfect solution,” Sabido advised, “Don’t be afraid to jump into it or lead with connections.” This is also because a lot of data come in an unstructured form. He said that it’s understandable to start with the question and then eventually go back and dig for more data. Other recommendations he mentioned are to embed insights to drive actions and deliver value, to keep existing capabilities while adding new ones, and to use an information agenda to effectively plan for the future. Summary The Philippines is poised to become the global center for analytics. With its participation in the consortium ANALITIKA, AIM is a partner in seeing this goal through. In 2015, only 30% of 4.4 million jobs will be filled, and it gives the Philippines the chance to address these needs. Industries are shifting. Whereas before, industries were separated into three main segments: agriculture (land-driven), industrial (asset-driven), and services (human capital-driven), there emerges a new sphere: big data. In fact, in IBM’s most recent Insights from the Global C-Suite Study, it revealed that more than 2 in 5 CEOs see threats coming from new sources, or new industries. This implies a greater demand to use data analytics to understand what customers want, and when they need it so businesses remain relevant and stay competitive. Big data is the new natural resource. There’s no stopping the rapid growth of big data in the digital universe. It is permeating every industry, and the need for skilled workers is becoming even more urgent. According to IBM, organizations that apply the right analytics to data for competitive advantage are 2.2 times more likely to outperform their industry peers. There are four business paradigms that have surfaced in the digitally-charged world today. Businesses are no longer lineal or fixed. Opportunities for businesses are hidden, as well, and the line between industries is being blurred. Because businesses are in a constant state of flux, using data analytics allows them to be a step ahead of the curve. Every industry can leverage big data and analytics. The Philippines is an example of a developing country that has used big data and analytics, for weather forecasting, traffic management, and to promote smarter agriculture. Even SMEs can find data analytics useful; regardless of the scope and scale of business

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“[Analytics] democratizes the information... Proper analytics of big data gives businesses the ability to make better decisions.” Chris Howard, IBM Technical Lead for Big Data needs, there is a right type of analytics programs that are suitable for each. Big Data in Development Focusing on the impact of big data in development was Dr. Erik Wetter, a seasoned professional in both the development sector and the academe. Known for spearheading Flowminder Foundation, Wetter discussed his non-profit organization’s projects in using “anonymized” mobile and satellite data particularly in Bangladesh and Haiti. Flowminder Foundation, created in lieu of the fact that 30 million people are displaced every year by natural disasters, with millions more due to famines and conflicts, sought to use data to track IDPs and create a more systematic way of bringing them relief and aid. “Having a lot of people move [from one place to another] creates policy problems for governments,” Wetter said. He showed the case study of the catastrophic Haiti earthquake in 2010, where it hit the town Leogane, 16 miles west of Port au Prince. Wetter’s group used satellite and mobile data to help effect a faster and more efficient way to get IDPs relief and aid. “Where are all the people? Where should we send the food, or the medicine?” He said, explaining that in times of disasters, people move so frequently and rapidly that agencies and governments often have a hard time tracking them down. Using satellite data, the group was able to compare and contrast the different imageries of before and after the earthquake hit. With the earthquake hitting in January, by February the satellite images showed that the area was turned into an official UN refugee camp. As weeks rolled by, the area slowly became a “fullblown city.” Although the use of satellite data was very helpful, Wetter said that there remained major drawbacks to this technology. First of which is that while they were able to see the tents being propped up, they did not see the people inside. “You make an estimate as to how many are inside,” Wetter said. Second is that a lot of these people had to register to receive food in these camps. This doesn’t make for having an accurate number because it would mean that some people could


ASEAN LEADERSPEAK register again in other camps to get more food, which would then muddle the statistics. The third drawback, which could arguably be the most challenging one, is that in camps, agencies and governments are able to track the number of people who are receiving food and other forms of aid, or those who arrived in the campsites. In disasters, though, most people do not go to camps. “The UN estimates that in a population of 3.5 million, only 350,000 go to camps – that’s only 10 percent,” Wetter stated, “Some people go somewhere else like a friend’s family’s, or other similar places.” Aside from these drawbacks, there remains another issue: getting accurate numbers for the stock and flow of people.

With mobile data, Wetter and his team worked with Digicel, a Haitian mobile provider to help track mass movements of the displaced people. Digicel helped in giving access to their call data records (CDR), the information that all mobile operators have – everything from call, text, data text, and data volume, that is transmitted to the nearest cell towers. They made sure, however, that these CDRs were “anonymized”. “Everyday you see which tower is used,” Wetter said, “You can see if someone was inside the city or outside the city; you get to see movement patterns.” For example, in the wake of the earthquake in October that year, UN camps from all over the world entered Haiti,

The use of mobile data in development is brimming with potential. It’s not however,a ‘magic potion’ that solves everything— there has to be a level of expertise needed to sift through the data in a large set. Photography by Nikki Victoriano. Ten Photos to Shake the World by ASSIST.

Getting to see these numbers is crucial, especially in times of disasters. Wetter gave the example of the population of Manhattan at noon, compared to Manhattan at midnight in the same day; the population could balloon to about 8 million in the middle of the day, but drastically deflate by midnight because the people would have traveled back to their homes either in New Jersey, or in various other neighboring cities or states nearby. “You get a snapshot of the stock, but you don’t know the flow,” he said. The same goes for Metro Manila; given that it’s an earthquake zone, it matters a lot for agencies and the government to know when an earthquake could happen. Will it hit during noon on a Wednesday, or during midnight? The problem that Wetter espouses then, is rooted in the fact that satellite data can only give an educated hypothesis, but not a concrete set of statistics.

a number of which were Nepalese camps. Because cholera occurs in Nepal, some fell ill when there was sewage that was dumped in a nearby river. A strong cholera epidemic broke out, and the Haitians, who previously never experienced cholera, caught the disease. “If you’re an aid agency, you would send to this particular area [where the cholera outbreak took place], but a lot of people were leaving that area,” Wetter said. He said that the data showed that people were moving to Port au Prince, but there were also some moving to another island up north. “You want to know where people are going, not where they were coming from,” Wetter said. When the mobile data was compared with that of UN agencies, they found that there were discrepancies in next page, please

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the numbers. They did realize, though, that mobile data proved to be more thorough in giving estimates. Wetter moved on to explain the two major fallacies with big data. The first is that of the “magic potion” fallacy. “Quantity is not the same thing as quality,” Wetter stressed, “When people talk about big data, they talk about billions of data points but just because you have 1 billion data points doesn’t mean that the data is any better. Big data is just a lot of data.” He explained that just because a set of numbers come from a database, it doesn’t mean that they’re perfect. The data must also be the correct data that corresponds to what it will be used for. Big mobile data is also not a magic potion that solves everything – there has to be a level of expertise needed to sift through data in a large set. “If you want to solve the outbreak of cholera in Haiti, you need to know about cholera,” Wetter said. With their case study in Haiti, it turned out that Digicel mobile subscribers were a good sample of the population. But when it comes to other situations, the question that must be asked is: who is my target audience? Who are my customers and are they represented in this sample? In Bangladesh, for instance, and other parts of India, while they may have access to phones, a large number do not have access to personal phones. Less than 30% in Bangladesh have personal phones, while others rely on their neighbor’s phones and the like. One sim card in Bangladesh could be used by a family of eight people, compared to Sweden where one sim is equal to one person. How would this affect the big data study? It would then mean that the use of mobile data in Bangladesh might not be as reliable as the use of mobile data in Sweden. “The data is useful if you know how to use it,” Wetter said, “But it is useless on its own.” An agency can make use of the mobile data, but it is not enough. They would have to also cross-check with other sources of information like UN numbers, or government numbers to derive at a safe estimate. The second important point that Wetter made is the “Star Trek” fallacy that involves the impact of big data. Data, he said, is just the tool and not the solution. He also mentioned that no remote data could replace actual field work. “You also have to know what’s going on,” Wetter said. Being out in the field and experiencing what is going on trumps a large volume of data accessed in a computer. Wetter explained as well that mobile data is very complex and sensitive in terms of privacy. He warned

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“THE DATA IS USEFUL IF YOU KNOW HOW TO USE IT...BUT IT IS USELESS ON ITS OWN.” dR. ERIK WETTER, Assistant Professor, Stockholm School of Economics and Co-founder and Chairman of Flowminder Foundation against data exhaust because wanting all the data is “akin to going to a hospital and asking for all the medical records.” There has to be a sophisticated way of analyses and curation of data. Another point with mobile data is that while real time data analyses are possible, it is not always scalable, cost-effective, or value-adding. The data would still need to be validated against ground data, medical data, and a range of other information. Having quick information, then, would not mean having a quick solution. It would always need to be supported by other data. Summary In development, the sphere of big data, specifically mobile data, is brimming with potential. Especially in Flowminder Foundation’s case study, they were able to leverage mobile data with Digicel Haiti to help alleviate the conditions of the IDPs. They were able to see the movements of the people, and were able to deliver relief and aid to those who needed it the most. Big data is not without its drawbacks. Although it has potential, it also has its own share of obstacles. For example, the satellite data that Flowminder Foundation used also lent itself to possible miscalculations. While there were tents, they could not see the people inside. While they are able to see the movement of people using mobile data, they are only given an idea of the stock, but not the flow of the people. Field work trumps big data. There is no replacing field work in development. While satellite and mobile data can be very useful especially in delivering relief and aid, it is integral to know the people, their conditions, and the geography. It is not enough to know data on where the cholera most likely started in Haiti, it is also important to know the disease, how it spreads, why it spreads, and the preventive measures to take. There has to be a sophisticated set of analytics applied to big data for it to be useful. Having big data is literally what it is – it’s having big data. But it doesn’t immediately translate to having the solutions, or the cure for a cholera outbreak. It needs systematic analysis and curation, and the big data must represent the people that the agencies or governments are trying to help. It is not a “magic potion” that offers a “Star Trek” ending – big data requires big analyses.


AIM NEWS

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or three MBA students at the Asian Institute of Management (AIM), their demanding coursework did not keep them from playing a crucial role in bringing Geeks on a Plane to the Philippines for the first time.

geeks ON A PLANE

Their journey to bringing in one of the biggest events for Filipino technopreneurs started when Shun Ishimoto happened to drop by AIM Professor Matthew Escobido’s office. He wanted to discuss other activities when he heard Smart and IdeaSpace were bringing to Manila Geeks on a Plane, an invite-only tour for startups, investors, and executives to learn about high-growth technology markets worldwide. Smart and IdeaSpace were looking for a venue for a technopreneurship summit, the first in a series of events for the Geeks on a Plane tour, and had difficulty finding a team who would help them manage this event. “We found out that they were bringing Geeks on a Plane here, so we pitched for it. AIM is a good venue, as it is right in the middle of the central business district. Our students would be more than capable to help them run it,” shared Professor Escobido, who mentored the student team managing the event. “I saw this as a challenge to our students: What if you could make this happen? If you are passionate enough and you believe in it, then let’s do it.” Ishimoto’s classmates, Nishant Abraham and Mica de Jesus, volunteered to be part of the team organizing the event. While he oversaw all the preparations, de Jesus focused on marketing and communications, and Abraham focused on the program and analytics.

For Escobido, the students’ various areas of expertise created a well-rounded team that could manage such a huge event. “It’s not just one group working, but more of converging groups having the same purpose, working together,” said Escobido. While preparing for the technopreneurship summit, Ishimoto met an AIM alumnus, Tom Gotuaco, who was working with Geeks on a Beach, a local movement inspired by Geeks on a Plane, where start-ups and entrepreneurs get to meet other entrepreneurs and innovators, and pitch their ideas to potential investors. The Geeks on a Beach team were handling another event in the tour, a ‘speed dating’ session where startups can pitch to potential investors, and they were also looking for a venue for the activity. The students were encouraged to bring both activities to AIM, eventually negotiating for the AIM team to get a slot at the speed dating session. Around 500 people ended up signing up for the summit, which then prompted the team to come up with a wat to screen potential attendees. “Eventually, there were so many people who wanted to apply that we had come up with a metric to decide if we were to grant a seat to this person,” shared de Jesus. “We asked ourselves, ‘What does this person bring to the discussion? How many years of experience does he or she have in the start-up industry?” turn to page 56

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geeks ON A PLANE continued from page 55

The next phase of the team’s work focused on developing the program for the summit. To ensure that the summit would address the entrepreneurs’ concerns, the team decided to send their invitees as a survey, asking them about their interests. Once they received the attendees’ feedback, they identified the topics to be discussed during the summit. They also checked out the profiles of the geeks flying to Manila to find out who could best discuss certain topics. The team also worked to ensure that both sessions would have a mix of both local and international perspectives. “We wanted a global perspective — while some panelists were from Silicon Valley, others were from emerging markets,” shared de Jesus. “Alice CEO Samer Karam, for example, brought the perspective from the Arab world. We wanted it to be attuned to what was going on, how start-ups are doing all across the globe.” The technopreneurship summit ended up having two sessions, the first focusing on opportunities for the Philippines and Southeast Asia, while the second session focused on best practices on innovation ecosystems. The positive reception that they got from the attendees overwhelmed the students. “When people started swarming into the seats, I was surprised, but in a good way. We though initially that maybe we’d have a few empty seats,” said de Jesus. “But the people who attended are really interested in the topic, because they have start-ups of their own. These are entrepreneurs who really want to find out how to get their business going.” I thought the most fun part of it was when we started hearing from other people about how great it was, the connections being made,” added Abraham.

“People were talking about it days after. We found out that everyone appreciated it and they all had this postevent glow.” The event also opened their eyes to other opportunities that they can pursue post-graduation. “Once you’re there and you’re listening to people, and they’re now saying that this is the new face of the entrepreneur and this is what we should be doing to change the world,” said de Jesus. “I thought that this was something I should consider, whether it was joining the investors’ side or joining a start-up.” “I think MBA students have this culture of [thinking that] first, you’ll get a superior education, then you’re going to go into corporate, then you see people around you doing things differently and probably ten times better, you actually change your perspective,” said Abraham. “You know that there’s life outside of the corporate world, there’s life beyond using your MBA as kind of a planner. You have to look beyond that.” In addition to organizing the technopreneur summit, Ishimoto also participated in the speed dating session, along with two incoming MBA students, pitching an idea to use case study discussions as a way for companies to decide who to hire. He noted that the process of organizing the event and taking part in the speed dating session taught him to be quick on his feet and focus on the present. “When you’re in the course, what you see is mostly theory. Cases try to make it more practical, but there are still limitations,” said Ishimoto. “What I’ve leaned is that things do not go as planned and you have to cope with that. Theory is there to back up your plan, but in the end, what really matters is responding to what’s going on.” Ishimoto, de Jesus, and Abraham are now looking at providing a way for start-ups to connect with each other and get access to the knowledge and the mentoring that they need. “Some people were saying that they wanted a deeper discussion or a more workshop-style event,” said Ishimoto. “We’re now working on making this more sustainable. For us, Geeks on a Plane on a Plane is just the first event of the AIM for Innovation program. We’re currently looking for opportunities how we can expand the conversation, how we can place ourselves in next page, please

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AIM NEWS this community, where people can say that they are happy that AIM is part of the ecosystem.” He added, “One of the speakers, Ed Isidro, approached me after the event, and he’s looking at co-developing something with us. What we’re trying to do now is to develop a program — AIM has the knowledge and people, we can be the ones to connect them to each other, and from there, we could grow the ecosystem itself.” “We’re working on building an online hub for investors, entrepreneurs, people who are interested in the start-up ecosystem, just so there’s a touchpoint,” shared de Jesus. “We’re also thinking of a continuity plan with the incoming MBA students.” Escobido hopes that AIM would pursue more similar opportunities, to give students a chance to translate what they learn in the case room to reality, while creating an environment where the next generation can

freely pursue entrepreneurship and innovation without fear or failure. “When you look at the other ecosystems, the youth are empowered to do things, to make mistakes. This is something that we need to encourage more. We talk about the case method, bringing reality to the paper, and this one is as close as one can get to the real thing. These kinds of events would develop functional skills, both hard and soft,” said Escobido. “While entrepreneurship will contribute to national development, it will also ultimately contribute to developing human resources. The next generation will pursue entrepreneurship and innovation and they will be better managers and leaders because of it.” We can be a place that innovators, entrepreneurs would flock to,” he added. Come in here, share that you know, and from that, more will be insppired, and eventually we’ll have a livelier ecosystem.”

DEPARTMENT OF FINANCE’S JOSELITO ALMARIO ON PROVIDING FINANCIAL SERVICES TO THE POOR continued from page 51

3. Mainstreaming of existing informal insurance, insurance-like, and other similar activities/schemes: and 4. Institutionalization of financial literacy (learning/ education) program that will highlight the impor tance of microinsurance, the applicable rules and regulations, the duties and responsibilities of the providers, and the consumer rights of the insured. Where are we? There are now 30 providers of micro-insurance including large commercial insurance providers; 22 mutual benefit associations with 1 institution alone covering 4 million lives. 134 licensed agents of which 34 were rural banks; and 20 million Filipinos insured. What are the implications of ASEAN Integration to micro-finance? • Cross-border supply - financial services including micro-finance can jump from one country to another; • Consumption abroad - people can also buy financial services from abroad even if that kind of service is available locally. • Commercial presence- Bank of Tokyo or Malaysian Banks creating branches or offices in the Philippines, nobody can stop them from doing so. • Movement of natural persons – A Filipino expert on financial services can go to another country and provide those services.

Given the mentioned implications, should we be afraid of the ASEAN Integration? Should we be afraid of these changes? But Director Almario pointed out that maybe we were asking the wrong question. The question should be, “Do we have comparative advantage with ASEAN countries in micro-finance? Where is the PH in terms of micro-finance? The director presented the results of a study conducted by the Economist Intelligence Unit (EIU) on Micro-finance in 2013. The Philippines is the 4th in overall microfinance business. The country is ranked 8th in terms of having a supportive institutional framework for microinsurance, and first terms of the regulatory framework for microinsurance (since 2009). Another study on the landscape of micro-insurance in Asia 2013 showed that the Philippines has the highest micro-insurance coverage in Asia with coverage of 20.6 percent of the population. Other countries in the region lagged far behind the Philippines in the area of microinsurance. Figures from the World Bank showed that the microinsurance penetration rate in the Philippines in 2013 was 20.4 percent, while neighboring countries such as Thailand only had 14.1 percent coverage and Malaysia with 3.6 percent. Now, should we be afraid of ASEAN Integration? The director challenged the audience. “With all these advantages, the question should be, ‘Can we penetrate ASEAN countries in terms of micro-finance?’ If microcredit provides the unserved and undeserved their present financial needs, micro-insurance will provide for their future unforeseen and unexpected financial needs.”

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ast September 3, 2014, the Asian Institute of Management-Ramon V. del Rosario, Sr. Center for Corporate Social Responsibility (AIM-RVR CSR Center) presented the Asian CSR Awards to standout companies across the region that have integrated social responsibility in their business philosophy, strategy, and operations during the Gala Dinner and Awards Night of the 13th Asian Forum on Corporate Social Responsibility (AFCSR), held at the Makati Shangri-La Hotel. Gracing the Gala Dinner and Awards Night was President Benigno S. Aquino III.

COMPANIES WITH SOCIAL RESPONSIBILITY INTEGRATED IN BUSINESS PHILOSOPHY, STRATEGY, AND OPERATIONS, RECOGNIZED AT THE ASIAN CSR AWARDS 58


AIM NEWS “The Awards are given for programs that achieve excellence in engaging stakeholders and developing innovative and sustainable solutions to pressing social challenges,” explains Dr. Francisco L. Roman, Jr., Executive Director of the AIM-RVR CSR Center. “The companies receiving the Asian CSR Awards have demonstrated their leadership, sincerity, and ongoing commitment to integrating ethical values, compliance with legal requirements, respect for individuals, involvement in communities, and protection of the environment into the way they do business.” The Asian CSR Awards have four categories: Poverty Alleviation, Environmental Excellence, Education Improvement, and Health Enhancement. The recipients of the 2014 Asian CSR Awards are the following: • Poverty Alleviation – Jollibee Group Foundation’s Farmer Entrepreneurship Program: Linking Farmers to the JFC Supply Chain. Jollibee Foods Corporation is recognized for practicing a business model responsive to societal needs, particularly in pushing for enabling people to develop business ventures to become part of a progressive society • Environmental Excellence – DOW Chemical Thailand’s DOW Chemical for Sustainable Industry. DOW Chemical Thailand is cited for its strong leadership across various industries to promote environmental sustainability and safety standards, designing a program that created impact in both scale and quality. Its holistic approach is towards creating shared value for both the company and the industries it serves. • Education Improvement – Jollibee Group Foundation’s Busog, Lusog, Talino (BLT) School Feeding Program. Jollibee Foods Corporation is honored for having a corporate social responsibility program aligned with its core mission and competencies as a business. Jollibee also extends its expertise in food safety to address food handling issues in the feeding program. • Health Enhancement – P.T. Unilever Indonesia for their School Program – An Integrated Health Hygiene Promotion. P.T. Unilever Indonesia is awarded for its program that addresses the health and sanitation needs

of a community, as well as encourages the youth to adopt good hygiene practices—underscoring the importance of behavior change among the youth in remote areas, where health and sanitation systems are poor. This year’s board of judges also handed out the CSR Impact Award to a program that has an ongoing track record of generating significant sustainable impact. This year’s recipient of the CSR Impact Award is the Valsad District Cooperative Milk Producer for the Tribal Development through Co-Operative Movement Program. The program has established more than 1,000 “societies” composed of at least 100,000 farmers. The focus on indigenous women has both direct and indirect social benefits that go beyond income generation. The AIM-RVR CSR Center also has a longstanding partnership with Intel Corporation, with both institutions awarding the Intel-Asian Institute of Management Corporate Responsibility Award (IACRA). This honors companies in Asia that have embedded corporate social responsibility into its operations, especially with how they have engaged with both shareholders and stakeholders. Awardees are also seen as role models, exerting positive influence to their stakeholders, peers, and communities. This year’s recipient of IACRA is Magsaysay Maritime Corporation, which is seen as fully understanding the needs and concerns of its key stakeholders, primary of which are its employees. Through its training and scholarship programs, the company has consistently produced quality seafarers for the manpower industry. They are also given training on financial literacy to better secure their future and are provided with ways to easily communicate with loved ones through Magsaysay Maritime Corporation’s partnership with a telecommunication company. “It is the AIM-RVR CSR Center’s belief that corporate social responsibility can be genuinely sustainable only when it is integrated into the company’s business model and is regarded as fundamental to strategy,” shares Dr. Roman. “The Asian CSR Awards recognize the companies that have been creating sustainable positive impacts, enabling them to become case studies of best practices for other companies in the region.”

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W

hen it was time for Christine Kempeneers and her team to take over the student-led business consulting competition from the pioneering batch, MBA Cohort 8 of the Asian Institute of Management (AIM), they decided to make it bigger and bolder than its predecessor.

THE STORY OF

AIM NEWS

AIM ACCELERATE The first contest, AIM Pitchblack, was a consulting competition participated by purely AIM MBA and Development Management students to help startups with their most pressing problem and the best student team that will come up with the most creative consulting solution will receive future business leader award. This year, Kempeneers and the rest of the core group from Cohort 9 namely, Rj Paguyo, Tersh Tupas, Yogs Villaruel, Cezar Roxas, Paolo Balinas, Suhel Mukherjee, and Fenny Wijaya, wanted to take it to the next level. The team decided to rename and rebrand the competition to AIM ACCELERATE (AA). This time, MBA students from renowned business schools around the world were invited to participate in the revamped competition. What initially started as a consulting competition for startups, the contest for this year was now geared towards helping established SMEs on their growth path towards the ASEAN 2015 Integration. From around 80 applicants from international business schools, 24 students from Nanyang Business School, The Indian School of Business, National University of Singapore, PUTRA Business School, IPADE Business School and the Asian Institute of Management got in bringing in expertise from different function areas.

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The final roster of local SME participants came from various industries offering different challenges for the student teams. The companies were Wilkonstruct Development Corporation, Guerrero Creative Enterprise, Beauchem Industries Internation, Inc., Mr. Wilson Sportswear, e-Methods for Business Management Corporation, and The Kard, Inc. AIM Accelerate was a three-day event, which started with an informal mixer for the students and SME participants. This was the first time that the students and the proponents were able to meet in person. As for the second day, a plenary session on the impact of the 2015 ASEAN Integration on SMEs was held at the Fuller Hall in AIM. Dr. Arthur R. Tan of IMI opened the session followed by AIM professors, Maoi Arroyo and Dr. Paolo Francisco. The last installment of the AIM Accelerate Competition was the Final Pitch & Awards Night. During the final pitch segment, the 6 participating student teams with 3-4 members each presented their recommendations for their particular SME. The presentation content was a result of several weeks of intense brainstorming within each group, along with consultations with AIM faculty advisers.


The event ended with the final reveal of the winners. The night belonged to Team Beauchem. The winners received $2,000 USD in cash, as well as the pleasure of being crowned winners of the first ever AIM Accelerate. In a post event interview with Team Beaucem member, Nicole Balane, she expressed that it was a big shock when they found out they won. It took a while before it sank in that they were the winners of the competition. When asked what attributed towards their success, she credited it to the openness and responsiveness of the SME client. Since the issue was succession, the team made sure to run by every suggestion to the discretion of the family. The great communication between both parties lead to solutions that were well received by the client. The team was quite pleased with the result of the competition and are still in contact post event. The Competition Experience The participating students were passionate about the competition experience. In spite of countless of sleepless nights, they found the event to be unlike any other business consultancy competition they had previously joined.

This was because of the student – SME interaction which facilitated a real life experience in business consulting. This is the unique value offering of the competition, as well as the blended approach at mixing students from different cultures with various expertise. AA eventually became the first ever student-led business consulting competition in the world of this magnitude and these were all made possible by the passionate and driven students of AIM MBA Cohort 9. These eight students worked seamlessly from the ideation to the execution of the three-day event. What seemed impossible then, was done and is now part of the legacy that this batch of students will leave behind. This event was made possible by the following major sponsors: AIM, TeamAsia Inc., and PMFTC Inc. Other key partners include SMART, Emperador Distillers Inc., Grab Taxi, and El Cielito Hotels. The event was also supported by BJ Marthel International Inc., Niigata Power Systems Co., Ltd., Saint Anthony Security and Investigation Agency, G&W Clubshares Inc., Hybridigm Consulting Inc., Radiocom Electronics Center Inc., Esquire Financing Inc., along with several other sponsors.

To know more about AIM Accelerate, visit www.aimaccelerate.com.

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AIM NEWS

T

he Career Services Office organized the HR Forum and Networking Event entitled No Boundaries: The Diffusion of Talent in ASEAN 2015 last October 16, 2014 at the Stephen Fuller Hall.

NO BOUNDARIES:

THE DIFFUSION OF TALENT IN ASEAN 2015

The forum aims to tackle concerns regarding human capital development and the blurring of economic boundaries during the 2015 ASEAN Integration. There were 117 corporate guests representing 74 companies. Main Facilitator was Dr. Gloria de Guzman. The keynote speaker was Ms. Carla Grant-Pickens (Philippines Area HR Leader, IBM). A Panel of Reactors from various industries gave more insights regarding the topic. The other panelists include: Mr. Jorge Osorio Bromberg (Country Human Resources Head, Citibank N.A. Philippines); Atty. Josephus B. Jimenez (President, PMAP); Ms. Evelyn Grace C. Sorongon (Vice President & Managing Director ,John Clements Consultants); Ms. Suzanne Villa Sta. Maria (President, Prime Point Management Services); Mr. James G. Matti (Managing Director, Towers Watson); Mr.Pierre Monserrate (Director HR Operations ,PMFTC) and Suhel Mukherjee (AIM MBA Student). After the forum, there was networking among the company participants and MBA Cohorts 9 & 10 students. PMFTC, Inc. was a major sponsor of the event. In addition, the following companies were minor sponsors: Del Monte, Nestle , Icube Group, First Philippine Holdings/First Gen, PrimePoint Management Services, and Cavalli Business Center.

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A LU M N I N E W S

T

he Reunion of Celebrating Batches for the AIM Alumni Homecoming 2015 was held last September 12 2014 at the TPIC- Bancom Room of the Asian Institute of Management.

Celebrating Classes for Homecoming 2015

REUNION OF CELEBRATING CLASSES FOR HOMECOMING 2015 Several alumni attended, representing the following celebrating batches: 1970 (45th year, Sapphire Celebrants), 1975 (40th year, Ruby Celebrants), 1980 (35th year, Emerald Celebrants), 1985 (30th year, Pearl Celebrants), 1990 (25th, Silver Jubilarians), 1995 (20th Lead Host Class), 2000, 2005 and 2010 (Host Classes). Alumni Association of AIM (AAAIM) Philippine chapter Chairperson Ms. Rowena Palmiery Bayoneta opened the night by greeting the nine celebrating batches. She shared her experiences in organizing her batch’s homecoming in 2012. Bayoneta assured the lead host class that AAAIM will help ensure a successful grand reunion next year.

AAAIM Chairperson, Rowena “Wing” Palmiery-Bayoneta, MBM 1992

AIM President Dr. Steven J. DeKrey also welcomed the alumni back to AIM. He updated the graduates on the latest developments at the Institute, and how AIM is making progress in becoming one of the top five schools in Asia. Dr. DeKrey stressed the importance of Homecomings in any institute. “Hosting the homecoming is an exceptional way to reconnect with your classmates and the Institute. And in recent years, it has become more than just an event to gather friends and classmates together. The past four host classes, including the homecoming that Wing’s batch hosted in 2012, have made the homecoming a platform to provide tangible assistance to the development of AIM and its students through donations and pledges”. Lead Host Class, MBM 1995, represented by Mr. Marlon Glenn Guinto, presented the plans for the Homecoming in March 2015. With the theme, “MEGA Homecoming”, MBM 1995 hopes to raise funds for the improvement of AIM facilities. The AIM Annual Alumni Homecoming will be celebrated on March 6, 2015 as part of AIM’s 47th Anniversary. All alumni are invited to attend the most anticipated annual networking event.

Homecoming 2015 Chairman, Marlon Glenn Guinto, MBM 1995

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A LU M N I N E W S

(L-R) Standing: Mr. Russell Ho, MBM1981, Mr. Hong-Ming Tsai, MBM1981, Mr. Der-Zen Hwei, MM1995, Mr. Ching-Kuo ”Patrick” Hsiao, MM1990, Mr. Don W. T. Chen, BMP1990, Ms. Jacinta Meng, MBM1985, Mr. Michael H. C. Hsu, MM1991, Mr. Shih-Chi”David” Chang, MM1993, and Mr. Steven Y. H. Tseng, MBM1987.

Mr. Richard Yeoh, TMP Bali-2013, AIM Governor, Tun Dato’ Seri Dr. Ahmad Sarji Bin Abdul Hamid and President Steve Dekrey

(L-R) Seated: Mr. Tony Chien, MM1979, Mr. Robert Wang, MM1979, Mr. Tien-Cheng Lee, MBM 1973, AIM Governor Mr. Stan Shih, President Steve DeKrey, Mr. Wenent Pan Ph.D. , TMP1988, Mr. Pi-Chuan Chen, MM1995, and Mr. Kee-Harn Wang, MM1989.

AIM President Dr. Steve Dekrey recently visited with alumni in four different countries through the President’s Forum events. These dinner events were organized mainly by the local alumni chapters and allowed Dr. Dekrey the chance to meet and greet the alumni.

SJD VISITS ALUMNI Dr. Dekrey used the opportunity to update the alumni about AIM’s Top Five in Five strategy offering a clear road map to elevate AIM among the top five business schools in Asia in five years’ time. The visits underscored the importance of alumni participation in the Institute’s drive toward the attainment of its goals. First to host Dr. Dekrey was Kelab AIM Malaysia on October 20, 2014 at the Royal Lake Club in Kuala Lumpur, Malaysia. The alumni who joined Dr. Dekrey at the dinner event were Haji Zulkifli Baharom (MM1985) – Kelab Malaysia President, Dato’ Raduan Md Taib (MM 1993) – Vice President, Ching Lai Huat (MM 1984) – Treasurer, Kol. Dato’ Mohd Ariffin (MM 1997) – Board Member, Richard George Azlan Abbas (MDP 1995), Khairuddin (BMP-MARA-03 1981) and Richard Yeoh (FBMP-KL 1984/ TMP 2013)– AIM Representative in Malaysia. Richard tirelessly worked to make sure the event was a success. Taipei, Taiwan was the next stop. Dr. Dekrey was hosted by the AIM Alumni Association of Taiwan, led by its dynamic chairman Ching-Kuo “Patrick” Hsiao. Other attendees at the Spring Of Shanghai restaurant were Tony Chien (MM 79), Robert Wang (MM 79), Tien-Cheng Lee (MBM 73), Dr. Wenent Pan (TMP 88), Pi-Chuan Chen (MM 95), KeeHarn Wang (MM 89), Russell Ho (MBM 81), Hong-Ming Tsai (MBM 81), Der-Zen Wei (MM 95), Don W. T. Chen (BMP 90), Jacinta Meng (MBM 85), Michael Hsu (MM 91), Shih-Chi “David” Chang (MM 93) and Steven Y. H. Tseng (MBM 87). Adding luster to the event was the presence of AIM Board of Governor Mr. Stan Shih, who took time out from his very busy schedule to show his support for AIM. Fu Shih Choib was unable to come but invited Dr. Dekrey to his office the following day. Third stop was Beijing, China, where the Beijing alumni chapter President Jack Niu (MM 98), Colin Wang (MM 99), Jie Gao (MM 95) and Flora Yuan (MBA 2011) graciously hosted Dr. Dekrey at the Westinghouse office of Colin Wang. Jack Niu presented the activities of the three (3) alumni chapters in China, namely Beijing, Shanghai and Kunming. The alumni also shared how AIM made a difference in their careers and personal lives. Since Dr. Dekrey included in his presentation the planned renovation of the AIM campus, Jack immediately contacted another alumnus, Rock Hsiung (MM 93), founder of Roled, makers of LED lighting systems. Rock instantly agreed to work with AIM in supplying the LED lighting systems for the caserooms and the AIM logo.

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Mr. Jack Niu, MM 1998, and President Steve DeKrey

(From left) Mr. Ching-Kuo”Patrick” Hsiao, AIM MM1990, Ms. Mae Chen, Director, Wandao Management Program, President Steve DeKrey, AIM Governor Stan Shih, Mrs. Shih, Mr. Pi-Chuan Chen, AIM MM1995.

Ms. Flora Yuan , MBA 2011, Mr. Jack Niu, MM 1998, President Steve DeKrey and Mr. Colin Wang, MM 1999

The last stop is Bangalore, India where Dr. Dekrey is to meet with alumni over breakfast at The Park Hotel on November 15, 2014. Confirmed to attend are Vikram Mulki (MM 86), Adietya Chopra (MBA 04), Balakrishna Kudigram (MBA 06), Mahesh Patel (MBA 08), Anup Thantry (MBA 08), Vijay Suryanayanan (MBA 08), Fahim Saleem (MBA 08), Varun Gulati (MBA 09), , Vinod Seetharaman (MBA 09), and Shibani Katti (MBA 09). While in Bangalore, Dr. Dekrey will also meet with AIM Board of Governor and Infosys founder Dr. Narayana Murthy and Ashok Soota (MBM 73), founder of Happiest Minds Technologies.


AIM NEWS

AIM HONORS FIRST VIC LIM AWARDEE Prof. Escobido was recognized for his passion of inspiring faculty and students as well as continuing the legacy of Prof. Lim’s belief in the thoughtful, instructional excellence at AIM. Family, friends, and AIM faculty gathered to celebrate the achievements of Prof. Escobido as well as remember the extraordinary founder of the award, Prof. Lim. Prof. Lim founded the award nearly a decade ago to call attention to the talents of extraordinary AIM teachers. He believed that an excellent teacher expands theoretical horizons and expounds on the implications of an academic subject beyond the classroom. This connection opens endless possibilities for the AIM graduate.

M

atthew George O. Escobido, core faculty at the Asian Institute of Management, became the first ever recipient of the Professor Vic Lim Award for Professorial Excellence in a ceremony held at the Fuller Hall, November 19.

Renowned Filipino sculpture artist Ramon Orlina designed the Prof Vic Lim Award trophy. It was Prof. Lim, then president of Republic Glass Corporation, who urged Orlina to venture into glass sculpting. Like the extraordinary teacher that he was, Prof. Lim helped unleash the talents of a gifted artist like Orlina. The Prof. Vic Lim Award trophy will have a prominent place and a permanent home at the Lopez Gallery of AIM. An awardee’s name will be added to the trophy’s base every time AIM recognizes professorial excellence.

(L-R) Mr. Raul Victor de Guzman (MBA 2008, First Vice President), Mr. Aristotle Cruz (CSBM 2008, Vice President), Ms. Yvonne Marcelo (CSBM 2008, First Vice President), Ms. Belen Lim (Senior Vice President), Mr. Rafael Algarra, Jr. (MBM 1993, Executive Vice President), Dr. Steven J. DeKrey (AIM President), Ms. Mae Villanueva (MBM 2000, Vice President), Mr. Andre Ibarra (MBM 2000, First Vice President), Mr. Chester Samaniego (MBA 2006, Senior Manager), and Mr. Miguel Javier (EMBA student).

SECURITY BANK DONATES 8M TO RENOVATE CASE ROOM The deal is sealed. Asian Institute of Management President Steven J. DeKrey, Ph.D. and Security Bank Executive Vice President Rafael Algarra, Jr. signed the memorandum of agreement for the PhP 8 million renovation and maintenance of the Security Bank Caseroom at the AIM Conference Center-Manila. The MOA signing was held at the Lopez Gallery, November 6.

SBC Senior Vice President Belen C. Lim, as well as Security Bank executives who are also AIM alumni, attended the event. Designs for the interior and exterior are now being finalized, as target schedule for construction work is from December 2014 to mid-January 2015. To launch the newly renovated caseroom, Dr. DeKrey will deliver a master class on leadership to SBC executives and preferred clients.

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CLASS NOTES Alfonso S. Estolan, Sr, BMP DepEd 2009, writes: “As an AIM alumni I am proud to say

that after our DepEd Scholarship in AIM, I took the EMT Test in 2010 and I was one of the nineteen passers out of almost 900 and was the lone passer from the Cordillera Administrative Region (CAR). I also took and passed the CES WE back in December, 2012. I was assigned as OIC ASDS of DepEd Kalinga last February 19, 2014”.

Anthony Liobet, MDP DepEd 2009, writes: “I am now a full-pledge Assistant Schools Division Superintendent. Thank you AIM for the KSAs and the very enriching education.”

Rodolfo Azanza, Jr., BMP 2013, shares:

“I completed the Basic Mgt. Program on August 30 2013. Back then I was Country Representative of a Norwegian commercial investor in the Phil. power sector. I worked there for more than 9 years. Upon completing my BMP in AIM, I felt ready to take on a top executive post. And in June this year, less than a year after my BMP, I was signed up as President/Managing Director of Norconsult Philippines, a 100% subsidiary of Norconsult AS of Norway, a global multi-disciplinary design and engineering consulting company and the largest in Scandinavia. Norconsult Phils. was registered with SEC way back in 1998. What had been very helpful to me apart from the basic management techniques are the things I learned in accounting (being a non-accountant) and in negotiations. The timeless insights of Prof. Jun Bernardo are gemstones and have also helped me a lot in my first 150 days. I had been able to manage structural/policy and behavioral change by applying the principles I learned from him. I hope that more people will enroll in AIM’s BMP classes as it is indeed a very compact way of learning the ropes as top executive.

Sudeshna Pan, MBA 2006, writes: “I

would like to share that I have completed my Ph.D. in Health Economics and Management from University of Tun Abdul Razak, Malaysia (AACSB and EFMD accredited GSB). The Title of my thesis is: An Empirical Investigation on the Impact of External Environments on the Innovation and Competitiveness in the Pharmaceutical Industry.

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Kamran Rashid Siddiqi, MBM 1981, writes “It is now a little over 33 years that I graduated from AIM. Since leaving the institute, I have worked in seven countries in three continents. I am now based in Dubai and covers CEMEA, one of four geographic regions of Visa Inc. AIM has been a tremendous help in my professional life. The education, professionalism and work ethics that were instilled in those two years continues to be the engine that powered my professional life. I remember well and deeply admire the towering personalities of the time: Gaby Mendoza, Mel Salazar, and so many others. What I remember most fondly is the great camaraderie amongst the students. We were all close friends who supported each other completely in our professional and personal lives. I got to see the best of the Filipino warmth of heart and joie de vivre. It was wonderful to be in Manila in those days and the friendships we had. All in all, my time at AIM was one of the most rewarding parts of my life. With all sincerity my deep gratitude to teachers, support staff, and classmates.

Maria Theresa Villanueva Martinez, MBM 1994, is returning to the Philippines after spending 20 years

overseas. She is now the General Manager for Roche Philippines.

Virgilio Espeleta, MBM 1991, is now a member of the adjunct faculty of the Asian Institute of Management. Espeleta will be teaching modules in Entrepreneurship and FAMCOR in various non-degree programs of the institute.


Michelle Boquiren, MBM 2000, joined

Amundi Distributors USA, LLC last September 4 2014 as head of US Fund Distribution. Ms. Boquiren is responsible for maintaining and deepening Amundi Distributors’ relationships with U.S.-based distributors and global distributors headquartered in the U.S.; managing existing and developing new partner relationships; and developing new fund solutions for investors. Ms. Boquiren will report to Stephen A. Eason, CFA, Chief Executive Officer and work primarily from Amundi Distributors’ offices in New York, New York. Amundi is the number one ranked asset management firm in Europe and one of the top 10 largest in the world with $1.1 trillion in assets.

Antonio c Acupan Jr., MM91,

was conferred as ASEAN Engineer by the ASEAN Federation of Engineering Organization in CAFEO 31 in Jakarta Indonesia last November 10, 2013. Acupan was also conferred as APEC Engineer specialist in Structural Engineering and Construction Management & Engineering by the Professional Regulation Commission, Commission on Higher Education and Philippine Technological Council thru a resolution that was approved last September 4, 2014.

Eka Wartana, MDP 1994, writes: “Our

class MDP ’94 have been taught by very capable Professors, like Prof. Anthonio “Tony” Perez, Prof. Victoria “Vicky” S. Licuanan and the others. We have a very nice friends in our group from various countries: The Philippines, Indonesia, Malaysia, Singapore, and Thailand. I have learned so many valuable knowledge from AIM that helped me develop my professional career. Thanks to AIM, thank you to our Professors and to our friends in 43rd MDP Group. One sweet memory from AIM is when I was the only one who got 3 Awards out of possible 4, which are: Superior Performance, Business Management Game (Top Performer), and Best Kaizen Project. It was the teaching result of AIM great Professors.”

Joel P. Guillermo, ME 2002, writes: “I am a graduate of Master in Entrepreneurship batch 2002. What I reminisce much about AIM is our CAN group discussions, weekend bonding with classmates and professors. Likewise, when we were chosen as Exchange Students in Japan thru AOTS (Association of Overseas Technical Scholars). “Many applied, but few were chosen”. We learned a lot from the way the Japanese practices KAIZEN and JIT. My education and learnings at AIM has helped me Explore, Experiment, Enhance, Expand and Earn more from the businesses that I founded after my graduation. Likewise, as an AIM Graduate, I get a lot of respect and admiration as a leader in professional organizations like PICPA, socio-civic organizations like Rotary, PCCI, YMCA and other non-government organizations.”

Amalor Pavanathan, MDM 1999, was appointed

by the Government of India as Deputy Managing Director on the Board of National Bank for Agriculture and Rural Development (NABARD). NABARD is the largest Development Bank in the region with a balance sheet size of about US $43 billion.

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AIM Leader December 2014 Issue