The CNN effect
But there is a window of opportunity, and it should be taken seriously
The Philippines Development Forum wasn’t the only important meeting taking place in Cebu last week, or the only international gathering attended by President Gloria Macapagal-Arroyo and Secretary of Finance Margarito Teves. As the international donor community gathered at the sparkling new Marco Polo Hotel (formerly Cebu Plaza) in Cebu City, across town approximately 60 top Asian stock brokers were meeting at the magnificent Shangri-La’s Mactan Island Resort for another conference.
Both meetings involved investment in the Philippines. The international donor community is composed of multilateral lending institutions such as the World Bank and the Asian Development Bank, as well as their member countries that support Philippine development through the provision of various aid programs and low-interest loans for the development of infrastructure.
The stock brokers, on the other hand, help local and international private-sector investors place investments in equities markets, providing capital for growing enterprises. The meeting was hosted by the chairman of the Philippine Association of Securities Brokers and Dealers (PASBDI), Vivian Yuchengco. Ms. Yuchengco is also a governor of the Philippine Stock Exchange and the managing director of The First Resources Management and Securities Corporation. The meeting was the 12th annual conference of the Asian Securities Forum, an association of broker associations in Asia.
Representatives of associations in Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Philippines, Taiwan, and Vietnam attended the conference, briefed delegates on market conditions in the region, and discussed financial innovations and new client mixes in their respective markets, individual association efforts to attract a fair share of global equity flowing into Asia, and market reforms meant to ameliorate risk and enhance transparency.
Bloomberg columnist and financial journalist William Pesek was among the invited speakers. Pesek is an influential voice among investors in Asia, and his commentary appears in both international media and domestic Asian publications. He is also seen regularly on Bloomberg Television. Admittedly controversial in many of his perspectives, Pesek acknowledges a high volume of critical e-mail – he calls it hate mail – from government officials, businessmen, and investors who disagree with him. (Note: Journalists and commentators actually relish negative feedback because it demonstrates their influence on readers.)
He was not particularly controversial in his comments in Cebu, however. “Asia is clearly rising and that bodes well for the region’s markets,” he said, forecasting continued growth in equities investment. Pesek believes that economic development in both China and India is a positive force for Asia, increasing interest in the region among highly liquid investors looking for opportunity in Asia’s developing markets.
For the Philippines, Pesek sees both challenge and opportunity. “The CNN Effect still dogs the economy,” he told delegates. By CNN Effect, Pesek is referring to the many negative reports in international media pertaining to the Philippines. Although Pesek visits the Philippines regularly, as a result of those negative reports he says that family, friends, and colleagues are genuinely concerned whenever he announces plans to be here.
Negative perception of their country also bothered the Philippine delegation. During the open forum following Pesek’s remarks, Ms. Yuchengco asked him, “Why does the Philippines always get negative press?” Pesek’s response was, “There’s a PR problem,” suggesting as many others have before him that the Philippines needs to manage perceptions of the country better than it does. But he acknowledges that the problem doesn’t lie solely with the Philippines.
“Media is also to blame,” he said, for not looking deeper into the reality of the Philippines. Still, Pesek admitted to some common frustrations. “There is so much potential in the Philippines. Looking at where it was (after World War II) and now really irritates me. This nation needs an aggressive leader that will shake things up” so that its potential is finally achieved, he said.
Pesek warned also that “the Philippines has a window of opportunity here (to improve external perception), and must use it by reducing debt, improving infrastructure, preparing the growing population for the information age, and addressing the brain drain.” He is concerned about over-reliance on remittances from overseas workers, calling it “an addiction that will cause long-term problems.”
But Pesek is mostly upbeat. He suggests that Asia and the Philippines should be more concerned with quality of growth than rate of growth; that the rest of Asia needs to figure out its relationship to China, and how development can be complementary; that the region meaningfully addresses environmental issues that threaten growth; and finally, that countries “get along.”
That was an interesting statement to make in a room full of delegates representing economic rivals China, Japan, and Korea, particularly. But their presence in the room demonstrated very clearly that cooperation and networking also bode well for Asia.