AIM Leader June 2015 Issue by AIM Alumni Publication

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June 2015 Issue

ASEAN Insights

The Future of E-commerce in ASEAN

AIM Reports

Technology facilitates tourism and buyer behavior in the Philippines Revolutionizing Revolutions

Cover Story

Digital Planet: Readying for the Rise of the E-consumer AIM Hosts a Fireside Chat on the Rise of the ASEAN E-Consumer Q & A with Ravi on the Digital Evolution Index (DEI) in the ASEAN Context

AIM Reports

Philippine Competitiveness Update

AIM News

Leadership in the Digital Age

Alumni News Japan-The Great Balancing Act Homecoming 2015 Eat. Engage. Enjoy Tee Off

Class Notes Cover design composed from original elements along with royalty-free images from http://www.freeimages.com and flag icons from http://www.freeflagicons.com/

AIMLEADER

EDITORIAL TEAM Bernardino Jiao EDITOR-IN-CHIEF

Maritess Aniago-Espiritu Annaliza Alegre Robert Untalan

ALUMNI RELATIONS OFFICE STAFF

Prof. Matthew Escobido Prof. Ronald Mendoza John Paolo Rivera Tristan Canare Monica Melchor Jessica Manipon Carmela Sioco Nina Cerissa Soliman

Aina Regina Lim Maria Raizza Bello Mary Lou Cunanan Anika de Leon Melay Jimenez AIM ASEAN 2015 Project Marlon Glenn Guinto Bernie Jiao

CONTRIBUTORS

Romeo Catap, Jr.

DESIGN AND ART DIRECTION

Lexmedia Digital PRINTING

EDITORIAL ADVISORY BOARD Dr. Steven DeKrey

PRESIDENT OF THE INSTITUTE

Dr. Jikyeong Kang DEAN OF THE INSTITUTE

Dr. Haji Zulkifly Baharom CHAIRMAN, FEDERATION OF AIM ALUMNI ASSOCIATIONS, INC.

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://www.myaimconnect.com and http://issuu.com/aimleadermagazine. Copyright 2015, 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

MESSAGE from the PRESIDENT Dr. Steven J. DeKrey

e live in a digitally connected world. In our region, especially, this digital revolution is most felt – from social networking to online shopping, ASEAN has become a hotbed of digital adoption. This bodes very well for the coming ASEAN integration. With the slogan “We’re stronger when we’re connected,” the region’s leaders have put in place an ASEAN ICT Masterplan to boost connectivity within the region. Once the ASEAN Economic Community ushers in a common marketplace and production base, a digitally connected ASEAN will be a force to be reckoned with. To put more perspective into the digitalization of ASEAN, AIM hosted a Fireside Chat last May. The interactive event featured Ravi Chaturvedi, MBM 2001, co-author of Digital Planet: Readying for the Rise of the E-Consumer. Produced by The Institute for Business in the Global Context at The Fletcher School of Law and Diplomacy at Tufts University, this breakthrough research gave rise to the Digital Evolution Index (DEI). The study measures the digital trajectories of 50 different countries around the world, highlighting the Philippines as among the top adopters. The DEI gauges the countries’ readiness for a digital economy and is derived from four main drivers: supply-side, demand-side, innovations and institutions. Based on their DEI scores, ASEAN countries are poised to “break out” and develop strong digital economies. This is hardly surprising. With a population of over 630 million, a substantial working age population, and an ICT masterplan in place, an integrated ASEAN has the capability to achieve digital Nirvana. Read more about the DEI, including a Q&A with Ravi on its implications for One ASEAN in our cover story. March 6, 2015, meanwhile, ushered in the summer for AIM when MBM 1995 hosted the 2015 Grand Alumni Homecoming with a beach-themed party. Led by Homecoming Chairman Marlon Glenn Guinto, MBM ‘95 creatively transformed the parking lot into a huge beachfront, complete with hula dancers and band. Alumni were greeted with colorful leis upon arrival and many came in their stylish beach attires. The run-up to Homecoming Night included a stage play, a movie premier, and even professional basketball games featuring the most popular PBA teams in the country. The celebrating batches of 1970, 1975, 1980, 1985, 1990, 1995, 2000, 2005 and 2010 made sure all events were well-attended and helped build the hype for the Grand Alumni Homecoming Night. The pioneering MBM ‘70 members, led by class president Rene Sunico, went out of their way to organize a successful and fun-filled Homecoming Golf Tournament at the Orchard Golf and Country Club. I certainly look forward to next year’s celebrations. Special thanks to MBM ‘95 for their notable donation of an MBA scholarship plus two commissioned artworks, and to MBM ‘70 for their additional donation to the MBM ’70 I.B. Jimenez Securities, Inc. & L.B. Padilla Professorial Chair in Entrepreneurship which, incidentally, their batch also established 20 years ago. I am also pleased to announce that we now have a new alumni lounge on campus. Located within the Alumni Relations Office, the new alumni lounge provides a comfortable and relaxing ambience for alumni to enjoy when they visit. Stay tuned for announcements regarding several alumni events we are planning to hold in the new lounge. Visit AIM soon so you can reconnect with former professors and friends. We can help you organize batch reunions to catch up with batchmates and reminisce about your student days. Cheers,

Steve President

ASEAN

IN SIG HTS

By the AIM ASEAN 2015 Project

Image composed from Royalty-free images from freeimages.com

here has been a rise in e-commerce usage globally. For one, China, one of the fastest growing e-commerce economies, has already emerged with two of the largest internet companies: Alibaba and Tencent. The ASEAN region, boasting with 620 million people, a 400 million strong middle class by 2020, 688 million mobile devices, 200 million internet users and US$$2.4 trillion GDP, has everything it takes to grow its digital economy.

Still, it is predicted that it will take some time before e-commerce hits this kind of level in ASEAN. Specifically in ASEAN 61, e-commerce accounts for less than 1 percent of global online retail or US$7 billion. This largely pales in comparison when the United States, EUâ&#x20AC;&#x2122;s five largest economies (Germany, France, Italy, Spain and UK), China and Japan are taken together to account for 76 percent of global e-commerce.

Figure 1. Global E-commerce Market Size

Source: AT Kearny & CIMB Research Institute. (2015). Lifting the Barriers to E-commerce in ASEAN. 1 Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam

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ASEAN INSIGHTS THE FUTURE OF E-COMMERCE IN ASEAN continued from page 5

While e-commerce is still at its infancy, it already suggests a strong market potential for the region through purchasing power increases, spread of internet penetration, and improvement of online offerings. ASEAN is home to roughly 9% of the world’s population, 7% of the world’s internet users, and 10% of the world’s mobile subscriptions. With the realization of the ASEAN Economic Community by end of this year, ASEAN promises to create a more conducive field for e-commerce businesses that are approaching this extremely diverse and challenging landscape. According to AT Kearney, the evolving online space and the myriad of opportunities for e-commerce adoption have nonetheless started to foster in the region, growing roughly 15 percent annually, almost three times faster than GDP. Singapore has less than three quarters of its population presently connected to the internet, one of the highest in the region. In Thailand, the Philippines, Vietnam, Singapore, and Malaysia, the rate of internet users who shop online ranges from 60 to 80 percent, rivaling levels found in Japan (78%) and the US (73%). Simply put, its young, digitally adept, and dynamic population is getting more intimately connected to the web against the backdrop of growing economy and bolstering infrastructure demand.

Figure 2. Key Facts about online users and shoppers in ASEAN6

Source: AT Kearny & CIMB Research Institute. (2015). Lifting the Barriers to E-commerce in ASEAN.

From these numbers, the ASEAN e-consumer shows a strong affinity for digital hardware and media usage. But catering to diversely multilingual, multicultural consumers in ASEAN proves to be a major challenge, especially for B2C e-commerce. When dealt critically well, this translates to opportunities for capturing the increasing disposable income of young, urban shoppers, albeit the strong prevalence of the shopping mall culture. Trends in ASEAN e-commerce The ASEAN e-commerce market is emerging into a formidable entity of its own, attracting big technology players into this dynamic marketplace. Advances in data gathering and storage allow retailers to capture every single item, event, and transaction in the supply chain which allows them to build direct relationships with customers and create supply chains driven by granular demand and supply data to reduced inventory and improve service. Wireless networks have also grown enormously in capacity, speed and the number of users and they can now connect to a multitude of devices. Enter M-Commerce M-commerce or Mobile-Commerce is one of the biggest influencers of the global growth of e-commerce. According to the Economist, if ASEAN were a single country it would be the third largest country in terms of mobile phone subscriptions. This is expected to increase, complemented by its high social media usage rates home to the 2nd largest facebook users in the world. While desktop computers remain the primary device to buy online, mobile phones are becoming more popular for online shopping in ASEAN (57%) than across the globe (44%). This is especially true in countries where broadband is not fully developed yet, such as in Indonesia, Philippines, Thailand and Vietnam; hence consumers resort to mobile phones instead. A number of e-commerce sites have already shifted their attention to m-commerce including Rocket Internet’s Lazada and Zalora. As customers opt to interact with their favorite brands and suppliers, organizations that are more “customer-friendly”, regardless of whether they operate B2B or B2C are more likely to survive. Retailers planning to move more assertively into the region should also prioritize improving mobile access and enhancing the ability to track mobile traffic.

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ASEAN INSIGHTS

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Figure 3. Percentage of online shoppers using mobile to buy

Commerce for SME Development B2B e-commerce is often grossly understated in any market and ASEAN is likely to be no exception. There are many businesses successfully operating in the B2B e-commerce space today that have little or no visibility to consumers at large. Many of the world’s biggest multinationals are presently investing heavily in the region to develop their e-commerce capabilities and these B2B companies are making significant inroads by heavily investing in the region and seriously upgrading their e-commerce capabilities. For the small businesses, this means a critical channel for tapping the global marketplace.

Source: AT Kearny & CIMB Research Institute. (2015). Lifting the Barriers to E-commerce in ASEAN.

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ASEAN INSIGHTS THE FUTURE OF E-COMMERCE IN ASEAN continued from page 7

SMEs in particular have always been struggling with labor-intensive processes of running a business that have an adverse effect on their efficiency, productivity and organizational growth. With B2B e-commerce, SMEs are able to benefit tremendously from reduced usage of time and resources through transactions that can be done online. B2B e-commerce allows SMEs to streamline their warehouse, call center and other functions that have the potential to become choke points in the company’s efforts to achieve their targeted growth objectives.

Figure 4. Internet Speed and Costs

Challenges • Physical Connectivity Relatively weak physical infrastructure and distribution networks in some Southeast Asian countries have rendered quite a fragmented e-commerce market which could toll on the growth prospects of the industry. While B2C and B2B e-commerce are heavily virtual transactions, timely delivery of physical goods will highly depend on efficient transportation system methods. • Online Connectivity Online connectivity in ASEAN countries remains relatively low. In Vietnam, the Philippines, Thailand, and Indonesia, less than half of the population uses the internet; only Singapore has comparable access to fixed broadband as markets such as the United States. With regards to speed, recent estimates show that the Philippines also has the slowest internet speed in the region. In terms of mobile broadband, less than half the population in the Philippines, Indonesia and Vietnam has access; Singapore again is the only country with access comparable to mature economies. • E-payments and the risks of Cyberattacks Even as e-commerce spreads across ASEAN, the vast majority of payments for online retail today are still made offline. A large share of unbanked is one of the underlying causes for this low penetration rates. Singapore, Thailand and Malaysia have two-thirds of its adults with bank accounts while 70 to 80 percent

Source: AT Kearny & CIMB Research Institute. (2015). Lifting the Barriers to E-commerce in ASEAN.

of citizens in Philippines, Vietnam and Indonesia are unbanked. Credit card penetration is even lower, ranging from 37 percent in Singapore to under 1 percent in Indonesia in 2011. Increasing e-payment penetration is crucial for retail e-commerce growth as it is less costly and risky for merchants than offline payment methods. Within the ASEAN 6 countries other than Singapore, online shoppers are more reluctant to give their credit card information than the global average. Eight of the 10 countries most threatened by cyber attacks are in Asia including Indonesia, Thailand, Philippines and Malaysia, with Indonesia even overtaking China as a greater source of cyber-attack traffic. While ASEAN countries have developed and enforced numerous laws on general regulations on e-commerce data protection and electronic transactions, there has been little ASEAN-wide sharing of best practices on cyber security nor has there been broader harmonization of legislative frameworks. Cooperation in this respect will advance smoother and consistent legislation processes that support growth of digital economies.

Figure 5. Online shoppers using online payments

Source: AT Kearny & CIMB Research Institute. (2015). Lifting the Barriers to E-commerce in ASEAN.

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ASEAN INSIGHTS

Indeed, this is a critical period of growth and infrastructure development for e-commerce in ASEAN as organizations take advantage of various opportunities, break through logistical challenges, localize to compete, and innovate to cater to these distinct yet similar markets.

Ways Forward

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ASEAN has been consciously laying the groundwork for regional cooperation in the information and communications technology sector which dates back to 1999 with the e-ASEAN initiative. In 2013, the ICT ASEAN Master Plan 2015, the regional framework for digital strategy, has recorded two-thirds of its actions already achieved and successfully implemented in various fields. Other initiatives such as the ASEAN Broadband corridor focuses on the development of next generation infrastructure, ensuring minimum standards, and strong broadband quality across the region. Indeed, this is a critical period of growth and infrastructure development for e-commerce in ASEAN as organizations take advantage of various opportunities, break through logistical challenges, localize to compete, and innovate to cater to these distinct yet similar markets. According to Accenture, changing patterns of online consumer behavior could be driven by internet access affordability, mobile device upgrade, the hunger for the best digital experiences, and the ASEAN governments’ push for ICT development agendas. While many of the businesses have built up a highly profitable traditional “brick-and-mortar” business, technology has its way of creeping into the core strategic considerations of businesses in order to remain competitive in a growing digital economy.

AIM REPORTS

John Paolo R. Rivera Dr. Andrew L. Tan Center for Tourism Asian Institute of Management

Image composed from Royalty-free images from freeimages.com

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AIM REPORTS

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“It is not enough that the travel and tourism industry provide data for browsing, the tourism industry needs to identify the gap in terms of tourism-related products and services.” – Mr. Galex Cabrera, TNS Global

The role of rapid information technology adoption The significance of technology in tourism has rapidly amplified. With the advancements in Internet usage and mobile platforms, the travel and tourism (T&T) industry has been compelled to orient its marketing strategies to incorporate the realities of contemporary times – availability, interactivity, and search capabilities (Nath & Menon, n.d.). As emphasized during the ad:tech Roadshow Manila 2015, “digital has been an essential part of the marketing mix and will gow in importance more so over the years. New technologies are constantly emerging and treds moving so quickly. All eyes are on Asia as opportunities in the developing markets continue to grow.” Furthermore, innovation and technological change have occupied a spot in the global tourism dialogue. Both have become essential in enhancing T&T business, destination competitiveness, and overall tourist experience (Blanco, 2011). As such, T&T stakeholders must be responsive to the progression

of technologies, the surfacing of pioneering advertising schemes, the changes in consumer preferences, and the stiff competition brought about by globalization. According to Sakulsureeyadej (2011), the evolution of mobile technology enables tourists to be capable in employing mobile devices when they design travel plans. An rapidly increasing number of travelers survey the Internet prior to making any travel decisions (Tengco, 2014). According to Umali (2014), there was a 75 percent increase in Philippine annual travel booking from 2007 to 2012. Hence, it is important for the tourism industry to enhance existing practices to respond to the changing consumer behavior. As new and more advanced mobile applications penetrate the local market, prices and technology will certainly be the machineries that will shape the architecture of T&T. In complementation with social media, we can expect a much bigger and complex market in which enterprises are able to supply services together (Blanco, 2011). This article will feature the emerging trends in digital technology influencing T&T as it generates opportunities for the industry’s growth and development. As per Blanco (2011), “we have no other choice but to understand and manage change.” That is, stakeholders need to address the issues confronting the industry and create effective strategies to move T&T forward through the use of digital technology. Emerging trends in digital travel The Taylor Nelson Sofres (TNS) Global Market Research Philippines conducted a study in 2010 on the digital life of Filipinos. According to TNS, the T&T industry has to maximize the opportunities the Internet offers (Cabrera, 2014). Since travel is a highly research-based activity, it is vital to reinforce interest on travel through mobile technology. Findings revealed the following: • There is a high propensity to purchase mobile phones compared to other devices. The relatively low cost of mobile phones and Short Message Service (SMS) plans compared to a computer and a broadband connection has made texting extremely popular, surpassing face-to-face conversation and e-mail (Cabrera, 2014). As such, the country has been dubbed as the “text messaging capital of the world” (Dimacali, 2010). next page, please

A I M R E P O R T S TECHNOLOGY FACILITATES TOURISM AND BUYER BEHAVIOR continued from page 11

• Mobile phones connect anyone, anywhere in the world. In Metro Manila, accessing the Internet is largely the domain of desktop computers, but mobile Internet usage is slowly encroaching, growing from 22 to 25 percent share (Cabrera, 2014). As an emerging trend, consumers prefer to browse over their mobile devices. In supplement, the Nielsen Southeast Asia Digital Consumer Report, as cited by Tonson (2011), “noted that a growing number of Southeast Asian consumers go online via Internet-capable mobile devices.” This increased preference of consumers increased the demand for smartphones and tablet computers. As such, in a survey conducted among ASEAN Member States (AMS) – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam, “four of the six AMS showed that ownership of an Internet-capable mobile device was shown to be equal to or greater than ownership of a desktop computer” (Tonson, 2011). Given the 100 million Filipinos, according to the Internet World Statistics and Montenegro (2014), 38 million are Internet users (the fastest internet population in the world); and the survey results showed that ownership of an Internet-capable mobile phone is at 64 percent, ownership of a desktop computer is at 68 percent; both of which have surpassed that of ownership of a laptop computer at 58 percent. Other pertinent information about Filipino mobile device users, subscriber identity mobile (SIM) penetration rate is 111 percent; mobile phone penetration rate is 80 percent; Internet penetration rate is 35 percent. Women browse 14.6 hours per month while males browse approximately 17 hours, bringing the average browsing usage to 16.4 percent (Umali, 2014).

Furthermore, as reported by Tonson (2011), Nielsen also determined the mobile internet penetration of AMS wherein Indonesia topped the list with 48 percent, followed by Thailand with 36 percent, Singapore with 35 percent, Viet Nam with 29 percent, and Malaysia with 21 percent. Therefore, according to Tonson (2011), the “increasing ownership of connected devices such as smartphones and tablets are revolutionizing digital media usage in Southeast Asia, with Internet usage in some markets surpassing time spent on traditional media such as television, radio or print.” With these developments, opportunities for engagement become high. Users prefer more interesting platforms such as tourism games and booking applications (“apps”). Receiving unadorned tourism offers and information via mobile Internet is not engaging enough (Cabrera, 2014). Social networking sites (Exhibit 1) and online photo sharing emerged as the preferred information source of consumers. According to TNS, 23 percent of mobile users access the Internet on a daily basis for social networking. This can further increase to 35 percent if the Internet is accessible through mobile phones. Moreover, 80 percent of Filipinos download at least one mobile app per month (Umali, 2014). Global Positioning Systems (GPS) is another emerging technology that can support the promotion of tourism (Cabrera, 2014; Umali, 2014). Technology-facilitated travel has grown in sophistication using Google maps’ “street view” applications (Umali, 2014). Moreover, location-based technology has a huge potential in retail applications and tour-related services. Furthermore, the App Economy becomes the new medium of consumer digital technology. For instance, SMART Communications has developed the APPVantage, which produces useful apps (Exhibit 2). The same

Exhibit 1. Social Networking drill down - Metro Manila

Source: Cabrera (2014) Note: For the complete study, refer to http://2010.tnsdigitallife.com/

AIM REPORTS Exhibit 2. SMART Communication’s APPVantage and Travel Applications

Source: Umali (2014).

platform was responsible for developing the pass-aload app in 2002. The development of digital tourism apps enables a traveler to be familiar with new places. For example, the Discover Iloilo app provides users with information on hotels and tourist-destination sites. Another example is the Baguio Guide app that has a Q-R code allowing users to get information on a particular location. Finally, Visita Iglesia allows you to preview historical sites and churches. Role of technology in the T&T industry The government plays a critical role in enhancing digital developments. In 2012, Dentsu Philippines, Inc. assisted the Department of Tourism (DOT) in creating customized solutions for identified target markets. According to Tengco (2014), there are five elements that play a vital role in travelling (Exhibit 3) – dreaming, planning, booking, experiencing and sharing. Other factors considered were: reaching the audience, creating good content, and applying engaging multimedia channels. However, a prerequisite to this is an understanding of how travelers plan – involves researching for upcoming trips, searching for travel articles, online videos, reviewing of travel bloggers, and comparing hotel prices and reviews. To mobilize the campaign, the strategy was divided into two phases as illustrated in Exhibit 4:

Exhibit 3: The Five Stages of Travel

• Phase 1: No banner advertisements. Under the “Philippine Week” campaign, online materials about the Philippines were translated into different languages. Also, the background of the log-in page of Yahoo! Mail showcased information about the Philippines. • Phase 2: Creating FUN-bassadors. A contest was held wherein participants showcased how fun it is to travel in the Philippines. These FUN-bassadors generated 285 million impressions alone on Yahoo!. next page, please

Exhibit 4: Philippine Week Campaign and FUN-bassadors

Source: Tengco (2014).

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“The Internet is an important medium in the travel and tourism cycle. It is not enough to have access to the network, but it is also important to have credible and beautiful content.” – Mr. Jason Tengco, Dentsu Philippines, Inc.

Source: Tengco (2014).

A I M R E P O R T S TECHNOLOGY FACILITATES TOURISM AND BUYER BEHAVIOR continued from page 13

The implications of these digital trends Given these trends, it is imperative to inquire about the complementary infrastructure. According to Ibrahim (2014), in terms of infrastructure building, the private sector is the major player and the government is the regulator. As the regulatory body, the government needs to establish the appropriate and creative policies to connect everyone. However, it is important that the regulatory agencies are dynamic in disseminating information. The Department of Transportation and Communication (DOTC) and the National Telecommunications Commission (NTC) must be empowered for stringent enforcement. Implementing a “national data policy” can help mitigate fraud (Ibrahim, 2014). According to Ibrahim (2014), this would boost consumer confidence, thus increasing e-commerce in the country. On the other hand, according to Tianco (2014), with the Cybercrime Prevention Act of 2012 being enforced, cognizance between market, government, and infrastructure is needed. Similarly, the government needs to create an environment where local firms can effectively compete with global firms (Tianco, 2014). For instance, Pinoy Travel, an online facility for booking bus tickets, made it easier to travel to distant provinces. Meanwhile, Travelbook.ph is an online travel agency that combines online facilities and call center services. As a global brand, Expedia is slowly penetrating the Philippine market for online booking. Having an efficient electronic platform would generate these implications as per Nath and Menon (n.d.): • Simplifies intricate buying-payment process; • Assists in monitoring causal relationships between advertisements and buying patterns; • Facilitates efforts necessary for niche marketing and narrow casting; • Lowers barriers to entry into the tourism industry and amplify competition; and • Augments competitive capability of organizations to expand their enterprises. Despite wide access to the Internet, it is still inadequate. While smart gadgets have filled the gap, the government is crucial in providing accessible communication. According to Tengco (2014), the Internet penetration rate Umali (2014) mentioned is still relatively low. Although cost is decreasing, it is not yet at the stage where it can be readily available for everyone. Tengco (2014) noted that although the country is at par with international digital travel standards, word of mouth and brochures are still the primary sources of travel information. To increase reach, it is critical to

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“The Philippine government is no longer a player in creating technology infrastructure. It acts as a regulator for the industry in terms of creating policies related to technology.”

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– Mr. Monchito B. Ibrahim, DOST-ICTO

understand the market. Out of the 700 million global users, 27 million are in the Philippines relying on Yahoo! for information (Landicho, 2014). For the demand side, there is a need to advance the rate at which Filipinos embrace technological developments. Tianco (2014) of Travelbook.ph underscored that there is a reaction gap between consumers and technology. To address this, it is necessary to create an app that will allow people to effectively use new technology. Furthermore, Soriano (2014) of Pinoy Travel noted that the market players also pose problems. For example, bus companies have a limited understanding of the preferences and needs of Filipino travelers. Creating apps that are user-friendly can address the shortcomings mentioned. On the other hand, technology also needs to adapt to the culture of consumers. According to Tianco (2014), one way for technology to adapt faster than consumers is the creation of a gateway and open innovation. As per Umali (2014), firms may begin small, target specific leisure, determine small features that the consumers want, and utilize new features such as cloud infrastructure. Moving forward To remain competitive, the T&T industry is required to develop new products and services that are engaging. As per Avila (2011), continuous changes and different ways of doing business necessitates innovative strategies, processes, and promotional activities. The Internet and online marketing has become an integral part of travel planning. Undeniably, content is the key. Creating meaningful, consistent, and timely content is critical. The biggest challenge of the T&T m industry in adapting technology is the mismatch between suitable technology and consumer needs. turn to page page 31

AIM REPORTS

I By Matthew George O. Escobido

n 1896, Andres Bonifacio hurriedly met with select Katipuneros in Pugadlawin to decide what to do after learning that the Spanish government knew of their existence. With about a thousand men and women, Bonifacio led a group of revolutionaries who took out their cedulas, tore them, and cried “Mabuhay ang Pilipinas!”

This started the Philippine Revolution that gave birth to an independent nation two years later. Almost a century after, Manila Cardinal Jaime Sin went to Radio Veritas, a Roman Catholic AM radio station operating in Metro Manila, to call on the people to shield a small breakaway group of military men from Marcos’ retribution. Sin tried to rally his people after receiving information that the Marcos government was out to crush the military coup plotters, and he succeeded. Millions heeded the call and flocked to what is now a historic part of EDSA, a roadway that connects the Northern and Southern part of Metro Manila. It served as the turning point of an upheaval that started at the voting precincts on February 7 and ended with a peaceful revolution 20 days later. When it was all over, the country’s democracy was restored and Filipinos taught the world the concept of “People Power”. In 2001, the Philippine Senate voted not to open an envelope that could have implicated President Joseph “Erap” Estrada of the corruption charges he was then facing. This development irked a significant number of technology-savvy Filipinos who started a text brigade that carries the message, “GO 2 EDSA!”. Later, hundreds of thousands gathered again on EDSA to rail against corruption. It eventually deposed the president and Filipinos once again introduced to the world its first “e-revolution”. The speed at which the first e-revolution unraveled was startling—it took only four days from the collapse of the Senate impeachment to remove a sitting president. Though the first EDSA People Power ousted the dictator five days after the Cardinal’s broadcast, for many it was years in the making after the assassination of a prominent opposition figure in 1983. For the majority, it was weeks after the bold and apparent election irregularities committed by the Marcos regime.

For the Katipuneros who lived a century before us, their cry in Pugadlawin was largely muted by foreign conquistadors only to be fully heeded after a world war that took place almost 50 years later. Communications technology played a crucial role on how the revolutions evolved. When Bonifacio huddled with the other Katipuneros, he could only muster the people he was directly connected to. In contrast, Cardinal Sin’s radio broadcast reached millions more than his physical voice could. Text messages may not have the reach comparable to a radio broadcast, but they may be re-broadcasted. This explains why texting reached a lot of people during the time EDSA Dos was developing, especially because many were convinced that the message was worth passing on. Such is the allure and power of the new technologies. Whereas traditional media grapple with restrictive regulations and stringent policies, texts allow one to send unfiltered information without the traditional gatekeepers. Because it is digital and therefore may get easily modified, texts can be added or deleted depending on context. Variants such as “GO 2 EDSA WEAR BLACK 2 MOURN DEATH F DMOCRACY” or “LETS GO 2 EDSA! ASSEMBLY 11PM” summon not the whole crowd but one’s own clique. These experiences in Philippine revolutions show that when the formal institutions are not able to empower their people, technology can allow them to engage directly, and mobilize if needed. As technologies evolve and facilitate more of our activities, we can expect more political upheavals of this nature, especially when people find a cause worth fighting for. The Arab Spring and Hong Kong’s Umbrella Revolution, with their extensive use of Facebook and Twitter, are but examples of this development. And Filipinos can be proud of setting these examples because once again we were first in revolutionizing revolutions.

COVER STORY

Study Authors Bhaskar Chakravorti, Christopher Tunnard, and Ravi Shankar Chaturvedi The following is reprinted with permission from the Institute for Business in the Global Context at The Fletcher School of Law and Diplomacy at Tufts University.

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Source: The Digital Planet Report, The Fletcher School at Tufts University

COVER STORY The Internet has come of age. Twenty-one years since the marketplace first took notice, the World Wide Web today is at the heart of the global economy, channeling interactions for nearly 40% of the world’s population.1 It took the Internet 12 years to gather its first billion users, and a third of that time to amass its third billion.2 Meanwhile, the emerging world is leapfrogging towards mobile phones, opening more avenues to Internet adoption. Broadband subscriptions on mobile phones, now 34% of global mobile phone subscriptions, have tripled since 2008.3 The next billion Internet users, logging on in an era of near universal mobile connectivity, offer promise of greater economic growth and increased business opportunities. The next billion will be different. The current three billion started off primarily as Internet users, surfing and emailing, before they became consumers of digital marketplaces. The next billion, already mobile customers used to interacting and transacting – downloading ringtones, content etc., – in a mobile ecosystem on their feature phones, will start off not as mere users but rather as e-consumers: internet enabled mobile devices will vastly expand their access to downloadable content; buying and selling goods and services through a mobile phone is a logical next step. This has profound implications for the future of global commerce and digital marketplaces. Where the next billion e-consumers will come from, who they are, what they are like, and how they will shape the digital marketplaces of the future are questions of great importance to businesses and investors globally. The answers depend on how governments, businesses, and consumers co-evolve to face the challenges and opportunities of the digital future. The hype surrounding the IPO of Alibaba, growing investor interest in the potential of the Indian electronic shopping market, including local players such as Flipkart and international giants, such as Amazon, together with the fast growth of e-commerce companies across Asia, Latin America and subSaharan Africa – several enabled by the Rocket Internet platform -- are clear signals of this growing phenomenon. Understanding the many forces that drive digital evolution will help in designing regulatory policies, steering innovation and allocating resources. To measure the digital trajectories of countries and to provide actionable, data-informed insights for businesses, investors and policymakers, The Fletcher

School, in collaboration with MasterCard Worldwide and DataCash, created the Digital Evolution Index (DEI). The DEI analyzes the key underlying drivers and barriers that govern a country’s evolution into a digital economy: Demand, Supply, Institutional Environment and Innovation. A longitudinal analysis of these four drivers during the years 2008 to 2013 enables us to make sense of the evolving global digital landscape, reveal patterns and provide insights into both current consumers and those to come. The index and the corresponding analyses of the patterns reveal many broad conclusions – each of them has powerful managerial, investment and policy implications.

Where the next billion e-consumers will come from, who they are, what they are like, and how they will shape the digital marketplaces of the future are questions of great importance to businesses and investors globally. Insights, Patterns, and Surprises Each emerging e-commerce market will chart its own path… • Our research shows that there is very little about the digital past and present of the West that instructs us about the digital present and future of the Rest. • Momentum and direction over time are determined primarily by the interplay between demand and supply, institutional environments, and innovation within the country. While there isn’t one grand pattern, to the extent that the four drivers are correlated, the evolution follows a linear path; when not correlated, the trajectory is non linear, and more often a random walk. This is due to a system of underlying drivers, some that move quickly (e.g. the next page, please

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spread of mobile communications and consumer applications) while others that move very slowly (e.g. policy and regulations, infrastructure improvements) which can keep certain states of evolution locked-in for arbitrary periods and then unlocked due to a combination of factors that create enough leverage for change. • Catchy acronyms and “clubs” (BRICS, Fragile Five) that lump together disparate emerging economies - while ignoring their underlying drivers - confuse rather than clarify our understanding of digital trajectories. … but neighborhoods matter. • Countries in close geographic proximity seem to display similar trajectories, as seen among the Nordics, Central and Southern European states, and members of the ASEAN. • Shared cultural norms; a commonality in social, political, and economic environments; and demonstration effects could all play a role in the neighborhood effect, giving regional trade a boost. • Regional economic grouping and related harmonization of institutions and supply chains have had a positive impact on individual country scores over time, as seen in Poland, Estonia, and Malaysia. In some highly innovative emerging economies, hybrid solutions are fostering vibrant digital marketplaces … • Innovative hybrids combining two or more elements of the digital commerce value chain access, marketplaces, transaction, and delivery are springing up to bridge infrastructure gaps. • Cash on delivery where electronic payments are thin; tablet-toting vendors where access is patchy; and delivery personnel doubling up as sales persons to cross-sell or upsell are some of the strategies making household names of marketplaces such as Lamoda in Russia, Flipkart in India, Kaymu in Africa, and Lazada in South East Asia. … despite the strong adherence to cash. • A combination of fledgling infrastructure, low payment card penetration, cultural preferences, and distrust of electronic payments have entrenched cash into emerging digital commerce ecosystems.

• Cash on delivery for e-commerce transactions is the preferred and growing payment method in some of the fastest-moving economies in our index. Attractive demographics and underinvestment represent untapped potential... • Some of the countries that are ready to break out and on the cusp are also some of the world’s most populous nations, including China, India, Mexico, Indonesia, Brazil, and The Philippines. Since all our components that measure demand are calculated on a per capita basis to allow for comparability, the growing per capita demand score multiplied by the size of populations reveals immense demand potential. • The Philippines, Chile, Colombia, Thailand, and Indonesia are among the fastest-evolving economies, and yet have received relatively little investment in digital commerce ecosystems to date. ...which can be helped or hindered by embedded institutions. • Policy and regulatory environments that promote rather than restrict the digital economy are a competitive advantage: Chile, Malaysia, and Estonia are reaping the benefits of their forward-looking governments. • By contrast, the lack of effective institutions can stymie the growth potential of e-commerce in some of the biggest emerging economies, including China, India, and Brazil.

Evolving Digital Planet: Key Patterns Whether and how the other 60% will participate in the internet economy will depend on the evolving ecosystems around them. Using DEI data, the Trajectory Chart below illustrates how countries’ digital ecosystems have been faring. We arrayed countries’ current (2013) status on the vertical axis against the fiveyear rate of change of each country, positive or negative, on the horizontal axis. To classify the performance of countries, we divided the trajectory chart into four distinct evolution zones, each of which is described next.

TRAJECTORY CHART

COVER STORY

How to read the Trajectory Chart

Source: The Digital Planet Report, The Fletcher School at Tufts University next page, please

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Full Rankings (2013)

Change in Scores Over Time (2008-2013)

Countries ranked on total scores across four drivers of Demand, Supply, Institutional Environment, and Innovation in 2013.

Countries ranked on their change in total scores across four drivers of Demand, Supply, Institutional Environment, and Innovation from 2008 to 2013 .

Source: The Digital Planet Report, The Fletcher School at Tufts University

Emerging Implications

Digital ecosystems would benefit immensely from improvements in logistics and transportation infrastructure, deeper financial inclusion, and better conditions of internet access.

The Digital Evolution Index is a comparative framework built to enable pattern recognition into how internet technology is transforming marketplaces â&#x20AC;&#x201C; a developing area of the global economy whose effects are unfolding daily. Entrepreneurs, businesses, and investors would do well to act on the opportunities embedded in the patterns revealed by the DEI. Governments and policymakers keen to see their countries reap economic gains from digital evolution ought to benchmark against the best performers on the Index to create enabling environments for their ecosystems to thrive. Businesses will always seek out opportunities to fill gaps between supply and demand: they have the highest leverage and payoffs in the short run here. It is their ability to innovate and navigate

COVER STORY

institutional constraints – areas where their leverage is lower, and the payoffs distant – that will determine success in the long run. Our research reveals the following broad patterns – each with very specific implications for businesses across the e-commerce value chain, investors and policymakers: • The biggest opportunities in Watch Out and Break Out markets in the near to medium term lie in improving supply conditions. Digital ecosystems would benefit immensely from improvements in logistics and transportation infrastructure, deeper financial inclusion, and better conditions of internet access. Collaboration between proactive policymakers and the private sector could help fast track improvements in access, transactions, and fulfillment. • Break Out markets and those on the cusp such as South Africa, Mexico, Vietnam and Indonesia registered the highest gains in demand during 2008 - 2013 in spite of significant limitations in supply conditions. Eliminating supply bottlenecks would enable them to realize the full potential of advantageous demographic trends and robust consumer demand within these markets. • The large and attractive demographics of China and India will continue to draw investments into marketplaces. Intensifying competition among internet retailers, while beneficial to the consumer, would place increased pressure on already strained infrastructure. Hybrid solutions and short term fixes, designed by innovative entrepreneurs to overcome gaps in supply, risk permanence as these businesses become successful. There is a need for forward-looking policy making in both these markets to ensure that infrastructure conditions can keep up with demand. • The increasingly integrated ASEAN economies, with their similar trajectories and 600+ million consumers, are also compelling candidates for digital commerce investments. Yet despite their rapid evolution, the Break Out countries of Indonesia, Thailand, the Philippines have received relatively little private equity investment to date. ASEAN’s integration and tariff harmonization will

generate opportunities for the creation of regional marketplaces and delivery networks. • The Stall Out economies of Europe, including the Netherlands, Finland, Belgium and France, could jumpstart their recovery by taking advantage of increased regional integration, selling goods across national borders to the 500+ million consumers in the wider EU. • Stand Out markets offer a disproportionately high ROI in e-commerce. While their domestic markets are highly competitive, they are also poised to transform into regional hubs for e-commerce. They can do so by taking advantage of strong supply infrastructure and supportive institutional environments to absorb demand from their neighborhoods. Entrepôts such as Singapore, Hong Kong, and Dubai stand to gain the most by integrating more deeply with their neighbors. Each of these overarching findings have clear action implications for managers in retail, technology and intermediary businesses, as well as in logistics and in the relevant infrastructure and supply chain sectors. There are also implications for investors, particularly in private equity and venture capital as they make choices on which e-commerce players in which markets they should invest in. Finally, there are implications for public-private partnerships and coordination and broad public policy action.

Bhaskar Chakravorti is the Senior Associate Dean of International Business & Finance at The Fletcher School at Tufts University and founding Executive Director of Fletcher’s Institute for Business in the Global Context. He is the author of The Slow Pace of Fast Change. Christopher Tunnard is Professor of Practice in International Business at The Fletcher School at Tufts University.

Ravi Shankar Chaturvedi is Research Fellow at Fletcher’s Institute for Business in the Global Context at Tufts University.

AIM NEWS

AIM Hosts a Fireside Chat on the Rise of the ASEAN E-Consumer By Carmela Sioco

he AIM Basant and Sarala Professorial Chair on Asian Family Corporations co-hosted an intimate Fireside Chat on the Digital Evolution Index (DEI), a ranking of 50 countries and their migration towards a digital economy, last May 12.

Together with Amihan Global Strategies (AGSX), AIM spearheaded the first leg of the Digital Evolution and Transformation Series, which is comprised of events that tackle cutting-edge topics on innovation such as the global digital economy, big data, and enterprise transformation in the ASEAN environment. In the study, the Philippines is identified as one of the rapidly evolving countries in the world. “Digitization is changing humanity in fundamental ways,” said Ravi Shankar Chaturvedi, Research Fellow for Innovation and Change at the Institute for Business in the Global Context at the Fletcher School, Tufts University. Chaturvedi,

also an AIM alumnus, is among the co-authors of the DEI research that has been capturing the attention of business leaders, global investors, and governments worldwide. Experts who joined Chaturvedi in the discussion are panelists Earl Valencia, the President and Co-founder of IdeaSpace Foundation; Monchito Ibrahim, the Deputy Executive Director of the Department of Science and Technology – Information and Communications Technology (DOST-ICTO); and Jerry Rapes, Managing Director of AGSX. “The Digital Evolution Index charts the progression of countries’ digital past and present, and reveals patterns for the future,” shared Chaturvedi, “and

our research shows that there is very little about the digital past and present of the West that instructs us about the digital present and future of the rest.” In the chart presented by Chaturvedi, ASEAN states such as the Philippines, Vietnam, Indonesia, Malaysia, and Thailand fall under the “Break Out” countries, those that have the potential to develop strong digital economies in the coming years. Although the ASEAN states are showing progress, with it comes a challenge to nurture sophisticated domestic consumers and to improve supply infrastructure. Another hurdle for the region’s digital evolution is its heavy reliance on cash. While Singapore, the United States, Hong Kong, and China are on the opposite end of the spectrum, ASEAN nations remain dependent on cash-based transactions.

AIM NEWS “The Digital Evolution Index charts the progression of countries’ digital past and present, and reveals patterns for the future.” - Chaturvedi

Despite the uphill climb that the region must take to achieve a vibrant digital economy, the DEI reports that the upcoming integration will offer ample opportunities in increasing digital commerce investments in the region. The establishment of regional marketplaces and delivery networks will help spur the beginnings of a standout digital economy.

“People innovate because there’s a need,” Valencia said, “But for innovation to happen in a country, it has to be inclusive.”

Within the Philippines, there is a strong push for innovation on all fronts. Earl Valencia, whose startup incubator IdeaSpace Foundation, received applications from 1,000 teams from every region in the country this year – a number that illustrates the clamor for a new and more efficient way of life.

The DEI research is produced by the Fletcher School and has sparked policy debates in a wide range of countries. It has also been cited in legislative discussions and deliberations in Hong Kong, Ireland, Australia, and Finland. It has been featured in over 160 unique articles in the media across the Americas, Europe, Asia, and Africa in 23 languages.

Q&A

with Ravi on the Digital Evolution Index (DEI) in the ASEAN Context Ravi Shankar Chaturvedi, MBM 2001, is one of the authors of the Digital Planet research which developed the Digital Evolution Index. Ravi is currently a Research Fellow for Innovation and Change, Institute for Business in the Global Context at The Fletcher School, Tufts University. After the successful Fireside Chat on the Digital Evolution Index, the AIM Leader conducted a follow up question and answer with Ravi to expound on implications of the Digital Evolution Index in the coming ASEAN integration.

The panelists discussed that the climate of innovation within the Philippines and across the region is vital to ensuring that the burgeoning market of 600 million people will make its mark in the global digital economy.

The AIM Leader (TAL) In the context of One ASEAN and the ensuing AEC, which of the 4 drivers of the DEI do you think will be most impactful in a positive or negative sense on the DEI of ASEAN countries? Will the effect be great enough to either propel or pull down the countries to the next higher or lower level? Ravi Shankar Chaturvedi (RSC) Momentum and direction of countries over time on the DEI are determined primarily by the interplay between demand and supply, institutional environments, and innovation within the country. To the extent that the four drivers are correlated, evolution follows a linear path; when not correlated, the trajectory is non-linear, and more often a random walk. Singapore, with its four drivers moving in lockstep, stands out in our DEI, and Malaysia is at an inflection point thanks in large part to its scores, comparable to that of Singapore, on Innovation and Institutions, although it could do a lot better on the Demand front. The other four ASEAN countries in our study — Thailand, Indonesia, Vietnam, and the Philippines — share similar weaknesses: these markets suffer from low scores on the Demand and Supply drivers, and from Institutional inconsistencies. next page, please

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While concerted action is required across all drivers for the rest of the region to be on a linear path in getting to Singapore, their greatest collective challenge in the near to medium term will be in nurturing sophisticated domestic consumers and improving supply infrastructure — moving the needle on these drivers, through better infrastructure and fast-tracking of financial and digital inclusion, will have a multiplicative effect on their digital progression.

(TAL) For the more digitally developed ASEAN countries, what strategies should they embark on to capture a bigger slice of the integrated market? For the less developed countries but with bigger domestic markets, how can they attract more investments to jumpstart their digital evolution? (RSC) ASEAN’s steps toward a liberalized economic zone within its 10-member bloc would, according to some estimates, create the world’s seventh largest economy — ahead of India — with a combined GDP of $2.4 trillion and a combined population of more than 620 million. This promise of freer flow of goods, services, skilled labor, and capital opens up opportunities for businesses and investors seeking an investment counterweight to India and China. Interestingly, there is a built-in interdependence in the construct of the AEC — the demographically rich countries are lacking, relatively speaking, in resources; while the resource rich countries lack the demographics. If implemented right, the AEC can help foster a vibrant regional digital economy. Singapore, as the leader of the pack, and Malaysia, at the cusp of standing out, are digitally advanced (relatively speaking) and resource rich, but lack the demographic depth — their combined population stands at under 5% of the region’s. The only way for these countries to sustain their upward trajectories is to continue to fast-track innovation and actively seek markets beyond their borders. It is in their interest to take the lead in laying the foundations for a single digital market for ASEAN, strengthening regional institutions, and seeking deeper economic integration with demographically rich neighbors. To remain on the cutting edge of digital innovation requires a highly skilled talent pool. Thus, governments in Singapore and Malaysia would do well to invest in education and open their doors to highly skilled immigrants from the rest of ASEAN and beyond. Businesses based in these markets, involved in the

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To remain on the cutting edge of digital innovation requires a highly skilled talent pool. Thus, governments in Singapore and Malaysia would do well to invest in education and open their doors to highly skilled immigrants from the rest of ASEAN and beyond.

digital commerce value chain, must seek out new markets to export their innovations. These businesses would stand to benefit greatly by contributing to raising the quality of demand in the neighborhood. Investors from these markets — both state owned, such as GIC, Khazanah, and Temasek, and private — that take advantage of the common market in the making by stepping in early to fund regional digital ecosystems will witness significant payoffs in the medium term. There has never been a better time for digital entrepreneurs and innovators in the region — especially in countries with bigger domestic markets. Governments in Thailand, Indonesia, Vietnam, and the Philippines would do well to jumpstart entrepreneurship and innovation in their markets by emulating initiatives such as Malaysia’s MaGIC. Establishing inter-linkages with other innovation hubs, in the region and beyond, could provide a huge fillip to entrepreneurs and start-up communities within their countries.Unclogging institutional and infrastructural bottlenecks, and showcasing local talent — innovators and entrepreneurs — could help pave the way to attracting greater investments into their countries.

(TAL) Based on your research findings, do you foresee ASEAN governments, with the ASEAN ICT master plan, leading the way to digital evolution/integration or will it be business and the private sector that will shape the digital future of One ASEAN? Or will it be determined by the 620+ million people that make ASEAN the world’s 3rd largest market? (RSC) The short answer to this question is all of the above. Let me expound: ASEAN’s attractiveness as a common market is rooted in its population size and its attractive demographics. According to the UN Population Division, ASEAN’s population is projected to increase from

633 million in 2015 to 717 million in 2030 — primarily driven by Indonesia, Philippines, and Vietnam— with working-age population accounting for over 68% of the total population. These trends, coupled with stable and, in some cases, falling dependency ratios (except in Singapore and Thailand) implies greater disposable incomes and higher consumption. This promise of higher and sophisticating future demand is bound to drive global investor interest in the region in the near to medium term. The ASEAN ICT master plan, led by regional governments is a laudable initiative, and is essential to creating an enabling environment and onramps for investments from the private sector to flow in. The key to moving the needle on the region’s digital evolution, and getting the rest of ASEAN a step closer to Singapore, is greater public-private collaboration to fill the gaps in crucial areas such as improving the inadequate digital infrastructure and unclogging bottlenecks. For the ASEAN region to truly realize its potential as the world’s third largest digital economy, it isn’t any one of the above factors that can make it happen — it requires all three to move in tandem. Private enterprise cannot do this alone, nor can governments — it requires collaboration between these groups.

(TAL) Is there a possibility the integration will further increase the digital divide between One ASEAN countries, even with the ICT master plan in place? Or based on the neighborhood effect, will the countries push each other to more or less the same digital trajectory? (RSC) The best way to answer this question is to perhaps look for precedents in other economic unions. Interestingly, Hungary and Estonia — whose ascent into the EU happened in the same year (2004) — provide an example for each of the above scenarios: As my co-authors and I detail in our Foreign Affairs article, Hungary’s illiberal Orban regime has exacerbated the digital divide between itself and the rest of the union through a series of mis-steps whereas tiny Estonia has set a gold standard — it reached digital nirvana by actively benchmarking against its neighbors, particularly Finland. Which way might ASEAN member countries go? They could go either way — one can only hope that countries emulate the digital trajectory of Estonia and not Hungary’s.

(TAL) While there is One ASEAN, the countries cannot be more different in terms of religion, politics and to some extent, even culture. How big an effect will these differences play in their march to Estonia?

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The key to moving the needle on the region’s digital evolution, and getting the rest of ASEAN a step closer to Singapore, is greater public-private collaboration to fill the gaps in crucial areas such as improving the inadequate digital infrastructure and unclogging bottlenecks.

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(RSC) These are significant factors. The lack of political stability, religious harmony, and inter-cultural understanding can easily derail economic progress — in both the physical realm and digital. Diversity and pluralism in peaceful times can be as much a strength as they can be vulnerabilities in volatile times. Despite these differences, one hopes that what unites ASEAN member states and its peoples is always more powerful than what divides them.

(TAL) In your opinion, which sectors of the digital ecosystem present the best opportunities for business in One ASEAN? (RSC) In the near term, significant opportunities exist for businesses engaged with components of the supply driver, especially for telecom and ICT enterprises, financial services organizations, and infrastructure firms. The wide range of opportunities for improvement in supply conditions across the region offer a great play for institutional investors. The nascent digital commerce space in these markets is ripe for private equity and venture capital investments. The increasingly integrating ASEAN economies, most of which are Break Out markets in our study, have received relatively little private equity investment. ASEAN’s integration and tariff harmonization will generate opportunities for the creation of regional marketplaces and delivery networks, paving the way for cross-border e-commerce. Global giants such as Alibaba are already jockeying for position. Alibaba’s recent purchase of 10% stake in Singapore’s national postal service provider SingPost, and their stated plans to collaborate in setting up an international e-commerce logistics business are harbingers of things to come.

AIM REPORTS

Philippine Competitiveness Update What will it take to break into the next level of development? By R. U. Mendoza, T. Canare, M. Melchor and J. Manipon AIM Rizalino Navarro Policy Center for Economic Competitiveness

By moving up one notch to 41st in a field of 61 emerging market economies, the Philippines seems to have shown meager progress in the recently released 2015 World Competitiveness Yearbook (WCY). Published by the International Institute of Management Development (IMD) in partnership with the AIM Rizalino S. Navarro Policy Center for Competitiveness, the WCY covers four broad factors in measuring competitiveness – economic performance, government efficiency, business efficiency and infrastructure. It uses economic data from various international and national sources, as well as an opinion survey in generating over 250 criteria to assess and rank the competitiveness of nations. The most improved factor for the Philippines this year is government efficiency, increasing from 40th to 36th in rank. The country’s economic performance also went up three places from 37th to 34th. Among other components, this improvement can be attributed to the growth in gross domestic product (GDP) which remained steady at 6.1 percent, during the year studied, putting the Philippines at fifth highest among WCY countries. Perhaps most promising is the 66

percent net foreign direct investment (FDI) growth the past year. Despite these gains, however, the Philippines continues to lag behind its neighbors in terms of exports and FDI, two important drivers of growth of the more developed countries in East and Southeast Asia. This begs the question: what it will take to take the country to the next level? Understanding competitiveness gains An analysis of the country’s competitiveness rankings over time reveals how far the Philippines has actually improved, notwithstanding issues of sustaining these improvements. There are two main indicators that might shed light on the country’s international economic competitiveness: the IMD’s World Competitiveness Yearbook (measured since 1989), and the World Economic Forum’s Global Competitiveness Report (GCR) (measured since 2004). WEF ranks the Philippines in a large field of about 140 countries; while WCY compares the Philippines to a much smaller and more competitive pool of roughly 60 emerging market economies. Unsurprisingly, it’s easier for the

AIM REPORTS country to ascend the WEF rankings—improving from 75th in 2011 to about 52nd by 2014. Hence it could be slightly more difficult to continue improving in the WCY ranking. On that scale, the Philippines improved its average ranking under the Aquino administration only very slightly from 42nd to 41st. Still, this improvement should not be belittled, as the country has in fact done much better than many of its neighbors in Asia. As the country maintained its ranking in WCY, during the same period the rankings of some of its Asian neighbors deteriorated. Indonesia, for example, fell five places from 37th to 42nd; while Thailand dropped from 27th to 30th. Even China fell from 19th to 22nd in its competitiveness ranking. The Philippines has also increasingly received positive assessments from a variety of public and private sector organizations:

Figure 1. Philippines WEF Global Competitiveness Report Ranking, 2005 to 2014.

Source: World Economic Forum Global Competitiveness Report

Figure 2. Philippines IMD World Competitiveness Yearbook Ranking, 2005 to 2015

• In 2012, an HSBC study forecasted that the Philippines will be among the fastest growing countries in the next 35 years—projected to leapfrog 27 notches to become the 16th largest economy in the world by 2050, largely on the back of a very young and relatively highly skilled workforce. • In 2015, the Center for Global Development, an international economic think tank based in Washington, D.C. released a brief study of the resilience of 21 emerging market economies, based on macroeconomic and financial fragility indicators, finding that the Philippines is 1st in this small pool of countries in terms of financial and economic crisis resilience.

Source: International Institute for Management Development World Competitiveness Yearbook.

• And since 2010, the country has witnessed 10 credit upgrades from the three major credit rating agencies – Fitch, Standard and Poor’s, and Moody’s Investor Service. In part owing to sustained macroeconomic stability and anti-corruption reforms, the country achieved its first investment grade status in March 2013, signaling a strong economic climate to foreign investors. Shedding old insecurities and protectionism Notwithstanding these recent economic gains, the Philippines maintains many restrictions against foreign investments. The country imposes foreign equity ownership restrictions on more sectors covered by the World Bank’s Investing Across Borders (IAB) database than most other developing countries. For instance, 1

some of these restrictions are focused on the service and primary sectors. In the “Investing Across Sectors” component of the IAB database, which measures statutory restrictions on foreign equity ownership in different economic sectors, the country scores lower (i.e. is more restricted) than the regional and overall IAB averages on 8 out of 11 indicators (see Figure 3). In the mining, oil and gas sector, the Philippines’ score is 49 percent and 57 percent lower than the regional and IAB averages respectively. And in the agriculture and forestry sector, the country’s score is 52 percent and 58 percent lower than the regional and IAB averages respectively. next page, please

The Investing Across Borders (2010) database presents cross-country indicators examining laws, regulations and practices affecting the FDI in 87 countries. The indicator areas measured consist of 1) Investing Across Sectors, 2) Starting a Foreign Business, 3) Accessing Industrial Land and 4) Arbitrating Commercial Disputes indicators (World Bank, 2010).

AIM REPORTS

Philippine Competitiveness Update

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Figure 3. Investing Across Services Indicators for the Philippines vis-Ă -vis IAB and regional averages

Source: AIM Policy Center staff calculations based on data from the Investing Across Borders Database (2010

Figure 4. Strongest and Weakest Country Performers on the Strength of Lease Rights Index2

Note: 0 = min, 100 = max Source of basic data: Investing Across Borders Database (2010:45).

AIM REPORTS

The Philippines likewise performs poorly when evaluated against its neighbors and the overall sample of 87 countries in the “Starting a Foreign Business” and “Accessing Industrial Land” sets of indicators. The country is among 18 of 87 economies surveyed by the World Bank that does not allow any form of foreign private ownership of land. It is also one of the ten weakest country performers on the index measuring the strength of lease rights (see Figure 4). As regards measures in starting a foreign business, the country scores low as the 17 procedures and 80 days needed to establish a foreign-owned limited liability company in the nation’s capital is much longer than both the IAB global average (i.e. 10.1 procedures and 42 days) as well as the regional average (i.e. 11 procedures and 64 days). Data from the UN Conference on Trade and Development (UNCTAD) also suggests very strong restrictions in the Philippines on some types of FDI. UNCTAD compiles and publishes an FDI restriction index implying different restriction indicators depending on the level of openness to foreign participation. Higher scores are given for higher degrees of restriction against foreign investors, with a score of 0 signifying full foreign ownership allowed and 1 indicating no permissible foreign ownership. Figure 5 shows the level of restrictions for each industry based on the average among the countries included in the UNCTAD study. Electricity is the most restricted sector with an average score of 0.59, while environmental services is the least restricted with a score of 0.16. Figure 6, on the other hand, shows the overall FDI restriction scores per country3. The Philippines and Ethiopia are among the countries with most restrictions faced by FDI. And while ASEAN countries included in the study also display high levels of restrictions (i.e., Indonesia scored 0.61, Malaysia 0.54, and Thailand 0.53), it is clear that investors in the Philippines face

relatively higher restrictions when compared to other ASEAN economies. This sheds further light on the claim that “other ASEAN economies also restrict foreign ownership anyway”. That is indeed true, but the overall figures suggest that the Philippines appears to display more restrictions, when compared to the other ASEAN economies. Nevertheless, private sector sentiment in the Philippines could be changing in this regard. While many sectors may have seen international competition as a threat in previous decades, the growing size and economic strength of Philippine firms and industries—notably large Philippine conglomerates—could signal a shift from fearing competition to welcoming it, seeing international economic integration as an opportunity not to be missed this time around. Big Leap Forward? In late August 2014, the Philippine House of Representatives commenced plenary debates on possible amendments to the economic provisions of the Philippine Constitution. At the time of writing this article in late May 2015, the House of Representatives approved on second reading Resolution of Both Houses (RBH) No. 1, which seeks to boost the inflow of foreign investments by easing the restrictive economic provisions of the Constitution. The economic charter change (or “Economic Cha Cha”) envisions adding the phrase “as may be provided by law” to at least 7 sections of the Philippine Constitution. This would allow Congress to consider passing enabling laws that would relax restrictions on foreign ownership in order to boost foreign investments. The goal is to boost and deepen the drivers of economic growth in the longer term, as the lifting of foreign investment restrictions could improve FDI inflows into the Philippines, particularly in the areas restricted in the Philippine Constitution (e.g. mining, utilities, mass media, and education). next page, please

Data for the strength of lease rights index (scored 0-100, 0=min, 100=max) was collected through close-ended survey questions which assessed whether certain provisions and clauses were present in a country’s legal and regulatory frameworks (World Bank, 2010). 3 UNCTAD (2006) details the scores given to a country given the level of restriction to an indicator whereby the resulting index ranges from 0 to 1. The indicators are: (1) foreign ownership, (2) screening and approval and (3) operational restrictions.

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Philippine Competitiveness Update

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Figure 5. Sectoral Restriction Scores by Industry, 2004 or Latest Available Year

Source: UNCTAD (2006:12).

Figure 6. Total Services Restrictions, 2004 or Latest Available Year

At least one international study suggests that efforts to remove ownership restrictions could help boost net FDI inflows on average by up to 78 percent. Such an effort should ideally be part of a broader drive to improve on the other factors that investors report are deterring their expansion in the Philippines—including, for example, affordable and stable energy and better transport infrastructure. Economic Cha-Cha opens the door to establish a stronger platform for promoting stronger investments and a more robust basis for sustaining more inclusive economic development. Nevertheless, it does not substitute for developing a sound economic development and industrialization strategy that seeks to maximize the country’s potential comparative advantages, and promotes more inclusive and broad-based economic growth.

Selected References International Institute for Management Development, World Competitiveness Yearbook. (Switzerland: IMD, 2015). Mendoza, R.U. and M.Melchor, “Economic charter change: Examining the pros and cons.” AIM Rizalino S. Navarro Policy Center for Economic Competitiveness. Makati City. [http://papers.ssrn.com/sol3/papers. cfm?abstract_id=2599131].

Source: UNCTAD (2006:11).

*This article draws extensively from Mendoza and Melchor (2015). The views expressed here are those of the authors and do not necessarily reflect those of the Asian Institute of Management. Questions and comments could be addressed to the lead author at: ronmendoza@post.harvard.edu.

UNCTAD, Measuring Restrictions on FDI in Services in Developing Countries and Transition Economies. (Switzerland: United Nations, 2006). World Bank, Investing Across Borders: Indicators of foreign investment regulation in 87 economies. (Washington, D.C.: The World Bank Group, 2010). World Economic Forum, The Global Competitiveness Report 2014-15. (Geneva: World Economic Forum, 2014).

TECHNOLOGY FACILITATES TOURISM AND BUYER BEHAVIOR

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According to Sakulsureeyadej (2011), there is also a gap between tourism activities and the technology available. Evolving into Online Travel Agents (OTA) (e.g. Pinoy Travel, Travelbook.ph) is one way organizations address this gap. However, Sakulsureeyadej (2011) argued that not every tourism enterprise needs to become an OTA. It is important to realize a firm’s competitive advantage and adopt the relevant technology in order to reinforce core competencies. Indeed, facilitation is a vital aspect of enhancing T&T. It includes adequate and matching technologies, reservations of transportation, board and lodging, and tour packages. This will increase tourist flow substantially and nurture a more accessible travel market. In the advent of the rising demands in digital travel, the importance of technology in tourism has been belaboured. As proposed by Murthy (2014), there is a need “to create an ecosystem where technology can interact with humans.” This prompts developers to explore emerging trends in digital travel. To make this a reality, De Avila (2011) encourage that the T&T industry must train its human resources at all levels to be prepared for the future, and most of all to differentiate from competitors. Of equal importance, stakeholders must liberalize in sharing knowledge and experiences with professionals in the industry. It is important to generate a continuous and productive debate on technology, innovation, and participation in the world of T&T across platforms, products and practical initiatives that prove to be effective in improving the tourist experience and competitiveness of organizations. It can now be construed that digital transformation is necessary. According to Michael Palacios, President of the International Mobile Marketing Association of the Philippines (IMMAP), as quoted by Montenegro (2014), digital transformation is “the re-alignment of, or new investment in, technology and business models to more effectively engage digital consumers at every touchpoint in the customer experience life cycle.” However, “a digital strategy is so much more than a website or a Facebook page,” Palacios emphasized. That is, Digital transformation encompasses creating goods and services that are responsive – consumer’s concerns are immediately addressed. VI. Endnotes 1 This article was culled from Alarilla-Uy and Rivera (2015) published in the Dr. Andrew L. Tan Center for Tourism Industry Outlook. Moreover, this article is a result of the forum entitled Emerging trends in digital travel and its impact on tourism buyer behavior organized by the Asian Institute of Management Dr. Andrew L. Tan Center for Tourism in partnership with

Yahoo! Philippines. It was held last 30 April 2014 at the Meralco Caseroom of the Asian Institute of Management. Disclaimer: The views expressed in this article are the views of the authors 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. VII. References Alarilla-Uy, M.C.A., & Rivera, J.P.R. (2014). Emerging trends in digital travel and its impact on tourism buyer behavior. Dr. Andrew L. Tan Center for Tourism Industry Outlook, 1, 5-10. Blanco, J. (2011). Understanding and managing innovation and technological change: A major opportunity for tourism organizations. AM-reports – Technology in Tourism, 1, 6. Cabrera, S.G.V. (2014). What role can mobile technology play in the tourism sector? A presentation for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. De Avila, A.L. (2011). Tourism: What lies ahead? AM-reports – Technology in Tourism, 1, 10. Dimacali, T.J. (2010, August 18). Philippines still text messaging champ – US study. GMA News Online. Retrieved from http://www.gmanetwork.com/news/ story/198832/scitech/philippines-still-text-messaging-champ-us-study Ibrahim, M.B. (2014). A discussant for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. Landicho, D. (2014). A discussant for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. Montenegro, B. (2014, Septeber 2014). PHL internet users now 38 million, two-thirds under 30 – IMMAP. GMA News Online. Retrieved from http://www. gmanetwork.com/news/story/380893/scitech/technology/phl-internet-users-now38-million-two-thirds-under-30-immap Murthy, N.R.N. (2014). Strengthening connectivity. A presentation for the Dr. Andrew L. Tan Center for Tourism track session on Strengthening Connectivity – Tourism meets technology: Beyond ASEAN borders. Held 27 June 2014 in Asian Institute of Management, Makati City, Philippines. Nath, A.V., & Menon, D. (n.d.). Role of information technology in tourism. Retrieved from http://fama2.us.es:8080/turismo/turismonet1/economia%20del%20 turismo/turismo%20y%20nuevas%20tecnologias/role%20of%20technology%20 information%20in%20tourism.pdf Sakulsureeyadej, A. (2011). How technology is changing global tourism. AMreports – Technology in Tourism, 1, 9. Soriano, A.M. (2014). A discussant for the Dr. Andrew L. Tan Centerfor Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. Taylor Nelson Sofres (TNS). (2010). Digital lifestyles. Retrieved fromhttp://2010. tnsdigitallife.com/ Tengco, J. (2014). It’s more fun in the Philippines. A presentation for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. Tianco, B. (2014). A discussant for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines. Tonson, M.A.R. (2011, November 05). Pinoy surfing web using smrtphones grow in number – Nielsen. GMA News Online. Retrieved from http://www. gmanetwork.com/news/story/237545/scitech/pinoys-surfing-web-usingsmartphones-grow-in-number-nielsen Umali, R. (2014). Digital tourism in the Philippines. A presentation for the Dr. Andrew L. Tan Center for Tourism forum on Emerging trends in digital travel and its impact on tourism buyer behaviour. Held 30 April 2014 in Asian Institute of Management, Makati City, Philippines.

AIM NEWS

By TeaM Energy Center for Bridging Leadership

Image composed from Royalty-free images from freeimages.com

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“The kind of leadership we are talking about is still emerging. It is new, it is inchoate, but it is recognizable as having features that earlier waves of leaders did not have to the same extent, driven in large part by the availability of new communications and information technologies.” - George Vradenburg, Leadership in the Digital Age Conference Report, 2003

In 2003, as high-technologies were just being introduced to the world, the leaders in different sectors and industries were asking this question: How do we lead in the digital age? Professionals at the Leadership in the Digital Age Conference could not yet define the phenomenon but were mostly in agreement that this kind of leadership emerged from innovations in the information and communications technology (ICT) industry – creating opportunities to explore leadership in other areas, citing American business magnate and inventor Bill Gates as a primary example. The work of Gates on structured and advanced technological strategies and tactics led to the founding of today’s largest software company in the world, Microsoft. However, he did not only lead the digital world with the technologies he presented to the excited public. Gates chose to share his inventions and profits – pursuing civic causes through establishing his own foundation, the Bill and Melinda Gates Foundation. The grant-making foundation supports initiatives that promote sustainable energy, medical technology, education and health among others. Two efforts which were given grants were the New Technology High School for replication in communities, and the Next Generation Learning Challenges which encourages the culture of inventiveness and creativity, and the use of technology to improve college readiness and completion in the United States.

The advent of the digital age presented new avenues – such as in Gate’s case – to expand leadership potential not only in one’s professional career but also in advocacy and social responsibility. Filipinos online As of September 2014, the Internet and Mobile Marketing Association of the Philippines (IMMAP) reported that 38 million Filipinos use the internet – mostly through smartphones and tablets. It was estimated that two-thirds of these users were below 30 years old. GlobalWebIndex, a market research study on the digital consumer, validates this characteristic of the Filipinos in its recent findings, ranking the Filipino youth as the 6th biggest online population among the world’s internet users aged 16-24. A March 2015 news report also states that research and surveys throughout the years show that the internet has been highly effective in attracting the Filipino youth because of six major benefits namely: faster communication, easier access to global trends, ease in keeping in touch with others, access to educational tools, enhanced self-expression and creativity, and finding sources of entertainment. While it would seem that Filipinos are keeping pace in the technology space, the benefits of going digital have not been felt by all. next page, please

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For Guiamel and his 25 co-Fellows, technology will be key in implementing their change projects. With the varying contexts that drive young people to lead, the challenge is in maximizing the potential of the digital space in the implementation of their change initiatives.

Working within limitations Originally from Mamasapano, Maguindanao, Ismail Guiamel transferred to Cotabato to pursue his studies. Coming from a conflict-affected area did not deter Guiamel – he was determined to become educated and went on to graduate with an engineering degree from the Notre Dame University. It was during his college years that he found himself joining different organizations, which elicited his passion and advocacy to bring all Filipinos together – whether Muslim or Christian – for a united Philippines. In his own words: “One Bangsamoro, One Dream, One Hope.” “We couldn’t access quality education because of the limitations of technology in Mindanao. Our learning capability, we admit, wasn’t great. But with determination, we finished our education. By helping each other out, we were able to graduate. These things formed me as a leader,” Guiamel claims. With much perseverance, he continued taking chances and sought more opportunities for learning by applying to and representing the Bangsamoro and the Philippines in international programs such as humanitarian summits sponsored by the Japan International Cooperation Agency (JICA) and the United States Agency for International Development (USAID). Fighting for his dream of a united Philippines, Guiamel utilizes the available technological

resources such as social media by promoting informed campaigns about the Bangsamoro and by networking with other leaders who also aspire for peace in the country. Technology and the youth leader Guiamel has just started a one-year leadership development journey through the Future Bridging Leaders Program of the AIM TeaM Energy Center for Bridging Leadership. 26 youth Fellows, aged 19-26, have been chosen from over 100 applicants nationwide, based on their leadership track record and distinct ownership of social issues. Over the course of the 12-month Fellowship, the youth leaders will develop change projects to address specific gaps in education, environment, governance, rural and urban livelihood opportunities, health, and access to basic services. Guiamel remains committed to working for education in the Bangsamoro. For Guiamel and his 25 co-Fellows, technology will be key in implementing their change projects. With the varying contexts that drive young people to lead, the challenge is in maximizing the potential of the digital space in the implementation of their change initiatives. Ian Golamco, a Filipino IT professional working in Sydney, Australia, puts it this way, “Success isn’t automatically achieved by those who have the most resources anymore, but by those who know how to most effectively utilize what they have.”

A LU M N I NEWS

JAPAN

THE GREAT BALANCING ACT By Mary Lou Cunanan

ore than 10 years ago when I was about to finish College, Japan was the very first country I thought of visiting for many good reasons. Unfortunately, it didnâ&#x20AC;&#x2122;t materialize. I went to the US instead for my internship, and stayed there for nine years.

I traveled to almost 20 countries since then and gave me significant insights about other countriesâ&#x20AC;&#x2122; cultures. Because of my extensive travels, I felt that I would learn very little from the MBA Japanese Week, but I eventually found out I was wrong. Stepping on Osaka Airport on the first day, I was reminded of my reasons for wanting to visit Japan when I was younger. Back in college, I took a lot of history electives because World History, particularly Asian History, fascinated me. Because of the classes I took, I was given insights about Japanese discipline, dedication, and pride for heritage. Fast forward to today, I witnessed firsthand how disciplined and dedicated the Japanese people are: from restaurants to drivers, to tour guides, and to executives of the companies we visited. The Japanese people are dedicated, humble, respectful, and mindful. This was evident from their gestures of bowing to show respect to the other person, to listening first before speaking, to arriving on time as to not inconvenience the other person, to come prepared, to dedicate oneself to their craft once they have made a decision and so on. These four attributes of the Japanese people (dedicated, humble, respectful, and mindful) are exercised both in their personal and professional lives. These four attributes, based on my observation, serve as the foundations as to why the Japanese people live longer and why they are a successful economy.

A LU M N I N E W S In our Operations Management class, we discussed the “Lean Systems Management”, which is practiced in most Japanese companies. We were taught about the Toyota Operations and its principles such as Kaizen (continuously innovating), Pokayoke (mistake-proofing), Jidoka (not passing on mistakes toward the next level or automation with a human touch) and so on. To run a Kaizen or a company focusing on innovation, the company or the people working for it should always assume that everything could still improve. In a world where companies are vying, or at least projecting to be the “best”, this can be difficult to adopt. To humbly accept that your operations can still be improved is a difficult pill to swallow, but absolutely necessary. In Japan, however, this Kaizen approach is evident in all the companies we visited. Each of them are still trying to improve and are receptive of other people’s opinions, even those coming from students from a third world country. This, to me, is absolutely remarkable and the highest testament to the humility of the Japanese. Every time we step out of the bus to visit our host companies, people would greet and welcome us with a bow. We were given presentations and undivided attention to our needs all throughout. All concessions were made to make our visits as educational and as comfortable as possible. The companies’ top executives gave us their valuable time for many hours. Having stayed in the US for many years, I can personally say this is not the normal Western business practice. Back there, an equal title or position is required to get the attention of top executives. During our Japanese Leadership Week, however, our hosts allotted a considerable amount of time to tour us, answer our questions, and hear our thoughts. I am still in great disbelief every time I reminisce on the days spent in Japan. During the tour itself, everything was impeccably organized. Everybody was well informed about the schedule. We were notified in advance if there were changes to the itinerary. The tour guides, professors, administrators, and drivers were all on time. I mentioned earlier that the Japanese give their guests their undivided and complete attention. This is also evident in the way their companies (such as Omron) would tailor fit their operations based on the needs and capabilities of their employees. A good example is the way they would attach trash bins to the sides of tables instead of putting them on the floor to make it easier for the floor sweepers to clean the area. These things are not rocket science, but they make work a lot more efficient when they add up. Again, it

goes back to being respectful and mindful of other people’s needs. As for dedication, one of the things I learned during the Kyoto Chamber of Commerce talk is that there are thousands of companies that are 100 years and older. The aspiration for longevity is made obvious when we visited Gekkeikan. This tells me that in order for a company to be great, one must have dedicated employees willing to improve on their craft and with a mindset of remaining loyal to the company. This contradicts the western style where loyalty is subservient to personal gain. Case in point: the General Manager of Project Management at the Toyota Headquarters has been with the company for 30 years. Another case in point: Gekkeikan has been in business for more than 340 years. This seems to be more of the norm in Japan than elsewhere. When the Japanese make a decision, they stick to it until it bears fruit. Their goals are always long term (surpassing even several generations) and never for a quick buck. Their business paradigm goes beyond making profits, which is the case in most businesses conducted in other places. An Alumni Night capped the tour with AIM graduates who welcomed us very graciously. Current students, from the EMBA and MBA programs and Japanese alumni laughed and gleefully shared their AIM experiences. We talked about AIM professors, difficult subjects, late night reading of cases, WACs, and how AIM imposes rigor in classroom training, continuously testing intelligence, grit, and character. Alumni offered advice on life after AIM for us to be successful just like them. Most, if not all of us that night, longingly looked forward to graduation to start our own careers. After the Japan trip, I thought of these things carefully and made an absolute decision to practice these four attributes: humility, respect, mindfulness, and dedication. Even with 10 years of work experience under my belt, I feel as if I am starting all over. Out of all the 20 countries I have visited and done business with, Japan is the best country by far that I have ever been to. The people of this country show there is indeed a way to balance profit, taking care of employees, managing operations, treating people with respect and dignity, enforcing discipline, and being sustainable. It might seem overwhelming and intimidating, but this is how the Japanese live their lives. There is so much knowledge to take away from the Japan trip and I am hoping to pass this on to my colleagues, as well as apply to my personal and professional lives.

2015

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GRAND ALUMNI

HOMECOMING

inally, the beach came to party with the AIM alumni last March 6, 2015. Hosted by the class of MBM â&#x20AC;&#x2DC;95, it was a night to remember attended by more than 500 alumni in their best beach outfits. Transforming the AIM parking lot into a covered beach venue complete with hula dancers, a reggae band, palm trees, lights, dance music and disc jockeys, everybody had a grand time eating, dancing, drinking and reconnecting with classmates, friends and professors all night long. AIM President Steve DeKrey, Dean Dr. Jikyeong Kang and 2015 Homecoming Chairman Marlon Glenn Guinto welcomed all alumni during the beach party & honoured the Sapphire Jubilarian class of 1970 represented by Rene Sunico, celebrating 45 years as pioneers of the institute and the MBM program. Oscar Dolendo and Annely Yulangco mentioned several donors and sponsors contributing to the success of the event which included Ayala Land, DMCI, Globe Telecoms, First Asia Hotel, Ginebra San Miguel, North Luzon Expressway, San Miguel Corporation, Megaworld Foundation, Inc., Splash Corporation, Chateau and Calderon next page, please

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Restaurants to name a few. Likewise, the much applauded hula dance routine generated unlimited participation from all alumni, students and faculty during the program. The class of MBM ’95 represented by 52 batch mates showed up in solidarity with the commitment of coming together that night and support the scholarship fund raising efforts of AIM. It was a momentous victory for the working team to see classmates from all parts of the world reunited after 20 years. Also, together with Megaworld Foundation, Inc. and Splash Corporation, the class of MBM ‘95 commissioned distinguished national artists and sculptors Ramon Orlina and Michael Cacnio to each create an AIM-inspired artwork for display at the AIM lobby within the year. The year-long preparation started with the acceptance of the Cacnio trophy in 2014 from MBM ’94 to handing over the flaming torch that night to MBM ’96 to host the 2016 alumni homecoming. Through the guidance of alumni association head Wing Bayoneta and directors, the working team survived the long road of preparations for the event. Other events hosted by MBM ‘95 and co-hosted as well by celebrating batches ‘70,’75,

A LU M N I N E W S

‘80, ‘85, ‘90, ‘95, 2000, 2005 and 2010 included a stage play, a movie premiere, Ginebra San Miguel PBA games at the Mall of Asia and the Araneta Coliseum courtesy of its President and MBM ‘95 classmate Bernie Marquez, a golf tournament at the Orchard Golf & Country Club hosted by MBM ’70, dinner parties, minireunions and a cocktail party for MBM ‘95. An 80-page souvenir yearbook was distributed that night amongst the lead host class of MBM ‘95 as well. The working team of MBM ‘95 included Marvee Celi-Bonoan, Annely Yulangco, Angie Pasiliao, Crissie Hontanosas, Oscar Dolendo, Jovy Convento, David Tan, Karina Salazar, Jomari Fajardo, Bibi Aquino and Marlon Glenn Guinto as Chairman with the very reliable support of the Alumni Relations Office through Ms. Karen Odessa Cabuyao and staff. Cheers to the Asian Institute of Management and see you all again next year. - Marlon Glenn Guinto, MBM ‘95

A LU M N I NEWS

EMBA’s long -awaited reunion finally happened! AIM’s Executive MBA (EMBA) Program celebrated its 18 th year by holding its first ever grand reunion last March 3, 2015 at the 3F Fuller Hall, AIM campus. The first Executive MBA Program of the Institute was launched in Malaysia in September 1997, through the help of Selangor Human Resources Development Center (SHRDC). It was conducted in Manila for the first time in 1998, the initiative of Prof. Felipe B. Alfonso, which was exclusively for the Lopez Group of Companies. The first openenrollment EMBA Program was conducted in Manila in September 1999. Other EMBA Programs were also held for Thapar Group, under the All India Education Society (AIES) (2002), SGV Company (2003), PT PP London Sumatra Tbk (2007), and CT Corpora Group (2007, 2010). Despite the rich history of EMBA, the busy schedules of alumni and students prevented them from coming together for a reunion. With the initiative and support from some EMBA alumni and students, the much awaited and long overdue reunion was finally scheduled. The homecoming evening was indeed a night of reminiscing, reconnecting, and networking with a solid show of support from the batches of Executive MBA Manila 1, 4, 5, 6, 7, 9 and 10, Executive MBA for Entrepreneurship and Corporate Innovation cohorts 3 and 5, Executive MBA Evening classes 1, 2, 3, as well as students from EMBA 2015 and EMBA 2016. AIM President Steve DeKrey and Dean Jikyeong Kang welcomed the alumni and were very delighted to have them back in the campus. Both emphasized the significance of the event, with Dean Jikyeong pointing out that “it’s not only

the opportunity to meet your classmates but also an opportunity to see other people from the program because after all, you chose to be in AIM. I think you want to make the best out of that opportunity and networking is a great opportunity.” Prof. Horacio M. Borromeo, Ph. D, WSGSB Former Head, gave updates on developments about the Executive MBA program over the years. He ended his remarks by saying that “your program, the EMBA will continue to grow at the Asian Institute of Management.” The AIM Alumni Office, through its Alumni Office Director, Mr. Bernie Jiao, took the opportunity to keep everyone posted about their activities, especially on the Grand Alumni Homecoming Week. Mr. Jiao also introduced the AIM Alumni Portal, and he encouraged the alumni to take advantage of the MOB alumni card with its various perks and privileges. Also present at the homecoming was Alumni Association of AIM (AAAIM) Chairperson, Ms. Rowena Palmiery Bayoneta. She was pleased to meet and welcome the EMBA crowd saying, “An event like this is certain to strengthen and forge new ties with EMBA. Given the turn out, I take it as a good sign and I encourage all of you to stay involved and connected. You are all a valued part of the AIM alumni network.” Alumni and guests were serenaded with wonderful song numbers performed by Mr. Bon Villanueva (EMBA 2016 student), Ms. Diane Gonzalez and Mr. Orvin Reyes (EMBA 2014 alumni), and Mr. Greg Mercado (EMBA 2014 alumnus). The event was hosted by Ms. Riki Quiroz, (EMBA 2015 student) and Mr. Vincent Lim (EMBA 2014 alumnus).

A LU M N I N E W S

Dr. Steve DeKrey, AIM President

Dr. Jikyeong Kang, AIM Dean

Hosts: Ms. Riki Quiroz, (EMBA 2015 student) and Mr. Vincent Lim (EMBA 2014 alumnus). Ms. Diane Gonzalez (EMBA 2014)

Mr. Greg Mercado (EMBA 2014 alumnus)

Prof. Junbo Borromeo

Mr. Bon Villanueva (EMBA 2016)

Mr. Orvin Reyes (EMBA 2014 alumnus)

The EMBA and Alumni Relations offices would like to thank the following event partners and sponsors:

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Over-all champions – MBM ‘73

1st Runner-up – 81st Batch of MDP 2012

2nd Runner-up – MBM ‘95

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CLASS NOTES

attended and finished MDP in 1974 during Martial Law days while I was the manufacturing manager at Phelps Dodge Phils., Inc. It was a hectic two months, day and night with my classmates from various disciplines and exposures, and from various Asia Pacific Countries with participants from the military, industrial manufacturing, church, construction, the government, and others. We leave the dorm only during Sunday (washday). I enjoyed my two long months stay at AIM as I got myself more developed in management, it being my work in Phelps Dodge, what with the continuous immersion in our cangroup meetings, debating and simulating various cases in manufacturing, construction, industries and government. The relations in our MDP in academics, can-group teamwork, basketball and jogging in the early morning, fondly with our girl classmates were without dull moments hehehe. Of course some, including the foreigners in our group, were not content and so they leave the campus overnight on weekends when we have no can-group meetings. The value of my immersion in MDP at AIM was much highlighted when the company I was instrumental in organizing (INPHASE Construction Co., Inc.) was assigned to me by the Board as its President in late 1979 when our founding President died of a heart attack, and I had to resign drastically from Phelps Dodge to manage the company that was at the time hemorrhaging due to financial and marketing problems. After three years of slow but planned strategic moves, the company started to grow and reached economic operating conditions as to be recognized in the construction arena, with big projects like NPC and PLDT, Moog in Baguio, and the Presidential Hangar in Villamor to name a few. I retired in 2004 and accepted an invitation of my Alma Mater the MLQ University to the Deanship of the School of Engineering which I managed and was proud to substantially increase enrollment and to produce high employability graduates while undertaking extension and linkage projects notable among which is the 96kwp Solar PV green generating plant which saves the MLQU electricity by way of its low rates due to 0 fossil fuel, and carbon credits to the SPV Supplier and credits from the utility when demand is low. At present I devote my time serving the construction and electricity industry as an accredited arbitrator/mediator resolving conflicts between owners, constructors and stakeholders without resorting to long and costly litigation.

Rogelio M. Avenido, Ph.D Professional Electrical Engineer No. 451 3 Catherine St. Sta Teresita Village Marikina City, MM, PH, 1800 <rave2037@ yahoo.com> 09189022235

Anwar Chowdhury, MM 1998,

has been promoted as Deputy Team Leader of a DFID/SDC financed Challenge Fund for the Eradication of Extreme Poverty in Bangladesh. Before then Mr. Chowdhury was Chief Financial Officer of this large Program since 2008 under the Employment of British Council, UK. As a strategic and hands on executive having experiences over 27 years in international development and challenge fund management, he is associated mainly with strategy formulation, policy making, sector development and challenge fund management. Anwar is an effective Leader with strong analytical, communications, organizational, professional and Interpersonal skills. He has arranged a number of conferences in Bangladesh for strengthening Auditing profession in Bangladesh Chowdhury did his MM from Asian Institute of Management in 1998, a Chartered Accountancy degree from the Institute of Chartered Accountants of Bangladesh (ICAB in 2006), a Chartered Secretary Degree from Institute of Chartered Secretaries of Bangladesh in 2003, and Master in Commerce from Dhaka University in 1987. He is also member of Quality Assurance Board of ICAB, the standing committee for providing guidance to ICAB for improvement of CA profession in Bangladesh. He is also a member of Independent Assessment Panel of Community Legal Services Project of DFID and assisting Katalyst, Bangladesh as a member of Independent Assessment Panel as Challenge Fund Expert. Currently he is the President of Bangladesh AIM Alumni Association.

Joint Birthday Celebration of MM 1976 buddies Toting Bunye, Ed de Guzman, who is visiting from Florida, Jerry Quibilan and friend Charlie Borromeo, elder brother of Dean Horacio ‘Junbo’ Borromeo, Jr., MM 1977, held in March at Recipes, Greenbelt 3, owned by Mikee De Guzman, son of Ed de Guzman, who lives in Vancouver, Canada.

Greetings from Nepal! I am Ashok from Nepal, a MDM 2005 batch student. We the Nepalese people are in great shock and distress due to strong earthquakes and several aftershocks post April 25. In the meantime, we are trying to support the earthquake affected families especially immediate relief materials, and to some extent, recovery through our own as well as external resources. You provided deepest sympathy immediately that values much to us. Most important part of AIM, is the alumni touch ever. And of course, the learning methods-case study, group discussion, field visits, and apart the flag raising ceremony were commendable. The learning of AIM are life long to me. With kind regards,

Ashok Raj Pokharel

Central Program Manager. SAHAMATI, Gaidakot, Nawalparasi Telephone: +977-56-502277/502090 Email: ashok@sahamati.org/ashokaim@yahoo.com Website: www.sahamati.org

After several overseas assignments, now (almost 5 years already) I am a General Manager of Emerson Electric (Thailand) Ltd. running a manufacturing plant in Thailand. Travel frequently in Asia visiting customers. I am MBM91 studied at AIM on the year our AIM’s fellow Gringo took Makati as his HQ. Still remember the excitement of the evacuation in the mid of the night and the bullet hole on the window of my bedroom at AIM’s dormitory. AIM train people to be Critical and Practical. Good friends, Great School!

AIM alumni in Taiwan were invited to join the 117th Philippine Independence Day celebrations at the Far Eastern Hotel in Taipei. From left: Mr. HanChuan Hsu (MM 1991 and Sr. Vice President of AIM Alumni Association of Taiwan), Mr. Pi-Chuan Chen (MM 1996 and President of Powertec Energy Co. Ltd.), Mr. Amadeo R. Perez, Jr. Chairman and CEO of Manila Economic Cultural Office and Mr. Patrick Hsiao (MM 1990 and President of the AIM Alumni Association of Taiwan).

Rene M. Fortuno, MDM 1999, is the Chief

of Party of the Micro-enterprise Disaster Assistance Fund for Resiliency Program (MIDAS). The MIDAS is an innovative wholesale lending and business support window for Micro Finance Institutions to cushion lending risks associated with disasters, and on the other hand, for their micro enterprise clients to bounce back better and mitigate future shocks. The program is funded by a US$4 million grant from the United States Agency for International Development for Typhoon Yolanda affected areas. The Philippine Business for Social Progress is lead implementer while the consortium members are ASA Philippines, Center for Agriculture and Rural Development, Negros Women for Tomorrow Foundation, and Taytay sa Kauswagan, Inc. The long-term goal of the consortium is to build a P5 Billion Resiliency Fund for 500,000 micro-enterprises in five years. From here on, the consortium will engage donors and development organizations to contribute and participate in expanding the program. This way, the MIDAS program can respond to the needs of micro-enterprises affected by calamities in many parts of the Philippines.

Prakarn Dherapratuangkul “Jack” 122/97 Moo 2, Vipavadee 58 Rd., Laksi, Bangkok, Thailand 10210

Congratulations, to

Mr. Mario Ramon G.M. Guanzon, M.E. (2005) AIM Alumnus,

Founder, President and CEO of the MMGI Group of Companies for successfully accomplishing the Owner/President Management Program, 40th Session, from the Harvard Business School in Boston, MA, USA. Held on October 2008 to October 2010! He has also just completed his Ph.D. in Organization Development from the Southeast Asian Interdisciplinary Development Institute. The commencement ceremony was held last May 5, 2015, at SAIDI, Loyola Heights, QC.