THE EXPAT EXPERIENCE: Chris Moriarty shares his experience setting up a business in the Philippines. This month, Chris sets the scene for his new venture, Flat Planet, and offers his assessment of the local business scene.
Having proven myself as a competent and successful business executive in Australia I set sail for the Philippines and started a business up here from scratch in partnership with my battle-hardened business partner David Barlow.
I am an entrepreneur, not a corporate executive – I don't have a driver, a bodyguard, a huge staff of lawyers and accountants or access to funds from head office.
I catch public transport, negotiate my own leases, try to manage the bureaucracy on my own as much as I can, am learning Tagalog and I am building my own network of ex-pat and Filipino business people.
The point here is that I am starting on the street. I do have the huge advantage of a bank balance full of Aussie dollars – but also the disadvantage of being a guest and outsider in this culture as opposed to actually being a part of it.
As this blog develops, I intend to sell the many reasons why Australian businesses should seriously consider leveraging this great country to improve and drive their competitiveness. Also, I intend to offer a very real glimpse of what it is like, day-to-day, running a business here.
The Wild West
The Philippines offers an experience that is much like what I imagine the American West must have been back in the 1800s.
The first thing you notice (aside from the shanty towns and desperate poverty on the road from the Airport) is the traffic. It is chaotic. Road rules are strictly voluntary. They think nothing of turning left from a right-hand lane or other dangerous stunts.
The people are thick on the ground. Manila has grown from a few hundred thousand only 30 or so years ago to around 20 million now. The energy here is intense. January was chaos. I returned to Sydney briefly in February and thought I was on another planet. Our great city where we whinge about roads and public transport is a sleepy country town compared to Manila.
Everything is cash. This is a problem. First, their biggest note is 1000 pesos – about $22.50. Try buying three computers with cash. Your pockets bulging, walking down the street, being approached by beggars – you have what for them would be a lifetime's earnings in your pockets.
Second, security guards are everywhere. After a few months you don't notice the shotguns and machine guns outside almost every building. Because of the cash economy, Armaguard-style vans are prolific and the guys running them have a paramilitary style.
There is a perceived threat of terrorism, but on the street it is a minor background issue with most problems centred around the far south of the Philippines where they have an Islamic insurgency driven by deep historical issues.
Violence in Manila is primarily criminal (petty crime is an issue and there are some car jackings and bank robberies – people do get killed) or, as in the guy who shot up the bus full of Hong Kong Chinese last year, driven by people just going mad due to the pressures of living here. Given the extreme poverty, it is not unexpected.
This is not to say it is lawless. There are lots and lots of laws. Some are very progressive. In fact, in a recent article one of the newspapers proudly trumpeted the Philippines' World #1 ranking as the society where women have equality with men. (Of course, contradicting this there is also a lot of prostitution. However, most of these women come from desperately poor families and in fact are the major bread winner and head of their households.)
Also, labour laws are very progressive and would not be unfamiliar to most Australian executives. There are strict unfair dismissal laws, anti-discrimination laws (sex & religion), holiday and sick leave and a bevvy of on-costs such as 13th month, health cover and retirement funds (although much less than 9%). (Of course, contradicting this there are many many domestic workers and street vendors/beggars who are paid appallingly and live in terrible conditions).
The politics here is famously colourful, and almost every conversation with a Filipino will include some comment offered by them about what they see as the deficiencies of their system. But, being from NSW, I can recount a few stories about what has gone on at home and they soon realise their system is not too bad.
In fact their democracy is vibrant and willing. There are so many newspapers up here that few people can name them all (I am one of them). They are obsessed with corruption – they hate it. There is a real national awakening and a tangible sense of an emerging nation full of promise.
Obviously, way above my level, there are issues – but there is also constant scrutiny by the hyper-active press and people do end up in jail or worse. For example, tragically, a senior military officer recently suicided over his mother's grave as a result of pressure applied by a corruption enquiry.
But as a middle market player there is very little. There is an issue at the level of petty corruption – parking inspectors who might accept a cash payment in lieu of issuing ticket for example... but once again, that sort of thing is not unheard of (though not as common) in Australia.
The Gold Rush
There are two gold rushes over here.
First, real gold. The Philippines sits on the Pacific Rim of Fire. My mining mates from the Handle Bar (the ex-pat mining industry pub) tell me the Philippines has the most mineral wealth per square metre of any place on earth. It is almost completely un-exploited. But, the local population are natural environmentalists and despite the huge positive opportunity mining presents towards solving much of the poverty in this country, the community is generally opposed.
Second, the people. The Philippines can thank the Americans for one great gift, a unified national education system built after the US occupation commenced in the early 1900s. English became the lingua franca for a country spread over more than 7000 islands and countless language groups (The Spanish education system taught in their local languages, so Spanish did not become a unifying national language although Catholicism did become a unifying national religion).
Also, about 30 years ago, American corporations started setting up offices across the Philippines and tens of thousands of corporate jobs were created. Now there is a workforce of millions of Filipinos who speak perfect English with a slight American twang, have degrees from world-ranked local universities, and have decades of experience working for western corporations.
The workers are intelligent, diligent and determined to prove themselves the equal of workers anywhere in the world. There is a lot of national pride tied up in the performance of each Filipino in their workplace – especially when working for a Western company.
So, that is the introduction. I have skirted over many many issues. All comments and questions are appreciated. I will answer each one plus use them as a guide for future topics.
Chris Moriarty is the Managing Director of Flat Planet Pty Ltd and President of Flat Planet Philippines Inc.
Analysis: The misnomer of bank regulation and loan costs
By Adam Zuchetti
Analysis: Bank ‘misconduct’ a woeful understatement
By Adam Zuchetti
Analysis: Banks wrongly targeted as business custodians
By Adam Zuchetti