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ISSN 2243-8963

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Editorial Board

Paulito V. Hilario, PhD

Editor

Anita B. Obispo, M.A.

Rommel Miles E. Corro, M.A.

Maria Theresa L.Ingles, M.A

Myrna Escoto, M.A.

Karen Gabinete, M.A

Board Members

Zarah Jasmin L. Jacob

Cover Design

Thelma Geraldine A. Baricaua,M.S

Consultant

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The Official Faculty Publication

Of the College of Arts and Sciences

San Beda College Alabang Alabang Hills Village, Muntinlupa City

Volume 3 No. 1 (January 2010)

ISSN 2243-8963

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FOREWORD

Ugong Faculty Journal January 2010 issue is a product of scholarly

researches of faculty members of San Beda College Alabang College of Arts

and Sciences, whose interests are in various disciplines of business , IT,

education, arts and sciences. The articles for publication may be in a form of

a basic or applied research.

This issue includes Prof. Arlegue‟s comparative analysis of civil

society engagement with the Association of Southeast Asian Nations

(ASEAN) and South Asian Association for Regional Cooperation

(SAARC). The use of SWOT analyses in the education, real estate and

maritime recruitment setting are the topics covered by the articles of Prof.

Tolentino, Prof. Capulong and Prof. Herrera. Prof Jimenez‟s article delves

on the factors affecting competitiveness of Cebu furniture manufacturers.

The faculty journal follows the standard format for scientific journal,

which includes the Title, Abstract, Introduction, Methodology, Results and

Discussion, and Conclusion. The inclusion of Recommendation and

Acknowledgement is optional to the author/ s of the article. The citation of

references is presented based on the standard format set by each discipline;

thus the authors decide on the style of reference citation to use.

The Editors

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Table of Contents

A Comparative Perspective of

Civil Society Engagement with the ASEAN And SAARC

Celito F. Arlegue, M.A ..................................................................... 1

Teacher Education In Muntinlupa City:

An Economic Perspective

Ernida Ancheta-Tolentino, MSPE ................................................. 32

Factors Affecting The Competitiveness of Selected Home

Furniture Exporters In Cebu

Caryl Jimenez, MBA ...................................................................... 55

Turning Things Around

“Breathing New Life To An Almost-Dead Business”

Allan Capulong, MBA .................................................................... 71

A Strategic Management Paper On The Filipino Seafarer

Recruitment Industry

Antonio Herrera, MBA .................................................................. 83

1

A COMPARATIVE PERSPECTIVE OF

CIVIL SOCIETY ENGAGEMENT WITH THE ASEAN AND

SAARC 1

CELITO F. ARLEGUE, M.A

Abstract

This article provides a comparative analysis of civil society engagement with

the Association of Southeast Asian Nations (ASEAN) and South Asian

Association for Regional Cooperation (SAARC). In particular, it examines

the participation of Solidarity for Asian People‟s Advocacy (SAPA) Working

Group on the ASEAN and South Asia Center for Policy Studies (SACEPS) in

drafting or monitoring the implementation of the ASEAN Charter and

SAARC‟s (Citizen‟s) Social Charter respectively. The article does this by

investigating the factors which facilitated (or obstructed) these CSOs‟

engagement with the ASEAN and SAARC in making or monitoring the

implementation of their respective charters. Utilizing the political process

theory as a framework of analysis, the paper argues that the experience of

SAPA and SACEPS in regional engagement shows that seizing and making

opportunities, effective framing of issues, and astute mobilization of resources

can open up even the most state-centered and elitist groupings like the

ASEAN and SAARC to civil society participation.

Governance in this day and age is a complex process characterized by multiple

actors and levels. In the sub-national, national, regional and global arenas, a variety

of actors interact, cooperate and compete to forward their respective agendas and

advocacies in multiple settings or fora, both governmental and non-governmental.

Indeed, the world, in a way, has transformed into a complex web of interdependence

where varied and multiple transnational connections and interdependencies between

states and societies appear to be increasing at an unprecedented rate. This global

trend can also be observed in the sub-regions of Southeast and South Asia. In these

places, governance at all levels is increasingly being challenged by civil society

organizations (CSOs) operating nationally and transnationally.

Civil society is an “essentially contested concept” (Connoly 1983) as scholars

and activists do not agree on what civil society‟s composition, strategies and goals

should be. In this article, civil society refers to the realm of individuals and groups,

operating at the national or transnational levels, which aims to democratize and

redistribute power in the state and regional institutions (Kaldor 2002). In particular,

1 Paper presented in the Global South Workshop 2009, Geneva, Switzerland. This is drawn largely from

the term paper written by the author for his Political Science 325 (Politics of Developing States) class, 2nd Semester, AY 2008-2009. The author gratefully acknowledges Dr. Teresa S. Encarnacion Tadem and

another anonymous reviewer for his or her comments on the initial drafts of this paper, but assumes full

responsibility for the manuscript. This paper is still a work-in-progress and should not be quoted without permission from the author.

2

civil society is viewed in this article as synonymous with international

nongovernmental organizations (INGOs), defined by Tarrow (2001, 12) as

“organizations that operate independently of governments, are composed of

members from two or more countries, and are organized to advance their members‟

international goals and provide services to citizens of other states through routine

transactions with states, private actors, and international institutions.” 2 In the past

decade, the increasing regional involvement of CSOs has been acknowledged by the

rise of new regionalism approach (Hettne and Inotai, 1994; Hettne, Inotai and

Sunkel, 1999). This approach essentially argues that the process of regional

integration necessitates the participation of both state and non-state actors.

In Southeast Asia, the simultaneous opening of the Association of Southeast

Asian Nations (ASEAN) and the realization of civil society groups and social

movements of the importance of regional engagement has brought about an

interesting case in analyzing governance at the regional level. ASEAN, known for

being a bastion of sovereignty and national interest, has expressed greater

willingness to engage with civil society organizations in recent years, which is a

profound change from its state-centric and elite-driven nature in the past. The

crafting of the ASEAN Charter provides a valuable case study on whether ASEAN

was able to translate its rhetoric of becoming “people-centered” into reality.

Similarly, in South Asia, leaders of South Asian Association for Regional

Cooperation (SAARC) had signed the Social Charter in 2004, and recently

acknowledged the vital role of CSOs in “driving forward the implementation of the

Social Charter and directed the NCCs (National Coordination Committees) 3 to

mobilize civil society organizations to achieve this end.” SAARC, like ASEAN,

has placed great emphasis on state sovereignty and the doctrine of non-intervention

in the affairs of member-states, and has only recently provided spaces for civil

society participation in the implementation of its policies. Hence, it is interesting to

know whether South Asian leaders fulfill their commitment to involve civil society

actors to truly realize the objectives of the Social Charter.

It is in this light that the paper provides a comparative analysis of civil

societies‟ engagement with the ASEAN and SAARC. In particular, it looks into the

role of Solidarity for Asian People‟s Advocacy (SAPA) Working Group on the

ASEAN and South Asia Center for Policy Studies (SACEPS) in drafting and in

monitoring the implementation of the ASEAN Charter and SAARC‟s (Citizen‟s)

Social Charter respectively. More specifically, it investigates the factors which

facilitated (or obstructed) these CSOs‟ engagement with the ASEAN and SAARC

in making and enforcing their respective Charters. Engagement is defined here as

2 It must be noted that Tarrow (2001) argued that INGOs are conceptually different from transnational

social movements (TSMs) and transnational advocacy networks (TANs). He defined TSMs as “socially mobilized groups with constituents in at least two states, engaged in sustained contentious interaction

with power holders it at least one state other than their own, or against an international institution, or a

multinational economic actor” (2001, 11). TANs, on the other hand, “includes those relevant actors working internationally on an issue, who are bound together by shared values, a common discourse, and

dense exchanges of information and services” (Keck and Sikkink 1998, 2 as cited in Tarrow 2001, 13). 3 The NCCs are the bodies created to implement the provisions of the Social Charter in SAARC member-states.

3

the involvement of CSOs in the consultation process regarding the drafting or

enforcement of ASEAN Charter and SAARC Social Charter. 4 By looking at the

issue of engagement, this article hopes to assist CSOs within and outside the

Southeast and South Asian sub-regions in refining their strategies and tactics for

more effective engagement with regional groupings. It also aims to contribute to

the burgeoning literature on civil society‟s role in governance across the globe.

The paper utilizes the political process theory in identifying and analyzing the

factors which account for the success or failure of civil society groups and social

movements in their engagement of state authorities in both national and

supranational levels. The theory has three aspects: political opportunity structures,

collective action frames and resource mobilization. While formally distinct, several

scholars have already integrated these three aspects in analyzing civil society, social

movements and their activities (Jenkins and Form 2005).

Being a case study, the paper concentrates on the factors which facilitated or

obstructed the engagement of SAPA and SACEPS in crafting or monitoring the

implementation of the ASEAN Charter and SAARC Social Charter respectively.

SAPA and SACEPS were chosen because both groups consider engagement in

crafting or monitoring the implementation of the regional charter as one of their

main advocacies (if not the most important one). It must be noted, however, that

CSOs in the Southeast Asian and South Asian sub-regions are characterized by huge

number and diversity, with varying influence on the ASEAN and SAARC. With

regard to the drafting of the regional charters, there were other groups which

participated in and contributed substantively to the process. The paper‟s focus on

SAPA and SACEPS, therefore, is one of its major limitations.

This descriptive paper attempts to address the questions it posted mainly

through qualitative methods of data collection, namely: literature review, key

informants interview and document analyses. It is divided into seven parts. The

first part sets the issue in context by tracing the involvement of CSOs in the two

regional groupings. The second part offers a narrative of events leading to the

adoption and implementation of the ASEAN Charter and SAARC (Citizen‟s) Social

Charter, and SAPA and SACEPS‟s role in the process. The next three parts, which

are the heart of the discussion, provides a comparative analysis of the factors which

impacted on the involvement of SAPA and SACEPS in the crafting or monitoring

the implementation of their respective regional Charters. The sixth part analyzes

the continuing challenges which confront CSOs in the two sub-regions. The

seventh and final part presents some concluding remarks and prospects for the

future.

4 It must be noted that CSOs do not agree on the meaning of “engagement.” Some CSOs, for example, equate engagement with “official dialogue” or “lobbying”. For this reason, they do not consider

“resistance” as a form of engagement. This is the reason why CSOs are also not united as regards the

utility of engagement. This view is drawn from the interview with Jenina Joy Chavez, Coordinator of the Focus on the Global South Philippine Programme, 4 March 2009.

4

CSOs in the ASEAN and SAARC: A Backgrounder

Involvement of CSOs in ASEAN

The 1997 financial crisis is a watershed event in terms of ASEAN‟s

relationship with its people. For one, the crisis led to ASEAN‟s adoption of Vision

2020 which envisions Southeast Asia “being governed with the consent and greater

participation of the people, with its focus on the welfare and dignity of the human

person and the good of the community” (ASEAN Vision 2020 1997). This opening

on the part of the ASEAN was accompanied by the simultaneous recognition of

CSOs of the merit of engagement at the regional level. It must be noted that prior to

the 1997 financial crisis, the focus of attention of CSOs in the sub-region had been,

at various points, the United Nations (UN), World Trade Organization (WTO) and

the International Monetary Fund (IMF). When ASEAN signified its commitment to

better institutionalize itself and to make the people part of this process, CSOs

thought that what they learned in their engagement at the global level could be

applied in the Southeast Asian sub-region. The sub-region, therefore, is viewed as

another arena where the different issues and advocacies of these groups can receive

a hearing and hopefully, impact on supranational and national policy-making.

While it cannot be denied that regional engagement of CSOs of the ASEAN

has intensified in the aftermath of the Asian financial crisis, it has to be pointed out

that the regional grouping has been dealing with CSOs for more than three decades

already. For this reason, the involvement of CSOs in ASEAN processes can be

categorized into two periods – “restricted engagement period” (1967-1990),

“increasing engagement period” (1991 to present). These periods, however, should

not be seen as airtight divisions as civil society activities in the first period overflow

to the succeeding period.

Restricted Engagement Period (1967- 1990)

ASEAN‟s first two decades of existence were almost entirely devoid of

grassroots civil society participation, although it tried to ask for inputs from the

business community in its different economic initiatives. In a way, one of the

reasons for the lack of grassroots civil society involvement is ASEAN itself was not

very institutionalized. Tay and Estanislao (2000) pointed out that from 1967 to

1976, ASEAN can be described as merely a “letter box”, since its functions and

programs were determined and undertaken primarily by national governments.

During the second period, from 1976 to 1992, the authors labeled ASEAN as a

“traveling circus” because the Secretariat remained weak despite the Association‟s

increasing number of activities in different fields. Hence, during these years, it

should not come as a surprise why ASEAN remained to be unreachable for

grassroot CSOs. Furthermore, during this period, ASEAN can be labeled as largely

a “club of dictators” 5 and therefore very elitist in orientation. Human rights issues

5 This term is borrowed from M.R. Sukhumbhand Paribatra, former Thai Member of Parliament and

currently Governor of Bangkok. The phrase was cited in Carolina Hernandez (2008, 307), “The ASEAN Charter and the Building of an ASEAN Security Community.” Indonesian Quarterly, 36 (3-4).

5

were considered to be a taboo and people who forward such advocacy were arrested

and detained. The relationship between national governments and grassroots civil

society organization was very hostile.

The only engagement of ASEAN during this period was with the business

community. The business community has interacted with the ASEAN since the

1970s. The ASEAN Chamber of Commerce and Industry (ACCI), for example,

serves as a vehicle through which businesses can have input on regional economic

issues. ASEAN ACCI, it has to be noted, played an important role in the creation of

AFTA.

Increasing Engagement Period (1991 to present)

ASEAN moved toward greater institutionalization as a response to the

changed global and regional environments brought about by the end of the Cold

War and the Asian financial crisis in the 1990s. Apart from these, ASEAN also had

to deal with the intensification of globalization and regionalization (in other parts of

the world) and the rise of emerging high-growth economies like China and India.

The complex challenges which characterized this period also pushed ASEAN to ask

for inputs from different groups to properly understand and respond to these

challenges.

Institutions like the ASEAN Institute of Strategic and International Studies

(ASEAN-ISIS), for example, had been requested by ASEAN to provide inputs to

ASEAN policies. ASEAN-ISIS is a Track 2 diplomacy composed of individuals and

institutes from most of the Southeast Asian countries. 6 Since 1991, ASEAN-ISIS

has met the members of the ASEAN Senior Official Meeting. It is also holding the

annual ASEAN-ISIS Colloquium on Human Rights since 1993. Furthermore,

ASEAN-ISIS spearheaded the formation of ASEAN People‟s Assembly (APA), the

first of which was held in 2000. The vision of APA is to have an inclusive ASEAN,

an ASEAN which goes beyond the elites and include all sectors of society.

Furthermore, APA also aims to articulate the concerns of these sectors to decision-

makers as inputs to policy-making. Without a doubt, it was through APA that

ASEAN and its member governments finally recognized people‟s participation.

APA is cited at the VAP and the ASEAN Security Community Plan of Action as a

means to promote people-to-people contacts. Apart from ASEAN-ISIS activities, it

must also be noted that the Working Group on ASEAN Human Rights Mechanism

was established in this period to forward the cause of human rights protection and

promotion in the region

6 ASEAN-ISIS members include the Brunei Darussalam‟s Institute of Policy and Strategic Studies

(BDIPSS), Cambodia‟s Institute for Cooperation and Peace (CICP), Indonesia‟s Centre for Strategic and

International Studies (CSIS), Laos‟ Institute for Foreign Affairs (IFA), Malaysia‟s Institute for Strategic and International Studies (ISIS), the Philippines‟ Institute for Strategic and Development Studies (ISDS),

Singapore‟s Institute of International Affairs (SIIA), Thailand‟s Institute for Security and International

Studies (ISIS), and Vietnam‟s Diplomatic Academy of Vietnam (DAV), formerly Institute for International Relations (IIR).

6

As noted above, ASEAN‟s recognition of the importance of the people in

ASEAN processes only occurred in the aftermath of the Asian financial crisis.

From that time on, ASEAN officials and events have never failed to reiterate this

recognition. In the 4th

ASEAN Informal Summit held in Singapore in November

2000, the Eminent Persons Group (EPG) declared that “the peoples of ASEAN must

themselves… take ownership, of the ASEAN Vision 2020, and that ASEAN matters

should not only be prerogative of governments, but also of businesses, the civil

society, and ultimately the people” (Report of the ASEAN Eminent Persons Group

on Vision 2020: The People‟s ASEAN, 2000). This was also the keystone of the

ASEAN Socio-Cultural Community established by Bali Concord II in 2003. In the

Vientiane Action Program (VAP) ASEAN Socio-Cultural Community (ASCC) Plan

of Action, CSOs are explicitly invited to act as agents for implementing the ASCC.

The four elements of the Plan of Action where CSOs could play a role were:

building a community of caring societies; managing the social impact of economic

integration; enhancing environmental sustainability; and strengthening the

foundation of regional social cohesion (Collins 2008).

On the initiative of Malaysia, which served as head of the ASEAN Standing

Committee in 2005, the first ASEAN Civil Society Conference (ACSC-1) was held.

This conference brought more than 120 CSOs across the region to raise their issues

and concerns to ASEAN officials. It was highlighted by the first ever 15-minute

interface between ASEAN heads of states/governments and civil society

representatives. It was also during the chairmanship of Malaysia that the Kuala

Lumpur Declaration on the ASEAN Charter was adopted, with an encouragement of

CSOs in the region to participate in crafting the regional grouping‟s constitution.

Not wanting to lose the momentum brought about by this initiative, the Solidarity

for Southeast Asian Peoples‟ Advocacies (SAPA) was established in 2006. SAPA

is network of CSOs, trade unions, and grassroots organizations spearheaded by

Focus on the Global South, the Asian Forum for Human Rights and Development

(FORUM-ASIA), South East Asian Committee for Advocacy (SEACA), Third

World Network (TWN), and the Asian Partnership for the Development of Human

Resources in Rural Asia (AsiaDHRRA). It is “an open platform for consultation,

cooperation, and coordination between ASEAN social movements and civil society

organizations including NGOs, people‟s organizations, and trade unions that are

engaged in action, advocacy, and lobbying at the level of intergovernmental

processes and organizations” (Rillorta 2007a, 15). SAPA has formed a specific

Working Group on the ASEAN, whose primary advocacy is to make the people part

of the ASEAN community-building process, particularly in the drafting of the

Charter and its Blueprints. SAPA has also been in the forefront of the organization

of 2nd

, 3rd

and 4th

ACSC held in 2006, 2007, and 2009 respectively.

Involvement of CSOs in SAARC

Whereas ASEAN has been incrementally opening up spaces for civil

society engagement, SAARC remains to be “officially” closed to such process. In

the SAARC Summits and other regional meetings, there is still no space for

representation of CSOs or at least, for the issues and concerns of the South Asian

people to be heard. This comes as a surprise, especially as SAARC noted the

7

importance of interaction at the people-to-people level as early as 1987 - in the

Katmandu Declaration issued on the 3rd

SAARC Summit. That document

recognized that “academics, researchers, non-governmental organizations and

others have an important role to play in promoting the SAARC spirit and giving

impetus to regional programmes and projects.”

While SAARC remains to be relatively closed to official civil society

engagement, this is not to deny its different initiatives to take the interests of the

people into account since the mid-1990s. Broadly speaking, civil society

involvement in SAARC can be divided into two periods: the restricted engagement

period (1985-1996) and increasing engagement period (1997 to present). These

periods, like the ones on ASEAN above, are not entirely independent of each other

and are only employed here for discussion purposes.

Restricted Engagement Period (1985-1996)

This period covers the first decade of existence of SAARC. The seven (7)

SAARC Summits held during the period addressed the most relevant issues and

concerns for South Asian people. Given that political and security issues were (and

continues to be) very sensitive due to the bilateral disputes in the sub-region,

particularly the long-standing dispute between India and Pakistan, it appeared that

SAARC had no choice but to discuss issues which fall in the economic and socio-

cultural realm. Some of the issues discussed in the Summits during this period

include rights and welfare of the child, satisfaction of basic needs, population

planning, environmental protection, human development and poverty alleviation.

The seventh summit held in Dhaka in April 1993, where consensus on the

eradication of poverty was arrived at, was significant because it also highlighted the

importance of “people-to-people contact”. Specifically, the 7th

SAARC declaration

“stressed the need to further promote people-to-people contact in order to ensure

increased involvement of peoples of South Asia in the process of regional

cooperation.” As regards the issue of poverty, the Report of the Independent

SAARC Commission on Poverty Alleviation also contained favorable references to

the role of NGOs in poverty alleviation programmes across the region.

Commenting on the recommendations of the report, Bhargava et.al (1995, 39)

pointed out that the members of the Commission had a “common understanding that

with the declining role of the governments consequent to economic liberalization in

the countries of the region, significant role would have to be played by labor

organizations and NGOs in such activities as awareness generation, empowerment

of underprivileged groups and in the implementation of development activities.”

The 7th

SAARC Dhaka declaration was also important because South Asian

leaders noted in this document that “the formulation of guidelines and procedures

for extending recognition to regional apex bodies would facilitate participation of

these bodies in promoting regional cooperation at the people-to-people level.” Such

guidelines and procedures have already been drawn and implemented. All of the

regional apex organizations recognized by SAARC, however, are professional

organizations such as the SAARC Chamber of Commerce and Industry (recognized

8

1992), and SAARC Law (recognized 1994). To this day, the regional organizations

attached to SAARC are limited to business and the professions such as doctors,

architects, accountants, among others.

While SAARC‟s policies remain to be restrictive as regards civil society

participation, non-official dialogues involving intellectuals, journalists,

parliamentarians, environmental activists, artists, writers, women and human rights

groups thrived during this period. Furthermore, grassroots CSOs and social

movements started conducting parallel Summits to the SAARC at about this time.

As discussed below, the origins of Peoples‟ SAARC can be traced to this period.

The anniversary of SAARC‟s first decade of existence was marked by a

declaration from South Asian leaders in the 8th

SAARC Summit in 1995 that

people-to-people contact has already been taking place through various fora within

and outside the SAARC framework. This declaration made it clear, however, that

the people-to-people contact that SAARC was referring to was facilitated mainly

through SAARC Chamber of Commerce and Industry and SAARC Law.

Grassroots South Asian CSOs, then and now, remain to be marginalized from

SAARC processes.

Increasing Engagement Period (1997 to present)

The 9th

SAARC Summit held in Male in 1997 was important in terms of civil

society involvement in SAARC processes as this meeting called for the creation of

the “Group of Eminent Persons (GEP)”. This group, with the SAARC Secretary-

General as resource person, was tasked to “undertake a comprehensive appraisal of

SAARC, and identify measures including mechanisms to further vitalize and

enhance the effectiveness of the Association in achieving its objectives.”

Furthermore, SAARC leaders declared that the GEP “may develop a long-range

vision and formulate a perspective plan of action including a SAARC Agenda for

2000 and Beyond which will spell out the target that can and must be achieved by

the year 2020” (Male Declaration, 1997). The Group was mandated to report to the

Heads of State or Government at the Tenth SAARC Summit.

The GEP‟s report was very significant as it recommended the creation of the

“Social Charter.” The Colombo Declaration of the 10th

SAARC Summit states:

The Heads of State or Government reviewed the progress made in the

social sector by SAARC and determined that, in order to increase

effectiveness, it would be necessary to develop, beyond national plans of

action, a regional dimension of action including a specific role for SAARC.

In this context, they agreed that it would be necessary for SAARC to

develop a Social Charter, which would focus on drawing up targets with a

broad range to be achieved across the region in the areas of poverty

eradication, population stabilization, the empowerment of women, youth

mobilization, human resource development, the promotion of health and

nutrition and the protection of children. The Heads of State or Government

9

further directed the Council of Ministers to initiate work on drawing up a

Social Charter.

Sri Lanka, which held the Chairmanship of SAARC during this period,

requested the Marga Institute based in Colombo to prepare a concept paper on the

Social Charter. The concept paper prepared by the said Institute recommended the

conduct of broad-based consultations with civil society groups across the sub-region

in order to get inputs from the grassroots on the contents of the Charter. This

recommendation, however, was not taken up by SAARC officials. For this reason,

the South Asia Center for Policy Studies (SACEPS), regional think tank where the

Marga Institute is one of the founding members7 , launched a process of civil

society consultations in six countries in the sub-region in order to formulate a

Citizen‟s Social Charter to complement SAARC‟s initiative to come up with a

Social Charter. SACEPS is an independent, non-profit making, regional, non-

governmental organization engaged in promoting policy dialogues, research and

interaction between policy makers, business community and civil society by

drawing in a wider constituency of people committed to promote regional

cooperation in South Asia.

In the next Summit held at Kathmandu in January 2002, South Asian leaders

recognized the contribution of the GEP in evaluating SAARC and in drawing out a

specific plan of action to better improve its performance. Furthermore, they also

endorsed the report of the Council of Ministers on the implementation of the

recommendations of the GEP Report 8 , and directed the same body to undertake a

review of progress in this regard. This mandate from the leaders put the drafting of

the Social Charter on top of SAARC‟s agenda.

The 12th

SAARC Summit held in Katmandu witnessed the signing of the

Social Charter. This landmark document seeks to establish “a people-centered

framework for social development… to build a culture of cooperation and

partnership and to respond to the immediate needs of those who are most affected

by human distress. States Parties are determined to meet this challenge and promote

social development throughout the region.” In relation to civil society participation,

the Charter includes as one of its principles the promotion of “participatory

governance, human dignity, social justice and solidarity at the national, regional and

international levels.” Furthermore, on the operationalization of the Charter‟s

provisions, the National Coordination Committee in each country is also mandated

to make it a “transparent and broad-based participatory process” (SAARC Social

Charter 2004). The same participatory approach should also be adopted in

implementation and evaluation of the Social Charter programmes under national

plans of action.

CSOs in the sub-region received a further push when South Asian heads of

state and government directed the National Coordination Committees (NCCs) in the

7 Other founding institutes of SACEPS include Centre for Policy Dialogue (CPD) Bangladesh, Research and Information System for the Non-aligned & other Developing Countries (RIS) India, Centre for

Policy Research (CPR) India, Institute for Integrated Development Studies (IIDS) Nepal, Lahore

University of Management Science (LUMS) Pakistan, and Institute for Policy Studies (IPS), Sri Lanka. 8 The GEP Report, however, was not accepted by the Council of Ministers in its entirety.

10

14th

SAARC Summit held in 2007 to mobilize civil society organizations in driving

forward the implementation of the Social Charter. In the latest Summit held at

Colombo in August 2008, SAARC leaders moved a step further in transforming

SAARC into becoming more people-centered when it directed its Council of

Ministers to “ensure that SAARC mechanisms identify further areas of cooperation

where people-centric partnership projects could be initiated” (Colombo Declaration

2008).

Without a doubt, the adoption of the Social Charter and subsequent

declarations of SAARC leaders about its implementation can be utilized by CSOs in

the sub-region to demand involvement in the regional grouping‟s institutions and

processes. Certain segments of South Asian CSOs, however, pointed out the state-

centric limitations of the Social Charter and how these would affect its effectiveness.

For one, they claimed that no substantive changes in the socio-economic conditions

of South Asian nations have occurred since the adoption of the Charter in 2004.

For this reason, CSOs and social movements across the sub-region, on the

initiative of the South Asia Alliance for Poverty Eradication (SAAPE), floated the

idea of having a “People‟s SAARC.” The origins of People‟s SAARC can be traced

as early as 1993, when representatives of CSOs and social movements, joined by

people‟s organizations of women, workers, peasant, fisher-folk, marginalized castes

and social groups, ethnic, religious and linguistic minorities, students, and youth

conducted parallel meetings with the SAARC Summit. During those meetings, the

idea of having an alternative to SAARC was brought about. This idea finally

became a reality with a decision to hold the very first People‟s SAARC at

Kathmandu in March 2007 (Ahmed 2009). Its vision reads:

People's Solidarity in South Asia must legitimately cherish the vision and

perspective of a alternative political, social, economic and cultural system

in the region which will do away with all distinctions and discriminations

of gender, caste, religion, language and ethnicity; will lead to a situation

free from exploitation and oppression, will inaugurate a climate in which

each individual will have the opportunity, in concern with the collectivity,

to realize the full development of her or his human potential; will restore

the balance and harmony with nature, will liquidate the artificial and

inhuman barriers that divide lands, collectivities and minds and transcend

all boundaries. Such a South Asia must be the goal of the people of this

region and of their solidarity (People‟s SAARC Concept Notes 2007)

The second People‟s SAARC was held more than a year later at Colombo in

July 2008. It came up with a 17-point goals and aspirations for consideration of the

15th

SAARC Colombo Summit to be held more than a week later on August 2-3,

2008. More interestingly, this meeting forwarded the radical goal of a “People‟s

Union of South Asia”, which appears to transcend the notion of nation-state and

state sovereignty, and therefore contradictory to the nature of the “official” SAARC.

Civil Society Engagement in Crafting and Implementing Regional Charters

11

Crafting the ASEAN Charter and the Role of SAPA

The concept of an ASEAN Charter is not something new 9

, although

ASEAN‟s ardent desire to come up with a charter is relatively recent. It can be

traced in November 2004, when the Charter was listed as one of the Association‟s

goals in the Vientiane Action Programme (VAP). This document acknowledges the

importance of a charter in strengthening ASEAN, and consequently, in realizing the

ASEAN Community. One year after, the ASEAN leaders signed during the Kuala

Lumpur Summit the Declaration on the Establishment of the ASEAN Charter,

creating an Eminent Persons Group (EPG) to make “bold, innovative, and

visionary” recommendations on the Charter. This declaration also formed the High

Level Task Force (HLTF) to do the actual drafting. In January 2007, the leaders

came up with the Cebu Declaration on the Blueprint of the ASEAN Charter,

endorsing the EPG Report and directing the HLTF to begin drafting the Charter.

From February to October 2007, the members of the HLTF conducted thirteen

meetings (13), apart from their consultations with ASEAN senior officials,

parliamentarians and members of the civil society. In November 2007, all the

ASEAN Heads of State and Government signed the Charter at the 13th

ASEAN

Summit in Singapore. Immediately after its approval, the ratification process in all

the ten ASEAN member-states was set into place. All the ten ASEAN member

countries had already ratified the Charter. The Charter has entered into force in

December 2008.

Recognizing the importance of the ASEAN Charter, the SAPA Working

Group on the ASEAN utilized all political spaces to influence its provisions. It

made submissions to the EPG on the ASEAN Charter on three occasions: Security

Cooperation (April 17, 2006 – Bali Indonesia), Economic Cooperation (June 28,

2006 - Singapore) and Socio-Cultural Cooperation (November 10, 2006 -

Philippines). The submissions on security and economic cooperation were received

by the EPG as a group. As regards the submission on socio-cultural cooperation,

since EPG no longer conducted a regional consultation, the Working Group just

made their submission through former President Fidel V. Ramos, the Philippine

representative to the EPG, and Ambassador Rosario G. Manalo, Ramos‟s EPG

assistant. These SAPA submissions, it must be noted, were products of the national

processes conducted from 2006 to 2007. These processes were held in the Burma-

Thailand border, Cambodia, Indonesia, Malaysia, the Philippines, Thailand and

Vietnam. These processes were envisioned to be “fora for discussion and learning

on the concept of authentic regionalism and its possibilities in the ASEAN; of civil

society engagement with the ASEAN on the country level; on the advocacies for

pro-poor ASEAN policies and development agenda; and to elicit civil society inputs

on the ASEAN Charter framework” (SEACA 2007: 3).

The key principles of SAPA‟s recommendations on the political and security

pillars include: a broader definition and reference to security; an introduction of

human security; a more conducive political environment for peace, security and

9 The Philippines first proposed a charter for ASEAN in 1974, although the initiative did not take off the ground.

12

stability; a process of harmonizing instruments and norms with international norms

and standards; and a clear definition of ASEAN key stakeholders, which should

include civil society groups across the region (SAPA Submission to the EPG on

Security Cooperation 2006).

On the economic pillar, SAPA‟s submission highlighted the following

principles: economic integration; financial and monetary stability; regional

harmonization and complementation in industry, agriculture and services; human

resources; labor rights; harmonizing existing norms and mechanisms to address

transboundary economic concerns; increased support to small-scale producers to

build their potential, sustainable production and consumption; energy and

development; implementation, monitoring, and mechanisms for adherence; and

social dialogue (SAPA Submission to the EPG on Economic Cooperation 2006).

Finally, on the socio-cultural pillar, the ten principles that SAPA

recommended for inclusion are: adherence to international norms; harmony and

cultural diversity; entitlements and freedoms; environmental sustainability; rights to

shared resources; recognition and protection of migrants; women‟s socio-cultural

rights; protection of the rights and the development of full potentials of children and

youth; role of a free, independent and plural media; and appropriate and people-

centered science and technology development (SAPA Submission to the EPG on

Socio-Cultural Cooperation 2006).

On November 26, 2006, SAPA made another submission to the EPG

reiterating the main elements of the previous submissions on the three pillars. That

submission identified the seven key points that SAPA wanted to include in the

Charter: regional recognition of human rights and human dignity as foundation of

the community; introduction of human security; regional harmonization and

complementation in industry, agriculture and services; sustainable production and

consumption, energy and development; environmental sustainability; institutional

mechanisms for responsive regionalism; and securing a process for the ASEAN

Charter (SAPA Reiteration of Civil Society Views on the ASEAN Charter 2006).

The EPG submitted its report on the occasion of the 13th

Summit in Cebu City,

the Philippines on January 2007. This report was subsequently endorsed by

ASEAN leaders for consideration of the HLTF tasked to draft the actual provisions

of the Charter. According to Corinna Lopa, they were generally satisfied with the

EPG report. They were quite certain from the start; however, that the bold and

forward-looking recommendations of the EPG would be watered down by the

HLTF due to the latter‟s bureaucratic composition. 10

Nonetheless, they still

participated in the only regional consultation held by the HLTF in March 2007 at

Manila. Apart from this meeting, some individual members of the HLTF also

conducted national consultations in their respective countries. These only happened

in Indonesia, the Philippines and Thailand. In majority of the Southeast Asian

countries, however, no such consultations occurred.

10 Corinna Lopa, Regional Coordinator of the South East Asian Committee for Advocacy (SEACA), interview with the author, January 30, 2009, handwritten notes.

13

For this reason, it should not come as a surprise that the draft charter prepared

by the HLTF failed to incorporate many of the principles enunciated by SAPA in

their EPG submissions. 11

This, however, did not deter SAPA members from

further engaging the ASEAN. As noted above, the members of SAPA expected that

HLTF would not be that progressive in crafting the provisions of the Charter. They

were also realistic enough to know that the best that they can expect from ASEAN

would be incremental change. 12

This position, it must be noted, was different from

some individuals who are part of ASEAN-ISIS, who expressed openly their

reservation on the ratification of the ASEAN Charter. 13

In the Statement of the 2nd

ASEAN Civil Society Conference held in Cebu

City, the Philippines, SAPA called for the creation of the People‟s Charter that

embodies the “rights, interests and aspirations of all peoples in the ASEAN region.”

This was subsequently reaffirmed in the 3rd

ASEAN Civil Society Conference in

Singapore, stating CSOs commitment “work for the creation of a just, people-

centered, caring and sharing ASEAN Community that shall be enshrined in an

ASEAN People‟s Charter.” This Conference also launched the process of drafting

the People‟s Charter which is envisioned to embody the shared values and collective

aspirations of the Southeast Asian people. More importantly, it is viewed to be “a

consensus document and reference point for a future amendment campaign.” This

explains why this process was envisioned to have a five-year time frame (2008-

2013), as by 2013, the ASEAN Charter would already be open for amendments.

To this end, SAPA held a meeting in Bangkok on February 1, 2008 to discuss

the regional and national initiatives that must be put in place in line with the

formulation of the People‟s Charter. The meeting also strategized on how the

regional network would engage the ASEAN on the crafting of the ASEAN Political

and Security Community (APSC) and ASCC Blueprints. Three days after the

meeting, they held a dialogue with ASEAN Secretary General Surin Pitsuwan who

expressed openness on engaging civil society on the following areas: migration,

environment, Burma, internally displaced persons, child soldiers and the ASEAN

Socio-Cultural Blueprint, among others. A month after, on March 5, 2008, SAPA

also met with senior staff members, including the Special Assistant to the ASEAN

Secretary-General/Political Officer at the ASEAN Secretariat in Jakarta to explore

“windows of ASEAN engagement of civil society and laid down civil society plans

for engaging the ASEAN.”

In May 2008, national processes pertaining to the ASEAN People‟s Charter

and Community Blueprints were launched in Cambodia, Indonesia, Malaysia, the

Philippines, and Singapore. These processes aim to: 1) introduce the ASEAN

Charter and SAPA‟s critique of the Charter, as well as the three Community

Blueprints; 2) to develop civil society inputs for the blueprints of ASEAN political

11 For a detailed discussion, see SAPA‟s “Analysis of the ASEAN Charter” (2007). 12 This, however, is different from the public positioning of SAPA on the ASEAN Charter. Publicly,

they signified their opposition to the Charter. Among themselves, they think they can work with it. 13 Herman Joseph Kraft, Executive Director, Institute for Strategic and Development Studies (ISDS), interview with the author, February 9, 2009, handwritten notes.

14

security community and socio-cultural community; and 3) if possible, develop an

action plan of civil society organizations at the national level on the engagement

with their respective government‟s ASEAN departments.

As regards the results of these initiatives, it was pointed out that there was a

need to build a popular campaign (national and sub-regional) beyond the processes

that were already conducted. On the Blueprint, no substantial policy proposals

came out of the exercise. It was also noted that the drafting of Political Security and

Socio-Cultural Community Blueprints was generally a closed process that did not

provide spaces for civil society engagement. SAPA was also active in engaging the

High Level Panel (HLP) which just submitted the terms of reference for the

ASEAN Human Rights Body. 14

Crafting and Monitoring the Implementation of SAARC’s Social Charter and the

Role of SACEPS

The importance of the Social Charter in South Asia cannot be overemphasized.

South Asia, home to about one-fourth of the world‟s population, is characterized by

severe poverty. This poverty, it must be noted, is both a cause and result of socio-

political tensions, armed insurgencies, gender discrimination and violence against

women, worst forms of child labor and appalling inequalities of all forms (SAAPE

Website). Among SAARC member-states, at least five countries are grouped by the

UN in the category of least developed countries (LDC) namely Bangladesh, Bhutan,

Maldives, Nepal and SAARC‟s newest member, Afghanistan. The three other

members – India, Pakistan and Sri Lanka - while not part of the UN‟s LDC list, are

also not developed either.

As discussed above, the concept of the Social Charter was first mentioned in

the Colombo Declaration of the 1998 SAARC Summit. The Charter was adopted

six years later, in the 12th

SAARC Summit in 2004, as the Summit meetings were

disrupted for more than four years due to the Kargil war. The adopted Social

Charter covered issues such as poverty alleviation, population stabilization,

empowerment of women, youth mobilization, human resource development,

promotion of health and nutrition, and protection of children. The crafting of the

SAARC Social Charter, however, was generally closed to civil society participation.

While Sri Lanka‟s Ministry of Foreign Affairs tapped a research institute to come

up with a concept paper on the Charter, the institute‟s key recommendation of

conducting broad and participatory consultations with civil society groups in all

member-countries was unheeded by SAARC officials. SAARC‟s failure to let

CSOs participate in the crafting of the Social Charter led SACEPS to formulate the

so-called Citizen‟s Social Charter.

SACEPS commenced the Citizen‟s Social Charter Process by establishing a

Task Force to conduct consultations with CSOs in each SAARC country.

14 This discussion on recent SAPA initiatives were largely drawn from the plenary presentation of

SEACA‟s Corinna Lopa, “ASEAN People‟s Charter and the Three Pillars of Cooperation”, 4th ASEAN Civil Society Conference (ACSC 4), Bangkok, Thailand, 22 February 2009.

15

Accordingly, meetings with CSOs in Bangladesh, India, Maldives, Nepal, Sri Lanka

and Pakistan were held under the auspices of SACEPS. The consultations were

described to be an open, inclusive, participatory process which involved civil

society, academic and research institutions, and other segments of the society.

Furthermore, “(t)here was a strong feeling that the civil society consultation should

be able to project their expectations before the national leaders of SAARC and their

responsibilities in resolving social concerns spelt out, so that the leaders could then

be held accountable for implementing their commitments under the Charter.”

(Sobhan and Rahmatullah 2003, 15).

Based on the result of these national consultations, the CSOs in each country

drafted a National Citizen‟s Social Charter based on a set of guidelines given by

SACEPS. The Task Force, through its Convenor, consolidated these national

charters into a first draft of the South Asia Citizen‟s Social Charter. This draft was

then presented in a symposium where an eminent group of citizens from CSOs

across the region took part, including Nobel Prize winner Amartya Sen. Revisions

to the draft were made based on the recommendations of the participants in the

symposium. The revised draft was presented again in the CSOs in each country for

comments. The final version of the Charter was afterwards written, taking the

comments on national CSOs on the revised draft into account. The Citizen Social

Charter is viewed as complementary to the official SAARC Social Charter.

However, the two charters also have significant similarities and differences. As

regards the similarities, both charters have dealt with issues like poverty, women,

children, youth, and human resource development. The Citizen's Charter, however,

has dealt with social integration and good governance, areas not addressed by the

SAARC charter. In turn, the later has covered areas like health, education and drug-

de addiction which the citizen's charter did not consider. 15

At present, one of the on-going projects of SACEPS is the monitoring of

Citizen‟s Social Charter‟s implementation in five SAARC countries. The project

hopes to examine the common elements of the Charter and monitor its

implementation in the following sectors: eradication of poverty; empowerment of

women and promotion of their well-being; the rights and well-being of children; the

rights and well-being of youth; development and utilization of human resources;

environmental degradation and ecological imbalances; protection of aged

population; and social integration and good governance (SACEPS Website).

SACEPS Board Members also attended a number of meetings and fora on the

contents of the Charter and its implementation, not to mention the reports and

papers that it published on the topic.

Beyond the Social Charter, SACEPS engaged the SAARC by conducting an

Annual Audit of SAARC's policy/programs. This audit reviews the past

commitments made by SAARC in its treaties and declarations, identifies what has

been achieved and what parts of the commitments are still pending, and enumerates

the decisions that need to be taken to carry out these obligations. Copies of the audit,

15 This is based from the news account of the speech given by the SACEPS Task Force Convenor on the Citizen Social Charter. Cited from http://www.thedailystar.net/2004/03/01/d4030101099.htm.

16

in the form of annual report, are presented to member governments, civil society

and the members of the media prior to the SAARC Summit with the hope that these

would be incorporated, or at least considered, in the SAARC process. In the last

two summits held in New Delhi and Colombo, SACEPS even made separate

recommendations for consideration of SAARC leaders.

Political Opportunities Facilitating the Engagement with the ASEAN and

SAARC

In both Southeast Asia and South Asia, global and regional developments

presented political opportunities which have been seized by SAPA and SACEPS to

influence the crafting and implementation of regional policies. In some instances,

political opportunities themselves have been made in order to facilitate civil society

engagement of ASEAN and SAARC.

Political opportunity structures pertain to “consistent – but not necessarily

formal or permanent – dimensions of the political environment that provide

incentives for people to undertake collective action by affecting their expectations

for success or failure” (Tarrow 1994, 85). Goldstone and Tilly, (2001, quoted in

Jenkins and Form 2005, 337) also refer to them as “the probability that social

protest actions will lead to success in achieving a desired outcome.” These

structures deal with changes in political environment that provide incentive for

undertaking collective action. They can be structural or dynamic. Structural

opportunities, such as state strength, refer to “stable aspects of institutional structure

(that) shape the differences in movement formation and strategy” (Tarrow 1994, 89).

“From the standpoint of social movements, these aspects are essentially fixed and

given, barring dramatic and unforeseen changes beyond their control” (Gamson and

Meyer 1996, 277). Dynamic opportunities, on the other hand, pertain to the

immediate institutional environment which may be “relatively volatile, shifting with

events, policies and political actors” (Gamson and Meyer 1996, 277). They

include four dimensions: opening up of access to participation; instability of ruling

alignments; availability of influential allies; and cleavages within and among elites

(Tarrow 1994). With regard to increasing access to participation, two points need to

be emphasized: 1) even partial opening can provide an incentive to participate; and

2) there is a danger that groups which seek to expand opportunities may find

themselves cut off from their base. Political instability is also another incentive for

collective action as this “creates uncertainty among supporters, encourage

challengers to try to exercise marginal power and may induce elites to compete for

support from outside the polity” (Tarrow 1994, 87). The presence of available allies

is another encouragement for collective action as it increases the probability of

success. Tarrow (1994, 88) noted that “(c)hallengers are encouraged to take

collective action when they have allies who can act as friends in court, as guarantors

against repression or as acceptable negotiators. For resource-deficient groups, allies

are an external resource that can be depended upon. The last dimension pertains to

divisions of the elites, which not only encourages collective action but also pushes

the disaffected elites to seek support from outsiders or to assume the role of

“tribunes of the people.”

17

Political opportunities can also be expanded by civil society groups. As what

Khagram et.al noted (quoted in Encarnacion Tadem 2008, 45), political

opportunities are “not only perceived and taken advantage of by social

movements… they are also created.” Tarrow (1994, 52) pointed out that groups

create opportunities for themselves and for others by “diffusing collective action

through social networks and by forming coalitions of social actors; by creating

political space for kindred movements and counter-movements; and by creating

incentives for elites to respond.” As regards diffusing opportunities, it is claimed

that collective action of one group can expand the opportunities of other groups.

According to Tarrow (1994, 96), this happens “when „early risers‟ make claims on

elites that can be used by those with less daring and fewer resources.” Furthermore,

“collective action exposes opponents‟ point of weakness that may not be evident

until they are challenged.” Collective action, however, not only creates

opportunities for groups and their allies, it also creates opportunities for opponents.

For example, “(m)ovements that make extreme policy demands can be

outmaneuvered by groups that pose the same claim in more acceptable form”

(Tarrow 1994, 97). This is what is meant by the statement that collective action by

one social movement can generate a countermovement. Finally, collective action

also creates opportunities for the elites, both in the negative and the positive sense.

Collection action can either result in repressive actions of the elites or in a situation

wherein disillusioned elites proclaim themselves as representatives of the people.

In Southeast Asia, a confluence of events in the 1990s and in recent years led

to changes in the political environment where CSOs operate. The end of the Cold

War, intensifying globalization, increasing regionalism in other parts of the world,

the expansion of ASEAN membership to include Cambodia, Myanmar, Laos and

Vietnam (CMLV), and the rise of transnational and non-traditional security threats

were just some of the events which led ASEAN to move for greater

institutionalization. This action was further reinforced by the 1997 financial crisis.

The financial crisis which swept the region exposed the increasing mobility

(and therefore volatility) of international capital movements due to information and

communication technology and the liberalized policies of the states. The crisis also

supposedly put to an end the East Asian economic miracle, which, consequently,

cast doubt on the viability of ASEAN. ASEAN was blamed for failing to predict

the crisis and for failing to mitigate its effects when it struck. While there were

questions on what ASEAN could realistically do given the multifaceted nature of

the crisis, it nonetheless responded by engaging East Asian countries through

ASEAN + 3 and by accelerating the implementation of the AFTA.

Without a doubt, the crisis contributed immensely on the decision of ASEAN

to build an open, dynamic and resilient ASEAN Community and consequently, to

recognize the possible contributions of the Southeast Asian people, particularly

CSOs in the process. Alternatively, the increasing clout of ASEAN in regional

affairs attracted the attention of CSOs in the sub-region which used to think that

ASEAN is too weak to really matter and therefore carried their advocacies in other

arenas such as the UN, IMF or the WTO.

18

Apart from the adoption of Vision 2020 which sought to make ASEAN a

“community of caring societies”, succeeding declarations and agreements of the

regional grouping further opened up access to participation of CSOs. The

Declaration of ASEAN (Bali) Concord II, building on the objectives set by Vision

2020, envisions the creation of an ASEAN Community based on the three

interrelated and mutually reinforcing pillars of political and security cooperation,

economic cooperation, and socio-cultural cooperation. As a framework to achieve

the ASEAN Community, the ASEAN Security Community (ASC)16

, the ASEAN

Economic Community (AEC) and the ASEAN Socio-Cultural Community (ASCC)

would be established. In the 2004 VAP, concrete measures were identified to

implement Bali Concord II. As noted above, it was in this document that CSOs

were tasked to assist in the realization of ASCC.

The 11th

ASEAN Summit held in Malaysia in 2005 further enlarged the

political space for civil society participation for two reasons. First, the Summit was

held parallel to the 1st ASEAN Civil Society Conference where the first ever 15-

minute interface between ASEAN heads of state/government and CSOs took place.

Second, that Summit also came up with a declaration stating the desire of ASEAN

leaders to establish an ASEAN Charter. For this purpose, an EPG was established

to provide “bold and forward-looking” recommendations on the contents of the

Charter.

The drafting of the Charter is another avenue for CSOs to participate in

ASEAN community-building process. As noted by Joy Chavez of Focus on the

Global South, the Charter-making process was a “clear target” for the CSOs.17

It

cannot be denied that this process was the primary impetus for the establishment of

SAPA. SAPA was formally established in a regional consultation held in Bangkok

Thailand in February 2006. This consultation was attended by more than 50

participants representing about 30 CSOs from the region. At present, more than 70

CSOs in both the national and regional level are part of SAPA. SAPA has created a

specific Working Group on ASEAN in order to engage the regional grouping in

drafting the ASEAN Charter.

SAPA‟s engagement with the ASEAN was also brought about by the presence

of a number of allies among ASEAN leaders and officials. On the EPG, SAPA

noted the contributions of Fidel Ramos of the Philippines and Ali Alatas of

Indonesia. As noted above, SAPA submitted its recommendations on the ASCC to

Ramos as the EPG no longer conducted another civil society consultation for the

socio-cultural pillar. The late Ali Alatas, on the other hand, has been a good friend

of a number of SAPA officials since his stint as Indonesian foreign minister.

Former Ambassador Rosario Manalo, who headed the HLTF during the most

critical stages of the drafting process, was also a key ally of SAPA. Despite her

16 This is now called ASEAN Political Security Community (APSC). 17 Jenina Joy Chavez, Coordinator, Focus on the Global South Philippine Programme, interview with the author, March 4, 2009, handwritten notes.

19

strong posturing in relation to civil society, CSOs in the region have a long

relationship with her since her stint in the UN. Behind the scenes, it was said that

former Ambassador Manalo conducted informal conversations with civil society

representatives to ask for their inputs to the Charter.

On the related issues of Burma and human rights, SAPA found an unexpected

ally in the persons of President Gloria Arroyo. President Arroyo, it must be

remembered, even issued a statement saying that it may be hard to have the ASEAN

Charter ratified in the Philippines because of Burma‟s rampant violation of human

rights at the height of the “saffron revolution.”

From Thailand, SAPA‟s allies include Prime Minister Abhisit Vejjajiva,

Ministry of Foreign Affairs‟ Kasit Piromya, and ASEAN Secretary-General Surin

Pitsuwan. As the current chair of ASEAN, Prime Minister Vejjajiva extended

significant support for CSOs‟ activities, including engagement with the ASEAN. In

the interface between ASEAN leaders and civil society representatives on the

occasion of the 14th

ASEAN Summit, the Thai Prime Minister performed an

unprecedented act of meeting the representatives from Burma and Laos who were

either refused entry or decided not to participate for fear of retribution from their

governments. The Thai leader was the only one among the ASEAN leaders who

decided to do so, despite appeals from civil society representatives during the

interface for ASEAN leaders to be in solidarity with their Burmese and Laotian

counterparts. During the meeting, he was joined by the Foreign Affairs Minister

Kasit Piromya. It must also be noted that Minister Kasit also participated in the 4th

ASEAN Civil Society Conference held on February 22, 2009 at Chulalongkorn

University. It that conference, he was joined by ASEAN Secretary-General Surin,

who, as pointed out above, met with SAPA during its meeting in Bangkok for the

ASEAN People‟s Charter. Apart from Secretary-General Surin, a number of senior

officials in the ASEAN Secretariat also have good relations with SAPA.

On instability in ruling alignments and cleavages within and among the elites,

it may be said that the rotating leadership of ASEAN and the policy differences

between the democratic and less democratic ASEAN countries also contributed to

the vibrancy of SAPA. On the rotating leadership, it must be noted that ASEAN is

known for “one-upmanship”, wherein the Chair of the Standing Committee is

expected to come up with initiatives that would define his/her country‟s

chairmanship. This was precisely what happened in the 1st and in the 4

th ACSC

conferences. In both instances, the leader of the ASEAN chair country provided

substantial financial support and encouragement to these conferences, as they were

viewed as part of the legacy of their leadership. The division between the

democratic and less democratic countries in the region also opened up spaces for

civil society participation. Countries like Indonesia, Philippines, Thailand and to a

lesser extent, Malaysia are known to be more supportive of CSOs compared to the

other countries in the region. In the case of SAPA, their relative success may also

be attributed to the fact that the past and present chair countries of ASEAN namely

Malaysia, Philippines and Thailand are relatively sympathetic to the cause of CSOs

in general.

20

SAPA, undoubtedly, also benefited from the expanded political opportunities

resulting from the activities of ASEAN-ISIS and other networks such as the

Regional Working Group for an ASEAN Human Rights Mechanism. ASEAN-ISIS,

in particular, can be considered as an “early riser” which paved the way for the

democratic opening of the ASEAN. This network‟s practice of Track 2 diplomacy

served as a confidence-building mechanism between two previously hostile groups

– the ASEAN elites and CSOs. The increased confidence between the two camps

was successfully tapped by the likes of the Regional Working Group, which, in turn,

became one of SAPA‟s models for successful engagement.

Developments in Southeast Asia also impacted on the dynamics of

regionalization in South Asia. While the Asian financial crisis did not affect South

Asia directly, the repercussions of the crisis on the ASEAN were observed with

great interest by SAARC leaders. As discussed above, the crisis resulted in

ASEAN‟s adoption of Vision 2020, which essentially shows Southeast Asian

leaders desire for greater political, economic and socio-cultural cooperation in order

to weather the crisis and regain the grouping‟s international prestige. Fearing either

the growing regionalism in Southeast Asia or the possible spread of the crisis to the

South Asian subcontinent, SAARC decided to take stock of what it had

accomplished and to chart its future direction. The Group of Eminent Persons

(GEP), which was created for these tasks, delivered an honest and forward-looking

report which identified the ways forward for SAARC. While the report was never

implemented in its entirely, many of its provisions were adopted by SAARC,

including the creation of the Social Charter.

The impacts of globalization made the need for a Social Charter more glaring.

Problems like widespread poverty, increasing rates of malnutrition and female

illiteracy, trafficking of women and children, increasing unemployment, depletion

of natural resources, among others, which have been connected to globalization

directly or indirectly, gave a sense of urgency for the creation of the Charter. As

noted above, the proposed Social Charter is envisioned to address a broad range of

issues including poverty alleviation, health, education, human development and

youth mobilization, promotion of the status of women, promotion of the rights and

well-being of children, population stabilization, drug de-addiction, rehabilitation

and integration, among others. For this reason, the SAARC leaders‟ announcement

of their desire to craft a Social Charter, apart from their directive that the process

should include broad-based national consultations, attracted the attention of CSOs

immediately.

In the case of SACEPS, therefore, SAARC‟s decision to craft a Social Charter

is a political opening which must not be left to pass. As noted by Ahmed (2009), by

committing themselves to the Social Charter, SAARC leaders, wittingly or

unwittingly, accepted regional integration as a goal. Regional integration, in turn,

entails civil society involvement in regional decision-making and processes. For

this reason, when SAARC ignored its recommendation to involve CSOs in the

process, SACEPS decided to conduct a parallel process where CSOs in SAARC

countries can input their contributions. The result of this process was then used as a

base document to engage the drafting of the official SAARC Social Charter. This is

21

a clear case of CSOs creating political opportunities when there were none. By

coming up with a Citizen Social Charter, SACEPS pushed SAARC elites to respond

by hastening the drafting of the official Social Charter. Knowing that there is

already a social charter which was a product of broad-based civil society

consultations, the elites responded by ensuring that the official SAARC Social

Charter include inputs from the “unofficial” social charter. It is important to note

that Citizen Social Charter was eventually submitted to the SAARC Secretariat as

an input to the official deliberations and finalization of the SAARC Social Charter.

Another interesting point was that Dr. Godfrey Gunatileke, who was officially

asked by SAARC Council of Ministers to draft the concept paper for the SAARC

Social Charter, also served as Convenor of SACEPS Task Force on the Citizen

Social Charter. For this reason, the Citizen Social Charter which came out of the

process was complementary to the official Social Charter.

At least on the issue of the Social Charter, other political opportunities

available for CSOs in Southeast Asia have not been available for South Asian CSOs.

For one, there were no South Asian counterparts to the likes of Fidel Ramos,

Rosario Manalo, Abhisit Vejjajiva, Kasit Piromya, among others. While there were

serious divisions among SAARC member-states, particularly between India and

Pakistan, these did not lead to the opening of political opportunities for CSO

participation. SAARC, while it is slowly opening up, remains to be purely

intergovernmental in its processes and institutions.

Framing the CSOs’ Engagement with the ASEAN and SAARC

While political opportunity structures are important for explaining collective

action, civil society groups and social movements must also be concerned on

formulating collective action frames that dignify and justify their action. Tarrow

(1994, 122) noted out that these frames “serve as accentuating devices that either

„underscore and embellish the seriousness and injustice of a social condition or

redefine as unjust and immoral what was previously seen as unfortunate but perhaps

tolerable‟” Similarly, Khagram et. al (quoted in Encarnacion Tadem 2008, 45)

stated that “movements help to create and recreate meanings through „framing‟ or

the „strategic efforts‟ by groups of people to fashion shared understandings of the

world and of themselves that legitimate and motivate collective action.” Frames,

therefore, are used by CSO and movement leaders to “externalize blame by

attributing grievances to the mutable policies and practices of institutional elites,

and they propose concrete social changes to alleviate these problems” (Jenkins and

Form 2005, 339) The formulation of these frames depends on “the actors in the

struggle, the opponents that they face and on their access to broader public through

the forms of collective action they employ and the political opportunities they

exploit” (Tarrow 1994, 134). Collective action frames must also be considered in

conjunction with ideology and consequently with strategies and tactics. As noted

by Jenkins and Form (2005, 341), “framing is best understood as a central

component of ideological work that links grievance claims to broader movement

goals as well as to specific strategies and tactics.” Also, frames, once formulated

and successfully employed, can also be imported into the messages of other

movements.

22

Broadly speaking, both SAPA and SACEPS framed their engagement in the

ASEAN Charter and SAARC Social Charter in terms of forging a more accountable,

transparent and participatory governance at the regional level. Critical of the state-

centered and elite-driven nature of both ASEAN and SAARC, these regional

networks advocated greater people‟s participation in decisions that affect their lives.

Given the widespread poverty in South Asia and the rationale of the Social Charter,

SACEPS also framed the issue in terms of social development and good governance.

In the case of SAPA, the group forwarded two objectives on why it engaged

the ASEAN Charter process: 1) “to cultivate ASEAN as a people-centered

organization” and 2) “to strengthen the sense of ownership and belonging among its

people, including enhancing the participation of and interaction among

Parliamentarians, NGOs, and civil societies of its member states.” Through its

inputs in the ASEAN Charter, SAPA envisioned an ASEAN that recognizes

universally accepted rights and standards, addresses transboundary economic, social,

and environmental conflicts in a peaceful, just and effective manner, and upholds

people‟s participation (Nuera 2007, 13).

SAPA‟s engagement with the ASEAN Charter process was framed in terms of

making ASEAN more democratic and accountable, more effective and more

“people-centered.” It considers engagement “both as a right of citizens of the

ASEAN region and an obligation to the region as well” (Nuera 2007, 13). This

framing can be best observed in the themes of the civil society conferences which

SAPA spearheaded. In the 2nd

ACSC held in December 2006 in Cebu City, the

theme was “Creating a Caring and Sharing Community: Enhancing People‟s

Participation in Governance and Development.” When Singapore hosted the 3rd

ACSC, it adopted the theme, “Moving Forward: Building an ASEAN People‟s

Agenda”. The 4th ACSC held in February 2009 in Bangkok adopted the theme

“Advancing a People‟s ASEAN.” In all the three conferences where SAPA served

as part of the organizing committee, the common threads which bind the themes are

the enhancement of people‟s participation in ASEAN institutions and processes and

building an ASEAN that truly and effectively responds to the genuine aspirations of

the people in the region. These two threads, it must be noted are intricately related,

as they are based on the democratic assumption that what is to the interest of the

people can be best gauged by the people themselves. Hence, an ASEAN that is not

democratic and accountable cannot effectively respond to the true needs and

aspirations of the Southeast Asian people.

The framing of the issue in terms of forging a more people-centered ASEAN,

both in processes and results, also affected SAPA‟s strategies, tactics, and arguably

its ideological positioning. While both Corinna Lopa and Joy Chavez denied

compromising their issues and concerns in the course of their engagement, they also

admitted that their actions have also been shaped by ASEAN‟s nature. Recognizing

ASEAN‟s traditional enmity with civil society participation, Lopa said that they

learned to “tone down” their delivery of issues. On the part of Chavez, while her

group Focus on the Global South‟s advocacy has always been “deglobalization”,

such term was never used in SAPA‟ engagement of the ASEAN. Given ASEAN‟s

23

liberal and capitalist character, SAPA‟s organizers knew that such advocacy would

not fly.

SACEPS, on the other hand, initiated a parallel Citizen Charter process

because of the lack of spaces for engagement in the crafting of the official SAARC

Social Charter. As noted by Behera (2008, 29), “The intergovernmental process for

preparing the SAARC Social Charter moved at its own pace with little involvement

or dissemination about it among the civil society organizations. It failed to receive

national and regional inputs because the SAARC Secretariat had not mandated it

nor had enough resources to play a proactive role in mobilizing member states and

civil society in the preparation of the Social Charter.” The Citizen Social Charter,

however, is not envisioned to be an alternative to the official Social Charter. The

former was envisioned to be a framework document for engagement with the

SAARC official process, as well as for dialogue with other civil society

organizations in South Asia.

By drawing up a Citizen Social Charter parallel with the official SAARC

Social Charter, SACEPS conveyed the message that the crafting of this important

document cannot be left in the bureaucrat‟s hands, that the people‟s perspectives on

the issues which involve them are important to make the document relevant and

effective. Given SAARC‟s and its member-countries‟ lackluster record in terms of

implementations of regional agreements, SACEPS also made it clear that civil

society participation should be encouraged not only in the drafting process, but also

in implementation and monitoring as well.

Civil society‟s role in the drafting, implementation and monitoring of both the

Citizen Social Charter and the SAARC Social Charter is critical in giving flesh to

the document. This perspective is also linked to the issue good governance and

social development (or more correctly, the lack of it) in South Asia. The

widespread poverty and marginalization in the sub-region, in a way, is a testament

that SAARC and national officials cannot address these problems alone. They need

CSOs in order to foster good governance and consequently, social development

The way SAPA and SACEPS framed the issue has been quite effective for two

reasons. First, as discussed above, ASEAN and SAARC, then and now, have been

perceived as an elitist association, a grouping that is primarily run by foreign and

economic ministers. In the case of ASEAN, the people‟s alienation from the

grouping can be seen in the fact that to this day, “there remains much

misunderstanding about what ASEAN is and how it does things, what it has been

meant to be and do, what it has done and what it has failed to do, what it can and

cannot do, and the promise of what it could yet become and accomplish” (Severino

2007, xii). Given the complex global and regional challenges that ASEAN face, the

claim that the regional grouping can no longer remain to be alienated from the

people attracts the attention not only of people in the region but of Western

countries as well. This has positive impacts for funding of CSOs as discussed

below. SAARC, on the other hand, is much guiltier of being state-centered and

elite-driven. As noted above, there is still a narrow political space for civil society

participation in SAARC processes and institutions. This space, however, has been

24

increasing due to the adoption of the Social Charter and greater openness on the part

of SAARC leaders to receive inputs from civil society.

Second, the call for a more democratic, accountable and people-centered

ASEAN is based on the declarations that ASEAN leaders themselves made. Hence,

this advocacy is just a way to make the leaders accountable for the promises and

commitments that they themselves said. As discussed above, a number of ASEAN

documents such as the Vision 2020, Bali Concord II, Vientiane Action Program, the

EPG Report on the ASEAN Charter, among others, recognize the importance of

involving the people in ASEAN institutions and processes. The same can be said

with regard to SAARC. SAARC, in its recent declarations, has also recognized the

importance of involving the people in the process, particularly in realizing the goals

of the Social Charter. Unfortunately, these declarations are usually nothing but

rhetoric, and SAARC bureaucrats and national officials do not usually translate

these democratic principles into practice. Nonetheless, these commitments of South

Asian leaders in recent SAARC Summits can be used as rallying points to truly

make the regional grouping more democratic in its principles and practices.

Mobilizing Resources for Effective Engagement of the ASEAN and SAARC

Mobilization deals with the resources that are available for social movements

to mobilize (Tarrow 1994). Resources include “any capacity for carrying out

collective action, ranging from tangible resources (money, space, publicity) to

people resources (leadership, expertise, access to networks and decision makers,

volunteer time and commitment) and societal resources (social status, legitimacy

and name and issue recognition” (Freeman 1979, quoted in Jenkins and Form 2005,

337). It also takes into consideration that “actors and their allies and targets differ

in terms of resources they command, their preparedness to make resources available

and their ability to use these resource effectively” (Klandermass and Staggnborg

2002, quoted in Encarnacion Tadem 2008, 45). One increasingly important

resource is the mass media, which is used by CSOs and social movements to

transmit messages and encourage others to follow their example or to take

sympathetic notice of their claims. (Tarrow 1994, 143-144).

The increasing regional prestige of SAPA and SACEPS are also due to its

ability to mobilize grassroots civil society organizations in a number of countries in

the region. As regards the ASEAN Charter process, SAPA network conducted

national processes in most of the countries in the sub-region to get a sense of the

issues and concerns that the people want to bring in the Charter. The same process

has been done again in connection with the move to come up with a People‟s

Charter. SACEPS also did the same thing on SAARC‟s Citizen‟s Social Charter.

Disappointed with the slow progress of the SAARC intergovernmental process and

its failure to conduct consultations wit CSOs, SACEPS initiated a parallel process

marked by the formation of citizen‟s groups in at least six SAARC countries.

Through this participative process, “civil society organizations in each country got

an opportunity to identify their own strategic issues and problems as these emerged

within their development context, and design systems and strategies which could

25

reduce the social insecurity of their vulnerable groups and draw up country-specific

Citizen‟s Social Charter” (Behera 2008, 29). These national social charters serve as

the key inputs in drawing up a SAARC Citizen‟s Social Charter, whose initial draft

was again presented in the citizens groups for comments and suggestions. The final

version of SAARC‟s Citizen Social Charter also included a provision calling for the

formation of Citizen‟s National Forum in each country to monitor the

implementation of the Social Charter. These CSO-based forums have performed a

good job in monitoring the discrepancies between official pronouncements made by

governments and the real situation on the ground. They also guaranteed civil

society participation in the process, as the National Coordination Committees

established to monitor the official SAARC Social Charter are generally devoid of

representation from CSOs.

The importance of these national processes cannot be discounted.

Recognizing Tarrow‟s (1994) warning about the possibility of CSOs and social

movements being “cut off” from their base as the opportunities for engagement

expand, these national processes keep the SAPA and SACEPS grounded with the

constituencies that they seek to represent. Furthermore, these national processes

also impacts on the nature of regional engagement. As what SAPA itself recognize,

“(i)n engaging the ASEAN Charter process at the regional level, strong foundations

should have been first at the national level because national interests defines one‟s

regional agenda” (Nuera 2007, 19).

The participation of SAPA in the ASEAN Charter process was also due the

generous support provided by Western governments and foundations to their

activities. As discussed above, Western countries played a huge role in pressuring

ASEAN‟s to open up spaces for people‟s participation. It should not come as a

surprise, therefore, if these countries are very supportive of the activities and

processes which aim to achieve a more people-centered ASEAN. SAPA-initiated

civil society conferences also showed efficient use of resources by letting

participating organizations fund their delegations. Apart from being cost-efficient,

it also creates a sense of ownership among the participants. Furthermore, SAPA

also effectively used the media to turn around events to their favor, such as ASEAN

leaders‟ refusal to grant access to civil society participants from Burma and

Cambodia in the 14th

ASEAN Summit. Immediately after the commotion,

APF/ACSC organizers gave interviews and release a statement drawing attention to

ASEAN‟s actions.

In the case of SACEPS, it also benefited from the generous foreign funding of

United Nations Department of Economic and Social Affairs (UNDESA). UNDESA

financed SACEPS process of drawing up a Citizen‟s Social Charter from its

initiation to its adoption. Apart from foreign support, SACEPS also utilized its

links with eminent persons in the sub-region in order to put prestige and credibility

to their policy recommendations. These group of distinguished individuals, who

also served as the think tank‟s international advisors include: Professor Amartya

Sen, Nobel Laureate, Master, Trinity College, Cambridge University; Professor

Nurul Islam Emeritus Professor, IFPRI, Former Deputy Chairman, Bangladesh

Planning Commission; Mr. Rafeeuddin Ahmed, Former Associate Administrator,

26

UNDP, New York; Mr. K. K. Bhargava, Former Secretary General, SAARC; Dr.

Mohammad Latheef, Permanent Representative of the Maldives to the United

Nations, New York; Former Minister of Education, Maldives; and Dr. Gowher

Rizvi, Director, Ash Institute for Democratic Governance and Innovation, Harvard

University.

Challenges Facing CSOs in Southeast and South Asia

Given the differences in the political, economic, socio-cultural and historical

contexts of Southeast and South Asia, the nature of the challenges confronting

CSOs in the two sub-regions is varied. However, there are still common problems

that Southeast and South Asian CSOs face. The first one is the inability of civil

society groups to come up with a united stance vis-à-vis their respective regional

organizations. In Southeast Asia, this is most evident in the seeming division

between APA and ACSC and its organizers, ASEAN-ISIS and SAPA. As Collins

(2008, 322) observed, “The danger for CSOs is that having both APA and ACSC,

and in 2007 those two were joined by another civil society conference meaning that

three civil society conferences about ASEAN were held in the span of thirteen days,

creates the perception of confusion over what CSOs want and thus hinders the

likelihood of them achieving an institutionalized relationship with ASEAN.” In

South Asia, the same problem can also be observed. As observed by Behera (2008,

26), “(t)here are too many tracks operating in the non-governmental domain with

little coordination. This often results in duplication and frittering away of limited

resources and energies to achieve the same goal. More importantly, there are

divisions among their ranks. Professionals involved in policy advocacy at the top

tend to look down upon NGOs and activists…This is only matched by activists‟

disdain for the veterans of Track Two dialogues who are often debunked as living in

ivory towers, divorced from the social realities on the ground.” While there was no

evident competition between SACEPS and SAAPE, it cannot be denied that these

two are miles apart ideologically. While SACEPS activities are consciously crafted

to provide inputs to the SAARC process, SAAPE-initiated People‟s SAARC is

designed to provide an alternative political, social, economic and cultural system in

the sub-region that appears to go beyond SAARC. In a way, this plurality of

perspectives is a good thing. However, this ultimately affects other considerations

such as funding among others.

The second challenge is that ASEAN and SAARC, generally speaking, remain

to be essentially the same. In the case of ASEAN, its modus operandi remains to be

the “talk big, act modestly approach” (Katsumata, 2007). This can be gleaned in the

ASEAN Charter, which did not include any provision on institutionalizing CSO

participation in ASEAN decision-making processes. While the political space for

engagement has widened in recent years, this process remains determined, directed

and controlled by the state elite, as evidenced by the 2006 guidelines on CSO

engagement. As observed by Collins (2008, 315), “it is a top-down process where

ASEAN establishes the objectives that the CSOs pursues and it is perhaps not

surprising that the types of the CSOs that are granted accreditation represent

professional and industry associations…” Similarly, SAARC institutions and

processes remain to be off-limits to civil society participation. There was not even

27

an institutional mechanism to link Track 1 and Track 2. To this day, the linkage

remains to be informal, ad hoc, and based on personal networks. Furthermore, all

the organizations attached to the regional grouping continue to be from business or

the professions. No accreditation is given to grassroots CSOs up to the present.

Conclusion and Prospects

This paper investigated regional civil society organizations‟ engagement of

Association of Southeast Asian Nations (ASEAN) and South Asian Association for

Regional Cooperation (SAARC). In particular, it looked into the factors that

facilitated or obstructed the engagement of regional CSO networks, Solidarity of

Asian Peoples‟ Advocacies (SAPA) Working Group on the ASEAN and South Asia

Center for Policy Studies (SACEPS) of their respective regional organizations. To

provide greater focus on the study, their involvement in crafting and/or

implementing the ASEAN Charter (in the case of SAPA) and SAARC Citizen

Social Charter (in the case of SACEPS) were analyzed and compared using political

process theory. The theory‟s three elements namely political opportunity structures,

collective action frames and mobilization served as the basis for comparison of

SAPA‟s and SACEPS‟s engagement of ASEAN and SAARC respectively.

With regard to political opportunity structures, it appears that the political

environment in Southeast Asia provided greater incentives for civil society

engagement. Developments outside and within ASEAN, particularly the Asian

financial crisis and the subsequent ASEAN community-building efforts, opened up

spaces for SAPA participation. These spaces were buttressed by a number of

influential allies, both in the ASEAN structure and in national governments, who

carried the cause of SAPA. Division among ASEAN leaders and their practice of

“one-upmanship” also benefited SAPA as this led to the establishment and funding

support for ASEAN Civil Society Conferences (ACSCs). More importantly, these

divisions lead to the inclusion of some progressive provisions in the Charter such as

the creation of ASEAN human rights body and adherence to democracy, human

rights and good governance, which in turn, could become the focal points of new

advocacies.

Apart from the opportunities presented by the political environment, SAPA

also effectively framed the issue of engagement and mobilized resources to forward

their advocacy. Aware that ASEAN has been perceived as an elitist organization

primarily run by foreign and economic ministers of member countries, it portrayed

its engagement of the ASEAN Charter process as a way to make the regional

grouping more democratic, accountable, and participatory. It also astutely used the

official declarations of ASEAN leaders themselves to push for its greater

involvement in crafting the ASEAN Charter. Moreover, its engagement was also

made possible by the generous support from donors within and outside the sub-

region. The way SAPA structured its conferences, particularly the ACSC where its

member organizations fund their own delegation, resulted in more efficient use of

resources and creating a sense of ownership of the process.

28

In the case of South Asia, the political environment was not the same with that

of Southeast Asia. While the repercussions of globalization and regional

developments in other parts of the world pushed SAARC to adopt a Social Charter,

the regional grouping remains to be elitist in both its institutions and processes. To

this day, there was no institutional mechanism for civil society participation in

SAARC. Despite this, however, SACEPS was able to make political opportunities

available by crafting a Citizen Social Charter. Since the process of drafting the

“official” Social Charter was closed to civil society involvement, the SACEPS-led

initiative of coming up with a Citizen Social Charter forced the SAARC elites to

respond accordingly.

SACEPS, like SAPA, also framed the Citizen Social Charter process as a

mechanism for civil society organizations across South Asia to participate for their

issues and concerns to be incorporated in the Citizen Social Charter. The broad-

based and participatory way of crafting the Citizen Social Charter was also

contrasted with the elitist and managerial manner of drafting the official Social

Charter. For this reason, SACEPS was able to make the SAARC leaders realize that

their citizen charter has higher legitimacy in the eyes of the people and therefore its

provisions should at least be taken into consideration in making the official Social

Charter. In terms of mobilization of resources, SACEPS, in the process of drafting

the Citizen Social Charter, received generous funding support from UNDESA,

which supported the process from beginning to end. It also imbued greater prestige

and legitimacy to the process by mobilizing its own group of eminent persons.

SAPA‟s and SACEPS‟s experience in engaging their respective regional

organizations, while characterized by varying degrees of success, shows that seizing

and making opportunities, effective framing of issues, and astute mobilization of

resources can open up even the most state-centered and elitist groupings like the

ASEAN and SAARC to civil society participation. However, this should not make

CSOs in both sub-regions complacent. As discussed above, there were still

obstacles to be overcome like division among the ranks of CSOs and the still largely

elitist nature of both ASEAN and SAARC. These, and other problems unique to

each sub-region, must be addressed if a democratic Southeast and South Asia is to

be realized.

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32

TEACHER EDUCATION IN MUNTINLUPA CITY:

AN ECONOMIC PERSPECTIVE

ERNIDA ANCHETA-TOLENTINO, MSPE

Abstract

The study qualitatively evaluates and contrasts the teacher education in a public

and private higher educational institution using administrators, faculty

interviews, and school visitations within Muntinlupa City. It utilized descriptive

research technique to examine the socio-economic situation of teacher

education. Content analysis was used to examine the mission vision and teacher

education program overview of both institutions using publicly available data

from the institutions‟ official websites. Management strategies of the two

institutions in relation to the program offerings for teacher education were

compared using publicly available data as well as interviews form

administrators and individuals involved in the institution using the SWOT

(Strengths, Weakness, Opportunity and Threats) Analysis. Implications of the

SWOT to teacher education were discussed.

Education is deemed as a tool to economic and social growth. Stakeholders

such as parents, students, government and others are attuned to making education

available to all since it is considered as the most important determinant of a man‟s

occupational destination there and studies suggests a wide belief that there is a

relationship between education and occupation. (Halsey, 1977), thus affecting his or

her growth within the society.

Like any other nation, the Philippines place emphasis on the value of

education throughout all levels of society. This is evident in the volume of children

entering the basic education system (both public and private) annually. According to

the National Statistical Coordinating Board (NSCB), between school year 2005-

2009, the participation rate for elementary and secondary school level rose from

84.4 to 85.12 and 58.5 to 61.9 (2008) percent respectively. This growth in

participation however is not sustained as the level of schooling appreciates. Data

from the NSCB indicates that out of the participation rates (in school year 2005-

2008) stated earlier, only 61.1 to 73.7 and 61.7 to 75.4 percent of the elementary

and secondary school participants completes their respective levels. A more dismal

picture is seen in Higher Education participation. The Department of Education

states that for every 100 grade1 pupils entering the system, 66 pupils will graduate

grade 6, 58 students will enter high school, 43 students will graduate high school,

23 students will enter College and only 14 students will earn a baccalaureate degree.

The number of graduates from teacher education has increased through the

years. From 1991 to 2000, there is an annual increase of 3.6 percent or about 47 392

new educators that graduates each year. (Bureau of Labour and Employment

Statistics, 2003) Even with the growth of teacher education, records form the

Professional Regulatory Commission (PRC) shows that of about 132,119 examinees

33

in the Teachers‟ Board Exam, only about 26.7 percent (35,238) passed the exam.

This however, excludes the graduates whom eventually passed the exam after their

first try. To address this situation, the CHED issued Memorandum 30 (s 2004) to

update the undergraduate teacher education curriculum in the Philippines. This new

curriculum increased the number of curricular units of both elementary and

secondary schoolteacher majors (174 from 144 units; and 174 from 151-176 units

respectively). It decreased the number of general education subject units from 107

and 99 units to 63 units for both elementary and secondary school majors. (Ministry

of Education, Culture and Sports, 1986) Additional professional education and

specialization subjects/units were included as well (from 30-35 to 57 units; and 40-

45 to 60 units respectively). (Commission on Higher Education, 2004)

The basic education sector, (specifically the public school system) generally

causes the demand for teachers in the Philippines. Moreover, with the number of

teachers employed remained almost unchanged, this scenario suggests a surplus in

the number of qualified teachers in the country. Based on the 2000 Labour Force

Survey conducted by the National Statistics Office shows that about “30 percent of

their respondents with education degree were employed in non-teaching

occupations”. (Bureau of Labour and Employment Statistics, 2003) This scenario

causes these unemployed teachers (and other professionals) to seek employment

abroad, made worse by the high rate of unemployment (13.9 percent) and

underemployment (19.6 percent) (American Federation of Teachers, 2009). In

addition, with better-qualified teachers going abroad to seek better paying

employment, this results to poor quality of instruction and working condition in the

basic education, specifically in the public school system. Making it worse is the

influx of students entering the public schools system, because of the current global

economic crunch, which affects those families who send their children to private

schools. Such events forces public schools to accept these students, and therefore to

have two, three or even four class shifts a day, each with about 70-80 students per

class to accommodate them. (American Federation of Teachers, 2009) It would

then be the role of higher educational institutions offering teacher education courses

to provide quality pre service training for would be teachers. The teachers in turn

will shoulder the task of providing quality instruction to the Philippine education

system.

This is the reason for a renewed and continuous interest in improving the

quality of education. Aside from creating programs that caters the needs of teachers,

the Commission on Higher Education (CHED) released Memorandum 30 (S.2004)

entitled “Revised Policies and Standards for Undergraduate Teacher Education

Curriculum” which addresses the needs to improve the quality of pre-service

teacher instruction in the Philippines. It also recognizes the role of higher education,

(teacher education in particular) in improving the quality of life of its citizenry,

through the attainment of various social and economic benefits.

In this paper, the researcher qualitatively evaluates and compares the teacher

education in a public and private higher educational institution. For the purpose of

analysis, these institutions differ in two points. First, one is a privately owned and

the other is a local government funded institution of higher learning. Second, the

34

first one had only started offering teacher education program this academic year

(2009-2010) and the other, have been offering teacher education course since 1991.

Methodology

In this paper, the researcher aimed to qualitatively evaluate and contrasts the

teacher education in a public and private higher educational institution using

administrators, faculty interviews, and school visitations within Muntinlupa City.

This study utilized descriptive research technique to examine the socio-economic

situation of teacher education in Muntinlupa City.

The first part of this study is to analyze the mission vision and teacher

education program of both institutions using publicly available data from the

institutions‟ official websites. Content analysis is the technique used for analyzing

this information.

Second part is to contrast the management strategies of the two institutions in

relation to the program offerings for teacher education using publicly available data

as well as interviews form administrators and individuals involved in the institution.

SWOT (Strengths, Weakness, Opportunity and Threats) Analysis was used in

data analysis/treatment in these areas: (1) Teacher education program, including

instruction, achievements, research and development (2) Financial management

strategies, including their status (3) Facilities management and market strategies (4)

Human resource management.

Permission to conduct study were asked from and granted by the

administration of the institutions concerned. The financial status reports of both

schools are limited only to what the institutions are willing to disclose to the

researcher. In both cases, most of what was shared is an estimate of the actual

values that were the target data for this study. The interviews lasted for an hour and

recorded using a digital video camera. The interviews were also later transcribed.

The chosen school participants in this study are two higher education

institutions located in Muntinlupa area. One is a university owned and funded by the

local government that has been offering teacher education since 1991, which we

will refer to as the “Local University” (LU). Although it was originally a

polytechnic college, it has been offering baccalaureate (CHED) courses since its

foundation. The other is a privately owned college, which has started offering

teacher education in the first semester, academic year 2009-2010, which we will

refer as to as “Private College” (PC). Patterned after the Technological University

of the Philippines, PCoriginally offers technical (TESDA) courses, but later

expanded and ventured into offering baccalaureate (CHED) courses as well. These

schools are the two of the three higher educational institutions that are currently

offering teacher education in the in the Muntinlupa City area.

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Findings:

Mission – Vision of Higher Educational Institutions

The “Local University” was founded in the spirit of the 1987 Philippine

Constitution that states that the State should “promote, foster, and promote the

rights of all citizens to affordable quality education at the tertiary level…”

(Muntinlupa, About PLMun, 2009).

The LU‟s College of Education declares a mission-vision philosophy based on

“learning and living”

“It…envisions itself as a center for creative development and research-

oriented teacher education activities contributing its full share to the

development of Filipino teachers as exemplars of academic excellence and

leadership in education as it reaches out to the rest of the world.”

The LU‟s mission states that the College of Teacher Education…

“…exist with a mission of promoting and facilitating the development

of dynamic professional teachers who are:

C – career-oriented

T – touches and transforms

E – every Filipino through evolutionary quality education …thus

enabling them to meet the challenges of the changing times.” (Muntinlupa,

College of Education, 2010)

It is evident in the LU‟s mission vision that the primary function of their

university is to provide quality, low-cost (if not free) tertiary education for the

people of Muntinlupa City who is capable to adapt to the ever-changing demands of

the global community.

The “Private College” started as a technical school, the PC soon expanded

into offering baccalaureate degree as well as graduate courses in cooperation with

the Technological University of the Philippines, where PC‟s founder is an alumnus.

PC envisions itself to be...

“…one of the nations‟ leading educational institutions involved in the

pursuit and advancement of knowledge in all dimensions, as an end in itself

and as a tool in personal, community and national development.”

The PC commits itself to these goals:

1. “Educate, train, and develop the students into competent, productive, and

values oriented professionals who shall serve as pillars of our country‟s

economy.

2. Advance human knowledge through research and study.

3. Cultivate a deep sense of moral and spiritual values so as to enhance

development of human and just individuals.

4. Make higher (sic) accessible to everyone through scholarship grants and

other related programs.

36

5. Promote and maintain beneficial linkages and network with institutions

and agencies in local. (Sic)

6. Contribute to the appreciation of the historical and cultural heritage of

the Filipinos and of mankind.” (Alabang, Mission and Vision, 2010)

One remarkable feature of PC‟s mission vision is the vision of having their

graduates to become “pillars of Philippine economy.” This clearly shows the values

adapted by their founder whom like all of their students, came from a humble

beginning and was able to be successful through hard work, dedication and

continuous education. These traits are what they would like to inculcate to their

graduates.

Teacher Education Course Program

The teacher education programs of both higher educational institutions are

based on the curriculum implemented by the Commission on Higher Education

(CMO 30, s. 2004). Though similar programs are present in both HEI, some

differences may be noticed. The LU offers the following CHED teacher education

programs under its College of Teacher Education:

Bachelor of Science in Secondary Education, major in:

Mathematics

Science

Music, Arts and Physical Education (MAPE)

Filipino

Social Science (Agham Panlipunan)

General Science

Bachelor of Elementary Education, major in

Regular (Elementary Education)

Early Childhood Education

Special Education

Special Programs (Certificates)

Certificate in Early Childhood Care and Development

Certificate in Teaching Programs

Graduate Studies

Master of Arts in Educational Management

Licensure Examination for Teacher Review

The PC on the other hand offers the following CHED teacher education

programs in their College of Education:

Bachelor of Secondary Education, majors in

Bachelor of Elementary Education

Bachelor of Technical Teacher Education (BTTE)

Unique to PC is their program on Technical Teacher Education that

“prepares career and technical teachers for Secondary schools and Post Secondary,

such as career centers, technical institutes, correctional facilities and community

colleges.” (Alabang, Courses, 2010) This program is patterned after a curricular

offered by the Technological University of the Philippines.

37

Admission and Retention Policies

Most of the LU‟s students came from the public schools within and around the

Division of Muntinlupa. Currently the LU-College of Teacher Education has an

enrolment of 962 students; 331 freshmen, 314 sophomores, 178 juniors and 139

seniors. Patterned after the Philippine Normal University (PNU), prospective LU

students are screened upon the recommendation of the applicant‟s high school

guidance counselors (preferably but not limited to city residence). Applicants with a

grade of 80 or higher are qualified to take the entrance exam of the College of

Teacher Education. Personal interview soon follows, for students who passed the

written entrance examination. In LU, a required grade of 85 (2.00) should be

maintained by all teacher education students, and are required to pass the qualifying

exam for each year/level in order to continue and attain their desired baccalaureate

degree.

A special requirement for all female students is included. Any student who is

with a child out of wedlock (“become pregnant”) during her stay in the LU is

disqualified from continuing her study in the College of Education. The

administration of the college perceives this situation as a deviance to the proper

values and virtue that a teacher should possess in her profession. This special

requirement however is not applied to the male students.

Following the provisions for CMO 30, s. 2004, students are expected to fulfill

the required Field Study Courses (6 subjects, 1 unit each) prior to their actual

Practicum (Practice Teaching, 6 units), one semester prior to graduation. Having the

whole Division of Muntinlupa as its laboratory, the student teachers are assigned to

have their practicum in a public school near his/her residence making it easier for

the students to accomplish the said requisite. The practice teaching requirement is

completed for one whole semester. Students are conferred of their degree once they

passed their curricular program requirements, and others that are specified in their

student manual.

Similar to LU, PC‟s students came also from lower income bracket families

(Class C and D); most from public schools but there are also students who

graduated from private schools. Currently, the PC has a population of about 2500

students (CHED and TESDA courses), and 20-30 percent of them are working

students. Prospective students of the College of Education needs to apply together

with their secondary education credentials and must be able to pass the written

entrance exam as well as the medical examination. They need to have at least an 85

grade weighted average (GWA) in their secondary credentials, and need to maintain

the same grade requirements to continue their degree of choice. If for some reason,

the student fails to comply with this maintaining grade requirement, they are

advised to shift to their second choice degree provided their GWA qualifies on that

degree.

38

Students Performance and Achievements

The LU has a modest performance in the Licensure Exams for Teacher (LET),

a required professional license for all teachers who wishes to practice their

profession. The LET mean passing rate of LU is higher than that of the national

mean passing score. In October 2009 LET, LU had 15 students who passed in the

Elementary Education program and 15 students who passed in the Secondary

Education program. As in other colleges in the LU, teacher education students are

required to complete research papers and instructional modules, as part of their

partial requirements in various subject areas. As of now, all thesis and term papers

made by the students (both undergraduate and graduate levels) are unpublished and

are housed in the college‟s library. The College of Education has its own student

publication (newspaper), apart from the institutional publication, which

disseminates information within the college, and is currently in the process of

making their refereed journal to highlight the researches and modules developed by

both the students and faculty.

Graduates of teacher education (both Elementary and Secondary) are easily

employed in various basic education schools within and around the Muntinlupa City

area. Most of them start out in private schools since public schools strictly

implement the minimum requirement for teachers to pass and have a teacher‟s

license. Graduates employed in the private schools are eventually able to pass the

LET, some opt to be employed in the Division of Muntinlupa, while others opt to

stay in the private sector for higher remunerations.

Collaboration with other institution of higher education is a part of LU‟s

avenue for program development. Being a member of the Association of Local

Colleges and University (ALCU) gives LU the opportunity to share information

with its other members. Participation in seminars and trainings such as those

organized by the Philippine Normal University is an example. Some of their faculty

members were also gives opportunities to become resource persons for such

seminar/workshops within and outside of the Muntinlupa City area. Foreign

exchange students are also welcomed in the LU. For the first time in LU-CTE‟s

history, a computer technology education student is currently participating in a

foreign exchange program in Japan this academic year (2009-2010).

Since PC is still on their initial year of offering Teacher Education, they only

have one section for all three majors (Elementary, Secondary and Technical

Education) whom are all taking up general education courses. Because of this, they

could not yet provide data on their college‟s performance on Licensure Exam for

Teacher. However, based on other CHED courses with similar PRC exams (such as

those for Accountancy and Criminology) PC has a modest exam performance in the

courses mentioned. As in all course subjects, PC teacher education students are

required to submit research papers as partial requirements in each subject in their

respective programs. These papers however are unpublished that are found at the

college‟s library. PC is planning to put up a research colloquium to showcase these

works and hopefully publish its own refereed journal to disseminate their students‟

39

and faculty‟s work, which will not only be available for teacher education but for

other Baccalaureate programs as well.

A part of the research and development program of the PC is the module

development for the various courses offered, in both baccalaureate and technical

programs. These programs however are not directly funded by the PC. Faculty

members are encouraged to produce these works for their classes and are made

available to the students through the PC‟s bookstore. A portion of the earnings from

its publications is given to the faculty–authors that serve as additional income and

productivity incentives.

Financial Management Strategies

As a higher educational institution founded through the provisions of Republic

Act No. 7160 (Local Government Code), the LU is funded primarily by the City

Government. This includes budget for academic programs, administrative functions,

faculty and staff salaries, maintenance and other operating expenses. Funding for

LCU may be implied as with higher budgetary allocation than old state institutions

(whose funding came from the national government), based on the Local

Government Code provision, of “40 percent of the internal revenue collection over

the previous 3 years is allocated to LGU‟s.” (No.6-5. Medium Term Plan, 1999-

2005) (Dayrit, 2005), p.3)

The local government also shoulders a part of tuition fees of a portion of the

student population in the LU. The Local Government for instance, allots 1500 slots

of sponsorships for the whole LU, about 300 slots are allotted for the College of

Education. Sponsored students are, graduates of public schools of Muntinlupa City.

They pay more or less Php800.00 every semester (for those who are not entitled to it,

are to pay Php2000.00 tuition fee every semester) for a full student course load of

21-24 units. Scholars must maintain certain grade requirements set by the LU. The

sponsorship scheme of the local government is in two parts; first, the tuition fee of

all freshmen entering the LU-CTE is shouldered by the local government in their

first year. After this, the students are then required to pay their tuition fee in full in

their succeeding years in the LU. With such low cost tuition fee, the survival and

completion rate of LU-CTE students are relatively high. Since the funding of the

LU came primarily from the city government, they do not experience instances of

having their funding subjected to “budget cuts” typically experienced by traditional

state universities whose funding are from the national government.

All funding needs of the LU for their academic and other programs may be

requested from the local government as well. The bulk of the LU‟s budget is

allotted for the faculty‟s salary, maintenance of facilities and programs;

maintenance and other operating expenses. Currently, they have their own building

within the grounds of a local high school. It houses the classrooms, laboratories,

library and covered courts (sports facilities). In the College of Teacher Education,

additional income-generating activities to augment budget deficit is non-existent

now since the current administrator is in their first year of leadership. They may

have such activities once the administrator has already settled down in their position.

40

Although research and development endeavors of its faculty are highly encouraged

by LU-CTE, these programs however does not receive allotment form the LU‟s

academic program budget. Research grants and similar funding opportunities are

non-existent.

Being a private institution, PC‟s main source of funding is the tuition fees

collected from the students, who pay Php420.00 per course unit or about Php16,

500.00 every semester for a full student course load. (21-24 units) Considering that

the bulk of the PC students came from the middle class (Class C and D), and about

20-30 percent are working students, the tuition fee rate of PC is quite affordable.

Currently, the PC does not offer scholarships, they do however offer tuition fee

discounts for early enrollees. Like most private institution of higher education, PC

adopts a system of tuition payment schemes for their students. They have the full

semester payment scheme, and the installment payment scheme. The latter allow

students to pay their tuition fee in 4 quarters (during preliminary, midterms, pre-

final and final terms) within the semester. Every examination, almost 50 percent of

the students submits promissory notes in lieu of their tuition fee payment, and most

of time, these payments are delayed. The students are allowed to take their exams,

without paying their tuition fee provided they submit a signed promissory note,

noted by the PC president. It is only during the final exams do the PC is able to

collect most of the students‟ tuition fee payment in full. A yearly students‟ clearance

form allows the PC to collect all unpaid tuition fees from the students.

Other sources of income for PC are its own bookstore, which supplies books,

modules, school, and P.E. uniforms for the students and the school cafeteria. It was

not specified though if both sources of income were run by the PC themselves or by

a concessionaire. It is income; although not big enough to be significant also help

provide additional income for the PC. The PC and Technological University of the

Philippines has an agreement that lets the TUP offer graduate programs using the

facilities of the PC campus. However, it was not specified if PC leases their

facilities to TUP for this specific program offerings. In terms of spending, the PC

uses its funds for improving its facilities such as the computer laboratory. The

facility is primarily used by the Computer Science program (but it is used by other

programs as well).The PC does not have its own school building, so the biggest

spending allocation the institution is their building rent, aside from faculty and staff

compensation. Currently, they are renting three buildings to house their school: the

main campus, which houses the bulk of the academic and administrative offices,

laboratories and the library, another building that houses the human resource office

and sports facilities, “Elizabeth Building, and another school building in Alabang.

Other expenses includes faculty other employees‟ salary, maintenance of facilities

and programs, and maintenance and other operating expenses.

Aligned with their teacher education program, the PC is planning to expand

their school to house a basic education department (elementary and secondary level)

which will serve as a laboratory school for their teacher education students who will

undergo practice teaching.

41

Likewise, although research and development endeavors of its faculty are

highly encouraged in PC, these programs however do not receive allotment form the

PC‟s academic program budget. Research grants and similar funding opportunities

are non-existent. It is therefore up to the faculty or student concerned to fund his or

her own research and development projects.

Human Resource Management

The LU-CTE only employs faculty members who have at least a master‟s

degree (Master of Arts, or Master of Science but not Master of Arts in Teaching).

Further, LU-CTE employs those with a baccalaureate degree in education but may

have a Bachelor of Science degree (for those who will teach majors class), which is

the required minimum academic requirement of CHED for tertiary teaching position.

Moreover, faculty members all passed the Licensure Exam for Teachers in their

respective area of specialization. These requirements are applicable for both faculty

members who teaches general education, professional and specialization subjects.

The bulk of their faculty holds Master‟s degree. Program chairpersons are also with

the same, if not higher degree holders. These chairpersons are all appointed by the

upper management whose appointment may be terminated if deemed appropriate or

necessary. None of the faculty members however, is employed fulltime.

Subsequently, faculty tenure is also non-existent. They are compensated on an

hourly basis, according to their qualifications or rank and the equivalent

remunerations provided under the Salary Standardization Law (which is followed

by all government employees). Their salary rate, although modest is lower than

what is given in the private sector. In addition to their salary, a cash gift of Php5000

annually is the only benefit that the faculty receives. They do not receive yearly

bonus. In addition, as a part time employee, they are not entitled to any scholarship

grants, vacation or sick leaves, and professional promotions. This practice therefore

serves as a budget savings since they do not need to allot a bigger budget for faculty

benefits, just the actual salary. This working condition however may appeal only to

those who are not looking for the security of tenure, or are not after good salary and

benefits (such as retired teachers and practitioners) since most if not all faculty

members are dispensable or may be terminated as it deemed necessary.

Although faculty members holding graduate degrees are preferable, PC on the

other hand also admits faculty members for its CHED courses, who have not yet

completed their Master‟s degree, provided they would be able to complete their

study within three years of their employment in PC. In the Teacher Education

program, they currently have Doctor of Philosophy, as well as Masters‟ and

Baccalaureate degree holders in their faculty roster. They employ full-time as well

as part time faculty members; therefore, security of tenure is present in the system.

Faculty members may be considered for tenure if he or she meets the academic

requirement of at least a Masters‟ degree and other work and ethics related

qualifications set by the PC. Such favorable working conditions would be appealing

to faculty members who would like to serve the PC permanently as well as those

whom preferred to work in a part time basis. The program coordinators (for

elementary, secondary and technical teacher education majors) are chosen by the

42

upper management, must have at least a Masters degree, wherein their field of

specialization is related with the program they will be leading.

Administrators (upper and middle), faculty and staff are compensated

according to their qualifications or rank and its equivalent remuneration according

to the guidelines in their employees‟ manual. There is no fixed “starting salary” for

all employees. To have an idea of the salary rate for PC, the lowest ranked faculty,

(Instructor 1) receives a salary rate of around Php11,400.00. Aside from the benefits

mandated by the government, faculty members also receive benefits such as sick

leaves, study grants or study assistance (for those taking up graduate studies), and

de loading (less 18 unit teaching load) for Master‟s and Doctoral candidates (in their

thesis or dissertation stage). The study grant/ assistance are a form of a loan because

the school is not financially stable enough to provide full scholarships to its faculty.

This is one of the faculty development goals (program) that the PC would like to put

into place soon. Faculty members who avails such grants are required to render full

time service to the school for a particular length of time, as stated in their faculty

manual.

Marketing Strategies and Students‟ School of Choice

Although both the LU and PC aim to attract the same market share (students

from Class C and D; teacher education program offering), both see their schools‟

appeal to prospective clients as an advantage against other institutions. LU sees the

advantages of having local government funding in their appeal to prospective

students. LU can offer free if not low cost higher education for students residing in

Muntinlupa City. Backed by their long experience and achievements in teacher

education, graduates employability and LET passers ratings, they find their school

as the better school of choice for teacher education in the Muntinlupa area because

school‟s achievements it serves as a mirror of their standard of excellence in

curricular or program offerings. It helps them attract students from neighboring

areas such as Laguna as well. It also allows them the opportunity to choose

applicants whom are more academically inclined than their competitors are. By

selectively employing licensed, professional faculty members with Masters‟ of

higher degree, LU could assure prospective students that only qualified professional

instructor will be allowed teach in their teacher education program.

These strategies allow the LU to depict its image as the school of choice for

teacher education in the Muntinlupa City, whose academic excellence and

affordability is at par with the rest, has to offer in the area, especially for their

targeted socio-economic group (Class C and D families). PC on the other hand

looks at their low cost private education offering, strategic location and academic

tie-up with TUP as their major advantage in attracting prospective students in their

school. Even if they are in their first year of offering teacher education, they opt to

adopt selection requirement similar if not more stringent than LU. They are also

targeting those students who were not able to qualify in the LU‟s teacher education

program. If the student could not maintain the required grade for teacher education,

they are allowed to transfer to another course (provided their grade qualify with the

course they would like to be transferred to), so they could still keep the student

43

enrolled in their school. Compared to other private schools in the area, their tuition

fee rate is reasonable. and would attract students to enroll in their school instead of

going to the university belt to acquire their baccalaureate degree. Moreover, their

tie-up with TUP and other tertiary institutions helps their school to maintain a high

quality standard in their curricular offerings for both the CHED and TESDA courses.

Through these images, the PC markets itself as the private school of choice for

tertiary (academic and technical) education in the Muntinlupa City area. The PC

projects a school that could offer quality education tertiary at an affordable rate that

has safe and accessible campus location that would make prospective students to

reconsider their plans of going to other areas such as the university belt to acquire

their degrees.

Marketing and promotional activities using “word of mouth” allows them to

disseminate information about their institutions not only for graduating high school

students but also to the lower level students. This information allows lower level

students to form an image of the institution which helps them in their decision

making process in later academic career (life), for it was found out that such

information is significant for higher education bound youth‟s decision in selecting

schools. (Hemsley-Brown, 1999)

To attract potential student applicants for their teacher education programs,

both LU and PC employs various marketing and scouting strategies. Prior to the

closing of each school year, the LU, in cooperation with the Division of Muntinlupa,

visits all public high schools to give students‟ applications to all graduating students.

With the help of the guidance counselors of the respective public schools, deserving

(academically inclined and, or coming from low-income families) students are

given the opportunity to apply and avail the free (or low) tuition fee tertiary

education offered by the local government trough the LU. This opportunity is also

extended to those high school students graduating from local private schools.

PC on the other hand ties up with various local public and private high schools

so, together with other higher educational institutions, could be included in the

school‟s career orientation seminars where they are given the opportunity to

communicate directly with their prospective clients. They could provide them with

their school information such as curricular or program offerings, amenities and costs.

Leaflets and fliers are also distributed during these seminars. Tarpaulin posters are

also put up in strategic places (specifically right in front of the academic buildings)

to provide information to would be student applicants of their course offerings and

student benefits. Furthermore, they are also offering tuition fee discounts for early

enrollees to attract would be students to have PC as their school of choice.

Although these efforts may be seen as effective means of marketing and

promotional strategies to attract would be students in their institution, these attempts

may have come too late because during this stage when graduating high school

students are given career seminars, they are already predisposed in favor of a

particular course or institution based on the context or influence of their families

and peers years before. (Hemsley-Brown, 1999) It was found out that young people

44

are affected by their family (particularly their parents) and peers in their choice of

career (academic or technical/vocational) and school of choice. Parents

unconsciously send messages to their children as to what course would best suit

them and the school that would best give them the training they need for the

particular career. Youth are partly affected by the kind of students a particular

school accepts. Typically having the desire to be accepted, young people is more

attracted to schools that they may have a sense of belongingness. The more these

students see similarities between the students of a particular school and themselves,

the more likely they would choose a particular school. (Hemsley-Brown, 1999)

SWOT Analysis

Using the SWOT Analysis for evaluating the Teacher Education of both the

“Local University” and “Private College”, we arrived at the following examination:

Local University – College of Education

For the Local University – College of Education, SWOT analysis revealed that

the following areas are their strengths, weaknesses, opportunity and threats:

Strengths:

Programs approved by CHED.

Wide range of course offerings.

Qualified educators, Masters

Offer free if not low tuition fee

due to government funding

Use of the whole Division of

Muntinlupa as its laboratory

Outstanding marketing and

promotional strategies

Weaknesses:

Special requirement obligatory to

all female students

Funding may be seen as

incumbent mayors‟ generosity

only

Unfavourable working conditions

for the faculty (accepts contractual

faculty members only)

Opportunities:

Improvement in their research

and development program

Opportunity to be centres for

development if not for

excellence

Collaboration with various

companies for additional

funding

Threats:

Keeping highly qualified

instructors to teach due to

unfavourable working conditions

Stagnant older faculty members

must be balanced with younger

innovative faculty.

The strengths associated with the LU-CTE are the following:

First in program offerings, the LU‟s programs follow the rules and guidelines

prescribed by the CHED. Its course offerings range from Bachelor of Elementary

Education to Master of Arts in Education. The faculty roaster boast qualified

educators who holds the minimum required credentials prescribed by the CHED.

45

Based on their graduates‟ LET modest performance, it can be said that quality

teacher education is offered in LU-CTE. It also helps that the LU adopts stringent

qualifications in selecting students for its programs. By doing so, it assures the LU

that they can get the best possible students in the area and this will assure quality of

the graduates they could produce, who will in turn be able to pass the LET and

become licensed professional teachers.

Second, in financial management strategies, with LU being funded by the

Local Government, the school could offer free if not low cost tertiary education to

its students. Instead of relying on the tuition fees alone for funding, the local

government could easily provide the need funding for program and maintenance

expenses without relying too much on the tuition fees collected from the students.

Having its own school building situated at a government owned property saves the

school additional funding allocation that may go to property lease or realty taxes.

This savings is used to enhance the school‟s education production cost through

additional budget allocations for the university library, classrooms and laboratory

equipments as well as other maintenance expenses.

Third, because the LU makes use of the whole Division of Muntinlupa as its

laboratory for student teachers to have their practicum, and its graduates are readily

employed within and around the city area, it helps in the schools‟ marketing and

promotion as a school of choice for teacher education. Free or low cost tuition fees

also add to the university‟s appeal to its target market (students).

The weaknesses associated with the LU-CTE are the following:

First, the undocumented special requirement obligatory to all female students

(but not applicable to male students), which states that any student who is with a

child out of wedlock (“become pregnant”) during her stay in the LU is disqualified

from continuing her study in the College of Teacher Education demonstrates gender

inequality and double standards in the admission and retention policy of the LU.

Although the call to preserve values and virtues of future teachers are important and

admirable, policies pertaining to its preservation should be made applicable to all,

not just for particular members of the student population.

Second, by having the Local Government fund the LU, students, parents,

administrators, faculty and staff may see the abundance or scarcity of budget

allocation for LU as a demonstration of the incumbent local government

administrations‟ generosity (or thriftiness) toward their constituents and not as part

of their responsibility to the people for being an elected government official.

Third, perhaps due to the perceived limited public funding, LU choose to hire

(contractual) part time instead of fulltime faculty members. Faculty members‟

employment at LU is at the mercy of the middle and upper management. This

means even that if the faculty is performing up to the LU‟s standards, the

management may terminate his or her employment if deemed it is necessary. The

faculty concerned has no choice but to obey its decision. With less faculty benefits,

and non-existent promotion opportunity for LU faculty, it would be more

46

economical for LU (in terms of budget allocation). This scenario however would

result to unfavorable working conditions for the faculty because of the economic

insecurities and academic (career) stagnation it would cause. It may also be a

ground for highly qualified faculty members to leave LU in favor of institutions

with better benefits, job security and professional growth.

The opportunities associated with the LU-CTE are the following:

First, the LU can readily improve their research and development program.

Having the whole Division of Muntinlupa as its laboratory, the LU could use this

opportunity to develop innovative instructional materials and teaching strategies.

Modules and other instructional materials, including computer assisted instruction

and multi-media materials developed by their students (as part of their required

thesis) and faculty could be piloted within the city, and if found effective may be

adopted by the division which in turn, will help improve the quality of teaching and

learning techniques in Muntinlupa City.

Second, with LET performance that continuously improving and having

qualified faculty at its roster, the LU could aim to have the CTED to be one of the

centers for development if not for excellence in teacher education. This may be

done by improving the working conditions of the faculty through offering job and

tenure security, as well as opportunities for career growth.

Third, with the limited funding sponsored by the Local Government, the LU

could seek tie ups with various companies whom, because of their social and

corporate responsibility to help the society, are willing to provide financial and

other assistance to the academic programs of LU. This will help LU to further

improve their curricular offerings and instruction. It will also give LU students a

chance to work with different companies that will in turn enrich their learning and

working experience.

The threats associated with the LU-CTE are the following:

First, the absence of tenure security and career growth opportunity may pose

as a threat to the LU‟s faculty roaster. The LU may have difficulties in keeping

highly qualified instructors to teach not only in teacher education but in other

programs as well. Teachers, with their not so high salaries may opt to choose

teaching positions somewhere else whom may provide them with employees‟

benefits far better than what LU could offer.

Second, Although hiring more experienced seasoned faculty may give an

advantage to students in terms of the on the job experiences and wisdom they may

share in and out of the field, it is the personal career drive of younger generation

faculty that will enable teacher education students to be more open and acceptant to

change and innovations. Younger faculty members, although lacking in wisdom and

work experience, are not afraid to try to accept new ideas. They are also more

acceptant of student teachers who have ideas different from their own and who are

not afraid to fail. Seasoned faculty members have the tendency to be complacent

47

about what works and what will not in the field, and are not inclined to try doing

something different. This may result to having graduates who are not inclined to

innovate and develop new teaching and learning strategies and materials.

Private College – College of Teacher Education

For the Private College –College of Education, SWOT analysis revealed that

the following areas are their strengths, weaknesses, opportunity and threats:

Strengths:

Programs approved by CHED.

Wide range of course offerings

BTTE course offering

Accessible location

Alternative choice for non state

college qualifiers

Affordable tuition fees,

qualified instructors and

professional tie-up with TUP

Weaknesses:

Lack of experience for the

institution in handling the program

Faculty qualification, Bachelor

High rental expenses for its

campus

Opportunities:

Alternative choice

Improvement of their research

and development program

Opportunity to be centre for

development or even

excellence

Opportunity for Graduate

studies

Threats:

the presence of better working

conditions and benefits found in

its competitors offering the same

teacher education program,

The strengths associated with the PC-CED are the following:

First, aside from the elementary and secondary teacher education program, the

PC offers technical teacher education program, which is usually only offered by

technical universities. It shows a broad scope of programs offered by the PC to their

students. Teacher education students who are more inclined to teaching technical

courses have the opportunity to do so with this course. It also opens the doors for

adult learners to enter the PC, aside from regular young adult learners, this

increasing its income. It will also strengthen and improve the quality of technical

education in Muntinlupa City area, which offers career opportunities for people who

would not be choosing the academic path in their career choice.

Second, the strategic location of the main campus along the national road (the

main city thoroughfare) will attract the students who wanted to attend tertiary

education but are weary of travelling to and from other tertiary institutions such as

those from the university belt area. It will save their students time, boarding and

48

travel allowance. It will also be accessible for students who are working near and

around the Muntinlupa City area.

Third, for students whose academic qualification could not meet the standard

set by other tertiary institutions (specifically, but not limited to public higher

institutions), the PC can be an alternative school of choice. With its affordable

tuition fees, qualified instructors and professional tie-up with the TUP (for graduate

courses) to ensure quality instruction and programs, it could be the private school of

choice for its target market within Muntinlupa City area.

The weaknesses associated with the PC-CED are the following:

First, although the program is headed by qualified, seasonal professional

educator, since the PC is in its initial year of offering teacher education, it can be its

weakness because of the lack of experience of the institution in handling the

program. Necessary experience in these course offerings may only be gained

through time.

Second, although hiring faculty members with Masters‟ course units only is

both acceptable and logical academic decision; it would be more beneficial for the

program to hire faculty members with at least a Masters‟ degree qualification most

notably, if it is the minimum requirement for CHED course instructors. This may be

easily done once the institution gains experience and produce graduates who will be

able to pass the LET and employed in schools within the area.

Third, by not having its own campus, the PC will always incur high rental

expenses for its campus. Funding which would likewise be allocated for program or

facilities development. This will only be alleviated once they acquire their own

property that will necessitate a huge capital on the part of the PC. Once this is made,

the PC could now allocate additional funding for its faculty and staff benefits and

program improvements.

The opportunities associated with the PC-CED are the following:

First, the lure of affordable, quality private tertiary education within the

Muntinlupa City area is not easy to resist specially among students from low-

income families and working students. This is made more appealing if the said

student could not qualify to free education offered by the government (local or

national) in the various local and state colleges or universities. The PC may be an

alternative for such students.

Second, through its course offering of teacher education, the PC could help

improve the basic education sector in setting up its own department, a proposed

course offering by PC in the near future. This will be of help to the community

because, similar to LU, it will be the laboratory school for teacher education

students. Innovative teaching strategies, course modules, instructional materials,

including multi-media instructions may be piloted in the basic education department,

which may later be adopted. Such instruction development output may bring

49

academic distinction to the institution thus may result in it to become a centre for

development or even excellence in teacher education, research and development.

Third, collaboration between the PC and TUP allows the latter to offer

graduate programs (master‟s and doctoral) within the PC campus. This will give the

faculty of PC an opportunity to be able to attain higher academic qualifications and

improve their teaching techniques without going outside of the campus. It may be

further improved if the PC could offer scholarships of discounts for faculty

members who will enroll in their programs. It will also allow others (specifically

teachers both formal and technical) in the community the opportunity to acquire

graduate degrees.

The threats associated with the PC-CED are the following:

First, the presence of better working conditions and benefits found in its

competitors, who are offering the same teacher education program, faculty members

may be tempted to transfer to other schools in favor of better compensation and

career growth opportunity.

Second, a presence of another private institution of higher education offering

the same or better teacher education program may be more attractive to their target

student applicants so a more competitive curricular offering, faculty roaster and

LET performance may need to be developed.

Conclusion and Recommendation

This study aimed to qualitatively evaluate and contrasts the teacher education

in a public and private higher educational institution using administrators, faculty

interviews, and school visitations within Muntinlupa City. It utilized descriptive

research technique to examine the socio-economic situation of teacher education. It

then content analysis was used to examine the mission vision and teacher education

program overview of both institutions using publicly available data from the

institutions‟ official websites. The management strategies of the two institutions in

relation to the program offerings for teacher education were compared using

publicly available data as well as interviews form administrators and individuals

involved in the institution using the SWOT (Strengths, Weakness, Opportunity and

Threats) Analysis. The areas for comparison: (1) teacher education program,

including instruction, achievements, research and development, (2) financial

management strategies, including their status, (3) facilities management and market

strategies, and (4) human resource management. Results show that although the two

institutions are following different philosophy in educating their students, both LU

and PC share commonalities in their mission vision. Both institutions are targeting

the same student market that came from lower income families and working

students. Both institutions would want to produce teacher education graduates who

are skilled at their craft, who imbibed the proper values and virtues that the

institution deemed important. The course offerings of both institutions are approved

by CHED, in which the Technical Teacher Education course, a special course

50

offering by the PC, but not in LU. They both expect their graduates to use their

skills and knowledge for the betterment of Philippine society.

The opportunity given by both institutions of higher to acquire higher

education at a low cost is a welcome chance for students from low-income families

to grow economically. Thus, both schools are true to their mission and vision as

stated earlier. The way these teacher education graduates contribute to the society

remains to be seen. In the case of the Local University, by being absorbed by the

basic education system, they are able to fulfil their socio-economic duty to serve the

people, especially if they are absorbed by the public school system where they are

needed more than the private school sector. Furthermore, as a scholar of the people,

it is the LU graduates‟ responsibility to return the academic opportunity given to

them to the ones who invested and needed those most, which are the people of

Muntinlupa City. In the case of the Private College, being in the first year of their

teacher education offerings, it will take four years to find out the returns of their

educational investments.

Although not as accurate, it may be inferred by looking at previous graduates

of PC, (how they are readily absorbed by the labour sectors, thus are able to

contribute to the society) that the PC‟s teacher education graduates may take similar

positive path.

One could clearly see in this study, the important role of the private sector in

providing tertiary education opportunity to many Filipinos (such as in the

Muntinlupa City area) coming from the low-income families (Class C and D). In

most cases, students from low-income families would rely on public tertiary

educational institution for the opportunity to acquire a baccalaureate degree. The

Philippine government, may it be the local or national government could only do so

little in providing quality tertiary education to its people, due to the bigger and more

urgent need of providing basic education for school-age children as mandated the

Philippine Constitution of 1987 and acted by the Philippine Education for All plan

in accordance to the UNESCO- Education for All. (EFA) With the high cost of

tertiary education, it is through the efforts of private higher institutions such as PC

that offers low cost tertiary education that helps low-income families, to get access

to it if they could not qualify in public colleges and universities.

One could not deny the fact that the teacher education course attracts students

of a particular profile. Teaching is a predominantly female occupation, perhaps due

to the nurturing nature of the profession, which is the primarily a female role. In

relation to teacher quality, studies also suggest that on average teachers‟ standard

test scores are relatively lower than non-teachers. (Hemsley-Brown, 1999) Among

college graduates, teachers‟ salary and other alternative wages may determine who

will most likely teach and where they would teach. This may imply that if given the

opportunity, students specially academically inclined ones, will choose not to teach

if the monetary remunerations for it is not as competitive as that of the other

occupations. This is probably the reason why the teaching profession does not

attract the best students to take it up. These students would rather choose a high

51

paying profession such as those in nursing, where their educational investments will

definitely pay off.

Moreover, by taking up teacher education course, one will be fixed in this

profession thus being trapped in a low paying occupation. Moreover, for well-

meaning individuals, those with intentions of sharing their professional knowledge

would think twice in teaching because of it. Such scenario results to having not so

bright students entering teacher education course. With such a pool of prospective

applicants to choose form, the education sector, most notably the basic education,

ends up having would be teachers with lower academic capabilities. This may be the

reason why half of the teachers who took and failed LET need to do it twice for

them to qualify for a license. The prospect of having unlicensed teachers practicing

the profession in the basic education sector (specifically in private schools) is a big

gamble in the quality of instructions and future achievements of the basic education

students.

Facing this scenario, what could be more effective in attracting academically

better students in the teaching profession, without compromising their ability to

switch career paths (to and from teaching), than to offer a double degree program

wherein the students could earn a baccalaureate degree in their chosen field (such as

sciences, mathematics or fine arts) and have an baccalaureate in education degree at

the same time. By making them to be “teaching profession ready”, these would be

graduates may be given an option to practice their profession, polish their skills,

techniques and experience in the field, which will then be useful and address the

needs of the labor industry, once they decide to share them in the form of teaching

in the higher education. This will also eliminate the need for them to have a

separated degree and later take up required education units, and pass LET. It will

also lead to innovation in the basic and tertiary level education in the country. The

notion that one cannot share what one does not have may also be applied to

education. Although not all are capable of being effective educators, especially for

fast learners whom could not bring themselves to the level of their students, there

are those untapped talents who could do more in improving the quality of education

in the country, if only they would be given an opportunity to do so. In relation to

this idea, it is worthwhile to note the Bachelor of Technical Teacher Education

course offered by the PC, which was patterned after the program offered by the

TUP. It usually attracts adult learners who are already established in their chosen

technical/vocational field, and for some reason, would like to share their knowledge,

skills and techniques with those who are of the same interests. Although its format

is quite different than what is proposed, its similarity in the idea of molding

“teaching profession ready” industry practitioners is quite innovative and will

greatly help in uplifting the socio-economic status of many Filipinos whom, up to

now, is relying on their employability as a main method of gaining socio-economic

success.

The teacher education sector has much potential in terms of uplifting the

socio-economic status of the country. Education administrators, managers, policy

makers and planners need to be open to innovation and continuously seek endless

possibilities in making teacher education able to address the needs of the people.

52

Program possibilities such as those mentioned above could open the doors for

would be industry practitioners whom would likewise be discouraged to teach, to

help the tertiary education adopt its programs and instructions to the needs of the

industry. This will thus eliminate the problem of having graduates with mismatched

employment qualifications. This will give them the opportunity to collaborate with

academicians; if left on its own to run the course programs, would likewise continue

to widen the gap between theory and practice. What academicians could share to

their students is limited to what they have experienced in the field. Most of the time,

their knowledge are limited and, would look and work well only in theory or in an

experimental settings but not in real life scenarios. This is what the proposed

“teaching profession ready” industry practitioners could give, a bridge to fill the gap

between what would work in theory and what could be expected in real life, thus,

will produce education graduates who are highly skilled and qualified to meet the

needs of the society.

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55

FACTORS AFFECTING THE COMPETITIVENESS OF

SELECTED HOME FURNITURE EXPORTERS IN CEBU

CARYL CHARLENE E. JIMENEZ, MBA ABSTRACT

This study attempts to identify the key factors that affect Cebu furniture

manufacturers using Michael Porter‟s Five Forces Model (1998) of

competitive analysis. The study explored factors from the departments of

marketing, production and finance to specific functional strategies to target

competitive advantage against other Asian producing countries in equally

producing high quality innovative furniture pieces in the international market.

The study discussed possible strategic thrust for Cebu furniture companies in

attaining competitive advantage in the age of globalization.

The wave of globalization has affected largely industries in all parts of the

world. The open trade policy has thrown the Philippine economy to a competitive

global arena where countries fight for space and place in the international market.

“Take change by the hand or it will take you by the throat.” Attributed to

Winston Churchill, this brief sentence emphasizes the need to understand and

embrace change in general (Bullard and West, 2002). Change is necessary to be

abreast with the impact of globalization. With innovation at the forefront of many

businesses worldwide, what is its impact with the home furniture exporters in the

country mainly in the Cebu area? Moreover, within the organization, what can

furniture manufacturers do to “take change by the hand” in the integral departments

of marketing, financial and production to be competitive today and in the near

future?

In the Philippines, the furniture industry has fully emerged as the trendsetter

among the furniture-producing countries of Asia, earning the title as the “Milan of

Asia”. With the rich tradition in furniture making combined with native artisans

with excellent design flair and deft hands, the country ranks among the world‟s best

and continues to capture worldwide acclaim in the international market. Despite the

country‟s economic crisis, the furniture export industry maintains an impressive

record of accomplishment as a major export earner and net exporter. As such, it has

earned a place in the government‟s list of top ten export priority products. The

thriving industry is now at the forefront of the country‟s drive towards global

competitiveness.

The country has three main centers of furniture production: Metro Manila,

Pampanga and Cebu. It is the Small and Medium Enterprises (SMEs) that mainly

dominate the industry, with 98% of the estimated 15,000 manufacturers employing

less than two hundred employees. In fact, 63% of the firms employ no more than

nine workers. The large furniture manufacturers, mostly comprised of exporters,

employ around 43% of the industry‟s total workforce of 481,500 direct workers.

56

Another 300,000 people are indirectly employed as subcontractors (FPRDI,

PCCARD, 2000).

Furniture export performance for the period of 1995 to 1999 yielded an export

growth between 8 to 11%. The United States remains to be the country‟s biggest

market, importing as much as 59% of our total exports. During the export ban on

rattan poles in the 1980s, wood furniture products were the alternative resource that

replaced rattan as the most common material used in furniture making. The use of

metal, mixed media and parts of furniture followed suit as a process of innovation.

As of December 2000, furniture exports to the United States amounted to US$225.4

M. Other export markets include members of the European Union which amount to

US$52.5 M. In the United States, the Philippines ranks as the eighth among the top

sources for imported furniture, with China leading the forefront, having exported

US$3.7 B to the United States as of year 2000. (FPRDI, PCCARD, 2000)

In 1986, the Philippines established itself as the top exporter of furniture

among its Association of South East Asian Nations (ASEAN) counterparts. Today,

the country‟s ranking dropped to the fourth, next to Malaysia, Indonesia and

Thailand. In terms of absolute value of exports, the Philippines pales when

compared to Malaysia, Indonesia and China which recorded furniture exports of

US$1.2 B, 860 M and 3.7 B, respectively (FPRDI, PCCARD, 2000).

According to studies as of year 2000, the world furniture export market was

estimated at US$52 B. This means that in the year 2000, the total Philippine

furniture exports were valued at US$381 M. These figures barely cornered ¾

percent, or 0.733%, of the global market share for furniture. Glaring facts that

furniture and timber industries in other parts of the world more effectively supply

this global market demand (FPRDI, PCCARD, 2000).

There is a growing concern that the local industry has not grown in leaps and

bounds as compared vis-à-vis to its neighboring countries. China has aggressively

adopted manufacturing and technology strategies with an emphasis on cost

combined with the importance of quality leading furniture manufacturers to

incorporate a flexible production system to produce innovative furniture pieces. The

Secretary- General of the Chinese National Furniture Association (CNFA) in fact

predicted that within twenty years Chinese furniture will “match foreign producers

for variety, quality and technique” (Robb and Xie, 2003). The interest of the

researcher was further fortified to pursue the study as the statistics in the country

show that while the country showed an export growth of 13% from years 1999 to

2000, China has garnered an export growth of 37% in the same period. With

China‟s accession to the World Trade Organization (WTO), it becomes a major

threat to almost all manufacturing businesses not only to those engaged in furniture

manufacturing as it boasts of a 500 Million workforce combined with low labor

costs.

While furniture-manufacturing still remains relatively labor intensive, because

of high interest rates, strict financing requirements and foreign restrictions in the

1980s, manufacturers had found it difficult to expand or modernize facilities and

57

import modern equipment. Capital investments and other fixed assets amounted to

3.5% of manufacturer‟s total expenses in an industry that depend more on manual

technology and simple woodworking machines. Other productivity impediments

include sourcing and cost of raw materials, sustaining product innovation and more.

The country already has a disadvantage of higher labor costs and interest rates;

wherein China and Indonesia are close at our heels posing as huge threats to the

flourishing industry. Given such obstacles, there are still areas wherein Philippine

furniture exporters can gain competitive advantages that this research aims to

achieve.

These considerations lead to the development of this study in order to identify

the key factors that affect furniture manufacturers; from the departments of

marketing, production and finance to specific functional strategies to target

competitive advantage against other Asian producing countries in equally producing

high quality innovative furniture pieces in the international market.

The study determined the furniture manufacturers‟ strategic thrust towards its

competitive advantage in the age of globalization. Specifically, this study obtained

answers to the following objectives:

1. Determine the factors that affect the competitiveness of furniture firms.

2. Identify the strategies adopted by the firms to sustain competitiveness.

3. Distinguish the extent of functional departments‟ contribution to

competitiveness.

4. Identify the relevance of the model equation to enhance the

competitiveness of the furniture industry in the country.

Theoretical Framework

Michael Porter‟s Five Forces Model (1998) of competitive analysis as shown

in Figure 1A , is a widely used approach for developing strategies in many

industries. With the intensity of competition among firms varies widely across

industries, the nature of competitiveness in a given industry can be viewed as being

influenced by the five forces which are threat of new entrants, threat of substitute

products, bargaining power of suppliers and bargaining power of buyers. In the

furniture industry like most industries, a company must develop an edge over rival

or competing firms, wherein it is instrumental that a firm must fully understand the

industry context that the company operates.

Rivalry among competing firms is considered the most powerful among the

five competitive forces. The success of a firm‟s strategy will depend largely on the

extent that the firm is willing to provide competitive advantage over the strategies

pursued by another rival firm. Changes in strategy may be in the form of lowering

58

prices, enhancing quality standards, adding product features, providing more

services, extending warranties and increasing advertising.

The potential entry of new competitors increases the intensity of

competitiveness among firms. Barriers to entry for these new firms can include the

need to quickly gain economies of scale, to gain technology and specialization,

strong customer loyalty, strong brand preferences, large capital requirements,

inadequate distribution channels, government regulatory policies and tariffs,

inaccessibility to raw materials, unfavorable locations and over saturation of the

market. However, despite implementation of these barriers, new firms may still

permeate the market by offering higher-quality products with lower prices. A firm

must provide counteractive measures through assessing or monitoring potential new

entrants and capitalizing on existing strengths and opportunities.

Presently, many industries are in close competition with producers of

substitute products in other industries. The threat of substitute typically impacts an

industry through price competition where a product‟s demand is affected by the

price change of a substitute product. The more substitutes available in the market,

the demand becomes more flexible since customers have more alternatives. A close

substitute product constrains the ability of firms in an industry to raise prices. The

market shares that these products obtain measures the strength of substitute products.

The bargaining power of suppliers greatly affects the intensity of competition

in an industry especially where instances of large number of suppliers exists, few

good substitute raw materials or the cost of switching raw materials is costly.

Producers and suppliers must work out strategies to assist each other to enhance

long-term profitability through improved quality, reasonable prices, and

development of new services, just-in-time deliveries and reduced inventory costs.

The bargaining power of consumers represents a major force affecting the

intensity of competition in an industry. Factors may increase or decrease the buying

power of consumers such that firms use strategies by offering extended warranties

or special services to gain customer loyalty whenever the bargaining power of

consumers is substantial.

The Five Forces Model provided useful ways of thinking about and analyzing

the nature of competition within an industry to identify opportunities and threats.

However, managers need to be aware of their limitations, as these are not yet proven

empirically. In the study, the researcher adopted some factors as the variables for

the model.

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At a macro level, the changes in the Five Forces of Michael Porter provided a

clearer understanding to the opportunities and threats affecting a firm. Such that the

firm must then formulate appropriate internal strategic responses based on the

theory. The researcher through Michael Porter‟s Value Chain Framework made a

parallel analysis as it complimented the Five Forces Theory at a micro level.

The value chain, a process of transforming inputs into outputs, comprises a

number of primary and support activities. Each activity adds value to the product,

while achieving superior efficiency, quality, innovation and customer

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responsiveness requires strategies that embrace several distinct value creation

activities. These goals are regarded as cutting across the different value creation

functions of a company or cross-functional integration (Hill and Jones, 2002).

The primary activities are executed together with design, creation and delivery

of a product, as well as its marketing and its support and after-sales service. The

research and development activities are concerned with the design of products and

the production process. With a superior product design, research and development

(R&D) can increase the functionality of products, which makes them more

attractive to consumers. The role of the research and development is to ensure

efficient production process, thus lowering production costs.

The production activities are concerned with the creation of a good or services

wherein a company creates value by performing its activities efficiently so that

lower costs results are equally consistent in performing high product quality which

leads to differentiation and lower costs.

Through brand positioning and advertising, the marketing function can

increase the value that consumers perceive to be contained in a company‟s product.

The marketing and sales can also increase value by discovering consumer needs and

communicating them back to the research and development (R&D) function of the

company, which can then design products that had better match the needs based on

consumer feedback.

The role of the service function of an enterprise is to provide after-sales

service and support. This function creates a perception of superior value in the

consumers by solving customer problems and supporting customers after they have

purchased the product.

The support activities of the value chain provide inputs that allow the primary

activities to take place such as materials management, human resource and

information systems.

The materials management or logistics function controls the transmission of

physical materials through the value chain, from procurement through production to

distribution. The efficiency in carrying out the task lowers costs, thereby creating

more value.

The support activity of human resource ensures that people are adequately

trained, motivated and compensated to perform their tasks efficiently as human

capital is the greatest resource of a firm. The information system combined with

communication features of the Internet creates efficiency and effectiveness which

the company manages its other value creation activities.

The final support activity is company infrastructure, wherein the

companywide contexts within which all the other value creation activities take place.

The infrastructure includes the organizational structure, control systems and culture

61

of the company. Since top management can exert considerable influence on these

aspects, top management should be viewed as part of a company‟s infrastructure.

Given the present obstacles that firms confront with globalization, it is critical

that firms take matters into their own hands by formulating internal strategies

specifically targeting the functional departments to enhance competitiveness and

growth. Moreover, given the ever-changing business environment, local

manufacturers need to formulate long-term beneficial strategies to survive the

competition prevalent in the furniture industry worldwide.

METHOD

Research Design

The researcher utilized a descriptive research design, specifically survey. Data

collected through descriptive research can provide valuable information about the

study units along relevant characteristics and about associations among those

characteristics (Arboleda, 2004).

The survey research determined the feasibility of the model equation from the

previous study to the Cebu production cluster wherein frequency and regression

analysis were used to validate the relationships.

Population

The samples were drawn from the trade associations namely the Chamber of

Furniture Industries of the Philippines (CFIP) and Cebu Furniture Industry

Foundation (CFIF). The furniture export firm Kosmos Furniture Design

composed of a management team and selected employees were included in the

study.

Sampling Technique

A non-probabilistic judgmental sampling design approach was utilized in the

research, wherein not every element of the total population has a chance of entering

the sample. The data survey from the Cebu cluster was obtained from the thesis

proposal of Miss Leah Angeli Paclibar and Miss Nikki Garcia, Business

Management students majoring in Marketing and Sales.

The researcher interpreted the survey results to determine whether the model

equation from the previous study of the author was applicable to Cebu as the

remaining production center not included in the study.

Sources of Data

A structured questionnaire utilizing a four (4) point Likert scale served as the

primary source of information. Focus group discussions through in-depth

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interviews from consulting experts and professionals from the furniture study were

also utilized to supplement the survey.

Research Model

From the results of the frequency analysis and secondary data from the

previous study, the variables of price, volume, raw materials, labor cost,

transportation costs and capitalization were also used for the Cebu production center

to determine the research model‟s relevance to the research.

MODEL EQUATION:

Yp = f (LC,C,TC,V,RM)

Yp = a + b*LC + c*C + d*TC + e*V + f*RM

Where: P - price in pesos (in 1000‟s) based on FOB shipping point, with a

direct or indirect relationship with the variables of labor force cost,

raw materials, and capitalization.

LC - labor force cost in pesos (in 1000‟s), fifty percent in the FOB

costing price is comprised of labor cost. A direct relationship

to price as mandated by government wage order.

C - capitalization in pesos (in 1000‟s) contributes ten percent of

the FOB costing price. A direct relationship to price as

influenced by capital infusion of the firm.

TC - transportation cost in pesos (in 1000‟s) comprises fifteen

percent of the FOB costing price. A direct relationship to price

as influenced by order shipment destination/s.

V - volume in pesos (1000‟s) comprises fifteen percent of the

FOB costing price. A direct relationship to price as influenced

by quantity of orders or contracts.

RM - raw materials in pesos (1000‟s) comprises ten percent in the

FOB costing price. A direct relationship to price as influenced

by availability of raw materials.

RESULTS AND DISCUSSION

Factors that affect the competitiveness of furniture firms in Cebu.

The results of the frequency analysis on Table 1, addressed the factors that

affect competitiveness as identified below. For the variables with a sixty percent

value and above was utilized as it provided a higher percentage for the data

analyzed.

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The sample data provided that in the supplier factor revealed that delivery

schedules, supplier location and relations and availability of suppliers commonly

received a less affect or a moderately affect rating notably due the present Cebu

respondents belong to an outsourced company and not a direct manufacturer of

furniture, a variation from the previous population.

Data revealed that for the raw material factor, eighty nine percent of the

respondents surveyed agreed that the Executive Order (EO) on the prohibition of the

use of abaca wood less affects competitiveness. Cebu manufacturers are innovating

with mixed media sources deviating from dependence on abaca as main components

in furniture production.

Results showed that on the competitor factor, fifty six percent of the

respondents agreed that improvements with other existing furniture companies has a

less affect on competitiveness while seventy eight percent of the respondents

expressed that the emergence of other furniture producers in Asian countries

moderately affects competitiveness. Indicating that domestic competition is not a

threat to local furniture manufacturers but international specifically Asian

competition posed a significant threat to competitiveness.

Among the customer factors, almost all received a less affect or does not

affect rating except the demand on products where seventy-eight percent of

respondents agreed that the demand on products moderately affects competitiveness

wherein customers dictate the volume of orders, the deciding point of buyers when

placing orders to manufacturers.

Table 1 Factors that affect the competitiveness of furniture export firms in Cebu

Variable Description %

Weighted

Mean Interpretation

1.1 Availability of supplier 100.00 1.56 Less Affects competitiveness

1.2 Location of supplier 11.10 1.89 Moderately affects competitiveness

1.3 Pricing given by supplier 44.40 1.56 Strongly Affects competitiveness

1.4 Delivery schedules of supplier 88.80 2.00 Less Affects competitiveness

1.5 Supplier relations 66.60 2.00 Less Affects competitiveness

2.1 Government Policy on Anti Smuggling 77.70 2.78 Does not affect competitiveness

2.2

EO on the prohibition on the use of

abaca wood 88.80 2.89 Does not affect competitiveness

2.3 Availability of wood and aluminum resources 55.50 1.44 Moderately affects competitiveness

3.1

Emergence of other Asian countries in the

furniture industry 77.70 1.22 Moderately affects competitiveness

3.2

Improvement of other existing furniture

companies 55.50 2.44 Less Affects competitiveness

4.1 Location of customers 66.60 2.89 Does not affect competitiveness

4.2 Demand on products 77.70 1.22 Moderately affects competitiveness

4.3 Customer standards 100.00 1.78 Less Affects competitiveness

4.4 Customer relations 88.80 1.33 Less Affects competitiveness

Table 1A Summary of the factors with above 60% value

Variable Description %

Weighted

Mean Interpretation

1.1 Availability of supplier 100.00 1.56 Less Affects competitiveness

1.4 Delivery schedules of supplier 88.80 2.00 Less Affects competitiveness

1.5 Supplier relations 66.60 2.00 Less Affects competitiveness

2.1 Government Policy on Anti Smuggling 77.70 2.78 Does not affect competitiveness

2.2

EO on the prohibition on the use of

abaca wood 88.80 2.89 Does not affect competitiveness

3.1

Emergence of other Asian countries in the

furniture industry 77.70 1.22 Moderately affects competitiveness

4.1 Location of customers 66.60 2.89 Does not affect competitiveness

4.2 Demand on products 77.70 1.22 Moderately affects competitiveness

4.3 Customer standards 100.00 1.78 Less Affects competitiveness

4.4 Customer relations 88.80 1.33 Less Affects competitiveness

**Note: This was used to derive progressive model for economterics. A percentage from 60% and above was

classified for model development

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Strategies adopted by the firms to sustain competitiveness.

The results of the frequency analysis on Table 2 enumerated the strategies

prioritized by each functional department. For the variables with a sixty percent

value and above was utilized as it provided a higher percentage for the data

analyzed.

Data provided that all marketing strategies were considered to contribute to a

less extent except for marketing research on the industry which was considered the

most important to the respondents as this increases market viability and direction to

forecast product lines to buyers.

Product quality output remains to be a high priority as data showed that

seventy-eight percent of the respondents signify the importance of quality as a

production strategy to remain competitive.

In research and development, a hundred percent of the respondents agreed that

the creation of designs and innovations remain to be a priority as a factor for

competition as the industry is strongly influenced by design trends.

For finance, while a hundred percent of the respondents agreed that the budget

on company operations was significant, the impact on competitiveness contributes

to a less extent. This indicates that a continuous influx of contract orders is still

necessary to for a firm to operate on an annual basis as buyers base product style

forecasts in advance seasons. This also signifies demand on specialty products or

items produced in a particular country.

65

Table 2 Strategies that contribute to the competitivess of furniture export firms in Cebu

Variable Description %

Weighted

Mean Interpretation

5.1 Marketing Plan Update 66.60 1.33 Contribute to a slight extent

5.2 Marketing Research on the industry 66.60 2.11 Contribute to a moderate extent

5.3 Strategic location for operations 88.80 1.56 Contribute to a slight extent

5.4 Advertisements and promotions 100.00 1.22 Contribute to a slight extent

5.5 Trade Fairs and other events 88.80 1.33 Contribute to a moderate extent

6.1 Quality control on products 77.70 2.00 Contribute to a moderate extent

6.2

Transactions with subcontractors and

employee relations 100.00 1.78 Contribute to a moderate extent

7.1

Technologically advanced machineries,

equipment and software 100.00 1.11 Contribute to a slight extent

7.2 Creation of new designs/software 100.00 1.67 Contribute to a moderate extent

8.1 Budget on company operations 100.00 2.11 Contribute to a slight extent

8.2 Currency issues (foreign exchange) 77.70 1.56 Contribute to a slight extent

8.3 Financial statement updates 44.40 1.64 Contribute to a moderate extent

Table 2A Summary of the factors with above 60% value

Variable Description %

Weighted

Mean Interpretation

5.1 Marketing Plan Update 66.60 1.33 Contribute to a slight extent

5.2 Marketing Research on the industry 66.60 2.11 Contribute to a moderate extent

5.3 Strategic location for operations 88.80 1.56 Contribute to a slight extent

5.4 Advertisements and promotions 100.00 1.22 Contribute to a slight extent

5.5 Trade Fairs and other events 88.80 1.33 Contribute to a moderate extent

6.1 Quality control on products 77.70 2.00 Contribute to a moderate extent

6.2

Transactions with subcontractors and

employee relations 100.00 1.78 Contribute to a moderate extent

7.1

Technologically advanced machineries,

equipment and software 100.00 1.11 Contribute to a slight extent

7.2 Creation of new designs/innovations 100.00 1.67 Contribute to a moderate extent

8.1 Budget on company operations 100.00 2.11 Contribute to a slight extent

8.2 Currency issues (foreign exchange) 77.70 1.56 Contribute to a slight extent

**Note: This was used to derive progressive model for economterics. A percentage from 60% and above was

classified for model development

3. Model Equation using Linear Regression

To qualify the responses derived from the surveys, a linear regression analysis

using multiple predictors was used to develop a model to enhance the

competitiveness of the furniture industry. The variables of price, raw materials and

volume were classified for model formulation as these were derived from the

frequency analysis with a sixty percent and above result. Other variables such as

transportation cost, labor cost and capitalization were used from the data collected.

Yp = f (T, L, C,RM,V)

Yp = a + bT + cL + dC + eRM + fV

Yp= 2.781 + .183T -.554L - .173C - .464RM +.146V

(t=1.675) (t=-3.041) (t=-1.632) (t=-6.093) (t=1.884)

Adjusted R square = 0.774 = 77.40%

F = 8.513, p = 0.11

Where: P = price in 1000 pesos

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LC = labor cost in 1000 pesos

C = capitalization in 1000 pesos

TC = transportation cost in 1000 pesos

V = volume in 1000 pesos

RM = raw materials in 1000 pesos

Coefficientsa

2.781 .458 6.072 .001 1.660 3.902

.183 .109 .338 1.675 .145 -.084 .450 -.217 .564 .240 .507 1.972

-.554 .182 -.644 -3.041 .023 -1.000 -.108 -.258 -.779 -.436 .459 2.179

-.173 .106 -.277 -1.632 .154 -.433 .087 .188 -.554 -.234 .715 1.398

-.464 .076 -1.017 -6.093 .001 -.650 -.278 -.822 -.928 -.874 .739 1.353

.146 .078 .424 1.884 .109 -.044 .336 .000 .610 .270 .406 2.460

(Constant)

TRANSPO

LABOR

CAP

RAWMAT2

VOL2

Model

1

B Std. Error

Unstandardized

Coefficients

Beta

Standardized

Coefficients

t Sig. Lower Bound Upper Bound

95% Confidence Interval for B

Zero-order Partial Part

Correlations

Tolerance VIF

Collinearity Statistics

Dependent Variable: PRICE2a.

The above data considers the variables such as labor cost, capitalization,

transportation cost, volume and raw materials as the predictors of price. The

relationships between these variables are strong since the adjusted R square is 0.774,

indicating that 77.40% in the variation of price was significantly explained by

transportation and volume.

Yp = 2.781 + 0.183T + 0.146V

From the multiple regression result, transportation and volume had a direct

relationship to price while the other variables of capitalization, raw material and

labor force cost had an indirect relationship to price.

Conclusions

The study indicated that the five forces of Michael Porter influenced the

factors that affect the competitiveness of furniture firms. The significance of price,

transportation cost and volume emerges to be the primary issues that firms must

address to enable them to be internationally competitive. Based on the results, the

mentioned variables were significant as it affects the competitiveness of the

respondent furniture exporters.

Price or cost directly influences the other variables wherein an attractive price

dictates contract orders of a firm. Volume was influenced by production output and

customer responsiveness influences repeat or continuous orders of saleable furniture

pieces. Transportation costs are now included as an important variable in the study

67

as unstable fuel prices in the world market greatly affects business worldwide. In

addition, the raw material variable is not significant in the Cebu cluster, a variation

from the previous study as firms use innovative designs on furniture pieces and

include mix media materials to be less independent on rattan.

The results indicated that furniture firms focused on building strategies on the

functional level specifically on the marketing, production and finance departments.

These strategies were directed at improving the effectiveness of basic operations

within the firm, to achieve overall goals of efficiency, quality, innovation and

customer responsiveness on products. Successful furniture exporters were able to

able to maintain their competitive position against other furniture manufacturers by

building competitive advantage through functional level strategies. In the

production department, upgrading the production systems/processes and improving

quality standards in the production department gained the highest rankings

signifying directly affecting a firm‟s competitiveness catering to both buyer and

consumer increasing demands for home furniture worldwide.

In the marketing department, strategies of increasing marketing promotions

and research received the highest result in directly affecting competitiveness by

strengthening the market viability of a firm in an international scale by capitalizing

on the existing developed markets and locating new market segments to compete in.

Strategies in the financial department stressed that firms were concerned that

in order for firms to be competitive necessary funds must be available when needed

and priorities of the firm are maintained and controlled.

The contributory role of each of the functional department was limited to their

functions. However, there were times when each department may embrace two or

more functions, which requires close coordination to achieve overall company

objectives. The role of each functional department was to ensure that strategic

priorities of top management were understood and disseminated in operations. If the

desired result was not met, then the manager of that specific department had the

responsibility to inform top management of a particular strategy‟s limitations.

In the model equation, data revealed that only two variables significantly

explained price, which were transportation and volume while capitalization, raw

materials and labor cost had an indirect relationship to price. With volume,

literature studies stress on a flexible production system responsive to scheduling

adjustments to increase orders and marketing strategies based on innovation and

risk to influence the increase of customer volume and product repurchases. These

studies coincide with the results of the linear regression as increase of contract

orders increases competitiveness. Philippine furniture manufacturers should address

the low productivity level inherent in the manufacturing sector to increase the level

of exports of the country as this has a direct relationship to price.

While data on the transportation cost also reveal a direct relationship to price

as opposed to the previous study. Transportation costs on country of origin to

shipment destinations either single or multiple via sea freight or air cargo greatly

68

affects competitiveness, as local firms have to frequently adjust FOB price to the

unstable weekly fuel prices. With regards to labor force cost, results reveal also an

indirect relationship as opposed to earlier expected indications as costs according to

literature studies reveal that competitive success is no longer about lowest labor cost

but issues on quality, efficient production processes, compliance to worker safety

and environment protection.

Results in this study reveal a significant difference of variables affecting the

Metro Manila/Pampanga and Cebu as production centers. While the Metro

Manila/Pampanga cluster has the variables of capitalization, raw materials and

volume that directly affects price, the Cebu cluster has only transportation and

volume as variables affecting price. Therefore, we can assume that although these

clusters belong in one country, these areas are still different and unique in terms of

the conditions affecting their competitiveness.

Recommendations and directions for future research

From these insights, the researcher recommends intensive strategies focused

on market penetration, market development and product development to uplift the

Philippine furniture industry as a whole.

Market penetration strategies may involve increasing market share with

current contract buyers for present products in present markets and intensifying

efforts to garner new furniture manufacturing contracts with new buyers to offer

increased production capacity and new competencies to increase sales volume. By

developing a flexible production plan for chase orders will differentiate the

company from its competitors. Usually chase orders are furniture pieces that are

considered core items of buyers and are not based on seasonal trends or chase orders

that are saleable in the market thus a need for repeat orders.

Market development strategies may involve firms introducing present

products into a new geographical area that is the European Union (EU) market.

Firms must capitalize on the brand name it has developed in the US market segment

by locating new market segments to compete in. Firms should aggressively direct

market themselves to European furniture trade fairs or directly to the buyer to

present portfolios to gain market entry.

Product development strategies involve increasing sales by improving or

modifying present products or services, in fact, some firms have adopted strategies

on outsourcing labor in China to compete with prices, but the strategy drawback on

design pirating. However, the overall picture of an effective production strategy is

with improved services, on-time delivery schedules are met which reduces shipment

delays, additional freight shipment charges, charge backs or cancellations from

buyers. At the same time, customer satisfaction is achieved because usually orders

are sold in advance to stores, mail catalogs or Internet purchases. With improved

products, firms may offer products such as children‟s furniture to current buyers or

to prospective buyers in the United States as trends still dictate to a high demand of

children themed furniture similar to the increase of children‟s apparel in the garment

69

industry. Firms can incorporate this new development in its production capacity, as

price points offered by buyers are high and workable.

With the model equation, firms may be able to utilize it to their advantage to

be price competitive against the other Asian players in the market. As long as firms

focus on the variables of volume and transportation costs which has a direct

relationship to price, price will remain to be competitive. The motivational factor

that attracts buyers to place orders with China and Indonesia is primarily low prices

on products and vast sources of raw materials. Quality may be a concern but buyers

reason that quality can be learned and improved in the long term.

The researcher also recommends further researches concerning the variables

not considered for model development with less than 60% value as these may also

have an alternative effect towards competitiveness, which may improve the existing

model. The researcher also encourages studies that include the external factors that

affect furniture firms and other functional departments strategy contribution to

competitiveness such as research and development (R&D), human resources,

materials management and information systems.

In the age of globalization, Philippine furniture firms have to evolve and be

flexible to the ever-changing business environment to keep up with competition

prevalent in the furniture global market. With Chinese manufacturers adopting

competitive strategies to enhance their position in foreign markets by lifting the

level of performance on a variety of objectives, China‟s World Trade Organization

(WTO) accession all the more fuels their continued expansion and performance in

the industry by and placing pressure on other major exporting nations.

Similar from the previous study, top management remains to be conservative

or traditional in strategy at the expense of potential competitive growth to cut down

on cost. Top management still has the prerogative to decide on which strategy is

best suited for the whole organization. The functional department supports top

management to ensure that strategies are aligned and disseminated within the

department. With globalization, a traditional management style is no longer

effective as strategic orientation in achieving competitive advantage is geared

towards flexibility, innovation and how well their organization competes in the

global market place.

To date, buyers have a renewed interest to place orders in the country as goods

made in China has saturated the North American market, giving customers less

variety and options. With this opportunity, firms must immediately “take change by

the hand” and become organized, to surpass other Asian players in equivalently

producing innovative and quality furniture at a competitive price.

70

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Foster, Jeremy J., Data Analysis Using SPSS for Windows, Sage Publications Ltd.,

London, 1998.

FPRDI, PCCARD under a DOST Project (2000). An Assessment of the Philippine

Furniture Industry.

Fuller, Peter B. (1994). Assessing Marketing in Small and Medium-sized

Enterprises, European Journal of Marketing 28 (12), 34-49.

71

TURNING THINGS AROUND

“BREATHING NEW LIFE TO AN ALMOST-DEAD BUSINESS”

ALLAN CAPULONG, MBA

Greatlands Development and Marketing Corporation started Villa Regina

Subdivision in 2004. The project was a low-cost, subdivision selling house and lot

packages ranging from P550,000 to P750,000. It is located in McArthur Highway

between the cities of San Fernando and Angeles Pampanga. It was one among the

low-cost real estate projects with low selling velocity and had no broker network

activity.

The project took a major facelift from August 2006 to December 2006, where

it totally stopped its marketing and sales efforts and was re-launched last January

2007 as Florida Residences. An American-inspired community that offers house

and lot packages ranging from P2,000,000 to P3,000,000. It is now the number one

(1) selling medium-end housing product as of 3rd

& 4th

quarter of 2007 beating real

estate giants like Avida by Ayala Land, Sorrento by Crown Asia of the Villar Group,

and Robinsons Land.

Yes, it‟s true. The business had a revenue growth of 1,900% in a span of one

(1) year. At first, this may sound impossible, but I say it was possible. Entrepreneurs

reach a common phase in the business life cycle where every strategy is just

ineffective, all your ideas does not seem to match the required output, and to add a

little more drama, your people does not have that fire in them to help you get

through.

What do you do? Close shop? Go find a job? Soul search? Well, a true

Entrepreneur sits back, takes a step backward, musters all the sanity left in him and

redefine his business plan once more. Again, it‟s a battle between the negative and

positive you, no one else but you.

For a losing company that was on the verge of collapsing, it takes real

inspiration and imagination to see the light and it doesn‟t take brilliant, rocket-

science, or an Albert Einstein type of a strategy to turn things around. All it takes is

to ask yourself the basic question where us Entrepreneurs always ask especially in

times of crisis like what I‟ve experienced.

What is the logic of my business?

It was the easiest question to ask but the hardest one to answer. Allow me to

take you through the exciting process of how I repositioned our real estate company

from a losing and close-to-damnation company to one of the best selling real estate

project in Pampanga.

72

Knowing That There is a Problem, A Very Big One

A common mistake of entrepreneurs is that the blame for the business‟ non-

performance goes through a lot of people and a lot of departments. One of the

greatest paradigm-shift for an entrepreneur is to finally look in the mirror and tell

the person one sees that “you are the problem!” From this point on, one begins to

see that since the business was originally anchored on the entrepreneur, of course its

success and failure will definitely be anchored on him/her.

Once the entrepreneur has that mindset of change, he/she begin to see that

from him/her flows the lifeblood of a company‟s drive for change. In all its areas

and on how it functions in the business environment. From here, he/she takes a

look at the main indicators of what is obvious. Therefore, the story of realization

and change begins.

In the case of the researcher‟s business, it was sales. The real estate project

was already on its 3rd

year and still no sales were coming in. To add to the confusion,

this project was located in a very strategic location in Pampanga and as you know

well, in a province that is booming very fast. Now whoever said that real estate was

all about location? I beg to disagree. On the onset, it was what the developer

originally thought of. The developer buys the land, develops it, and sells it. Nobody

came. A business where capital expenditure is huge, losing money for three (3)

consecutive years was more or less a sign for the developer to finally close shop.

Again, what was the logic of my business?

Stop, Look, Listen, and Think

The developer started by checking what is happening to this country. These

are some of the findings from my research:

1. The country experienced growth in terms of GDP at 5.5% and GNP of

5.8% in 2006.

2. I also found out that during the same year, our global heroes who are the

OFWs poured in $12B through formal channels and an unconfirmed data

that it was the same amount through informal channels.

3. Opportunities to supply the need for housing are still very visible. There

will be an estimated 3.8 million housing need come 2005-2010. This

housing need is composed of the expected backlog, substandard, and new

household according to the Housing Urban Development Coordinating

Council (HUDCC).

The government identified key challenges for housing that they have to

accomplish and these are the following:

1. Meeting the rapidly growing housing need;

2. Expanding private sector participation in socialized housing

financing and construction; and

73

3. Strengthening the capacity of housing institutions;

4. An industry called the Business Process Outsourcing (BPO)

industry is like a spreading wildfire in the metropolis and in key

cities nationwide.

5. Local and international tourists are increasing everyday.

6. A special segment of the Filipino Baby Boomers scattered around

the world were looking for a place to invest and because they are as

I have said Filipinos, we are on top of their list.

7. The Philippines is being eyed as a strong candidate to be the

retirement capital of Asia because of the country‟s natural resources

and its culture of hospitality.

Government Programs & Directions According to the Housing Urban Development and Coordinating Council

(HUDCC), the housing efforts of the government for the next three years will focus

on the bottom 40 percent of households because of their inability to get formal

housing assistance. This means providing these households with affordable

socialized housing either through efficient production of housing units for

ownership or rental or through sustainable housing finance. If and when necessary,

the government will step in to provide subsidies to make housing more affordable.

Government however will ensure that these are targeted and transparent.

The housing market should be made more efficient. This strategy calls for

government to improve the efficiency of the housing market and for private sector

to innovate and produce decent housing at lower costs. Housing agencies have been

tasked to cut down bureaucratic red tape in the processing of housing applications.

The target for this activity is to cut into half the processing period. To address the

high price of urban lands for housing, Congress is being encouraged to enact the

National Land Use Code. This code identifies all areas for specific uses and resolves

conflicts in the use of land, their classification and their location. This will be

accompanied by the Land Insurance Bill that seeks to promote a more reliable and

fraud- proof system of securing land titles and addresses the problem of forgery of

land titles.

A sustainable housing financing shall be put in place. When one thinks about

housing finance, one immediately thinks of PAG-IBIG. This should no longer be

the case when the private sector is encouraged to participate in the housing market.

Housing finance shall rest on market-based principles and efficient use of subsidies

and incentives to address specific market failures. Innovative financial schemes

shall be put into place to generate long-term funds for housing.

The OFW Phenomenon

One of the major factors that have been affecting a lot of industries other than

real estate is the emergence of the OFW market. This does not only fall under the

social aspect of this environmental analysis but is also directly affecting the

economy of the Philippines because of the huge inflow of money from different

74

parts of the world. The typical Filipino being known as the global employee has

been to every destination possible, working hard for their families to let them

survive while they are struggling here in the Philippines. This social phenomenon

has opened a lot of businesses and gave the country a new hope for sustaining its

growth. An estimated 8.3 million Filipinos or 17% of the total population are

working abroad. If we will look at it on a micro level, there will be one (1) OFW for

every six (6) household. Some 800,000 to 1M Filipinos emigrate on an annual basis.

This number is expected to grow steadily in the years to come. The Philippines is

the third largest country that sends out its labor force in world. The Philippines is

only third among the top two (2) countries namely Mexico and China. An average

of 2,500 Filipinos leave the country everyday. According to the recent report by the

Asian Development Bank (ADB), the growing OFW market of the Philippines

ranks 3rd

in the world for remittance made. This amounts to around $14-21 billion in

remittances or a total of 32% of the GNP. This is expected to grow at 17.5% per

annum.

According to the data by POEA in 2006, the deployment rate increased by

7.5% from 2005 to 2006. OFW remittances increased as well by a huge 19.4% from

2005 to 2006.

2005 2006 % Change

# Of Deployed OFW 988,615 1,062,567 7.5%

OFW Remittance in $ $10.7B $12.8B 19.4%

Source: POEA

The table below shows the origin of the $12 billion OFW remittances. From

these figures, overseas marketing efforts may be planned well and marketing

budgets allocated for campaign programs of real estate companies. There was a

whopping increase in remittances from Canada that recorded 400%.

Country 2005 2006 % Change

1. USA 6,424,848 6,526,429 1.58%

2. Saudi Arabia 949,372 1,117,915 17.75%

3. Canada 117,061 590,627 404.55%

4. Italy 430,071 574,662 33.62%

5. United Kingdom 300,725 561,670 86.77%

6. Japan 356,659 453,398 27.12%

7. UAE 257,429 427,246 65.97%

8. Hongkong 338,895 413,723 22.08%

9. Singapore 240,149 285,126 18.73%

10. Taiwan 86,551 168,998 95.26%

Source:POEA

The top ten provinces ranked by the number of OFW Households are shown

below. This will help real estate developers evaluate specific locations if it is viable

75

or not. The usual investment choices made by a typical OFW is to buy properties for

personal use and their relatives in the province. Pampanga has the most number of

OFW household compared to the total household recorded in that province.

Province Number of OFW

Household

Share of OFW

Household to total

number of

Household

Pangasinan 124,956 27%

Pampanga 99,359 29%

Iloilo 98,122 27%

Laguna 96,650 25%

Cavite 93,620 25%

Rizal 82,510 24%

Batangas 77,739 23%

Bulacan 71,818 18%

Negros Occidental 59,290 26%

Tarlac 52,290 26%

Source: POEA

The top ten destinations of OFWs from year 2004 and 2005 are illustrated

below.

TOP TEN

DESTINATIONS

OF OFWS

DEPLOYMENT

2004 2005 % Change

1. Saudi Arabia 188,107 193,991 3.13%

2. Hongkong 87,254 94,553 8.37%

3. UAE 68,386 81,707 19.48%

4. Taiwan 45,059 46,714 3.67%

5. Japan 74,480 42,586 -42.82%

6. Kuwait 36,591 40,248 9.99%

7. Qatar 21,360 31,418 47.09%

8. Singapore 22,198 27,599 24.33%

9. Italy 23,329 21,261 -8.86%

10. UK 18,347 16,799 -8.44%

Source: POEA

From the data that was gathered, it proved that the real estate industry today

compared to what it was during the financial crisis of 1997 is now standing on solid

ground. This means that there is a strong and growing market compared then that

most real estate investments were all speculative.

Another finding is that the sophistication level of the market that we are

serving have increased due their exposure in the global market and that the

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dynamics of the marketing landscape has changed tremendously over the years.

Porter’s Framework Analysis

The framework helped me understand the inter-connectivity of the players in

the industry and how to gear my company in response to the changing behavior.

Bargaining Power of Suppliers

The power of suppliers of raw materials in the real estate industry mostly

depends upon the economic situation. During this time of construction boom,

suppliers generally have greater bargaining power and have the capacity to

command higher prices. During times of crisis, suppliers tend to lower their prices

because of the diminished number of customers. This is very much manifested in

steel and cement materials. During this time that real estate is booming, suppliers

give higher prices due to increased demand and urgency.

Bargaining Power of Customers

Individual buyers do not have much bargaining power when it comes to prices.

On the other hand, corporate accounts may have certain advantages because of

volume discounts. The power of the individual buyer relies on his ability to pay in

cash, which forces a developer to lower prices in exchange for better cash flow.

Homebuyers are highly price sensitive since this expenditure represents a

large fraction of the buyer‟s monthly income and savings. They also face high

switching costs in terms of location that a developer is offering. However, due to the

increasing sophistication of buyers, which is brought about by their exposure, they

are able to demand for higher quality, extended financial terms and better service in

terms of amenities and other value-added features.

Pressure from Substitutes

Not everyone from the listed housing backlog can afford houses. That is why

substitutes include purchasing lots only, renting, and living with parents, etc. No

matter how uncomfortable these substitutes are, these are more practical options for

those who can‟t afford to purchase their own house for the moment.

Threat of New Entrants

The horizontal housing industry is a capital-intensive industry. Its barriers to

entry are high due to the need for suitable land banking requirement, access to

financing for development, financing that will come from customers and the need to

apply economies of scale. However, in the horizontal residential sub-sector where it

is highly fragmented, entry barriers are made lower because of the emergence of

many landowners offering joint ventures. This is also the sector in real estate where

location is the least sensitive unlike condominiums that require it to be in a

developed location and resorts that demand a naturally beautiful location. In order

to garner a good market share, buyers must know and appreciate the product that the

developer is offering. In any given development before, land was always the largest

cost but because of possible joint ventures, developers now can allot their funding in

developing nice entrances and model houses for pre-selling which will improve

their cash flow.

Access to development financing is also a prerequisite in real estate. This

77

funding line should at least have the lowest possible rates. This is possible if a

developer has a good track record and a good relationship with the bank. Some old

time developers tap their own source of financing for a project to push through.

Financing for customers is also a major factor since not everyone has the capacity to

pay outright. That is why a part of this paper talked about financing access like

HDMF and GSIS to name a few.

Economies of scale play a major role in keeping costs down. A lean

organization handling a lot of projects at one point is the most ideal. The key to

achieving economies of scale is by developing and selling the first project fast and

opening new projects by using all and the same business template. A real estate

company that maintains its own construction company should be able to expand to

more than 1 project since the investment and learning curve of the organization will

be put to waste.

Knowing One’s Competitors Intimately

A developer has to understand the success factors of the big players in my

industry and to know how they position their products in every locality that they are

into. The size of the horizontal housing industry is very difficult to estimate because

of the number of small players scattered in various parts of the country. In 2006, six

(6) major developers had about P33 Billion in booked sales of residential

subdivisions. Below is an overview of the major players in the real estate industry:

Below is an overview of the major players in the real estate industry:

Brittany, Crown Asia, Camella, etc. under the Villar Group

This company is the pioneer among the market leaders in the mass housing for

socialized, low and medium income segments. They became successful in

penetrating this market because of liberal payment schemes to those who are in

financial difficulty. After developing its capability in these segments, this group is

now catering to higher income market segments having developed some of its new

projects in Region IV.

Sta. Lucia Realty

The Chamber of Real Estate and Builders Association (CREBA) bestowed

upon this 31-year old real estate company as the “Developer of the Year” for 2006

during the CREBA-HUDCC national convention. This company survived the hard

times by not acquiring massive properties but participated through joint-venture

agreements with landowners. Aside from developing residential properties, this

company also ventured into malls and retailing. As of today, Sta. Lucia has

developed 137 subdivisions, 11 championship-quality golf courses, 7 first-rate golf

communities, 5 sports and country club estates and 1 mall.

Filinvest Land Inc.

The company was spun off from Filinvest Development Corporation, the

listed holding company for real estate business of the Gotianun family. Its projects

are primarily located in Luzon, particularly, the National Capital Region

(Novaliches, Quezon City, Paranaque, and Las Pinas) as well as in Cavite, Laguna,

Batangas, Rizal, and Bulacan. Some are also located in the Visayas-Mindanao

78

region, specifically Cebu and Davao. Filinvest is involved in various projects such

as high-end residential communities, middle-income projects, socialized housing

developments, farm estates, township projects, technology parks, and leisure malls.

Filinvest Land, Inc. has a land bank of 2,608.5 hectares.

Landco Pacific Corporation

Landco Pacific Corporation is a major, multi-product real estate development

firm engaged in high-end residential resorts, leisure farms, first home residential

developments, shopping centers and CBD‟s and memorial parks. Founded in 1990,

the company was soon overseeing the planning and management of an estimated 80

development projects for some of the country's major property developers, such as

The Tutuban Center and Filinvest Festival Mall. The company was also responsible

for the development of the winning bid for the Fort Bonifacio Global City.

Robinsons Land Corporation

Robinsons Land Corporation (RLC), one of the Philippines' leading real estate

companies, is involved in the development and operation of shopping malls and

hotels, and is also one of the country's most progressive in developing residential

condominiums, as well as land and residential housing developments, including

socialized housing projects located in key cities and other urban areas nationwide.

RLC was incorporated on June 4, 1980 to serve as the real estate arm of JG Summit

Holdings Inc., one of the country's largest conglomerates with diverse interests in

branded consumer foods, agro-industrial and commodity food products, textile,

telecommunications, petrochemicals, air transportation and financial services.

Ayala Land Inc.

This real estate arm of the Ayala Corporation is known and considered as the

most successful real estate player in the country today. This company is the only

full time property developer engaged in land development construction of office and

residential buildings, shopping centers, industrial estates, office buildings,

apartment buildings, hotels and resorts, infrastructure development and middle-

income housing.

Through its over 50 years of experience in real estate, Ayala Land, Inc. has

earned a reputation as the country's leading real estate developer. It is primarily

credited for Makati City's metamorphosis from grasslands back in the 1940's into

the premiere business district it is today. To this day, it is the preferred business

location of the most prestigious corporate, commercial and residential addresses,

site of many international hotel chains and home to exclusive high-end residential

areas developed by the Ayala group over the past 50 years.

An estimated 65% of the projects of these major developers cater to the mid-

market segment. All of these developers except for Sta. Lucia Realty offer house

and lot packages. Sales coming from the provinces account for about 33% of the

2005 sales of major developers. This percentage mostly came from the two

developing regions IV and III. There is an estimated minimum of 2-5 developers

present in any given location. Sta. Lucia realty sells mainly open lots with cuts

ranging from 150sqm above and sold at a minimum of P3,000 per square meter.

79

Crown Asia, on the other hand, focuses on house and lot products targeted to the

middle-income market. Filinvest is involved in doing both house and lot selling and

lots only.

As of October 2007, there are emerging companies that will also play a major

role in the growth of the Real Estate Industry. These companies have also invested

billions of pesos as part of their future plans. These companies continue to

experience high sales and it is important to assess what makes them successful as

we move forward. They are as follows:

1. Megaworld / Empire East

2. Century Properties

3. Eton Properties

4. Globe Asiatique

5. Federalland

6. Nuvo Land

7. SM Development Corporation

8. Phinma Properties

9. DMCI Homes

Understanding One’s Micro-Market

One of the most unforgettable experiences for the researcher was to re-scan

the market where my business operated. There was the realization that the company

was not competing at all in a marketplace where competition was very stiff. This, if

I may advice my fellow Entrepreneurs especially those in the early phases of their

business‟ life cycle, is very important. Scan your micro-market and better things

will happen. The basic ingredient of a good micro-market scan involves an analysis

of the locality, the competitors, and most importantly, the customers.

Findings (Sample results from our micro-market scan)

Locality

The Pampanga market had one of the fastest population increases

amongst all the provinces in the Philippines.

The new North Luzon Expressway increased land values in

Pampanga.

The newly opened Subic-Clark-Tarlac interchange will give

Pampanga a boost in its local economy.

Customers

Age-range of potential customers is from 28-40 years of age.

The potential market includes local professionals, small and

medium-size business owners, and families of OFWs.

OFWs can purchase a house by offering financial package that

would extend their payment term.

Competitors

75% of our competitors in Pampanga are in the lot-selling segment

only. Only 25% offers house and lot packages.

80

Only a few developers engage in comprehensive marketing and

sales activities.

The absorption or selling speed in Pampanga is very high at 200-300

houses per month.

Re-visiting the company‟s micro-market gave the developer the right mix of

how to repackage their product and choose the exact segment that they wanted to

serve. Because of the research findings, it was the developer‟s decision to finally

shift from the low-cost segment upward the mid-cost segment. This was a major

decision point because doing so will also entail that the entire organization upgrades

the way it does business.

Know What It Takes

In order to be successful in real estate, the following things should be

considered:

1. Location and accessibility of the development

2. Extensive market research

3. Product packaging

4. Customer-oriented housing products

5. Value-added features

6. Tailor-fit financial packages

7. Access to capital

8. Cash flow management

9. Product concept and innovation

10. Comprehensive marketing plan

Re-configuring One’s Organization

With the changes in the environment, also came the need to effect change in

the organization. The configuration of your organization must be aligned to what

type of market opportunity one will be seizing based on your long-term strategic

plan. One cannot just configure it the way others do it, otherwise one will fall into

the trap of fielding the wrong army in a competitive war.

Marketing

The owner informed the marketing department that they would pause

operations and reconfigure everything. When they all came back, it was totally a

different product that they had to sell. The owner had to go through the process of

evaluating the current sales force if their profile is still the one needed to push for a

new type of product. The upward movement of the target market requires an upward

movement in the entire packaging of who will push for the product not only in their

physical appearance but also in the type of knowledge and attitude needed to be a

deserving front-liner of the company. The owner replaced each one of them.

The marketing communications also changed dramatically because suddenly,

they will have to communicate to a new market segment, which is more

knowledgeable, more sophisticated, and more powerful in terms of purchasing

power. The pricier a product becomes; the more sophisticated one‟s customer gets.

81

Operations

Imagine a workforce that was used to delivering low-quality products and then

suddenly the owner asked them to deliver, industry breaking, quality, and timely

products. Marketing promised customers superb product delivery, the department

delivered the promised perception that the marketing department gave the customers.

Operations in real estate comprise 90% of total spending since bulk is used for land

development, and housing construction. Therefore, the Entrepreneur should make

sure that resources are utilized at an optimum level while seeing to it that

expectations are met with the right quality and delivery time. A long-term training

program was designed to meet the ever-growing quality needs of the new target

market as well as exposure programs so that the workforce knows the quality and

type of finishing that other players offer.

A part of this is the handling of the organization that delivers the goods. New

product, new quality demands, new culture. The owner had to do a total facelift to

how things were done and measured in order to respond to the needs of the

changing market. There were many rejections from the start because everyone was

already in their comfort zone.

Finance & Accounting/Procurement

The company‟s back office support suddenly became a war zone because of

the many demands that needed support. The company had to establish a more

professional way of counting numbers, which means newer systems and better

procedures. Before, it was just a matter of recording transactions but it totally

evolved to a back office support that also responds to the needs of the market such

as extended financial terms, efficient collection services, and financial management.

Cash flows had to be managed because since sales grew by 1,900%, the

organization had to be robust enough to be able to handle such kind of sudden

growth in sales. Cash flows had to be managed daily, weekly, monthly, so that

management is always updated on sudden change in the movement of its vital

resource, which is cash. Suddenly one starts to realize that personal finances cannot

sustain the operations of one‟s business and that a bigger appetite for financial

infusion is needed from other channels like loans from bank and investment

companies.

Human Resource

One does not force people to change, one inspire them. The developer had to

sell them the idea that the developer‟s plan for change will be for the betterment of

the company. From the entrepreneur lies the ability to create a very good vision for

the company that people will follow because they see something good in it. One has

to know that this is the hardest resource to manage because they are human beings

after all, with feelings, dreams in life, and the right to choose. Gone are the days that

employees are given their job description, sent to their workplace, and paid every

15-30 and the job will automatically be accomplished. It is about showing them that

working for the owner creates satisfaction. A feeling where their input adds up to

the company‟s drive for success, the company‟s achievement of their vision.

Start with the ABCs of human resource by providing for their basic needs and

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make sure that mid-term and long-term plans are laid out for their growth. Clear

communication, involvement, and inspiration are the things that one should always

practice and remember. For the company, it was all about investing in a human

resource team before anything else. Always remember, no investment pays higher

dividends than investment in the employees.

Ready, Aim, Fire After analyzing every facet of one‟s business, a good business plan should

always be produced so that lampposts are established and management control is

present. Once one is ready with all the scientific analysis together with the right gut

feel, it is time to cross the bridge and do it.

83

A STRATEGIC MANAGEMENT PAPER ON THE FILIPINO

SEAFARER RECRUITMENT INDUSTRY

ANTONIO HERRERA, MBA Introduction

ABC Co. Inc. is a recruitment agency that supplies Filipino seafarers to ship

owners in different parts of the world. Since its founding in the 1970s, the company

has grown to a size of 200 employees and has had experience operating passenger

vessels, general cargo, oil tankers, liquid gas carriers, etc. In keeping with its

philosophy, ABC has developed in-house training programs and a seafarer family

welfare program that keeps its seafarers‟ performance and motivation at a high level

and customers ultimately satisfied.

One of the problems of the company, however, is that it has not had any

significant sales growth in the past years. The company has been catering to only

two primary clients for the past ten years. Although the company has been receiving

consistent income for the years that it has been in existence, the potential for growth

has been covered by a cloud of complacency. This study is aimed at identifying the

opportunities for growth in the company and formulating plans, making use of the

company‟s strengths, while still striving to reverse its internal weaknesses.

Research and Methodology

The evaluation methods used for this paper include the External Factor

Evaluation Matrix (EFE), Internal Factor Evaluation Matrix (IFE), Threats-

Opportunities-Weaknesses-Strengths Matrix (TOWS), Competitive Profile Matrix

(CPM), Porter‟s Five Forces of Competition Model, Internal-External Matrix (IE),

Grand Strategy Matrix, Strategic Position and Action Evaluation Matrix (SPACE),

and the Quantitative Strategic Planning Matrix (QSPM). A Balanced Scorecard was

also developed to evaluate between shareholder and customer/operational objectives.

General Philippine Economic Environment

Major Economic Indicators, Philippines, 2001-2005

Item 2001 2002 2003 2004 2005

GDP growth 3.0 4.4 4.5 5.0 5.0

Gross domestic

investment/GDP

20.6 19.3 18.7 19.5 19.5

USD Exchange Rate 50.99 51.60 54.20 56.04 55.09

Inflation rate (consumer

price index)

6.1 3.1 3.1 4.5 4.5

Debt service ratio 15.8 16.4 16.1 19.0 18.0

Sources: Bangko Sentral ng Pilipinas; Bureau of Treasury; National Statistical Coordination Board; National Statistics Office; staff estimates. 2005

84

A picture of the Philippines‟ general economy is important in any strategic

formulation. The Philippines is currently experiencing a slow but steady rise in

terms of its GNP from the years 2001 to 2005. In terms of the inflation rate, the

economy experienced a decrease of 3% from 2001 to 2002, but since then has

increased at a slow pace. Although the government has been heralding a promising

economic future for the Philippines, it remains to be experienced by individuals and

small corporations. Some of the main reasons for this are the upward trend of

international oil prices, and the constant weakening of the peso against the dollar (as

seen in the general economic factors table). These two factors have made an

increasing impact in local prices, whether it is by real pressure from foreign

suppliers or by perceived price increases in various industries. Although ABC Co.

Inc. along with the other players of the Philippine manning industry are somewhat

shielded by their dollar-earning nature from these price fluctuations, a lot of

administrative expenses such as office supplies, transportation, and the like, are still

obviously purchased in peso. This means that while most of the company‟s

expenses that are directly related to the deployment of the seafarers, a considerable

part of its expenses are still affected by this particular economic condition.

Rising OFW Indicators

Since ABC Co. Inc. is primarily a supplier of sea-based, and to a lesser

extent, land-based Filipino workers abroad, it would also be important to consider

the economic factors that relate foreign employment of Filipinos and how these

factors have contributed to opportunities in the manning industry.

For starters, so many Filipinos have been turning to overseas employment for

their livelihood over the years. Whether it has been for economic factors, political

instability or otherwise, more and more Filipinos have looked to other countries for

employment.

OVERSEAS FILIPINO WORKERS' REMITTANCES

in thousand US dollars

Worker 2000 2001 2002 2003 2004 2005

Sea-based 926,677 1,093,349 1,199,183 1,298,223 1,464,930 1,669,358

Land-based 5,123,773 4,937,992 5,686,973 6,280,235 7,085,441 9,019,647

T O T A L

* 6,050,450 6,031,271 6,886,156 7,578,458 8,550,371 10,689,005

Source: POEA 2005

The continuous increase of Filipinos seeking employment abroad is evidenced

by the upward trend of Overseas Filipino Workers‟ remittances over the past several

years. The remittances of Sea-based OFWs increased by a rate of 97.27% from

1999 – 2005. The remittances of Land-based OFWs also increased by 51.63%.18

18

POEA

85

This not only signifies the fact that going abroad is becoming more attractive

to Filipinos, it also shows that Filipino laborers are also becoming more and more

attractive to foreign employers. The dramatic increase in remittances of sea-based

Filipino workers not only means that more are leaving the country to work in

internationally owned ships. It also means that foreign ship owners have been

accepting more and more Filipino seafarers for employment. This presents an

opportunity for the company to rely on the rising dependability of Filipino seafarers

to look for additional clients and broaden their geographical reach in terms of

clients, and ultimately boost profits.

This particular indicator is a two-edged sword. Seeing the fast upward pace of

overseas sea-based workers means that, the other competitors have been steadily

increasing the fleets of foreign ships that they have been manning over the years. To

not keep up with the competitors‟ pace would mean being left behind in the race for

market share. This implies so many other repercussions. First, it strengthens the

bargaining power of the current customers since the company‟s customer base

remains stagnant and the business depends on them. Then, it could bring the

company out of touch with current market demands such as up-to-date technology,

IT solutions, and value-adding services that come much easier to those having a

wider variety of customers. Indeed, if the company does not broaden its reach, it

could fall into the trap of complacency in servicing their existing customers and lose

sight of the expertise that it takes to cater to different types of clients.

High Unemployment in the Philippines

Although some socio-cultural factors are developing that reinforce the

upward trend of the OFW remittances, unemployment in the Philippines is one of

the main reasons why a lot of Filipinos look for work abroad. Unemployment was

increasing from 10.2% in 2002 to 12.7% in 2005. When looking at these figures in

relation to its Asian neighbors, the Philippines‟ unemployment rate is alarmingly

high. 19

12.70%

3.60%

1.40%

6.40%

10.90%

0.00%

5.00%

10.00%

15.00%

Philippines Malaysia Thailand Singapore Indonesia

Unemployment Rates in Southeast Asia

2005

Source: CIA World Factbook

19

CIA World Factbook

86

Malaysia posted an unemployment rate of 3.6% in 2005, Thailand 1.4%, and

Singapore 6.4%. Among its more developed neighbors, only Indonesia had an

unemployment rate in almost the same level at 10.9%.

Certainly, the unemployment rate in the Philippines could be counted as a

factor contributing to the attractiveness of foreign employment to Filipino citizens.

More Filipinos are looking for opportunities abroad to compensate for the lack of

jobs here in the Philippines. In addition, if it takes too long to turn the

unemployment situation around, as will be discussed later, it could produce a

lingering culture of preference towards employment in other countries.

One external factor that contributes to the increasing demand for seafarers is

globalization. The global market, because of the loosening of trade restrictions

among countries in the recent years (especially with China), is continuing to need

more and more means for the transport of their goods across the seas. This means

that the demand for seafarers globally would be in a steady ascent in the coming

years.

Rising Need for Land-based Workers in Japan and Other Parts of the World

As will be discussed later in the internal assessment, one of the company‟s

key strengths is that it has recently acquired a license to deploy land-based workers.

It is also important, therefore, to take into account the growing demand for land-

based workers all over the world.

Annual Philippine Land-based Deployment Growth (2000 - 2005)

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

1999 2000 2001 2002 2003 2004 2005

Source: POEA 2005

The Philippine land-based deployment industry has been experiencing an

optimistic trend in the past years after a decline during 2003. This could be

attributed to the growing demand for skilled workers (factory, construction,

electrical, etc.), which rose by 8% in 2005. The deployment of teachers and civil

engineers also climbed by 45.6% and 27% respectively. Overall, the deployment of

Filipino land-based workers abroad is clearly on an upswing and is expected to

maintain its steady growth in the end. Reasons for this upward trend are perceived

to be the following:

87

1. English proficiency and culture adaptability of Filipinos;

2. increasing acceptance of outsourcing through foreign workers by

multi-national companies;

3. small difference in the degree of service at a big price difference

of Filipino technical personnel (teachers, IT professionals,

engineers);

4. acceptance by the Philippine Government of Filipino workers as a

primary mover in the country‟s economy.; and

5. Aggressive moves by the Philippine Government to market

Filipino workers to more and more destinations in the world.

This increase represents an opportunity for land-based agencies to reap profits

if the proper marketing is implemented to reach new clients.

Top Ten Sources of OFW

Remittances 2005 Top Ten OFW

Destinations 2005

in Million USD by deployment

1 USA 6424 1 Saudi Arabia

2 Saudi Arabia 949 2 Hong Kong

3 Italy 430 3 UAE

4 Japan 356 4 Taiwan

5 HongKong 338 5 Japan

6

United

Kingdom 300 6 Kuwait

7 UAE 257 7 Qatar

8 Singapore 240 8 Singapore

9 Germany 134 9 Italy

10 Canada 117 10 United Kingdom

Source: POEA 2005

One location of particular interest is Japan, where one of the company‟s

main customers for the sea-based unit, Mitsui OSK Lines, is located. Japan has been

one of the most consistent Filipino OFW destinations in the world. According to the

2005 annual report of the POEA, Japan was ranked fourth in the world in terms of

OFW remittances, and fifth in the world in terms of number of OFWs deployed.

This attests to Japan employing a high number of Filipino workers as well as the

high level of monetary gains that the OFWs in Japan are able to bring home.

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Top Ten Destinations of OFW New Hires 2005

1 Saudi Arabia 65,259

2 Japan 38,803

3 Taiwan 34,369

4 UAE 33,969

5 Kuwait 24,917

6 Qatar 17,671

7 Hongkong 17,633

8 Lebanon 13,210

9 Korea 6,920

10 Bahrain 4,817

Source: POEA 2005

Despite Japan‟s tightening of immigration policies in recent years, it still hired

the 2nd

highest total of new OFWs for the year 2005. Looking at the previous reports,

it is also notable that Japan ranked 1st in new hires in the two previous years, 2003

and 2004.

Also making the deployment outlook to Japan brighter is the enactment of the

recently signed Free-trade Agreement between Japan and the Philippines. The

agreement that was signed on 9 September 2006 paves the way for the entry of a

limited number of Filipino nurses and caregivers into Japan. Although it is a modest

start, the agreement is viewed by some as the start of more employment

opportunities for OFWs in Japan. This strengthens the fact that Japan‟s acceptance

of Filipino workers remains stable and opportunities to deploy to Japan will be

present for years to come.

Technological Factors / Phase-Out of Single-Hull Ships by the International

Maritime Organization

On November 13, 2002, a 26-year old oil tanker called Prestige sank along

the coastline of Spain. It was instantly a worldwide ecological issue and sprang

forth numerous calls for action by governments, environmental groups, and

citizenries. It also has a number of European countries fighting over accountability

for the incident.

“The Prestige spilled an estimated 17,000 tonnes (4.5 million gallons) of

its 77,000-tonne (20 million gallon) cargo of fuel oil, contaminating

hundreds of kilometres of coastline, killing wildlife and forcing a ban on

fishing and seafood harvesting that has put tens of thousands of people out

of work..”

- CNN.com

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In response to this incident, the International Maritime Organization (IMO)

made moves to phase out the single-hull design of the Prestige in favor of the safer

double-hull type of oil tankers. This move would prevent further risk of oil tankers

sinking and contaminating global waters and was immediately supported by a lot of

countries. Hence, the IMO dictated several deadlines for the phase-out of single-hull

oil tankers depending on their categories and ages. Trade by way of these ships

would be prohibited after their respective deadlines.

This would mean that a majority of single-hull tanker ship owners in the world

would be either scrapping them or selling them to purchase the new technology

double-hull ships in line with the different deadlines. It is also important to note that

though this IMO directive was addressed for oil-tankers only, that several ship-

owners of other kinds of ships (cargo, passenger, VLCCs, etc.) could also be

anticipating further directives, and as such, would also purchase double-hulls to

replace their other ships as well.

The first deadline for Category 1 tankers (as highlighted in the IMO revised

phase-out schedule), was on April 2005. Categories 2 and 3 tankers have their

deadlines set at varying times from 2005 to 2010 depending upon their ships‟

anniversary dates.

Revised phase-out schedule

Category of oil tanker Date or year for phase-out

Category 1 - oil tankers of 20,000 tonnes

deadweight and above carrying crude oil, fuel

oil, heavy diesel oil or lubricating oil as cargo,

and of 30,000 tonnes deadweight and above

carrying other oils, which do not comply with

the requirements for protectively located

segregated ballast tanks (commonly known as

Pre-MARPOL tankers)

5 April 2005 for ships delivered on 5 April

1982 or earlier

Anniversary date in 2005 for ships

delivered after 5 April 1982

Category 2 - oil tankers of 20,000 tonnes

deadweight and above carrying crude oil, fuel

oil, heavy diesel oil or lubricating oil as cargo,

and of 30,000 tonnes deadweight and above

carrying other oils, which do comply with the

protectively located segregated ballast tank

requirements (MARPOL tankers), and

Category 3 - oil tankers of 5,000 tonnes

deadweight and above but less than the

tonnage specified for Category 1 and 2 tankers

5 April 2005 for ships delivered on 5 April

1977 or earlier

Anniversary date in 2005 for ships

delivered after 5 April 1977 but before 1

January 1978

Anniversary date in 2006 for ships

delivered in 1978 and 1979

Anniversary date in 2007 for ships

delivered in 1980 and 1981

Anniversary date in 2008 for ships

delivered in 1982

Anniversary date in 2009 for ships

delivered in 1983

Anniversary date in 2010 for ships

delivered in 1984 or later

Source: International Maritime Organization 2005

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This technological factor could be viewed both as a threat and as an

opportunity for the company. This is for the mere fact that as several ships are sold

or scrapped, several manning agreements would also be ending. This would

definitely coincide with the ship owners renegotiating contracts that naturally come

with buying new ships, such as the manning agreement. As the ship owners dispose

of old vessels and acquire new ones, they would surely renegotiate their contracts

with their current manning agency for the new vessel. More than any period, this

would be when the country could expect ship owners, who are not satisfied with

their current manning agencies, to go out and contact other prospective work force

suppliers. It would also be the time that ship owners who are satisfied with their

current manning agencies would contact new prospective agencies for constructive

competition.

The threat and opportunity lies in the thought that many agencies could

possibly lose their current clients or gain new clients during this time. It would all

depend on the course of action they would take in response to the IMO edict.

Legal / Political Factors20

The POEA “Hard to Enter, Easy to Leave Policy”

The government agency that is most directly related to the industry is the

POEA. Over recent years, the POEA has been moving for tighter regulation of the

sea-based and land-based agencies and better prevention of incidences of illegal

recruitment in the country. This has been the main area where the government and

legal factors come to play.

POEA administration‟s campaign policy has been “hard to enter, easy to go”.

In line with this policy, many measures have been taken to ensure that new license

applicants are screened heavily, and that government regulations would be strictly

enforced among those agencies that are already licensed and running. From 2004 to

2005, there was a 19% decrease in the number of new licenses issued (from 99 to 77

licenses).

There was also a sharp decline in the number of licenses renewed from 468 in

2004 to only 64 in 2005, representing an 86% drop for the period. Moreover,

because of the POEA‟s tightening degree of implementation, there was a significant

increase in the number of cancelled agency licenses in 2005 compared to that of

2004. From 36 licenses in 2004, 67 licenses were revoked in 2005, representing an

86% increase.

The POEA conducted 863 agency inspections in 2005, discovering 33

violations to existing POEA rules and regulations. This affects the industry in

different ways. First, it gives more experienced agencies better footing in industry

ground since it is putting up higher barriers for new recruitment agencies to enter.

Second, it is also making it imperative for all existing players to tighten their

20

POEA Annual Report 2005

91

policies in communicating with their applicants, in the representation that their

company has to these applicants, in its briefings before departure, and many other

facets of their business.

Development Initiatives of POEA for More Foreign Employers to Take in

Filipinos

The Philippine Government is very much interested in developing the OFW

industry of the country, both sea-based and land-based. President Gloria Macapagal-

Arroyo has initiated projects through the POEA and DOLE to continue looking for

new foreign clients. One of the successful projects of 2005 was the DOLE Labor

Opportunities Program which brought together prospective employers and Filipino

recruitment agencies. The event generated a total of 15,462 job orders from the

participant agencies.

The POEA also undertook marketing missions to Taiwan, UAE, Qatar,

Bahrain, and Cyprus, proving that the government is serious in its thrust to market

the Filipino worker in Asia and all over the world.

Competitive Forces

Industry Background

The main business of ABC Co. Inc. is to supply sea-based manpower to ship

owners or any of their agents around the world. This means that while this study

examines ABC as competing with the other manning agencies in the Philippine

manning industry, the owners cannot ignore that competitors are present around the

world. It should also be emphasized that the global manning industry is directly

dependent on the world shipping industry – the transport of goods such as oil, cargo,

and passengers by sea – such that one cannot be studied without consideration of the

other.

Background on the Global Shipping Industry

The manpower demanded by ships required for seaborne trade would certainly

be directly proportional to the amount of trade goods that are to be transported each

year. In the same way, the amount of seafarers demanded by the world market

would be directly proportional to the number of ships currently comprising the

global merchant fleet. As of January 1st 2005, the world trading fleet was made up

of 46,222 ships, with a combined tonnage of 597,709,000 gross tonnes.

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Different Sectors as percentage of total number of

ships in world fleet: 1 January 2005

General Cargo

Ships, 39%

Tankers, 25%

Bulk Carriers, 13%

Container Ships,

7%

Other, 4%Passinger Ships,

12%

Source: Lloyd's Register Fairplay January 2005.

World Shipping Figures

2002-2004

2002 2003 2004

World Trade Output Growth

Rate

1.9% 2.6% 4.1%

World Seaborne Trade (goods

loaded for the year)

5.88B Tons 6.17B Tons 6.76B Tons

World Seaborne trade growth

rate

0.8% 3.7% 4.3%

World Merchant fleet growth

rate

2.3% 1.5% 4.5%

Oil Tankers world Growth Rate 6.6% 4.1% 6.1%

Dry Bulk Carriers Growth Rate 1.9% 2.5% 4.2%

Source: United Nations Council on Trade and Development 2004

Globalization has been an external factor that has affected almost all industries

in the world. Shipping, and consequentially manning, are two of the world‟s

industries that are more directly affected by globalization‟s continuing spread.

World trade goods output growth has been increasing from 1.9% in 2002 to 4.1% in

2004. Vigorous trade brought about by globalization has brought about the need for

more seaborne trade, and more ships. 2004 has given impressive numbers in terms

of trade growth and the growth of the global shipping fleet, especially the oil

tankers. One of the reasons for this sharp increase in tankers is the scrambling for

the purchase of new double-hulled tankers (as discussed earlier). The next section

would give a background about the global manpower industry and how the Filipino

seafarers fare in the competition to man these trading ships.

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Background on the Global Manning Industry21

As of 2005, the population of seafarers worldwide serving on internationally

trading merchant ships is estimated at 466,000 officers and 721,000 ratings. Of this

number, the Philippines is the leader, providing 20% of the worldwide population.

That means that the Philippines supplied around 220,000 seafarers in 2005. The

prevailing reasons for international ship owners‟ preference towards Filipinos is

their level of English proficiency, adaptability in changing environments, and non-

confrontational nature.

According to the BIMCO ISF (Baltic and International Maritime Council /

International Shipping Federation) Manpower update 2005, there was a surplus of

224,000 ratings with respect to demand and a shortage of 16,000 officers in the year

2000. This implies that there is intense competition for the supply of ratings

seafarers internationally.

Though the Philippines is the leading seafarer supplier in the world, China has

been making great strides towards competing for market share with our country. A

study in 2002 that appeared in the international publication “Maritime Review”

gave a little overview of how Chinese seafarers have been increasing in demand the

part several years. In 1998, China had 80,000 seafarers employed in deep sea trade.

After being stagnant in the years previous 1998, the figure was expected to swell to

105,000 in 2005 because China‟s continuing liberalization. The obvious reason for

this rise is because of the cheap price of labor that is being paid to Chinese seafarers.

The ITF (International Transport Workers Federation) standard rate for an average

of 22 seafarers is $750,000 per annum, the average for Chinese seafarers is

$300,000 per annum. Although the Filipino‟s wage scale is generally below ITF

standards, it is still much higher than the Chinese crew. At a rough estimation of

industry standards, the figure would be around $500,000 per annum at 22 seafarers.

21

BIMCO ISF Manpower Update 2005

94

Background on the Philippine Sea-based Manning Industry

22

The Philippine Sea-based Manning industry is composed of 723 registered

manning agencies all over the country. The current market leader is Magsaysay

Maritime Corporation. ABC is in the upper half of the industry in terms of

deployment along with a high concentration of its players. The number of Filipino

seafarers deployed as recorded by the POEA experienced an annual growth rate of

4.60% from 2000-2005.

Marketing Mechanisms

Since the manning industry does not rely on conventional marketing vehicles

such as television and print advertising, it is important to discuss the mechanisms

available for players in the manning industry to hunt and close deals with ship-

owning companies abroad.

One of the reasons why Magsaysay Maritime Co. is the leader in the industry

is that they have been a shipping company before entering into the manning

industry. As such, they have had the privilege of being in the network of shipping

companies worldwide, being in contact with the clients while many of the other

players started from scratch.

Today the unified efforts of shipping companies to forward their causes and

profitability gives rise to several shipping federations all over the world who meet

regularly in what are called shipping conferences. The largest of these groups are

called the International Maritime Organization and the International Shipping

Federation. In these conferences, several representatives from shipping companies

all over the world gather in one venue, giving delegate manning agents a chance to

market their services. The attendance fees for these types of conferences, though a

bit onerous would compensate for the collection of prospective clients in one venue

as opposed to visiting their offices one by one. The conferences that seem to be

diamonds in the rough are those of smaller shipping organizations, some national or

some just instituted by a group of few shipping companies that have the same

agenda. It is in these conferences that the delegation is a bit smaller and a more

personal approach could be made to the individual prospects.

The more risky and costly form of marketing for the manning industry is when

companies contact the shipping companies from national business directories or

ship registries and arrange visits with the goal of closing a deal to man their fleet of

ships. This kind of marketing is risky because it depends on whether the random

shipping companies are looking for new manning agents or not. So much of it

depends upon timing and coincidence that the company could fund several trips and

still not be able to net a manning agreement.

22

www.poea.gov.ph

95

Competitive Profile / Critical Success Factors

It cannot be overemphasized that the main factors that affect success in this

industry have to do with the size and bargaining power of the ship owner clients,

and the international character of the industry. Because of these considerations, the

familiarity of manning agencies with conducting business in the global setting is

hoisted into the forefront of critical success factors ahead of conventional ones such

as price and efficiency of service.

The following are the critical success factors that are essential in measuring

competitiveness in the manning industry:

1. Global Marketing Initiative

2. International Corporate Image

3. Pricing

4. Seafarer Performance / Efficiency

5. Office Staff / Processing Efficiency

Global Marketing Initiative

As the industry caters to large, corporate, foreign clients all over the world,

conventional means of marketing such as television and radio advertising, print

media and the like are not applicable to this kind of industry. The first customers

that a manning agency will get to start with will most likely come from international

networks (probably a foreign acquaintance or common friend). To be able to

achieve growth after the first client, however, an agency would have to aggressively

pursue marketing efforts in other countries.

There are numerous ways of going about this, with varying effectiveness.

Some manning agencies choose the random approach, procuring shipping

directories from different ship intensive countries such as Greece and Japan, and

individually contact them with the interests of making personal visits in the hope of

closing a deal. This method, though less costly than others, relies much on luck and

coincidence to be successful.

The more prevalent practice in the manning industry is to send marketing

delegates to attend international shipping conferences around the world. These

conferences are attended by many representatives from different ship owning

companies, offering a large concentration of prospective clients in one location.

Having access and taking advantage of these marketing channels would be one

of the big keys to surviving and growing in the manning industry. Having more

clients effectively gives each agency more adaptability through experience with

different ship owners and would add to their international exposure and image.

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International Corporate Image

When ship-owning corporations are seeking for a manning agent, they usually

get information from one of three sources. First, they would skim through the

manning agents they already have contact with, namely the agents that have reached

them via the marketing channels mentioned above. Second, they would be asking

their colleagues from their own industry about their experiences with their own

manning agents and recommendations according to which agents their friends in the

industry know of. And lastly, if they have a nationality in mind that they would like

to inquire about, they ask the government agency that is related to foreign

employment and shipping in that particular country (in the Philippines, these would

be the POEA and the MARINA respectively).

Of these three sources, access to global marketing channels helps with the first.

International corporate image brings the manning agent closer to the second and

third sources (exposure to industry players and government agencies).

Attaining that level of international corporate image wherein random ship

owners contact your agency is difficult and would require taking care of

relationships and networks. When attained however, it gives a great competitive

advantage, providing the possibility of new clients even with less marketing efforts.

Pricing

In general, players in the Filipino manning industry already enjoy a price

advantage over western competitors such as European seafarers, while at a

disadvantage with some Asian competitors such as China and India (as mentioned

in the competitive forces section).

The weight of price competitiveness between Filipino manning agencies,

therefore, is a little lower than others. Ship owner clients, in favor of the price

difference between Western and Asian seafarers, give a little more breathing room

when Filipino agencies are concerned. Pricing is still, included in the first

negotiations between clients and manning agents, before the ship owners get their

first opportunity to gauge the seafarer performance and office performance of each

manning agent. It is, therefore, placed before the rest in terms of weight.

Seafarer Performance / Efficiency

When initial contact has been made and the manning agreement has been done,

maintaining the client would largely depend on the product itself, which is the

performance of the seafarers. High performance means the imperative of

minimizing problems onboard and any possibility of labor disputes between the

seafarer and the owners.

Accidents and delays to ships always prove costly. Collisions between ships

result in multi-billion dollar suits, while any sort of delay in port or at sea would

97

mean thousands of dollars in opportunity and maintenance costs for the ship-owners.

Because of this, it is very important to note that one small human error from any

seafarer could cost many monetary losses. Liabilities from these kinds of errors as

well as the chance of losing the client make sailor efficiency all the more important.

In addition to this, seafarer performance could easily build-up or pull down

any agency‟s international corporate image, since players in the shipping industry

are easily connected to each other.

Office Performance / Efficiency

Office performance works hand-in-hand with seafarer performance in being

the two key determinants of effective service in the industry. Office functions of the

manning industry include the following:

Building an efficient database / pool of qualified seafarers for deployment;

receiving and working on manpower orders from the client ;

processing seafarer documentation;

PDOS (pre-departure orientation seminar);

travel arrangements from the Philippines to the ship‟s next convenient port;

coordination with the ship owner‟s port agent; and

dispatching of seafarers on date of departure

Client frustration over seafarer problems onboard the ship are almost equal to

any frustration they may encounter due to delayed deployment, missed flights,

incomplete documents and poorly briefed sea crew. The difference between office

performance and sailor performance would be that faulty seafarer performance

entails greater liabilities or costs.

External Factor Evaluation Matrix (EFE)

KEY EXTERNAL FACTORS Force Weight Rating Weighted

Score

Opportunities

1 High Unemployment Rate Economic 0.05 2 0.10

2 Culture of Migration / Foreign Employment Socio-cultural 0.05 2 0.10

3 Rising need in foreign countries for land-

based workers Economic 0.20 1 0.20

4 Globalization / Steady growth of global

fleet Economic 0.05 2 0.10

5 Phase-out of single hull ships Technological 0.13 1 0.13

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Threats

1 Competitive rise of Chinese seafarers Competitive 0.10 3 0.30

2 Stricter implementation of POEA Political 0.08 4 0.32

3 Appreciating peso value Economic 0.05 2 0.10

4 Inflation Economic 0.12 2 0.24

5 Worldwide surplus of seafarers Economic 0.17 1 0.17

Total EFE Score 1.00 1.76

Internal Assessment

Management

Well- Experienced Management

Being one of the pioneers in the Philippine Manning Industry, ABC has had

the privilege of being manned by very competent managers. The years of

experience that the company has had, gives ABC managers the advantage of having

been through several irregular circumstances that contribute to their adaptability to

change. These instances include management of ships through transferred

ownership, disaster management of sunken ships, and handling cases such as jump-

ship or onboard conflicts. This gives managers the edge of being dynamic enough to

handle various situations without many problems.

Good Standing with POEA

Furthermore, the company‟s efficiency in the industry has translated into a

good relationship with the POEA. Its constant high level of deployment and other

unique achievements have been cited by the POEA in numerous occasions:

1. received Top Performer Award (Citation for deployment) 1994, 1996, and 1998;

2. received Award for Excellence (Consistent Top Performer) in 2002 and 2005;

3. received POEA citation for being one of the pioneers in the manning industry;

and

4. received POEA citation twice for exemplary concern for seafarer welfare.

Management System / Low Employee Empowerment

The company‟s management system could be characterized as being

vertical or traditional. While the middle and lower ranks have their own everyday

routines and designations, top management exercises a high level of supervision and

most of the decisions still have to be run through them before proceeding. In certain

99

aspects, this kind of management is still appropriate. This is because the allowance

for error in the manning industry is very small. A small delay in documentation or

communication with the client or the seafarer could result in many losses for the

clients. Moreover, since individual clients control a large chunk of the company‟s

profitability, it is only fitting that mistakes be kept at a minimum and constant

monitoring is one way of ensuring this.

As a result, employee empowerment has been difficult to attain.

Micromanagement has been made a practice by some of the managers and

bureaucracy has hindered employee‟s individual contributions. Such a high value is

given to not committing a mistake that the middle and rank-and-file employees go

to meetings expecting a defense rather than a forum to voice their ideas to improve

the company. Employees pay more attention to their individual work rather than the

bigger picture because of the vertical system. In addition, the decisions that need to

be run through top management causes the turnover of work to be slower than what

it is desired to be.

In trying times where initiatives in marketing and cost cutting are quickly

becoming imperatives, the company needs to make initiatives to empower their

employees. This would entail giving them more freedom to do their jobs, but setting

measurable quotas in minimizing errors and such. This would give the employees

more confidence in their jobs, allowing the ideas to flow and taking a little pressure

off top management.

Human Resource Development / Lack of Initiative to Develop Employees

As aggressive as the company has been in developing training programs for

the benefit of its seafarers, it has not been as active in looking for ways to cater to

the self-improvement needs of its employees. As the everyday work for employees

in a manning agency can be considered mechanical and as ongoing pressure to

minimize errors are constantly called for in the different departments, the company

has not made an initiative to equip their employees with the proper training for them

to have an attitude towards excellence. New employees are usually just set off into

their new jobs with the development of a high standard of work dependent on the

way the managers will be able to mentor them. Although the company does boast a

line-up of extremely competent and well-experienced management, development

through personnel training would still be able to raise the bar and more formally

introduce the measurable standards by which the company wants to operate.

Marketing

Product

ABC is committed to supplying the most responsible and dynamic

seafarers in the Philippines. The company has had years of experience handling

different kinds of ships including general cargo, dry cargo, bulk carriers, oil tankers,

liquid gas tankers, and passenger vessels. ABC‟s continuous seafarer training is not

only to maintain the high level of performance of its seafarers, it is also geared

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towards making all crew from ABC fit to be deployed for duty in any kind of ship

in the world. When ship-owner clients ask about the availability of a crew for a

particular kind of ship, the goal is to be immediately able to pull out from the pool

with no need for additional time.

Limited Customer Base

ABC currently caters to two primary clients:

1. DEF Co. (Greece)

2. GHI Co. (Japan)

Because of the limited number of clients that the company has catered to for

many years, the references that these clients are able to make for ABC is likewise

limited. Word of mouth and networks from the shipping industry are some of the

best springboards for growth in the manning industry and in this respect; ABC has

not been able to cash in.

Absence of a Marketing Plan

Currently, the company does not have a clear cut marketing policy, nor does it

have a designated position for marketing in its organizational structures. As

marketing in the manning industry relies largely on international networks and word

of mouth from ship owners, ABC has concentrated on operations and has not had

efforts to hunt for new clients abroad.

This dependence on external forces in gaining new clients has been one of the

reasons for the slow growth of the company through the years. New clients arriving

in the company during the late 1990s up to the present have been minimal and

merely through coincidence. Walk-in clients in the manning industry are extremely

low in incidence.

Operations

ABC was one of the first manning agencies in the Philippines to be ISO

certified. Because of this, quality procedures are monitored regularly and a Quality

Assurance Representative is present to organize management review meetings and

internal audits in order to keep the standards of the company‟s procedures at a high

level.

License to Deploy Land-based Workers

One of the new recent projects of the company that has gained it an

opportunity for profits is the incorporation of a land-based recruitment agency. To

start with, ABC went into a joint venture with an independent management group

that had clients in Japan in need of land-based workers from the Philippines. The

initial agreement was for ABC to fund a land-based corporation and for the

management group to make use of the license under supervision of the company.

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The group would pay ABC a fee for making use of the license and the agreement

would hold until the group is already able to fund its own license.

This started in the year 2003, and the agreement ended in 2005 when the

management group decided to go independent. This left the company with a land-

based license without any clients to start with. This gives ABC an advantage over

other manning agents in that it has opened a window to diversify into another

industry with opportunities to generate more profits for itself.

The operations department is subdivided into fleets. These fleets are

determined by manageable sizes and are sorted by client. Each fleet has its own

manager, who directly communicates with the client‟s representatives for their

assigned ships, and a fleet assistant, who is in charge of gathering and compiling all

documentation requirements for crew in that particular fleet. Each fleet also has its

own corresponding accounting staff in the accounting department that sees to the

disbursements of wages and communicating with the clients regarding billing.

There are two centralized sub-departments of the Operations Department,

namely the Dispatching and Recording Department. Dispatching is in charge of

accompanying boarding seafarers to the airport for smooth facilitation. Recording,

archives all copies of crew documents for all fleets in case a need for these

documents arises.

Welfare Program for Seafarers

As the company was founded by a former ship captain, there has been from

the start an attitude of care towards the seafarers of ABC. One of the first unique

programs of the company has been its welfare program for the benefit of the

families of the seafarers it deploys. Having control over the release of all the

seafarers‟ salaries and wages from the ship-owner clients, ABC has ventured into

granting cash advances to the seafarer beneficiaries. Their families are welcome to

go to the office when there is a need. They are then interviewed by company

representatives, and when the reason for cash advances are satisfactory, are given

cash to be deducted from the seafarers‟ salary account with minimal interest.

In addition to this, the company has also been active in disaster coordination,

always contacting seafarers‟ families who live in the location of a recent disaster

(storms, earthquakes, volcanic eruptions, etc. ABC has found that one of the biggest

factors that contribute to the motivation of seafarers onboard is the knowledge of

their families‟ safety and well-being. These welfare measures take motivation to a

higher level and consequently help performance and loyalty rise as well.

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Internal Factor Evaluation Matrix

KEY INTERNAL FACTORS Function Weight Rating Weighte

d Score

Strengths

1 Well-experienced Management Management 0.15 4 0.60

2 License to deploy land-based

workers Operations 0.15 4 0.60

3 Good Standing with POEA Management 0.05 4 0.20

4 Welfare Program for Seafarers Operations 0.07 3 0.21

5 In-house training for Seafarers Management 0.07 4 0.28

Weaknesses

1 Limited Customer Base Marketing 0.08 1 0.08

2 Low Employee Empowerment Management 0.08 1 0.08

3 No Marketing Plan Marketing 0.20 1 0.20

4 Poor Collection Efficiency Finance 0.10 2 0.20

5 Lack of Human Resource

Initiative for Employees Management 0.05 2 0.10

Total IFE Score 1.00 2.55

Strategy Formulation

TOWS Analysis

STRENGTHS –S WEAKNESSES- W

1. Well-experienced Management

1. Highly Vertical Management

2. License to deploy Land

based

2. Low Employee

Empowerment

TOWS ANALYSIS 3. Good Standing with

POEA 3. No Marketing Plan

4. Welfare program for Seafarers

4. Poor Collection Efficiency

5. Seafarer In-house Training 5. Lack of H.R. Initiative

OPPORTUNITIES - O SO STRATEGIES WO STRATEGIES

1. High Unemployment Rate

1. Develop a new seafarer training program for

double-hull operation (O5,

S5)

1. Build Marketing Plan for Current and potential

Customers (O4, O5, W3,

W4)

2. Culture of Migration

2. Build Marketing Efforts for Land based Deployment

(O2, O3, S2)

2. Promote people from the

ranks to form a

designated marketing team in company (O3,

O4, O5, W1, W2, W3)

3. Rising Need for Land based

4. Steady Rise of Global

Fleet 5. Phase-out of Single-hull

Ships

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THREATS -T ST STRATEGIES WT STRATEGIES

1. Rise of Chinese Seafarers

1. Implement Stricter Policies in dealing with applicant

seafarers (T2, S1, S3)

1. Strengthen Employee Cost-Consciousness through

seminars ( T4, W4, W5)

2. Strict Implementation POEA Reg

3. Appreciating Value of

Peso

4. Inflation 5. Worldwide Surplus of

Seafarers

TOWS MATRIX STRATEGIES

Concentric

Diversification

Market

Development

Market

Penetration

Product

Development

Proposed Strategy

In consideration of the company‟s strengths and weaknesses, as well as the

opportunities and threats present in the current environment, the most appropriate

strategy would be concentric diversification into the land-based recruitment industry.

The company, however, should not take for granted the opportunities present for the

sea-based unit, where secondary strategies of market penetration and market

development should be pursued.

Concentric Diversification (Land-based Industry)

In order for the company to get its land-based unit up and running, it just

needs a place to start. Its good standing with the POEA and well-experienced

management give it the capacity to maximize the benefits of its land-based license

should the first client start asking for workers. In addition, the company‟s high

degree of liquidity makes it ready to finance an aggressive land-based marketing

campaign that would provide the clients that it needs to start.

1) Marketing Campaign for Japan could start immediately

One of the company‟s 2 primary clients is located in Japan.

It has come upon several business connections in Japan over the years.

Japan was ranked #2 in the 2005 POEA annual report in terms of new

OFW hires (38,803), despite Japan‟s implementation of strict immigration

policies last year.

Japan ranked #5 in the top ten Destinations of Filipino OFWs 2005

2) Studying market prospects to other Asian countries

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Market Penetration and Market Development

While the company starts marketing into the land-based industry, it should

not ignore the opportunity presented by the deadlines enforced by the International

Maritime Organization (IMO) to phase out single-hull oil tankers. Since a lot of oil

shipping companies would be selling or scrapping their ships in favor of the new

technology double-hull ships, a renegotiation period arrives in which these

companies would be signing new manning contracts, either with their existing

agents or with other agents. This gives an opening for manning agents to present

themselves to companies with existing ties with other agents and probably pull out

with new ships.

1) Market to Japanese Shipping Companies.

Make connection either through networks or directly from Lloyd‟s

Fairplay Shipping Directory.

2) Market to Other Shipping Companies from other countries.

Market through Networks or through Shipping Conferences worldwide.

Market Segmentation

Main Unit (Sea-based)

The industry could be generally classified according to the types of ships

serviced as mentioned in the previous section (passenger ships, cargo ships, oil

tankers). Expertise in one category of ships could differentiate a company, but only

to a small extent. The types of ships where agencies are able to be differentiated are

oil tankers and passenger ships. Other than these two types of ships, supply of

seafarers are generally considered similar and a lesser degree of expertise or

differentiation could be seen by customers.

ABC‟s fleet of manned ships is currently comprised of 70% Oil Tankers and

30% General Cargo Ships.

It is recommended that the company, though having had a lot of experience

manning several different kinds of vessels, prioritize on searching for Oil Tanker

companies to increase their fleet size while still marketing to the other players that

are encountered in the shipping conferences and directory marketing trips.

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Land-based Unit (Concentric Diversification)

Landbased Deployment 2005

Professional

and technical

related

workers

22%

Skilled workers

47%

Household and

related

workers

30%

Other Skills

1%

As depicted in the graph above, the highest percentage of land-based OFW

new hires deployed last year were under the category of skilled workers (46.93%).

These include factory and construction workers, dressmakers, building caretakers

and electrical workers. The next two categories, which include household workers,

and professional and technical workers, are close together at 29.93% and 22.29%

respectively.

In terms of salary, professional and technical workers net a much higher salary,

followed by skilled workers, and then household workers. Because revenues in the

land-based recruitment industry are received as a percentage of each deployed

workers salary, the highest amount of revenue that a recruitment agency can get per

worker deployed would come from the deployment of professional and technical

workers.

Philippine Land-based Deployment

New Hires 2005

Occupational Group 2005

%

Contribution

A. Professional and Technical Related Workers 63,941 22.49%

Teachers 789

Nursing Personnel 674

Civil Engineers 625

MedTech 524

Mechanical Engineers 452

Draughtsmen 442

Dental Assistants 344

Aviation Related Workers 211

Other Professional Workers 59,880

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B. Skilled Workers 133,420 46.93%

Construction Workers 30,078

Factory Workers 39,477

Building Caretakers 12,607

Sewers and Embroiderers 4,452

Wiremen Electrical 2,991

Tailors and Dressmakers 2,906

Other Skilled Workers 40,909

C. Household and Related Workers 85,088 29.93%

D. Other Skills 1,836 0.65%

Total New Hires 284,285 100.00%

Upon closer examination of the number of newly hired workers deployed for

the year, the researchers find implications in that the higher yielding workers

(professional and technical) have a much lower number of workers deployed for

each occupational category (teachers, nursing personnel, etc.), with each category

not reaching 1,000 new hires for the year. Under the categories of skilled workers

and household workers, on the other hand, the number of newly hired workers

deployed per subcategory is much higher because of the less specialized job

descriptions. This gives a number of implications about how the land-based market

is segmented and how land-based agencies are to proceed in the industry:

Agencies that specialize in deploying certain subcategories of professional

and technical workers such as nurses would have a higher yield per worker

deployed, but would have a hard time reaching a high level of deployment

since the annual deployment for these types of workers only reach the

hundreds for the whole Philippines.

Agencies that focus on skilled workers and household workers would have

an easier time reaching a higher level of deployment, with a marginally

lower yield per worker.

This implies that although agencies‟ first customers would require one

particular kind of worker, it would be advisable for land-based agencies to

have a pool of several different categories of workers in order to cater to a

wider range of clients and be more successful in the industry.

It is also important to note that while skilled workers and household related

workers are both less specialized than the technical categories, one big

difference is that household workers are more susceptible to exploitation.

The researchers notice this as more and more features on print and on

Television narrate the plight of Filipino domestic helpers abroad.

With these in mind, it is recommended that the company gather a large pool of

technical, professional and skilled workers, marketing for clients to deploy both

categories of workers. These two categories of workers could help the company‟s

profitability in two different ways. Pooling and marketing for skilled workers would

present the company with opportunities for larger and more stable deployment,

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though giving less return per worker deployed. This would help the company

establish a stable cash flow that would defray its expenses. Marketing for technical

and professional workers, on the other hand, would give the company less

deployment, but a much higher return per worker deployed. This would help the

company‟s chances for growth because of its higher profitability, and in the end,

could be the cash-generating segment for overall profits.

References:

Baltic and International Marine Council and International Shipping Federation.

BIMCO/ISF Manpower Update. 2005.

CIA World Factbook. The Central intelligence Agency. Jul 2006

<https://www.cia.gov/library/publications/the-world-factbook>.

CNN.COM. 6 Nov 2003. Cable News Network. Aug 2006. <cnn.net>

International Maritime Organization. International Maritime Organization. Dec

2006. <www.imo.org>.

Lloyd‟s Register Website. Lloyd‟s Register Fairplay. Dec 2006. <www.lr.org>.

Migration Policy Institute (MPI) Home Page. Migration Policy Institute. Dec

2006. <www.migrationpolicy.org>.

National Statistics Office, Philippines Official Website. National Statistics

Office. Jul 2006. <www.census.gov.ph>

The Philippine Overseas Employment Administration. Annual Report. 2005.

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ABOUT THE AUTHORS

Prof. Celito F. Arlegue is currently the Executive Director of

Council Of Asian Liberals And Democrats. He finished his

Master of Arts in International Studies from the University of the

Philippines in Diliman. He is a part time faculty of the

International Studies Department.

Prof. Ernida Ancheta-Tolentino graduated in 2004 from the

University of the Philippines in Diliman with her MS in Physical

Education. She is a full time assistant professor for the Physical

Education Department.

Prof. Caryl Charlene E. Jimenez completed her Master of

Business Administration from the University of Santo Tomas in

2006. She is currently the Department Chairperson of the

Business Administration and Entrepreneurship Department. Prior

to San Beda College Alabang, Prof. Jimenez‟s work experience

were from industries related to manufacturing, export trading,

retail and administration.

Prof. Allan Capulong completed his Master of Arts in

Entrepreneurship from the Asian Institute of Management in 2008.

He is an alumnus of San Beda College Alabang and a part time

faculty member for the Business Management Department. He is

the CEO of Homewell Development Corp.

Prof. Antonio Herrera is a part time faculty for the Business

Management Department. He is an alumnus of the SBCA High

School. He completed his Masters in Business Administration

from the Ateneo de Manila University in 2007.

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