Arthur Francis Tyde III

Moving to Manila is insane, you could buy a nice house in Austin with that kind of cash... While my uncles observation and recommendation was fundamentally correct I choose not to take it as advice... My sister started to cry, Its too far away! Ill never talk to you again! A very close friend of mine who is originally from the Philippines thought it was great – "you'll be dating movie stars!" she said, and continued "the white man is very popular in there!" When people would ask me what living is Manila is like, I'd ask them to imagine what Hong Kong might be like had the British turned it over to the Mexicans... Its worth pointing out that I did consider Mexico and Costa Rica, but why Manila?

It's tempting to launch into a bunch of pointless ranting about Bush, the US economy, worthless currency, moral bankruptcy, the war machine, being just another hamster on the tax wheel and all. I'll leave those discussions to those passionate, erudite and personable subject matter experts who always manage to zero in on me at cocktail parties. Suffice it to say that I needed a change of scenery and have been looking to make a major geographical shift for some time without making too many psychological sacrifices. From my perspective, quality of life is best experienced at the inflection points of infrastructure, culture and economy. Without these things, work, food and freedom; in the right proportions, we're isolated natives. In an increasingly wired (and wireless) world this simply won't do. We all have different priorities – so let me articulate clearly what I personally mean by infrastructure, culture and economy.

Infrastructure: Communications and creature comforts are undeniably important. I like fast food, use lots of electricity and generate more than my fair share of garbage, I demand cable TV, high speed broadband, NPR, BBC, air conditioning and proximity to an international airport. I want cheap local transportation and a safe place to park my car. My needs are greater than most because I do more. The fallout from this list is obvious. With broadband I can work most opportunities virtually, handle email, download US television programs, with VOIP keep a couple of US phone lines and continue to go where I want, when I want. These things and oxygen, make me happy.

Language and Culture: I am less interested in what local cultures were and more interested in what they are evolving into. A healthy international scene is important with lots of restaurants, movie theatres, big malls – hardware and electronic stores. Viagra, four for a dollar – I'll take it! If I can walk into a buzzing shopping center and see pirated software, music, watches, designer labels and pharmaceutical products proudly displayed on the shelves so much the better. These are the things that add daily quality to my mixture vs. Opera or obscure modern art exhibitions, which I don't give a damn about and probably never will. Having lived on the west coast for the better part of 15 years, it seems that western and Asian cultures will fuse over the next 100 years, remember Blade Runner? The earliest and best opportunities to understand this fusion will be on the front lines of that clash. In term of language, English and Chinese will prevail and merge, other languages simply don't matter in terms of the global business economy.

Economy (potential for growth in the region): There has to be interesting geographic, physical, regional, human, natural and other resources to make the area appealing to first world investors of both time and money. I should be able to maintain access to first world opportunities while paying reasonable prices. I have always operated on a cash basis. My cars, airplanes, and shelter – all these things have been bought with cash (and I do not come from money) so opportunities, banking, and management of value based commodities matter. Lastly, I should be able to maintain a long runway of opportunities such that if one deal falls through another will cover the loss. In short – I must be able to make ends meet with no more effort than it would take were I based in a first world country.

Historical Context

Life is a series of chance encounters and essentially I visited the Philippines to hang out with a woman from Singapore I had met on a business trip to Malaysia in March of 2004. My calendar was open, my wife had run out on me six months earlier; seemed to me that a sexy island babe, the beach and some adventure was as good a plan as any! I booked my tickets… Over the course of three weeks I spent quality time with the locals and really came to appreciate the country as strategic, friendly and loaded with potential.

Republic of the Philippines, an analysis

On the surface its babes, beaches, great diving and "party party," all night long. In terms of the general condition, the Philippines are a mess when compared to its neighbors. The government is rife with corruption, public servants (especially the police) are underpaid, the standard of living is one of the lowest in the region, the Philippine peso is low against the dollar and the average daily wage is about $10.00 USD. Foreigners are often framed and shaken down by the locals - being well connected politically is extremely important. The water system is questionable, you need backup power to protect against brownouts, there are volcanoes, typhoons, tropical heat, diseases, garbage, traffic, smog, and there are good reasons you dont see too many Filipino restaurants elsewhere in the world... There is a general ineptitude in the population resulting from a national inadequacy complex. Filipinos have been kicked around by the Spanish, Japanese and Americans for too many years and there is definitely a "defeated nation," pathology. Leaders here don't market the strengths nor lead with hope and vision – rather they try and explain away all the problems while denying any personal responsibility for the condition. Gloria Arroyo, President of the Philippines was recently quoted recommending that people "pray to almighty god for a better economy." This behavior saps courage from people and encourages the adjudication of personal responsibility. People who stay in the Philippines are considered losers while OFWs (Overseas Foreign Workers) who leave the country to send money back to their families are deified. Its simply pathetic.

On the other hand, I tend to fall in love with potential... The Philippines is an English speaking country only 300 miles off the coast of China, close to Singapore, India, Korea and Japan. Strategically, it's the key to the region geographically and there are good reasons for the Spanish, Japanese and Americans to have fought for it on more than one occasion. You can fly to any major financial center in the region in less than 4 hours and most international carriers serve Manila. In addition, Philippine Airlines (the national airline) is an excellent and typically overlooked airline. Real estate (compared to Singapore, Shanghai, Hong Kong and Tokyo) is an absolute bargain. Due to low wages across the board, the cost of living is also very low. The 16 oz. Porterhouse steak I enjoy in San Francisco for $40.00 costs just $6.50 in Manila and a bottle of beer is 50 cents. If you live in upscale neighborhoods high speed DSL, backup power, and filtered water systems are common, most major western, eastern, and European banks have branches in Manila. There are well run areas of the country - the city of Makati for example is expertly administered. Nearby areas such as Pasay City, the Roxas Boardwalk and other areas are seeing large amounts of foreign and government investment. The peso is gaining against the dollar and the government of Ms. Arroyo, between prayer sessions, has started to implement some intelligent reforms to the tax system. I strongly believe that the Philippines is poised for explosive growth. It's natural resources, proximity to China, and ability to bridge the east / west culture gap are significant, unique in the region, and highly undervalued assets.

Opportunity flows west to east, and east to west through the Philippines

Opportunities flow to the Philippines from the east in terms of demand for raw materials and labor, and from the west in terms of professional talent for business process outsource operations. The call center business (thanks to VOIP) is a good example of how jobs are moving fast to Asia. 80% of all newly created professional positions in the Manila Times are related to the call center industry. Dell, IBM, Intel, and a host of independents are all setting up shop and making a fortune. Companies charge clients $35.00 USD an hour per operator and pay fully loaded employee costs of approximately $2.50 USD. Already, the demand is so high that local wages are going up and the middle class is expanding. This results in a professionally trained English speaking workforce that is used to doing business across international boundaries. Fortunately, the local economy depends on Asia for most of its future growth and the skills being transferred from the west will be exceptionally useful in the resource business. Material demand from China is strong which is growing export revenue and causing Chinese companies to make investments in the Philippines. The Chinese are even paying to overhaul the national rail system. Another interesting trend shows companies in China are now outsourcing westbound communication tasks to the Philippines - and programming work that was once the exclusive domain of India is now being done in Manila. Due to historical links with the US, excellent English skills and compatible value systems (religion, political systems, corruption?) it's possible that the Philippines may be well situated to not only take a share of work from India in terms of technology – but ultimately be a better relationship broker to markets in Asia, the US and Europe.

The personal connection

Its possible to build a case to move just about anywhere, fundamentally; I like the place, I like the people, I think there is a bright future here, and close ties with the US – particularly the San Francisco area make it easy for an American (especially this American) to make a home in Manila. This was important as the Bay Area is still my financial home base. The RT ticket from San Francisco is $815.00. San Francisco has (outside of the Philippines) the largest and most consolidated Filipino populations in the US so I was able to get a lot of biased feedback on the Philippines from all the folks who choose to leave.

OK , to sum it all up, this means that odds are my investments (condo, companies, resources) will generate returns, and that I will be able to tap into the general opportunity generated by double digit growth in China. It also means that I can buy in today in a much more significant way than I could in a more developed country in the region. I'll also spot opportunities faster with my feet on the ground in the region.

Where else did I consider

Let's look at the other countries I considered and why... I looked seriously at Mexico. Its close to the US, I could fly my own plane to and from and the cost of living is low. I like boarder towns - there are lots of ways to entertain and be entertained. Central America had some appeal, especially Costa Rica. I felt sure that I could get settled in any of these countries without much of a problem. However, the well being of all these places is tied to the US economy. In addition, it seemed like it would be harder to learn Chinese in a place like Mexico.

I contemplated Canada (Vancouver), New Zealand (a very close second), the Netherlands and some more obscure European locations. While many places provided better aesthetics - they all came with large tax liabilities, high cost of living, and werent wild enough for me.

Summary

Fundamentally, I wanted a place, with due regard to Doug Casey, where danger plus crisis equals opportunity. So I asked myself where in the next 20 years would we see substantial growth and a fair amount of crisis? The Economist provided lots of great data in terms of where they projected the greatest economic growth would be. Where could I live well, make and save money, and hopefully keep more than my fair share of it. Central America never seemed to rise to the top of that list, nor did South America, anywhere in Europe, Africa or the mid,continent.

China was the hub, and from my perspective all boats in (or near) that harbor will rise. Testing these waters has been interesting - I maintain my consulting practice, still based in San Francisco though balancing my time between the US, China, Korea and Japan. The girl I met years ago in Malaysia has transformed her Singapore based café into a regional chain of Internet cafés, 25 at last count… (though as a note, we actually broke up well before I moved here) Lastly, my sister calls me every week on my trusty 415 area code phone number, I was living in Manila for three months before I broke the news to her that I'd already moved…