Sánchez: Diversified economy

Monday, July 18, 2011

I FIND those calling for a Coke boycott to protest the company’s purchase of pre-mixed sugar so not with it. The boycotters’ argument goes like this: Coca-Cola’s “boycott” of expensive local sugar is killing the sugar industry and Negros economy. Coke’s choice of a cheaper sweetener alternative has affected not only those directly involved in the sugar industry but almost the whole of Negrense society because the island economy is highly dependent on sugar. Crisis in the sugar industry means crisis in Negros economy.

In other words, the Negrense provincial economy will float or sink with the fortunes of the sugar industry.

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Thank God corporate giants have a different take on the provincial economy from these losers. Ayala Land locked horns with SM Prime Holdings Inc. for a negotiated lease and purchase of 7.7 hectares of prime properties owned by the Negros Occidental provincial government.

So intense was the bidding that SMPHI even filed a civil case for certiorari with application for temporary restraining order and or preliminary injunction against Governor Alfredo Marañon and the members of the Committee on Awards and Disposal of Real Properties.

The stakes are that big. Winning proponent Ayala Land aims to plunk P6 billion to develop Capitol Park and build the hotel and retail areas. Ten years down the road, the heart of Bacolod could look like high-end Greenbelt in Makati .
These are indications that the provincial economy is not in a crisis mode as the Coke boycotters alleged, that major corporate players are willing to bet on the purchasing power of the growing Negrense middle class to guarantee the corporate giants’ return on investments.

After all, what investors in their right mind would risk their capital in an unstable economy where it would hold itself hostage to rise and fall on a single industry?

These corporate giants grew to where they are today by judiciously studying the economic and political landscape, not by throwing good money after bad. These corporations have mastered the art of portfolio management, and well our local entrepreneurs learn from them.

Entrepreneurs reduce their investment risks by creating a diversified portfolio that includes enough different types, or classes, of securities so that at least some of them may produce strong returns in any economic climate.

Compare that with the boycotters who yearn for the bad old days where Negrenses have to bow down to the (in)security of a single industry, take it or leave it. The sugar industry catches a cold, everyone gets pneumonia. The small Negrense middle class intellectuals have to find employment in sugar industry-related jobs in Negros Occidental or else relocate to Metro-Manila or Cebu.

Well, opportunity knocks. Let’s face it. Cebu became CEBOOM in the 1990s when mall giants SM and Ayala (yup, the same players), opened outlets in the city within a two- year period, with the government providing the infrastructure such as road widenings and construction projects around Cebu.

These giants made use of networking, the one-stop shopping concept where diversified commercial and service outlets are under one roof. The principle is that no one is as strong as all of us, reducing to obsolescence the concept of the sugarcane monoculture which basically says you’re strong if I’m strong. In other words, if the industry falls into a precipice, it will take every Negrense down with it.

Perhaps our local governments can entice our experienced Negrense managers who learned the ropes of portfolio management in Metro-Manila or Cebu . Perhaps, they could change the culture of dependence to the industry to reliance on diversified players in our local economy.

That way, even if two or several fall, there would still be many survivors who can provide Negrenses with employment and new skills from non-sugar based jobs.
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