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The Honolulu Advertiser
Posted on: Friday, October 2, 2009

Floods show lack of preparation


By William Pesek

Hawaii news photo - The Honolulu Advertiser

Residents wade through floodwaters south of Manila. Despite promises, officials have done little to improve drainage and sewage systems.

BULLIT MARQUEZ | Associated Press

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Suddenly Twitter seems less annoying.

The online messaging service derided by comedians such as Jon Stewart as "inane chatter" proved to be a lifesaver in the Philippines this week. So was the networking site Facebook, which Filipinos used it to plead for help and inform friends and relatives about how to avoid the worst of Manila's floods.

It's a good thing, given how clueless the government was in what's being called the nation's Hurricane Katrina. Critics are right to invoke U.S. incompetence as New Orleans took on water in 2005. Philippine officials embarrassed themselves by claiming their response was no less tardy than that of other governments.

The line seems to be: We were a little less pathetic than officials in the U.S. and Taiwan, so go easy on us. Yeah guys, you go on believing that. Manila's 12 million people know how your neglect and ill-preparation put them at risk.

The Philippines' woes offer three lessons for Asia and investors betting on the region's growth potential.

First, governments are often big on spin, small on results. The Philippines is a prime and tragic example, as we were reminded this week. The storm left at least 277 people dead.

Don't underestimate how Twitter Inc. or Facebook Inc. can exert people power. Twitter, for example, played an unexpected role in protests after Iran's recent election. China even blocked Twitter on June 4, the 20th anniversary of the Tiananmen Square massacre. Discussions on Facebook also are unnerving the region's governments.

All that online chatter puts the onus on elected officials to do their jobs. Filipino politicians have a well-deserved track record of declaring victory the moment growth returns. This year's 51 percent surge in the Philippine Stock Exchange Index gave many people the sense that the good times were back.

The aftermath of tropical storm Ketsana shows how that's largely an illusion. Yes, the Philippines economy is growing 1.5 percent while the U.S.'s is in recession. The trouble is, even 7 percent growth rarely touches those who need it most.

These people live in the Manila shantytowns that literally floated away as antiquated sewage systems backed up. The last few governments pledged to upgrade drainage and sanitation programs, only to do little. They promised to improve infrastructure, only to leave the problem for the next leader.

Second, the implications of Asia's march to urbanization. If you want to take the pulse of economies, you could do worse than hang around train stations. Be it Jakarta, Manila, Mumbai or Shanghai, the hordes of people arriving downtown offer investors more insights than statistics or the financial pages.

On the one hand, they suggest global demand for energy and other raw materials will rise in the years ahead. New roads, bridges, hospitals, schools, airports and housing mean higher demand for cement, steel, lumber, glass, rubber, copper and a host of other basic materials. On the other hand, governments must avoid being overwhelmed by the dynamic.

Manila's crisis is a cautionary tale. It's not just that officials didn't do more to prepare — like investing in better weather-tracking technology. Infrastructure and city services haven't kept pace with a fast-swelling population. Economic growth will slow as a result.

Third, the effects of global warming. The prospect of yet another typhoon this week won't be a surprise to scientists concerned about the future of coastal cities such as Manila. It's getting harder and harder for skeptics to explain away the increasingly extreme nature of weather patterns. Rising global temperatures are a big threat to Asia's economies.

The point here isn't to kick the Philippines when it's down. The economy has vast potential, and two little-appreciated facts are worth mentioning here.

One is demographics. Thirty-four percent of Filipinos are younger than 15, while just 4 percent are older than 65.

The other is natural resources; the nation is rich with mineral and thermal-energy resources.

Such attributes mean little if the government doesn't make the most of them. President Gloria Arroyo failed to use several years of rapid growth to increase the efficiency of the economy and attract the long-term investment needed to maintain it.

In May, Filipinos will elect a new leader. Should he or she fail to put the nation on a more prosperous path, the Twitter and Facebook crowds will be watching. That goes for the rest of Asia, too.

William Pesek is a Bloomberg News columnist. The opinions expressed are his own.