SAND DOLLARS

The Gulf Coordination Council (GCC), awash with massive oil windfall, is seeking bargain investments in this Global Financial Crisis which, through established ties, Filipino Entrepreneurs could entice.

Established in 1981, comprised of Bahrain, Kuwait, Oman, Qatar, the UAE, and Saudi Arabia, it aims to strengthen trade, agriculture, industry, investment and security among members.

Its six economies, controlling 45% of the world’s proven oil reserves, collectively have a GDP surpassing $1.13 trillion (2008) growing 42% from 2007’s $810 billion - contrasting with major economies struggling in the Global Financial Crisis. US GDP, after surging 2.8% (Q2, 2008) wilted to -0.3% (Q3); EU projects 1.4% 2008 growth, half of 2007, further dropping to 0.2% in 2009.

Desert Power

Oil exports fuel GCC country growth, and oil hitting $147/barrel in July delivered massive windfalls, the GCC's current account growing approximately $1 billion daily. Today, GCC’s oil revenues are about $460 billion. Despite a 5 million population boom since 2000, the average member country 2008 per capita GDP is $30,000; double 2004's, and equaling Spain’s and Italy’s ($30,118 and $30,365, IMF 2007).

Immense liquidity has financed GCC’s $1.5 trillion infrastructure budget until 2010, outstripping the US' $1 trillion (HSBC, January 2008), and developing architectural and engineering marvels: Dubai's The Palm Jumeiras, touted as the world's “Eighth Wonder;” and The World, a Filipino entrepreneur's target for monumental, Galaxy-shaped artificial reef to revive the disturbed marine ecology.

SWFt Action

GCC generates sustainable GDP growth from non-oil industry, insurance against when stocks dwindle. This includes investments income from massive oil windfall surpluses, of which the GCC has saved 70%.

This Sovereign Wealth Fund (SWF) earns from investments in worldwide assets the Financial Storm cheapened. Last year, the Abu Dhabi Investment Authority (ADIA) purchased 4.9% of Citigroup for $7.5 billion. In January the Kuwait Investment Authority invested $5 billion in Citigroup and Merrill Lynch, later criticized by Americans, who “trust [the banks] less” after Asian and Arab capital infusion.

Last 17 November, I mentioned net monies’ South-South flow. From 2002–2006, GCC invested 11% of total capital outflows in Asia, offering returns higher than US and EU interest rates and asset yields. Expected to hit 20% by 2020, GCC will replace Western investments (McKinsey, 2008) with Asian opportunities untainted by 9-11 xenophobia, and investment limits. ADIA, for example is investing $60 billion in emerging – mainly Asian - market stocks.

Wise Men and Women

Foreign Direct Investments inflows are key. Aligning the country to GCC’s massive net monies, this pro-growth government can create an Elite Corps of Investment Attaches, attached to the Department of Trade and Industry Secretary: young, vibrant go-getters with Masteral degrees, and uncompromising passion for national service, seeking to re-orient our Board of Investment from a regulatory mindset, towards an aggressive, dynamic approach: setting real targets and incentivizing performance with bonuses and awards. They must have entrepreneurial “moxie” to entice investments into a portfolio of our developable industries: tourism, BPOs, and Infrastructure (Thailand’s highways were constructed on Build-Operate-Transfer, interspersed with private construction firms’ toll stations).

Young, mixed-heritage Attaches can be matched to specific markets: Fil-Chinese sent to China, Fil-Indians to India, Fil-Spanish to Latin America, and Filipino Muslims to the Middle East, and other up-and-coming growth areas, like Tunisia. This, plus incisive profiling of potential investors, would increase the BOI's investments promotions arm’s effectiveness.

Our President has established strong GCC relations, meeting with leaders from Saudi Arabia, Kuwait, and the UAE, easing Investment Attache entries. She attended the wedding of Brunei’s Crown Prince Bolkiah, with whom the Macapagals have 16th century relations.

To complement our mid-term horizon objective, this Administration can launch, say, the “Philippine Student Exchange Program” sending 1,000 of the best and brightest Government Scholars annually to GCC, BRIC, and G20’s best public universities, following China (60,000 sent mostly to North America) and India (50,000 to US and former Empire colony Ivy League schools). To operationalize this, Philippine Ambassadors can be directed to obtain 50 scholarships from each of the G20’s host countries, making “a thousand flowers bloom.”

In reciprocity, our Administration can offer deserving foreign students enrollment into our best universities like UP, PUP and PNU, reflecting the host countries’ generosity. For example, for every 5 Filipinos sent to the University of Brasilia, 5 Brazilians are enrolled in UP. An initial Php100 million fund can be allocated by CHED, in collaboration with the DFA, for honorariums.

This “reverse Fulbright” cross-culturation will anchor ties between fellows who will eventually decide where Investments are channeled. Some, becoming entrepreneurs in five years, would benefit from school-formed networks – i.e., classmates who would become future leaders - capitalizing on that special alumni bond. For example, scholars sent to Norway or Greece would benefit from ties with sea-personnel recruiters.

Thus will these Wise Men and Women eventually return, bearing gifts.

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