Saturday, 19 December 2009

BPO phenomenon

WHO hasn’t heard of BPO? No, I am not talking of Banco De Oro. That would be BDO, although I am certain that most people know all about BDO and its current domination of the Philippine banking scene.

I am talking about BPO as in business process outsourcing. I would imagine that as many people who have heard about BDO would have also come across a BPO, in some way or other.

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It is hard to miss the ubiquitous structures where these companies are located. In many places where they are, the buildings housing them are prominently clustered together, making them visible for all to see.

In Metro Manila, there are four centers where these BPOs are mostly situated—Makati, Alabang, Eastwood (Quezon City) and Ortigas. Cubao and the area around UP Diliman are also fast becoming magnets for these companies to locate in, thanks to generous incentives from the site’s developers. There are also many centers outside of Manila, like Clark (Pampanga), Cebu, Davao, Baguio and Iloilo.
Or, if someone has not noticed (a bit difficult to believe) these places, perhaps one has a relative or a friend who happens to be connected with a BPO organization. After all, apart from nursing and leaving for abroad, going into a BPO seems to be the career of choice for many of our young graduates.

Generically called call centers (although believe it or not, there are many types of BPOs, and call centers are only a segment of the industry), these companies have attracted a large number of our young working population. By the Business Processing Association of the Philippines’ own estimates, one million of them will have been working in some type of BPO within five years’ time. Had it not been for the global financial crisis, the five years would have even been shorter.

But just what does a BPO do? Well, everything really that a business organization does can be outsourced, or done by a third-party organization. For example, to answer calls from its customers, an American utility company may choose to have those calls answered in the Philippines, instead of in the United States. The advantage is obvious. Each customer service representative in the US probably earns the equivalent of about four or five customer service representatives in the Philippines. So obviously, as long as it takes less than four or five Filipinos to do the job of one American, it makes sense to locate the process here.

The even better thing, of course, is that it does not take four or five Filipinos to do the job. In some cases, it even takes less than one.

How does this happen? Well, by the simple phenomenon called underemployment. Let me qualify this statement by calling it “relative underemployment.”

Why relative? Because in the United States, a customer service representative does not need to have graduated from college to do the job. A simple high school leaver will be fine, thank you very much. Here in the Philippines, however, it is a slightly different story.

People who work in BPOs here have all invariably completed some kind of college degree. For the most part, they would have done something like a business-related, or perhaps communications-related, course. That is a minimum requirement for acceptance to the job.

Happy Christmas to all our readers, and their families and loved ones. May this holiday season be truly blessed for us all!

More next week...
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Published in the Sun.Star Cebu newspaper on December 19, 2009

Monday, 14 December 2009

Future expectations

WE all remember the dotcom boom.

Who doesn’t have any memory of those heady times, when share prices of heretofore unknown companies rose to stratospheric levels? When any company with a dotcom after their name could simply do an IPO and their shares would just sell like the proverbial hotcakes?

All to do with future expectations, as we know. Everyone who bought any of those overvalued (as we now know them to be today) shares were of the same mind that at some point, what they were buying would be worth far more than what they paid for.

After all, no one invests in anything to make a loss. The rationale for any investor in buying any asset is always that at some point in the future, that asset is going to make a return for the investor.

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Question is, how far off into the future will those expectations hold? How far off is the investor’s horizon in deciding whether what seems not to be too valuable today, would suddenly turn and become very valuable in the future?

The answer is – it depends.

On what, might we ask, does the answer depend?

Well, mainly on how long those expectations remain positive.

A bit of an evasive answer, right?

Well, not really.

Witness the current financial crisis. For a number of years, asset-backed securities, securitized by American mortgages, seemed to be bullet-proof. As the popular belief went, who does not need a house to live in? And if this were to be true, then surely mortgages would be an eternal fountain from where untold wealth for all would spring.

And spring it did, until late 2008. For when the whole world collectively realized that although everyone needed a home, they still had to be able to afford to buy one and pay for it (and it seemed that many Americans had become unable to do the latter), then, the whole myth of high expectations collapsed.

Which brings me to the issue of President Barrack Obama’s Nobel Peace Prize.

Even in his very own acceptance speech, Obama was humble enough to admit that by any stretch of the imagination, he was not deserving of the award – or at least not yet. He had not done enough to spread the word of peace across the world, and therefore had no business being in that podium, at that point in time.

Obama, more than most American presidents who came before him, has benefited greatly from future expectations. And understandably so. As his country’s first non-white president, many of his countrymen – white and non-white alike – look to him to be able to do almost superhuman things, and right many of the wrongs that all of his collective predecessors could not.

But the weight of future expectations is a heavy burden to carry. Many of the dotcom companies who enjoyed the heady days of yore know this only too well.

A large number of financial institutions that made a killing packaging and selling mortgage-backed securities are also only too aware of its perils.

Which is why Obama must do all he can to be able to deliver on his future promises. Or risk falling on his own sword, and be impaled by the weight of unfulfilled expectations.

(Belated greetings to my son, Jacob Anthony, and sister, Aleli, who celebrated their birthdays on the 26th of November and the 6th of December, respectively).
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Published in the Sun.Star Cebu newspaper on December 14, 2009.

Saturday, 28 November 2009

Unacceptable risk

THIS last week was a sickener, to say the least. While people in the United States were celebrating Thanksgiving, the traditional holiday for showing gratitude for one’s blessings, all we could do for ourselves was to engage in national mourning on an unprecedented scale.

For down South, in that part of the Philippines which has known little peace for as long as most of us can remember, dozens of innocent civilians were massacred, in what has to be a monstrous act of barbaric proportions, so savagely calculated in its intensity, and yet so mindlessly inane in its execution.

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Whoever the perpetrators of that massacre were, and whatever their motivations for doing so happen to be, there has to be no escaping their utter disregard for public opinion, let alone the laws of the country in which they reside. For how else could they have imagined that an entire nation—not to mention the families, relatives and friends of the victims—would not look after an entire convoy that just disappears from the face of the earth?

Reports say that the assassins planned everything in advance—from staking out the convoy’s route, to digging mass graves in which the bodies and even the vehicles of those they were going to murder, were to be buried. But what were they thinking? That people would just accept the newfound existence of some kind of “Bermuda triangle” in Maguindanao, which is able to swallow people and vehicles without a trace? Would no one come looking? And would no one notice the freshly turned earth just a few kilometers up the road, and start wondering how on earth asuch haphazard diggings could just have sprung up for no apparent reason?

Most of all, what about national, and even world, opinion? Did the perpetrators simply think that killing dozens of people would not attract any attention outside their little enclave in the South? That nobody would speak out against the heinousness of their deed, and the world would just continue turning on its axis, as if nothing ever happened at all?

The problem is, the perpetrators knew. They were fully aware that the nation would know. They knew full well the world would know. But they just did not care. Too drunk with power, they disregarded everything—our nation’s laws, our people’s customs and traditions, and our national honor and pride—just to be able to show who is boss.

Somewhere along the line, the current administration has to share in the blame. Its practice of “business politics”—of paying back political IOUs, regardless of how these IOUs were incurred—is mostly to blame.

The part of the world where this all took place was a haven for the current administration during the last elections, with some places registering zero votes for the president’s opponents.

Zero votes? Hell, even statistical error tells us that there must be someone out there, from among the thousands of voters, with a dissenting opinion, or even just someone who ticked the wrong box. But it was a perfect delivery, which demands no less than the perfectpayback.

But in business, as in politics, there is something called unacceptable risk. This is what happened in the recent financial crisis, when banks and other financial institutions suddenly began to realize that not all was well with the US mortgage market, and that they had better jettison the assets they were holding, which were backed up by these mortgages.

Our only hope for justice to prevail, is that the current administration would realize that its alliances in that part of the country have now become an unacceptable risk, that even the dangers of not paying back political debt are now far outweighed by the consequences of coddling criminals and fugitives from the law.

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Published in the Sun.Star Cebu newspaper on November 28, 2009.

Friday, 23 October 2009

Finex does Cebu 2

WHAT does Cebu have that other places in the Philippines do not?

What does this island in the sun, with so few native resources to speak of, have that makes it stand out as a beehive of creative entrepreneurial activity?

Kenneth Cobonpue, Butch Carungay and Bunny Pages—guests during the Financial Executives Institute of the Philippines (Finex) Annual Convention in Cebu City at the beginning of this month—were all proof that there is indeed something unique among Cebuanos, and in Cebu’s ability to be the incubator of entrepreneurial ideas and ventures.

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Back in time there was Penshoppe, of course. From a little mom and pop shop in Cebu, it has become a national brand, a favorite among the young and energetic set.

And Julie’s Bakeshop? Who would now not have seen one somewhere in a bus stop anywhere in the Philippines? I remember in my younger days when it was still alone outlet in Fuente Osmeña, and how over time, with creativity and imagination, it has managed to franchise its way to national prominence.

And even among the country’s crème de la crème in business, it is Cebuanos who stand tall and proud above the rest. John Gokongwei, Henry Sy and Lucio Tan all trace their roots to Cebu. So do the Gotianuns, who have developed Alabang into a viable alternative to the Makati Business District.

So there is indeed a secret to Cebu. Maybe it is the sun and the sea. Or perhaps the steely drive and determination of a people descended from the blood of our first national hero, Lapu-lapu. Fiercely independent and tribal, Cebuanos love to help each other out in achieving fame and fortune. The strength of the island’s various chambers and trade associations, and the cooperation among its members attest to the fact that amid the healthy competition, there is also a lot of cooperative collaboration going on.

For instance, Kenneth Cobonpue, for all his busy schedule, takes time out to teach design courses at the UP Cebu’s Fine Arts Program. This is his way of giving back his skill and talent to the next generation of designers, so Cebu will always be blessed with talented artisans for the future.

It has been many years since I have been out of the place I like to call home. But every time I manage to make my way back there, I always come away feeling energized and recharged.

The energy, creativity and enthusiasm of the Cebuano are indeed contagious.

Outside of the Finex convention proper, I was also able to see the progress that the island has made in terms of its information technology (IT) and business process outsourcing (BPO) sector—familiar to me because of the industry

I am now in. Even by the standards of Manila, the progress seems impressive.

I had a chance to make my way to the IT Park across the Waterfront Hotel, and the buzz and flurry of activity among the businesses there were palpable. All the recognizable names among the leading BPO organizations seem to be represented, a testament to their belief in the ability of the Cebuanos to be able to deliver world-class IT and BPO services to their demanding customers all over the world.

And on the way back to Manila, I found myself aboard one of Cebu Pacific’s brand new airbuses, amazed by the airline’s ability to depart and arrive on time, and even more amazed by its ability to offer fares at very competitive rates.

And little wonder that it can do all this, because it is owned by Mr. Gokongwei himself, one of Cebu’s favorite sons.
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Published in the Sun.Star Cebu newspaper on October 23, 2009.

Saturday, 17 October 2009

Finex does Cebu

I THOUGHT I had seen the end of it. Of Ondoy that is. The week after the storm hit Metro Manila, leaving in its wake hundreds of people dead, many families left to rue their losses in property and loved ones, not to mention the billions of pesos of damage wrought on our already ravaged economy,

I was glad to be out of the capital.

Yes, I was in Cebu of all places, to attend the annual convention of the Financial Executives Institute of the Philippines (Finex), the country’s premier association of professionals in the field of finance. Held at the new Parklane Hotel across the sprawling Cebu Business Park, the event was very well attended, not only by the association’s movers and shakers in Manila, but also by the hardworking and loyal members of its satellite and affiliate organizations in the provinces.

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Dignitaries too were in full attendance. Cebu’s own Mike Rama delivered the opening address to the visiting financiers, exhorting them on their theme of “Transcending Global Challenges.” Then there was former energy secretary Vince Perez, engaging as usual, and in his element as he was talking about opportunities in the alternative energy sector. There was also Region 7’s own Gary Teves, whose job it was to explain to all gathered what the government was doing to fix its seemingly bottomless budget deficit, a task not made any easier by the ravages of Ondoy. And finally there was Cebu’s son Ace Durano, regaling the audience with his tales of endless possibilities for the country’s tourism sector.

All in all, the Finex convention was a resounding success, showcasing the province and city’s progress in the process.

In addition to the parade of dignitaries, the event also featured notable Cebuano success stories in the field of business—a reminder to the Manileños that entrepreneurship was alive and well in places outside of the capital, and most especially in Cebu.

First on the list of the guest entrepreneurs was Kenneth Cobonpue, who at this stage is already considered one of the country’s top design gurus. His products have received worldwide acclaim, and his client list counts the likes of Brad Pitt and Harrison Ford among his loyal customers.

Hot on Ken’s heels was young Wharton-schooled businessman Butch Carungay, who spoke about his passion for design as inspiring his move away from investment banking to the fashion accessories business. Already holding shows in Paris, Milan and New York, Butch told an admiring audience how he raised the game in terms of the country’s fashion accessories exports, transforming the image of Philippine fashion accessories from cheap generic to expensive branded items.

The third but certainly not the least among the Cebuano entrepreneurs was Bunny Pages, owner of a number of business interests that span education and hospitality.

Displaying an uncanny ability to spot undervalued businesses and up and coming opportunities, he narrated his story, and how he has always been able to acquire businesses that were seemingly underdelivering on their promise, and how he was able to make them deliver their potential. With his life motto of always “moving forward,” he certainly wowed the audience with his keen sense of the possibilities of business opportunities out there.

It was Cebu’s turn to shine under the lights, and the island certainly did not disappoint. If there were any doubters among the country’s top financiers about Cebu’ s future growth prospects, all of them certainly left convinced about the island’s potential. More next week.

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Published in the Sun.Star Cebu newspaper on October 17, 2009.

Saturday, 25 July 2009

What’s in a name (conclusion)

CORPORATE names count for a lot, es-pecially in today’s overcrowded marketing space.
Household brands like Coca-Cola, Budweiser and Marlboro have proved priceless for their corporate parents, and their reputations are being zealously guarded by their trademark owners, like the golden treasures of Fort Knox.

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And quite rightly so.

Who would, for example, not recognize the name Coca-Cola? From the hinterlands of the Amazon to the foothills of the Himalayas, it would probably be difficult to find somebody who would not be able to identify the unmistakably curvy bottle that embodies the brand.

And then there is the new Coke – Microsoft. It would not be a stretch to imagine that not a soul in the whole wide world would be oblivious to the name. Just in our own country, the ubiquitous Internet café is everywhere, and even street urchins are now savvy enough to create their own Friendster and Facebook accounts on Microsoft-operated PCs.

With the age of globalization, of course, comes the age of the global brands. Spread by the increasing reach of mass media and, of course, the all-conquering worldwide web, the powerful advertising messages of these global brands have become almost impossible for anyone to escape.
The other trend that has fuelled the rise of brand empires is the advent of mega sports franchises like Manchester United and Real Madrid. With an audience estimated in the billions, and a passionate following circling the world many times over, the brands that the shirts of these teams carry is guaranteed instant name recognition.

This is what AIG experienced when in 2007, it sponsored the Manchester United name, and had its brand emblazoned across the chest of sporting gods like Cristiano Ronaldo, Wayne Rooney and Rio Ferdinand. Almost instantly, the heretofore almost anonymous AIG name became synonymous with the Red Devils, and fans all overwere mouthing the brand like a mantra, from the pubs of Manchester to the beer gardens of Bangkok.

The AIG name worked like a charm for United, too. In 2007, the team won its first Premier League title in many years, and in the next year retained the title, along with winning the Champions League for only the second time in almost a decade.

Then came September 2008, and the world changed for AIG. From a name synonymous with victory, it suddenly became an object of ridicule and loathing–exemplars of the greed that people had now come to associate with corporate America, and the genesis of the global financial crisis.
Today, the name that AIG has built so painstakingly with its business success over so many years, as well as the added Manchester United boost, is about to be consigned to history.

Its component companies —including our very own Philamlife—are scrambling to rid themselves of the AIG tag, and reinventing their images behind new brands, preferably as far away from the AIG association as possible.

And little wonder that they are. Corporate brand names may be global franchises, and they may reap golden rewards for their owners when used properly. But once tarnished, they become like lead weights that only drag their companies down, if not abandoned in time.

Published in the Sun.Star Cebu newspaper on July 25, 2009.

Saturday, 18 July 2009

What is in a name?

WHAT'S in a name?

Apparently, a lot!

In the United Kingdom today, for example, the IN thing to have is what is called a double-barrelled name, or the hyphenated (or sometimes non-hyphenated) combination of one’s maiden and married names (or for males, their maternal and parental surnames or even grandmaternal and grandpaternal surnames, if the name has extended to more than one generation).
Thus, you have people like Anthony Worral-Thompson, Tara Palmer-Tomkinson, Sascha Baron Cohen and Helena Bonham Carter standing out from the rest of their crowds, their names adding cachet to their already celebrity standing.

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Names count for a lot, too, even in the Philippines.

In my generation, it was American names for babies that were fashionable. Thus, many of my contemporaries have names like Randy, Leslie, Joy and Florence.

In my grandfather’s generation, their names tended to be Spanish-sounding ones, such as Juanito, Fernando, Vidala and Elena. Today, in the generation after us, Spanish names have become fashionable once more, usually given as combinations like Juan-Emmanuel. Likewise, “old-sounding”

English names have come back into vogue, like Jacob Anthony or Joshua Thomas.

Corporates, too, have their own favorites as far as names are concerned.

In the early part of the last century, the IN thing to have was long and rather formal sounding corporate names, just like the double-barrelled English surnames in our example. Jardine Davies, The Imperial Chemical Company, Patons & Baldwins, Procter & Gamble—these were just some of the organizations that were famous during that era, with some surviving and being even more famous today.

Organizations established in more contemporary times had shorter, and in some instances, “weirder” names than those founded before them. Sprint, Verizon, Amazon, Google, Microsoft and Oracle are probably good examples of these.

And yet for all the generational nuances, once established, names are likely to be kept for a long time by the organizations that have them. Today, for example, the turn-of-the-century Jardine organizations and Procter & Gamble stand shoulder to shoulder with more recently established ones, like Amazon and Google. Different generations with different norms on the form and structure of their company names. And yet, all of them are powerful brands, with name recognition very high among their target customers.

What this seems to show, then, is that it is not the names as such, but the positive associations that come with the name. Be they the long versions of a hundred years ago, or the abbreviated ones from the turn of the millennium, so long as the names themselves have earned the credibility and respect from their customers, the name is a winner.

But what happens to those with long-established corporate identities, that now suddenly find themselves out of favor in the name recall game?

The global financial crisis has forced this question into the open, with erstwhile “famous” names like Citicorp (Citibank), Merrill Lynch, The Royal Bank of Scotland, AIG and many others having had theirs tarnished—and some would even argue—beyond repair.

What is to be done with them?

More next week.
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Published in the Sun.Star Cebu newspaper on July 18, 2009.

Wednesday, 15 April 2009

A sleeping giant awakens

IN the era of the truly global economy, few players stand out from the rest. These are the giant multinational corporations, whose reach transcends borders, and whose activities dwarf many of even the world’s biggest economies.

And among those business organizations that can be considered truly global in scope and reach, perhaps none could claim to have such a profound influence on the world’s economy than the American International Group (AIG).

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Prior to the meltdown of the world’s financial markets last year, AIG was a behemoth among giants, casting its influence in all corners of the world, and having a stake in all sectors of the financial services industry, from retail to corporate banking, to corporate finance and investment banking, and to securities underwriting and insurance.

So huge was its business expanse that if we were to borrow an old phrase from the English colonialists, we could say that “the sun never sets on AIG’s business.”

Of course, fate has a way of dealing with even the most mighty, and it did deal AIG an almost fatal blow on the occasion of the global financial meltdown.

As it turns out, one of the reasons for the organization’s dominance in the international scene was its large-scale participation in the burgeoning business of assetsecuritization—the now infamous sub-prime mortgage saga, which brought down in its wake a number of well-respected financial institutions, including Lehman Brothers, Merrill Lynch and many others.

When the American housing market started to turn sour, the assets underlying the securities that AIG and the other market makers were issuing shrunk in value, forcing the issuers to ante up collateral to guarantee them with the subsequent buyers. The resulting need for huge amounts of cash collateral forced many into bankruptcy, consolidation and even liquidation.

As the old adage goes, “owe the bank a few thousand dollars, and the bank owns you; owe the bank a few million dollars, and you own the bank.” Fortunately for AIG, the sheer size of its exposure into the global debt markets made it impossible to allow its collapse. If it were to happen, the knock-on impact would be unimaginable. So to stave off a complete financial Armageddon, the Federal government stepped in and rescued the financial giant, propping it up with billions of dollars in federallyguaranteed loans.

While many had written off the financial giant to eventual collapse, slowly but surely AIG rebuilt itself from the ashes of its former self. Many of AIG’s core businesses remained strong, with dominant positions in the major global markets.

For example, Philamlife remains the Philippines’ largest insurer, with a franchise envied by all of its competitors.

A significant part of AIG’s resurgence is the contribution of its current chief executive, Edward Liddy.
A respected investment banker and insurance executive, Liddy brought with him to AIG a credible reputation, which allowed AIG to have an effective dialogue with the Federal government, its current backer and guarantor. It also gave the insurance company a better image in the financial markets.
Today, after a successful stint at stabilizing the wounded giant, Liddy steps down and gives way to an equally respected executive in Robert Benmosche, former MetLife CEO.

Where AIG will go from here on is still a big question mark.

But as Admiral Yamamoto once said after bombing Pearl Harbor, the sleeping giant might just be reawakening.

Published in the Sun.Star Cebu newspaper on August 15, 2009.

Monday, 9 February 2009

Are you ready for this?

NO, it’s not an excerpt from the Queen song.

I am referring to the path-breaking choice that Americans may have to make in the presidential elections in November.

Never has the world’s most powerful democratic nation been confronted with as unprecedented a choice — in fact two choices — at least concerning one half of the electoral process.

Would they elect a white woman or a black man to the presidency of the most influential nation on earth?

Never before have the gender and color barrier ever been breached in the contest for the American presidency. The Rev. Jesse Jackson tried and failed to secure his party’s nomination for the presidency, and Geraldine Ferraro, although managing to gain her party’s confidence, was only running for the post of vice president.

But a woman or a black man for the highest elected post in perhaps all of the world? Is America ready for this? Is the world even ready for this?

All the way from George Washington to George W. Bush — 43 presidents and 212 years later — there has never been a person of color of any gender or a female person of any color who has managed to occupy the highest office of the land. And even that exclusive club is limited still.

White Anglo Saxon Protestants (WASPs), with the exception only of a few with Irish-Catholic roots, have tended to keep the office of the presidency as a virtual monopoly for themselves.

Only the Americans themselves can really say if they are ready. As a shining beacon of hope, democracy and liberty to the rest of the world, is the nation finally at a stage where it can actually practice what it has preached for so long?

Oh yes, indeed. We forget that among America’s nation-students, many have already breached the gender or color barriers long ago. Even a conservative male-dominated Moslem country has had Benazir Bhutto as prime minister, and an ethnically more homogenous Peru has elected a Japanese-Peruvian, Alberto Fujimori, as its president.

But in America, the land of the free and the home of the brave, where women and persons of color have enjoyed success in almost any field of endeavor, the long line of almost exclusively WASPs has remained unbroken — that is until this year’s election rolls along.

The Democratic Party will certainly break the mould first, for the first time nominating a candidate belonging to either category as its standard bearer for the electoral contest. Because apart from Hillary Clinton and Barack Obama, everyone else in the party has put away his or her presidential ambitions on hold, at least for another four years.

But the bigger question remains — can America go all the way and break the mould as a nation, by choosing whoever it is that the Democrats put up for the public vote?

It all remains to be seen, of course, because America today is saddled with a host of serious problems that have neither to do with race nor gender. Its economy is badly in need of rejuvenation, and issues of security continue to haunt its collective consciousness — both problems which Democrats have not been known to be very good at solving, apart perhaps from the Clinton years being economically prosperous times for the nation.

But the implications for America will be significant if it does go ahead and break new ground. For it will give the rest of the world the unequivocal message that all of us — black or white, male or female — are truly equal as people on this earth.

Published in the Sun.Star Cebu newspaper on February 9, 2009.