Here is an idea. Build a Philippine military/industrial simplex.

US drones, made in Mexico. [Photo source: Los Angeles Times, by Don Barletti]

By JoeAm

I know simplex has a geometric connotation, but I use it to imply a simple complex.

Joke lang.

The US military industrial complex won World War II and threatened to become such a driving force behind US foreign policy that protests arose to smash it down a bit. But it is for sure still a force, both in the strategy department as air craft carriers prowl the planet and as a political force as the industrialists aggressively lobby their congressional representatives.

I don’t understand why the Philippine military buys everything abroad and sends money and jobs out of the country. I was thinking about reasons why this might be happening and the best I could come up with is that generals are short-term thinkers. They are looking forward to the next promotion or retirement at a young age. They can only get Christmas gifts (modern military gear) if their country buys them from Korea or Japan or the US . . . or the enemy China. There is no one around who can take a long-term idea from concept into manufacturing. The generals don’t think in those terms. Government runs in six year thought patterns. No one cares beyond that.

Furthermore, industrialists here seem to think in terms of consumers, not hard core manufacturing. Perhaps no one has sat down with San Miguel executives or people from other business giants to explore how to start an industry.

The term “simple” is meant to say, “start at the beginning“. Consider the basic gear that can be made in quantity and put into the domestic battlefield: drones, rockets, small missile boats, bullets, grenades, protective clothing, boots, you name it. “Made in the Philippines.”

  • Jobs in the Philippines.
  • Pesos/dollars in the Philippines.
  • Pride in the Philippines.

More gear, cheaper gear, quality gear.

Exportable gear, if done right. (US drones, made in Mexico.)

What is interesting is that Senator Gordon sees the merit of this and advocates Philippine ship-building for the military, and adding naval architecture design to studies at maritime academies and institutions. (“Gordon wants RP to build its own ships“)

But starting an industry goes beyond ship-building and design.

Mar Roxas was instrumental in building a BPO industry. Maybe he should come out of retirement.

Or maybe Congressman (Senator?) Alejano will take this matter up. Or Senator Trillanes when he is out of office next year. I sense that both are going to be around a long, long time. They are former military officers, true Filipinos, service-minded, honor-minded, straight thinkers, straight dealers.

You need a legacy, Sirs?

Create and build an industry.


112 Responses to “Here is an idea. Build a Philippine military/industrial simplex.”
  1. chemrock says:

    For some perspective, these Asean countries have some naval shipbuilding capabilities — Singapore, Thailand, Indonesia, Malaysia and Vietnam. They have built patrol boats, corvettes, and other littoral mission vessels. They manufacture for their own navies as well as in co-operation for western countries. Indonesia is planning on building 2 submarines, Singapore for JMMS or helicopter carriers. Singapore is the only Asean country that has the capability to build more complicated vessels like frigates.

    There are some major challenges for Philippines :
    1. There is no economies of scale, so it must have the capability to absorb a lot of losses for decades. This goes for shipbuilding as well as other armaments.
    2. Low technological and technical skill levels restrict the scope to more simple small scale productions like patrol vessels.
    3. Difficult to get out of the ‘bottom of the market’ syndrome. You do not possess sufficient skilled workers and manufacturing capabilities to build complicated stuff, on the other hand you do not have large-scale production to justify investments in those areas.
    4. When at the bottom of the market, it is almost impossible to get foreign lead contractors in various sub-systems to team up with you. Eg in the Korean frigate deal, even the Korean shipbuilder could not retain their partnership with BAE that provides the weapons systems.
    5. Corruption — this is a perenial problem. Malaysia’s naval program has been embroiled in big problems of foreign contractors not getting paid. These are suppliers of the various ancilliary systems — weapons, sensors, etc. If big names shun you because of distrust, you be stuck with lower end of the market suppliers.

    Philippines has the great advantage of deep waters and space. This can be capitalised by attracting Sorkor and Singapore yards who are running out of space in their own countries. A few are already here, like Keppel Shipyard. We ought to localise them by creating joint ventures to kick start the program.

    • Francis says:

      On attracting joint-venture deals—would be good to attract such from allies by not only citing profit but implying benefits in common defense; a strong PH is a strong ASEAN/Quad and a strong ASEAN/Quad can say “No” to China.

    • 1. Taxpayer subsidies would have to be a part of the program.
      2. True. But I imagine it is possible to purchase expertise from outside the Philippines or put the arm on the US to assist.
      3. See point one. The purpose is not immediate profits, but the seeding of in-house manufacturing. Guns are already made here. Garage industry. There are piecemeal manufacturing plants that might be re-purposed.
      4. Start simple. One piece at a time.
      5. Yes, it has to be done by San Miguel or other reputable companies.

      Great idea on the shipyards.

  2. Francis says:

    I am obliged to say—on behalf of the inner lefty in me—that playing with military-industrial complexes is like playing with fire; if unrestrained—it may incentivize war itself for the sake of profits.

    Eisenhower’s warnings are apt.

    Still—fire is terrible but fire is necessary; a “war” industry is necessary for nations to secure themselves in an uncertain world, in an anarchy of nations that is only tenuously regulated at best. This is most true for small guys like us.

    In aiming to achieve rapid national progress—I can never forget the example of Japan. One of @Joeam’s blogs talked about the need to aim for a national goal—like prosperity—and build things from there. The Meiji Japanese did something like that; Fukoku Kyohei or “Rich Nation, Strong Army” as it were. It is worth revisting why the Japanese so desperately tried to advance the state of their nation; we should understand that it wasn’t for any abstract goal of glory or helping the people but something very practical—survival. The Japanese saw the (once great) Chinese humbled by these Western imperialists—simply put, they did not want to end up like China.

    I am not as sure, but I feel that Taiwan, South Korea and Singapore were driven by roughly the same imperative to survive—Taiwan needed a strong economy to ward away the PRC, South Korea may have needed a strong economy as a matter of national security with North Korea a few miles away, and Singapore was a little city-state out on her own.

    This is why I feel China is a blessing-in-disguise in some aspects; if utilized correctly, this tense moment we have with China could serve as a catalyst for rapidly accelerating the Filipino nation-building project. We can gather our fear—and transform it into will-power.

    Emphasis on can. Not will.

    I may be a peacenik—but let’s admit it; campaigning for national progress based on making us climate resilient isn’t half as sexy as campaigning for national progress so that foreign powers may no longer control us like puppets. There is something about building for the defense of the nation that arouses some sort of passion.

    Of course—let us not forget that this passion is like fire. In excess, it burns. Let us not let ourselves be overwhelmed by nationalism and fall into racism and xenophobia; let us not be overly suspicious of our Chinoy brethren—who are every bit as Filipino as we are.

    Yes—we fear China. Or rather—we fear the government of China, the PRC. And we will not let that fear become destructive and manifest into such destructive forms like racism—but we shall channel that fear into something constructive.

    In the mental, cultural and social aspect—let us channel this fear into hope for a better world, a better Philippines; in contrast to China’s veiled calls for the dominance of her people, a benevolent one-party-state ruling—let us present a nation that is cosmopolitan, that is liberal, that is democratic, that respects the diversity of her peoples, that takes pride in all this.

    But that is not the main subject of this comment.

    The main subject is how do we make concrete manifestations of that transformation of fear into something constructive?

    With the goal of securing the security of our nation—we should aim for a holistic view of security. It is worth taking a close look at the slogan of the Meiji Japanese; “Rich Country, Strong Army” implies that a strong army cannot exist without a rich country, or that being rich counts as well as being well-armed.

    Investing in a strong “war” industry may bring benefits to civilian parts of the economy. DAPRA in the US comes to mind; the internet itself wouldn’t have existed, without the likes of DAPRA—and it is evident that the internet has produced billions (if not trillions) of dollars in economic value.

    Some might say—that’s America; a small country like us won’t see such benefits. I would disagree. Even our small nation can see similar benefits. For example—the Philippines has a thriving electronics and semi-conductor export industry; while I am no expert and perhaps am being too optimistic—would it be possible for such existing industrial capacity to form a virtuous cycle with a thriving defense drone industry? And wouldn’t a thriving defense drone industry give rise to a civillian drone industry.

    Skills used in making swords—can also be used in making plowshares. In this neoliberal and highly globalized economy—it’s hard for the state to give breathing room for the nation to develop its own capabilities without withering under too much international competition; the “defense” industry can help go around this, a bit.

    Of course—let us not forget Eisenhower’s warnings—and remind ourselves to take a holistic view of defense and national security.

    • The war footing already exists if we look at the purchases of jets and ships and armaments. The enemies exist, too. Yes, there is both a defense and a nationalistic reason to build in-house. I’m a peacenik, too, and active protester of the Viet Nam War. But this is an economic an nationalistic no-brainer to me. Why send profits and money overseas and not realize the job opportunities. Yes, I share your optimism that a small country in a low-cost labor market could make this work.

      Eisenhower was talking about the Goliath US. I think consumer goods is the Goliath here.

      • edgar lores says:

        Peacenik. I haven’t heard the term since… well, since the 60’s.

        I am one, too. But not a beatnik.

        The thoughts I have about this topic is that we are an archipelago. And we need boats and ships to patrol the waters, protect our fisherman, discourage pirates, chase drug and other-goods smugglers, and capture Abu Sayyaf raiders who take hostages from across the sea.

        I’m thinking of Coast Guard cutters. I agree there should be a native industry to build boats and ships to meet the need.

        There are the conflicts with communist and Muslim rebels but I suppose the armaments — guns, armored carriers, helicopters, planes, and drones — for these can be procured from abroad. Well, perhaps, we can at least build armored fighting vehicles.

        And perhaps part of the money poured into these armaments are better spent thinking of ways and means to alleviate living conditions.

        • “. . . better spent thinking of ways and means to alleviate living conditions.”

          I also got a comment on Twitter that said it would be a higher priority to build up agriculture first. I tend to think of when I was a bank executive working on multiple projects at once, all of which were important, that it meant ignoring none and working on all at different parts of the day. To suggest a defense manufacturing priority is not to negate other pressing needs, it is just one way to do what is already being done smarter and possibly better, and indeed supply the jobs that can alleviate living conditions.

  3. karlgarcia says:

    I love this topic, but I have said my piece (which I hope would not turn to pieces) in the past few blogs.

    I am here to listen fore more point of views.

  4. karlgarcia says:

    Francis may I copy your comment here:

    Francis on June 30, 2018 at 9:06 am

    not a military guy or expert in such things but that raises a very interesting question

    why are we looking at defense from the perspective of “big guys” like PRC and US? it is probably important to realize that “standard” tactics and strategy won’t work for us because “standard” tactics and strategy is based on assumpions meant for resource-rich, wealthy and huge nations?

    if we can’t buy a carrier, or buy enough frigates—perhaps solution lies outside the box?

    Francis on June 30, 2018 at 9:09 am
    good also to link manufacturing to defense

    but also—builds up national self-confidence, morale as well. not only among masses (i.e. ordinary citizens) but also among elites: raises elite confidence in themselves, makes them less passive.

  5. karlgarcia says:

    Maybe we should do an ethical forced technology transfer unlike China which did it unethically and made Trump complain.

    • Francis says:

      An ethical technology transfer would likely involve:

      1. a massive program to bring back talent that has gone overseas, as well as to cultivate potential talent (i.e. Fil-Ams) that could supplement our homegrown talent

      2. ensure follow-through of #1 by beefing up resources at departments like DOST—and make sure that talent gathered from #1 isn’t wasted by ensuring consistent channels for research to be implemented in gov’t projects and in the private sector

      3. joint-venture/resource-sharing initiatives with richer allies like Japan, Australia and US. probably try to bargain for more stuff by emphasizing collective security aspect; i.e. strong Philippines is a strong ally to balance against China.

      4. find a niche where we can win, and pour tons of money into it.

      people think “blue skies” research (“pure” research) is useless for a poor country like us. i don’t think so. while we can’t obviously beat the likes of US and China in the “big” projects, we can find specialized niches where we can become competitive

      example of this is UK—which realized that it can’t obviously compete with US and China on AI—so it decided to specialize in AI ethics

      what are strengths of the Philippines? one thing mentioned in the comments above (@Chemrock’s) is our deep ports—good for shipyards. would be interesting to find more possible niches for Philippines to take advantage of.

      5. think outside of the box. don’t follow the herd.

      related to #4—but focusing on what we already know or what we already recognize as a “must” is self-defeating; if you already know it too well, somebody with tons of money must have already exploited that opportunity.

      while seeking for “miracle” silver bullets is not going to solve things by themselves—it may pay for the PH to be very unorthodox in looking for niches to specialize in. i am reminded of Steve Jobs—find the opportunity no one knows exists yet.

      • karlgarcia says:

        Wow! Thanks again!

        • karlgarcia says:

          Absorptive capacity.
          We actually need companies to absorb the technology transfer, without them, it is like going to those numerous conferences spaced out. Into the left ear, exit to the right.

          We need Philippine versions of Minnesotta, Minining and Manufacturing.

          They manufacture Scotch Brite.

  6. karlgarcia says:

    In our jeepney modernization program, I thought more Filipino companies would offer to bid.

    That is not what is happening, we will get Chinese and other foreign bidders.

    We were innovative with the jeepney more than 60 years ago.
    What happened?

  7. Tancio de Leon says:

    Talking about drones. For sometime now, I know of drones made by students flying around Loyola Heights and Ateneo. Their ongoing concern is security and privacy. We have the technology.

    • Sup says:

      Locally made drones eyed for Philippine military

      Rainier Allan Ronda (The Philippine Star) – March 30, 2016 – 10:00am

      MANILA, Philippines – After apparent success in building microsatellites to observe the Philippines’ land and water territory, the Department of Science and Technology (DOST) is now keen on developing unmanned aerial vehicles (UAVs) or drones to help the military conduct surveillance closer to earth.

      Carlos Primo David, executive director of the DOST Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD), said the department has begun initial talks with the Department of National Defense (DND).

      “We are in the process of coming up with a memorandum of agreement with the DND for military research,” David told reporters in a press briefing recently at the UP Diliman Electrical and Electronics Engineering Institute after the successful launch of private cargo spacecraft Cygnus, which transported the Philippines’ first fully designed and built microsatellite Diwata-1 from the Kennedy Space Center in Cape Canaveral, Florida to the International Space Station.

      “It’s about time we also do research for military purposes,” David said.

      David said that the DOST hoped to build UAVs that will be useful to the Armed Forces for surveillance and reconnaissance.

      “This will be more high-tech UAVs which we in PCIEERD feel our researchers in universities can fabricate,” David explained.

      David said that Ateneo de Manila, UP Diliman and FEATI have existing programs doing R&D on UAV development


      • chemrock says:

        Fabricating a drone and put a vidcam on it for surveillance missions is relatively easy. It’s just a matter of flight time capability that makes the difference.
        Weaponising it with missiles is world of difference. At the moment, there is only a handful of countries can has this capability.

      • Ah, GREAT find, Chemrock. Thanks. Also, engaging the universities is a great resource, too.

    • Yes, they are cheap these days. I’m not sure it is our technology though, but that of China packaged for sale in the Philippines. I dunno, really.

  8. karlgarcia says:

    This is what I was trying to point out regarding our procurement law which practically disqualifies all players because our local defense industry is still in the embryonic stage.
    How can we get past this hurdle?

    Given the state of the local defense industry, virtually all players are vulnerable to the following two excuses for reversing the “anointment” of a preferred supplier:
    * Qualification for suppliers. Normal bid invitations include a protection against fly-by-night suppliers that stipulate that “bidders should have completed, within five (5) years from the date of submission of bids, a contract similar to the project. With all Philippine defense companies still in an embryonic state, this virtually disqualifies all local players
    * Commoditized products. Unless the preferred company were manufacturing the world’s only light saber — it really wouldn’t take much for spin doctors to question the selection. Regardless of the technical merits of company’s design, there are virtually no locally produced defense articles that are sufficiently unique to merit being singled out for a negotiated purchase, in lieu of other potentially cheaper imported alternatives

    • karlgarcia says:


      SRDP barriers

      To deal with these omnipresent barriers to SRDP, defense companies could lobby for a change in the rules-of-the-game. The industry could ask Congress to amend procurement rules and make them more favorable to local production. This, however, is a time consuming approach with an uncertain outcome. Furthermore, such amendments have the potential for unintentionally weakening the protections that the current law was meant to implement in other procurement areas (e.g., routine purchases for schools, hospitals, etc.)

      This is NOT the only option for the defense industry.

      Despite the challenges presented in both the previous (RA 7898) and current (RA 10349) AFP modernization law cited earlier in this article, both actually contain substantial pro-SRDP provisions namely the following:

      Sec. 10. Self-Reliant Defense Posture Program. — (a) In implementing the modernization program, the AFP shall, as far as practicable, give preference to Filipino contractors and suppliers or to foreign contractors or suppliers willing and able to locate a substantial portion of, if not the entire, production process of the term(s) involved, within the Philippines.

      (b) In order to reduce foreign exchange outflow, generate local employment opportunities and enhance technology transfer to the Philippines, the Secretary of National Defense shall, as far as feasible, incorporate in each contract/agreement special foreign exchange reduction schemes such as countertrade, in country manufacture, co-production , or other innovative arrangements or combinations thereof.

      (c) The AFP likewise ensure that in negotiating all applicable contracts or agreements, provisions are incorporated respecting the transfer to the AFP of the principal technology involved as well as the training of AFP personnel to operate and maintain such equipment or technology.

      The spirit of the law is clearly in favor of SRDP. But the AFP modernization law does not actually direct the AFP to buy locally. It merely encourages it to do so, and with a very ambiguous caveat: “as far as practicable”. Given the state of the manufacturing industry, there is a significant disconnect between the intent of that section and practical implementation. The law does not lay out a plan for how to develop local defense industries to the point where it would be practical to source equipment from them. Prototypes should not be mistakenly equated with a production-ready design, or production capacity.

      These two mandates: “buy local” and “buy only mature products” appear totally contradictory. After all, how can the AFP buy mature products from an immature local defense industry? A potential answer: license-production of existing weapon systems in the Philippines.

      What is licensed manufacture?

      The following is an excerpt of a document prepared by an organization that monitors the growth of the international arms industry.

      Licensed production is where a company’s product is manufactured under contract by a company in another country. At its simplest, parts purchased from the vendor are assembled in the buyer country; at its most advanced, a weapon’s design, along with the expertise of engineers, is purchased and the equipment built in its entirety in the buyer country.

      The document above cites India as an example of a country that insists on licensed production of weapons as a pre-condition for acquiring them from foreign vendors. Russia, Israel, France, and the United Kingdom have all complied with India’s demands to secure that regional power’s business. It is worth noting that India’s procurement policy is the same model espoused by Section 10 of the AFP modernization law. Other countries have adopted a similar approach.

      Tim Huxley described in his book Defending the Lion City how Singapore uses a point-system for selecting weapon systems, with contracts awarded to options garnering the highest score. Special additional points are awarded to prospective suppliers that include locally-produced content thus ensuring success for companies that enter into partnerships with Singaporean companies. This strategy has resulted in in-country production of components for Singaporean F-16 multi-role fighters and CH-47 Chinook heavy lift helicopters.

      The South Korean aerospace industry benefited greatly from licensed production of 120 KF-16 multi-role fighters. The US Department of Defense notified Congress of the South Korean request for local production in 1991, and a mere ten years later, the first South Korean supersonic aircraft, the T-50 Golden Eagle, took to the air. It was arguably no accident that the Golden Eagle was developed in partnership with Lockheed Martin, the manufacturer of the F-16 from which South Korea obtained the production license.

    • A new law would have to be written to favor made-in-the-Philippine products and Filipino contractors.

  9. karlgarcia says:

    More on SDRP:

    In 2013, the Self-Reliant Defense Posture (SRDP) program — an ongoing albeit lackadaisical effort to create an indigenous defense industry — saw the most tangible display of high-level support in recent decades, when the Department of National Defense committed significant resources to the modernization of the Government Arsenal (GA), and facilitated the organization of the Defense Industries Association of the Philippines (DIAP). Both actions came on the heels of the successful entry into Philippine Navy service of a series of indigenously constructed marine vessels: The BRP Tagbanua (AT-296), the largest locally manufactured warship in history, and three Multi-Purpose Assault Craft (MPAC) Mk.II, arguably the fastest ships in the fleet. Both joined the fleet a year earlier.

    The year also saw the operational use C-130 #3633, the first Philippine Air Force Hercules transport aircraft to undergo Programmed Depot Management careof the 410th Maintenance Wing. It was an achievement many hoped would herald a new era in improved Hercules availability — all by Filipino hands.

  10. karlgarcia says:

    Lorenzana to local maritime industry:
    ‘Support our Self Reliant Defense Posture Program’
    Manila City, Philippines- Department of National Defense (DND) Secretary Delfin N. Lorenzana, speaking during the PHILMARINE (Philippines Marine) 2017 Conference which opened today at the SMX Convention Center, encouraged the local maritime defense
    industry to support the Self-Reliant Defense Posture Program (SRDP) by considering the needs and requirements of the Armed Forces of the Philippines (AFP) in its ongoing modernization program.
    The SRDP Program is a key initiative of the DND to develop the country’s local defense industry with the end in view of eventually sourcing defense materiel from local suppliers thereby boosting the local economy.
    Sec. Lorenzana said that the implementing rules and regulations of RA 10349 or the Revised AFP Modernization Program have “leveled the playing field for legitimate local industries to build major defense equipment and weapons system for the AFP.”
    “With this development, I would like to encourage our domestic maritime industries to dedicate some resources to design, construct, upgrade, and upkeep defense materiel for our Armed Forces,” Secretary Lorenzana said.
    Having a strong and vibrant local maritime industry is especially important as it is in the field of technology that the DND anchors its SRDP, the Defense chief pointed out.
    “This is where our maritime defense industries, which are technology-based, are now called upon to participate,” he said.
    Secretary Lorenzana, however, called on potential proponents and suppliers to strictly comply with existing procurement rules to avoid delays in the procurement process, which has a far-reaching adverse effect on the operations of the Armed Forces.
    “We are all aware how tedious and time-consuming government procurement process is because of numerous documentary requirements and confirmatory actions,” he
    said. “It is in this light that I would suggest to prospective suppliers to carefully study the process and avoid short cuts. Many projects have incurred delays or contract rescinded due to questionable documents,” the Defense Chief added.
    “These are only meant to protect taxpayers’ money and not to favor any particular group,” Secretary Lorenzana stressed.

    • The idea is right, but if no one works to help break through the barriers, then it won’t happen. He can’t just ask for it to happen, I think. I wonder what the SRDT program is, in terms of staffing and activities.

      • karlgarcia says:

        I wonder too.
        If it seems that we are always begging participation and telling the business community not to get pissed of our procurement laws because it is for their own good, then we need to fix a lot of things.

        Btw I asked my dad for some inputs.

        Re AFP 300 B for ” first horizon” we could start a mil industrial “simplex” (joeam) in PH. Or a portion thefeof.

    • I got this note on FB:

      Pnoy’s admin has plans already like this, dba? They intend to create an eco-military-zone in Bataan or Subic, I think. And encouraging foreign defense companies to settle in. It got lost in the rumble of election period.

      • karlgarcia says:

        It is ongoing but needs an energizer battery.

        The AFP modernization law amendment attempted for the AFP to be exempted from our procurement laws.
        But we all know how a spider web looks like.

        So many overlaps and deal killers.

        • karlgarcia says:

          And it is not just economists who are ambidextrous, I guess all are

          From one of my comments above.
          The spirit of the law is clearly in favor of SRDP. But the AFP modernization law does not actually direct the AFP to buy locally. It merely encourages it to do so, and with a very ambiguous caveat: “as far as practicable”. Given the state of the manufacturing industry, there is a significant disconnect between the intent of that section and practical implementation. The law does not lay out a plan for how to develop local defense industries to the point where it would be practical to source equipment from them. Prototypes should not be mistakenly equated with a production-ready design, or production capacity.

          So change all the synonyms of encourage to all the synonyms of mandatory.

        • There are no deal killers, only determination killers. And if determination is there, I am absolutely convinced it can be done. The fact that so many people are speaking of it, Lorenzana, Gordon, AFP during Aquino . . . suggests there is a value to the idea, and it only takes superior and dedicated talent to make it happen. If we kill it in the open thinking phase because we see all the problems and not the solutions, then we are for sure failures from the getgo. There ARE solutions to every problem. I sincerely believe that.

          • karlgarcia says:

            I stand corrected.
            That made me determined to dig in further.
            As for continuity.
            DND had an interagency summit.

            Date Released: December 8, 2017
            DND Holds Summit on Industrial Collaboration for DND Procurement
            Philippine International
            The Department of National Defense held a Summit on Industrial Collaboration Program under the DND Procurement, on December 8, 2017, at the AFP Officers’ Club in Camp Aguinaldo, Quezon City. The Summit on the industrial collaboration program (ICP) on countertrade and offset was conducted in cooperation with the Department of Trade and Industry, through the Philippine International Trading Corporation (PITC). It has the end goal of developing the Philippine Defense Industry.

            According to Defense Secretary Delfin N. Lorenzana,summit is in line with the DND’s present thrust of pursuing its self-reliant defense posture (SRDP) program and will help revitalize the country’s defense industrial development. “This activity will help us get acquainted with the different forms of countertrade as well as its significance. It will also give us sufficient information that will enable us to incorporate countertrade in our
            procurement activities and facilitate its implementation,” he added.

            • That is good to know. I would think for an interagency program to prosper, someone has to fund it to get dedicated time and attention spent on the task. Otherwise, it bounces from one conference to another with people speaking of the concept and good intent, but nothing happening.

              I had to look up ‘countertrade‘. It means: international trade by exchange of goods rather than by currency purchase.

              I don’t know how the Philippines would engage in that if it has no products.

  11. karlgarcia says:

    If our future points to a Federal system.
    Those national scope like NEDA,PEZA, DTI DND,DBM must coordinate well

    The 18 federated regions must not all be tourism spots
    All with deep ports will leave a portion for our maritime related Military Industrial simplex

    Some military reservations occupied by civilians must be cleared.

    BCDA must set a limit then disappear.
    We need military bases so ablish bcda before it is too late leave the problem to PEZA and DTI.

    If reclamation is needed make it useful so PEA has a role too.

    • Yes, it will be a nightmare to get some national projects done because Federalism risks doing to the nation what the bickering cities do to Metro Manila, make it ungovernable.

      • Francis says:

        They say they want us to be like Singapore and Japan and Korea.

        They say Marcos was “good” because he brought “authoritarian development” like them.

        They promise us federalism which is only going to decentralize things further.

        The guy promising this is a self-proclaimed strongman.

        What a bundle of contradictions.

  12. karlgarcia says:

    Quick Lesson :
    If you look at the word encourage add the word only before it, it will not produce anything, and nothing will make you determined to solve your problems.

    Of course we are also good at “it only encourages more corruption”, that is another problem yet to be solved.

    • I think the way to seal off corruption is to have an aggressive audit function attached to each project and severe penalties for those who engage in it (requires a definition of what is an authorized commission and what is not). Yes, it is a concern.

      • Afterthought. Cheating on a defense project ought to bring the strongest penalties because it is undermining the defense of the nation, rather like treason.

      • Francis says:

        While an agressive auditor or stricter regulations might be welcome, I think that their effectiveness might be reduced in the PH context.

        We have a lot of good laws, some quite strict; it’s just people keep finding (loop)holes no matter how tight the net is.

        I think that some “skim some of that and send ’em here” corruption is present in l developed countries like US and Japan. However—the difference is that in those countries, even the corrupt know that national self-interest exceeds all else including their short-term interests; hence, while there is some drag due to vested interests and corruption—the institution still has “its eye on the ball” so to speak and overall gets the job done, if imperfectly.

        The problem in the PH is that the job never gets done at all.

        The problem is institutional, cultural. You have to make leadership gain (regain?) that primal drive to seek national self-interest—which we seem to have lost. Maybe China will force our leadership to grow up.


        I hope for the former.

    • Totally off topic, I don’t know why Ben Kritz crossed my mind, so I googled him to find that he is writing regularly for the Manila Times. We used to have very robust on-line exchanges, often in agreement, often not, and fell apart when he opposed Aquino canceling the lake dredging project. He was really hot about it and I figured he must have had some vested interest in it. Anyhow, here is a recent article he wrote, which seems to indicate he remains a reasonably objective observer of things:

      And this one on poor internet service:

  13. josephivo says:

    1. And Cyber-warfare! Analyze Putin’s actions, and the North Koreans and our good friends in China. Then focus on defense. Many countries are vulnerable, their must be a considerable market.

    2. Same for defense against all other none-conventional warfare as island building, old maps forgeries, fake news, influence peddling, economic infiltrations, terrorism….

    3. Filipino oligarchs only invest in low risk, “rent” related businesses as real estate and monopolies. (Investing their surplus saving abroad?) Isn’t most of the manufacturing mostly driven from companies abroad, foreign investment in major plants surrounded by smaller local suppliers? Also in the BDO most is driven by American and Indian companies. Starting a new industry will be ineffective as all risk and even a large premium will have to be paid by the state.

    • “Starting a new industry will be ineffective as all risk and even a large premium will have to be paid by the state.” So the current approach is the preferred approach?

      • NHerrera says:

        Current approach, the preferred approach? May be, economically and financially, in the short and medium term; but not in the long term and misses the strategic element?

        • That’s my belief, too. And, indeed, I think the State must subsidize the risks. But I do want to know how josephivo thinks the Philippines ought to build its defenses if home manufacturing is ruled impractical.

      • josephivo says:

        Ought? There is plenty of brainpower here, especially if you add the successful Filipinos abroad. There is sufficient capital that could be mobilized. But… a homebased industry will require a different culture. Looking at the future, not living in the now. Focus on creating the best value, not the easiest profit (from rent). Rewarding results, not blind loyalty.

        The current autocracy, as every dictator, focuses on the now, on “being”, on beliefs in values not on the future, not on “becoming”, on the measurable outcomes. Now all is about commit to the leader, belief whatever stories he tells. Currently I’m in a quite negative, desperate mood. The rainy season? Or more likely because of the politics as observed here and in many parts of the world. (But Friday when Belgium wins from Brazil, all this could change in a moment)

        Can? A visionary individual finds outside support to start something new. Repeat the BDO miracle. A new Young Turks movement bypasses the hierarchy and launches its own initiatives with a type of crowd funding.

        • That makes sense. Rewarding results. Look to the future. Go Belgium! The visionary is how I concluded the article, looking at what Roxas did. If there are no pragmatic visionaries in the Filipino power class, they “ought” to hire you. 🙂 And Chem. And . . . the rest of us . . .

          • NHerrera says:

            Wow! That will be some scene, the stalwarts here huddled in a conference with a chest of ice cold beer and coffee brewing — discussing, analyzing, drafting a report for action. Hey, don’t forget moi — I can do the addition and subtraction of numbers. 🙂

        • Francis says:

          The problem—@josephivo—is sadly that in my generation, it seems that cynicism and pessimism has become the dominant feeling.

          I envy the oldies here—you older guys here had the likes of Recto, Araneta, etcetera. I flip through the history books and see a generation that grappled with questions of tensions between religious traditionalism and modern liberalism and leftism, the direction of national economic policy, what it meant to be Filipino—most striking to me (a guy born in this age where it is expected to whine about the “hopelessness” of our nation) is this implicit belief that everyone (whether right like the old Catholics or left like the once-young Joma) had—that the Philippines could change and it was worth dreaming for the sake of the nation.

          My generation lacks hope.

          • josephivo says:

            Don’t forget so now and then to look to the positive things too:

            Health increased dramatically over the last decades, education with the K+12 program, poverty decreased, mobility increased, cheap access to information….

            As nutrition during the first 1000 days after inception improved and infections decreased, stunting will decrease and average IQ’s increase. New technologies will keep improving productivity for many…

            Traditional conservative powers are loosing influence such as the hyper-conservatives in the church. OFW have seen the world, the Philippines is no longer a string of islands…

            The timeline of history is moving forwards, temporary set backs will be temporary.

      • Francis says:

        “So the current approach is the preferred approach?”

        The problem is probably not so much the approach—but more of the implementers of the approach.

    • NHerrera says:

      Interesting to me that before today’s Philippine Statistics Authority report [PSA, a no nonsense Agency], both DOF and BSP — a day or two ago — had to scramble: first DOF forecasting 4.9%, then BSP forecasting 5.1%. DOF and BSP earlier pronouncements were way off the mark.

      • Inflation is hard to get back into the box in short order. It is the fundamentals of TRAIN and weak peso (and businesses that take advantage of the uptick to gouge) that are bearing down (or, pushing up . . . on prices), and there is no near-term relief from them.

    • NHerrera says:

      More on the current thread.

      From January 26 give or take a few days, here are the relative movements of DJIA, SSE, PSE [US, China, PH] stock indices. The last few days, the PSEi did a “dead-cat bounce,” but the general movement shows that PSEi reflects more or less China’s Shanghai Stock index — China being the PH’s current patron.

      • My blog tomorrow is a report card on President Duterte, based on an article I did two years ago establishing benchmarks. Maybe re-post this there. I love that expression “dead-cat bounce”. I’m reminded of a cat I saw jump from the roof of my house and land on a cement walk about two stories below. I swear its legs were only about one inch long as it hobbled off. Live cat, no bounce. Short legs. I’m sure there is an economic phenomenon that fits.

        • NHerrera says:

          Will do.

          • karlgarcia says:

            Got too look it up because I am imagining fat cat Garfield doing it and he did not even bounce.

            What is a ‘Dead Cat Bounce’
            A dead cat bounce is a temporary recovery from a prolonged decline or a bear market that is followed by the continuation of the downtrend. A dead cat bounce is a small, short-lived recovery in the price of a declining security, such as a stock. Frequently, downtrends are interrupted by brief periods of recovery — or small rallies — where prices temporarily rise. The name “dead cat bounce” is based on the notion that even a dead cat will bounce if it falls far enough and fast enough.

            Read more: Dead Cat Bounce
            Follow us: Investopedia on Facebook

  14. karlgarcia says:

    The licensed manufacturing idea might eliminate the representation practice where a Filipino appears to be a fly night company just accomodating and facilitating for a foreign player, then a scandal happens then nothing happens.

    If you do licensed manufacturingfor let us say airbus, hyundai, and the like, we could have planes, drones, ships,guns,name it we will have it all done by Filipino hands.

    I think that also covers the tech transfer concern and a little reverse engineering.
    Then the inhouse brand will follow

    btw we could do that to the car industry and the jeepney if we wanted to, maybe we could start there.

  15. NHerrera says:

    I learned quite a bit from the TSH postings of karl, Joe, among others, regarding the concept of PH military-industrial complex SIMPLEX. Thanks guys.

  16. chemrock says:

    There are diverse views on the development of a military industrial simplex within this blog comments.

    I think first and foremost there must be a policy objective for this. Without this policy the program will go in myriad directions. Dick Gordon cannot just stand up and say lets do it. You need to first set out what you want to achieve.

    Joe’s idea is inclined towards the economics – jobs, peso savings, hopefully make some money with exports. If we gonna spend on defence hardware, might as well built them ourselves. An accountant will say this is a built or rent decision. If this were so, there are algorithms that can compute fairly accurate cold figures from which decisions can be made.

    If it is purely a policy of building defense capabilities, I would think out of the box. No matter how much hardware a small country acquires, it will be no match for China. In future warfare, the one that controls the spectrum is going to be the winner. I am talking of radio frequency spectrum. Electronic warfare is the future. In fact, it is already here. It is in this electromagnetic arena that small countries have a chance to put in place some technology and equipment that can negate the might of great military powers. Go buy, steal, learn and develop the technology to create and build the great electromagnetic wall or dome and no missiles fired from those islands by the Chinese can do damage to the country.

    • karlgarcia says:

      I remember the Mech animes like Voltes V.
      We see dome like force fields.
      The electro magnetic ball followed by the laser sword.

    • NHerrera says:

      Meaning choose the nature of the M-I Complex to focus on — one of which is the SOFT ware, less on the HARD ware. Make sense, considering the trend.

      • NHerrera says:

        I remember a few years ago: a student from a local Computer Science school, STI, created quite a stir worldwide because of the computer virus he programmed and let loose worldwide. We have quite a school there, and one with some good reputation. So a unit of STI teams up with Government — in a joint, secret ? organization [but can one keep a secret in PH; but that is another story] — and do the digital M-I Complex with that as a start. Conceptually, that may well be the big kick of a return needed for the moolah. Strategic too.

    • karlgarcia says:

      Full spectrum dominance-

      Full-spectrum dominance also known as full-spectrum superiority, is a military entity’s achievement of control over all dimensions of the battlespace, effectively possessing an overwhelming diversity of resources in such areas as terrestrial, aerial, maritime, subterranean, extraterrestrial, psychological, and bio- or cyber-technological warfare.

      Full spectrum dominance includes the physical battlespace; air, surface and sub-surface as well as the electromagnetic spectrum and information space. Control implies that freedom of opposition force assets to exploit the battlespace is wholly constrained.

      This is for world domination and beyond.
      Ok we can go with electromagnetic spectrum and concentrate on gamma radiation.
      The Hulk will protect us until Thanos arrives.

    • Three great ideas. Policy objective. Calculate the values. Think outside the box for a small country’s best advantage.

  17. NHerrera says:

    Off topic

    What did China expect when it pressed EU to ally itself with China on trade? China is not yet Numero Uno, as I understand it.

    Oh well — nice try but no cigar.

  18. karlgarcia says:

    Last on SDRP.
    I will drop a more uodated article (2016) for those interested.
    Remember, Duterte once said AFP Modernuzation is a waste of money.

  19. Side note from the book I have been reading for weeks now, on and off.

    Social development index is defined by the author himself as having the following components:

    1) energy capture (energy used per capita, an important indicator Francis also identified) Early cultures had dogs, then draft animals (carabao and oxen), some had horses and war elephants, further down the line you have Roman and Chinese water mills and metal forges.. later industry..

    2) urbanism/organization. Think Rome and its aqueducts for water, and the Cloaca Maxima for sewage, and the landfill that became today’s Monte Testaccio.

    3) information processing. Think Sumerian writing to count stocks of barley. Sumerian scribes had exams and a privileged position similar to IT people today. Think hieroglyphs to tell stories. Think alphabets to simply hieroglyphs so more people could be literate than before. Think Arab numbers to simplify teaching multiplication and dibay-dibay. Think Chinese abacuses. Think Venetians who developed modern accounting, Florentines who pioneered modern banking from banchi, benches. Then of course what Native Americans called “singing wires” – telegraphs. Heneral Luna used it..

    4) and finally: warmaking capacity. The Philippines already may have a roughshod but somehow working index in the areas 1-3. The realities of history show that without 4 one doesn’t get far. They say that the first thing the US President (at least until Obama) asked when there was an international crisis was “where is our nearest aircraft carrier”. Russia with its concentration on land-based power has the world’s most modern tank now. The Philippines had a (post-)colonial military tradition, with an army to fight wars inside, and sponsoring powers to protect it on the outside..

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  1. […] one of his articles, Joe suggested we have a Military Industrial Simplex. Though simplex method has to do with operations research, that is not it. It simply means to keep […]

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