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THE FREEMAN SOLUTION: How To Alleviate The EDSA Traffic Crisis And Generate Tens Of Billions For The Economy By Empowering The Rise Of The Philippine Tech Industry (An Economic Strategy) By Franco Mabanta and Co.

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Photo from Franco Mabanta's FB Page

The Context:

The abovementioned company is a Think Tank comprised of two tech CEO's, one city planner, one Chinese economist, one Filipino billionaire, one Congressman, one powerbroker, a blockchain specialist, an investment banker, a branding expert, and two of the top political strategists in the country.

We want to help.

*As of this writing, the Freeman Solution has been presented to two Philippine Senators and their responses were excellent. (Both Senators have committed to help lobby for its legislation once fully ready.)

We decided to publish the idea on social media with the intent of fully putting it through the fire. We'd like everyone to freely, unabashedly weigh in and help find ways to adjust and fine-tune and strengthen it, as we're of the belief that any important idea that is truly credible (and beneficial on a macro level) must not only survive intense public scrutiny, it must thrive in spite of it. So please feel free to comment as openly as you'd like -- be it positively or negatively.

Yes, we welcome recommendations that are completely out-of-the-box; even the ones that may sound crazy. We're grateful to be corrected if any errors were penned. As always, we'll be open-minded about bad/unfavorable feedback and will keep them on the thread, but will delete comments that are either malicious or useless to the open dialogue.

Lastly, we appreciate good-natured humor, so do crack a joke or two -- we've learned that it's good for the process.


The Initial Objective:

To keep editing this post and adding to or subtracting from the plan as more good suggestions are brought to light.

The Central Objective:

To have the Freeman Solution rapidly evolve over the weeks till it morphs into a bulletproof strategy ready to be authored as a bill in Congress.


The Premise (And All Key Factors):

1. Very soon, the biggest industry in the world will be the tech industry. The most valuable commodity of the 20th century was oil; the most valuable commodity of the 21st century is data. (The only way to gather big data is through tech.)

2. The Philippine tech industry is on the verge of blowing up. Our government has -- in essence -- been sleeping on a tangible, unambiguous gold mine that's been ready and ripe for the taking for at least three years now.

3. An academic study published by the Japan International Cooperation Agency shows that the we -- as citizens of the Philippines -- lose between P2.2 billion to P3.5 billion EVERY SINGLE DAY due to traffic.

If we're talking about even just the economics of it all (other detrimental aspects notwithstanding), that statistic boggles the mind. And yet every week, circumstances across and surrounding EDSA are allowed to relentlessly and remorselessly persist to deteriorate.

At the very heart of the matter, this is inexcusable -- both fundamentally and by any definitive ethical metric.

Furthermore, the study focuses primarily on efficiency of productivity and work hours, but fails to take into account things like health, stress levels, lack of sleep, mental fatigue, hours lost for family time and exercise, rage issues and violence, anxiety, and other factors that are crucial to the overall equation and/or are cohesive metrics in terms of measuring the totality of loss.

4. Auto analyst and social media luminary James Deakin (not part of the abovementioned Think Tank) calls traffic the most pressing issue of our time -- a source of concern that may end up being more detrimental longterm than poverty, drugs or corruption.

Deakin outright refers to the traffic problem as "a national crisis", a social pandemic so critical and so harmful that authorities would be right to put Manila in a state of emergency. We agree with him.

5. Senator Grace Poe and Department of Transportation Secretary Arthur Tugade recently got into a very public war of words about who's to be blamed for EDSA's predicament.
We have a deep respect for both individuals and we're of the belief that instead of pointing the finger left or right, the direction to point towards is forward.

6. In spite of the traffic, the Philippine economy is booming. In fact, majority of the economies across Southeast Asia are in midst of a widespread and flourishing financial upswing.

*It's important to note that only four economies in this region use English in business: Singapore, Hong Kong, Malaysia and the Philippines. This is a significant factor that we'll discuss later in greater detail.

7. I currently own or part-own four companies in tech and none of them are based out of Manila.

Do you know why?

One word: tax.

The Philippines taxes all tech companies 30% to 33% -- that's one third of your money taken away by the government right off the bat. It's a brutal paycut for any business, regardless of how promising your enterprise is.

8. Conversely, do you know how much tech companies are taxed in Singapore and Hong Kong?

Zero percent.

Yes. They get taxed nothing.

9. Fortunately for the Philippines, Singapore is in a bit of a pickle at the moment. Why?
The astronomical cost of living in small but mega-wealthy Singapore has caused a corporate ripple effect over the last decade and now all SG-based companies are legally obligated to pay their employees salaries that are proportionally stratospheric.

One of the trickiest (and most difficult) symptoms of universal high wages is how the OPEX and CAPEX of many Singaporean companies balloon to excessive, oftentimes unmanageable levels. This is by far one of the most unattractive attributes of doing business there, particularly for foreign and mid-level startups.

10. Hong Kong -- on the other hand -- is unequivocally fucked right now.

With powerhouse Mainland China breathing down their necks, titanic rallies dominating both their streets and the national conversation, widespread whispers accusing the United States of maliciously funding the dishonest media and black propaganda to favor the rallyists, and the occasional acts of violence, by no means is it unfair to say that the situation Hong Kongers (and their foreign investors) now find themselves in is chaotic, disconcerting, instinctively inescapable, and wholly problematic for business growth; not to mention an unflinching source for a shared and heavy pessimism.

11. Once and for all, let's properly acknowledge what the real source of the traffic crisis is.

We need to FINALLY admit that we won't solve anything by simply creating better roads or improving public transport or mandating new automotive laws to follow (like color coding).

Metro Manila is OVERCROWDED -- plain and simple.

The capital Manila alone is the world's most densely populated city with 42,857 people per square kilometer, or 111,002 people per square mile -- all contained within an area of 42.88 square kilometers. Sheer ridiculousness.

This is the heart of the problem.

Unfortunately, innovative solutions like Elon Musk's revolutionary Boring Company come with price tags well beyond what our country can pragmatically afford. (The Boring Company -- mind you -- will soon relieve the city of Los Angeles of all its traffic woes via a massive interconnected network of high-speed underground tunnels. Meaning no more traffic in LA. But at a cost of approximately half a billion pesos PER MILE of every tunnel built. Nope, not cheap.)

12. Our diagnosis:

The best and most efficient way to fix the daily catastrophic deadlocks across EDSA is to decongest the mega city by directing people AWAY from its center -- not through provocation or by being forceful, but by creating a catalyst that excites and motivates in a way that makes people happy to do it.

How do we do this?


The Plan:

1. Immediately implement a new zero percent tax law for tech companies.
What does this achieve?

- We immediately become a player in the global tech scene by competing head on with Singapore and Hong Kong for regional ascendancy, fully intent on ruthlessly taking advantage of their respective business and societal handicaps.

(Note that timing here is critical. If either country somehow manages to make shrewd adjustments before we capitalize, our piece of the pie gets smaller.)

- With one simple chess move, we'll essentially wipe out majority o
f the non-English speaking Southeast Asian tech competition, or at the very least, make it extremely challenging for them to operate.

- THE BIG PICTURE: Our new zero percent tax legislation for the tech industry will mean immense incentive internationally and should generate billions in foreign investments at breakneck speed; not dissimilar to how our casino industry yielded billions when our government opted to open our doors to neighbors like Australia and Macau.

(We can't stress enough how meaningful/valuable international relations are in the tech world. Trust established through successfully maintained multinational partnerships will be a quintessential factor in helping elevate the Philippine economy at every phase moving forward, in a plurality of diverse areas, on top of and aside from the initial accelerated technology-funded financial influx.)

- Hundreds of thousands of new jobs will be created within the first four to six years.

- Tens of thousands of Overseas Filipino Workers (OFW's) will finally have clear and rational reasons to come home, as the industry's demand for employees with different skillsets and high-paying but reasonable rates of salary increases each year.

Imagine all the new possibilities for coders, programmers, managers, app developers, designers, intelligence agents, delivery men, software engineers, translators, graphic artists, videographers, photographers, copyrighters, teachers, web security administrators, high to low-level assistants, company operators, computer support specialists, online marketers, offline marketers, chefs and cooks, mathematicians, product inventors, corporate and political lobbyists, research scientists, blockchain consultants, office electricians, executive secretaries, data analysts, network architects, cleaners and maids, social media strategists, content creators, realtors, interior decorators, accountants, and so much more. This -- as far as we're concerned -- is going to be one of the golden side effects of the Freeman Solution.

(Note that a considerable number of these newly birthed occupations will be work-from-home jobs and/or jobs that won't be requiring the typical and antiquated 9 to 5 schedule for hours punched in -- meaning less people in total traveling daily and less cars on the road during rush hour.)

- Most importantly, some of the very best tech conglomerates in the world will finally be incentivized to start setting up arms and extensions of their companies and businesses on Philippine soil, integrating great resources in the process, and fundamentally guaranteeing that we don't get left behind by the rest of the world. The move will allow us to position ourselves concretely and lock us into the one industry that is going to be singularly responsible for carrying humanity on its shoulders and into the future.

2. Adopt Dubai's tax-free blueprint, with one exception.

- The thriving Middle Eastern city is owner to a highly effective geography-based system that explicitly delineates the precise areas selected and categorized as tax-free zones.

- Simply put, if a business-owner sets up shop within any of the locations mapped out by the Dubai government, his or her company is freed from the burden of annual taxation.

- We think the same system should be utilized here, except solely and exclusively for tech-centered or tech-related enterprises (at least for now). One of the central priorities, after all, is to stimulate, accelerate and ultimately embolden the impending rise of our country's tech scene; the reason being that no other Filipino industry that's been similarly overlooked or under-utilized the last few years -- at least in as far as we can tell -- has shown more potential and capacity to do this much good for this many people by implementing a zero percent tax law.

3. We bookend EDSA with tech.

The first move is to make the decision to create not one, but two tax-free zones, both exclusive to the tech industry as previously discussed.

We then strategically position both zones opposite of each other -- at both ends of EDSA to be precise. One tax-free zone open to all tech enterprises on each end.

Preferably, we situate one zone in a place like Clark City, Pampanga up north; and the other zone somewhere in the vicinity of Laguna down South. HERE LIES THE KEY TO THE DECONGESTION OF MANILA.

- This should help pull a substantial amount of cars and buses away from the capital's nucleus and redirect work-related activity towards specific cities just outside the Metro, thereby gradually decreasing the density of the population day-by-day, month-by-month, and year-by-year as the industry sees continual growth.

- Now how sure are we that these multinational and Filipino-owned tech companies (once they've set up shop in either zone) are going to be able to attract/persuade/compel large amounts of people to work for them considering they'll need to travel beyond the borders of Metro Manila everyday?

As mentioned at the top of this post, tech is now on its merry way towards becoming the largest, most lucrative, most unstoppable industry in the world. It's a speeding car on a wide open highway. Its destination: worldwide industrial leadership and a category of unrivaled economic influence. As far as the naked eye can see, there is currently nothing on the highway that can hinder the drive.

In fact, the imminent realization of the tech industry's global dominance isn't mere possibility anymore -- it's an inevitability. This WILL happen. There's no debate here. And when the money arrives, all sorts of new demand will follow.

Because with strong economic ascendancy always comes a multitude of human opportunity.

This is why we're certain that the people will come. Because apart from love and sex, there is nothing that captures our collective humanity with more tenacity and depth than the opportunity for freedom (money) and the gift of being given purpose (work).

*In fact, we even predict that quite the number of employers and employees will eventually move out of Manila and relocate within or closer to the tech zones.


The Culture Hub Possibility:

Under the recommended abovementioned circumstances, the Philippine tech sector should rise at a decent speed alongside the rest of the world. And with our companies and enterprises reenergized both by international influence and a sudden influx of financial capital, there are some of us in this Think Tank who believe it's very logical to assume that once the two tax-free zones have experienced any level of meaningful success, both zones may organically begin morphing into something more than a pair of Silicon Valley spin-offs.

The assumption (or aspiration, depending on which of us you ask) is for the two tech zones to diversify into two progressive CULTURAL HUBS, both unique and charismatic in character, and open to all people who share a like-minded ambition for success in the fields of tech, entrepreneurship, artistry, politics, science, business, innovation and perhaps even in F&B and sporting ventures.

Having two cultural hubs, each located on opposite ends of EDSA, now serves a double purpose in that not only will they drive traffic away from Manila as previously discussed, they'll also force the north and the south into a constant state of (healthy) technological and cultural competition -- which is always a good motivator, great for the economy, and super great for consumers.

*Note that if the tech zones don't end up evolving into the cultural hubs, it isn't a dealbreaker, so to speak, as the aspiration for the cultural hub evolution was never the ultimate objective. But we do admit that even just the visual idea of two thriving tech zones that amplify as culture hubs on opposite ends of EDSA is pretty cool -- particularly since we've yet to see anything of the sort in the Philippines.


The Proof Of Concept:

A zero percent tax legislation is NOT a radical idea. This point is crucial.

1. In the early 2000's, the Philippine government shrewdly implemented a zero percent tax law for the BPO industry.

And what happened?

The whole thing blew up.

The Philippines transformed into the #1 player in the world in the call center space.

Today, there are 1.2 million Filipinos that work in BPO-related enterprises; the industry is robust and prospering and the whole world knows us for it.

2. Is it true that the call center industry is going to die soon? If so, what are the ramifications in using the BPO sector as an analogous proof of concept for a tax-free legislation for the Philippine tech scene?

The call center industry itself won't die, but, yes, the profession of call center agent should be extinct within the next five to seven years. (I've done the math and all the numbers point in that direction.)

Our friends in Silicon Valley have made phenomenal advancements in artificial intelligence which will eventually render almost all BPO-related occupations obsolete. A.I. will operate at a cost, speed, efficiency and accuracy that humans simply won't be able to compete with. Yes, unfortunately that means millions of people around the world -- particularly in the US, India and the Philippines -- will lose their jobs.

(This is obviously quite sad, but what's even more unsettling to me is that so few of us here in Manila are aware of -- much less planning solutions for -- the looming call center apocalypse. The BPO space is important to the skeletal structure of our national economy and there's no question that we're counting down the days until the industry is crippled forever, yet I see or hear no one addressing the danger presented by a million Filipinos losing their jobs at the same time. I'll tackle this issue in detail in another piece as I'd like us to stay on topic here.)

Now within the the context of supporting and nurturing the Philippine tech space, it's inconsequential that call center agents are ultimately going to be out of work as that line of thought misses the point.

The heart of the matter here -- the preeminent bottom line, so to speak -- is that our national government under then-President Gloria Arroyo made the choice to implement a zero percent tax law for all BPO businesses and that decision resulted in phenomenal levels of success, elevated millions of Filipinos from two generations into a growing middle class, created a system in a new sector that yielded strong annual revenue for the economy over two decades, opened the doors to a legion of international investments and partnerships, and -- by almost every conceivable metric -- made the Philippines a better place primarily by giving millions of Filipinos a chance at better lives.

It was an unprecedented triumph. And it now serves -- indisputably -- as a viable proof of concept ready for juxtaposition.

3. Yes, I suppose there's an irony in that the industry now being used as a proof of concept (BPO) will inevitably be devastated by the industry it might help uplift today (tech).

But never mind that new technology is ending the call center occupation. That sort of thing has happened to literally every industry in every culture in every continent across world since the beginning of human history. And it will continue to happen till we're all gone. When was the last time you went to Tower Records to buy music, used a fax machine to send a letter, or rode a horse to get somewhere faster? When was the last time you bought an adult magazine for pornography? Soon enough, physical newspapers -- like horses and magazine porn -- will disappear. In the next five years, the US will undergo a gigantic economic upheaval as artificial intelligence and robotics will take away millions of jobs from truck drivers, retail workers, factory workers, and (as mentioned earlier) call center agents. Within that time frame, 30% of ALL malls and shops will close down, too, as Amazon sucks out $20 billion in commerce from that industry while paying precisely zero dollars in federal tax.

That's what innovation does. It is innovation's job to kill industries, which -- ironically -- means the only job innovation won't kill is its own. And that's completely natural.

But what we'd like to emphasize with strength and sincerity is to appreciate how we can make something truly magical happen when we combine (1) a new technological innovation that serves the greater good, (2) the willingness of the individual and the community to evolve alongside the innovation, and (3) intelligently analyzed adjustments to our laws that empower good technological innovations instead of hinder them.

Because, remember, it's been almost 20 years now since the BPO industry's then-newly created zero percent tax legislation burst into the scene and took the country by storm. Today, tens of billions of pesos in call center wages are being paid in full to Filipinos every month -- consistently and without fail.

And although there's a plethora of factors we have to consider, this we can say with absolute certainty:

Whatever grand economic successes the BPO sector made, all of it will look tiny, miniscule, negligible, practically inconsequential in comparison to the breathtaking amount of money and opportunities that a successful tech industry will bring to the people.


The Opposition (Or Lack Thereof?):

As far as the foreseeable future goes, we can't seem to find established anti-lobbying parties with a sensible incentive to contest this new law. This is an uncommon thing.
1. Before proceeding, let's discuss how lobbying in government works:

Let's say a Congressman or Senator tries to pass a bill for medicinal marijuana -- it is an unequivocal certainty that he or she will be on the receiving end of attacks from lobbying groups funded by billion-peso cigarette companies and big pharma.
Similarly, a bill intending to legalize divorce will instantaneously be lobbied against by Catholic and Christian groups.

This is the nature of modern politics in all democracies the world over -- the lobbyists with more money win 97% of the time. It's corrupt and annoying and terribly difficult to fix, but that's the reality of the world we live in. For decades, we've been made to keep functioning within a political system that is broken at the core.

2. To the point, this proposed bill of zero percent tax for all PH-based tech companies may turn out to be one of the rare scenarios wherein we won't be seeing any person or group lobby against it, simply due to the fact that we see no logical/strategic reason for anyone to do so. Somewhat anomalous (not to mention lucky).

3. It's beneficial to note that similar to most of our national sports programs and a vast majority of the film industry, Philippine tech has yet to be properly supported by our government -- which is unfortunate.

Because unlike all our sports programs and our film industry in its entirety, the tech space is capable of EASILY yielding tens of billions of pesos every year. Hundreds of billions if given the proper time, attention and energy, making it incredibly difficult to lobby against.

Let's keep our fingers crossed regardless.


The Conclusion:

Before our Think Tank conceptualized and started to flesh out The Freeman Solution, the always reliable James Deakin told us he doubts the traffic problem can be completely repaired within the next 12 years. He and I are both optimists by nature, but as far as this situation goes, he was a bit more hopeful than I was.

Now by no means am I claiming that the Freeman Solution is the only answer to the problem. In fact, we would all be very happy and supportive if anyone comes up with something better.

But at this moment, as far as the options on the table go, we don't see a coherent way forward until we first handle this non-sensical, cancerous pandemic of overcrowding. It acts like a paralysis on the city.

The World Population Review tells us that there are 12 million people in Metro Manila, but the larger urban area has a population estimated at 21.3 million. This density is much higher than that of Mumbai (23,000 people/sq km), Paris (20,150 people/sq km), and Toyko (10,100 people/sq km).

This is borderline insane.

In retrospect, upon closely examining how Metro Manila as a whole was managed (or, rather, mismanaged) over the last three decades, it feels almost as if a dumb, angry mechanic was slowly unscrewing pieces of our minds. Well, the screws have finally come off and now we're wholly and painfully unhinged from the reality of our predicament. Not to mention the basic common sense that used to be so readily available seems to have devolved into something barely accessible at best; a distant memory at worst.

And yet we can discover some lighthearted humor upon finding out that sitting at the very back of this metaphorical jeepney we've been on is our ultra-promising Philippine Tech Industry, still young -- yes -- but bursting at the seams with spectacular potential. It waits in a restless silence, thirsting for its turn to drive, amidst and in spite of the traffic that has us all in shackles. The Tech Industry looks at each of us -- the passengers -- in the face, and eagerly so, knowing fully well that once called upon to take the wheel, it would both lead and serve as an obvious and articulate refutation to a plurality of national and local problems.

Despite its youth, the Industry has already began arming itself with the skillsets and manpower and foreign interest it needs to rapidly transform the jeepney into a rocketship, ready to blast off on cue and take everyone along for the ride. Imagine the possibilities, it thought, if only taxation didn't keep confiscating a third of its rocket fuel.


The Post Script:

In summary, the Freeman Solution is an effort to alleviate glaring national issues such as traffic, OFW woes, unemployment and overpopulation, over and above the assertion that it will generate billions for the Philippine economy, without directly compromising or damaging anyone's well-being.

We're expecting a bit of pushback from people who'll say this may oversimplify complex socio-economic problems (and we'll be first to admit that that's a fair point), but we believe the manifesto is not and will never be the right place to collect a few cluttered puzzle pieces comprised of the miniscule and the trivial.

We also understand that this undertaking will be tremendously laborious to implement -- as is the case with all big projects -- and that there will be a multiplicity of unforeseen symptoms that we'll have to handle. (Internet speed, anyone?) Yet that's all perfectly fine.

Because nevertheless, we know the entire country can at least agree on one thing:

That reasonably well-considered action will always and consistently trump those who choose to do nothing.

That's it for now.

As mentioned at the start, please hit us up in the comments section and let us know how you feel. Tell us which things you like, which things you hate, which things you love, and which things you think are insane. After all, as Filipinos, we simply want the Philippines to move in the right direction.

And moving a little faster helps a lot.

Source and Original Article:>>> Franco Mabanta's FB Page


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