Community OS — An Intuitive Economic Development Approach For Data-Driven, Data-Derived Smart Cities In The Philippines
What does LAB.PH do?
Community OS is an intuitive Economic Development Management Framework designed to create an inclusive & participatory economy for all 238 Congressional Districts in the Philippines by utilizing decades of research and development by the Roxas-Kalaw Foundation and its Triple-Bottomline approach that balances the financial, ecological and social impact of various activities within an ecosystem.
LAB.PH is the consulting arm of the foundation, tasked with targeting communities in need of economic, environmental and/or social interventions, which can help bring them out of various forms of poverty. The team is composed of a mix of innovation-driven experts in the fields of economic development, education, entrepreneurship, finance, science, technology and the creative industries.
LAB.PH, along with its consortium partners, comes into various districts, forges partnerships with both the public and private sectors, organizes their communities, collects and analyzes different sets of data, and then identifies supply & demand gaps in each industry across all sectors that are accurately quantified through a social accounting matrix.
We then reveal business opportunities with an open data framework, generate a list of business requirements and then we deploy a portfolio that is a combination of tailor-fit businesses according to its idiosyncratic needs. The model produces information and a lens in which various members of the communities are able to quantify problems in their areas to stimulate entrepreneurship, trade, partnerships and inbound investments(among many other benefits) into their areas, effectively eradicating poverty and promoting sustainable growth.
To achieve the above stated, a combination of supply & demand, technology, connectivity, accessibility, marketplace, infrastructure, and various other forms of companies are assembled and injected during various phases of the installation as derived from its data.
The model is then scaled to other districts which creates an optimized, interlinked supply chain and potentially a nationwide marketplace which highlights or maximizes each of their strengths and simultaneously supplies the deficiencies of its various counterparts.
LAB.PH’s goal is to eradicate poverty and repair the economic structure of the country by reversing its order to be community-centric rather than enterprise reliant. Its business objective is to become the definitive Big Data play with a scalable model across the world, one nation at a time.
The Philippine Economic Structure
In order to understand the philosophical grounding of this methodology, it is imperative for readers to first understand the dynamics of the nation’s current economic structure as this model heavily relies on undoing the knots and creating new threads of business and equal opportunities for the members of each community we work with. The Philippines is a peculiar case of a country stuck in stasis in terms of development— its demographic being aware of various advancements made around the world and yet they find themselves unable to apply these concepts in the local context due to the country’s stature as an emerging market: The technology infrastructure is still being developed, the government is slow to catch on to these new dynamics and various players are only beginning to find their footing. We are moving, but not quite in the right direction. The two biggest problems faced by Filipinos now are Poverty and Unsustainable Growth, with our definition of poverty being individuals who are non-contributing members to their respective local economies and unsustainable growth being defined as a set of developments that are short-sighted in nature. In essence this causes things to feel clogged, rushed and incoherent most of the time. It’s been the story for decades now.
Riddled with tons of problems to solve and with an ever-growing population of about ~110 million, the Philippines has seen a steady increase in startup businesses and ventures aimed at alleviating these issues. On all fronts, there is no shortage of efforts to cultivate this growing ecosystem. As recently as July 2019, the Innovative Startup Act (R.A. 1137) was enacted into law, allowing startups to ‘grow’ through the provision of various resources, programs and initiatives in a joint effort between both the public and private sectors.
To financial institutes and large industry stakeholders from outside the country, this makes the archipelago an especially attractive prospect as they can leverage these companies gain a position in the market and expect good returns within ‘x’ amount of years — except this isn’t quite the case.
“And despite the swaths of fintech innovations in the country, mobile payment adoptions remain low at 21 percent. The country’s only unicorn, Revolution Precrafted, is more of a real estate company than an internet firm.”
Take this into consideration. There are no major industries in the Philippines, no Googles, no Amazons, no Teslas, nothing. We rely on servicing-based industries and that isn’t quite optimal as local talent flocks to other countries instead with better learning environments and much heftier compensation. Though there has undoubtedly been an influx of major partnerships and large sum investments made over the past few years by larger entities, (Go-Jek, Globe to name a few), it hasn’t been enough for the rest of the region to prosper in that regard. According to a report by e27 in 2018, the Philippines’ internet economy ranks last in the region, with high underemployment (18–20% average) and stagnating wages as contributing factors. Furthermore, Filipino companies have cited fundraising as their primary difficulty in getting their products and services off the ground.
As illustrated in the figure above on the left, we can surmise that there is a huge disparity of both local and foreign investments in terms of location-based diversity. Most of the capital flows in to specific regions in the north (where industries are based to cater to Metro Manila mostly) and surprisingly, in this day and age, there are areas where investments can’t be quantified. On the right is a heat map of the country’s poverty incidence rate, which can be directly correlated to the lack of funds injected into these areas.
Despite good initiatives from government agencies such as the Department of Science and Technology (DOST), the Department of Trade and Industry (DTI) and the Department of Information & Communications Technology (DICT), driving actual investments into the region that can be translated to economic growth will inevitably require more than granting our startups exposure and providing resources. Though they’ve done a swell job at this so far, there is an inherent need for other stakeholders in the ecosystem to provide what’s lacking: An educational infrastructure that allows for creativity, an environment enabling entrepreneurs to validate (and potentially fail.. productively) their ideas and most importantly, information/data regarding their markets and respective consumer bases. Without these components, it will be quite a challenge to attract big-ticket institutions or haul in any significant capital.
The OFW Dilemma — The Good, The Bad & The Ugly
Long touted to be one of the biggest contributors to economic growth are the Overseas Filipino Workers, individuals who temporarily relocate to other parts of the world to provide for their families’ needs. Interestingly enough, OFW money also accounts for about 70% of spending in malls and various commercial outlets in the Philippines.
Take these figures into consideration:
- 96% of businesses are MSME’s
- 4% of businesses are enterprise corporations
- 87% of the GDP is accounted for by just (roughly) 19 wealthy families
Thus, relying on the Gross Domestic Product as the primary metric (as we have for a couple of years now) for economic development makes no sense, given its capitalistic nature. If the GDP is attributed to the growth of the mere 4%, it does not mean that there is actual impact trickling down to constituents in areas where they are present. To provide further context, the Philippines has been wrongly labelled to be resilient, especially during times of natural calamities. We are a tropical country, and on average, it means that there are about 25–30 typhoons/hurricanes/cyclones that can come to smite various areas on any given year, and each time, OFW’s would naturally be obligated to contribute capital back into these areas. This by no means shows any significant progress, but rather just represents a temporary bump in the GDP metric that can be used to paint a good picture of the country for the next article you see online.
In the past few years, there have been numerous summits, symposia and conferences urging the government to export more people. In order to maintain our current GDP trajectory, it would have to go up from 6.7% to 8%, and then to 10%, and then 12% and so on and so forth because corporations are only trying to maximize their profit. Since this is the mechanism in place, this is the mechanism that they need to scale, which is completely unsustainable.
As depicted in the image above, the continuous destruction of biocapacity occurring over the last few decades has been dismal. The last time the country had enough resources to sustain its processes was way back in 1961. With no industrial processes, raw material is continuously exported and we’re stuck importing the finished goods.
Enterprise corporations entering undeveloped areas play a huge part in this downtrend as they utilize much of their natural resources and human capital without giving anything in return to the community. Resources are of course still very much finite and when they run out, they just opt to move to the next location leaving individuals in preceding areas with no recourse.
“Therefore, we become a net exporter of human labor and a net importer of food.” — Dr. Sixto K. Roxas
A country that should be agricultural just by looking at its land mass and general topography is exporting primary products and IMPORTING secondary products made from those, including food. Because the supply chain is mostly controlled by large entities, prices hike all the way up and options are quite limited. Essentially this puts a stranglehold on people, especially in the provinces. This is one of the primary reasons for Filipinos in the lower income bracket to opt to find a job abroad for greener pastures, as they believe they can provide a better lifestyle for their children this way.
This is a sad state, and though people claim not to have ample opportunities, it actually isn’t the case. Simply put, the opportunities are present, but they just haven’t been recognized yet. There just isn’t enough accurate data outside of the Metro Manila region circulating around to enable various stakeholders in these ecosystems to mobilize. It’s vital to recognize this as a major problem because then it would be easier to deduce the root cause of this looming crisis.
However integral OFW’s may be to the current dynamic, speaking long term, this is unsustainable. If this keeps up, the amount of talent available locally will take a significant hit as a direct effect of such, leading to even more more knots that will undoubtedly be difficult to untie over the next few years.
To put it bluntly, this short-sighted way of city planning leads to unsustainable development in just about every perceivable aspect.
The main drivers of the Philippine economy are the development corporations. The image above details the planned developments in the country. In Metro Manila alone, there about 63 of those. The harbinger for these developments is the establishment of a shopping mall. Once they’re placed there, the land prices automatically increase and everyone starts going in and land banking. The Philippines has no centralized database for this, so in essence no one knows exactly how much land these corporations own. On average, idle properties are held for as long as 12–15 years before they are fully urbanized, and this is why the country imports its food. All of the arable that could be made productive before it’s urbanized cannot be utilized because they hold these areas — a familiar case for thousands and thousands of hectares in the country.
Perhaps the most glaring issue of all is the pipe dream of turning all the rural areas into fully urbanized cities. Nearly everyone who isn’t deep into studying the landscape of the local economy would agree that seeing various infrastructures and business centers being put up would equate to good progress, because why not? Jobs are created, tourism increases, local citizens get to experience the Manila dream without having to leave their homes, and so on. Research indicates that a different story is being told, though. This couldn’t be further from the truth as Metropolitanization is actually detrimental to the development of these areas because as stated above, natural capital is severely depleted. To top that, we’ve become so overly dependent on enterprise corporations to provide for our needs that communities are tailored and trained to be the future workforce for these companies and when it’s all said and done, it does more harm than good to them overall. These entities simply move on to the next area to develop and drain of their resources while areas where they are already present in suffer because the older members of the community’s children are no longer able to find suitable occupations nor can they utilize natural resources because they’ve either been used up or there are powers that be that are putting a stranglehold on them.
This all circles back to the focal point of this section. Because this is unsustainable, individuals sooner or later will have to leave for greener pastures. What is happening right now is no different from what the Philippines was during the Spanish colonial period, when civilians were kept in the dark about new knowledge and new information during the time so that they could be kept in check and pluck all their resources. Once they figured that out, they went on to oppose their oppressors. Today, we see remnants of this pattern seeping through the Filipino society’s culture, albeit in a less violent manner in the form of — you guessed it right, Overseas Filipino Workers. The unsustainable development of various areas simply forces their hand because they have families to feed and as human beings, they naturally crave for a higher purpose to fulfill. Both of which are, unfortunately, the realities of the cause of the country’s perils today.
An overly capitalist dependent market functions like a machine with unlimited cogs to replace the worn out or the dysfunctional ones. Don’t like your pay? We can replace you easily. Don’t like how you’re being treated? We’ll open the door for you, and good riddance. Bring in the next applicant!
Of course, this is not to discredit the positives borne out of their work, as corporations undoubtedly still play a big part in shaping the economy of any country. This is not hate speech, but more of an objective observation backed with research. The fact of the matter is, we’re just too dependent on them right now as it stands and as a profit-driven organization they have their own KPI’s to fulfill — one of which isn’t to prioritize ensuring the personal development of each member of its ecosystem.
Metro Manila Is A Densely Populated Capital
Metropolitan Manila (often shortened to as Metro Manila; Filipino: Kalakhang Maynila), officially the National Capital Region (NCR), is the seat of government and one of the three defined metropolitan areas of the Philippines. It is composed of 16 cities namely: the City of Manila, Quezon City, Caloocan, Las Piñas, Makati, Malabon, Mandaluyong, Marikina, Muntinlupa, Navotas, Parañaque, Pasay, Pasig, San Juan, Taguig, and Valenzuela, as well as the municipality of Pateros. The region encompasses an area of 619.57-square-kilometer (239.22 sq mi) and has a population of 12,877,253 as of 2015. It is the second most populous and the most densely populated region of the Philippines. It is also the 9th most populous metropolitan area in Asia and the 5th most populous urban area in the world. -Wikipedia
To drive home the point of the lack of foresight in addressing some of the biggest problems the country faces today— we can look no further than Metro Manila, the capital of the Philippines. This is where business districts, manufacturing plants, processing facilities and multiple high net worth firms are located and is considered the place to be for anyone wanting to do large scale transactions. Yes, we have seen growth, and yes there are good initiatives out there to ensure that we continue that trend, but again, at the end of the day, poor planning and empty vision statements can only do so much when it comes down to the wire. In this day and age, we need data. The internet speeds from service providers in the Philippines are at the very least decent enough to access content that helps us learn the significance of many different things, none more important than something considered to be more valuable than oil.
Now, understandably, Metro Manila is the perfect test bed for both local and foreign entities for their products and services. Without connectivity and accurate data going around, it’s difficult to envision any company taking the risk, and sadly, this is mostly only available in our capital. In terms of entering the market, some have succeeded, many others have failed. In cases where they’ve managed to penetrate the mass market though, things can go wrong, as people have indirectly suffered as a consequence.
Ah, yes. The proverbial Manila traffic. Anyone who’s been to this part of the country knows that it can literally take hours to travel as little as 3 kilometers and as a result — businesses slow down significantly. Individuals situated here will have to wrestle with this problem on top of having to worry about their day-to-day tasks, easily consuming up to 3–4 hours of their time daily when it could have been allocated to more productive activities. In hindsight, people are forced to wake up very early to get to their destination and some leave very late at night because of the difficulty of finding decent transportation during peak hours.
Thus, services that offered the prospect of convenience became very prominent in the country when competitors like Uber and Grab first came into the scene. With issues like trust and safety to consider, these software-based, crowd-enabled applications thrived as they were able to address them swiftly. With these platforms, you could easily hail a ride in a comfortable private vehicle with an agreed upon fare amount and the driver’s details provided on the app beforehand, and on top of this, it was much cheaper and more accessible, catered for the demands of the typical Filipino. Innovative incentive models and on-demand bookings provided a win-win situation for both drivers and consumers, but with it came unforeseen problems.
Ride-sharing services were meant to reduce traffic, but instead became a large contributing factor to the increase in volume of vehicles over the years. When Uber was acquired by Grab, that spelled disaster for everyone involved. Fares hiked up to double the price of Taxis, the incentive model was removed altogether so drivers had to work double time just to earn money and this caused a divide in the market. All of a sudden, it was no longer a viable nor an affordable option for some and so they opted to utilize their own private vehicles once more. The effect? More cars, and more problems.
At this stage, any solution being offered is considered band-aid. No policy change, infrastructure upgrade nor traffic law enforcement initiative is going to solve this mess completely. The area has become so clogged to the point wherein it’s beginning to affect the moods of individuals in their work environments and their homes and unless something is done soon, things will most certainly implode. The only way to fix this right now is to diffuse industries outwards from the metro, and finally, this leads us to our next point..
Community OS — Connectivity, Data, Opportunities, & Sustainability
Community OS is an Economic Development Management Platform devised by Dr. Sixto K. Roxas, with an in-depth, step-by-step answer to solving today’s most wicked issues which was carefully formulated over the course of 50+ years. However big of a challenge it may be to execute, this, in our eyes, is an inclusive framework-based solution that can help address many of the root causes of complications in this problem-laden nation as a fusion of a macro and meso-level management consulting play.
The Roxas-Kalaw Foundation was established with the goal of eradicating poverty in mind, and by extension, LAB.ph is its consulting arm, specializing in services to promote ideas, people and businesses into projects, resources and networks for the development of sustainable ecosystems in the Philippines. LAB.ph targets communities in need of economic, environmental and/or social interventions which can help bring them out of various forms of poverty.
Before we drill down on the specifics of our vision, here is a quick recap of what has been discussed so far:
- Initiatives for economic improvement are lacking and scattered, rendering us being unable to solve our two biggest problems: Poverty and Unsustainable Development.
- Capital is hard to come by and is almost exclusive to the Metro Manila area and its surrounding regions, leaving other parts of the country in stasis
- There are no major industries in the Philippines, the last one was Steel in the 90’s. Thus, we have no unicorns either.
- Opportunities are present, but they just haven’t been recognized yet.
- Metropolitanization is actually detrimental for rural areas.
- OFW’s, however helpful they are to increase the GDP, are not supposed to be in their current situations in the first place (unless it was their choice)
- GDP in the Philippines is merely a vanity metric where majority of its increase/decrease is only accounted for by the activities of some of the wealthiest families in the country.
- Conglomerates are given too much control over communities and their supply chains.
- Innovation is good, but must be regulated and accounted for when planning ahead, before it causes more problems.
The first step of our approach is to enable communities and local governments to capture data which will be completely open source. The framework serves as an ‘Operating System’ that we can install into communities which we define as a population of about 500,000 people in what we refer to collectively as a Congressional District (The equivalent of Counties in the US). These are areas large enough to have a diverse local economy , to share business opportunities with fund managers/entrepreneurs, and at the same time build wealth because we track the impact of various aspects on the household income statements and the overall balance sheet of a community by consolidating them. The idea is to collect vital information through various means, including but not limited to:
- Community Management Centers
- Crowdsourced Databases
- Real-Time Geographical Information System Mapping
- Land-use and Resource Accounting Profiles
- Community Accounting Systems
- Apps/Data Exchange for Enterprises
- Electronic and Mobile Government
- Internet-of-Things Technology
This is all quantified and sorted into what we call a Social Accounting Matrix that covers all sectors of a particular congressional district, a ‘crystal ball’ of sorts that gives insights into available resources and correlated to that is identifying gaps in various industries across all sectors in these communities in order to fulfill their needs. Based on this, we analyze the lacking and required infrastructures in order to generate a list of requirements that then becomes a portfolio that is tailor-fit for the community, then packaged and encapsulated with various financial instruments. On the enterprise side we partner with organizations like the Philippine Chamber of Commerce and Industry (PCCI), the Chamber of Agriculture, Incubators, Accelerators and so on in order to boost and enable the existing ecosystem.
With data on hand, we can easily shift the economic activity in our pilot areas to increase investments, increase business presence, and essentially increase household wealth so that they can gain purchasing power for goods and businesses that will be launched/deployed in the area as revealed by the data. The portfolio will include a list comprised of both new and existing ventures that will be supported by both our private incubation/acceleration partners and our financing arm, one of which is a joint venture investment bank called CIMB-Bancom II. The general rule of thumb for the Lab is to be as inclusive as possible, meaning we generally have no bias towards certain projects/individuals and we don’t allow exclusivity for service providers to enter specific areas. Neutrality will allow for the best possible product/service to be deployed within a community based on need from derived information and stimulates healthy competition to make way for various business, social, scientific and technological innovations.
The image above is an example of a list of initial investments (although not an exhaustive one) that can be made in areas where Community OS is installed based on their quantifiable needs, which again, can easily be modified or tailored from community to community.
In short, we’re supplying accurate market data, feasibility studies and due diligence information for external parties such as funds to come in and make investments, where the above mentioned resources were previously not available or sufficient enough to cater to any sort of financial instrument.
The catch? There’s no catch. All this data is open source. Our model does not seek to monetize this aspect (directly) as we believe in giving equal opportunities for everyone as the Filipino people in the middle and lower class particularly have always been confused or clueless in terms of what they wanted to do. Typically, lower income families would tend to put up obscure businesses like Sari-Sari stores or purchase Tricycle vehicles— and our role is to come in and say, “Based on the community data, the industry you want to enter is saturated (in this case, “There are too many tricycles in your area already), how about you try ____ instead, complete with research, training, financial backing and a clear path to implement a go-to market strategy?”
One concrete example of such is in San Jose Del Monte, Bulacan. In a span of 5 months, we were able to map out a total population of 600,000 individuals, 59 baranggays (villages) and 69 different industries. Their total asset size is about Php 30 Billion. The data reveals that their community exports an average of Php 20,000,000 (USD $400k) a month worth of pork, and yet they import almost Php 800,000,000 (USD $16M) worth of processed pork products. The disparity is just too huge to ignore and therein lies the opportunity to create facilities to enable that supply chain to capitalize. Slaughterhouses, Processing Centers, Micro Piggeries, Backyard Hog Raising, etc. Just think, even if you put up hundreds of each of these, it would still not be enough to satisfy the Php 780M deficit in the supply chain. The end goal is to be able to identify gaps like these across every sector in order to repair their supply chains.
Similarly, for Local Government Units (LGUs), they have certain annual budgets that must be expended. While most of it is spent well and with good intentions in mind, there are random projects that pop up every now and then that aren’t beneficial to their constituents at all. Basketball courts, unwarranted medical missions and feeding programs are some primary examples. With DATA, it’s much more easier for them to assess the needs of the people and craft relevant projects, policies and initiatives. When gaps across various sectors in a community are recognized, it opens up a floodgate of opportunities for their constituents. We are sharing these insights with the ecosystem in order encourage more participants to enter.
LAB.ph’s goal is to build a portfolio of projects through the cluster management system. Via Community OS, the goal of the Community Management Center is to provide the best services to the community and the various sectors and industries within it so that before the installation period ends there are already enough sector-specific projects and management centers for households to improve their family income and net worth. The main economic bottom-line of the Management System (Not just during the installation period) is the optimization of households’ income and net worth, in conjunction with increasing corporate bottom-lines.
Equipped with varying and complementary skill sets, LAB.ph also provides the following programs:
- Research and Development (R&D) for advancing the overall knowledge and/or capabilities of a particular field
- Incubation for nurturing new/existing micro, small and medium enterprises (MSMEs)
- Acceleration for enabling/sustaining growth, scale, reach and/or impact for those ready to move to the next level
The ECSOM Framework — Quantifiable Metrics For Economic Development
Behind the implementation of this model is our community framework and our technological framework (which we’ll dive into a little later). The ECSOM framework has three interlinked networks as shown above: Organization & Management; Planning Monitoring & Information Network; Production and Distribution Network.
This framework, unlike others, has been proven to work going back as far as the 1980’s where Dr. Roxas utilized Apple II computers to collect data from 100,000 households with turnover occurring every two weeks. Today, we’ve updated this model with all of the new technologies made available to us to streamline the installation of Community OS — what once took 18 months now takes just 5 months, what was 100% primary data gathering is now 15% primary data and 85% IoT based with the goal of making the information as near to real-time as possible.
The ECSOM Engine is a triple bottomline approach that evaluates performance and balances the financial, ecological and social impact of various activities within an ecosystem. In this case, we can frame our view of a community as that of one big corporation with needs to fulfill, objectives to meet, stakeholders to satisfy and external parties to collaborate with.
NOTE: For this one, you’re going to want to print out the image above or keep it on a separate screen while reading the content below to make sense of it.
Three primary metrics are utilized: Social Equity/Household Net Worth which is the consolidated income statements and balance sheets of a community, Biocapacity, an input/output ecosystem of biological materials to sustain the economic and industrial processes and the Ecological Footprint which represents the quantity of natural resources needed to support an economy.
A common driver pattern used by 95% of the Philippines or any emerging economy, no matter if it’s a corporate activity, a CSR, a government agency, NGO, or a non-profit is as follows:
- An external owner comes into an area to build (and own) the artifact capital, utilize the natural capital and exploit the human capital in order to..
- Convert raw materials into products and services in the form of industries that are externally owned
- All of the products are exported, and all of the profits go exclusively to them.
- Nothing flows back into the community.
We call this cancer growth as once they go into these areas and extract the resources, they simply move to the next area. What is their end-goal, you ask? It almost seems as if they want to turn the Philippines into Singapore with no agriculture, just pure urbanization. That’s just not supposed to happen given our set of resources. The products and services created in these areas are almost NEVER consumed locally. They’re always exported to an outside country or an outside urban area, which also explains why they have large, fat margins.
As mentioned a while back, the OFW phenomenon is caused by draining human capital from an area and sending them abroad. The money they earn is sent back to their families and is used as consumption funds for various establishments, businesses, residential areas, etc. — directly benefiting only the external owners. In about 10–15 years, when an OFW retires, they come back home with no savings and no investments because they were purely utilized for consumption, and a younger family member would then have to take over. It’s a vicious cycle that will never end until we do something about it. Once again, 87% of the GDP of the Philippines belongs to just 19 families that effectively implemented that specific driver pattern for their benefit.
The Community OS framework seeks to create an economy driven by human capital instead of external owners. They should serve as the life blood of an area. Why train them to leave when we can train them to stay?
Training them to stay means that human capital must be cultivated in order to form the basis for Prosumer households — both ‘producers’ and ‘consumers’. Right now, they’re mostly only consumers. Case in point, what’s worse is that by design, remittance centers are conveniently situated in malls so that they could spend their cash right away. Our framework seeks to develop a more sustainable driver pattern as detailed below:
- These prosumer households form the basis for public and private groups within a certain area where they go into joint ventures with external owners (where they can still provide value through their expertise, technology, networks, etc.)
- These JV’s allow them to build and co-own the artifact capital, cultivate and utilize the natural capital, cultivate and utilize human capital to convert the raw materials into products and services in the form of industries that are jointly owned in order to satisfy both household and public consumption which in essence is the opposite of the current export-first mentality.
- The profits then form the basis for inventory formation & fixed capital formation.
- How they interact with other communities then comes into play — they can import their needs from communities or export to them which basically balances out the surplus.
- The surplus profit then serves as a form of investment because one community can enter into another as an external owner, and the process can be repeated for all 238 congressional districts in the country.
- We then analyze and optimize the waste to see how they can be used as inputs for other industries. For example: Coconut. Theoretically there are about 17 different products that can be made out of this resource, but in reality most areas only have about 3–4 and the rest of the material becomes waste.
- Entrepreneurs can then come in and utilize the waste as raw material to create products that can fill the need of other industries in the supply chain.
- At the same time, these industries are serving to drive income as we utilize the community members as employees and owners, thus ensuring that all the industrial activity serves to increase their overall net worth, opposite of corporate accounts that view these human resources as cheap labor.
In the ECSOM canvas, we switch things up, putting community accounts on top of the corporate accounts as a subsidiary of the former, then we produce a win-win-win across the board and across all three metrics. If the community accounts perform well, then so do the corporate accounts by way of having joint ventures. As iterated previously, higher community net worth means higher purchasing power for goods and services which would mean that more businesses could be launched in these areas. Over time, various factors in the three columns all increase over time and thus it becomes sustainable.
An example of a supply chain integration done was in the town of Talavera, Nueva Ecija (Population: ~125,000) using one supply chain: Milk. Two milking carabaos were given to each household in this area essentially turning them into contract farmer households. The anchor farm and collection center were installed within each poblacion, the processing facility and packaging plant within each municipality, and the marketing & distribution within the urban centers. This activity managed to completely eradicate poverty in that area.
The Dichotomy of Rural and Urban Areas
As it stands, we can make a definite claim that Filipinos in general are obsessed with urbanization. About 95% of OFW’s come from areas receiving the most investment. This is where the problem is rooted in. Poverty is not alleviated in these areas just because investments were made, there is no poverty problem to solve in the first place because they’ve kicked all the people out. As mentioned before, on average, land bankers would purchase land in rural areas and hold them for about 12–15 years until they’re fully urbanized. With the all the urbanization occurring in various areas, we’re forced to import food because these lands are idle. There are times when even the irrigation is cut off so that their land could be considered idle and they could speed up this holding process, thus rendering it unusable for any other purpose and forcing us to import food while we export all the raw material through corporate channels.
Instead, what should be happening is that urban areas should be investing various elements, including capital, technology, human resources and energy into rural areas, not to urbanize them, but to increase the productivity of the rural elements shown above, because right now, the Philippines is importing all of them from other countries when we should just be importing them from other areas within the country. Once again, we still need to make a distinction on what the outputs are in each area through big data collection.
Rural areas must take the natural capital to increase the yield factor and the equivalence factor in order to increase the output of primary products. Urban service centers theoretically should apply the above elements (capital, tech, energy, HR) to increase the conversion efficiency from the primary products to the secondary products (From palay to rice, from sugarcane to rum, from coconut to coconut oil, etc.). This entire value chain then provides the basis for consumption, imports and exports, often referred to as the local economy.
The end result after each installation basically has ecosystem participants in each link that then generates an effective input-output model across all sectors using ICT in order to collect, aggregate and analyze the data. Now imagine this same system being installed and implemented in multiple congressional districts — we can create an efficient, data-driven network that could potentially serve as a nationwide supply chain that could open up a number of opportunities for the Filipino people, something the country desperately needs in its currently deplorable state.
Big Data, Monitoring & Evaluation
As seen above, there are various data sets that we use and various stakeholders that can gain access to certain sets which they deem valuable or vital to their planning. Through our direct partnership with Unity , we are currently developing a Simulator Platform that enables us to place all of this information into a gamified piece of software that can take chunks of data and visualizes/communicates these opportunities for community members, local government units, logistics, marketplaces, rural banks, national banks, NGOs, Financial Institutions, Fund Managers etc. in the form of portfolios, investments, entrepreneurship/enterprise development and scaling up, and other activities across the different sectors. The goal of the simulator is to aid various stakeholders in their decision making process and for them to have a cleaner, easier to understand overview of the social accounting matrix.
Community OS has four categories of Data:
Stock Information on Resources
- Land — based on physiography, slope, rainfall, physical and chemical characteristics of soil
- The soil types (Soil Management Units)
- Water ground, surface, foreshore brackish and salt water, with stock and flow characteristics.
- Forested areas and grasslands with technical characteristics
- Mineral Resources: areas with known reserves and under commercial exploitation, areas under exploration, reserve areas.
- Household population and demographic data, sex and age composition, education and skills, labor force characteristics, social and occupational differentiation.
- Capital stock, private and public: land improvements, buildings and houses, plant and equipment, rolling stock, inventory, public infrastructure.
- Financial stocks: financial assets, liabilities and networth of system, private corporations and institutions, government and private households.
Flow Information showing Income Streams accruing to:
- Households, Corporations, and Government
- The Rest of the World from Economic Transactions during the current accounting period and savings generated from these streams.
Data Block showing Intermediate Transactions between Economic Sectors during the accounting period.
- Social Accounting Matrix
Data Block giving the “Final Demand” Purchases of the Sectors in:
- Flow information showing income stream from themselves and
- From the producing sectors in intermediate transactions between economic sectors.
- These are classified into:
— Consumption goods purchased by households,
— Products purchased by Government for current operations,
— Products purchased by private and govt sectors for capital formation and inventory
— Exports purchased by the rest of the world sector.
The Column of Totals:
- Production by sector
- Services sold by the primary factors during the accounting period
- Total capacity of the community’s stock of natural, human and capital resources
Units of Measurement
- Physical Units correspond to the product or resource e.g. cavans of palay or corn, kgs. of meat liveweight and dressed weight), adult mandays of labor, hectare-months of land, square-meter-months of building, etc.
- Value Units are expressed as price times the physical units. But different price concepts must be specified: purchasers’ prices, producers’ prices, shadow or accounting prices per unit, pesos of what year’s purchasing power, etc.
Portfolios are assembled per Community and managed through the platform, using insights from the ECSOM Algorithms used to power the Social Accounting Matrix at the heart of Community OS. This allows Community Managers to implement from a sector perspective the investments and scaling up of the mapped industries and work on connecting each link in the supply-chains to the overall picture of the integrated local economy.
Community OS therefore allows for a healthy interchange of decision-making between the people and sector institutions, and encompassing all types of projects whether it be a business project like a processing plant or a government road, they will all begin to produce results in business scaling and increasing household income and corporate bottom-lines.
In conclusion, and to summarize, this is what we do:
- Lab.PH assembles and deploys solutions for the unconnected and underserved in the Philippines through its managed portfolio of business, social, scientific and technological innovations
- Lab.PH works with local communities, government agencies, NGOs and other stakeholders to collect and analyze economic, environmental and household data per Congressional District (238); portfolios are customized to address each district’s idiosyncratic needs and subsequent
stages of growth.
- A Triple Bottom Line framework (ECSOM) is used to evaluate performance and balance the financial, ecological and social impacts of a community’s actions; key metrics are bio capacity, household net worth and ecological footprint.
- Lab.PH promotes transparency and competition through the sharing of data and adoption through relevant platforms, affordable devices, reliable connectivity and intelligent apps.
To learn more about the Roxas-Kalaw Foundation, LAB.ph, the Community OS Initiative and the installation process in various congressional districts, you may reach out to me via email at firstname.lastname@example.org for partnerships. We are continuously seeking to grow our network of collaborators, consortium partners, local government units/government officials, infrastructure providers, suppliers, technology-based portfolio companies and are in the process of developing a fund structure for various channels.