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RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE

UNCLAS SECTION 01 OF 03 MANILA 003160 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL CASC BTIO BEXP EAIR ECON RP
SUBJECT:  U.S. BUSINESS PLAYING MAJOR ROLE IN DYNAMIC CLARK REGION 
 
REFS:  (A) Manila 06 2637  (B) Manila 06 3414 
 
¶1.  (U) Summary.  During an August 16 visit to Clark Freeport Zone, 
the Charge d'Affaires focused public and corporate attention on the 
positive role of U.S. business in the Philippines.  Joining 
Philippine President Arroyo, the Charge attended the groundbreaking 
ceremony for Texas Instruments new billion dollar semiconductor 
manufacturing plant which will eventually provide over 3000 new 
jobs.  Clark is a rapidly developing region with potential for much 
greater growth as highways linking Manila and Subic port are 
completed in 2008 and plans for airport expansion are realized; the 
Ambassador and DCM visit regularly (reftels).  Highlights of the 
visit to Clark included briefings by executives of the Clark 
Development Corporation and the Clark International Airport 
Corporation, as well as tours at America Online's support center and 
the Clark Museum on the former site of Clark Air Force Base.  A 
radio and television simulcast plus a local media roundtable 
produced widespread media coverage of the Texas Instruments 
investment and the additional opportunities U.S. business is 
bringing to the historic Clark-Subic regions, and throughout the 
Philippines. 
 
CLARK 
----- 
 
¶2.  (U) The Clark Freeport Zone sits on the site of former Clark Air 
Force Base near Angeles City just north of Manila on the island of 
Luzon, the largest island in the Philippines.  The U.S. Air Force 
turned over control of the facility and land to the Philippines 
following the eruption of Mt. Pinatubo in 1991.  Several U.S. and 
other foreign businesses have located facilities in the area which 
is served by the Diosdado Macapagal International Airport.  Nearly 
500,000 passengers transited the fast-growing airport in 2006.  A 
new express highway connects Clark to Manila and additional 
extensions are planned which will make Clark the center of a "high 
tech" corridor between Subic Bay port facilities in the west, Manila 
to the south, and the city of Tarlac to the north. 
 
2ND TEXAS INSTRUMENTS FACILITY PROVIDES HIGH TECH JOBS 
--------------------------------------------- ---------- 
 
¶3.  (U) Texas Instruments constructed in 1978 its first Philippines 
production facility in Baguio, several hours north of Manila, due to 
its favorable climate for electronics manufacturing and supply of 
high skilled labor.  It employs over 2200 people.  In April 2007, 
Texas Instruments announced a $1 billion dollar expansion project at 
the Clark Freeport Zone.  The 8-hectare facility will assemble and 
test semiconductors and produce more sophisticated products, 
ultimately employing around 3000 Filipinos.  Texas Instruments says 
its Clark operations will be its most environmentally efficient 
investment site in the world.  A major source of pride for the 
Arroyo administration is that the Philippines won the project over 
neighboring countries including China, Thailand, and Vietnam. 
 
¶4.  (U) The Charge participated in a groundbreaking ceremony 
alongside President Arroyo and other local and regional officials. 
During her remarks, President Arroyo said she supports the continued 
creation of a "high tech" corridor.  She referred to the selection 
process as a "courtship" and members of her government as part of 
the courtship team.  She indicated that the national government 
would continue to play a major role in promoting foreign 
investment. 
 
CLARK DEVELOPMENT CORPORATION PLANNING EXPANSION 
--------------------------------------------- --- 
 
¶5.  (U) Established in 1993, the Clark Development Corporation (CDC) 
manages the daily operations of the Clark Freeport Zone.  By 2007, 
Clark had 401 registered business enterprises with over 50,000 
employees.  The majority of businesses are service providers or 
manufacturers.  President Arroyo placed the Clark Freeport Zone 
under the jurisdiction of the Philippine Economic Zone Authority in 
2005 to prevent business pullout after the Supreme Court nullified 
tax incentives due to an anomaly in the law covering Clark Freeport. 
 In April 2007, President Arroyo signed orders correcting the 
anomaly, and guaranteeing the tax incentives under the 
administration of the CDC. 
 
¶6.  (SBU) During informal briefings, CDC Chairman Rizalino Navarro 
described plans to finish connecting the Subic Bay Freeport Zone (on 
the site of the former U.S. naval facility), Manila and the city of 
Tarlac via superhighways, with Clark at the center.  The CDC also 
favors the signing of Executive Order 500B that would liberalize the 
airline industry allowing more carriers to operate out of Clark's 
rapidly growing airport.  CDC officials said they would like Clark's 
airport to become the premier international airport serving the 
Philippines and a major Southeast Asian hub, eventually to include 
direct routes for U.S. airlines.  A Chinese consortium is conducting 
a pro bono feasibility study for airport expansion.  CDC officials 
pointedly asked the Charge what the U.S. reaction would be if 
 
MANILA 00003160  002 OF 003 
 
 
Chinese investment developed a former U.S. Air Force base.  Charge 
said that U.S. companies must be offered fair and transparent 
opportunities in all airport expansion projects; CDC officials 
readily agreed. 
 
CLARK INTERNATIONAL AIPORT CORPORATION (CIAC) SEEKS TO UNSEAT NAIA 
AS PHILIPPINES' MAIN INTERNATIONAL AIRPORT 
--------------------------------------------- --------- 
 
¶7.  (U) Beginning in 2002, Clark's airport has steadily expanded its 
passenger capacity, handling almost 500,000 in 2006 due in large 
part to low cost carriers.  Recently, both Cebu Pacific and 
Philippine Airlines announced plans to establish a hub at Clark.  To 
handle expansion, Clark Airport Corporation has developed a master 
plan including the creation of a second runway to increase aircraft 
capacity, a new terminal to accommodate 12 million passengers per 
year, and a maintenance facility.  Projected costs are over a 
billion dollars.  The Chinese consortium conducting the feasibility 
study expects in finish by September 2007. 
 
¶8.  (SBU) Clark Airport President Victor Luciano stated that he 
expected the bidding process for expansion contracts to be fair and 
open and that U.S. firms would have an equal opportunity to win 
contracts.  He said that he expects Clark's airport to supplant 
Manila's as the international airport of choice in the Philippines 
due to its location at the center of a high tech corridor and the 
inability of Manila's airport to expand to meet expected demand. 
Clark Airport officials are also in favor of President Arroyo's 
signing of Executive Order 500B, liberalizing the air industry. 
 
AOL, A MODEL U.S. EMPLOYER 
-------------------------- 
 
¶9.  (SBU) The Charge met with AOL's Director of Call Center 
Operations, Doreen Thibodeaux at AOL's Clark site located in the 
former communications bunker of Clark Airbase.  AOL is a global web 
services company and advertising network in the United States. 
Clark-based AOL Member Services, established in 1998, has 1000 
employees and provides live chat and email support to 23.5 million 
AOL members.  Under the direction of Ms. Thibodeaux, AOL has become 
a model employer.  Already known for its excellent employee training 
programs, AOL also provides on site gym facilities and medical staff 
initiating programs to improve overall employee health and 24 hour 
meal service.  AOL employees conduct community outreach programs, in 
one case, eliminating a scabies outbreak at a local orphanage.  As a 
result of building a corporate community, AOL has a high retention 
rate, high employee satisfaction, and high customer service 
satisfaction ratings.  Although the decision has not been formally 
announced, Director Thibodeaux confided that AOL will outsource its 
Philippine operations to E-Telecare, but that it expects its 
existing workforce to remain intact. 
 
THE KEEPER OF THE FLAME 
----------------------- 
 
¶10.  (U) Honoring shared U.S.-Philippine history, Clark Development 
Corporation established the superb Clark Museum in the former base's 
finance building in 1997. Clearly a point of pride to the local 
community, the museum houses historical photographs and memorabilia 
from the air base as well as local historical material.  Its 
engaging curator -- well-known in Clark as the "Keeper of the Flame" 
-- served as community relations advisor to every U.S. commander at 
Clark since 1949. 
 
LOCAL MEDIA FRIENDLY AND SUPPORTIVE 
----------------------------------- 
 
¶11.  (U) The Charge used a live radio interview on a popular show to 
convey the positive role of U.S. business in the Clark region, 
through companies like Texas Instruments, AOL, UPS, and Sutherland. 
The Charge also highlighted U.S. government programs, such as the 
USAID funded family health clinic in Angeles and the numerous Peace 
Corps workers in the area. 
 
¶12.  (U) A local media organization also hosted a roundtable 
question and answer session with the Charge.  Members included 
representatives from print, radio, and television.  Questions 
focused on three areas.  Will more U.S. businesses invest in the 
area?  Will the U.S. remain the Philippines' number one trading 
partner?  What will U.S. government do for Amerasians (referring to 
mixed race children of American service members and local Filipinos 
living in the area)?  The Charge reaffirmed American-Filipino trade 
links and said that he expected U.S. firms to be interested and 
competitive in bidding on investment opportunities in the region and 
country in general.  He again cited various U.S. government and 
non-governmental projects in the country as well as citing AOL and 
Texas Instruments as examples of American business involvement. 
 
¶13.  (U) Texas Instruments groundbreaking and the Charge's 
appearances were widely covered in local and national media.  We 
 
MANILA 00003160  003 OF 003 
 
 
successfully conveyed continuing U.S. interest in the Clark and 
Subic region, which reassures very pro-U.S. communities.  We also 
conveyed the positive role U.S. business plays in providing economic 
opportunities and social responsibility projects throughout the 
Philippines. 
 
KENNEY