Dataline 02 (2014) by Department of Trade and Industry

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January 27, 2014 1

January 27, 2014 Vol. 19, No. 02

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A bi-monthly digest of global and domestic industry trends and developments. Published by the Trade and Industry Information Center, Department of Trade and Industry  Manila, Philippines Tel. (632) 895.3611  Fax (632) 895.6487  To subscribe, email: publications@dti.gov.ph Online: http://www.dti.gov.ph

In this issue Focus PHL among world’s fastest growing economies Inside DTI 1. DTI eyes 20-% growth in FDIs in 2014 2. DTI beefs up industry policy team 3. DTI submits EU GSP+ application 4. DTI seeks US duty-free status for goods made in Visayas Good News, Philippines! 1. BOI-approved investments up 12% 2. FDIs up 33% in September 3. PHL seen to become major car exporter in 10 years

Business Update Gov’t eases foreign investments’ restrictions Consumer News 1. DTI calls for competition policy review 2. JAO outlines amendments to Price Act 3. DTI: Pinoy consumer awareness improving 4. More Pinoys see better life in 2014 Features Franchisees in the making Asia Watch ASEAN told to adopt PHL tack for hiking FTA usage Statwatch

What’s New? MSME News 1. DTI-Caraga allocates P87.9-M grassroots projects 2. DTI holds business continuity planning seminar in Negros Oriental

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Focus PHL among world’s fastest growing economies

Vol. 19, No. 02 2

he Philippine economy is seen to continue its strong growth this year and remain as one of the world’s fastest growing economies, Moody’s Analytics announced. “The Philippines continues to outperform and will remain one of the world’s fastest growing economies in 2014,” Moody’s Analytics Senior Economist Glenn Levine said in a report titled Asia Pacific Outlook 2014: Realizing Potential. “Confidence is high, and investment, both public and private, is driving the economy forward. Demand should rebound quickly after Typhoon Haiyan,” Levine said. The country’s gross domestic product (GDP) grew by 7.4% in the first nine months of 2013, faster than the government’s 6%-7% target for the year. The growth was attributed to strong consumer demand that continues to make up the bulk of the country’s

Inside DTI 1. DTI eyes 20-% growth in FDIs in 2014

he Department of Trade and Industry (DTI) is eyeing a 20-% increase in foreign direct investments (FDIs) to the country this year amid increasing interest from foreign firms. DTI Secretary Gregory L. Domingo said the DTI is aiming to hit USD 4B in FDIs this year.

GDP, government spending, and rising investments. Although the government and economists forecast a dip in economic output in the fourth quarter following the devastation caused by Super Typhoon Yolanda and other recent calamities, rebuilding efforts in early 2014 are expected to prop up the economy. Thus, growth is expected to remain within the government’s target of 6.5%-7.5% this year. Levine said the Philippine economy’s performance will be in line with the region’s performance as global demand picks up. “There are reasons to believe 2014 will be better. The Organization for Economic Cooperation and Development’s (OECD) leading indicator of economic activity is accelerating, suggesting that developed world GDP will improve in the coming quarters,” he said. (TPS 12/18/13)

visited the country to explore investment opportunities here. The government conducted a roadshow in Europe as part of efforts to promote the country as an investment destination and create more jobs to support economic growth.

FDIs have been on the rise, with investments reaching USD 2.8B in 2012 from USD 1.8B in 2011 and USD 1.2B a year earlier.

During the recent Association of Southeast Asian Nations (ASEAN)-Japan Summit, Domingo said at least eight Japanese firms expressed interest to invest in the country.

Domingo said as a result of the government’s roadshow in Europe in October last year, two business missions composed of British companies had already

As of September last year, FDIs to the country already amounted to USD 3.1B. (TPS 12/20/13)

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2. DTI beefs up industry policy team

January 27, 2014 3

he Department of Trade and Industry (DTI) continues to strengthen its industry development and policy arm with the recent appointments of two experts on economics and trade policies to join the ranks of trade officials under the Industry Development and Trade Policy Group (IDTPG). Ceferino S. Rodolfo was appointed Assistant Secretary for Industry Development and Trade Policy. Prior to his appointment, Rodolfo served as Vice Dean and Acting Dean of School of Management at University of Asia and the Pacific (UA&P) from 2009 to 2013 and was part of its core faculty for Competitive Strategy and Business Economics. Rodolfo’s expertise includes trade policy, industrial policy, and international trade and negotiations. He earned his degree in Economics from the University of the Philippines (UP). He completed his PhD in Public Administration at the UP National College of Public Administration and Governance (NCPAG) and earned his Masters of Science Degree in Industrial Economics at the Center for Research and Communication (now UA&P). He has over 15 years of experience in the areas of trade and industry policy (research, teaching, policy advocacy), and industry and sector competitiveness for various organizations including academic research networks, government agencies, and development partners. Rafaelita Aldaba, on the other hand, was recently appointed as Assistant Secretary. Prior to her appointment,

Aldaba served as Acting Vice President of the state think-tank Philippine Institute for Development Studies (PIDS) from 2012 to 2013. From her stint at PIDS, she became a trade facilitation expert and team leader at the Asian Development Bank (ADB), and served as Project Manager for various inter-agency research projects from 1991 to 2009. In PIDS, she had written several papers focusing on the ASEAN economic integration; micro, small, and medium enterprises (MSMEs); trade liberalization; competition policy; industrial policies; free trade agreements (FTAs); and foreign direct investments (FDIs). She earned both her PhD and Master of Arts Degree in Economics and Bachelor of Science in Business Economics in UP. She also attended advanced studies in International Economic Policy Research at Kiel Institute of World Economics, Germany in 1989. “The appointments of Asec. Rodolfo and Aldaba are timely as they are necessary, now that we are at the high point of elevating our trade engagements with our traditional and pioneering trade partners, while we work to improve our country’s competitiveness through the Industry Roadmaps Project. Their expertise and involvement in both these processes will contribute greatly in achieving our goals for industry development and policy reform,” DTI Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said.

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3. DTI submits EU GSP+ application

Vol. 19, No. 02 4

epartment of Trade and Industry (DTI) Secretary Gregory L. Domingo recently signed the Philippine application to the GSP+ Scheme of the European Union (EU). The EU GSP+ arrangement is a special incentive scheme for sustainable development and good governance anchored on the effective implementation of 27 international conventions on human and labor rights, environment and governance principles to which the Philippines is a signatory.

and garments sectors will greatly contribute to the revival of the country’s manufacturing industry since these sectors account for more than 50% of the country’s industry labor force,” DTI Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said.

The DTI, as lead agency for this initiative, has concluded more than a year of preparatory work involving inter-agency consultations and industry briefings on the scheme’s requirements and benefits. The application is supported by industry groups and associations who would like to take advantage of the GSP+ preferences, particularly the textile and garments and the tuna sectors.

The projected increase in exports could translate to 267,587 additional jobs both in the agriculture and manufacturing sector.

“The manufacturing industry roadmap identifies government interventions in assisting the private sector in gaining more access to markets. The sustainability of the tuna

4. DTI seeks US duty-free status for goods made in Visayas

s a way of encouraging companies to take part in helping Visayas recover from the devastation of Typhoon Yolanda, the Department of Trade and Industry (DTI) intends to draft a bill allowing duty-free access of goods to the United States (U.S.) market. The idea is to persuade manufacturers to set up shops in areas damaged by Yolanda, with the promise of selling their goods to the U.S. at zero tariff. Department of Trade and Industry (DTI) Secretary Gregory L.

Initial estimates indicate that the GSP+ could increase Philippine exports to the EU by 611.8M euros, representing around 11.96% expansion over 2012 Philippine exports to the EU.

Product sectors with the highest projected increases

• • • • •

Animal or vegetable fats and oils (231.2M euros) Prepared foodstuffs (151.2M euros) Textiles and garments (79.7M euros) Footwear, headwear, umbrellas (28.5M euros) Chemical products (17.1M euros)

Domingo is communicating the concept to Philippine Ambassador to the U.S. Jose Cuisia. "We will pursue this and make consultations with the U.S. Congress to see if it is possible. If it is, we will come out with a draft bill and look for sponsors in the U.S. Congress. This will be duty-free access to the U.S. market," Domingo said. The vision is to jump-start the economy in Central Philippines by encouraging businesses, especially garment makers, to build factories in Regions 6, 7, and 8.

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Good News, Philippines! 1. BOI-approved investments up 12%

January 27, 2014 5

otal investments approved by the Board of Investments (BOI) rose 12% in 2013 compared to 2012 on the back of the country’s improving economic conditions. Total investments approved by the agency reached P403.17B, up from the P360.35B in 2012, BOI Managing Head Adrian S. Cristobal Jr. said. “The investments were for a total of 281 projects which are expected to generate 37,885 jobs once at full operations,” Cristobal said. The bulk or 74% of the investment pledges amounting to P298.24B came from domestic firms, posting a growth of 0.4% from 2012, P286.3B. Foreign investment pledges, which accounted for the remaining

2. FDIs up 33% in September

oreign direct investments (FDIs) in the Philippines for September last year was recorded at USD 3.11B, 33% higher than the USD 2.33B in the same period in 2012, data from the Bangko Sentral ng Pilipinas (BSP) showed.

26%, reached P104.93B, 42% higher than 2012’s P74B. In terms of investment pledges by sector, electricity, gas, steam and air conditioning supply, which covers power generating plants and renewable energy projects, recorded the largest share of investment commitments at P268.24B, representing a 67-% share. Top 5 foreign country sources for investments Country

Value (in billiion pesos)

British Virgin Islands United States (U.S.) The Netherlands South Korea Australia

45.80 41.76 5.98 2.26 1.82

% share 44 40 6 2 2

The investment roadshow in London last October resulted in two investment missions from the United Kingdom (UK) while Japanese investors also expressed interest following Secretary Domingo’s visit. (BWD 12/18/13, TPS 12/25/13)

Top investing countries

The net FDI for the first nine months of 2013 also surpassed the BSP’s previous expectation of USD 2.1B for last year.

• • • • •

The BSP is now estimating at least USD 2.6B for the 2014 FDIs. Meanwhile, Department of Trade and Industry (DTI) Secretary Gregory L. Domingo is expecting to see at least USD 4B net FDIs by the end of this year after investment roadshows abroad produced positive results.

British Virgin Islands Japan Mexico United Kingdom United States Top fields of interest

• • • • • • •

Arts, entertainment, and recreation Financial and insurance Manufacturing Real estate Sewerage Waste management and remediation Water supply

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3. PHL seen to become major car exporter in 10 years

Vol. 19, No. 02 6

he Department of Trade and Industry (DTI) looks at making the Philippines a major vehicle exporter in the next 10 years in light of continuous economic growth. The country's economic expansion is perceived to have increased the middle class' ability to buy vehicles and may rouse car companies to locate assembly in the country.

The automobile industry also yielded P368B in 2012 representing 12% of the industrial sector and 3.8% of the gross domestic product (GDP). Despite the rescheduled release of the automotive industry roadmap from December 2013 to the first quarter of this year, DTI Secretary Gregory L. Domingo noted that car sales continued to rise. (MST, 12/19/13)

Cars assembled locally in 2012 reached 75,000 units, 15.38% higher than the 65,000 units in 2011.

MSME News 1. DTI-Caraga allocates P87.9-M grassroots projects

he Department of Trade and Industry (DTI)-Caraga is allocating more than P87.9-M grassroots participatory budgeting (GPB) projects in the region for this year. Under the bottom-up budgeting (BuB) strategy, DTI will distribute 130 projects in 49 local government units (LGUs), six cities, and 43 municipalities in the Caraga region. One of the major GPB projects is the country’s fourth accredited Ang Tindahang Pinoy. The program, which has an investment of P500,000, showcases and sells world-class products catering to local

2. DTI holds business continuity planning seminar in Negros Oriental

he Department of Trade and Industry (DTI)-Negros Oriental held a two-day seminar workshop on small and medium enterprises (SMEs) business continuity planning in Bais City in December last year. At least 40 participants from different local government units (LGUs) and centers for consumer welfare attended the seminar.

and foreign tourists. It was launched in Butuan City on December 24, 2013 in cooperation with the regional processed foods industry cluster. Other GPB Projects • • • • • • • • • • • • •

Baking Catering services Coco by-products processing Eco-tourism projects Handicraft Health and education projects Livestock production Meat processing and skills training Organic rice production Palm oil production and industry Pangasius industry Pastry and bibingka-making Various livelihood projects

Calamity loans products were also showcased. Topics discussed • Being financially prepared during times of disasters and calamities • Survival strategies for small businesses • Calamity insurance suitable for SMEs

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Business Update Gov’t eases foreign investments’ restrictions

January 27, 2014 7

he government is currently reforming the imposed restrictions on foreign investments and workers in the Philippines. The National Economic and Development Authority (NEDA) works with various government agencies, particularly the Professional Regulation Commission (PRC), to shorten the Regular Foreign Investment Negative List (RFINL), Socio-Economic Planning Secretary Arsenio M. Balisacan said.

for the Association of Southeast Asian Nations (ASEAN) economic integration in 2015. Balisacan said they already have drafts on the amendments to Executive Order (EO) 98. “I hope we could get this completed early this year. We don’t want to dilly-dally because, as you know, 2015 is just around the corner. We need to be able to position ourselves well in relation to our neighbors,” he said. (BMI 12/18/13)

The revised RFINL may be released early this year in preparation

Consumer News 1. DTI calls for competition policy review

epartment of Trade and Industry (DTI) Secretary Gregory L. Domingo seeks a review of the Philippines’ Competition Policy to give more teeth to the law and further protect and promote consumer welfare. “There is a need to strengthen competition policy in the country,” Domingo said.

2. JAO outlines amendments to Price Act

he Departments of Trade and Industry (DTI), Agriculture (DA), Health (DOH), Environment and Natural Resources (DENR), and Energy (DOE) have issued a joint administrative order (JAO) outlining amendments to Republic Act (RA) 7581 or the Price Act. JAO No. 13-1 included new items on the list of basic goods and prime commodities. The lists are critical as these become the basis for a price freeze. Price freeze violators may be liable

Under the guidelines, the Office for Competition (OFC) shall adopt and implement a mechanism for cooperation with the DTI to investigate anti-competitive conduct within consumer welfare laws, including those that are implemented under Republic Act (RA) No. 7394 or the Consumer Act of the Philippines and RA No. 7581 or the Price Act.

to pay an administrative fine of up to P1M. (PDI 12/19/13) Items added to basic commodities list

• Fresh fruits • Household liquefied petroleum gas • •

(LPG) and kerosene Locally manufactured instant noodles Potable water in bottles and containers Items added to prime commodities list

• Livestock and fishery feeds

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3. DTI: Pinoy consumer awareness improving

Vol. 19, No. 02 8

ilipino consumers are now more aware of their rights and becoming more cautious in protecting them, Department of Trade Industry (DTI) Undersecretary for Regional Operations and Development Group (RODG) Zenaida C. Maglaya said. “We are improving in terms of consumer awareness and their desire to protect their rights, but in the past, it’s the culture of the Filipino to quietly suffer and they just won’t patronize that store anymore,” Maglaya said. Consumer awareness is now at 70%, compared to 35% in 2007.

4. More Pinoys see better life in 2014

ore Filipinos look forward to a better life this year, Social Weather Stations (SWS) survey showed. The net personal optimism rose to a “very high” +35 in September 2013, with 40% of the respondents

FEATURE Franchisees in the making

ranchising may be a realistic route for those who intend to grow their available "seed fund" into a more sustainable living resource. Franchisees are already presented with an existing concept and well-defined track upon which they will operate their business. The business has been actually tried and the franchisee is given an initial picture of how the venture will be received by the public.

Consumers have the right to basic needs, right to information, and to redress. The right to redress means the government can step in if there is misrepresentation in the product’s label or advertisement. She also reminded consumers to be responsible in their purchases. It is part of the consumers’ responsibility to scrutinize the product before buying it. Maglaya prompted consumers of their rights in relation to warranties. Products with “implied warranties,” or products that do not give a specific warranty period, can be returned or replaced within 60 days.

saying they expected the quality of their lives to improve in 2014, SWS said. This was higher than the “high” +28 (35% optimistic) recorded in June 2013. The survey used face-to-face interviews with 1,200 adults nationwide. (TPS 12/19/13) The Civil Code and the Intellectual Property (IP) Code provisions apply to franchising arrangements since there is no specific franchising law in the Philippines. (BWD 12/17/19) PHL’s most frequently franchised businesses

• • • • • •

Beauty services Food cart Health and wellness services Hospitality Tourism-related enterprises Other retail businesses

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ASIA Watch ASEAN told to adopt PHL tack for hiking FTA usage

January 27, 2014 9

he Philippines has notched among the highest usage of Association of Southeast Asian Nations (ASEAN) trade deals in the region urging neighbors to adopt the country’s outreach campaigns to help more businesses reap integration gains. Efforts to help entrepreneurs meet requirements for obtaining lower tariffs could bridge the gap between Southeast Asian firms’ current preference for using bilateral instead of regional deals. “ASEAN-led FTAs have been generally underused,” TKN Southeast Asia Coordinator for the International Institute for Sustainable Development Alexander C. Chandra and ASEAN Business Advisory Council (ABAC) Executive Director Ruben Hattari said. “Notably, in many instances, the utilization rates of bilateral FTAs pursued by an individual ASEAN member-state are generally higher in comparison to those carried out under the ASEAN framework,” Chandra and Hattari added. They particularly pointed to the Department of Trade and Industry (DTI) Doing Business in Free Trade Areas (DBFTA) program, described as a multi-pronged effort of engaging the public, strengthening inter-agency links, and establishing policy networks.

STATWATCH 611.8M Euros Expected increase in PHL exports with the GSP+ scheme

USD 3.11B Value of FDIs recorded for September 2013

P403.17B Total BOI-approved investments for 2013

P89.9M DTI-Caraga’s allocation for 2014 projects

75,000 Units of cars assembled locally in 2012

40% Percentage of SWS survey respondents who expect quality of life to improve this year

20% Projected growth in FDIs this year

14%

Growth in electronics export in Oct 2013

7.4% PHL’s GDP for the first nine months of 2013

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What’s New? (A synopsis of selected book acquisitions at the DTI-TIIC library)

Vol. 19, No. 02 10

Title : Celebrate! Decorate! A Quarter Century of Creative & Innovative Material Development & Holiday Decoration from the Philippines Publisher : Christmas Décor Producers and Exporters Association of the Philippines (CDPEAP) Call Number : SITC 8/45 608/ CDPEAP/2013

Publisher : Technology Resource Center (TRC) Call Number : SITC 061.6/01.01.01/ TRC/2010 This booklet presents instructions and recommendations on starting a “pag-aalaga ng pukyutan” business. It gives ideas and some pointers in running the business like capitalization and equipment to be used; procedures on harvesting and handling; and managing the beehive, like food and water for digestion and metabolism.

Philippine Postal Permit No. PM-04-08

This book features the best of holiday decors using indigenous and non-indigenous raw materials. Also presents the stride of the handicrafts industry in sourcing and developing the Philippines’ rich natural resources not only for commerce but also, more importantly, as a source of national pride. It also serves as reference materials for designers, manufacturers, students and Christmas décor enthusiasts.

Title : Gabay sa Negosyo: Pag-aalaga ng Pukyutan

Legend: BMI BWD PDI MST TPS

Business Mirror Business World Philippine Daily Inquirer Manila Standard Today The Philippine Star

Entered as Third-Class Mail at the Makati Central Post Office under Permit No. PM-04-08 valid until 31 December 2014

Editor-in-Chief/Anne L. Sevilla Managing Editor/Vic S. Soriano Associate Editor/Jam H. RaposonWriters/Resty P. Par, Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya Design/Layout/Ren C. Neneria Circulation/Myrna V. De Los ReyesTo subscribe, email: publications@dti.gov.ph