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February 10, 2014 1
February 10, 2014 Vol. 19, No. 03
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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 eyes top 3rd in global ranking Inside DTI 1. DTI open to creation of ecozones for local, export marts 2. IPOPHL moves to get PHL out of U.S. IPR watchlist 3. Japan to become top source of investments on food 4. DTI to wrap up safeguard review
MSME News 1. RuMEPP-Caraga overshoots target by 200% 2. ADB, Standard Chartered partner for supply chain financing program 3. Pangasius industry soars in Caraga Business Update 1. PHL, EU to start FTA talks in Q1 2. FDA warns public on counterfeit medicine Features PHL joins RCEP
Good News, Philippines! 1. 2013 banner year Asia Watch for trade, investments 1. ADB investment to Asia Pacific 2. PNoy’s foreign trips up by 10% to USD 43B draw in P334B investments 2. Stronger demand seen to rise 3. DTI sees more investments with AEC after ASEAN integration 4. Citi predicts higher PHL GDP Statwatch What’s New?
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Focus PHL eyes top 3rd in global ranking
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he Philippines is seen to surpass its target of moving up to the top third of global competitiveness ranking surveys by 2016 on the back of reforms that have significantly improved infrastructure and ease of doing business in the country. “We continue to work on our competitiveness as we are implementing a lot of projects,� Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said. Notably, data released by the National Competitiveness Council (NCC) showed that the country might even exceed expectations. “The top third target is not a stretched target anymore. This target has become quite achievable, and we may even surpass this target significantly,� Domingo said. “We’re now in a position to take off because of our infrastructure, procedures, and legal system. We’re still behind developed countries but we’re significantly ahead of many of our peers,� he said. Domingo said the Philippines is expected to rank anywhere from 60th to 62nd place by 2016, out of 185 countries covered by the “Ease of Doing Business�
Inside DTI 1. DTI open to creation of ecozones for local, export marts
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he Department of Trade and Industry (DTI) is studying a proposal calling for the creation of economic zones (ecozones) to cater to both domestic and export production. “We are looking into that proposal,� DTI Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said. The Joint Foreign Chambers (JFC) is recommending the establishment of the Domestic Economic and
report by the World Bank-International Finance Corp. (WB-IFC). Last year, the country posted a 30-rank improvement in its position in WB’s “Ease of Doing Business� report. The Philippines ranked 108th in the world in terms of the ease of doing business, up from 138th the previous year. This jump was said to be the biggest improvement for any country in the world last year, and was also the biggest improvement for the Philippines since the survey started 11 years ago. In September last year, the Philippines also leaped 10 notches to the 65th spot out of 144 countries in the 2012-2013 Global Competitiveness Report of the World Economic Forum (WEF). The leap was attributed to the Philippine government’s significant improvements on governance, innovation, and drive against corruption, as well as the country’s favorable economic performance. For its part, the DTI continues to put in place critical measures including those that can further streamline the permitting processes for local businesses.
Export Zones which would be open even to firms producing for the domestic market. At present, ecozone locators are required to have the bulk of their production for export. The JFC said the new zones could be administered by the Philippine Economic Zone Authority (PEZA) and be put up in less-developed regions of the country where there are numbers of young workers available to be trained.
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Cristobal said among the problems faced by businesses here pertain to local government units’ (LGUs) various rules and regulations. DTI Secretary Gregory L. Domingo said while the idea has been proposed before,
2. IPOPHL moves to get PHL out of U.S. IPR watchlist
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he Intellectual Property Office of the Philippines (IPOPHL) is making ways to have the country removed from the United States (U.S.) government’s watchlist of countries with intellectual property rights (IPR) violations this year. IPOPHL Director General Ricardo R. Blancaflor said the agency sent a representative to the U.S. last month to provide an update on the efforts being taken to enforce IPR, as well as on the implementation of the amended IP Code. “IPOPHL Deputy Director General Allan B. Gepty went there [U.S.] to give an update. The U.S. government wanted to know what we’re doing on IPR,� he said. In the Office of the U.S. Trade Representative’s (USTR) 2013 Special 301 Report, the Philippines was retained in the watchlist of countries with IP violations. Countries placed on the watchlist are those which need to address underlying IPR problems. The USTR said in the report it wants the Philippines to take important steps to address piracy over the Internet.
3. Japan to become top source of investments on food
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he Philippines expects increased foreign direct investments (FDIs) mostly from Japan this year as Tokyo companies committed to go into local manufacturing, banking, and power projects.
the Department still needs to get PEZA’s take on the matter. Domingo said as PEZA caters to export-oriented firms, the creation of such zones may require some changes to Republic Act 7916 which created the agency. It also said that while the Philippine government has already moved to modernize its copyright and IPR enforcement regimes with the amendment of the IP Code, it needs to see the implementing regulations that will further strengthen and clarify the law. Republic Act 10372 or the Amendments to the IP Code was signed by President Benigno S. Aquino III in February last year. The amended IP Code gives the IPOPHL enforcement and visitorial powers. Under the amended IP Code, the IPOPHL is also authorized to create the Bureau of Copyright, which will play a role in promoting awareness on IPR and be responsible for the accreditation of collective management organizations or those which will collect royalties for copyrighted works being used in public places for commercial purposes. The value of counterfeit items seized by the government reached a total of P7.76B in 2013, up 47.40% from the P5.27-B haul a year earlier.
Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said the Philippines ranked high on the list of Japanese investments and that Japan wanted to increase trade and investment opportunities here.
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“Our cooperation with Japan has reached new heights. We are privileged to have their trust and we intend to further strengthen our relations with them in the years to come. For now, I can say that we are on top of their priorities,� he said. Domingo cited three major factors that Japanese investors are looking for in the Philippines—good economy, conducive environment for business, and friendly people.
Malaysia, and Indonesia remain in Japan’s list of preferred investment sites “but the Philippines is the apple of their eyes for now,� Domingo said. The government said with the strong interest of Japan in the Philippines, it may rise as the top foreign investor this year. “In terms of projects and jobs creation, it will be dominated by the Japanese,� Domingo said.
The Philippines’ traditional competitors like Thailand, Viet Nam,
4. DTI to wrap up safeguard review
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reliminary investigations are being conducted to determine whether safeguard duties should be imposed on imported newsprint, galvanized iron (GI), and pre-painted galvanized iron (PPGI) to protect local industries. Department of Trade and Industry-Bureau of Import Services (DTI-BIS) Director Luis M. Catibayan said the agency was able to gather all comments from parties in both cases in mid-December for newsprint and in the third week of the month for GI and PPGI. The DTI is determining whether safeguard duties, either import quotas or tariffs, should be imposed on foreign-made newsprint, GI, and PPGI after local firms claimed imported products were causing "serious injury" to the industry. The investigation on imported newsprint began on September 20
Good News, Philippines! 1. 2013 banner year for trade, investments
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nvestor confidence soared in 2013 on the back of perceived significant improvements on governance, intensified drive against corruption, the country’s favorable and robust economic performance, and the ratings upgrade granted by credit-rating firms.
last year after Trust International Paper Corp. (TIPCO) — considered the country’s largest newsprint maker — filed a petition for safeguard duties with the DTI. DTI Assistant Secretary Ceferino S. Rodolfo said in October that most of the country’s imports of newsprint came from South Korea and the United Kingdom (UK). Newsprint is mainly used for newspapers, books, magazines, pad paper, and notebooks. The probe on imported GI and PPGI, meanwhile, started on September 27, 2013 following a similar petition filed by local galvanized steel manufacturer Puyat Steel Corp. Imported GI and PPGI, according to DTI-BIS Assistant Director Sherwin Prose C. Castaùeda, mainly come from China.
Such developments were reflected in the numbers, whether in terms of a rise in the investment pledges of both local and foreign firms, the number of trade missions pouring in the country, and the significant jump in rankings in the various global competitiveness surveys released in 2013.
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More notable, however, is the relative “ease� in swaying investors to look at the country as a lucrative site for new businesses or expansions. As one trade official put it, the government no longer needs to “beg� for time from investors to take a second look at the Philippines. Even Department of Trade and Industry (DTI) Secretary Gregory L. Domingo remarked that 2013 was “almost too good to be true,� save for some hiccups that diverted government and private sector resources to relief and rehabilitation efforts. DTI Undersecretary for Trade and Investment Promotions Group (TIPG) Ponciano C. Manalo Jr. meanwhile pointed out that the good governance measures implemented by the government have been the driving factor in the upgrades from major global ratings agencies and the rise in competitiveness rankings in 2013. “Business and economic reforms introduced by the government are now starting to be institutionalized which should bring even more confidence from global investors to locate in the Philippines,� Manalo explained. The government had “done well� in 2013 by addressing corruption and supporting a number of tax measures through Congress,
2. PNoy’s foreign trips draw in P334B investments
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resident Benigno S. Aquino III generated P334.16B in investments and 43,365 jobs through his 26 official trips since his term began in June 30, 2010. The Philippines got 55 foreign companies committing 66 projects to the country and P611B investment promises from China, Japan, United Kingdom (UK), and the United States (U.S.).
such as the Sin Tax Law and the Law eliminating Common Carriers Tax and Gross Philippine Billing for passengers, European Chamber of Commerce of the Philippines (ECCP) Vice President for External Affairs Henry Schumacher noted. The government, Schumacher pointed out, was able to achieve rating increases and “nurture� the country’s economic growth. American Chamber of Commerce (AmCham) Senior Advisor John D. Forbes similarly noted that the “high economic growth rate achieved in 2013—despite weak growth in major external markets— demonstrated the positive results of the government’s reforms over the last three years.� “Increased spending on infrastructure, improved budgeting procedures, targeted improvements in low-ranked indicators in global ratings, growing international tourist arrivals, more Public-Private Partnership (PPP) projects rolled out than ever before... are among the significant reforms,� Forbes said. The Philippine Chamber of Commerce and Industry (PCCI) also acknowledged that the local economy had been growing faster than forecasts, which demonstrated the resiliency of business conditions in the Philippines, PCCI President Miguel B. Varela earlier said. (PDI 1/10)
Some countries visited by the President
• Australia • Brunei • Cambodia • China • Indonesia • Japan • Laos • Myanmar • New Zealand
• Russia • Singapore • South Korea • Switzerland • Thailand • UK • U.S.A. • Viet Nam
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These are seen to produce around 100,000 jobs. Out of the 66 projects, 16 have been completed and 16 are in progress, while the rest are still being prepared.
3. DTI sees more investments with AEC
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he Department of Trade and Industry (DTI) expressed optimism that investors are looking at the Philippines as an entrance to South East Asian markets with the coming Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) next year. “With the AEC 2015 in the horizon, there is a strong interest in making the Philippines a hub for retail, automotive parts exportation, and aircraft maintenance, repair and overhaul,� DTI Undersecretary for Trade and Investment Promotions Group (TIPG) Ponciano C. Manalo Jr. said. Companies in Europe and the United States (U.S.) conveyed their interest in investing in the Philippines, particularly in the business process management sector, during DTI's investment missions abroad.
The President’s trips are part of his obligations for the Asia-Pacific Economic Cooperation (APEC), Association of Southeast Asian Nations (ASEAN), and the United Nations (UN). (TMT 12/29/13) and company visits to the country in the first half of this year. To sustain the foreseen growth in investments, the Department will further cultivate trade and investment opportunities with focus on developed priority markets in the South East Asia region, as well as Japan and South Korea. Industries of interest for AEC 2015 • Aircraft maintenance, repair, and overhaul • Automotive parts exportation • Retail Industries to pursue with Asian markets • Infrastructure development • Manufacturing • Tourism Industries with potential investment momentum • Computer entertainment • Digital telecommunications • High-value electronics components
These promotion efforts are expected to boost foreign missions
4. Citi predicts higher PHL GDP
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itigroup Inc. sees the Philippines’ gross domestic product (GDP) for 2014 to be at 7.3%, higher that their 6.9% forecast for the previous year. The company predicts an average growth of 7% this year and 6.8% for 2015; well within the National Economic and Development Authority’s (NEDA) 2015 forecast of 6.5% to 7% and above the consensus projection of 6.1%. GDP is seen to have a V-shaped recovery, with a slowdown in the fourth quarter of 2013 due to Typhoon Yolanda (Haiyan) but a sharp
bounce-back in the first quarter of 2014 caused by the rebuilding efforts. Citi also predicts a base scenario of the country’s current account maintaining its surplus position, inflation of 4% to 5%, and the Bangko Sentral ng Pilipinas’ (BSP) gradual 50-basis point increase in key interest rates in the second half of the year. Despite the consensus expectation of 2014 corporate earnings growth to be at 7.9% from last year’s 11.1%, Citi views this as a chance to gain stocks with large market capitalization due to the predicted V-shaped recovery. (PDI 12/25)
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MSME News 1. RuMEPP-Caraga overshoots target by 200%
February 10, 2014 7
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he Rural Micro Enterprise Promotions Program (RuMEPP) Program Management Unit (PMU) reported that its operations in Caraga was able to assist 6,978 new and existing micro enterprises (MEs), 215% above the 3,248 set by the International Fund for Agricultural Development (IFAD). RuMEPP was a seven-year, USD 22.83-M program funded by IFAD and implemented by the Department of Trade and Industry (DTI). It aimed to aid the 19 poorest provinces in the country by developing MEs and giving them access to Micro Finance Institutions (MFIs) funded by the Small Business Corp. (SB Corp.) to create jobs and reduce poverty. The program, which winded down at the end of 2013, provided P36.64M worth of business development
2. ADB, Standard Chartered partner for supply chain financing program
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he Asian Development Bank (ADB) has tied up with Standard Chartered Bank to support the supply chain financing of small and medium enterprises (SMEs) in Asia. The partnership is the first of its kind under ADB’s supply chain finance (SCF) program and is expected to finance more than USD 800M in supply chain transactions. These transactions will be directed through small businesses
3. Pangasius industry soars in Caraga
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he considerable growth of Pangasius business in the Caraga region is continuing to spur job generation and wealth creation in Northeastern Mindanao’s depressed areas. For 2013, different growers in the municipalities of San Miguel, Lianga, and Tandag have stocked at least 5,000 fingerlings,
services (BDS) that enhanced various industries in the Caraga region. Caraga’s gross regional domestic product (GRDP) was reported by the National Statistics Coordination Board (NSCB) to have constantly increased, boosting its rank from the lowest of 17 regions to 11th. MEs served in Caraga Province
Target Actual % served difference
Agusan del Norte 670 Agusan del Sur 846 Surigao del Norte 662 Surigao del Sur 1,070
2,015 1,851 1,653 1,459
301 219 215 136
BDS projects released (amount per province) Province Agusan del Norte Agusan del Sur Surigao del Norte Surigao del Sur
Amount (in P millions) 8.7 9.0 8.4 10.6
that supply large companies with materials for intermediate and final production, as well as retail sales. Under the agreement, ADB and Standard Chartered will share the risk in the transactions that will in turn support the development of intra-Asia supply chains, as well as supply chains between Asia and other regions of the world. (TMT 01/09)
which translate to about P300,000 worth of investments. The industry in Surigao del Sur started in June 2011 when Department of Trade and Industry (DTI)-Surigao del Sur partnered with the Surigao del Sur State University (SDSSU) for a Pangasius production project. The business has grown in the province two years since. (MAB 12/28)
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Business Update 1. PHL, EU to start FTA talks in Q1
2. FDA warns public on counterfeit medicine
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he initial stages of negotiations for the Philippines-European Free Trade Agreement (FTA) may start this first quarter. Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian S. Cristobal Jr. said the Department has done impact studies on the FTA that explore wider trade and investments with four European countries: • Switzerland • Norway
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he Food and Drug Administration (FDA) warned consumers against buying counterfeit medicines. Fake medicines have harmful health effects and can kill patients, according to FDA Acting Director Kenneth Hartigan-Go. Consumers should only buy from legitimate drug outlets
FEATURE PHL joins RCEP
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he Philippines is advancing trade negotiations with emerging economies for the Regional Comprehensive Economic Partnership (RCEP). RCEP would make the Asia-Pacific region a global economic powerhouse covering 3B people. The government is on track for the RCEP talks, with the adoption of legal and regulatory regimes in line with regional economic integration, Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian Cristobal Jr. said. The RCEP economies aim to conclude negotiations in 2015, which is simultaneous with the establishment of a single market
• •
Iceland Liechtenstein
"We have expressed our serious intention to proceed with the European FTA after we have done impact studies and consultations with stakeholders," Cristobal said. Cristobal believes the strong foreign investor interests are back with the increasing number of free-trade deals the Philippines is negotiating.
with pharmacists. When in doubt, consumers can ask the pharmacist if the drug outlet buys its stocks from legitimate distributors or suppliers/ wholesalers, Go added. “If you have used the drug before and noticed any difference in appearance of the packaging or the drug, you may report it to the FDA via e-mail at report@fda.gov.ph,� he added.(TPS 12/26/13) and production base by the 10 Association of Southeast Asian Nations (ASEAN) members. (BM 12/29/13)
Regional Comprehensive Economic Partnership (RCEP) economies 10 ASEAN members • Brunei Darussalam • Cambodia • Indonesia • Laos • Malaysia • Myanmar • Philippines • Singapore • Thailand • Viet Nam Dialogue partners • Australia • China • India • Japan • New Zealand • South Korea
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ASIA Watch 1. ADB investment to Asia Pacific up by 10% to USD 43B
February 10, 2014 9
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anila-based lender Asian Development Bank (ADB) said they increased their support for sustainable projects within Asia and the Pacific by 10% in 2011 and 2012 that helped in “expanding economic opportunities� in the region. The ADB said the 10-% increase totalled to USD 43-B support— through their Strategy 2020— for projects focusing on sustainable, inclusive, and environmental growths. ADB said they also approved a total of 112 environmental projects amounting to USD 13B, a 50-% increase compared to the amount invested in 2009 and 2010. (MAT 12/26)
2. Stronger demand seen to rise after ASEAN integration
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he Philippines expects stronger demand for its electronics, automobile, and shipbuilding parts when the 10 Association of Southeast Asian Nations (ASEAN) members establish a single market by 2015, Department of Trade and Industry (DTI) Undersecretary for Industry Development and Trade Policy Group (IDTPG) Adrian Cristobal Jr. said. “The country’s auto-parts industry, as well as electrical equipment and services on shipbuilding have the potential to grow further under the ASEAN economic integration,� said Cristobal. The country’s industry strengths on these sectors could contribute effectively in building an effective ‘supply chain’ of the ASEAN economies, he said.
STATWATCH USD 43B Total value of ADB’s support for sustainable projects within Asia and the Pacific
USD 800M Worth of ADB’s support to the supply chain finance (SCF) program
P334.16B Worth of investments generated from PNoy’s 26 official trips since 2010
P7.76B Worth of counterfeit items seized by the government in 2013 P36.64M Worth of business development services provided by DTI-Caraga to micro enterprises under the RuMEPP
P300,000 Value of investments of three municipalities in Northeastern Mindanao in the Pangasius industry
6,978 Number of Caraga micro enterprises assisted by RuMEPP-Caraga
60th-62nd PHL’s target rank for Ease of Doing Business Report in 2016 from 108th in 2013
7.3% Citigroup’s projection of PHL’s GDP for 2014
5 Number of steps undertaken by an applicant for business name registration in Bacolod City’s Business Permit and Licensing System (BPLS), minimized from the original 24 steps
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What’s New? (A synopsis of selected book acquisitions at the DTI-TIIC library)
Vol. 19, No. 03 10
Title : Global Microscope on the Microfinance Business Environment 2013
Publisher : The Economist Intelligence Unit Limited Call Number : 00 000/04/EUI/2013
Legend:
MAB MAT PDI TMT TPS
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Publisher : Technology Resource Center Call Number : SITC 011/01.01.01/ TRC/2013 This booklet presents instructions and recommendations on starting a pork meat processing business like tocino, longanisa, bacon, ham, tapa, and sausage. It gives ideas and pointers in making the products as well as the equipment to be used. Also considers capital requirement, food costing and pricing, and control of expenses. 42p.
Philippine Postal Permit No. PM-04-08
This report features a special article that examines three cases from around the globe that highlight the ways in which firms have shifted toward broader financial inclusion, demonstrate common characteristics among a diverse range of providers and describe a potential structure for a more inclusive financialservices ecosystem. Also provides an in-depth analysis of the microfinance environment in 55 countries. 78p.
Title : Pork Meat Processing
Manila Bulletin Manila Times Philippine Daily Inquirer The Manila Times The Philippine Star
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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