dataline
30 June 2014 1
dataline
30 June 2014 Vol. 19, No. 13
A bi-monthly digest of global and domestic industry trends and developments. Published by the Knowledge Managment and Information Service of the 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 Business confidence up in Q2 Inside DTI DTI eyes Europe Good News, Philippines! 1. P1.62-B investments poured in ARMM 2. WEF-led agriculture initiative to boost investments 3. PHL to hit 2014 GDP target 4. More French firms eyeing PHL MSMEs 1. Domingo bats for broader approach to SME and trade integration 2. P1.88-M SSF projects turned over to Ifugao 3. Franchisers support moves to lower taxes for MSMEs
Business Update 1. DTI pushes fashion industry 2. PHL expects big leap in competitiveness ranking Consumers News 1. Local biz trademark application increases 2. Public warned against text scams Feature DTI’s Sikat Pinoy National Fashion Fair promotes MSMEs ASEAN Watch 1. PHL to be Asia Pacific’s growth leader 2. PHL can be Asia’s valuable brand in services trade Statwatch What’s New?
dataline
Focus Business confidence up in Q2
Vol. 19, No. 13 2
B
usiness optimism in the Philippines gained more strength in the second quarter of the year over the first quarter, latest results of the Bangko Sentral ng Pilipinas (BSP) Business Expectations Survey (BES) showed. The country’s business Confidence Index (CI) rose to 50.7% in the April to June period from 37.8% in the previous quarter of this year. “The country’s strong macroeconomic fundamentals such as manageable inflation and steady growth of remittances as well as more favorable external conditions support the positive business outlook,” the BSP said. The BSP said investors remain bullish on the economy for the third quarter because of “more optimistic outlook of firms in the wholesale and retail trade and construction sectors given their expectations of briskier demand at the start of the school year and new expansion projects in power generation, telecommunications, and building of highways.” Also, the outlook for exports and imports turned more favorable in Q2 2014. Among business types, dual-activity firms were the most optimistic, posting a record-high CI of 54.4%. Importers expected that growth would be driven by higher consumer demand during the summer and enrolment period. Meanwhile,
Inside DTI DTI eyes Europe
T
he Department of Trade and Industry (DTI) has set its eyes on more trade and investment promotions in the United States (U.S.) and Europe. DTI Industry Promotion Group (IPG) Undersecretary Ponciano C. Manalo Jr. said U.S. Secretary
the improved optimism of exporters could signal an expected strengthening of demand with the recovery of global markets. Across sectors, the business outlook in Q2 2014 was more bullish. Firms in the construction sector were the most optimistic, followed by the services, wholesale and retail trade, and industry sectors. Consistent with the favorable overall outlook on the macroeconomy, the outlook of firms on business operations improved in Q2 2014. Notably, the outlook of firms engaged in the agriculture, fishery and forestry and mining sub-sectors was the most robust among those in the industry sector. On the other hand, the more positive sentiment in the services sector was driven by the financial intermediation, business activities, and real estate sub-sectors. Factors of Q2 2014 Business Confidence growth
•
•
• • •
Robust consumer demand during the secondary harvest season, graduation and enrolment periods, and summer season New construction projects boosted by rehabilitation efforts (from Typhoon Yolanda) and stepped-up infrastructure projects Increase in orders and new contracts/ projects leading to higher volume of production Expansion of businesses, launch of new product lines, and rise in investments Continuing confidence in the Aquino administration
of Commerce Penny Pritzker visited the country this month with 12 delegates from business sector. The U.S. delegation looked for opportunities here in areas of insurance, financial services, mining, and manufacturing, among others.
dataline
30 June 2014 3
“The Obama Administration’s recent swing of U.S. economic prospects towards the Asia Pacific Region is foreseen to strengthen existing commercial ties and foster new ones,” Manalo said. “With these recent developments in 2014, we expect to gather renewed support from the U.S. as we develop our local industries, attract more investments, and expand our global market for goods and services,” he added. He said the Philippine Embassy in Washington D.C. and the Philippine Trade and Investment Centers in U.S. will have a series of trade and investment promotions in Houston, Atlanta, and Philadelphia. For the first quarter of the year, the Philippines already received 11 business missions from the U.S.
Good News, Philippines! 1. P1.62-B investments poured in ARMM
T
he Regional Board of Investments-Autonomous Region in Muslim Mindanao (RBOI- ARMM) have approved P1.62B worth of investments in the first semester this year, surpassing their 2013 portfolio of P1.46B. RBOI Chairman Ishak V. Mastura foresees that big local
or 41% of full year of 2013’s 27 inbound missions from the U.S. Likewise, DTI organized business mission to Europe this month. DTI Secretary Gregory L. Domingo and Manalo led the outbound business missions particularly in Germany, Sweden, Norway, and France. “Our visit to Europe aimed to further strengthen the economic ties of the Philippines with European countries as well as to sustain the gains from our visit in 2013 and return visits made by officials and various business delegations from Europe to the Philippines,” Manalo said. “DTI and Board of Investments (BOI) have already received 25 inbound visits from Europe this year,” he said, citing that it was already 68% of the total inbound business missions in 2013. companies will continue to invest to take advantage of the positive business sentiment in the region and the stability brought about by the signing of the Comprehensive Agreement on the Bangsamoro between the Philippine government and the Moro Islamic Liberation Front (MILF) early this year.
RBOI-approved Investments in ARMM Q1 2014 (In Million Php) Firm Lamsan Power Corporation SR Languyan Mining Corporation Agumil Philippines, Inc. ABSCOR Multi-Trading Company
2. WEF-led agriculture initiative to boost investments
P
hilippine agricultural products and related commodities will have the much needed boost in terms of investments through the Grow Asia Initiative, an agricultural platform of the World Economic Forum (WEF), the Department of Agriculture (DA) reported.
Activity Amount Biomass renewable energy 921 Nickel ore mining project 520 Oil palm kernel crushing plant 170 Import and export trading business 10
“The recently formed Grow Asia Initiative under the WEF will attract investments for the country’s top agricultural exports. This can be of great help for our agricultural sector,” DA Secretary Proceso J. Alcala said. Designed to ease the flow of agricultural investments in the region,
dataline
Vol. 19, No. 13 4
Grow Asia has immediately shown its potency when the country’s locally grown rice, corn, cacao, coffee, and palm have immediately attracted inquiries from potential investors at the sidelines of the WEF on East Asia.
for a modern, climate-smart, and market-oriented agri-fishery sector. The P27.5-B initial fund of the project is jointly provided by the World Bank (WB), the national government, and LGUs.
Alcala said the government has been preparing for this opportunity, hence the establishment of the Philippine Rural Development Program (PRDP) set for implementation in the second semester of this year, a venue in which the national government can partner with the private sector and local government units (LGUs) in providing key infrastructure, facilities, and technologies to boost farm production.
Alcala explained that the Philippines would harness the PRDP to engage with Viet Nam’s Public-Private Task Force on Sustainable Agriculture, Indonesia’s Partnership for Sustainable Agriculture, and the Myanmar Agriculture Network.
PRDP is a six-year program, which aims to establish a platform
3. PHL to hit 2014 GDP target
D
espite posting a growth of only 6% in the first quarter, Philippine gross domestic product (GDP) could still settle within the government's target of 6.5%-7.5% this year, economic experts said. "The growth target is attainable because the industry sector, particularly manufacturing, will boost GDP in the next three quarters with double-digit increases," Ateneo de Manila University Economist Fernando Aldaba said. Aldaba said weather would remain a big factor in increasing output particularly in the agriculture sector. Better weather conditions, he said, would allow the sector to improve its performance.
4. More French firms eyeing PHL
M
ore French companies are exploring opportunities in the Philippines which continues to become a more attractive destination for investments. France’s Ambassador to the Philippines Gilles Garachon said
Alcala said that under the PRDP, farmers would be able to tap the regional market, which currently has a soaring demand for soya, rubber, tea, high-value crops, and fisheries.
On the same note, University of Asia and the Pacific Economist (UA&P) Cid Terosa said Philippine economic growth will hit the lower-end of the government's target. "Trade could grow faster in the second half of the year with stronger markets abroad," said Terosa. Also, Asian Institute of Management (AIM) Policy Center Executive Director Ronald Mendoza believed that the target will be achieved on the back of higher infrastructure spending by the government. "Private sector investments would also continue to grow due to the latest (credit) upgrade," said Mendoza. (TPS 05/29) more French companies are interested to visit the Philippines to check out business opportunities and investments. French Chamber of Commerce and Industry in the Philippines President Cyril Rocke said while the Philippines was not on the radar
dataline
30 June 2014 5
of French firms before, it is now seen as a top location to do business in the region. “The Philippines, until the last few years, was not really on the map of French business and investors. But recently, the Philippine economy is much better. And also, the governance has improved. Better transparency and better management
MSME News 1. Domingo bats for broader approach to SME and trade integration
2. P1.88-M SSF projects turned over to Ifugao
T
he Ministers issued the Qingdao Statement describing actions for trade and economic growth across Asia Pacific at the recent Asia Pacific Economic Council (APEC) Meeting of Ministers Responsible for Trade (MRT) held in Qingdao, China.
of the government, so there is influx of French companies interested in the Philippines and wanting to enjoy the growth of this economy,” he said. He said French companies are interested in opportunities in infrastructure, energy, consumer goods, food, and beverage. (TPS 05/30)
in barriers to trade in goods and services and in investment, Department of Trade and Industry (DTI) Secretary Gregory L. Domingo said.
“We welcome the continuing progress made towards the Bogor Goals of free and open trade and investment in the Asia-Pacific region,” APEC said.
“The Philippines welcomes two areas of work which will further address the challenges faced by small and medium enterprises (SMEs). First, addressing and removing non-tariff barriers, and second is in simplifying customs procedures,” said Domingo.
The Bogor Goals Report of 2014 concluded that all APEC economies have made significant progress in reducing substantial reductions
Domingo led the Philippine delegation to the APEC MRT composed of DTI and the Department of Foreign Affairs (DFA) officials.
T
he Department of Trade and Industry (DTI) turned over P1.88M worth of shared service facilities (SSFs) to five cooperatives and associations in Ifugao. SSF recipients received the SSF and signed the memorandum of
agreement (MOA) cementing their commitment to the SSF Program. DTI-Cordillera Administrative Region (CAR) Assistant Regional Director Carmelita C. Usman challenged the recipients to endeavor to be more productive
SSF recipients Lamut Grassroots Savings Development Cooperative (LAGSADECO)
a set of equipment for its fruit processing project
P979,000.00
Ifugao Federation of Development Cooperatives (IFEDECO)
packaging machines
P357,000.00
Tinoc Organic Products Multi-Purpose Cooperative (TOPMPC)
organic products processing P228,000.00
Lagawe Multi-Purpose Development Cooperative (LMDC)
wearable and home style project
P160,000.00
Four-Corners Association
rice wine brewing
P160,000.00
dataline
Vol. 19, No. 13 6
and be globally competitive as envisioned by the SSF Program. The program continues to provide the “big push” for micro, small,
3. Franchisers support moves to lower taxes for MSMEs
Business Update 1. DTI pushes fashion industry
T
he Association of Filipino Franchisers, Inc. (AFFI) is supporting moves to lower taxation rate for micro, small, and medium enterprises (MSMEs) to boost industry growth.
MSMEs account for the bulk of businesses in the country at 99% and provide 66% of employment however. Its contribution to domestic growth is only one-third of gross domestic product (GDP).
“The taxation value saved by MSMEs would certainly be reinvested in their enterprises and result in additional employment, additional facilities build-up, additional marketing support, and most importantly, would spur an increase in their level of competitiveness,” AFFI said.
“Clearly, there is a need for a quantum leap in policies and laws that will enable MSMEs to become the economic growth engine they should rightfully be. One of the first areas to address policies and laws is in of taxation,” AFFI said.
T
he Department of Trade and Industry (DTI) is positive that the improving local fashion and garments industry will continue to expand and eventually go global with steadfast marketing support for local enterprises. “This industry is a growing and recovering industry. It is getting back on where it was in the early days of 2000,” DTI Investment Promotion Group (IPG) Undersecretary Ponciano C. Manalo Jr. said during the opening of the agency’s Sikat Pinoy National Fashion Fair, themed Piling-Piling Pananamit Pilipino.
2. PHL expects big leap in competitiveness ranking
and medium enterprises (MSMEs) to achieve higher productivity level and to be able to compete in the global market.
T
he National Competitiveness Council (NCC) reported that the Philippines’ ranking in the World Bank-International Finance Corp.’s (IFC) Doing Business Report this year can jump from 108th to 29th place, if reforms are made in four big impact indicators. In terms of starting a business and registering property, the necessary
Manalo noted that the fashion industry is in a competitive scenario for Philippine export and domestic markets. For the first quarter of 2014, export of garments grew by 4% and travel goods and handbags by 289.2%, compared to the same period last year. This increase is backed by the garments industry’s March 2014 performance that showed 5.6-% growth compared to the same month last year. For the first quarter of 2014, textile, apparel, footwear, and travel goods collectively was up by 9.4% and valued at USD 559.8M.
reforms include the reduction of the steps in completing the processes and the costs that come with them. The council is also pushing for automation of the registration processes. As for getting the credit indicator, reforms involve making credit data on utilities available and undertaking a review of collateral and bankruptcy laws.
dataline
30 June 2014 7
For the protecting investors indicator, the NCC wants a review of the Corporation Code of the Philippines to be conducted to be able to achieve gains. Should the Philippines get the 29th spot this 2014, the country would also see its standing in the Southeast Asian region improve to the fourth spot from sixth place out of the 10 countries. The Philippines is aiming to get to the top three economies by 2016. (TPS 30/05)
Consumer News 1. Local biz trademark application increases
L
ocal brands have overtaken foreign brands in trademark application in the country in the past years, according to Intellectual Property Office of the Philippines (IPOPHL). IPOPHL Director General Ricardo R. Blancaflor attributed these growing numbers to the IPOPHL offices outside the Metro Manila area. Meanwhile, he noted that with the lifting of the Philippines from the United States Trade Representative (USTR) Special 301 Watch List, foreign companies are now more eager to enter the Philippine market
2. Public warned against text scams
I
n light of increasing victims of deceitful texts and the possible proliferation of this crime following the time for school enrolment, the Department of Trade and Industry (DTI) alerted the populace of text scams and ways to detect such malicious activity. DTI-Pangasinan Provincial Director Peter O. Mangabat advised of a spreading text scam where a victim is encouraged to send a message to a long number to win, only to unwittingly send load of at least P50 to the swindler. The Department is enjoining the people to report such scams
Doing Business Report’s indicators/ bases in ranking countries and economies
• • • • • • • • • •
Starting a business Dealing with construction permits Getting electricity Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Resolving insolvency
with the improved intellectual property rights system here. “In the last one and a half years, we have over 3,000 brands that have designated Philippines. That means they want to be registered in the Philippines…they want [their] brand to be protected in the Philippines,” Blancaflor added. Number of Trademark Filings Year
Local brands
2011 2012 2013 2014
10,555 11,667 12,275 5,406
Foreign brands 8,019 8,980 10,632 3,248
to the DTI and the National Telecommunications Commission (NTC). Pointers to recognize text scams
• • • •
The message comes from an 11-digit mobile number, not a special 4-digit number It claims to be awarding a prize for a raffle or contest that was never participated in Monetary exchange is required before the prize can be claimed The message sender stresses that the prize should be claimed immediately; registered promos provide at least 60 days for a prize to be claimed.
dataline
FEATURE DTI’s Sikat Pinoy National Fashion Fair promotes MSMEs
Vol. 19, No. 13 8
V
arious quality accessories and apparel by micro, small and medium enterprises (MSMEs) from 15 regions of the country were exhibited in the Sikat Pinoy National Fashion Fair (NFF) organized by the Department of Trade and IndustryBureau of Domestic Trade Promotion (DTI-BDTP)- last 21 to 25 May at the SM Megatrade Hall, SM Megamall, Mandaluyong City. Participating in the event themed Piling-Piling Pananamit Pilipino were 151 enterprises from the different regions, as well as DTI agencies, the Philippine Postal Corporation (PHLPOST), Go Negosyo, and Air 21 Global Inc. “In holding this fair, we expect to break a new ground for the country’s growing fashion industry as we provide marketing support for participating MSMEs to reach a broader domestic market and eventually secure a foothold in the global market,” said DTI Investment Promotion Group (IPG) Undersecretary Ponciano C. Manalo, Jr.
ASEAN Watch 1. PHL to be Asia Pacific’s growth leader
(FOBAP) President Robert M. Young with DTI Directors and Undersecretary Manalo. Sales generated breakdown (in P million) Island Group
Region Cash Region 11 Region 4A Region 7
2.36 2.16 7.36 10.36
& booked 4.12 3.19 1.32
Negotiated 7.00 0.003 0.23
Special settings
• • •
Hall 1-wedding exhibit and consultation services by Dream Maker Hall 2-Cebu FAME by FAME Foundation Phils., Inc. Hall 3-Abel Iloco fabric products by Ditta Sandico, sponsored by Ilocos Sur Vice Governor Deogracias Victor Savellano Awardees
•
Aside from booths showcasing fashion pieces, the event also featured seminars for interested entrepreneurs and a fashion show of bridal gowns and evening wear created from indigenous materials attended by Foreign Buyers Association of the Philippines
•
According to Delloite Global’s report “Competitiveness: Catching the next
6.88 0.64 4.32 13.36
Top 3 performing regions by sale (in P million)
•
I
Cash Negotiated & booked sales sales
Luzon 9.24 Visayas 2.8 Mindanao 11.68 Total 23.72
The event, visited by some 17,614 guest, was able to generate a total of P23.7M in sales with cash sales and booked orders worth P13.4M and recorded sales under negotiation worth P10.3M.
n Delloite Global’s latest report, the Philippines is seen to be Asia Pacific region’s economic leader.
Total
•
Best Dressed Booth-Kit’s Silver Jewelry, Pampanga, Region 3 Most Innovative Product-Carabao horn evening bag by Austolia Jewelry Arts, Cebu, Region 7 Top Selling Exhibitor-Mindanao Pearl Center, Davao City, Region 11 Seminars
• • • • •
Bag Accessorizing-Cottage Industry Technology Center (CITC) Beadworks 1-CITC BIR matters and the duties of SMEs as responsible taxpayers-Bureau of Internal Revenue (BIR) Hair and Make-up-Salon By Alyssa Massage oils-CITC Online marketing-Air21 Global Inc.
wave: The Philippines,” manufacturing, business process outsourcing (BPO), construction, transportation and logistics, and information communications will boost the country’s economic growth.
dataline
30 June 2014 9
“The strong growth in global manufacturing to 2033 will drive world growth, and this presents the Philippines with great potential to integrate into the global supply chain of high-value manufacturing,” Deloitte Global Managing Director for Global Clients and Industries Gary Coleman noted. “Compared to other regions that have experienced slower economics, the Philippines’ story is quite remarkable. There are great opportunities — if the Philippine government can seize them — to fuel growth and become one of the most competitive nations in the region,” Deloitte Asia Pacific Chief Executive Officer (CEO) Chaly Mah Chee Kheong said.
2. PHL can be Asia’s valuable brand in services trade
T
he Philippines has huge potential to be Asia Pacific’s “heart of services trade.”
The services sector has significantly contributed to the Philippine economy in increasing employment, investment, and revenue generation. It represents 44.15% in gross exports in terms of service value added, according to Philippine Institute for Development Studies (PIDS) Research Consultant Dr. Ramonette Serafica. The country's strong information technology-business process outsourcing industry places the country in a comparative advantage as a net exporter of services, she added. She suggested that an innovation and human resource development (HRD) government policy should be implemented to further create an environment conducive to the country’s improving competitiveness.
STATWATCH P1.62B Investments registered with the Regional Board of InvestmentsAutonomous Region in Muslim Mindanao (RBOI- ARMM), surpassing the 2013 portfolio of
P1.46B
USD 559.8M Exports revenue of PHL garments in Q1 2014
P23.7M Total sales generated by Sikat Pinoy National Fashion Fair
5,046 PHL trademarks registered with the Intellectual Property Office of the Philippines (IPOPHL) in Q1 2014, compared to
3,248 foreign brands
11 PHL’s inbound business missions from the United States
41%
(U.S.) in Q1 2014, or of full year of 2013’s 27 inbound mission from the U.S.
dataline
What’s New? (A synopsis of selected book acquisitions at the DTI-TIIC library)
Vol. 19, No. 13 10
Title : LDC Services Exports: Trends and Success Stories
Publisher : International Trade Centre Call Number : 02 000/15.00/ITC/ 2013 This paper aims to provide a basis for understanding services exports of Least Developed Countries (LDCs). It highlights supplementary empirical and qualitative information as well as industry and enterprise level material for seven selected LDCs: Bangladesh, Cambodia, Myanmar, Senegal, Rwanda, Uganda, and Vanuatu. It discusses the lessons learned in the literature and in the field on the conditions underlying services export competitiveness in LDCs. Also contains case studies drawn from the seven LDCs that are a modest sample of the many service providers who are constantly innovating and engaging in international business, providing employment, and helping to raise living standards in the poorest parts of the world. 40p.
Title : Empowering Women Entrepreneurs through Information and Communication Technologies Publisher : United Nations Conference on Trade and Development Call Number : 02 000/01.01.07/ UNCTAD/2014 This publication aims to help bring clarity to some of the key underlying ICT dynamics that are of relevance for women’s entrepreneurship and to set out a method for conducting an assessment which integrates these dimensions. It aspires to serve as a comprehensive and valuable resource to support the formulation of evidence-based policies empowering women entrepreneurs through ICTs and to make possible the full leveraging of the potential and capacities of women entrepreneurs in particular in developing countries. 86p.
Legend TPS
- The Philippine Star Editor-in-Chief/Anne L. Sevilla Managing Editor/Vic S. Soriano Associate Editor/Resty P. Par Writers/Jam H. Raposon, Hazel S. Dizon, Joanna D. Cruz, Airiz A. Casta, Kit S. Andaya Design/Layout/Ren C. Neñeria Circulation/Al AquinoTo subscribe, email: publications@dti.gov.ph