Dataline 17 (2014) by Department of Trade and Industry

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25 August 2014 1

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25 August 2014 Vol. 19, No. 17

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 PHL emerging, phenomenal Good News, Philippines! 1. PHL seen to become regional franchising hub 2. Q2 economic growth seen at 6.5% 3. European Commission backs PHL bid for EU preferred status Inside DTI 1. PHL e-vehicle, aerospace firms upbeat 2. Usec Terrado cites competitiveness ranking 3. DTI pushes for global expansion of franchises 4. 2014 counterfeit seizures seen to reach all time high 5. Shared liability of manufacturers and sellers pushed MSMEs 1. Further European activity of local firms thrusted by DTI 2. DTI-9’s Roving Academy to make SMEs disaster-resilient, ready for AEC 3. DTI-Iloilo holds MSMEs Expo 2014

Business Update 1. PHL makes USD 10.95-M sales at Thaifex 2. DTI, Bacoor City sign agreement for BN registry center Consumer News 1. PNoy signs anti-lemon bill into law 2. DTI-Ifugao conducts Diskwento Caravan 3. P37-M substandard steel products seized, 11 busted Feature Learn how to enter JVs legally with LGUs, GOCCs Statwatch What’s New?

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Focus PHL emerging, phenomenal

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he Philippines is an “emerging power” and could turn into a “phenomenal country,” the British government announced. Great Britain Ambassador to Manila Asif Ahmad said the Philippines is one of several countries that the United Kingdom (UK) can engage with in trade, economics, investments, and people-to-people relations in the 30-year horizon. Ahmad said the country “is one of those identified as an emerging power” because of its economic integration, its role in the Association of Southeast Asian Nations (ASEAN), and the British community in the country. Other factors that make the Philippines viable for engagement with the UK is Manila’s role in counter-terrorism,

Good News, Philippines! 1. PHL seen to become regional franchising hub Factors that make PHL a franchise spot

• • • •

Huge and young population (median age of 23) Cosmopolitan people who love to shop and dine English-speaking, well-educated, and service-oriented labor force Strategic location

Source: Philippine Franchise Association (PFA)

he Philippines is positioned to become a franchise hub in Southeast Asia in an integrated Association of Southeast Asian Nations (ASEAN) economy as the country enters the so-called “double sweet spot.” The country’s competitive working age population and the accompanying rise of income are expected to become investors’ gold mine in the coming years. “We will have a booming economy for 10 years and we are just entering that spot in 2015. That’s next year, and we’re here at the very start of the boom,” Philippine Franchise Association (PFA) Chairman Emeritus Samie Lim said. Speaking at the Franchise Asia Philippines Conference 2014, Lim said the country’s thrust to become the franchising hub of the region would soon become a reality given the influx of foreign brands to the country, and the number of businesses that had set up shop here.

and its campaign on climate change and open global trading, he said. The British envoy noted that the Philippines also plays a big role in advancing human rights in Southeast Asia. Ahmad said many high-ranking British officials visited the country in recent months, proof that the British government is giving importance to the Philippines. The British Embassy in Manila also has a full-time economist here, a regional economist based in Singapore and another department that deals with that aspect in London. Ahmad said the UK has also been very supportive of the government’s public-private partnership (PPP) program. (MAT 07/17)

The number of foreign brands participating in the franchise expo alone has risen by 400%, indicating huge interest in the Philippine market. These franchises come from the United States (U.S.), the United Kingdom (UK), Indonesia, Malaysia, Singapore, Korea, Japan, Taiwan, and Hong Kong. Based on a study by international consultancy and survey firm EGS, the Philippines outperformed other countries in the region in terms of attracting franchise investments. Also, most foreign companies considered the Philippines to be an excellent regional headquarters for international franchises. In the same conference, Department of Trade and Industry (DTI) Secretary Gregory L. Domingo has committed to provide support for the franchising industry, possibly by subsidizing local companies’ participation in international trade and exhibition events. (PDI 07/18)

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2.2.Q2 Q2economic economicgrowth growth seen seenatat6.5% 6.5%

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he Philippine economy likely grew 6.5% in the second quarter of the year, gaining some momentum back after slowing in the first quarter, two leading think tanks in the country said. The stronger growth for the second quarter this year is expected to result in more jobs to offset the impact of higher inflation and weaker exports during the period, the First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) reported.

their previous 6.3% economic growth projection for the country for the period. “Second-quarter gross domestic product (GDP) growth may surprise on the upside, considering the 1.6M jobs created in the year ending April 2014, and double-digit growth of 12.8% in industrial output for the same month,” the report said. Data on labor and employment showed encouraging growth of 4.5% in April, pushing total employment to 38.7M, compared with 37M in April 2013. (MAT 07/21)

In the July issue of the The Market Call, FMIC and UA&P revised upward

3. European Commission backs PHL bid for EU preferred status

he European Commission (EC) intends to favorably endorse to the European Union (EU) parliament the Philippines’ application for Generalized System of Preferences Plus (GSP+). GSP+ is a program under the EU Generalized System of Preferences (GSP) scheme that offers preferential tariffs to exports from eligible countries in the form of zero tariffs on all products covered by the scheme. Based on a review of the Philippine application, the EC concluded that the Philippines has met eligibility criteria for GSP+. In particular, the note verbale from the EC cited that the Philippines has ratified and is implementing international conventions required for inclusion in the GSP+ program. “We thank the EC for their positive assessment of our application. This is a step forward in a stringent process. We hope that before the year ends, the application will be approved by the EU parliament,” Department of Trade and Industry (DTI) Undersecretary for Industry Development Group (IDG) Adrian S. Cristobal Jr. said.

“We have been intensifying efforts to secure the GSP+ approval from the EU Parliament as part of our strategy to increase trade with the EU. We have been meeting and communicating as well with Philippine embassy officials in Europe to strengthen our campaign for the GSP+ application,” Cristobal added. The Philippines is already a beneficiary of the GSP scheme, which provides for reduced tariffs or zero tariffs to a limited number of products. Once the application to GSP+ is approved, Philippine exporters will enjoy zero tariffs on all products covered by the scheme, including big-ticket items that the Philippines is currently exporting under the regular GSP such as animal/vegetable fats and oils, prepared foodstuffs, machinery and mechanical appliances, chemical products, textiles and garments, and plastic products. “On the domestic side, we shall convene the PH task force for GSP+ to ensure that our industries are ready to take advantage of GSP+ market access, once the application is approved. This includes technical assistance and capacity-building

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for Philippine exporters to Europe through the EU’s Trade-Related Technical Assistance (TRTA) Project. We also need to identify trade barriers that our exporters are facing, among others,” Cristobal said.

scheme will translate to enhanced production capacity in the Philippines. Based on consultations with exporters last year, the DTI estimates GSP+ scheme could generate an additional 270,000 jobs in both the agriculture and manufacturing sectors.

Cristobal added that increased exports to EU as a result of the GSP+

Inside DTI 1. PHL e-vehicle, aerospace firms upbeat

n industry association expects sales of electric vehicles in the country to reach P4.44B by 2015, about 20 times higher than the P214.2M recorded in 2013, as the country continues to make a push for this energy-efficient and eco-friendly transportation. To help reach such target, the Electric Vehicle Association of the Philippines (EVAP) will be presenting a roadmap that will outline the strategies and overall direction for the sector. This roadmap is expected to help create an environment where the use of electric vehicles is highly promoted, encouraged, and supported by both the Philippine government and society that would lead to eco-friendly and efficient transportation. The roadmap focuses on program development, local market build-up, production capacity enhancement, local and export markets expansion, and full integration of electric vehicles in both the local and

2. Usec Terrado cites competitiveness ranking

regional automotive industries. The industry sought support in the implementation of policies that will attract investments, create a more predictable business environment, establish industry clustering and value chain, enhance competitiveness measures, and integrate resources. Meanwhile, the aerospace manufacturing industry, which will also be presenting its roadmap, expects revenues to grow to USD 1.4B by 2022, as it moves to build international capability and expand markets with government support. It was also estimated that the number of jobs to be generated by the industry will reach 8,300 by 2022. Last year, the aerospace manufacturing industry’s estimated revenue stood at USD 385M, employing 2,200 Filipinos who provided support and services to various economic activities.

more competitive in the ASEAN region,” DTI Management and Services Group (MSG) Undersecretary Nora K. Terrado said.

“We are improving and moving in the right direction towards becoming

Terrado said the Philippines’ jump to the 59th spot in the Global Competitiveness Report 2014 of the World Economic Forum (WEF) is an indication that the country is positioning well in the ASEAN bloc.

he Philippines is gaining a strong foothold towards competitiveness in the regional economy, an official from the Department of Trade and Industry (DTI) said, commenting on the impending ASEAN Economic Community (AEC).

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Among the 10 Southeast Asian member-countries, the Philippines placed sixth in terms of competitiveness, ahead of Viet Nam, Laos, People’s Democratic Republic, Cambodia, and Myanmar. “There are a lot of worries around ASEAN about the integration but this has been happening over a period of years. It’s just a matter of formalization,” she said. Terrado said the Competitiveness Report has shown that the trends are positive across most dimensions of the index. She noted that the Philippines is leveraging on its market

3. DTI pushes for global expansion of franchises

inancial support for the participation of Philippine franchises in international fairs is being studied by the Department of Trade and Industry (DTI) to enable local enterprises to take advantage of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) through overseas expansion. DTI is considering coursing the funding through the Center for International Trade Expositions and Missions (CITEM), a corporation of the Department focusing on exports promotions. The financial assistance scheme may start next year once a study is completed.

size, business sophistication, good financial market development, health, and primary education. She also said that while the reports mentioned mostly positive developments, there is also room for improvement. “The improvements are coming from such a low base that the country cannot afford to be complacent. For instance, transport infrastructure has improved but remains in a dire state especially in the state of the country’s airport and seaport facilities,” Terrado quoted the WEF report. may have to pay to participate in international franchise shows. In agreement with DTI, the Philippine Franchise Association (PFA) also sees the AEC as a chance for home-grown franchises to set-up internationally. “We all know that the best defense is a good offense. If foreign franchises can open in the Philippines, home-grown franchises should also aggressively seek opportunities to open overseas,” said PFA Chairman Emeritus Samie Lim. The AEC will integrate the markets of the ASEAN members by 2015. (TPS 18/07)

The funding will be used to partially finance fees that local franchises

4. 2014 counterfeit seizures seen to reach all time high Inclusion of fake goods confiscated

• • •

Luxury items Pharmaceutical products and apparel Video and audio discs

Source: Intellectual Property Office of the Philippines (IPOPHL)

he Intellectual Property Office of the Philippines (IPOPHL) is expecting to surpass the highest recorded value of P8.3B of seized counterfeit products set in 2011.

Committee on Intellectual Property Rights (NCIPR) has reached P7.6B.

For the first semester of 2014, value of fake goods confiscated by the multi-agency intellectual property rights (IPR) task force National

In the past months of the 2014, the worth of seized goods has been rising at three-digit rates on a year-to-date basis. (BMI 19/07)

The first semester value is almost as much as the worth of false items seized in 2013 which was at P7.8B.

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5. Shared liability of manufacturers and sellers pushed

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evisions to Senate Bill No. 1795 s. 2013, An Act Establishing Legal Standards and Procedures for Product Liability Litigation and for Other Purposes or the Product Liability Act, is being proposed by the Department of Trade and Industry (DTI) to make manufacturers and sellers equally responsible for defective products. The bill looks to mark-down and speed-up litigation and resolution of product liability cases while observing a fair balance between the interests of consumers, manufacturers, and sellers through the establishment of certain legal regulations. DTI finds the bill in accordance with Republic Act No. 7394 or The

MSME News 1. Further European activity of local firms thrusted by DTI

round 20 Philippine companies will be brought by the Department of Trade and Industry (DTI) to France for the Salon International de L'Agroalimentaire (SIAL) food fair and to Germany and the United Kingdom (UK) for business matching sessions within the year in a bid to strengthen trade and investment relations in Europe. The SIAL is the world’s largest food fair held every even year, and this year’s edition is set to take place on 19-23 October in Paris. The 2014 exhibition is expected to draw 6,000 exhibitors and 150,000 guests from 100 countries, and will center on challenges the global food industry is encountering. As for the business matching sessions to be held in Hamburg and London, it will be organized by companies from Switzerland participating in the SIAL. The country is already a beneficiary of the European Union’s Generalized System of Preferences (EU GSP) which reduces the tariff of 3,767 products and removes the tariff

Consumer Act of the Philippines but looks to make it more impartial by making the manufacturer just as liable as the seller instead from just being secondary. Of particular concern by the Department is the bill’s Section 3 Subsection C, which states that manufacturer liability is only subsidiary and that the manufacturer will only be held entirely accountable if the seller has no fault, and that the damage or injury is a direct effect of the manufacturer’s negligence. “In the interest of fairness, manufacturers should be held jointly and severally, or solidarily liable with the product seller,” the Department’s Sector Planning Bureau (SPB) said in a position paper. (BMI 15/07) on 2,442 products, while an application for the EU GSP+ has been submitted earlier this year. If approved, the EU GSP+ will allow for zero tariff on 6,274 products from the Philippines. Another endeavor pursued by the country are free trade agreements (FTAs) with the EU and the European Free Trade Association (EFTA). (TPS 21/07)

Philippine products for promotion in SIAL

• • • • • •

Alcoholic and non-alcoholic beverages Coconut products Fresh and processed fruits Muscovado sugar Processed marine products Snack foods

EFTA member states

• • • •

Iceland Liechtenstein Norway Switzerland

Source: European Free Trade Association (EFTA)

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2. DTI-9’s Roving Academy to make SMEs disasterresilient, ready for AEC

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he Department of Trade and Industry-Region 9’s (DTI-9) Small and Medium Enterprise Roving Academy (SMERA) this year is aimed at making small businesses disaster-resilient and preparing them for the opportunities the ASEAN Economic Community (AEC) will bring. The SMERA was held from 21-26 July 2014. Aside from the abovementioned activities, there were also one-on-one consultations with concerned government agencies to help small businesses secure needed assistance about product development and access to finance and market.

3. DTI-Iloilo holds MSMEs Expo 2014

he Department of Trade and Industry (DTI) held the Micro, Small, and Medium Enterprises (MSMEs) Expo 2014 last 28 July to 3 August at SM City Event Center, Iloilo City.

Topics discussed in DTI-9’s SMERA 2014

• • • • •

ASEAN Economic Community Business continuity planning Financing Visual merchandising seminar Product development seminar Areas visited by the SMERA

• • • •

Dipolog City Pagadian City Ipil, Zamboanga Sibugay Zamboanga City (SMERA also to cater to SMEs from Isabela City, Basilan)

DTI-Iloilo targeted domestic sales from the Expo to reach P1.5M. The fair featured 30 MSMEs that showcased their products. Products at the MSMEs Expo 2014

Organized in cooperation with the Iloilo Provincial Micro, Small, and Medium Enterprises Development (PMSMED) Council, the MSMEs Expo 2014 is part of this year’s celebration of the Small and Medium Enterprise Development (SMED) Week with the theme, “Strengthening Competitiveness and Sustainability of MSMEs.”

Business Update 1. PHL makes USD 10.95-M sales at Thaifex

he Philippines’ participation in the 10th Thaifex-World of Food Asia last 21-25 May yielded USD 10.95M in sales and 260 total inquiries for the participating firms. The Philippines Pavilion, occupying a 198-sqm space in the event, housed 20 local food exporters represented by 56 delegates. The country’s participation was made possible through the maiden joint venture of the Center for International Trade Expositions and Missions (CITEM) and the Philippine Food

• • • • •

Processed food Crafts Furniture Natural and organic products Loom-weaving products

Products showcased by the Philippines Pavilion

• • • •

Beverages Processed food Snack items Sauces and mixes

Source: Center for International Trade Expositions and Missions (CITEM)

Processors and Exporters Organization, Inc. (Philfoodex). “We are proud to co-organize this event together with Philfoodex, in bringing Food Philippines to Thaifex.

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It has been a very good avenue for our country’s top-selling export products to be promoted in Asia’s influential meeting place for global players from the food, beverage,

2. DTI, Bacoor City sign agreement for BN registry center

he Department of Trade and Industry (DTI) and the Bacoor City government signed an agreement to jointly support entrepreneurship through the establishment of the business registration center in Bacoor, Cavite. The business name registration facility will be implemented more effectively if this is brought closer to potential clients, DTI Region 4A Regional Director Marilou Quinco-Toledo said.

food technology, and retail & franchise industries,” CITEM Executive Director Rosvi C. Gaetos said.

which refers to DTI’s e-business name registration system - an online, web-based system that enables faster and easier registration. The registration center will receive on-line business name applications, encode walk-in clients’ applications, accept online and/or cash payments, and print business name certificates. DTI has already started training the staff who will man the center and process applications.

“The center will use the current E-BNRS,” Toledo added,

Consumer News 1. PNoy signs anti-lemon bill into law

resident Benigno S. Aquino III signed the anti-lemon bill into law which protects car owners from brand-new but defective motor vehicles. Under the new law, anyone who purchases a brand new car and experiences defects within a year after purchase would be able to secure a refund or replacement of the unit if repairs prove useless.

2. DTI-Ifugao conducts Diskwento Caravan

he Department of Trade and Industry (DTI)–Ifugao conducted a three-day Diskwento Caravan during the Gotad ad Ifugao, a province wide thanksgiving celebration, on 16-18 June 2014. The DTI-Ifugao said the activity served 845 consumers and generated about P460,467 in sales. It allowed consumers to avail themselves of quality goods and products at discounted prices from participating retail stores and suppliers.

The term “lemon” attributes to brand-new vehicles that fail to meet quality and performance standards. A car qualifies as a lemon if it has been repaired four or more times for the same defect within the warranty period, which is 12 months after purchase or the first 20,000 km of operation. (TPS 20/07)

Ten suppliers and merchandisers operating in Ifugao and others from Nueva Vizcaya participated in the Diskwento fair. Diskwento fair participants • • • • • • • • • • •

B-MEG (thru Lydia’s Agrivet) Cindy’s Bakery Outlet Connie’s Wetshop Erlind’s Dried Fish Genny’s Fruitstand Godswill Helen’s Fruits Lagawe Trading Mila’s Bakeshop National Food Authority (NFA) The Generics Pharmacy (TGP)

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3. P37-M substandard steel products seized, 11 busted

25 August 2014 9

he Department of Trade and Industry (DTI), together with representatives from the Philippine National Police-Criminal Investigation and Detection Group (PNP-CIDG) and Laguna Police seized P37M worth of substandard construction steel products in Cabuyao, Laguna last month. The operation in Barangay Bantic led by CIDG 4A Regional Chief Felipe R. Natividad arrested 11 persons, including five undocumented Chinese nationals, and also yielded the seizure of assorted substandard steel bars, angle bars, and rolled bars of different sizes, said CIDG Chief Director Benjamin B. Magalong. Magalong said coordination was made with the Bureau of Immigration for Deportation (BID) for the proper disposition of five Chinese nationals. He said the operation was covered by a search warrant issued by the Cavite Regional Trial Court (RTC) to the South Luzon Steel (SLS) Industrial Corp.

FEATURE Learn how to enter JVs legally with LGUs, GOCCs

he Center for Global Best Practices (CGBP) recently conducted a pioneering seminar entitled, “Business and Public Officials’ Guide on How to Joint Venture Legally with local government units (LGUs) and government-owned and -controlled corporations (GOCCs)” on 22 August at Edsa Shangri-La Hotel, Mandaluyong City. The CGBP, with Forensic Solutions, Inc., aims to walk prospective firms through the revised guidelines and procedures that took effect on 26 May 2014. Joint ventures (JVs) are increasingly becoming popular as a fast and

STATWATCH USD 10.95M PHL’s sales from the 10th Thaifex-World of Food Asia 2014

P7.6B Value of fake goods confiscated by the IPR Task Force in the first half of 2014

P4.44B Expected sales of e-vehicles by 2015

P37M Worth of substandard steel seized by the DTI, CIDG, and Laguna Police

P1.5M Targeted sales from DTI-Iloilo’s MSMEs Expo 2014

P460,467 Diskwento Caravan sales held in Ifugao last June

400% Rise in number of foreign brands that participated in Franchise Asia Philippines convenient approach in implementing infrastructure and development projects at the national and local government levels. The National Economic and Development Authority (NEDA) released the 2013 revised JV guidelines applicable for LGUs, GOCCs, government instrumentalities, government financial institutions (GFIs), and state universities and colleges (SUCs) to accelerate economic growth.

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

Vol. 19, No. 17 10

Title : Mobile Marketing: Fundamentals and Strategy

Publisher : McGraw Hill Author : Varnali, Kaan/Toker, Aysegul/ Yilmaz, Cengiz Call Number : 06.06/VAR/2011 This book provides an overall, up-to-date picture of the mobile marketing landscape. It includes a list of mobile services and applications, comparing their features and value propositions with those of traditional media, and elaborates on the unique challenges and benefits of using mobile service. It contains both simple overviews of the prevailing technologies found in mobile marketing and, more importantly, some clear guidance on how to use them. 163p.

Title : Entering New Markets: A Guide for Trade Representatives

Publisher : International Trade Centre Call Number : 08.01/ITC/2013 This book explains how to promote trade abroad within the context of national trade policy and export strategies. It assists foreign trade representatives (FTR) in their activities in promoting trade, and provides a set of specific tools, methods, and capacity-building possibilities for trade support institutions in charge of supervising FTR networks. 204p.

Legend BMI MAB MAT PDI TPS

Business Mirror Manila Bulletin Manila Times Philippine Daily Inquirer The Philippine Standard

Editor-in-Chief/Patricia May M. AbejoManaging Editor/Anne L. Sevilla 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. Neñeria Circulation/Al AquinoTo subscribe, email: publications@dti.gov.ph