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22 September 2014 1
22 September 2014 Vol. 19, No. 19
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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 Exports grow 21.3% PHL’s exports highest in East and ASEAN
Business Update DTI dispels fears on full banking liberalization
Good News, Philippines! 1. PHL to grow 6.7% in 2014 2. Factory output up for third month 3. Mineral production grows 17%
Consumer News 1. Pinoys, victims of quick money schemes 2. P40-M substandard construction materials seized in Laguna
Inside DTI 1. DTI-PAB receives approval to continue as APLAC MRA Signatory 2. DTI seeks P3.64-B 2015 budget 3. Gov’t to establish local competitiveness index 4. 10-% investments growth in 2015 expected MSMEs 1. DTI backs SME digitization 2. Market access workshop held to prepare SMEs for AEC 2015
Feature 1. 60th Manila FAME features German Home Specialist 2. Get ahead in business ASEAN Watch 1. PHL eyes more trade with ASEAN 2. PHL is fastest-growing ASEAN auto market Statwatch What’s New?
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Focus Exports grow 21.3% PHL’s exports highest in East and ASEAN
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hilippine exports grew by 21.3% in June 2014, outperforming East and other Southeast Asian economies, the National Economic and Development Authority (NEDA) reported.
Electronic products remained as the country’s top export with total receipts of USD 2.22B, accounting for 40.8% of the total export revenue in June 2014, or a growth of 10.7% from USD 2B in June 2013.
The country’s exports in June hit USD 5.44B, a strong expansion from USD 4.49B recorded in the same period last year.
Top 10 Philippine Export to all Countries: June 2014 (Year-on-year % growth)
“This is the highest level since the economy started posting a continuous positive growth in the same period last year. It is also way faster than the 6.9-% increase in May 2014 and the 4.1-% expansion in June 2013,” Socioeconomic Planning Secretary Arsenio M. Balisacan said. Export Growth East and Southeast Asia June 2014 (In %) Country Philippines Viet Nam China Malaysia Singapore Thailand Indonesia Hong Kong Korea Taiwan
Growth 21.3 12.7 7.2 5.6 4.7 3.9 3.8 2.7 2.5 1.2
Source: National Economic and Development Authority (NEDA)
Total exports for the first six months of the year rose by 8.3% to USD 29.8B from USD 27.5B in the same period in 2013. “The export gains are broad-based, as reflected by increased overseas demand for our manufactures, mineral products, total agro-based, and forest products,” Balisacan said.
Good News, Philippines! 1. PHL to grow 6.7% in 2014
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he Philippine economy is expected to grow by 6.7% this year, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) reported.
Machinery & Transport Equipment Bananas (Fresh) Other Mineral Products Other Manufactures Articles of Apparel and Clothing Accessories Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts, and Ships Electronic Products Chemicals
120.4 98.9 74.2 67.8 44.5 32.5 10.7 0.1
Source: National Economic and Development Authority (NEDA)
By major groups of electronic products, semiconductors comprised 27.6% of the total exports and shared the biggest with export earnings worth USD 1.5B and rose by 14.5% from USD 1.3B recorded in the same month last year. “Our overall outlook for Philippine merchandise exports continues to be optimistic in view of favorable expectations on the global economy for the rest of 2014, particularly on the growth prospects of advanced countries such as the United States (U.S.) and the Euro Area,” he said. PHL’s Top Export Markets June 2014 (In Million USD) Country Japan China U.S.A. Hong Kong Singapore
Amount 955.98 859.38 751.68 487.74 377.97
Source: National Economic and Development Authority (NEDA)
UNESCAP urged the government to improve its revenue collection to be able to achieve the modest growth targets.
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It said the Philippine government needs to introduce policies to enhance domestic resource mobilization including rationalizing the tax system to create a larger tax base.
It said despite all the damage and disruption caused by Super Typhoon Yolanda, inflation is still forecast to close the year at 4.3% or within the higher end of government’s outlook.
In 2013, the Bureau of Internal Revenue (BIR) collected P1.217T in tax revenues, P158.72B or 15% more than the collections made in 2012.
“The Philippines provides an example of growth, driven by a conducive policy climate. The government has engaged in significant productive public spending in infrastructure and social areas, while private investment has also increased,” it said. (TPS 08/07)
UNESCAP said the Philippines is still in a stronger growth rate compared with the rest of Southeast Asia, which is forecast to grow 4.6%.
2. Factory output up for third month
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he country’s factory production posted a double-digit growth in the third consecutive month in June, the Philippine Statistics Authority (PSA) said. The PSA said the volume of production index (VOPI) grew 13.3% in June from a year ago, following a 13.4-% increase in May and 12.2-% gain in April. The National Economic and Development Authority (NEDA) said it expected the manufacturing sector to support growth in the next quarters,
3. Mineral production grows 17%
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ineral production increased 17.1% in the first quarter from a year ago, the Mines and Geosciences Bureau (MGB) said. MGB said gold accounted for 38.6% of the total production value at P8.48B in the January-March period. This was boosted by higher output from the Didipio gold project of Oceana Gold Philippines Inc. in Nueva Vizcaya; Toledo copper project of Carmen Copper Corp. in Cebu; and Padcal copper-gold Project of Philex Mining Corp. in Benguet. Direct shipping nickel ore and nickel sulfides accounted for 34.8% of the
after the gross domestic product (GDP) grew by 5.7% in the first quarter. (MST 08/13) PHL Factory Output Growth June 2014 (In %) Sector Printing Leather products Fabricated metal products Furniture and fixtures Machinery except electrical Basic metals Transport equipment Textiles Food
Growth 153.8 40.5 39.8 26.7 26.7 24.4 19.8 15.4 13.1
Source: Philippines Statistics Authority (PSA)
total production value, while copper came in third with 24.3%. Combined value of silver, zinc, iron ore and chromite accounted for the remaining 2.34%. MGB Acting Director Leo L. Jasareno said three mining projects were expected to start operation this year, including the Vitali iron ore mining project of Atro Mining–Vitali Inc. in Zamboanga del Sur; Libjo nickel laterite project of East Coast Mineral Resources Co. Inc. in Dinagat Island; and Agata nickel laterite project of Minimax Mineral Exploration Corp. in Agusan del Norte.
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“Total investment of said projects is estimated at P1.46B. Their entry will boost the number of operating
Inside DTI 1. DTI-PAB receives approval to continue as APLAC MRA Signatory
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he Department of Trade and Industry’s Philippine Accreditation Bureau (DTI-PAB) has received approval from the Asia Pacific Laboratory Accreditation Cooperation Mutual Recognition Arrangement (APLAC MRA) Council to continue as a Signatory to the APLAC MRA. As such, DTI-PAB also continues its signatory status to the International Accreditation Cooperation (ILAC) MRA. In the Joint Annual Meeting of APLAC and the Pacific Accreditation Cooperation (PAC) held on 21-28 June 2014, in Guadalajara, Mexico, it was announced among the APLAC MRA and ILAC MRA 121-member signatories that the DTI-PAB, the sole member from the Philippines passed the re-evaluation, and the approval to continue its signatory status was issued. The APLAC-MRA Council issued the certificate to continue as a signatory to DTI-PAB after the conduct of a peer evaluation on 13-17 January 2014 based on Philippine National Standards/ International Organisation for Standardisation/ International Electrotechnical Commission (PNS/ ISO/ IEC) 17011:2007 and APLAC MR 001 - Procedures for Establishing and Maintaining Mutual
2. DTI seeks P3.64-B 2015 budget
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he Department of Trade and Industry (DTI) proposed a total budget of P3.64B for 2015. Based on the DTI proposed budget, which was submitted to the Department of Budget and Management (DBM), P3.18-B of the
metallic mines in the country from 43 to 46,” Jasareno said. (MST 08/13)
Recognition Agreements Between Laboratory Accreditation Bodies. Under the APLAC MRA, there is an assurance that accreditation issued by a signatory accreditation body is equivalent in quality that opens new international trade opportunities without the need and expense of obtaining additional accreditation from each country. An MRA is an open system based on internationallyaccepted standard of competence that is used to provide assurance in testing and calibration results. It hastens market access, subsequently facilitating cross border acceptance of results and response to market changes. With this, suppliers can easily identify reliable testing and calibration laboratories minimizing testing costs, delays, and logistic difficulties. The DTI-PAB is the Philippines’ national accreditation Body that accredits inspection, testing and certifying bodies, and other organizations offering conformity assessment services needed by the country. Accreditation is a voluntary, third party-reviewed process in which an organization’s management system and/or technical competence is thoroughly evaluated on a regular basis to ensure that it continuously conforms to international standards.
total DTI budget for the Office of the Secretary (OSEC) has been allocated of which P1.54B will be for the central office while P1.64B will be for the regional DTI offices. The budget will also support a total of a 1,626 personnel.
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3. Gov’t to establish local competitiveness index
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gencies of the Philippine Government led by the National Economic and Development Authority (NEDA) looks to create a local competitiveness index to better assess the country’s performance. NEDA, with its attached agency the Philippine Statistics Authority (PSA), and the Department of Trade and Industry (DTI), through the National Competitiveness Council (NCC), will formulate policies and procedures to establish a routinary collection of data and reporting of competitiveness starting in the cities and municipalities. At present, performance data gathering and recording systems are only used regionally.
4. 10-% investments growth in 2015 expected
“We need to identify objective and specific indicators of development and competitiveness at the local level that can be directly linked with the country’s global competitiveness rankings,” NEDA Vice-Chairperson and Socioeconomic Planning Secretary Arsenio M. Balisacan said . With the recognition of objectives and indicators at the local level, the economic capabilities and weaknesses of the local government units (LGUs) can be determined and addressed, streamlining efforts under the Philippine Development Plan (PDP). (GMA 07/08)
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decreased by 38% to P149.45B from P240.74B during the same period in 2013.
Jobs to be generated from the estimated approved investments for next year are also seen to increase from this year’s 42,000 perceived jobs to 46,000.
The decline in the amount of investments is chalked-up to the agency’s heightened monitoring for compliance of previously authorized mass housing projects under the Investment Priorities Plan (IPP) which led to a slowdown in the approval of projects of the same kind.
nvestments for 2015 is targeted by the Board of Investments (BOI) to increase by 10%, or from this year’s estimated P491.05B to P540.15B.
The BOI has activities planned for next year under its industry development and investment policy services and investment promotion and facilitation services to spur investments.
Despite the decline, the BOI is still positive that this year’s target can be surpassed by 10% with an anticipated 197 projects worth P405B due for approval within the year.
For the first semester of this year, investments approved by the BOI BOI 2015 Activities Industry development and investment policy services
Processing of 3,500 incentive applications and endorsement to the Bureau of Internal Revenue (BIR) Update 31 plans and policies
Source: Board of Investments (BOI)
Investment promotion and facilitation services
Assist 5,295 investors Conduct 296 promotional events
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MSME News 1. DTI backs SME digitization
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he Department of Science and Technology (DOST) is consulting with the Department of Trade and Industry (DTI) to incorporate in its National Broadband Plan e-commerce that may be harnessed by small and medium enterprises (SMEs). The DOST-Information and Communications Technology Office (DOST-ICTO) has solicited comments on the proposed plan with the DTI. Incentives for SMEs that will use broadband for their business is one of the aspects that the DTI would like to see in the National Broadband Plan. Having SMEs employ e-commerce systems aligns them to DTI’s shift to digital services and processes.
2. Market access workshop held to prepare SMEs for AEC 2015 Workshop Organizers
ASEAN SME Working Group Business Alliance (US-ASEAN Business Council, USAID) Department of Trade and Industry (DTI) Philippine Chamber of Commerce and Industry (PCCI) Philippine Exporters Confederation, Inc. (PHILEXPORT) Participating Companies
US Companies Local Companies Baker & McKenzie HanCole eBay KLT Fruits, Inc. FedEx Shopinas Google International Business Machines Corp. (IBM) PayPal Procter & Gamble Corporation Source: Philippine Chamber of Commerce and Industry (PCCI)
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ompanies from the United States (US) and local firms imparted their business knowledge to small and medium enterprises (SMEs) through one-on-one consultations during the Workshop on Market Access for SMEs: Supplying to ASEAN and the World. The workshop, attended by 200 SMEs, looks to prepare them for the integration of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) in 2015 by enhancing how they handle opportunities and challenges in the rapidly changing global economy. "It is only by harnessing the huge potential of these economic cooperation agreements that we will be able to minimize and manage effectively the risks and maximize the full potential of our economy
The National Broadband Plan, targeted to be completed by 2017, aims to hasten adoption of broadband in the Philippines. Another initiative of the DOST-ICTO is the implemention of the Philippine Digital Strategy (PDS) 2011-2016, which provides for the formulation of a national broadband policy across the private and public sectors. (BMI 08/10)
National Broadband Policy Details of interest to DTI Broadband minimum speed Definition of types of data permitted for transmission Guidelines on incentives for SMEs Policy on prescribed platforms and technologies for systems compatibility of databases between government offices
Source: Information and Communications Technology Office (ICTO)
and firm enterprises," said Philippine Chamber of Commerce and Industry (PCCI) President Alfredo M. Yao. The event was facilitated by Business Alliance, a partnership of the US-ASEAN Business Council and the US Agency for International Development (USAID), in collaboration with the ASEAN SME Working Group and the public and private sectors. "We assure our SMEs that the government is putting together resources to prepare SMEs for this integration. We have prepared long before this integration is happening, we have orchestrated an SME development plan and identified various support services that SMEs can access to help them be more competitive," said DTI-Regional Operations Group (ROG) Assistant Secretary Blesila A. Lantayona.
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Business Update DTI dispels fears on full banking liberalization
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he Department of Trade and Industry (DTI) is confident that the full liberalization of the private banking sector under a new law would boost the competitiveness of the financial services sector in the country. Republic Act (RA) 10641 or “An Act Allowing the Full Entry of Foreign Banks in the Philippines,” allows 100-% foreign bank ownership in the Philippines in time for the 2015 Association of Southeast Asian Nations (ASEAN) regional economic integration or the ASEAN Economic Community (AEC). It amends RA 7721, or “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines.”
Consumer News 1. Pinoys, victims of quick money schemes
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espite the Consumer Code of the Philippines, many Filipinos are still victims of quick-money scams. Aside from this, many also fall for network marketing strategies that recruit to buy and sell overpriced products. Philippine Women’s University Sociology Professor Bro. Clifford Sorita cited factors why Filipinos are easily enticed by such schemes. Due to Filipinos’ “instant mentality” and the economic condition’s influence they tend to be gullible in quick-money schemes. Also, the business models of these schemes are framed in such a simple manner that entice many people to join.
2. P40-M substandard construction materials seized in Laguna
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he Department of Trade and Industry (DTI) and the Philippine National PoliceCriminal Investigation and Detection Group (PNP-CIDG)-4A raided the warehouse of South Luzon Steel Corp. in Barangay Banlic, Laguna. At least P40M worth of allegedly substandard construction materials were seized. The materials, which included 18,000 deformed steel bars, were said to be
“With the entry of these banks in the country, we do not only augment the domestically available financial resources to boost commerce but also ensure the free flow of financing to support infrastructure projects that will further boost the economy and create more jobs,” DTI Investment Promotion Group (IPG) Undersecretary Ponciano C. Manalo Jr said. Earlier, the Philippine Chamber of Commerce and Industry (PCCI) warned that this move may put the country’s banks at the mercy of the giant banks in other ASEAN countries. However, the Bangko Sentral ng Pilipinas (BSP) said that the law will make local banks become more competitive. Pinoys also tend to unwittingly join a scam when their friends, acquaintances, or family members are the ones who invited them. There are three ways to detect illegal marketing schemes in the Philippines. First is to research if the company is legitimate or read reviews about it. Also, ask for necessary documents from the company’s representatives such as; • BN registration from DTI or the Securities and Exchange Commission (SEC) • Business permit from the local government unit (LGU) • Tax identification number from the Bureau of Internal Revenue (BIR) The consumers must be wary if the company fails to present at least one of these documents. . for a housing program in Yolandadevastated areas in Leyte. The area was under surveillance for a week when an informant tipped them off about the allegedly smuggled items. CIDG-4A Regional Director Senior Superintendent Felipe Natividad said the raid was a continuation of operation against South Luzon Steel Corp. (TPS 11/08)
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FEATURE 1. 60th Manila Fame features German Home Specialist
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ermany’s International Product Development Specialist Detlef Klatt will remodel Manila FAME’s 60th edition with a special setting of handcrafted tabletops under the Design for Exports Program. Manila FAME will showcase a collection of tabletops, which include dinnerware, flatware, and other table accessories, produced by 17 different home design companies using different materials and techniques. Klatt will give product and material development assistance to local manufacturers to create a diverse yet cohesive range of merchandise, particularly ceramics, pottery, and other table top categories. He also worked with leading home design companies and assisted them in maximizing business opportunities through product development, market intelligence, and buyer matching.
Davao, Metro Manila, Pampanga, and Tarlac where he did an evaluation on the materials and techniques utilized by each company. Along with the assessment of each company was his introduction of the program and his concept for the special setting. “I know the potential of this country as a source of finely crafted products. In the Philippines are materials which you will not find anywhere else. On one side, the materials and techniques show creativity. On the other side, each has a character and tells a story,” Klatt said. He added that the companies were very open and enthusiastic to the idea of working with him to develop new products. The 60th Manila FAME will be held at the SMX Convention Center, Mall of Asia Complex in Pasay on 16-19 October 2014. (PDI 27/08)
Moreover, Klatt visited participating companies located in Bicol, Cebu,
2. Get ahead in business
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inning or losing in business is in the hands of the entrepreneur though there is a big influence in nature such as competition, economic condition, and calamities. An entrepreneur could stand up and declare that the battle is not yet over just like in the movies, but a business is not a contest of courage. It is better to give up business earlier if your expert understanding believes it would not succeed. Here are some tips for getting ahead in business: Love your customers. Your priority in business is to make your customer happy. Extend your efforts in knowing how you will encourage them to buy your goods and ask for your services.
Remember that business fails if there is no customer. Be careful of illusion. There is nothing wrong with being a positive thinker. However, open your eyes in the reality of losing, creating mistakes, encountering accidents and calamities, and other unwanted possibilities. Produce quality products. High quality products sold in lower prices will keep your customers. Look for ways on how you can cut your expenses in your business operation such as asking for discounts from your suppliers or letting contractors do specialized tasks. Be calm in facing your problems. You will be successful if you know how to solve your problems with calmness. (Bandera 11/08)
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ASEAN Watch 1. PHL eyes more trade with ASEAN
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he Philippines is aiming to increase trade with the Association of Southeast Asian Nations (ASEAN) to take advantage of the region’s huge market under the ASEAN Economic Community (AEC). The government wants to see trade with the ASEAN further go up in the long-term, Export Marketing Bureau (EMB) Director Senen M. Perlada said. The AEC aims to create a single market and production base to promote free movement of goods, services, investment, and skilled labor within the region. Perlada said most of the goods being traded by the Philippines with its Southeast Asian peers are in the export industry such as electronic equipment as well as vehicle parts and mineral fuel products. The country also sees opportunities in exporting fast moving consumer goods to further increase trade with the region. (TPS 11/08)
2. PHL is fastest-growing ASEAN auto market Units of Vehicle Sales in the ASEAN Region Indonesia Thailand Malaysia Philippines Viet Nam Singapore Brunei
642,323 440,911 333,142 108,957 54,939 19,794 8,992
Source: ASEAN Automotive Federation (ASEAN Autofed)
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STATWATCH P540.15B BOI’s target investments for 2015
P3.64B DTI’s proposed budget for 2015
P40M Sales generated from the Bohol Sandugo Regional Trade Expo 2014
P40M Worth of alleged substandard materials seized from South Luzon Steel Corp. in Laguna
108,957 Motor vehicle units sold from January-June 2014
21.3% PHL’s export growth in June 2014
17.1% Growth in mineral production in Q1 2014
13.3% Factory output growth in June 2014
he Philippines posted the fastest growth in motor vehicle sales among seven countries in the Association of Southeast Asian Nations (ASEAN), recording a 24.9-% increase in the number of units sold to 108,957 units from January to June this year.
at 2.04M units in the first semester of the year.
This figure, however, accounted for a mere 6.8% of the total motor vehicle, which stood at 1.61M units for the first half of the year, according to data from the ASEAN Automotive Federation (ASEAN Autofed).
Domestic production stood at only 42,020 units in the first five months of the year, accounting for only 2% of total motor vehicles produced in the aforementioned ASEAN countries.
The Philippines continued to lag behind four other countries in ASEAN in terms of motor vehicle production. Total production by Indonesia, Malaysia, Philippines, Thailand, and Viet Nam stood
Philippine sales and production of motor vehicles are however expected to further increase over the next several years, with the expected issuance by the government of a new automotive road map. (PDI 08/11)
6.7% UNESCAP’s expected PHL economy growth for 2014
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What’s New? (A synopsis of selected book acquisitions at the DTI-library)
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Title : The Business of BioTrade: Using Biological Resources Sustainably and Responsibly Publisher : United Nations Conference on Trade and Development (UNCTAD)
Title : Empirical Insights on Market Access and Foreign Direct Investment Publisher : United Nations Conference on Trade and Development Author : Fugazza, M/Trentini, C
Call Number : SITC 29/07/UNCTAD/ 2014
Call Number : 03.10/FUG/2014
This paper explores how the efforts of the BioTrade Initiative provide incentives for business to conserve biodiversity by using biological resources sustainably and responsibly. It identifies the actual, practical, bottom-up incentives generated by BioTrade partners and practitioners. It also proposed recommendations to support the implementation of the convention on biological diversity (CBD). 50p.
This paper conducts examination of the influence of market access conditions on foreign direct investment (FDI) decisions using a unique data set on bilateral FDI outward stocks and novel measures of market access. Authors find that over the period 1990–2010, export platform and complex-vertical investment strategies have been driving FDI decisions around the world. 23p.
Legend BMI MST PDI TPS
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Business Mirror Manila Standard Philippine Daily Inquirer The Philippine Standard
GMA - Greater Manila Area Bandera Editor-in-Chief/Patricia May M. AbejoManaging 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 AquinoTo subscribe, email: publications@dti.gov.ph