The OFW deployment industry has suffered with shallow pool of highly trained people and resulted in fewer takers and the increasing deployment of factory workers, maids and entertainers.
Of the 7.8 million sent to different parts of the world from the year 2001 to 2008, average yearly deployment was 893,475 people, but close to half of them (47%) are rehired land-based workers plus 24% returning seafarers. Newly hired averaged only 29 percent or less than a third.
Taking the year 2007 as an example, Soriano, using POEA figures, revealed that of first-time OFWs, 121,715 were factory workers, 107,135 were classified as service workers mostly domestics while only 43,225 were professional and technical workers. Another 20,000 were sent out as sales workers and clerks.
“In 2007, 74% of deployed workers were domestics, service and factory workers,“ he pointed out. Of all the deployed, only 14% were new hires.
Among nurses, only an average of 10,000 get nursing jobs abroad each year, a far cry from the alleged tens of thousands some public officials claim. Most nurses end up without jobs here.
The most alarming trend is the increasing rate of female workers getting jobs overseas. In the past seven years, 64 percent were female against 36 male and most of them were sent as domestic helpers, entertainers and factory hands. -- Abe P. Belena, PHILEXPORT News and Features <--back
2. Finance expert, economists say growth and dev't, not stable prices, is BSP's chief mandate
Top Bangko Sentral ng Pilipinas (BSP) officials are dead wrong in claiming that the main job of the BSP is to keep prices of basic goods stable.
This view was shared by former Finance Secretary Ernest Leung, UP economic professor Med Sta. Ana and University of Asia and the Pacific professor Victor Abola during a forum on the exchange rate controversy held at the PHILEXPORT headquarters in Pasay the other day.
The three expert on fiscal and monetary policies told victims of the strong peso that top BSP are misinterpreting the mandate of BSP. Professor went to the extent of reading to them the provisions of the BSP charter that spell out that economic growth and development, not price stabilization, is the chief mandate of the central bank.
“Stable prices is just a tool towards growth and development, not an end by itself,” he pointed out.
“If the BSP is indeed sincere in supporting a market-driven exchange rate, it must also align interest rates charged by the banks to global levels,” batted in Victor Abola.
The three listened to testimonies of different local industries that said their sectors have incurred losses and worse, lost markets due to a strengthening peso.
Erdie Feliciano, a leader from the furniture industry, shared his company's experiences both in the domestic and foreign fronts. Having catered to both, his company grew from a small outfit a few workers to a group of companies that, at its height in 2007, employed 6,000 regular skilled workers.
The strengthening of the peso in the later part of 2007 that continues until today plus the global recession last year, has decimated their work force to 2,000 workers. They particularly lost their domestic market to Chinese furniture, mostly plastic.
Oscar Barrera, chemical sector representative to the Philippine Exporters Confederation, Inc. (PHILEXPORT) boar, shared his company's sad experience in the manufacture of floor tiles. He said that his company, using mainly local raw materials, was doing well when prices of imported tiles were just even. When the peso got stronger while the Chinese yuan was kept weak, they were swamped with very cheap imported tiles in the local market and abandoned the tile business.
A third example were toiletries. Imported shampoo, bath soap and other consumer goods made by a company which was once in the Philippines, but is now based in a neighboring country, is now offering its products at almost half the price of local manufacturers making similar items led by the last multi-national hold-out in the consumer products business.
The latest development in the consumer products industry is that, the multinational based in the country, has transferred the production facilities for many of its popular products in neighboring countries although it still keeps its main factory near the presidential palace in Manila. -- Abe P. Belena, PHILEXPORT News and Features <--back
3. Proposed national transport plan defines RP’s strategic national transport network
MANILA - A strategic national transport network for the country has been defined in the proposed national transport plan (NTP) of a study team commissioned by the Philippines-Australia Partnership for Economic Governance Reforms (PEGR).
According to George Esguerra, Assistant Team Leader, a strategic national transport network will serve to create a unified, well-integrated economy where people and goods can move and trade swiftly and efficiently both domestically and internationally.
This entails filling the missing links in the existing networks and expanding capacities and level of service in the inter-regional and inter-provincial transport links based on the emerging concentrations of demand generated by industries and services, Esguerra detailed.
As pointed out by Esguerra, the country’s roads, seaports, airports, and railways have been spotty and many of them are operating beyond asset capacities.
As specified in the Plan, the strategic national road network consists of north-south road backbone, east-west laterals, and other roads of strategic national importance which interlink regional and provincial capitals, growth centers, and defined principal ports and airports of the country.
The Plan aims to increase the paved ratio from 21% to 90% of the entire road network by end-2016.
As regards the national port network, it covers the base ports and terminal ports under the jurisdiction of the Philippine Port Authority (PPA) and the Cebu Port Authority (CPA), and ports directly managed by the special economic zones, particularly the Subic Port (SP) and the Mindanao International Container Port (MICP).
The Plan targets to improve or construct 15 RORO terminal ports and nine ports for international transport and strengthen port security systems and procedures of all national ports by end-2016.
The national airport network, on the other hand, consists of the international ports under the special airport authorities and the national airports in the Civil Aviation Authority of the Philippines (CAAP) airport classifications, except the 40 community airports while the road RORO terminal system includes the identified Western, Central and Eastern Nautical Highways.
Under the plan, four international airports (Diosdado Macapagal International Airport (DMIA), Ninoy Aquino International Airport (NAIA), Mactan, Cebu and Laoag) will be developed and four intermodal/tourism airports (Panglao, Caticlan, Puerto Princesa, Butuan and Cotabato) are to be expanded.
The strategic national transport network translates to a seamless, intermodal transport logistics network connecting production hubs, distribution centers and markets to establish high-quality, efficient logistics chains.
Part of the Plan is to establish a single transport document for customs, immigration, quarantine and security purposes that can be used in all transport modes and a single access point for administrative processes and procedures to promote the simplification and decentralization of exchanges of freight-related information and to substantially reduce the cost of regulatory requirements.
The proposed NTP is estimated to cost Php748 billion or about 1.2 percent of gross domestic product (GDP), about 69% of which are for road and road transport.
The investment cost is slightly higher than the average actual investment in transport infrastructure during period 1999-2008, which is less than 1% of GDP, but is significantly lower compared to about 4% for other Asian countries.
To effectively implement the plan, a Congressional Bill, “National Transportation Policy Act”, and an Executive Order have been drafted.
The passage of the Bill is essential to establish a much-improved regulatory regime in the provision of public transport services while a swift endorsement of the EO to the Office of the President would be highly desirable to sustain momentum for the Plan.
The NTP is a work-in-progress requiring more detailed assessment of updates from agencies as part of the formal updating of Medium-Term Philippine Development Plan (MTPDP). -- Liza C. Leong, PHILEXPORT News and Features <--back
4. Competitive currency a fundamental competitiveness strategy, says experts
For a developing country bereft of political, technological, and institutional conditions to be highly competitive, a competitive currency serves as a fundamental competitiveness strategy.
Replete with a smorgasbord of competitiveness constraints, any developing country that wishes to be globally competitive will have a strong policy preference for a weak currency, said Mr. Filomeno Sta. Ana of Action for Economic Reforms.
Unlike in the developed economies, local entrepreneurs in the country are operating in an unfavourable business environment characterized by prohibitively high transportation costs, weak energy and technology infrastructure, and bureaucratic red tape, among others.
Amid all these constraints, the last thing these entrepreneurs need is an overvalued peso, especially if other developing countries have undervalued their currencies, Sta. Ana stressed.
While the Philippine peso is overvalued by 20%, the Chinese yuan is undervalued by 70% denting the price competitiveness of Philippine products that are directly competing with Chinese goods.
The rationale for adopting a competitive exchange rate goes beyond price competitiveness.
According to former Finance Secretary Ernest Leung a competitive currency does not only help buoy price competitiveness, it is crucial in improving the country’s overall competitiveness.
Noting the pivotal role in enhancing national competitiveness, Mr. Leung stressed that a strong peso is a very costly strategy and an inappropriate one for addressing the country’s huge import dependence and managing the sizeable external debt obligation.
Combined with efforts to simplify the tax system and further develop the capital markets, a competitive currency will be facilitative of many positive developments.
With a competitive currency, the local industries are less inclined to seek tax exemptions or engage in tax evasion. Combined with a simple tax system, this should translate to a much-improved revenue performance needed to fund productivity-enhancing measures, Mr. Leung explained.
Mr. Leung likewise pointed out that with a competitive currency, overseas Filipino worker (OFW) remittances can provide a much greater stimulus to the local economy. With more developed capital markets, these remittances can be easily tapped to fund productive investments and not just spent on consumer goods. -- Ritchelle Alburo, PHILEXPORT News and Features <--back
5. Product simplification, alternative materials ways to reduce prices
Exporters are encouraged to consider alternative materials, product simplification and production volume discounts as ways to make their prices competitive in the international market.
This advice was given by Delfin Bibat, former Foreign Buyers Association of the Philippines (FOBAP) director and country manager of Southgate Ltd. (The Connor Group), in a seminar for exporters of gifts, toys, travel goods, furnishings and furniture.
“If you participate in a gift show, the targets might be there but you don’t really know the buyers there. So vendors have to be ready with alternative pricing, we have to because we are usually higher price than the other Asian markets,” he said.
Bibat said sellers have to consider alternative materials when they undertake product development which is also crucial in lowering prices.
He said product simplification, on the other hand, may require some industrial engineering.
“This is one of the weaknesses that we have as a country and as an industry –-we don’t make an active stance in simplifying a product. Simplification is a major trend so we must do it. Usually, the simpler it is, the cheaper it is,” he advised.
Bibat said pooling or clustering is an option in order to meet big volume orders of the buyers.
“In China, if the order is too big for them, companies still accept this because they can subcontract some jobs to their competitors. It is not that in the Philippines that is why, we are at a disadvantage. It is very rare that people are willing to share production,” he noted.
Bibat’s recommendations could help address concerns particularly of foreign buyers of handicraft products.
Salvio Valenzuela Jr., executive director of the Philippine Chamber of Handicraft Industries Inc. (PCHI), bared that major buyers in the recent Ambiente fair in Germany were concerned about higher costs of local products.
“One hundred percent of them were saying that price is really the problem of the Philippines. Our prices are 20 to 30 percent higher than competitors not just China but also Thailand, Vietnam and India,” he said.
“The price is high enough for them not to source in the Philippines,” he added, quoting a buyer who decided to source its products from India as saying.
To address this, Valenzuela cited the need for the country to address its supply chain management from raw materials to inputs like electricity cost, labor and logistics.
He attributed the high cost of shipping raw materials from regions to the National Capital Region, the major producer of exports-based companies, to lack of proper infrastructure facilities. -- Danielle Venz, PHILEXPORT News and Features <--back
6. Furniture exporters see revenue losses due to El Niño
Forest-based furniture exporters expect revenue losses due to dry spell brought about by El Niño and climate change towards the latter part of 2010.
“Revenue losses may stem from lack of materials. I think towards the latter part of the year, the ordering will improve. But if we have nothing to sell, if we cannot produce the orders, it is difficult,“ said Rashmi Tolentino-Singh, vice president for industry relations of the Chamber of Furniture Industries of the Philippines (CFIP).
Singh said the current El Niño may have adverse effects particularly on the bamboo and vines should these dry up as a result of the drought. These are used as raw materials for production of furniture products.
“Many of our companies now have shifted from traditional rattan to the use of vines. So I expect them to be really affected by that,” she said.
But firms which are using non-traditional materials like fiber glass, metal and resin and those importing materials may be spared from the drought’s impact, she added.
To address this, Singh cited the need for the exporters to consider materials development and utilize other materials which could help them cope with the impact of the El Niño.
“From economic crisis to climate crisis, but we are still here. There is a need to work more on the part of the company owners, on the part of the associations and on the part of the government also to keep the industry afloat,” she further said.
PHILEXPORT President Sergio Ortiz-Luis Jr. earlier said that apart from the lingering global financial crisis, export stakeholders would consider the impact of climate change in the crafting of next Philippine Export Development Plan (PEDP).
Ortiz-Luis said climate change was already taking its toll on company resources and country.
He identified indigenous exports particularly food, furniture, mining and manufacturing that maybe affected by the changing weather conditions.
“We must not only be able to minimize our losses, we must be able to adapt to new situation. And we must plan a more rapid recovery as individual enterprises, as industry groups and as a pivotal segment of the national economy,” he added. -- Danielle Venz, PHILEXPORT News and Features <--back
7. RP’s labor policies tend to hurt local companies than foreign-owned firms
The country’s current labor policies are unable to make the local firms competitive nor attract more foreign investments crucial to jobs generation.
This was concluded by a paper titled “Labor Policies and Philippine Companies: Analysis of Survey Opinions” written by University of the Philippines School of Economics Professor of Economics Emeritus Dr. Gerardo P. Sicat.
The study analyzed the responses from a survey of Philippine companies concerning labor market policies such as minimum wage-setting process, hiring and firing practices, training and holidays.
Based on survey results, Sicat said labor laws that are currently in place tended to harm local firms owned by the citizens most heavily compared to foreign investments operating in the country.
Also, the government’s goal of inviting foreign direct investments (FDIs) has not yielded as much fruit as those other countries in the regions that have continuously raised the inflows of desirable FDIs.
“These twin facts seem to emphasize a failure of economic policy to address two major needs –-to make domestic enterprises competitive and to be a home to greater volumes of foreign capital to enable the country to raise growth, domestic employment, and sustained prosperity,” he said.
Companies owned by Filipino nationals, whether 100 percent or 60 percent controlled joint venture investments, are more critical of minimum wage legislation compared with foreign enterprises.
In general, Sicat said respondents thus found the minimum wage rate low enough.
“Foreign companies tend to have a higher per worker wage bill compared to the minimum wage. This establishes the important point that the minimum wage hurts domestic firms owned of Filipinos than those owned by foreigners,” he stressed.
Apart from the minimum wage policy, most of the dissatisfaction came from domestic firms also in policies on cost of severance pay regulation, freedom to employ on a fixed-term basis, regulation protecting against dismissal of regular workers and regulatory mechanisms for the settling of labor disputes.
They also scored poor policies on government labor inspections of the enterprise, performance of the public employment service officer, government incentives for enterprises for the training of workers and quality of vocational schools.
On the other hand, foreign-owned companies rated policies on the number of mandatory national holidays and other discretionary national and local holidays more critical than Filipino-owned enterprises.
“Foreign-owned companies regard this policy on holidays critical. Perhaps, compared with their awareness of holidays in other countries, they think the Philippines has too many of them or that some of the holidays are too unpredictable in occurrence,” Sicat pointed out.
The survey covered 157 companies located in Metro Manila and Metro Cebu that provide a wide range of employment in the country. The survey was conducted early 2009. -- Danielle Venz, PHILEXPORT News and Features <--back
