In backing the Cebu appeal, Aquino and Perlada said that SME exporters that sought projects from the grant needed the support to steer themselves to full recovery. Besides, the year-long export decline had resulted in closures, lay-offs and suspension of operations in many export enterprises in the Visayas.

The attached Cebu appeal further prayed to the EDC that it fast-tracks the processing of the pending proposal instead of diverting the money to purposes yet to be defined by DTI. -- Abe P. Belena, PHILEXPORT News and Features <--back

2. Smaller cities beat the big ones in speed of giving business permits in Metro-Manila

The smaller cities in Metro Manila like Mandaluyong, Marikina, Navotas and Valensuela are way ahead of the big cities at speeding up the time needed to grant a new or renew a business permit.

For the above mentioned towns, the time spent by micro, small and medium-sized enterprises was from one to two weeks. Manila, Quezon City and Pasig were found at the bottom rung of the efficiency rating. It has taken them an average of one month to renew business permits.

This was one of the highlights of a soon to be released study on the efficiency of all cities in the metropolis in the processing of business permits undertaken by the Ateneo School of Government commissioned by the National Competitiveness Council (NCC).

The preliminary report which was presented to NCC Chairman Cesar Bautista the other day, was only 85 percent complete as it did not yet include the respondents representing the big corporations represented by the local and foreign chambers.

A total of 398 enterprises representing mostly single proprietorships ranging in size from the very small to the medium-sized ones were interviewed by the survey researchers.

In the case of new businesses, processing time was between one and two months across all of the surveyed cities.

Assessing the result, Bautista said that not much has been accomplished since the NCC made its first survey three years ago. The same problems are still there and the lag time falls below the norm in the ASEAN.

Among the problems encountered by applicants for yearly renewal of their business permits, the most difficult to get was the fire safety clearance issued by the Bureau of Fire Protection, followed closely by getting a sanitation clearance and a barangay clearance.

Bautista pointed out that these same problems were already identified three years ago but little has been achieved to solve them.

The ease of starting and staying in business is one of the yardsticks in the international review of the competitiveness of each nation.

In the case of new businesses, applicants' main headache was the time it took them to get their Bureau of Internal Revenue (BIR) registrations. A BIR registration is the last step a new entrepreneur has to hurdle to be able to start doing business.

The researchers observed that the local governments could not be entirely blamed for the long delays because some of the main bottlenecks where handled by national government agencies like the BIR for business registration and the issuance of official receipts and the Bureau of Fire Protection for fire safety clearances.

“If the small cities can make the process faster, why can not the big ones?,” Bautista questioned. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. Lab that determines quality of RP made jewelries built in Marikina

If the glittering piece of jewelry displayed on an outlet of a Philippine jewelry maker claims the gold is 24 carats, that is now true.

The first Philippine assaying and hallmarking laboratory capable of determining the quality of gemstones and precious metals used in making expensive jewelry was opened at the Cottage Industry Technology Center (CITC) in Marikina last week.

A joint project of the Guild of Philippine Jewelers and the CITC, the assaying and hallmarking center will be the official judge on the quality of local jewelry items and will put on its stamps on items it tests.

The laboratory was built as a major project funded with a grant from the Export Support Fund of the Export Development Council and was meant to standardize the quality of Philippine fine jewelry and position the industry firmly in the international marketplace.

For the jewelry manufacturers, it will provide them with a stamp of quality that matches true value for money of every item that passes through the laboratory.

The facility was projected to generate an initial P350,000 in quality testing and hallmarking fees in its initial year of operations and hopes to grow fast as the potentially great local jewelry industry attempts to fiercely compete with Thailand in markets in Asia, Europe, and other parts of the world.

Coaxed out of the informal economy over a decade ago, the jewelry industry had slowly grown to become a multimillion export industry but still far behind that of Thailand which has built its own jewelry almost at the same time to now export at least $3 billion worth of precious jewelry today despite having no gold raw material of its own. -- Abe P. Belena, PHILEXPORT News and Features <--back

4. Local firms encouraged to take advantage of benefits of FTAs

Filipino exporters are encouraged to take advantage of the benefits of free trade agreements (FTAs) especially as more of their products are shipped to Asian countries which the Philippines has already signed FTAs with.

In a seminar organized by Universal Access to Competitiveness and Trade (UACT), Raphael Edward Madarang of the Ateneo Center for International Economic Law said local firms are utilizing FTAs to avail of tariff benefits, save on costs and reduce the amount of duties that they pay to Customs.

Citing result of an Asian Development Bank Institute survey, Madarang said some users of FTAs also report increased export sales.

“Apart from that, you can see that trade globally, regionally has been focusing on trading partners which we have FTAs,” he said. “…You would see a lot of countries are already focusing on FTAs so it would make sense for the businesses in the Philippines to participate in the FTAs.”

Madarang said the Philippines has already signed FTAs particularly with Japan, China, Korea and India where its export shipments are increasing.

To participate in the FTAs, he advised companies to study the rules of origin (ROOs) and determine product specific rules.

Mandarang noted that ROO are extensive and comprehensive documents that, despite ongoing efforts at simplification, remain complex and subject to broad interpretations.

“One of the main impediments for companies to avail of FTA benefits is the complicated structure of ROO. And it continues to be an important factor that influences the decisions of companies,” he said.

“The key to a successful application of the rules of origin is due diligence and a scrutinizing outlook and does not take everything at face value,” he added.

Madarang said it is thus important for exporters to partner with government and obtain rulings from Customs and the Tariff Commission where necessary.

He noted a set of ROO will have a different impact on different industries. Thus, strategies that sectors can apply to avail of ROO vary due to diversity in parts, nature of parts, processes, products and intermediate products.

Mandarang also urged local firms to check on applicability of preferential tariff rate and cost-effectiveness of the exercise.

“Identify the specific margin or preference that your product will enjoy in case it qualifies for preferential treatment,” he said adding that “Take caution in the possibility that administrative cost may be the same as when availing of the MFN (most favored nation) rate.”

To avail of FTAs’ benefits, Madarang said companies need to break down their product into its components, capture the origin of each component and review the methods to determine originating and non-originating costs.

“Get supplier declarations where possible or conduct your own due diligence,” he said. “A local purchase is not sufficient proof of domestic origin.”

Moreover, Madarang said they should also trace the route taken or to be taken by the goods to ensure compliance with direct consignment rule and determine if goods will undergo any form of processing at the transshipment point. -- Danielle Venz, PHILEXPORT News and Features <--back

5. Capacity building of stakeholders to manage sustainable reforms to boost businesses, investments pushed

Exporters are pushing for involvement of stakeholders and alignment of key policy reform programs to boost businesses and investments in the country to national development plans to ensure better implementation.

In a speech delivered during the 31st National Conference of Employers, Philippine Exporters Confederation, Inc. president Sergio Ortiz-Luis said while already various reforms have been undertaken to address issues affecting the business environment, these problems continue to persist.

Ortiz-Luis identified some of these issues as cumbersome business registration and licensing procedures, weak/lack of access to market information and financing, deteriorating educational system, tax policies and administration, inflexible labor laws and administration and limited public-private dialogue particularly with informal operators.

“The pitfalls in addressing them in the past may have been caused by the fact that reforms are complex, often political, and requires significant resources, and stakeholder ownership, involvement and communication. We should be conscious of such signals and learn from past mistakes,” he stressed.

With this, Ortiz-Luis said it is thus high time for the country to seriously review and revise if necessary the way it is planning and implementing policy reforms.

“The following factors are important to consider: reforms are made sustainable by building the capacity of key public and private stakeholders to manage reforms over the long term; align the reforms to national development plans and work closely with government as the lead proponent,” he said.

On the policy reforms, Ortiz-Luis reiterated the need for the country to cut cost of doing business by reducing from 52 to at most 35 days, the global average, the number the days to set-up a business here.

To address such serious obstacle to investment and growth, Senator Edgardo Angara, the event’s keynote speaker, underscored the crucial role of information, communications technology (ICT) in dramatically improving services of the government.

“ICT can cut red tape, reduce the number of steps to a minimum, and signatures to do business -and in the process, reduce corruption in government transactions,” he said.

Moreover, Ortiz-Luis said strict regulations for foreign investments must be also reviewed, particularly those on payments, capital transactions and transfers, to allow foreign investors more flexibility.

He said they have long been also advocating for the constitutional prohibition on foreign ownership of lands to be amended.

“This has always been one of the bottlenecks in the expansion of foreign investments as they only limited to the lease of lands. We then hope that the fiscal incentives bill pending in the legislative halls will take this into consideration,” he added.

Apart from government’s institution of policy and structural reforms meant to create jobs, the Employers Confederation of the Philippines (ECOP), in a resolution issued at the end of the two-day conference, called for a review of the Labor Code.

The employers’ group recommended the repeal particularly of the policy on contracting and subcontracting, policy on night work prohibition for women and the law and policy on wage fixing and determination.

“…Employers must be given the flexibility and leeway to adjust wages especially in times of economic difficulty, the prerogative to consult with their own workers on the need to realign compensation and other benefits in order to remain resilient, operational and prevent losses, and in essence promoting the rights and freedom of employers and workers to freely negotiate the terms and conditions of employment,” the resolution noted.

“Employers and investors must be given enough freedom to direct their business operations through contracting, subcontracting and outsourcing,” added PHILEXPORT’s Ortiz-Luis. -- Danielle Venz, PHILEXPORT News and Features <--back

6. Development of seven big winner sectors seen to generate $75 billion FDI, 10 million jobs

The Philippines needs to pour in more investments into infrastructure projects and develop other key sectors like creative industries and tourism, medical travel and retirement, to generate $75 billion in foreign direct investments (FDI) and 10 million jobs over the next 10 years.

The Joint Foreign Chambers (JFC) believes that developing the so-called seven big winners, which also include agribusiness, business process outsourcing (BPO), manufacturing and logistics, and mining, will move the Philippines far along the path to becoming a high middle-income country.

It said the efficient and modern airports and seaports are critical enablers for national competitiveness. These directly affect logistics costs for goods and associated services and impact on both domestic and international tourism.

In line with this, the group raised the need to establish one international airport in each region and increase international carrier service through reduced costs and pocket open skies starting with Palawan.

To decongest Manila gradually, it pushed for a shift of international container traffic to Batangas and Subic.

Budget should also be allocated for vital power, water, road and rail infrastructure projects.

The IFC said the country must meet conditions precedent to declaration of open access and retail competition within this year to attract investments in new cost-effective power generation projects.

Likewise, the Visayas Wholesale Electric Spot Market (WESM) has to be initiated without further delay and integrate it with Luzon WESM. The Mindanao WESM, on the other hand, should kick off no later than mid-2011.

Citing data, the group said infrastructure funding gap was estimated to reach P200 billion this year based on the required infrastructure spending at five percent of the country’s gross domestic product (GDP). This factored a nominal GDP growth forecast at 7.2 percent.

“Provision of better infrastructure will be a major challenge for the next administration given the deficit,” the IFC said. “PPP (public-private partnership) presents opportunities to harness available resources and capacities of the private sector for infrastructure development.”

It pointed out that domestic capital market likewise has available fund for infrastructure investment.

Moreover, the group said the country should harness its potential and become a creative goods exporter along with other developing economies.

Creative workers abound in advertising, animation, cultural exhibition and performance, mobile phone applications, music and performing arts, visual arts, among others.

Likewise, the BPO, financial services, legal services, research and development and consulting services and software development also employ knowledge workers, it said.

To develop the sector, the IFC recommended that the country stimulate its overall creative industries environment with human resources development, rebrand Philippine creative image, develop uniquely Filipino products, encourage tie-ups with large foreign firms and encourage Filipino talent to stay home as well as return home. -- Danielle Venz, PHILEXPORT News and Features <--back

7. Policy experts call for a reversal of underinvesment in education to generate more jobs

With employees clamoring for a wage hike and employers under great strain to cut costs, policy experts stressed the importance of reversing underinvestment in education.

Addressing the employment woes of the country necessitates increased investment in education to raise labor productivity and facilitate movement of labor to high value skills, said Senator Edgardo Angara and former National Economic Development Authority (NEDA) chief Romulo Neri during the recently held 31st National Conference of Employers by the Employers Confederation of the Philippines.

To keep the cost of labor competitive, Neri pointed out that the Philippines will have to move from low value to high value skills.

The labor cost of other developing countries is exceedingly low that it has become increasingly crucial for the government to aid the migration of workers from low value to high value skills if it were to keep the labor cost globally competitive, Neri detailed.

Moving from low value to high value skills entails scaling up spending on education.

Angara noted that country’s investment in education is below the East Asian average, which stood at 3.6% of national income. The Philippine spends only 2.3% of national income on education.

With P174.9 billion or 11% of the P1.541-trillion national budget for 2010 going to the education department, Angara noted that it is indeed vital for the government to make targeted spending.

Angara noted that more than half of the teachers of Science and Math at the high school level are non-Science and non-Math majors.

The country will have to raise its public investment in training its Math and Science teachers if it hopes to move to high value skills.

Science, Math and Engineering, as well pointed out by Angara, are wealth-creating fields and should thus be an investment priority by the government.

Specifically, Angara called for the revitalization of the Science, Math and Engineering education in higher education.

He particularly mentioned the need for the Philippines to apply to be a signatory to the Washington Accord to better formally recognize the qualifications of Filipino engineers globally.

The Washington Accord recognizes the substantial equivalence of programs accredited by signatory bodies and recommends that graduates of programs accredited by any of the signatory bodies be recognized by the other bodies as having met the academic requirements for entry to the practice of engineering. For every one million people, the Philippines has 152 engineers compared to 500 for China and 200 for India. The country's ratio is below the average for developing countries.

Based on United Nations Educational Scientific and Cultural Organization (UNESCO) research, the average number of scientists and engineers per million of the population should total 380.

The Philippine is also underinvesting in research and development (R&D). UNESCO recommends R&D spending to be equal to 1% of gross domestic product (GDP) but the country spends only 0.12% of GDP for R&D. -- Ritchelle Alburo, PHILEXPORT News and Features <--back