Third is for the BSP to rationalize its market intervention policy and sent tighter intervention levels to avoid wide swings in the exchange rate that may prove disastrous to exporters. In a recent forum, University of Asia and the Pacific economic professor Victor Abola suggested that the BSP should buy cheap dollars now to build up its forex reserves and pay off the country's foreign debts, stop its peso-mopping up operations of requiring banks to deposit huge amounts with the BSP and reduce interest rates to international levels.

The Cebu exporters also called on the Department of Finance to address their concerns with regards to the governments current account, debt servicing and export performance as these policies impact on job creation.

And last, for the Department of Foreign Affairs and the POEA to come out with investment portfolios through which OFW remittances could be plowed into productive projects to stimulate further the development of the industrial sector. -- Abe P. Belena, PHILEXPORT News and Features <--back

2. No to wage increases this year ECOP

If the organization of big employers can have their way, there must be no wage increases this year.

The Employers Confederation of the Philippines (ECOP) came up with the no wage increase stand in a position taken after the chief executives and owners of the biggest industrial and manufacturing companies in the country held their National Conference of Employers last week.

ECOP is the organization of big businesses in the Philippines that focuses its advocacies on labor-management relations. It came out with the stand as labor federations of all stripes went on overdrive to ask for wage adjustments as Labor Day on May 1 celebration neared.

ECOP zeroed in on the petition of the moderate Trade Union Congress of the Philippines (TUCP) asking for a P75 per day across the board wage for workers nationwide.

Among the handful of arguments that ECOP marshaled to oppose wage increases, the most interesting was its claim that "high wage increases will exacerbate the shrinking of the formal sector particularly in the decimation of thousands of micro and small establishments which do not have the financial resiliency to cope with such increases".

It pointed out that from 1999 after the Asian Financial Crisis up to 2008, the beginning of the global recession, 65,000 business enterprises closed shop. This resulted in the loss of a total of half a million jobs.

The organization of industrialists and big manufacturers said that by the end of 2008, the formal industrial sector employed just 5.5 million Filipinos from the sector's peak of having six million workers before the Asian financial crisis.

As of today, the country has a labor force of 34 million able bodied men and women. Only 6.5 million are employed by the formal sector that pays legally mandated wages. Most workers representing 26.8 million have transferred to the informal sector while the rest are jobless.

It argued that a dictated wage hike that is not productivity-driven will further drive the prices of manufactured goods higher.

It further pointed out that in terms of workers productivity among Asian economies, the Philippines is third lowest, beating only Cambodia and Vietnam. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. BoC goes hi-tech in tracking down imported goods

The Bureau of Customs (BoC) is yet to prove its recently rolled out automated national single window system of speedy processing of incoming cargoes, it is now going hi-tech by adopting the state-of-the- art Global Positioning System (GPS) technology to track down container trucks leaving customs territories.

Adopting GPS technology was announced by Customs Deputy Commissioner Reynaldo Nicolas the other day as he led the public consultation on the Enhanced Customs Transit System project in its headquarters at the Manila Port Area.

In line with this plan, Nicolas will also head two new units that will accredit the GPS service providers and monitor the GPS implementation.

GPS is one of the cutting-edge technologies brought about by the information revolution. It uses satellites in tracking down anything that moves on earth. It was popularized during the US invasion of Iraq when war planes bombed military targets with pinpoint precision with the aid of satellite-monitored intelligence data on the ground.

In the Philippines, GPS is known to be used by the biggest security agencies in tracking down armored vehicles that fetch and deliver cash to and from banks.

During the public hearing, Nicolas said that the BOC is set to finalize the drafts for the Customs Administrative Order (CAO) that sets the rules on the operations of the satellite-aided monitoring system and the Customs Memorandum Order (CMO) detailing its operations.

When operational, the enhanced transit system is envisioned to stamp customs seals with satellite monitoring devices upon the arrival of a containerized cargo. For breakbulk cargo, barcoded tapes are used.

Based on pre-determined destinations, the cargo is released and tracked in real time by computers based in any of the ports of entry from the time the hauler leaves the port to the moment it reaches its pre-declared destination.

In case a cargo is brought elsewhere, the team tracking those imported goods, notify the police. The diverted cargo is intercepted and confiscated. It is one anti-smuggling weapon that seems to be foolproof if it is made to work.

During the public consultation, Atty. Clemente G. San Agustin, Vice President for Operations of the Philippine Exporters Confederation, Inc. (PHILEXPORT), raised the issue of possible increase in costs as GPS instruments are installed, compared to the current set-up where containers are "customs guarded". He further stressed the importance of working with the Philippine National Police to ensure the safety of the containers despite the GPS.

Nicolas committed to look at the costs and expressed confidence that the new rates will not be higher than the existing levels. He likewise reported that the BOC has already initiated talks with the PNP to help the BOC in this matter.

Another participant recommended that the BOC conduct a time and motion study first before the program becomes fully operational in the middle of next year. He cited that the x-ray scanning of goods is already causing additional processing time. The implementation of the GPS program, he pointed out, should not further clog the ports. -- Abe P. Belena, PHILEXPORT News and Features <--back

4. Heavy reliance on remittances pulls down RP in global opportunities survey

With its seemingly chronic reliance on remittances from the overseas Filipino workers (OFWs), the Philippines finds itself slipping eight notches in the ranking of countries based on growth opportunities.

According to the International Business Report (IBR) 2010 of US-based accounting firm Grant Thornton, the country skidded down to 25th place this year from 17th place two years ago in the ranking of 27 countries based on the "opportunity index".

Calculated based on key indicators such as gross domestic product (GDP), GDP per capita, population size, foreign trade projections and the human development index (HDI), the country's total score in the opportunity index dove to 56 points from 69 points in 2008.

As cited in the Report, although the economy weathered the storm better than most of its neighbors over the course of 2008 to 2009 due to lower dependence on exports, its continued reliance on remittances from an estimated five million Filipino workers abroad to stimulate consumer demand poses a significant risk to long-term economic growth.

That the Report perceived the country's strong reliance on workersremittances as a substantial risk to the country's long-term growth prospects is without doubt well-founded.

Overseas employment is meant to serve as a temporary palliative to the country's inability to create enough jobs to its fast-growing population, now 98 million, making the Philippines the 12th most populous country in the world.

After decades of having to look for jobs abroad, Filipinos continue to slave in foreign lands to feed their families back home while an increasing number of local companies found themselves in the red on the back of heightened global competition and dwindling supply of highly skilled workers.

The lack of skilled professionals has been noted in various fora to pose a significant risk to the expansion of the vibrant business process outsourcing (BPO), one major bright spot of the Philippine economy.

Meanwhile, the export sector and other industries competing against cheap imports have been adversely hurt by the continued appreciation of the peso against the dollar as a result of the resilience of workers' remittances.

Even the OFWs have not been impervious to the undesirable consequences of their remittances which left them with fewer goods and services to afford as the purchasing power of their foreign earnings are diminished by the strengthening of the peso.

Experts have stressed that relying on these remittances without being mindful of the hard facts that it is symptomatic of serious economic policy glitches and that it incurs substantial economic and social costs augurs ill to the country's long-term economic growth. -- Ritchelle Alburo, PHILEXPORT News and Features <--back

5. EDC appeals for jewelry incentives in the E2M system

The Export Development Council (EDC) has endorsed the request of the Guild of Philippine Jewelers, Inc. (GPJI) to the Department of Finance (DOF) to allow jewelers to continue with the manual entry processing of their import documents under the Customs Electronic-to-Mobile (E2M) system until the system has been updated.

This will enable them to avail of the incentives under Republic Act (RA) 8502 or the Jewelry Incentives Development Act (JIDA) under which jewelers who are registered with the Board of Investment (BOI) are allowed to import their raw materials tax and duty free.

The EDC also endorsed to the DOF the request of the GPJI to refund the duties, excise tax and storage charges paid for importations by jewelers who are qualified for duty-and excise-free importation of raw materials.

By automating lodgement entries, payments, and cargo release, the E2M system serves to expedite the release of shipments and prevent unscrupulous trade-related transactions.

In a letter addressed to Sec. Margarito Teves, Trade Secretary Jesli Lapus, who is also the Chairman of the EDC, noted that while the Council fully understands the government's revenue concerns, it is equally important to ensure that exports of fine jewelry are made globally competitive through efficient, red-tape free and less restrictive handling of imported inputs.

As the incentives under the JIDA have yet to be inputted into the E2M system, the BOC refused to release the importations of two major BOI-accredited jewelers and subjected these to duties and excise taxes. -- Ritchelle Alburo, PHILEXPORT News and Features <--back

6. Firms incur reduced transport cost, hefty sales with Ro-Ro service

Many multinational and local companies utilizing the roll-on roll-off (Ro-Ro) network are incurring transport cost reduction of as much as ten to 60 percent, hefty sales resulting from speedier delivery of goods and gaining new markets.

This was bared by an Asian Development Bank (ADB) study titled "Bridges across Oceans: Initial Impact Assessment of the Philippines Nautical Highway System and Lessons for Southeast Asia".

The ADB cited San Miguel Corporation (SMC), one of the country's leading business conglomerates, which reported to have incurred cost savings of 57 percent of transporting beer from its Laguna-based manufacturing plant to Calapan, Mindoro.

Its total transport costs to ship a truck load of beer via Ro-Ro only reach P13,000, inclusive of the back trip. This amount is less than half the P30,000 SMC would pay using conventional shipping.

Leading food conglomerate Nestle Philippines, an extensive user of Ro-Ro to ship its goods nationwide, claimed that the network expansion complemented its growth to reach more markets in the Western Visayas.

With Ro-Ro, Nestle was able to minimize its inventories, thus eliminating the need for distribution centers. It already closed 32 of its 36 distribution centers all over the country. And the company plans to shut down its other distribution center in Davao by early next year.

This was because of the direct, frequent deliveries the companies can now make to their regional markets via Ro-Ro.

"The domestic shipping industry is restructuring and becoming more competitive. Some of the major shipping lines have introduced bigger ships to compete effectively against the Ro-Ro service," said the ADB study.

Another company Gardenia Bakeries was able to save on freight cost while able to access more markets with Ro-Ro.

The network also allowed the company to enjoy record sales over the last few years with access to new markets and limited loss due to spoilage and lower transport costs as well.

"With the expansion of Ro-Ro routes, regional trade has grown. The relatively cheaper, more frequent and faster commodity flows have opened more opportunities for the creation of new markets, especially those linked with the main economic growth hubs of Cebu, Iloilo, Bacolod, Dumaguete and Cagayan de Oro," said the ADB study.

The nautical highways have opened new market particularly for agri-fishery products and stimulated regional trade, tourism and area development.

In the process, economic development can be seen is previously isolated places, where none existed before,the study said.

"Local area development is being accelerated. The establishment of new Ro-Ro terminal serves as catalyst to the development of the municipalities and areas surrounding them," it added.

Ro-Ro terminal system includes the identified Western, Central and Eastern Nautical Highways. -- Danielle Venz, PHILEXPORT News and Features <--back

7. Creation of multi-sector body tasked to undertake power roadmap pushed

A business group is preparing an energy roadmap which proposes the creation of a multi-sector body tasked to implement a fair program which will ensure a competitive and reliable power supply in the country.

Philippine Chamber of Commerce and Industry (PCCI) Energy Committee chairman Jose Alejandro in an interview said they would like the next administration to work with the private sector who is not even a stakeholder.

"With this, a real balance and unbiased (power) program can be achieved," he said. "In fact, we would like to suggest to the current administration to start organizing that body so that some of the data can be already gathered that can be presented to the next government."

Alejandro said the PCCI was informed about the power crisis in various areas of the country as early as last year.

"But the DOE (Department of Energy) does not seem to be fully equipped under the EPIRA (Electric Power Industry Reform Act) to decide on that and implement (appropriate measures)," he noted.

Alejandro said the country must develop a power program which will ensure competitive power rate and foster investments in the sector.

"Every business wants something that is true to life because this is something that you can predict. Subsidy is not true to life because it is unpredictable," he added.

Moreover, Alejandro said the program should particularly guarantee consistent reliable base power and power reserves.

He said these measures could address the impact of rotating brownouts especially on operations of small and medium enterprises (SMEs) located in Mindanao.

Alejandro said business operations of companies engaged in manufacturing and business process outsourcing (BPO) could be affected.

"The danger of call centers and BPOs is they can leave (the country) in one weekend," he noted. -- Danielle Venz, PHILEXPORT News and Features <--back

8. EDC pushing legislative measures to lower shipping cost

The Export Development Council (EDC) is continuously pushing for various legislative measures meant to lower the cost of shipping in the country, still the highest in the ASEAN region, to make Philippine exports more competitive.

In the legislative advocacy performance report of EDC Networking Committee on Transport and Logistics (NCTL), it noted that the country should attract new players to foster effective competitionamong domestic shipping industries.

To encourage the entry of foreign shipping lines, the committee recommended the need to increase the foreign equity in overseas shipping which is currently limited to 40 percent under the Philippine Overseas Shipping Development Act.

"Amendment of Section 1009 of the Tariff and Customs Code will allow foreign transshipment of goods without compromising the Cabotage principle," it said.

Clearance of foreign vessels to and from Coastwise Port is stipulated in section 1009 of TCC.

Citing section 8 of the Domestic Shipping Development Act of 2004, the committee added that although the said law effectively deregulated the domestic shipping industry, it may only set their own rates if effective competition is promoted.

It thus suggested that this precondition be strictly observed and implemented through Maritime Industry Authority which is empowered to exercise regulatory intervention on the matter.

The working group also traced the unstoppable rate increases in the cargo handling fees to Philippine Port Authoritys mix of functions which are development, maintenance, ownership, operation and regulation of ports.

"In many cases, conflict of interestarises in the practice of these powers," it said. "These regulatory and developmental functions need to be separated, and transform PPA to purely a regulatory agency removing its authority to share from cargo handling revenues."

To address this, the NCTL also underscored the need to increase private sector representation in PPAs Board and inclusion of other government stakeholders like the Department of Agriculture.

To sustain roll-on roll-off (Ro-Ro) as a low cost alternative, it is crucial to have a policy that will declare all roads as part of the Road RoRo Terminal System.

"This will prevent the collection by LGUs (local government units) of illegal toll feesand also allow chasis Ro-Ro operations, standardization of RoRo terminals and ships," the committee reasoned.

Moreover, the EDC Networking Committee on Legislative Advocacy and Monitoring is also pushing for the strengthening of Export Development Act (EDA) of 1994.

The EDC is seeking Congressional action particularly to achieve its quasi judicial power to sanction any government agency, officer/employee or private sector entity that impedes efficient exportation of Philippine goods as stipulated by section 7 of EDA. -- Danielle Venz, PHILEXPORT News and Features <--back