Since the peso has strengthened from P50 to the dollar to its present rate averaging P45 to the dollar, OFWs, it was pointed out, have been losing five pesos for every dollar earned abroad.
In the same situation are the exporters whose competitiveness lies in the dollar cost of their production. If the peso paid for labor and raw materials fetches less dollars, the exporter continues to be producing expensive goods.
Earlier during the week, former Budget Secretary Benjamin Diokno suggested before a forum with the Philippine Food Processors and Exporters Organization (PHILFOODEX) that instead of borrowing abroad, the government should capture the dollar remittances of OFWs by issuing dollar denominated bonds specifically offered as an investment vehicle for OFWs.
Previous attempts made by the Bureau of Treasury to issue OFW bonds was gobbled up by the banks instead of being sold to OFWs and their families. -- Abe P. Belena, PHILEXPORT News and Features <--back
2. RP developing biotech growth centers
The private sector, government and academe are gearing their efforts towards developing "biotechnology growth centers" in some key cities and universities in a bid to make the country become the next Silicon Valley.
"We will try to establish something like the biotech centers in the world, the Silicon Valley or the so-called Bangalore, India (biotech centers)," stressed Ceferino Follosco, cluster consultant of the Export Development Council's National Cluster Management Team (NCMT).
Follosco said they would initially set up these growth centers in Cebu and Davao as well as in the University of the Philippines and other universities.
"But we will try to visit where the so-called academic institutions are because they have to use the R&D (research and development)," he said.
Follosco said efforts of establishing biotechnology growth centers are expected to help boost economic growth and reduce poverty in the country
. "Because this will spawn a lot of industries around that," he explained.
Follosco said similar to the five successful export industry clusters located in regions and provinces, biotechnology growth center may soon serve as a model for people in other areas.
These model industry clusters include the bottled sardines industry of Dipolog, Zamboanga del Norte; the furniture industry of Cebu; the food processing industry of the CARAGA region; the eight industry clusters of the Davao Provinces; and the Northern Mindanao Vegetable Industry Cluster.
Clusters are expected to increase the productivity with which companies can compete, nationally and globally.
"We want to move these five clusters up to the next level. And we are trying to revive those that did not win in the top five. After that, we look at new things like IT biotech because these have bigger impact," Follosco further said. -- Danielle Venz, PHILEXPORT News and Features <--back
3. Development criteria for EU GSP beneficiaries pushed
EuroCommerce is calling for the application of objective development criteria, such as the gross domestic product per capita, for determining which countries are eligible for European Generalized System of Preferences (GSP).
In a position paper published in a business briefing of the International Trade Centre (ITC), it said the selection criteria need not be based on sensitivity like import threshold.
"A country's size, its export volumes or its share in total GSP-covered imports should not per se hinder its acceptance as GSP beneficiary. Otherwise, the EU would exclude bigger but poor and commodity-dependent suppliers," stressed the group.
EuroCommerce represents the retail, wholesale and international trade sectors in Europe.
It said should an assessment on these grounds come to the result the specific country meets the criteria, the country should be entitled to GSP preferences.
The objective development criteria, it added, will also determine whether all high-income countries should be excluded from the GSP.
Such may be likewise considered in deciding the continued participation in the scheme of other beneficiaries, including countries that have become major global actors in international trade with very significant and wide-ranging exports to the EU and participation in global markets.
However, should the European Institutions prefer for import share as a suitable criterion, EuroCommerce strongly recommended a high percentage for all products.
"Lower percentages for individual products or groups of products would most likely be seen as inspired by protectionist considerations," it pointed out.
Moreover, the group believed that should countries are removed from the GSP following the conclusion of a free trade agreement with the EU, the bilateral agreement in question needs to provide for predictability, legal certainty and stability at least to the same extent as the unilateral preferences.
"This also goes for any transitional periods. The tariff rate foreseen by the bilateral agreement should be lower than the one offered by the GSP," it added.
To simplify the GSP and enhance its acceptance as a tool for development, EuroCommerce said no more distinction should be made between sensitive and non-sensitive products.
With this, sectoral or product-specific exclusions should no longer be contained in the scheme.
"There is still considerable scope in eliminating duties under the GSP," it noted. "Duties should be totally suspended where preferential treatment results in ad valorem duties or three percent or less, or in specific duties of 5 euros or less."
The groups position on the issue was made as the European Commission is preparing the next European GSP 2012-2015. The new GSP is expected to provide for better market access to the European Union for all developing countries. -- Danielle Venz, PHILEXPORT News and Features <--back
4. Gov't to aggressively adopt technology business incubation program
The government will aggressively adopt the technology business incubation (TBI) program to catch up with its neighbors that have taken greater strides in developing their start-up companies.
The TBI program started in early 1990s when it established the first technology business incubators mostly in the University of the Philippines (UP) campuses in Diliman, Los Banos and Miag-ao in Iloilo province.
"The sad thing is that after we have initiated the program, there was no sustained investment and initiative. While the Philippines was one of the countries here in Asia that went first into technology business incubation, there was no sustained effort," Department of Science and Technology (DoST) Undersecretary Fortunato dela Pena lamented.
As a result, the country has remained at low level of less than 10 in terms of the number of business incubators by the end of year 2000.
This was much lower compared to some neighboring countries which have already reached the 100 level mark, he pointed out in a forum, attributing this to their investments poured into technology business incubation.
Recognizing this fact, dela Pena said that already, a consortium of universities, the private sector and the local government sector is amenable to establishing incubators that will nurture start-up companies who are into innovations.
Apart from this, he said the government is undertaking another measure to stimulate the innovation environment in the country.
Dela Pena said a company is entitled to incentives even beyond the original period if it invests capital and hire more people.
"But this time they added as a criterion that which can enable a company to receive incentives when it is able to show the organizations involved that it has developed innovations as evidenced by patents approved here in the Philippines," he noted.
Moreover, Dela Pena said they are investing more in human capital which is a key factor in innovation generation.
The DOST is running a research and development for technology program which provides scholarships for graduate studies in engineering and science and technology and pursues research studies for technological advancement.
The program involves a consortium of universities that offer mature engineering graduate courses including the Ateneo de Manila University, De La Salle University, Mapua Institute of Technology, the Central Luzon State University, San Carlos University, the Mindanao State University-Iligan Institute of Technology, the University of the Philippines-Diliman and UP Los Baños.
Dela Pena said such program hopes to increase the number of people involved in research development.
He said the Philippines has the lowest statistics of scientific manpower per million population engaged in research development compared at least with the original members of ASEAN, excluding Laos, Cambodia and Myanmar.
"This is a massive development program and we are happy to report that they are meeting their targets in terms of the numbers, in terms of quality and in terms of research output," he added. -- Danielle Venz, PHILEXPORT News and Features <--back
5. Domestic integration to harness exports as growth engine, says ADB
To harness the role of exports as a growth and development engine, the Asian Development Bank (ADB) stresses the importance of intensifying current efforts to integrate the country's 7,107 islands by strengthening maritime links.
Domestic integration will help strengthen the linkage of exports with other sectors of the economy and boost its contribution to the countrys economic development, said ADB Senior Economist Giovanni Capanelli.
While the country strives to integrate with Asia and the rest of the world, it should also set out to foster greater integration of Philippine islands, Capanelli noted.
Capanelli likewise said that greater interconnectedness of these island economies is integral to strengthening industrial linkages, which in turn is vital to raising the value-added of Philippine exports.
Domestic integration will enable the country to fully harness the role of exports as a key engine of economic growth and development, he said.
Said policy advice by Capanelli is consistent with a study done by Mari-Len Reyes Macasaquit of the Philippine Institute for Development Studies (PIDS).
Based on said study, the industrial linkages in the country have been weak and highly concentrated in Metro Manila due mainly to the absence of modern and advanced physical infrastructure outside Metro Manila.
As a result, the country fails to exploit trade complementarities between island economies and finds itself increasingly sourcing production inputs abroad engendering deeper fragmentation of the domestic market.
As detailed in the PIDS study, interconnection between islands would lower transportation costs and create new economic opportunities as it facilitates greater mobility of resources and goods and promotes country-wide industrial linkages and trade.
Being an archipelago, such interconnection is best achieved through efficient inter-island shipping. An ADB Report notes that the Philippinesroll-on, roll-off system has allowed the transportation costs to decline by 10-60% since the system was put in place in 2003.
Said Report likewise mentions that the opening of the Strong Republic Nautical Highways has generated positive network effects on the economies of the smaller islands along the major routes.
Meanwhile, a study of the World Bank warns developing countries to make the necessary policy interventions to integrate domestically and promote countrywide growth and development as international economic integration is biased towards deeper fragmentation of domestic markets.
Capanelli likewise stressed the importance of adopting a multi-track approach to regional integration consistent with the varying levels of economic development and the disparate capacity of East Asian economies to institute the necessary policy interventions to ensure the gains from trade. -- Ritchelle Alburo, PHILEXPORT News and Features <--back
6. Unemployment, poverty: biggest challenges to P-Noy gov't
Lack of jobs and extreme poverty are the two biggest problems the incoming government will have to solve.
This was the assessment of former Budget Secretary, now UP economic professor B enjamin Diokno in speaking on the prospects for the Nonoy Aquino administration during the general membership meeting of the Philippine Food Exporters and Processors Organization (PHILFOODEX) held recently at the Club Filipino in Greenhills.
He said that as of 2008, there were 2.7 million Filipinos who had no jobs and another 8.5 million who have occasional work only. Making this worse are are 1.3 million people who join the labor force every year as they either reach the age of 18, graduating in collage or in technical or vocational schools.
"If you are looking for a job, that means you are unemployed," the economist explained. "If you already stopped looking for a job, you are no longer part of the labor force. If, on the other hand, you told the census people that you worked only one hour for the past week, it means you are underemployed and not totally jobless."
As a consequence of the dearth of good jobs in the local front, poverty incidence, Diokno further explained, reached 32.9 percent the other year. And due to the impact of the global recession, this could have grown to 34 percent last year.
Those who are poor are families that survive below $1 dollar or roughly P45 a day, Diokno pointed out.
He traced the high jobless rate and widespread poverty to lack of foreign direct investments that he said is the lowest among the original ASEAN 5 plus Vietnam. It averaged between $500 and $700 million a year in the past decade.
With a very thin industrial and manufacturing sector, Diokno suggested that heavy investments should go into agriculture, but exporters should now target the close to 100 million Filipinos in the domestic front as market, instead of trying to sell abroad. -- Abe P. Belena, PHILEXPORT News and Features <--back
7. Power shortages in Mindanao, Luzon to worsen
Small enterprises in Mindanao and Luzon should start reconditioning their old power generating sets. The electric power shortages in both islands are bound to get worse in the coming years before they get better.
This was the suggestion given by Philippine Exporters Confederation, Inc. (PHILEXPORT) trustee for Northern Mindanao during a consultation meeting recently in Cagayan de Oro which has been suffering an average of four-hours a day power black-outs.
Sicat told the Northern Mindanao exporters that as early as two years ago, the business community has been forewarning the government that its reserve power generating capacity is far too thin and it was time to build those big power plants.
Mindanao was projected to suffer brownouts beginning last year if no new plants are built and it did, Sicat said. Luzon was to experience the same this year. And it happened. Only the Visayas was spared because two companies built a couple of medium-sized power plants that went on stream this year.
The export leader said that since it took the reins of government, the Arroyo administration had not built a single big power plant in both Luzon and Mindanao.
Since it takes an average of three years to build a big natural gas plant like the Ilijan plant in Batangas and five years to construct a hydro-electric dam the size of San Roque in Pangasinan, brownouts will get worse in the next two to three years if the new administration does not move fast.
Sicat estimated that to build the 2,000 megawatts generating capacity needed for Luzon, an investment of at least $2 billion is required. Another 1,000 megawatts each for the Visayas and Mindanao will require an equal amount.
With that kind of money needed, he suggested that the new government must go on an aggressive investment promotion campaign to lure in investors in new power plants. -- Abe P. Belena, PHILEXPORT News and Features <--back
