Explaining why the country sank to the last rank in infrastructure, Lim said that the drive in previous years to bridge the gaping budget deficit sacrificed much needed infrastructure. He further said that the country is worst in the distribution of public works projects nationwide, worst in energy infrastructure and worst in water system.
The end result of our deteriorating competitiveness in these critical areas got the Philippines to claim the dishonor of having the highest unemployment rate in Asia and the highest dependency ratio in the region.
These gave rise to the OFW phenomenon, Lim explained. -- Abe P. Belena, PHILEXPORT News and Features <--back
2. APEC calls for info on impact of protectionist decisions amid crisis
The APEC business advisory council chief in the Philippines has called on business leaders to share impacts of protectionist policies adopted by trading partners to local enterprises in efforts to stem the dangerous trend from derailing global economic recovery.
The call was made this week by Department of Foreign Affairs (DFA) Secretary and concurrent chair of the APEC Business Advisory Council Roberto R. Romulo in a letter to Philippine Exporters Confederation, Inc. (PHILEXPORT) President Sergio R. Ortiz-Luis.
Romulo sent a copy of a recent analysis made by the World Trade Organization (WTO) on the dangerous trend of increasing protectionist policies adopted by developed and developing nations to shield their domestic industries from imports while their economies remain in recession.
The WTO analysis said “the main risk today is that governments will continue to cede ground to protectionist measures if only gradually, as long as the global economic situation continues to deteriorate.”
The other risk if for these measures to delay global recovery as similar measures adopted by governments in previous decades were proven to be wrong decisions.
On top of protectionist measures were those on automotive and steel industries. In many countries from the United States to India, Brazil and China, different forms of protectionist measures were adopted including direct subsidies, tax incentives and government buy-ins.
In the case of the United States, a Buy American provision in the stimulus package was seen by its trading partners as protectionist. The same is true with the return of subsidies this year for the dairy industries in both the European Community and the United States.
Anti-dumping investigations and cases filed have also been on the rise in many countries. One particular object of anti-dumping measures were footwear exports of China to Europe and the Americas.
The WTO has also noted the use of non-tariff measures including safety and environment standards as new forms of protectionist measures. It is not that the developed countries that use non-tariff measures are adopting new policies but they are making new applications to old rules.
As they affect Philippine exports, three non-tariff measures required by the US and the EU are to take effect next year. For the US, there will be a need for traceability documents for wood products used in furniture and home furnishings and pre-shipment testing for safety of food exports beginning next year.
In the EU, all ocean caught fishes will be required to submit verified traceability documents one week before shipments arrive in any importing port in Europe. The Bureau of Fisheries and Aquatic Resources (BFAR) has sought for a postponement of the EU measure to assure compliance by exporters, fishing fleets and processors but the request was rejected. -- Abe P. Belena, PHILEXPORT News and Features <--back
3. Outstanding MSMEs get awards
The first-ever Presidential Awards for Outstanding Micro, Small and Medium Enterprises (MSMEs) were given to nine successful enterprises from Luzon, Visayas and Mindanao.
At the same time, 26 private institutions and local government units were cited for best practices in MSME promotion and development.
The awarding took place at the opening ceremony of the MSMED Week 2009 on 8 July at the Hall 3 of SM Megamall. Aside from Presidential trophies and certificates, the 9 Outstanding MSMEs received a prize of P20,000 and phone kit from Globe Telecoms.
The outstanding MSMEs from Luzon were Roger & Beth Pili Nut Candy (micro), J. Emmanuel Pastries (Small) and Lighthouse Cooperative (Medium).
For Visayas, the awardees were Dood’s Enterprises (Micro), Filbake Food Corporation (Small) and VICKMIK Enterprises (Medium). The recipients for Mindanao are Lao Integrated Farm (Micro), Manolette Bakeshop (Small) and AMS Employees Fresh Fruits (Medium).
From among the nine winners, the VICKMIK Enterprises was chosen by Globe Telecoms as the Globe Masigasig Awardee for the year. The VICKMICK additionally received a trophy, a P30,000 cash and a mobility bundle from Globe for this award.
Best practices are initiatives that have made outstanding contributions to improving any of the four strategic areas which are fundamental in developing the MSME sector. These are: 1) creating a business and investment enabling environment; 2) providing access to finance; 3) improving access to markets and; 4) enhancing productivity and efficiencies of MSMEs.
The recipients of Presidential Citations for best practices in the area of creating a business and investment enabling environment were: German Technical Cooperation (GTZ); Municipal Governments of Baler, Aurora; Sta. Maria, Bulacan; Aliaga, Nueva Ecija; Talavera, Nueva Ecija; and Hermosa, Bataan; City Governments of Angeles, Pampanga; San Fernando, Pampanga; and Bayawan, Negros Oriental; Provincial Government of Camarines Sur; Chinese Filipino Business, Inc. and St. Mary’s College Tagum City, Davao del Norte.
Conferred for best practices in the area of improving access to finance were: Baao Multi-Purpose Cooperative; Cooperative Bank of Benguet; Simbag sa Pag-Asenso, Inc. (SEDP); MASICAP MSME Development Foundation, Inc.; CARD Bank, Inc.; Bank of Philippine Islands (Universal/Commercial Bank Category); Planters Development Bank (Thrift Bank Category); and Fair Bank (Rural Bank Category). -- PHILEXPORT News and Features <--back
4. European markets reducing fresh fruits and vegetables imports; opting for quality products
European buyers have reduced the volume of their orders for fresh fruits and vegetables from developing countries, including the Philippines, and are opting for more quality products to get value for their money amidst the global financial crisis.
These were the key findings of a report released by the Nertherlands-based Centre for the Promotion of Imports from developing countries (CBI) which tackled the effects of the economic slump on the fresh fruit and vegetable sector.
The CBI’s Sector Alerts revealed that the crisis has a “profound” impact on the exports, profit margins and employment in the sector which varies per exporting country depending on the type of export products, the structure of production and the target markets.
The West European and Asian markets are performing better than the North America and East European markets, it said.
“Exports for developing countries are under pressure, especially as importers in Europe are using their market power to reduce prices,” said the CBI. “The sector is also hit by reduced demand for more expensive varieties of tropical fruits and vegetables, for products grown outside of the European growing season and for recently introduced varieties.”
Likewise, some exporting firms are affected by the exchange rate changes, particularly producers serving the United Kingdom market, it added.
The CBI said the situation is further aggravated by the difficulty of companies in accessing the financial services of financial institutions, and suppliers turn to their EU importers for support.
“However, these importers are also facing delayed payments by their buyers; terms of 60 days are now quite normal. These developments put pressure on the whole sector, and European buyers indicate that quite a few developing country suppliers of fresh fruits and vegetables may be forced out of business as a result,” it said.
Because of this, importers are lowering the volume of orders to reduce any risks and have also become stricter on product quality.
“Quality shortfalls, which previously might be overlooked, can now result in the cancellation of a particular order, rejection of a shipment or even termination of a business relationship,” it said.
To continue generating sales despite the crisis, exporters must comply with the increasingly strict quality standards set by importers, the CBI said, noting “food and safety concerns remain vital importance.”
“EU importers are continuously looking for interesting markets and products. By having competitive offers of unique products, exporters will be able to grab attention from EU buyers,” it noted.
To survive the crisis, CBI experts and several business support organizations (BSOs) advised exporters to invest in programs and activities relating to quality, certification, logistics and market entry to retain existing buyers and even find new ones.
“Producers who have production and quality monitoring systems in place and are able to offer additional services have a competitive edge. Especially in logistics, growers and BSOs need to be able to meet buyers’ demands. Improvements in handling, forwarding, faster shipments, and quality control during shipments increase the quality of the products,” they noted.
The expert said companies must focus on their core competencies and undertake a long-term strategy based on innovation and cooperation, lowering of production costs and risk assessment/management.
Moreover, exporters and BSOs should work on increasing awareness among buyers about the potential and products of their country, it added.
The Center also encouraged exporters to diversify their sales market outside the EU. “Asian countries like Korea, Vietnam, India and China, appear to be recovering more rapidly from the international economic crisis. Their economies continue to develop, showing increasing opportunities in the consumer demand for fruit and vegetables increases.” -- Danielle Venz, PHILEXPORT News and Features <--back
5. Gov’t will continue to help MSMEs access financing, gain markets
The government is continuously helping the micro, small and medium enterprises (MSMEs) access financing and gain more markets.
Trade Secretary Peter Favila during the recent entrepreneurship summit said the SME Unified Lending Opportunities for National Growth (SULONG) program has lent some P305.57 billion.
Favila said they are also providing technical assistance to the MSMEs, particularly to export-oriented firms.
“The granting of technical assistance is likewise intensified to encourage our MSMEs, the vulnerable sectors… (to the crisis) to diversify, innovate and upgrade technological capacities,” he said.
The trade chief said government efforts are also geared towards promoting investments at the local level.
Over 200 local government units (LGUs) nationwide have already streamlined their business registration processes which resulted in 17-percent increase in registration and 36-percent rise in tax collections, he said.
Small Business Corp. chairman Virgilio Angelo said his agency is undertaking a financial literacy program designed to assist the MSMEs produce financial documents which can support their loan applications with the bank.
Angelo said they are also promoting to smaller banks the implementation of cash-flow method in granting loans. Such method, otherwise called the risk-based lending, uses the borrowers’ cash flow, capitalization and financial capacity as lending criteria.
For his part, Science and Technology Undersecretary Fortunato Dela Pena said his department is ensuring that MSMEs introduce new technologies to improve their productivity.
“What we are doing at the DOST is to make sure that small businesses would be able to introduce new technology,” he said. “For the start-up, we are addressing this through business incubation program.”
SBC’s Angelo said improving access to financing and markets, promoting growth of investments and ensuring productivity are the goals of the Republic Act No. 9501, the Magna Carta for MSMEs.
The DTI estimated that of the total 783,065 registered business enterprises operating in the country, around 99.7 percent or 780,469 are MSMEs and the remaining 0.3 percent (2,596) are large firms. -- Danielle Venz, PHILEXPORT News and Features <--back
6. Utilize FTAs RP enters into to enter non-traditional markets, exporters told
Exporters are advised to create competitive products and utilize the free trade agreements (FTA) the country enters into in order to penetrate non-traditional markets outside the United States.
Special Envoy for International Trade ambassador Donald Dee said it is imperative for industry players to identify other opportunities that they can take advantage of in terms of market access to prepare themselves for the expected recovery of the global economy.
“A lot of countries are now more accessible to us due to the concessions that we got from our agreements with Japan, China , South Korea , Australia and New Zealand ,” he said.
Dee cited the Japan-Philippines Economic Partnership Agreement (JPEPA) and Association of Southeast Asian Nations (ASEAN)-Japan FTA which offer enormous trade opportunities especially for exporters of agriculture products.
Aside from goods export, JPEPA has allowed the country to focus on services as its core export product, he added.
The ambassador said Philippine businesses of some agriculture products likewise could benefit the ASEAN-China FTA.
Moreover, Dee said the recently signed FTA between ASEAN members and Australia and New Zealand could pave way for the exporters to enter these “untapped markets”.
Under the ASEAN-Australia-New Zealand FTA (AANZFTA), the two countries will remove taxes on all tariff lines by 2020. By next year, Australia will eliminate tariffs on 96.4 percent of its tariff lines, while New Zealand will remove 84.7 percent of its lines.
“The AANZFTA already provides the groundwork for us to enter those two markets, given the preferential treatment that we have been accorded them,” he said. “It is now up to us to study and identify products that we should push for in these markets.”
Dee said the signing of another FTA between ASEAN countries and the European Union could also provide an added boost to the sector. Its negotiations, however, are currently at a standstill.
To effectively capture these potential markets, he encouraged businesses to direct their resources to products where they have advantage, such as those that highlight “product design, craftsmanship and make use of indigenous materials.” -- Danielle Venz, PHILEXPORT News and Features <--back
