PNoy Encourages Investors to Expand Businesses in the Philippines

President Benigno Aquino III urged Tuesday potential investors to consider expanding their respective businesses in the Philippines since the country is now in a better position to offer more and readily meet their requirements in order for their investments to prosper.

In his speech during the opening of the Philippine Investment Forum 2013 at the Peninsula Manila in Makati City, Aquino said that potential investors could partner with the government in investing in three priority sectors.

These include agriculture, which is the source of income for some 12.1-million Filipinos; tourism, which expects some 56-million visitors by 2016; and infrastructure, which will support agriculture and tourism through the development of road networks, ports, and airports that will ensure the safety and efficient passage of tourists and goods all over the country.

“At the end of the day, we are inviting you to come to the Philippines whether in these three sectors, or in others, because we know that, here, hard work, innovation, and creativity are rewarded with success,” the President said.

“This is not an empty promise — you will have the Filipino people and our administration as committed partners,” he added.

Aquino underscored the creativity, dedication, and loyalty of Filipino labor, saying these are the characteristics that firms want in their work force.

“Given the opportunity, they (Filipino workers) will do the same for you, whatever industry you may be involved in,” the President said.

“The investments that you will bring into our country will redound to tens of thousands of jobs for our countrymen—men and women who will be able to put food on their tables, send their children to school, and meet the needs and wants of their families,” he said.

“Together, we will be empowering them: giving them greater power to contribute to economic growth and opportunities to uplift their lives and even the lives of their fellow Filipinos. All together, we will be building the success of the industry, the Philippines and the Filipino people,” he added.

The President noted that since he assumed office in 2010, he had spent the last two years and eight months on weeding out graft and corruption in order to provide a level playing field for all as well as to “ensure that integrity, transparency, and accountability characterize our actions.”

“Over the past years, we have been doing everything we can to level the playing field—from reforming the judiciary, to streamlining the process of setting up business in the Philippines, to following the proper bidding and procurement processes. We are also investing heavily in our countrymen—empowering them to take stock of their lives and to realize their potential,” Aquino said.

The Philippine Investment Forum 2013 brings together policymakers, business leaders, economists and key overseas investors in painting an overview of the Philippine economy including analysis into all its key sectors.

Swedish firms eager to invest in the Philippines

Swedish firms are interested in investing in manufacturing in the country after a business delegation was in the country last month, the Trade department said in a statement yesterday.

A total of 12 companies from Sweden had a briefing with the Trade department to discuss investment opportunities in the Philippines.

“I believe that there is great potential for an increased bilateral dialogue between the Philippines and Sweden and strengthened business and industrial relationships,” said Head of Delegation Eva Walder who is also the director-general for Trade of the Swedish Ministry of Foreign Affairs in the statement.

Companies represented in the delegation were Atlas Copco Group, Celemi Systems AB, Clean Motion, Comex International, AB Electrolux, Telefonaktiebolaget L.M. Ericsson, Svenska Handelsbanken AB, Ikano Group, SEK, Tetra Pak, Volvo Car Corp. and the Swedish Foreign Trade Association.

“What is encouraging for us is the heightened interest of foreign investors in the Philippines. There is a solid stream of business missions coming and we believe this as a vote of confidence in our government’s capacity to effect significant long-term structural and policy reforms,” said Trade Undersecretary Adrian S. Cristobal, Jr.

He added that “strategic investments in these high-potential growth sectors, especially in manufacturing, generate employment opportunities and stimulate more development in the rural areas.”

Cebu, 8th Best Site for BPO

ITS booming business process outsourcing (BPO) sector has again gained Cebu City a place among the world’s best.

Tholons, an advisory company on global outsourcing and investments, included the city in a list of preferred outsourcing destinations in the world.

In its “Top 100 Outsourcing Destinations Report for 2013”, Tholons listed the city in eighth place. This is a notch higher compared to the city’s ranking last year.

Aside from Cebu, six other Philippine destinations were included in the list. Manila is now third, moving up from fourth last year. Davao ranked number 70; Sta. Rosa, Laguna, 84; Iloilo City, 93; Bacolod City, 94; and Baguio City, 99.

Tholons ranked the cities based on the quality, availability and skills of the workers in its BPO industry, cost of operations, infrastructure, cost of living, risk profile and quality of life, among others.

According to the report, the Philippines enjoy a more vibrant Information Technology (IT)-BPO industry than either Indonesia or Malaysia.

“Based on the events of 2012, the Philippines continued to garner interest from large, Western providers, not only as an offshore delivery location, but likewise as a potential rich domestic market for IT services,” Tholons said.

In 2012, 17 new BPO companies opened in Cebu.

The Cebu Investment Promotions Center estimates that there are already about 95,000 people employed in the BPO sector in Cebu.

Upon learning about the city’s recent achievement, Mayor Michael Rama said he welcomed the inclusion of the city in Tholons list.

“That wonderful accolade will be for all of us. It was a great surprise personally for me,” he said in his regular news conference yesterday.

Philippines Gateway to Halal Market

The Center for International Trade Expositions and Missions (CITEM) has cited the Philippines’ gaining popularity as a global business platform and gateway for the $632 billion halal food market.

“Halal’s increasing global popularity stems from strict cultural and religious adherence to its quality standards that make it synonymous to health and hygiene,” said CITEM Executive Director Rosvi Gaetos.

Halal is a major component of the International Food Exhibition (IFEX) Philippines which will be beld on May 16 to 19, 2013 at the SMX Convention Center in Pasay City.

CITEM is currently undertaking preparations for the forthcoming IFEX Philippines, a biennial event and the premier international sourcing hub for the finest ethnic Asian food, ingredients, and raw materials.

The event would have an entire pavilion devoted to Halal to give the industry players all the room they would need to market their products to a vast foreign audience.

Halal pertains to foods that are allowed under Islamic Law. Haram, on the other hand, refers to foods that Muslims are forbidden to consume such as pig and dog and their derivatives, carnivorous animals except animals that only eat fish, amphibians such as frogs, crocodiles, turtles, and seals, among others.

Under the Islamic Law, it is likewise forbidden to use dirty equipment during preparation, processing, and manufacturing.

This development has turned the Halal seal into an international symbol of good quality and marketability.

Halal foods are prescribed for the world’s 1.8-billion Muslims, consequently yielding a global annual market that constitutes some 20% of the world’s entire food consumption.

“In support of the Philippine Export Development Plan’s Halal Development Plan, a special participation rate for IFEX Philippines 2013 will be offered to Halal-certified companies, Halal certifiers, as well as Halal-compliant restaurants and hotels, if they exhibit,” said Gaetos.

“This development underscores CITEM’s strategy of using IFEX to help make the Philippines a leading Halal producer in the ASEAN Free Trade Area (AFTA), now poised to become the ASEAN Economic Community (AEC), a unified regional production and trading block by 2015,” she added. (EHL)

Filipino consumers more brand loyal than global peers, Nielsen study finds

An estimated 80 percent of Net-savvy Filipino consumers would buy new products from familiar brands rather than switch to a new brand, according to a study recently released by market research firm Nielsen.

The trend reveals a higher level of brand loyalty among locals compared to the global trend which shows 60 percent of consumers around the world with Internet access prefer to buy new products from familiar brands.

“Introducing innovations on established brands that are already trusted by consumers can be a powerful strategy,” Nielsen Philippines managing director Stuart Jamieson says in a statement.

“Millions of dollars are being spent on new product innovation by manufacturers, yet two out of every three new products will not be on the market within three years,” he adds.

The results of the Nielsen Global Survey of New Product Purchase Sentiment were obtained from over 29,000 Internet respondents in 58 countries. It shows that brand familiarity is one of several key characteristics that resonate strongly with consumers worldwide.

“To deliver successful new products, marketers and retailers should ensure that they uncover unmet consumer needs, communicate with clarity, deliver distinct product innovations, and execute an optimal marketing strategy,” the local Nielsen chief says.

While 77 percent of Filipino respondents welcome new product options, Nielsen’s survey reveals that 74 percent of consumers prefer to wait until a new innovation has proven itself before making a purchase.

Another 70 percent of respondents say that they would consider store-brand options and 64 percent of respondents say they were “enthusiastic” about such brands.

The survey also shows that 74 percent of Filipino respondents like to tell others about new products that they purchased.

“Consumers are enthusiastic about adopting new product innovations but somewhat there’s trepidation about embracing new brands,” Jamieson says. “In order for consumers to adopt new brands, marketers need to launch very strong awareness and trial-building campaigns, supported by a positive product experience. It is vital that marketers generate positive word-of-mouth endorsements because negative experiences can significantly diminish the likelihood of new product success.”

Economic factors also play a role in purchase decisions with 60 percent of Filipino respondents reporting that challenging economic conditions make them less likely to try a new product.

However, when given a choice, 52 percent express willingness to pay a premium price for a new product.

Nielsen’s survey shows 53 percent of Filipino respondents say they are partial toward local options over global brands, compared to 26 percent of Asia-Pacific respondents who say they do not favor local brands.

Nielsen’s review of 21 methods to reach consumers across various media and advertising platforms shows that a mix of word-of-mouth communication, traditional advertising, and Internet activity are the most persuasive ways to drive awareness. However, potential reach and ease of execution varies substantially.

While 83 percent of Filipino respondents say word-of-mouth advice from family and friends and 82 percent advice from a professional or expert are the most persuasive source of new product information, receiving a free sample (75 percent), traditional television advertising (72 percent) and active Internet searching (69 percent) remain influential.

Philippines can be RE leader in Southeast Asia

The Philippines is sitting on vast renewable energy potential of more than 250,000 megawatts of power that can save money, generate jobs and make electricity available and affordable to more Filipinos, Greenpeace said in a report yesterday.

The economy stands to benefit from massive renewable energy investments and does not need to rely on outdated and destructive fossil fuels, according to the report titled “Green Is Gold: How renewable energy can save us money and generate jobs”.

At a press conference in Quezon City, Greenpeace launched the report, in which the group sought to debunk notions that renewable energy technology was expensive and not economically viable.

“It will make the cost of electricity more economical, generate growth for the country while posing fewer risks to the environment and people, and contribute to energy independence,” said Von Hernandez, executive director of Greenpeace Southeast Asia.

Greenpeace said the country’s RE potential was estimated at 261,000 megawatts, which “remains untapped, with investors now moving to other markets in the region, having been locked out by coal projects in the pipeline”.

Anna Abad, the group’s climate and energy campaigner, pushed for what she called an energy revolution by turning its back on coal and capitalising on RE technologies, such as geothermal and solar panel production.
“This report shows clearly how renewable energy is the win-win solution for sustained economic growth in the Philippines,” she said.
Abad said the Department of Energy should not miss out on the opportunity to realise the full potential of the five-year-old Renewable Energy Act of 2008.

Hernandez noted how the RE law had been hailed as a landmark law that was seen to usher in the new era of renewable energy in the country by generating billions of dollars in investment and creating new opportunities.

“However, after five years, implementation has yet to bear the fruits that were envisioned when the law was crafted. We have yet to see major implementation, which has been hobbled by foot-dragging, the inability of government agencies to enact corresponding rules and regulations, and willful sabotage,” he said.

Hernandez blamed what he described as the “conflicting policy direction being pursued by the DOE and by the Aquino administration”.

Compared to previous administrations, he said, it was only now that the government was supporting more than 20 proposals for coal-fired power plants, “which goes against the spirit and intention of the RE law”.

“It is unthinkable that we’re investing in our own suffering,” he said, pointing out the environmental costs of coal and other conventional fuels.

The Greenpeace report said RE technology was typically labour-intensive, “which means they spend more on hiring people, have a higher domestic content than conventional fossil fuel sectors, and often produce higher-end, better-paying, cleaner, healthier jobs”.

For example, it said, a 10-megawatt solar plant employs 1,000 people during the construction phase and another 100 people in permanent full-time jobs.

In terms of revenues, Greenpeace said geothermal energy, a “mature industry in the Philippines”, had saved the government more than $7 billion since 1977.
“Other RE technologies suggest more savings to the economy—or biomass: US$96.9 million per year; for hydro: $65.9 million per year; for solar: $8.5 million per year; and for wind: $29.5 million per year.

The report said the Philippines possessed the natural resources that could propel itself as an RE leader in Southeast Asia.


GOOGLE Pilipinas

Google opened its Philippine office yesterday, January 23, 2013.

According to Google’s statement made on Wednesday, the new office is part of Google’s ongoing efforts to provide and improve services for its Filipino users, help the country’s businesses grow, both locally and globally, and tap local talent.

“The Philippines is a key country in Southeast Asia in terms of its digital economy and tech-savvy population,” Julian Persaud, managing director of Google Southeast Asia said in the statement. According to Persaud, more than 33 million Filipinos access the Internet regularly, and Internet usage is set to grow exponentially.

Manuel L. Quezon III, Undersecretary for Presidential Communications Development and Strategic Planning, who represented President Benigno “Noynoy” Aquino III at the company’s launch said he is optimistic that Google Philippines’ presence would lead to innovations.

Google Country Manager Narciso Reyes meanwhile said they see Google as a part of Filipinos’ everyday lives.

Reyes says in a press statement, ‘Our local team will be committed to providing better services to our Filipino users and to helping businesses – large and small – grow locally and globally, contributing to the growth of the Philippine economy.’

Fruits of good governance

The year 2012 was a year when we began to see the fruits of good governance and its impact on the Philippine economy.

At the start of 2012, the platform of good governance was criticized for having delivered a paltry performance the year before, 3.9%. It did not matter that the period coincided with global supply disruptions brought about by the tsunami in Japan, the crisis in MENA and the floods in Thailand; what the critics saw was the very minute contribution of government consumption expenditure to total GDP, a clear indication of governance reforms.  As it turned out, the reforms were investments to an improved climate for business and society, as a whole.

The President initiated the moves to promote transparency and accountability by announcing his “Social Contract with the Filipino People” at the start of his term in 2010.  This became the basis for the Philippine Development Plan 2011-2016, which translated the Social Contract into tangible policies and programs. The Plan preparation, while spearheaded by the NEDA, involved all agencies of government, the business sector and civil society.  The overarching goal articulated in the Plan was to achieve rapid, sustained and inclusive growth anchored on the principles of good governance.

One of the first reforms implemented was intended to expunge what was termed as the “culture of impunity” and this meant going after the “wang-wang”of Philippine society- the tax evaders, smugglers, corrupt officials, usurpers of authority, etc. Bureaucratic reforms to reduce the cost of doing business, such as the procedures for applying for a business permit and registering a business name, are further being addressed to improve the country’s business environment. Strategies to increase participation in the budgetary process were also piloted and will perhaps be expanded in 2013.

Beyond these reforms, the notion of “matuwid na daan” resonated in all agencies of government.  As a result, savings were being realized from many quarters of public service provision.

Towards the latter part of 2011 and all through 2012, government has accelerated its disbursement both in MOOE and capital outlay.  The former included the government counterpart in administering the conditional cash transfer (CCT) program, whose coverage was increased to some 3 million families.  The latter, together with projects under public-private partnership (PPP), was intended to address the neglected state of infrastructure that was eroding the country’s competitiveness.

The business sector, both here and abroad, have likewise appreciated these reforms. As a result, there have been eight positive rating actions earned since the Aquino Administration assumed office, from Fitch, S&P, and Moody’s. We have also moved up in various competitiveness and governance rankings.

Gross domestic product for the first three quarters of 2012 grew by 6.5 percent, and it is highly likely that growth will surpass the targets set by the Development Budget Coordinating Council (DBCC), which was 5-6 percent.  This growth occurred while deepening macroeconomic stability and fiscal discipline.  Inflation was low and stable, 3.2%; fiscal deficit was kept at about 2%; debt stock to GDP was reduced to about 50%, down from about 74% in 2004.  It must also be noted that elsewhere in the world, countries were going through economic crises (US, Japan, Euro Area) or political crises (Egypt, Libya, Syria).

The primary driver of growth on the demand side was household consumption, which grew by 5.7%, although the increase in fixed capital (7.9%) was also substantial.  In particular, investments in construction posted a major turnaround, growing by 12.6% in the first three quarters of 2012, from a contraction (-9.4%) the year before.  This development is expected to sustain the growth even in the medium term, for instance, public investments were channelled to addressing infrastructure bottlenecks.

The export sector continued to be weighed down by external events.  Nevertheless, it increased by 8.6%, contributed largely by exports in services that included the IT-BPO sector.  Apart from signs of a recovery, the portfolio of goods and markets has also diversified. This makes the Philippines less vulnerable to shocks coming from a single country or region.

The present challenge is to sustain the growth and make it more inclusive. It has been observed that employment has not responded quite well to the growth. Improvements in the country’s competitiveness are expected to bring in investments, perhaps in the short term; this will then create jobs, which can be expected in the medium term.  Public policies and programs will continue to address infrastructure bottlenecks and reduce the cost of doing business to encourage investments.  Programs for human capital development will also be in place to ensure that when these investments demand the labour, there will be an appropriate supply. Likewise, social protection and safety nets have been set in place for the marginalized and most vulnerable sectors of society, as well as providing for assistance to victims of disasters, natural or man-made.

One potentially huge source of investments is the remittance from Overseas Filipinos (OFs), which are expected to increase by about 5% for the full year of 2012.  In the first nine months of 2012, remittances from OFs have already amounted to US$ 15.6B, much higher than FDI inflows. What is needed is a deliberate program to encourage investments from OFs and their families, effectively involving them in the economic development of the country and create jobs in the process.

There is a lot of scope for public policy and programs to promote inclusive growth.  NEDA is in the process of completing its assessment of the first two years of implementation of the PDP wherein the gaps to achieving the Plan targets have already been identified.  Going forward, the strategies of government will be deliberate; they will be directed to address the gaps, and they will take stock of what has been done and what can be expected in the future. The principles of good governance will continue to be the anchor on which these strategies will be designed.  As before, these strategies will be articulated in a document, the Updated PDP, against which we will commit, once again, our due accountability as an institution.

(COPYRIGHT: Malaya Business Insight)

PSEi Breaks 6,000-Point Mark

The Philippine Stock Exchange index (PSEi) continued its bull run yesterday, reaching and breaking the  6,000-point mark for the first time in 86 years of stock trading. Investors locally and abroad were elevated by the  positive economic news.

The PSEi rallied by 1.23 percent, or 73.46 points, to post another record close at 6,044.91, which is also the new intraday high.

 “We are very proud to have reached and breached the 6,000 level, which affirms that market liquidity continues to be strong and investor sentiment remains positive over good news both locally and abroad,” said Hans B. Sicat, PSE president and CEO.“We also believe that corporate earnings will remain strong for the full year of 2012, which should support the market’s phenomenal performance,” he added.

“Indeed it is more fun at 6,000 and we look forward to setting new records this year.”

Traders flashed the “More Fun at 6,000″ and the number seven (7) signs on the trading floor yesterday (in the photo above) indicating the next crucial index ceiling.

This only means a stronger and more progressive economy for Asia’s Roaring Tiger for 2013.

Business Optimism Continues To Pick Up

It was showed in a survey conducted by the Bangko Sentral ng Pilipinas (BSP) that for the fourth straight quarter, local businessmen remained positive with economic prospects despite growth concerns in the US and the sovereign debt crisis in Europe.

From 40.5 percent in the first quarter, it was showed by the central bank’s Business Expectation Survey (BES) that for the second quarter of 2012 the business confidence index improved to 44.5 percent in the second quarter of the year.

Cyd Tuano-Amador, BSP assistant governor, mentioned and stressed in a press conference that this was the fourth consecutive quarter that the business confidence index has improved.

“The BES has edged again higher and this is the fourth consecutive quarter that business confidence continued to remain bouyant,” Amador said.

After dropping for two consecutive quarters to 31.8 percent in the second quarter of last year from 47.5 percent in the first quarter and the record level of 50.6 percent in the fourth quarter of 2010, the confidence index steadily improved for four straight quarters to 34.1 percent in the third quarter of last year, to 38.7 percent in the fourth, to 40.5 percent in the first quarter of the year and to 44.5 percent in the second quarter.

The confidence index is composed and computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative with respective to their views on a given indicator.

Acting deputy director of the BSP’s Department of Economic Statistics (DES), Teresita Deveza, outlined the continued optimism of businessmen to the upsurge in orders and new contracts leading to higher volume of production as well as widening in business and new product lines.

Deveza also mentioned that higher government spending, seasonal upstick in demand during the summer, enrollment, and harvest seasons as well as favorable macroeconomic fundamentals.

“Also contributing to businesses’ improved sentiment were the prevailing favorable macroeconomic conditions such as lower interest rates and manageable inflation as well as the steady growth of remittances that contributes to healthy external payments position,” she said.

The Cabinet-level Development Budget Coordination Committee (DBCC) expects the gross domestic product (GDP) expanding between five percent and six percent this year due to higher government spending under the Public Private Partnership (PPP) scheme of the Aquino administration.

The GDP growth slackened to 3.7 percent last year from 7.6 percent in 2010 due to weak global trade, resulting in a sharp drop in the country’s export earnings, as well as the under spending by the Aquino government.

The survey also showed that fewer respondents expect inflation to go up but more respondents expect the peso to appreciate due to robust remittances from the overseas Filipino workers (OFWs) and robust receipts from business process outsourcing (BPO) sector.

The survey was conducted between April 2 and May 11, 2012 that had 1,587 respondent firms from the Top 7,000 corporations of the Securities and Exchange Commission.