Trade and Commerce
Situationer Ways forward.
Investment and trade, among others, are essential to job creation. Modest investment spending is a key reason why unemployment remains high at 11.4 percent. Investment, as a portion of gross domestic product (GDP) was 19.5 percent in 2001 and expec-ed at 20.1 percent in 2004. Foreign investments have been slow in coing to the country. For example, the in-ease in foreign direct investment in-lows from US$1.43 billion in 2002 to US$1.49 billion in 2003 was insignificant and did not reduce unemployment. This situation is a result of several factors, including the pull of investments towards China, weakening investor confidence due to concerns about fiscal sustainability, and structural problems such as peace and order and a weak infrastructure and logistics system. The latter, for example, has hampered the distribution of products. Based on the World Competitiveness Report, the Philippines’ ranking slid from 48 in 2001 to 56 in 2002 among the countries included in the Global Competitiveness Ranking (GCR). The high cost of doing business has hampered the competitive-ness of the Philippines. Power costs are higher compared to China, Taipei, Korea, and Indonesia due to high distribution charges. (Philippine power rates, however, are lower than Singapore, Malaysia, Thailand, and India). At the same time, telephone and mobile phone charges were the highest among ASEAN member countries.2 Also, the limited government funding for infrastructure is adversely affecting the country’s competitiveness. The Philippine infrastructure and capital outlay perfor-mance vis-à-vis other Asian countries is the lowest for the period 1998-2002, averaging a mere 3.3 percent of GDP. The poor quality of infrastructure is perennially cited as the main problem in the Philippines’ global competitiveness. Philippine ex-ports also face stiff global competition as countries continually strive to improve their productivity and competitiveness. Exports (in dollar terms) grew by 2.4 percent in 2003 and 8.5 percent as of August 2004 while imports grew at 6.1 percent in 2003 and 6.9 percent as of July 2004. While Philippine merchandise exports (in dollars) grew at an average of 19.2 percent in 1992-1997, export growth decelerated to 14.8 percent in 1998-2000 and further to –1.1 percent in 2001-2003. Philippine merchandise exports were affected by the melt-down in the IT sector in 2000. Exports have grown modestly in 2003 as global demand firmed up. The ADB’s forecast of 8.5 percent growth of Philippine merchandise exports in 2004 is at par with Malaysia and five percentage points higher than Indonesia’s, while Thailand and Singapore will post higher growth rates. A. Targets Investment rate target - from 19 percent to 28 percent of GDP as a result of increased investment promotion activities. Increased spending on public infrastructure by PhP100 billion shall be pursued through greater private sector investments. Exports of goods and services are targeted to increase from US$39 billion to US$50 billion in two years or a minimum growth of 10 percent every year as the government focuses on priority areas such as ICT, automotive, electronics, mining, health care, and tourism. These are where the country has comparative advantage because of its human resources and geographic location and the revitalization of the power, airlines, and shipping industries. The government will strengthen its program to support three million entrepreneurs and small and medium enterprises (SMEs) by providing credit, technology, and marketing assistance. Loans to self employed small business owners will be tripled.
B. 5 Strategic Measures
1. Make food plentiful at reasonable prices to make our labor cost globally competitive;
2. Reduce the cost of electricity to make the cost of running our machines and our manufacturing processes regionally competitive;
3. Modernize the physical infrastructure and logistics system at least cost to ensure efficient movement of goods and people;
4. Mobilize and disseminate knowledge to upgrade our technologies and increase our people’s productivity; and
5. Reduce red tape in all government agencies to reduce transaction costs
C. Focus of Job Creation Thrusts:
1. High skill industries and services, namely, software, business processing outsourcing or BPO, contact centers, fashion garments, jewelry, medical services, automotive, electronics, health care;
2. Medium skill industries and services, namely, agribusiness, tourism, hotels and restaurants, entertainment; and
3. Simple skill industries and services such as construction, SMEs, micro-enterprise.
D. Policy Objectives
1. Promote investments in agribusiness.
2. Promote entrepreneurship and SME development.
3. Promote energy independence and savings.
4. Promote investments in infrastructure.
5. Promote investments in exports.
E. Action Plan
1. Agribusiness
2. Entrepreneurship Micro, small and medium enterprises (MSMEs) play a significant role in our country’s development. In 2001, MSMEs accounted for 99.6 percent of the country’s total business enterprises (811,589) and enerated a 69.1 percent share of total employment. While SMEs provide more jobs compared to large enterprises, they however, contribute only 32 percent of value added.
a. Provide credit, technology and marketing support for three million MSMEs; and
b. Empower existing SMEs to generate additional employment through increased lending and promotion of Big Brother-Small Brother program.
Trade and Investment On a yearly basis, target loans shall be PhP24 billion in 2004; PhP28.80 billion in 2005; PhP34.56 billion in 2006; PhP41.47 in 2007; PhP49.77 in 2008; PhP59.72 billion in 2009; and PhP71.66 billion in 2010. The participation of private financial institutions to promote and comply with the mandatory lending quota to SMEs shall be further encouraged. The legal impediments to the establishment of an SME Credit Bureau shall be removed. The establishment of an SME credit rating/scoring system shall be fast-tracked. The implementation and operation of the SME Capital Market shall be strengthened and venture capital financing shall be promoted.
The One Town-One Product (OTOP) Program shall be implemented (the development and promotion of a product or service where a town has competitive advantage. The OTOP interventions include: provision of a comprehensive package of assistance to MSMEs and OFWs through a convergence of services by LGUs, NGAs and private sector in product/design development, skills and entrepreneurial training, marketing assistance and introduction of appropriate technologies. OTOP also promotes the Big Enterprise-Small Enterprise Program as a source of technology and market, ensures sustainability of the MSME through the industry clustering approach by capitalizing on complementation among towns within a province or a region. Technology based entrepreneurship shall be encouraged and supported.
Tap returning OFWs as sources of capital; OFWs shall be tapped to invest in micro and small income-generating projects and activities. The remittance profiling survey project for efficient remittance data collection shall be pushed. The Program for OFWs (LDPO) shall be immediately implemented. Partnerships/linkages with other formal remittance channels (e.g., foreign banks and money couriers) shall be established. The government with support from the private sector will conduct a massive information campaign, through trimedia, Presidential foreign trips, consultations, dialogues and symposia to encourage OFWs/migrant to invest in SMEs, use formal channels of remittance and save in banks particularly in GFIs. The SME Development Plan will include OFW utilization to establish a clear and well-defined working relationship between Department of Trade and Industry (DTI) as support provider for OFW/SMEs and OWWA as caretaker of OFWs. The use of formal channels for remittances will be promoted through incentive programs such as higher than prevailing interest rate in the market and other similar services offered by the informal network. The possible expansion of the formal banking branch network shall be studied to effectively link overseas workers with the remittance receiving families. Issuance of OFW bonds as savings and investments shall be explored. The SME Guidance Program shall continue its lending operations and venture capital funds and implement and expand the web-based marketing of SME receivables.
Continue product development as part of technology support
Provide an environment conducive to MSME development. The documentary requirements and processing time for registering BMBEs will be simplified and reduced. The Philippine Business Registry System will serve as platform for one-stop centers to facilitate business registration and harmonize government frontline services delivery. An on-line Investment Registration and Monitoring System and Business Action Centers — where a comprehensive package of assistance to businessmen/ entrepreneurs will be housed under one roof, shall be set up nationwide. To spur the development of MSMEs, access to information on business opportunities, available raw materials, available sources of funds and latest technologies including product design shall be facilitated. LGUs shall be encouraged and supported for SME Centers. Entrepreneurial culture will be developed and promoted by incorporating entrepreneurship in the educational curriculum. Labor productivity shall be enhanced and industrial peace promoted to ensure amiable relations between firms and workers. Local government units (LGUs) shall implement city development strategies such as city investment promotion, problem-solving activities as well as the Bayanihan Savings Replication Project and the One Cluster-One Vision Project.
Investments To sustain and generate investments, aggressive promotion campaigns shall be pursued especially in the identified priority areas that will support the country’s job creation thrusts. Focused investment promotion in priority markets (e.g. US, Europe, Japan, Taiwan and Singapore) for the retention, expansion and diversification of existing investments shall be undertaken in cooperation with major foreign companies operating in the Philippines and other partners (e.g. foreign embassies, business chambers and associations, international organizations, etc.). a. Draw up a more focused incentives package with focus on priority areas: Information Technology and IT-enabled Services Sector, Automotive, Electronics, Mining Healthcare and Wellness, Tourism, Shipbuilding, Fashion garments, Jewelry, and Agribusiness.
b. Simplify Investment Registration Procedures
Ongoing efforts to further simplify procedures and requirements in registering investments will be continued. These include reducing the documentary requirements, processing time, steps and fees as well as the issuance of various certifications. There shall be a nationwide implementation of online registration and monitoring of investments.
Exports To attain the US$50 billion export target by 2006, the industry shall move toward expanding the export base by tapping new markets, developing more competitive export products and services and maximizing opportunities through bilateral and multilateral agreements. Toward this direction, the following activities shall be undertaken:
a. Maximize exports and investment opportunities offered by trade agreements; The Philippines will continue to participate in and conclude various international trading arrangements, among others, the Japan-Philippines Economic Partnership Agreement (JPEPA), the ASEAN Priority Integration Program (PIP) and the ASEAN-China Free Trade Area under the Framework Agreement on Compre-hensive Economic Cooperation between ASEAN and the PRoC. Discussions on economic cooperation initiatives through the Asia-Europe Meeting (ASEM) will be continued while pursuing aggressively the European market. Possible trade agreements with other major trading partners including the US, Taiwan, South Korea, India, Canada, and Australia-New Zealand will be initiated. Studies to identify advantages and disadvantages of these agreements shall be conducted in consultation with various stakeholders. Development programs and activities in Mindanao and Palawan aimed at taking advantage of trade and other opportunities in the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) will be pursued. The external trade and marketing activities from Mindanao and Palawan to focus areas in BIMP-EAGA and its ASEAN Dialogue partners such as China, Japan, Korea, India and Australia shall be promoted and intensified. SME development activities in Mindanao and Palawan shall be coordinated and integrated to enhance trade in BIMPEAGA. Technical assistance will be provided to facilitate and enhance Philippine participation in BIMP-EAGA activities. The Mindanao and BIMP-EAGA database will be updated and maintained.
b. Pursue a market-driven strategy that will link our supply capacity closer to the high-impact markets. Export promotion will focus on the following priority markets: US, China and Hong Kong, Japan, ASEAN, European Union, Taiwan, Australia-New Zealand, South Korea, India, Canada, United Arab
Emirates and Kingdom of Saudi Arabia. The Philippine Export Development Plan (PEDP) for 2005-2007 will elaborate on this. A market-driven export promotion campaign will be undertaken for the following Philippine export products/services in addition to the priority areas where investments will be promoted.
(i) Marine Products:
(ii) Construction Materials/Services:
(iii) Gifts, Toys, Housewares and Holiday Decors
(iv) Home Furnishings
c. Simplify export and import procedures and facilitation The import and export documentation and clearance procedures will be automated to improve efficiency, transparency and accountability. Unnecessary administrative and legal barriers that hamper semiconductor and electronics exports will be dismantled. An electronic business facilitation platform will be developed to facilitate business matching and eventually, export transactions. The One Stop Export Documentation Center will be strengthened. The Automated Export Documentation System shall continue to be implemented. The manufacturing warehouse liquidation system shall be implemented.
d. Maintain existing and develop more competitive export products and services and diversify markets
The US$150 billion Halal market will be tapped using the United Arab Emirates and Kingdom of
Saudi Arabia as gateways. Philippine food products shall be exported to areas with significant OFW
presence. Product standards will be aligned with international standards. The government shall maintain its membership with the Pacific Accreditation Cooperation and International Accreditation Scheme for Quality Management System (QMS) to ensure international recognition of Philippine QMS certificates. Likewise, it shall pursue participation and negotiation of bilateral/multilateral recognition arrangements on conformity assessment activities (testing, certification, etc. especially on products that are regulated by foreign countries). The country shall intensify commercial intelligence to cover market information, competitor intelligence and potential and existing barriers to Philippine exports. In areas where there are no trade
posts but are potential markets, the diplomatic mission shall conduct trade promotion and commercial intelligence.
e. Legislative Agenda To further promote entrepreneurship, the amendment to the Magna Carta for SMEs (RA 6977 as amended by RA 8289) shall be pushed. To simplify and streamline import and export procedures, the Export Development Act shall be amended. PD 930 which simplifies export procedures by realigning functions of certain government offices/ agencies involved in processing export documents shall be repealed. Likewise, EO 1016 withdrew the inspection, commodity and export clearance requirements on Philippine exports shall be repealed. The amendment of EO 226 or the Omnibus Investment Code of 1987 shall be pursued to rationalize the investment incentive system.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment