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29 July 2019

Published also in Business Mirror

The Department of Trade and Industry (DTI), through its Competitiveness Bureau (CB), held its second Logistics Services Philippines (LSPH) Conference and Exhibition on July 15 and 16,  2019, at the Mezzanine Hall of the Philippine International Convention Center (PICC) in Pasay City.

With the theme, “Logistics 4.0: Towards an Innovative and Inclusive Logistics Services Sector,” LSPH 2 gathered stakeholders from the logistics services sector, government and development partners to thresh out issues and formulate solutions in a bid to boost competitiveness of logistics services in the country.

Trade Secretary Ramon M. Lopez, in his keynote speech, said that the logistic challenges must be further drilled down to be properly addressed.

“The DTI is working closely with the industry representatives on a number of reforms and this covers reducing logistics costs making doing business easier, addressing our human capital requirements, and many more,” he said.

The event featured different discussions on the global trends and practices, and the future of logistics services in the country. It also tackled on how micro, small  and medium enterprises (MSME) take advantage of Industry 4.0 and how logistics service providers (LSPs) contribute to making MSMEs more globally competitive by incorporating digitalization and innovation-related modules.

In partnership with the MSME Council, and Board of Investments, the two-day event showcased the services of around 50 LSPs to potential clients: MSMEs, exporters and importers who are looking for reliable and affordable logistics services for their business.

The trade chief, during his speech, also revisited the Joint Administrative Order and said that he has instructed Undersecretary Rowel Barba to reconvene the technical working group composed of the Department of Transportation, DTI and Department of Finance to reconstitute the JAO resolving high shipping costs and port congestion into an executive order (EO).

The 10 Commitments of the Philippine Logistics Service Sector was also revisited by Marilyn Alberto, president of Philippine Multimodal Transport and Logistics Association Inc. during the morning session. Recent updates of the logistics sector’s initiatives were also reported.

For Day 2, a special workshop for e-tailers on “Efficient Logistics Services for E-Commerce Driven Demand Chains” was facilitated at the Banquet Hall for the exchange of information between key players in the logistics ecosystem to better identify and explore opportunities among LSPs.

As part of the initiatives to capacitate the MSMEs in the Philippines, the workshop drew perspective from e-tailers on logistics issues that they encounter in the e-commerce industry and formed solutions to address them.

The LSPH Trade Exhibit, on the other hand, ran for two days and served as a steady platform to showcase logistics services such as, but not limited to freight forwarders, air/land/sea transport, storage and warehousing, customs brokerage, cargo handling services and allied services.

Among the present panelists and partners were officials from the Departments of Transportation, Public Works and Highways, Information and Communications Technology, DTI, the Interior and Local Government, Labor and Employment, Education, Commission on Higher Education, Bureau of Customs, Technical Education and Skills Development Authority, Professional Regulatory Commission, Land Transportation Office, Philippine Ports Authority, and the Maritime Industry Authority (Marina).

LSPH 2 was attended by around 750 delegates, including exporters, business-support organizations, government agencies, private sector, media, and the academe – in which became an avenue to exchange knowledge and insights on global trends, industry prospects, eCommerce, robotics, artificial intelligence, digital solutions, and a future-ready government.

29 July 2019

Published also in Business Mirror

The Department of Trade and Industry (DTI), as chairman of the Micro, Small and Medium Enterprise Development Council (MSMEDC), staged this year’s National MSME Summit on July 16, 2019, at the Philippine International Convention Center (PICC), Pasay City, to showcase vital and game-changing whole-of-government policy reforms, programs, and initiatives to empower and build revolutionary Filipino entrepreneurs.

Driven by the government’s strong desire to encourage innovation among MSMEs, the summit’s theme—“Inclusive and Sustainable Innovations for Globally Competitive MSMEs”—underscored the need to develop MSMEs and young entrepreneurs by equipping them with the values, skills and entrepreneurial spirit necessary for their businesses to succeed in the digital economy.

“We attribute our country’s undeniable economic growth and success to the vibrant entrepreneurial spirit of the MSME sector, which plays a significant role in reducing poverty and achieving inclusive growth,” Trade Secretary Ramon M. Lopez said during the summit.

The DTI chief noted that data gathered from the local government units (LGUs), through the Philippine Business Registry (PBR), indicated that there are about 1.5 million registered enterprises in the country.

“We need to encourage all MSMEs to innovate. I remember very simply—anything new to a firm is innovation, anything new to the world is invention. We call on MSMEs to explore novel ideas, business models, transform from traditional to digital,” DTI-Regional Operations Group (ROG) Undersecretary Zenaida Maglaya said.

The Philippines is currently considered one of Asia’s economic bright spot, with an average gross domestic product growth average of over 6 percent. The country has also been given high investment grade ratings of “BBB+”—highest ever, notch lower “A” rating from international credit rating agencies. And,  as of April 2019, the country’s unemployment rate slid down to 5.1 percent and underemployment was at a record-low of 13.5 percent.

In line with the vision of President Duterte to provide better and comfortable lives for all Filipinos, Lopez highlighted various MSME programs under the seven-point strategy essential for MSME development—mindset, mastery, mentoring, markets, money, machines and models—that are focused and targeted to benefit those at the bottom of the pyramid, and aimed to help ordinary people succeed and prosper in life.

The midterm mark of the Duterte administration gave birth to the DTI’s groundbreaking initiatives for MSMEs: Pondo para sa Pagbabago at Pag-asenso (P3) which provides an easy access and no collateral microfinancing fund for Pinoy entreps; Kapatid Mentor ME (KMME) Program which give way to a massive campaign for entrepreneurship development producing confident entrepreneurs with the right mindset and business know-how; Go Lokal! which mainstreams MSME products without incurring the high cost of operating a retail outlet; and the recently launched Negosyo Serbisyo sa Barangay (NSB) to bring DTI services to the grassroots.

Lopez added, “The MSME development is the embodiment of our President’s “Tapang at Malasakit” program to help lift more of our countrymen out of poverty, and bring long overdue economic development to all the parts of our country. By accelerating the 7Ms strategy for MSME development, I am confident that our economic priority agenda to achieve inclusive growth and shared prosperity for all will bring into sharper focus the areas of higher importance and greater impact for our MSMEs.”

The summit was graced by Madam Honeylet Avanceña who reiterated the Duterte administration’s full support to MSMEs and commitment to further advance entrepreneurship in the country, especially in the countryside.

Attended by more than 1,000 participants from the ranks of entrepreneurs, tech startups, academe, business experts, mentors, and enablers, the Summit provided immense opportunities to exchange knowledge and insights from starting a business to preparing for the challenges ahead in today’s globally competitive business environment.

22 July 2019

Published also in Business Mirror

The Department of Trade and Industry (DTI) will ask President Duterte to issue an executive order (EO) that will significantly reduce logistics costs for local companies over the next few months.

Trade Secretary Ramon Lopez said he has instructed Undersecretary Rowel Barba to reconvene the technical working group composed of the Department of Transportation, DTI, and Department of Finance to reconstitute the joint administrative order (JAO) resolving high shipping costs and port congestion into an EO.

Lopez told reporters at the sidelines of the 2nd Logistics Services Philippines Conference and Exhibition on Monday that the proposed EO is expected to bring down the average cost of logistics as a percentage of sales of local firms from about 27 percent to below 20 percent by year-end or “a few months after that” with streamlining of the process and costs of transporting goods.

Citing World Bank’s Dr. Ruth Banomyong, the DTI chief said the average logistics cost of firms consist of only 11.11 percent of the total sales in Thailand, Vietnam at 16.3 percent, and Indonesia at 21.40 percent.

Lopez said they are keen on coming up with clear guidelines on shipping fees, which are currently set freely by the international shipping lines.

“Normally, ayaw nating makiaalam sa mga [we do not want to intervene in] setting rates but we have to set perhaps certain parameters by which they can move so that we avoid overcharging, unnecessary charges or fees being imposed on the importers,” he said.

Lopez also urged importers to negotiate with different suppliers who can provide the best rates.

He said the proposed EO will specify the agency that will be accountable for the setting or at least having better control on shipping rates; while the Bureau of Customs (BOC) addresses port congestion.

“[Under] JAO basically right now, [it is] interagency cooperation. But the agency responsible for that will just have to be clarified and strengthened. But of course, we have the cooperation of the international shipping lines here,” he added.

Lopez further said the three departments will likely endorse the draft EO to the President.

Wala tayong control sa EO [We have no control when the EO will be issued] but on the draft, the technical working group will be reconvened. Give us maybe in a month’s time, we will have a draft on this one,” he said.

“For now, our immediate response will be the JAO and then to be followed by the EO. The EO will set the tone from then on,” he added. PNA

22 July 2019

Published also in Business Mirror

AS countries attract foreign direct investment (FDI) to special economic zones (SEZs), active support to promote clusters and linkages is key to maximizing development impact, according to a United Nations report.

United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2019 pointed out that firms operating in zones have greater scope to collaborate, pool resources and share facilities especially in specialized zones.

“…But multi-activity zones can extract some of the benefits of colocation. Proactive identification of opportunities, matching efforts and training programs, with firms within and outside the zone, significantly boosts the impact,” the report said.

The report identified the Philippines as among the countries with the highest numbers of SEZs, along with India, the United States, the Russian Federation, Turkey, Thailand, the Dominican Republic, Kenya and Nicaragua. China alone hosts over half of all SEZs in the world in Asia.

SEZs are credited with more than 60 percent of the Philippines’s  exports. This, as zone programs in many countries account for a major share of exports, particularly manufactured exports.

The report also cited early research on the Philippines indicating that the share of FDI flows going to SEZs increased from 30 percent in 1997 to over 81 percent in 2000.

“SEZs can make important contributions to growth and development. They can help attract investment, create jobs and boost exports—both directly and indirectly where they succeed in building linkages with the broader economy,” it said.

Likewise, zones can also support global value chain participation, industrial upgrading and diversification.

“However, none of these benefits are automatic,” it added.

The report underscored the importance of strategic design of the SEZ policy framework and development program.

“Zone policies should not be formulated in isolation from their broader policy context, including investment, trade and tax policies. The types of zones and their specialization should build on existing competitive advantages and capabilities. And long-term zone development plans should be guided by the SEZ development ladder,” it said.

The report said zone development programs should take a frugal approach.

Unctad’s SEZ Sustainable Development Profit and Loss emphasizes the need for financial and fiscal sustainability of zones, as their broader economic growth impact can be uncertain and take time to materialize.“High upfront costs due to overspecification, subsidies for zone occupants and transfers to zone regimes of already-operating firms pose the greatest risks to fiscal viability,” it added.

22 July 2019

Published also in Business Mirror

Furniture and home products are displayed in this Business Mirror file photo of a trade expo meant to open doors to local and international buyers of the country’s premium home, fashion, holiday, architectural and interior products. Furniture products comprise some of the country’s best exports.

Local furniture manufacturers are working to bring down the rising costs of major raw materials and components as they aim to boost exports growth even amid strong domestic market.

Myrna Bituin, Philippine Exporters Confederation Inc. (Philexport) trustee for the furniture sector, said they would like to meet with the Department of Environment and Natural Resources (DENR) officials so they could provide them the legal source of lumber.

“We don’t want to use illegal [sources],” she said, noting furniture makers then wanted to connect with these legitimate suppliers of plantation species.

Bituin pointed out that prices of raw materials now comprise a huge portion of their production costs.

She noted it is “not easy” to increase prices, thus, exporters have to absorb rising costs to protect customers from those adjustments. She added the group also intends to buy in bulk raw materials otherwise, it is cheaper to import these.

Bituin remains hopeful of achieving exports growth in 2019 after posting flat growth in the first half of the year.

“On the high-end market, we are still okay,” she added. “But the local market is good. It is the local market that is really earning.”

Image Credits: Alysa Salen
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