KEYNOTE SPEECH OF SECRETARY RAMON M. LOPEZ
FFCCCII 32nd BIENNIAL CONVENTION
22 March 2019, Marriott Hotel, Pasay City
[Greetings and acknowledgements]
Magandang gabi po sa ating mga kaibigan mula sa federation. You are the friends of the Department of Trade and Industry. Kayo po ang nagpapatakbo ng ekonomiya, ng ating bayan. Palakpakan po natin ang inyo pong mga pinaghihirapan at kasaganahan din sa pagnenegosyo dito sa Pilipinas. This is my third time to join you in your very important gathering. This is the 32nd Biennial Convention.
It is always a big honor and pleasure from the Department of Trade and Industry family to be with all our friends in the industry. We are your representative in government. The DTI is your representative in government. We are here to work for you. Kaya po kung meron kayong problema, ang bilin po ng ating Pangulo is to let us know so we can address and find solutions to your problems. I hope that we will be able to address all those problems you are facing. There are so many policy issues that we face each day. There are so many problems that we face each day. Lalo na po sa negosyo.
Relationship. In the administration of President Rodrigo Roa Duterte, this is a relationship that has become really beneficial, especially to all of us in trade and industry sector. China’s role has become very significant in our economy. Hindi po pwedeng maging mahina ang relationship natin sa China due to the Independent Foreign Policy of President Rodrigo Roa Duterte, we are able to strengthen further our respective relationships with our partners, especially those from China. Our two Presidents, PRRD and President Xi Jin Ping, in fact has met, has undertaken about six bilateral meetings already. That’s how close our two presidents are. There’s a series of meetings every time we are in China for the Presidential Visit or State Visit. The visit of President Xi Jin Ping in Manila, the Belt & Road Forum, our participation at the China International Import Export Expo and soon, there will be another presence of our President at the Belt & Road Forum this April 2019. And of course we recognize also the efforts of all our other officials who are having their own participation in gathering and meeting Chinese counterparts like incoming trade mission from China this March. And there will be another Boao Forum that will be led by Speaker Former President GMA. This will be followed immediately by the Belt & Road initiative Forum.
Of course China, from former number two top trading partner has become number one in the past two years. Number one if we combine both the import and export. China is our 4th largest export market and number one import source.
China’s strong commitment to support the Philippines is a proof of confidence in President Duterte’s administration. Just recently, we are able to approve several major industrial projects. For example, last December we welcome the entry or the registration of Hebei, the one of the biggest iron and steel company in China and partnering possibly with Steel Asia here in the Philippines to produce the first ever integrated iron and steel operation in the country, with no government support. That’s a good indication that our partners from China are coming in. Pulangi Hydroelectric power plant in Pulangi in Bukidnon was also approved last September. This is a hydroelectric power plant/ There are other major infrastructure projects. The much talked about Kaliwa dam, a very important project supported by our friends in China. There are also grants given to us. The two bridges along Pasig river, one in Binondo area and one in Rockwell Estrella. These are from China grants. Of course there’s the third telco player, Mislatel, China Fortune Land Development for a 200-ha industrial park in Batangas. These are just a few of the many projects that we are facing and we are accepting right now.
It is the good time to do business. I’m sure kayo po, you are experiencing a good growth in your respective businesses. Tama po ba? Is everybody happy with the way our economy is growing?
Past 80 quarters, the economy has positive growth rate. Fifteen consecutive quarters, over 6% growth rate. Many countries are envying what we are achieving right now. And the very good part of this growth rate is that the sources of the growth are not the usual. On the demand side, you look at usually Consumption, Investment, Government, of course export minus import. But on the domestic side, we are getting to experience a very strong domestic demand. Before, our country used to depend only on Consumption. That’s good also, it’s not bad. But this time, it’s not only Consumption. Gross Domestic Capital Formation or Investment Capital Formation is one of the main source right now plus Government spending because of the Build Build Build infrastructure spending. Now, double digit growth over 10 %. So domestic demand are all double digit compared to the single digit in the previous administration.
On the Production side, so these will be on the Agri, Industry, and Services, our economy usually depend only on Services, over 6% growth, 6%-8% range. Now, Industry is also experiencing 6%-8% growth. Part of Industry—manufacturing and construction. Manufacturing is at 6%-7% growth. You know construction, it’s double digit, 15.8% growth. Before, one quarter, our country will only have about 28,000 construction projects, not only government, private as well. Twenty eight thousand in one quarter. Now, its over 40,000 projects in one quarter. So, ang daming negosyo. Ang daming perang umiikot. Hindi ba kayo masaya doon? Maraming construction projects, maraming negosyong umiikot and more.
As a result, of course there is more employment. There are 826,000 jobs recorded last year, in 2018. That brought down the unemployment rate to 5.3%. That used to be in about 6.6% in the previous years. But in January, it even went down to 5.2%. So, with the young population, 24 years old average age and growing population by 1.7% every year, we are about 107 million in population. That will be your market. Much larger consumer market. Alam ko maganda rin sa negosyo yun. Because of that, so much investments being attracted to enjoy the growing domestic consumer base. So its creating also a positive cycle – more investments, more jobs, more income, growing middle income – that is the reason why there a lot of people eating out.
Just a few days ago, we launched the coffee retail concept, KAPEtirya in Baguio. We want to mainstream our very delicious Philippine-made coffee. So it will be a franchiseable concept soon. Why are we doing that? Right now, we are enjoying instant coffee. You know, 3-in-1, 2-in1 coffee. But there’s a growing market of those eating out, preferring cafés. So there’s a growing number also of coffee shops. And we are riding on that growth. The Department of Trade and Industry is basically starting a project that brand a café that will be government-owned but private sector-run and private sector investment. It will be a franchiseable concept wherein a franchisee or private sector will be the one to operate and borrow the brand of KAPEtirya and operate it nationwide. Hopefully we will have more than 1000 branches nationwide. We invite all of you to invest on it once we roll out the franchiseable concept. This is just one example of how bullish we are on a much stronger economy and growing middle class society.
The much talked about inflation problem last year was just much talked about. Wala talagang problemang madali. It’s just a 5.2 average inflation rate. It’s not even a double digit inflation rate experienced in other countries. Remember, several decades ago, we experienced double digit inflation rate but however it was talked about issue last year. It’s fine. It kept us in our toes. But that was just a 5.2. Take note, 5.2 percent.
Last January, it went down already to 4.4%, then February, 3.8%. So, we expect that to be in the area of 3%. Again, good for business.
A lot of reforms are being made, Rice Tariffication to help solve again inflation and supply issues. So many more reforms are being done to encourage more businesses, level the playing field, remove the unfair trade practices, and open up the economy without neglecting the support to the sector. The proceeds of the tariff rate to be collected, the 35% tariff on rice, will be brought back to the agriculture sector, to the farmers. This time helping farmers because it is still over 95% locally produce, so we have to make sure that the 95% local producers, farmers, producers of rice will be improve competitiveness and productivity, that will make them more profitable, more prosperity for the rice farmers. A lot of support will be given to them that will make them more competitive and hopefully become global producers of rice in the future.
DTI is working to sustain this momentum by working on several fields. Our priority is Trabaho, Negosyo, at Konsyumer protection. You can summarize it in those areas. We want to create jobs that why we push for more investments. Our investments last year hit a record-level of Php 915 billion. That’s 48% higher compared to the previous year of Php 617 billion. Remember that the Php 617 billion in 2017 was already a record-level for the past 50 years of the Board of Investment. Fifty-year history ha. Record-level na nung 2017, na-surpass pa ng 2018. So again, an indication of strong confidence to President Duterte. We create trabaho or jobs from investments. And as investors come in, it also creates negosyo or business opportunities. Businesses that will surround the manufacturing activities or the investments that are coming in. Supporting the creation of foreign investments, creation of jobs, we want to make sure that there’s a market for our products.
We enjoy right now the Generalized System of Preferences or what we hear as GSP. The GSP privilege in the US is about 3,500 products enter the US market with zero duty so we can encourage exports to the US. Also in EU, we enjoy the GSP+, 6,274 items are also entering the EU market with zero duty. So what we are trying to do now is encourage investors even from China, given the US – China trade war, for them to locate to the Philippines. Because if they manufacture in China and send it to Europe, their tariff rates will be higher. But if they locate in the Philippines, manufacture here, sell to EU, they’ll have zero duty. So that’s a huge advantage. I hope some of your are also enjoying these. Your manufacturing are also selling to EU.
Other reforms we’re doing include the Ease of Doing Business. Our President signed the Ease of Doing Business last year. The IRR was completed on October 22 and the law is already in effect. In other words, if you are experiencing difficulty in transacting with government, application in the Executive branch, should not be more than 20 days. So for simple transaction, it should be 3 days, 7 days for complex transaction, and 20 days for highly technical. It’s a very harsh law and implements a two-strike policy. But first you should complain. First strike, suspension. Second strike, termination at kulong pa. Bawal na rin pong magbenta ng fire extinguisher. You can buy your own or have your own fire extinguishers without the need to buy it from the authorities.
At the DTI, we also try to protect the micro, small, and medium enterprises. (MSMEs). We want to make sure that our MSMEs are supported. First, in fact, we have the 7Ms. They have to learn from our Filipino-Chinese brothers on how to do business. That’s why we want to teach them the proper Mindset, conduct Mentoring. We thank all our partners in helping us mentor all our MSMEs. I hope we can have more of you as mentors. We have almost 1,049 Negosyo Centers.nationwide. I understand that there are a lot of chambers from different provinces. We encourage you to just allot event two hours a week. You or your technical people who are good in accounting, product development, HR, legal, etc, all these functional requirement for businesses to help our MSMEs to prosper. Or you may include them in your value chain. Make them as suppliers. Sa kanila tayo bumili. So you can allow them to grow and they will have markets for their products. These are huge assistance and help to the country in nation-building. If you can try to help us in those areas: mentoring and teaching, enabling, and empowering our MSMEs. Our President really want to elevate and uplift the lives of those at the bottom of the pyramid. Because if you uplift them, actually you are creating more prosperity and widening the reach where everyone will be prosperous.
Try to help them in microfinancing. We have launched a microfinancing program where there’s no collateral needed, aiming to stop the usurious 5-6 loans. You can also be our partners and become Credit Delivery Partners and help us spread the availability of this microfinancing loans.
A lot of opportunities are created for our MSME brothers and sisters. We are teaching them how to fish not just giving them donation.
There are a lot of programs, like promoting our products abroad. The Philippines, DTI is participating in the Dubai Expo to give better visibility to many of our businesses and products. We also joined the China International Import Expo, which part of China’s efforts in opening up their market, welcoming more suppliers for their country. We also trying to support all the SMEs who are participating.
As our support to our MSMEs, we hope more retailers can open up for their products. Try also to give them cash payments so they’ll have a working capital.
I would like to thank all of you for listening. DTI is your partner in your businesses. Thank you for being a partner in nation-building.
Maraming salamat po.