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

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

Trade Secretary Ramon M. Lopez urged a 108-man delegation from the Korea Importers Association (KOIMA) to explore Philippine products that would complement the needs of the South Korean market.

Lopez pushed for organic, natural food and health care, as well as design-driven products, including furniture, fixtures and garments. Likewise, he emphasized the growing opportunities in electronic parts and components, and software and game development.

“We encourage you to discover other products from the Philippines that you can bring back to South Korea. The Philippine government is committed to assist your buying mission in the country. We are optimistic that this deepening relationship and trade cooperation would help our countries in addressing trade imbalance,” Lopez told the delegation.

The KOIMA delegation is currently in the Philippines for a buying mission to source raw materials and other products from the country. The delegation represents over 50 South Korean companies.

The Philippines is the biggest supplier of fresh bananas and pineapples in South Korea. Fresh mango, calamansi or Philippine lemon, coconut water, virgin coconut oil and banana chips are also noted to be popular in the South Korean market.

During the PHL-Korea Business Forum organized by DTI on July 11, 2019, officials from the DTI’s Export Marketing Bureau (EMB), Center for International Trade Expositions and Missions (CITEM) and Board of Investments (BOI) presented various trade and investment opportunities in the country to the delegates.

A business matching activity was also organized that would link the delegation with over 100 Filipino companies. The said activity has facilitated over 200 business meetings.

Lopez emphasized the growing opportunities once the negotiation over the PHL-Korea free-trade agreement (FTA) has concluded. He added that Koima and Philippine exporters will greatly benefit from the agreement.

The trade chief likewise offered the assistance of the DTI to KOIMA in facilitating trade in the country.

“President Rodrigo Duterte’s administration is committed in making doing business in the country easy. So we assure you that DTI will be your partner in the Philippines as we work on streamlining more government processes and promote e-government,” Lopez assured.

Meanwhile, KOIMA Chairman Kwang-hee Hong expressed optimism in the stronger business relationship between Philippines and South Korea. He also shared that Korean importers are greatly interested in Philippine products.

Present during the forum were South Korean Ambassador to the Philippines Dong-man Han, Trade Undersecretary Rowel Barba, Board of Investments Governor Angelica Cayas, CITEM Executive Director Pauline Suaco-Juan, DTI-EMB Director Senen Perlada, Philippine Trade and Investment Center-South Korea Commercial Counsellor Jose Ma. Dinsay, and Philippine Chamber of Commerce and Industry President Alegria Limjoco.

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

By Angie M. Brosas | Knowledge Processing Division | DTI-Export Marketing Bureau

08 July 2019

Published also in Business Mirror

THE Philippine government is sending the Philippines’s first-ever delegation of Philippine start-ups to the RISE Conference 2019, the largest technology conference in Asia, from July 9 to 11 at the Hong Kong Convention and Exhibition Centre (HKCEC).

The Philippine participation in the RISE Conference 2019 is one of the key projects under the Start-up Assistance Program 2019-2023 agreed upon by the Departments of Trade and Industry (DTI), Science and Technology (DOST) and Information and Communications Technology (DICT).

The three government agencies are working together to promote and assist Philippine startups through the following joint initiatives: the digital start-ups Philippine Program of the DICT which aims to boost the ICT ecosystem and promote and develop local ICT start-up businesses; the Technology Transfer Support for Nurturing Tech Start-Ups of DOST-PCIEERD, which contributes to the economic and industrial development of the country; and DTI-EMB’s Startup Pilipinas, which provides government support to scale up local start-ups by participating in outbound business-matching missions and international pitching competitions.

The government selected the exhibitor-participants based on the following criteria: innovation, scalability, motivation and delegation profile. The DOST shouldered the tickets and conference passes of the start-up participants while DICT and DTI shouldered the booth expenses and country pavilion.

The 28 selected start-ups are Aiah, Arnichem Corp., BeamAndGo, Nexplay, Burket.Ph, Captivate, C Estates-Tokenized Real Estate Platform, Cocotel, Farmwatch Solutions Inc. Hoy, HYBrain, Hyperstacks, Insight Supply Chain Solutions, Jazzypay, Kumu Inc. Mayani, Mosaic Solutions, NXTLVL Farms, NXTLVL Water, PearlPay, Prosperna, Social Light, Stock Knowledge, StyleGenie, transitflix by GYPSY, Tudlo Innovation Solutions Inc., Wizher and Partner incubators and accelerators—Brainsparks, Impact Hub Manila and QBO Innovation Hub will also take part of the Philippine delegation.

The participation of these start-up companies will feature the Philippine start-up community’s potential in the international market, and provide them with global exposure and opportunities on partnerships, mentorship and investments.

The Startup Pilipinas is a five-point program developed by the DTI as the industry cluster program to foster inter-enterprise linkages among MSMEs and strengthen collaborative networks. With this action plan, the Philippine government aims to create high-growth and high-impact start-ups that will nurture innovation, sustain economic growth and generate large-scale employment opportunities. Digital start-ups Philippine Program promotes and develops the country’s start-up ecosystem by bringing together industry stakeholders and enabling them to create innovative business products and solutions for economic development.

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