PRESS STATEMENT OF DTI SECRETARY RAMON LOPEZ ON THE PEZA BOARD MEETING ON 09 October 2019
I called a special Board meeting of the Philippine Economic Zone Authority (PEZA) this morning to emphasize the importance of the tax and incentives reform that we are pushing for, which has the mandate from our President and was approved by the Cabinet.
We had to explain fully that there are ongoing refinements in certain provisions of the bill to address the serious concerns of the stakeholders, especially the existing PEZA locators, and a number of senators who are equally concerned on minimizing any possible repercussion on jobs if some firms leave the country.
To have a smoother transition, current discussions are on the number of years in the sunset provision for existing locators, as well as extra years of income tax holiday (ITH) and lower tax rates for new projects in strategic, high-technology industries with preference on locating in least developed areas.
It was emphasized that the concerns of the stakeholders are being addressed.
With these adjustments, the PEZA Board together with its management, led by the Director General [Charito Plaza], has officially aligned its position to give strong support to the Corporate Income Tax and Incentives Rationalization Act (CITIRA) and its parameters of having longer performance-based, time-bound, focused, and transparent set of incentives. The PEZA DG will no longer ask for status quo or exemption from CITIRA.
Statement of Department of Trade and Industry on the Alleged Affiliation of Secretary Ramon Lopez to the Philippine International Development Agency (PIDA)
The Department of Trade and Industry (DTI) denies any affiliation or link of any of its officials and representatives, particularly Secretary Ramon Lopez, to the Philippine International Development Agency (PIDA).
PIDA, which claims to be a government agency handling centralized procurement services, is inviting local and foreign companies to bid for various government projects following a registration fee of USD 3,350 to its alleged agents who are mostly identified as high-ranking government officials, including Sec. Lopez.
The DTI Secretary is not at any way connected with this kind of fraudulent activity. Sec. Lopez maintains a reputable name both in private and public sectors and remains one of the trusted Cabinet Secretaries of President Rodrigo Duterte’s administration.
Any procurement requirement of DTI for its programs and projects strictly adheres to RA 9184 or the Government Procurement Reform Act.
DTI will not tolerate this kind of deception that intends to ruin public trust among government agencies and their representatives.
DTI has reported this group and their activity to the National Bureau of Investigation for further inquiry and legal action.
Press Statement of Secretary Ramon M. Lopez on September 2019 Inflation
Philippine headline inflation fell further to 0.9% year-on-year (yoy) in September, the lowest since June 2016. The decline in food prices, specifically rice prices, largely brought down inflation. Rice tariffication liberalized rice importation which brought down rice prices, from over PHP 48 to PHP 40 and below.
Rice prices are projected to go down further as we encourage major food retailers to import rice directly and cut down traders.
NFA is also bringing out their rice inventory and the Philippine International Trading Corporation (PITC) will also be asked to consolidate importation for smaller rice retailers and food outlets.
The drop in transport costs has also contributed to the inflation deceleration. Global oil prices stabilized as concerns over potential oil supply disruption from attack on Saudi Aramco oil facilities simmered down.
Average inflation over January to September period now stands at 2.8%, already below the midpoint of the government’s inflation target range.♦
Date of Release: 04 October 2019
Keynote Address of Secretary Ramon M. Lopez Inclusive Innovation Conference 2019
23 September 2019, Sofitel Philippine Plaza, Pasay City
Ladies and gentlemen, good morning!
Thank you all for coming to the Department of Trade and Industry’s (DTI) Inclusive Innovation Conference. As the world enters the Fourth Industrial Revolution—also known as 4IR or Industry 4.0—the Philippines must prepare itself to ensure that it remains competitive. By pooling our knowledge and experience together, I am confident that we can work together to realize President Rodrigo Duterte’s vision of a future where all Filipinos have a better life.
With that in mind, the World Economic Forum’s (WEF) “Readiness for the Future of Production Report 2018” gave its assessment of how countries are being affected by the changing nature of production via the adoption of rapidly emerging technologies. In the report, it cited the Philippines as the archetype of a legacy country. That is, it is a country that has a strong production base today but is at risk in the future that we need to work on across the Drivers of Production. These Drivers are: (1) technology and innovation; (2) human capital, (3) global trade and investment; (4) institutional framework; (5) sustainable resources; and (6) the demand environment.
The Report likewise stated that legacy countries like the Philippines need “to carve out a strategy for the future.” Their three most pressing challenges are “Institutional Framework, Human Capital, and Technology & Innovation.” Furthermore, they need to “reskill and upskill workers, upgrade their technology platform, seek frugal innovations, and ensure the fundamental building block of good governance is in place to perform well in the future of production.”
Recognizing these challenges, DTI has various plans, policies, and programs in place in order to better prepare the Philippines for the Fourth Industrial Revolution.
PREPARING FOR THE TECHNOLOGY (Plans and Policies)
First of all, our plans and policies for preparing for Industry 4.0 are guided by our Inclusive Innovation Industrial Strategy (i³S). The i³S aims to grow innovative and globally competitive manufacturing, agriculture, and services industries by focusing on three major areas. These are: (1) the creation of an innovation and entrepreneurship ecosystem; (2) the removal of obstacles to growth to build industry clusters; and (3) the strengthening of domestic supply and value chains, which would deepen our participation in global and regional value chains and networks.
The i³S relies on strong government-academe-industry collaboration. However, the government needs to act as main coordinator and facilitator in addressing the most binding constraints to the growth of industries. The strategy stands on 5 major pillars: (1) building new industries and industry clusters; (2) capacity-building and human resource development (HRD); (3) innovation and entrepreneurship; (4) growth and development of Micro, Small, and Medium Enterprises (MSMEs); and (5) ease of doing business and investment environment.
The core principles of i³S are reflected in our plans for industry development, which are our industry roadmaps. Since the beginning of our Manufacturing Resurgence Program (MRP), we have formulated—and are implementing—over 35 roadmaps across agribusiness, manufacturing, and services sectors.
With the advent of the Fourth Industrial Revolution, we recognize the need to update our roadmaps to incorporate innovation as a key element. We also need to include corresponding measures that will enable our MSMEs and industries to upgrade and sustain their competitiveness. As such, we are doing these through a number of initiatives:
UNIDO Leveraging 4IR Project
We are partnering with the United Nations Industrial Development Organization (UNIDO) with the “Leveraging 4th Industrial Revolution for Inclusive and Sustainable Industrial Development in the Philippines” project. Also called the Leveraging 4IR, this project will foster inclusive and sustainable industrial and economic development in the country through a smooth transition of our industries towards Industry 4.0.
The project focuses on the automotive, electronics, aerospace, and agribusiness sectors. It aims to promote the uptake of Industry 4.0 technologies and business models by firms in these sectors, as well as crafting the roadmap for adoption of Industry 4.0 among them. The objective for us is to have an innovation ecosystem that supports technological learning and innovation of small- and medium-sized enterprises.
Included in its outputs are the establishment of an SME Academy to provide Industry 4.0 trainings for SMEs, an Industry 4.0 pilot factory, and 4 Industry 4.0 Roadmaps covering the automotive, electronics, aerospace, and agribusiness sectors. This project will also include Industry 4.0 Training for government policymakers to enhance their capacity to implement Industry 4.0 policies and programs.
Artificial Intelligence (AI) Roadmap
Second, we will be starting the process of formulating an Artificial Intelligence (AI) Roadmap for Philippine industries soon. Our AI Roadmap will define our national AI strategy for our priority like agribusiness, manufacturing, and services sectors. Likewise, we will establish an AI Task Force, a multidisciplinary group composed of public and private sector members.
The Roadmap will be done in coordination with other national government agencies like the departments of Science and Technology (DOST) and Information and Communications Technology (DICT). Also included are key stakeholders from the industry and the academe. NEDA will always be part of this.
With focus on building a pool of data scientists, our aspiration is for the Philippines to become an AI Center of Excellence. We aim to be ready with the Roadmap in the first half of 2020.
Human Capital Development and Reskilling and Upskilling of Workforce
The changing nature of work in Industry 4.0 requires corresponding improvements in our human capital and workforce. The economy of the future demands lifelong learners who are able to reskill themselves and upgrade their skill set in a world of cyber-physical systems.
To address this, we have forged a Memorandum of Understanding (MOU) with SkillsFuture Singapore (SSG) to adopt a similar approach to human capital and workforce development. Through the development of a skills framework that will be incorporated and harmonized with our industry roadmaps, we intend to design training programs and other forms of support. These will assist members of our labor force to thrive in the new world of work.
Updating of the e-Commerce Roadmap
We have the e-Commerce Roadmap 2016-2020, which presents the country’s strategic plans, policies, and other support measures to harness the benefits of e-commerce for the Philippines. While our current goal is for e-commerce to contribute at least 25% of GDP by 2020, we are in the process of reviewing these and revising our targets.
Fifth, in addition to enhancing our roadmaps and other plans, we are looking forward to the implementation of two landmark laws on innovation. These laws, which were recently signed by President Rodrigo Duterte, are the Philippine Innovation Act and the Innovative Startup Act.
The law’s main objective is to generate and scale up action in all levels and areas of education, training, and research and development (R&D). This will promote innovation and internationalization activities of MSMEs as a driver of sustainable and inclusive growth.
The law also calls for the formulation of a National Innovation Agenda and Strategy Document (NIASD). This will establish the country’s vision and long-term goals for innovation. It will provide a roadmap and strategies for improving innovation governance through clear-cut delineation and complementation of innovation efforts across agencies.
More importantly, the law creates an Innovation Fund, which is a revolving grants fund of Php1B sourced from the General Appropriations Act (GAA). This fund will be administered by the NIC. There will also be an Innovation Development Credit and Financing as well as Credit Quota programs, to provide funding for innovation initiatives.
Among the key provisions of the law is the creation of the Philippine Startup Development program, which will be composed of programs, benefits, and incentives for startups and startup enablers. These include subsidies, grants-in-aid, and expedited processing of applications. The law calls upon DTI, DOST, and DICT as lead host agencies to promulgate appropriate policies and guidelines for the coordinated implementation of the program.
The law further creates under each lead host agency a Startup Grant Fund to provide initial and supplemental Grants-in-Aid for startups/ startup enablers. It also calls for the creation of Startup Visas and the establishment of Startup Ecozones.
DTI is primarily responsible for a number of tasks. One is the promulgation of rules for the efficient registration and assessment of startup enablers to be registered under the program. We are planning to setup one-stop shops all over the country to facilitate this. What’s more, we will administer and manage the Startup Venture Fund (SVF), in coordination with its attached agency, the National Development Company (NDC). The SVF will be used to match investments by selected investors in startups based in the Philippines.
In coordination with the Board of Investments (BOI), DTI will also develop a Startup Investment Development Plan (SIDP). Covering short, medium, and long-term strategies, this plan will spur investment in, and promote the growth and development of startups and startup enablers of the Philippines.
It is important to support the growth and enable the scaling up of our startups. DTI will lead in pushing for more market-oriented research through the conduct of market and feasibility studies and accelerators or mentoring programs. These will further complement the R&D programs of DOST, as well as the Department of Agriculture (DA) and the Commission on Higher Education (CHED). In turn, our startups will fuel our country’s innovation drive through their new products, new services, and new business models.
The Implementing Rules and Regulations (IRR) for both laws are currently being formulated and are expected to be out by next month.
Industry 4.0 Fiscal Incentives being discussed under CITIRA
Sixth, the use of new technologies as well as the shift to Industry 4.0 technologies are among the criteria proposed in selecting industries and activities to be included under the Strategic Investment Priority Plan (SIPP). From these would be drawn a list of priority industries that would be entitled to new incentives under the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).
Included here are the use of modern or new technologies like AI, as well as investments to upgrade and introduce new processes, products, services, or business models. Among the priority sectors identified under the SIPP are innovation, R&D activities, and startups.
Industries covered under the SIPP are: electronics and electrical; automotive; machinery and equipment; aerospace; IT-BPM and e-commerce; agribusiness; chemicals; and transport and logistics.
For incentives, the Income Tax Holiday (ITH) will be given to the following. Good improvements in the CITIRA, which is being deliberated. (1) 4 years as base for products that are expanding and moving up the value chain; (2) 5 years for Special Activities like Agribusiness and investments outside Metro Manila; (3) 7 years for intermediate parts and components; and (4) 10 years for superior to high-tech products that are not yet present in the Philippines
There will also be Reduced Corporate Income Tax: 18 % for 2019; 17% for 2021; 16% for 2023; 15% for 2025; 14% for 2027; and 13% for 2029. There will additional deductions as well for the following: (1) accelerated depreciation; (2) deduction on labor expense; (3) R&D expense; (4) trainings; (5) infrastructure development; (6) Net Operating Loss Carry-Over (NOLCO); (7) domestic inputs; and (8) reinvestments.
Electric Vehicle Incentive Strategy (EVIS) Program
Seventh, we have the Electric Vehicle Incentive Strategy (EVIS) program. This program will provide comprehensive fiscal and non-fiscal support to enable the traditional motor vehicle industry to shift to EV and jumpstart the development of the EV industry.
The fiscal support is necessary to narrow the cost gap between EV and conventional vehicles. It will also attract investments in Completely Knocked-Down (CKD) manufacturing, the manufacture of strategic parts and components like batteries, the establishment of testing facilities, and the production of charging facilities.
I would like to reiterate that our incentives for this program—are consistent with that of CITIRA, as well as for all our other programs—will be time-bound, targeted, performance-based, and transparent. To stimulate market demand, government procurement of vehicles will prioritize models produced under this program.
Among the fringe benefits we will give to this program are the following. These are proposals: (1) priority in registration and issuance of plate numbers; (2) exemption from the Unified Vehicular Volume Reduction Program (UVVRP); (3) free parking in commercial centers and commercial-business district (CBD) roadsides; (4) priority in PUV franchise application; (5) provision of space for charging stations; and (6) annual vehicle registration fee exemption with a 3-year registration interval. We have to create the demand to attract producers.
APPLYING THE TECHNOLOGY (Programs and Projects)
While we put in place plans and policies in preparation for Industry 4.0, we are also implementing various initiatives to build our innovation and entrepreneurship ecosystem.
Regional Inclusive Innovation Centers (RIICs) with USAID STRIDE
Our Inclusive Filipinnovation and Entrepreneurship Roadmap aims to increase the country’s ability to innovate.
In partnership with DOST and other agencies, we are building Regional Inclusive Innovation Centers (RIICs) in different parts of the country under the i³S. For this initiative, we have technical assistance from USAID’s Science, Technology, Research, and Innovation for Development (STRIDE) program being implemented by RTI International. We have 4 pilot RIICs to date: Legazpi in Region V; Cebu in Region VII; Cagayan de Oro in Region X; and Davao in Region XI. Some of the key drivers of the RIICs are here with us today.
The RIIC consist of a network of innovation agents that collaborate in order to commercialize market-oriented research towards competitiveness in the regions. It is a government initiative in cooperation with the industry and the academe as well as R&D institutions, which aims to generate better employment opportunities, more entrepreneurial activities, and sustainable economic prosperity in the country’s regions.
To sustain the initiative per RIIC region, the support of the Regional Development Council (RDC) is obtained. A Core Group of regional stakeholders from government, academe, and industry is also formed to drive efforts forward.
In the last ten months, the RIIC initiative has conducted a lot of trainings and sessions. For example:
- Pilmico Foods Corporation in Iligan is expanding their collaboration with the Mindanao State University-Iligan Institute of Technology (MSU-IIT) on particular R&D needs. These include increasing quality control processes of their products. Pilmico wants to introduce sensor technologies to identify and lessen the presence of pests in their products.
- Limonero Fruit Drinks in Cagayan de Oro is working with the University of Science and Technology of Southern Philippines (USTP) to develop a prototype that will improve its distribution network within local schools.
- Eng Seng Food Products of Davao is expanding its partnership with the University of Southeastern Philippines (USeP) to help improve manufacturing processes in their durian and coconut products.
- Leslie Pili Products of Sorsogon has partnered with Bicol University and submitted a proposal for funding under DOST’s Collaborative Research and Development to Leverage Philippine Economy (CRADLE) program. This program funds projects wherein the academe solves problems identified by the industry. SLERS Industries, together with Xavier University, also submitted to CRADLE a proposal for their spent pork lard to be used as fuel additive in their factory.
- In Cebu, Knowles Electronics supports Cebu’s aspirations to increase its innovation capacity. They signed an MOU to develop a Professional Science Masters (PSM) program with the Cebu Institute of Technology University (CIT-U), which will cover such topics as industrial automation.
In addition, we have ongoing partnerships and are intended to utilize disruptive technologies to better prepare for 4IR.
Smart Manufacturing Survey
To enhance our interventions to support our manufacturing sector, we are conducting a smart manufacturing survey using a framework developed by the Manufacturing Enterprise Solutions Association (MESA). This survey aims to assess the technology utilization status of manufacturing firms and understand their status or position in terms of Industry 4.0 preparedness.
It covers 8 dimensions: (1) planning and scheduling; (2) manufacturing activity management; (3) equipment connectivity and data management; (4) materials management and handling; (5) equipment maintenance; (6) shop floor visibility; (7) quality; and (8) cybersecurity.
There are also ongoing discussions for possible collaboration with companies. For example, there is Wave Computing for the training of data scientists and other AI skills to be demanded by the AI industry. There is also Siemens for a country roadmap including EV, intelligent transport system, and smart manufacturing.
Industrial Human Resource Development (IHRD) Project & Supply & Value Chain Development with JICA
In the light of Industry 4.0 technologies, the Japan International Cooperation Agency (JICA) has funded a project that aims to strengthen industrial HRD, as well as supply and value chain development. This program will focus on auto and auto parts, supporting industries, and fusion areas of IT and electronics.
The components of this project include:
- Strengthening linkages between universities and industries, which will be handled by CHED;
- Enhancing technical knowledge and skills for auto parts suppliers, to be handled by the Technical Education and Skills Development Authority (TESDA);
- Providing business assistance for e-PUV, to be handled by our very own BOI;
- Conducting Kaizen consultation to auto parts, also by BOI;
- Providing Capacity Development on Die and Mold Engineering for Local Companies and the Metals Industry Research and Development Center (MIRDC), to be handled by DOST-MIRDC;
- Holding matching seminars, by BOI; and,
- Forming a Startup Ecosystem between the Philippines and Japan, by DTI’s own Competitiveness and Innovation Group (DTI-CIG)
SUPPORT SYSTEMS AROUND TECHNOLOGY (Innovation Environment)
We have also included a new category called “Innovation Drivers” among the list of Preferred Activities that may avail of incentives under BOI’s Investment Priorities Plan (IPP). This category includes:
- Research and Development (R&D) activities;
- Innovation Centers, Business Incubation Hubs, Fabrication Laboratories (FabLabs) and Co-working Spaces
- Commercialization of New and Emerging Technologies – These cover but are not limited to: (1) agricultural biotechnology tools; (2) disaster mitigation/ prevention hardware or software; (3) hardware or software for increasing agricultural productivity; (4) mechanized means for natural resources conservation; (5) portable technologies; (6) hardware or software for the prevention of disease outbreaks; (7) remote monitoring devices or systems; (8) professional services for remote sensing; (9) hardware or software for the upgrading of local industries; (10) photonics; (11) nanotechnology; (12) and natural health products..
In closing, the government, under President Duterte’s promise of Tapang at Malasakit, is determined to pursue inclusive innovation. By this, we mean that everyone—MSMEs, startups, skilled, less-skilled, urban centers, and provinces—can advance even if at different paces. More importantly, no Filipino shall be left behind in the Fourth Industrial Revolution.
What’s more, we are committed to provide support to those who need assistance in adopting advanced technologies and adapting to new realities despite the disruption these may bring. Lastly, we want to ensure that the positive impact and benefits of Industry 4.0 innovations are felt by all of us in our country, regardless of geography or generation.
As the necessary ingredients to increase our country’s competitiveness, these will lead to higher productivity, more investments, more and better jobs, more sustainable and inclusive growth, and shared prosperity for all. In simple terms, with innovation at the front and center of our industrial policy, our strategic industrial framework for growth can be summed up with the following formula:
INNOVATION + ADOPTION OF NEW TECHNOLOGIES + HRD + ENABLING BUSINESS ENVIRONMENT = HIGHER COMPETITIVENESS & PRODUCTIVITY→ INCLUSIVE & SUSTAINABLE GROWTH
Preparing for Industry 4.0 is also happening even within DTI as we are now in the process of evaluating various datasets collected by different groups. We plan to integrate and connect these datasets, as well as digitize and apply modern technologies such as data science and blockchain. This will enable us to improve our policies and programs and—through automation—deliver our services in a more efficient manner that translates into faster and reduced cost for our stakeholders.
As we go through this digital and economic transformation journey, let us all work together to ensure that our industries, our workers, and our companies are ready for Industry 4.0. Through our collective effort, we can bridge the digital transformation divide among our people, between the public and private sectors, and across the regions.
Thank you at mabuhay tayong lahat!
Press Statement of Secretary Lopez on the African Swine Fever in the Philippines
The Department of Trade and Industry (DTI) joins the Department of Agriculture (DA), in assuring the public that raw pork with certifications from the National Meat Inspection Service (NMIS) and processed pork products from trusted brands are safe to consume and should not be banned in supermarkets and wet markets.
The DTI, along with the DA and the National Food Authority (NFA), monitored the prices of pork products in Farmers Market, Mega Q Mart, and Kamuning Public Market last 19 September. We found that the prevailing prices of pork are around PHP 200 to PHP 220, but vendors say that public fear of the ASF is affecting pork demand.
Meanwhile, Pork meat brands found in supermarkets and groceries certified by the Food and Drug Administration (FDA) are produced by the member-companies of the Philippine Association of Meat Processors Inc. (PAMPI). These only use raw materials certified by the Veterinary Quarantine Certification by NMIS. These meat products like the canned goods and hotdogs are cooked. Therefore, these products are safe to consume and must not be banned.
We also advise the consumers who shop in wet markets to ask vendors to present their NMIS certificates, issued everyday by NMIS. These certificates are proof that these pork products have been tested and found free of ASF.
According to DA Secretary William Dar, there is no national outbreak of ASF. The virus is contained in select areas in Rizal and Bulacan and the DA is currently containing the situation. Hence, we call on the local government units to ease on the total ban of pork products in their areas and allow certified pork products except those from identified areas in Rizal and Bulacan.
ASF is a virus that is contagious to pigs but is not communicable to humans. But we advise the public to thoroughly cook their pork and other meat products to ensure that all bacteria and viruses are eliminated. The DTI-Consumer Protection Group is working closely with the DA to monitor the situation to ensure that consumers always have safe and affordable food options.♦
Date of Release: 19 September 2019
Press Statement of Secretary Ramon M. Lopez On the Philippine-China bilateral meeting held on 29 August 2019 in Beijing, China
We heard encouraging words from President Rodrigo Duterte and President Xi Jin Ping during the bilateral meeting, as they focused on how we can advance peace and cooperation in many fields, like in trade and investments, infrastructure and finance, education, agriculture, science and technology, security, and working against transnational crimes and illegal drugs.
President Xi reiterated China’s policy to help balance trade with the Philippines by buying more goods especially agriculture and agri-based products and industrial goods. This was reinforced during my side meeting with Chinese Commerce and Finance Minister Zhong Shan when he mentioned that China wants to import more goods from the Philippines. To date, Philippine exports to China have been growing at an average of 10% in the last three years.
Chinese companies are also encouraged to invest in the Philippines to help increase jobs and production capacities that will enable the Philippines to enhance its exports capabilities. The momentum of Chinese investments has been very positive as foreign direct investments (FDI) from China grew six times more in the last three years. More big-ticket projects are on the way especially in manufacturing both in heavy industries like petrochemical, iron and steel, as well as light industries like textile, construction, technology-based services, agribusiness, energy, power, transportation, infrastructure, and tourism.
On tourism and people-to-people exchange, Chinese leaders are also optimistic in seeing more Chinese tourists visiting the Philippines and other nearby Asian countries. From only about 500,000 tourists from China in the Philippines in 2015, the number has increased to 1.2 million in 2018 and is expected to reach 1.5 million this year, helping boost the local economy.
Today, DTI arranged a business forum with President Duterte, with around 300 Chinese and Filipino businessmen having registered to attend the session this afternoon.♦
Date of Release: 30 August 2019
Press Statement of Secretary Ramon Lopez on CITIRA bill and the proposed amendment of the PEZA law
PRESS STATEMENT OF DEPARTMENT OF TRADE AND INDUSTRY
SECRETARY RAMON M. LOPEZ
28 August 2019
The statements of Philippine Economic Zone Authority (PEZA) Director-General Charito Plaza do not have the endorsement of the PEZA Board. Likewise, PEZA’s position on tax reform and the moves to propose a new PEZA law are not officially endorsed.
As Chairman of the PEZA Board, I have been hearing the side of industries and locators. In fact, we have conducted several industry consultations around the country, not only for BOI-registered companies but also including those from PEZA, Subic, Clark and other Investment Promotion Agencies (IPAs). We also met with Japanese and Korean locators in our recent visits to Japan and Korea.
In fact, PEZA companies have been coming to us for support. Moreover, it’s actually PEZA locators that we have been representing so that they can have a reasonable transition period, i.e. extending the transition period from five to ten years for existing locators.
The exemption of 90% export-oriented companies from VAT and duties reflected in both the Tax Reform for Attracting Better and High-Quality Opportunities or TRABAHO bill and the Corporate Income Tax and Incentive Rationalization Act or CITIRA bill were also adjustments made in the draft bill.
That’s why we have been working closely with the Department of Finance (DOF) and Congress on adjustments and transitions to the draft bill on tax reform. This is to soften the landing for existing locators towards a time-bound and performance-based incentive. These are very rational economic principles that I believe in and must be understood by all government policy makers. This is the way forward for a more sustainable growth path.
We are not taking away incentives but making these more efficient and effective. These incentives will be enhanced with several options and special and longer incentives for strategic and higher technology-based and value-adding sectors, or those located in least developed areas.
As long as PEZA is a government agency and a custodian of fiscal incentives, it is part of an overall tax reform that the government has adopted, which will bring benefits for the greater majority.
Hence, the PEZA Director General's claim that the DTI Secretary never showed support nor listened to the sentiments, issues and problems of industries are unfounded, totally not fair, and uncalled for.♦
Date of release: 29 August 2019
Press Statement of Secretary Ramon M. Lopez on Export Performance in Q1 2019
PRESS STATEMENT OF SECRETARY RAMON M. LOPEZ ON EXPORT PERFORMANCE IN Q1 2019
Based on the latest preliminary data from the Philippine Statistics Authority (PSA), our country’s merchandise export performance in the first quarter of 2019 has declined by 3.1%. Specifically, Electronics, which comprises more than half of our merchandise exports, dipped by 1.7% to US$ 8.8B. Non-electronics, on the other hand, decreased by 4.8% to US$ 7.5 B.
In general, we consider this as a reflection of the slowdown in the global economy. Exports of our Asian neighbors decreased even more: South Korea by 8.7%, Indonesia by 8.3%, Singapore by 6.3%, and Japan by 3.9%. Out of 11 trade-oriented Asian economies, 9 countries declined in their export performance and only Vietnam and China registered positive performance.
The Philippines, as part of a global production network is being affected by the negative sentiments brought by the US-China Trade War, since US and China are the top trading partners. According to industry players, global demand for electronic parts and final goods has been shrinking and will continue to weaken in 2019. In the case of the Philippines, this has been mirrored in the decline of exports in certain electronics sub-sectors such as components and devices, control and instrumentation, and telecommunication products to major markets like Singapore and Hong Kong. Meanwhile, weak orders from their principals have weighed down on major PH exporters of Non-electronics such as machinery and transport as well as agri-based exports (e.g., sugar and coconut). Similarly, our exports of wood manufactures continue to be hounded by weak orders from the principals of major PH exporters.
Backed by robust domestic demand, firms are finding more lucrative opportunities to sell in the local market. For example, a quick check with a major producer of shrimps and prawns revealed that they stopped exporting and instead concentrated their sales and distribution in the domestic market. This can partially explain the 22% decline of our exports of shrimps and prawns in the first quarter of 2019.
Additional feedback from major players revealed that our exports are hampered by lingering issues they encounter on costs and inefficiencies in transport and logistics. This continues to slow down the turnaround time in the production and shipments of exporters.
Supply issue has affected export mainstays such as fresh and processed mangoes: season is delayed and shortened due to double whammy of La Nina last year during flowering season and El Nino this year.
In the case of chemicals, there remains the lingering issue of the policy concerning controlled and regulated chemicals, which hampers the turnaround time of our exporters from production to market.
As part of our action plan, we are prioritizing addressing the core issues above (i.e., supply, competitiveness, port operations/logistics, and infrastructure gaps (e.g., R10 is now operational, etc) with relevant government agencies consistent with the Philippine Export Development Plan.
We are continuously working on diversifying our export offerings and destinations. In particular, we are looking at focusing our promotional efforts for the following products and services, among others which we consider as export growth drivers: office equipment, consumer electronics, motor vehicle and motor vehicle parts, high-value coconut products (e.g., MCT coconut oil), forest products (e.g., plywood, fiber board, etc.), and wearables (e.g., footwear, handbags, etc.). On services exports, audiovisual / creative industries (e.g., film, animation, game development), healthcare information management systems, software development, and tourism-related services will receive more focus.
DTI is also pursuing trade initiatives to increase exports to trade partners to help increase exports. Based on recent negotiations, Indonesia has revoked anti-dumping on bananas and allowed for the exports of shallots. They will also invest on coffee manufacturing and processing. There are also talks with Singapore on importation of more agricultural products like fresh fruits and vegetables, meat and poultry products. DTI is also maximizing opportunities under existing preferential trade agreements with ASEAN, China, Japan, South Korea, India, Australia and New Zealand, India as well as with EFTA countries. We are also promoting more products to the US and EU to expand utilization of their GSP schemes.
Trade promotional efforts are also being done on the non-traditional markets in Russia, Africa, Latin America and South Asia. These markets are expected to experience high economic growths and with their huge population can provide for alternative export markets in the near future.
The DTI, together with other government agencies are already trying to provide solutions to these issues, consistent with the strategies laid out in the Philippine Export Development Plan (PEDP). Notwithstanding, from the 2018 total export level of US$89 B, we remain confident that we are still on track in meeting our total export targets to reach a range of US$ 122 to 130 B by 2022. We expect a positive growth trajectory to set in in the subsequent quarters.♦
Date of release: 9 May 2019
Press Statement of Secretary Ramon M. Lopez on Chinese-Only Establishments in the Philippines
PRESS STATEMENT OF DTI SECRETARY RAMON LOPEZ ON CHINESE-ONLY ESTABLISHMENTS IN THE PHILIPPINES
May 7, 2019
Senator Panfilo Lacson is correct in calling out Chinese-only establishments that bar Filipinos from entering. Serving only Chinese clients or any specific nationality in a store is a form of discrimination and is not allowed.
There should be language options or translations in these establishments. In China, Japan, and other countries, they even have English translations for menu and signages, to cater to their major emerging markets who do not speak their language.
We have already directed our regional offices to check the stores in their areas. But please report any violating establishment to us through our hotline: 1-DTI (1-384).
ON RETAIL TRADE LIBERALIZATION
Retail is currently reserved for Filipinos if their equity size is US$ 2.5 million and below. Above that amount, retail establishments can be fully foreign-owned. But the pending Retail Trade Liberalization Bill proposes to lower that hurdle rate to US$ 200,000—or the equivalent of a medium-sized enterprise. The goal of this bill is to encourage more investments and jobs creation, while still providing necessary protection to Filipino micro and small entrepreneurs.♦
Date of release: 8 May 2019
Press Statement of Secretary Ramon M. Lopez on the 25th ASEAN Economic Ministers Retreat
PRESS STATEMENT OF SECRETARY RAMON M. LOPEZ
ON THE 25th ASEAN ECONOMIC MINISTERS MEETING RETREAT
APRIL 22-23, PHUKET THAILAND
ASEAN Economic Ministers (AEM) made headway in six priority issues during the 25th AEM Meeting Retreat on 22 to 23 April in Thailand. In the meeting, we tackled the following issues:
(1) ASEAN Priority Economic Deliverables in 2019;
(2) Criteria and Approach to Guide ASEAN’s Strategic Economic Engagements
(3) Monitoring and Evaluation Framework of the ASEAN Economic Community;
(4) Implementation of ASEAN Trade in Goods Agreement (ATIGA);
(5) Regional Comprehensive Economic Partnership Agreement (RCEP); and
(6) Suggested reforms for the World Trade Organization (WTO).
ASEAN Priority Economic Deliverables in 2019
The ASEAN community supported this year's ASEAN Chair, Thailand, in its priority economic deliverables, namely future–orientation, enhanced connectivity, and sustainability in all dimensions. Progress in these deliverables ranges from digital integration in the 4th Industrial Revolution (4IR) to trade facilitation and connectivity. These priorities were chosen to prepare ASEAN businesses for the advent of new technologies and equip the workforce with appropriate skills to cope with the challenges of said new developments.
Criteria and Approach to Guide ASEAN’s Strategic Economic Engagement
We discussed setting criteria to guide ASEAN Ministers on the forms and level of cooperation with other countries or economic regions. This will include economic significance, degree of convergence on new Free Trade Agreements (FTA), and resource requirement, among others.
Monitoring and Evaluation Framework of ASEAN Economic Community and Implementation of ATIGA
AEM highlighted the need to review and eliminate unnecessary non-tariff barriers (NTBs) implemented by some ASEAN Member States. NTBs make it more difficult and costly to trade. As a representative of the Philippines, I cited that NTBs affect both agricultural (horticultural products, bananas, tobacco, fishery products, meat, young coconut, seeds, poultry, and swine feeds) and industrial goods (electronics, pharmaceutical products, cosmetics, apparel, and footwear). Some of these Philippine products have difficulties entering some markets because of high tariffs and strict import requirements imposed.
On RCEP, AEM reaffirmed its commitment to realize the ASEAN Leaders mandate to conclude the agreement this year. We encouraged the trade negotiating parties to exercise utmost flexibility in the forthcoming sessions, taking into account constitutional and legal limitations. All pending issues must be settled by June if we are to meet the targeted November deadline for RCEP conclusion. Just the same, the agreement should be balanced and mutually beneficial and balanced trade agreement to establish free and fair trade in the region.
Suggested reforms for the WTO
We noted that the WTO is facing issues on rulemaking, transparency and monitoring, and dispute settlement. Specifically, AEM is unified in recognizing the need to fill the vacancies in the WTO’s Appellate Body, which hears appeals from disputes among WTO members. The supposedly seven-member body currently has three members, two of whom will vacate their posts this year. Since the pillar of the multilateral trading system is on the dispute settlement mechanism, we underscored the need to immediately start the process of filling up the vacancies.♦
Date of release: 25 April 2019
Statement of DTI Secretary Ramon M. Lopez on Cement Safeguards
STATEMENT OF DTI SECRETARY RAMON LOPEZ ON CEMENT SAFEGUARDS
Cement is a strategic industry in the Philippines because it is a critical input to infrastructure (Build, Build, Build) and decent homes for Filipinos.
As such, we have to ensure its availability (right price, top quality, right place, sufficient volume) in both the short- and long-term. Having a vibrant domestic industry, under a contestable market where legitimate imports can freely enter, is important in ensuring this.
But relying solely on imports and being at the mercy of global supply and demand situation is risky and irresponsible considering changes in global demand and supply conditions. This will lead to a dependence on imports, leading to the perennial trade deficit.
Even if the cement industry is considered as strategic, it receives no tariff protection whatsoever, as imports currently enter at zero duty. However, safeguard duties are legitimate tools in trade remedies (i.e. allowed under our international commitments such as in the World Trade Organization) to assist industries that have experienced a surge in the importation and a decline in sales and profitability.
In the case of cement manufacturing, imports of cement increased from only 3,558 metric tons in 2013 to more than 3 million metric tons in 2017; and the share of imports (from non-manufacturer or “pure” traders) increased from only 0.02% to 15% during the same period. Equally important, the industry experienced a sharp decline in income (earnings before interest and taxes) of 49% in 2017.
With the elements of surge and injury clearly, established, the DTI is mandated to impose a safeguard duty. In determining the amount of duty, however, the DTI balances the interests of all stakeholders—and has given particular attention to ensuring that supply remains steady and that prices will not increase.
DTI is thus imposing a provisional safeguard duty of Php 8.40 per bag, equivalent to about 4.0%. This is the level that will still ensure price and supply stability as:
1) Imports will still continue, ensuring strong competition;
2) There is currently enough domestic capacity of 35 million MT, to meet demand estimate of 25 million MT, but must still be encouraged to increase, given continuous growth in demand; and
3) That we are requiring the cement manufacturers to maintain their current retail price levels. We will closely monitor the selling price of cement manufacturers and ensure that they will not increase their prices.
At the same time, the safeguards will encourage existing and new players to build additional facilities. New facilities will help us attain a healthy level of domestic capacity that will address our perennial trade deficit, ensure a long-run supply of needed for public infrastructure and homes for Filipinos, and generate more jobs here in the country.
This is a provisional duty, effective for 200 days, in the form of cash bond on imported cement, while the Tariff Commission undertakes and concludes its formal investigation.♦
Date of release: 18 January 2019
Press Statement of DTI Secretary Ramon M. Lopez, 1st Logistics Services Philippines Conference and Exhibition
Press Statement of DTI Secretary Ramon M. Lopez
1st Logistics Services Philippines Conference and Exhibition
6 December 2018, Philippine International Convention Center
Good afternoon to our friends from media. Today government and the private sector banded together for the First Logistics Services Philippines Conference/exhibition. Based on registration reports, there are approximately 500 participants coming from the logistics services industry, government sector, and development partners.
We are here to focus our attention on the logistics services sector. Its vital role in the movement of goods and service and its impact on the economy cannot be overemphasized.
Thus, I am joined here in the panel by both government and the private sector to show the country’s solidarity in pushing forward this sector of the economy.
Think about it. An efficient logistics services sector will not only help the business and its bottomline, it will also help the consumer and the country in general.
Just this morning we heard from the President of the Philippine Multimodal Transport and Logistics Association, Inc. and her positive forecasts on the logistics services sector as a job creator and the sector’s potential for growth.
Transport and logistics are priority sectors in the inclusive industrial led innovation strategy (i3s) and government is poised to provide full support to this industry, as we heard from Asec. Fita Aldaba.
We are circulating to our media friends, the sector’s TEN COMMITMENTS, which serves as guidance in the promotion and development of the logistics services sector.
This “10 Commitments” is a product of series of dialogues among the government, the industry players, and the development partners. It gives a clear-cut direction for all stakeholders in terms of priorities and targets. We have already succeeded in rallying all the concerned sectors to support our priority agenda. The next step is to sustain the momentum and implement the strategies identified in the 10 commitments.
Aside from the conference, we also aim to encourage our exporters to outsource their logistics activities and focus on their core business activity. We hope to link these LSPs through the Logistics Services Philippines Exhibition that will happen tomorrow at the Mezzanine Area of Reception Hall. The Exhibition is organized back-to-back with National Export Congress, which will be participated by 48 logistics services providers (LSPs) offering freight transport service, customs brokerage service, warehousing and storage and cargo handling services. This business-matching activity opens opportunities for our LSPs to link with MSMEs and promote their products and services. We have high hopes that the historic two-day activity will bring positive outcomes for the logistics services sector.
We thank you for your time.♦
Date of release: 6 December 2018
Joint Press Statement on the Occasion of the Signing of the Memorandum of Understanding on the Establishment of a Joint Economic and Trade Committee between the Republic of the Philippines and the Independent State of Papua New Guinea
JOINT PRESS STATEMENT ON THE OCCASION OF THE SIGNING OF THE MEMORANDUM OF UNDERSTANDING ON THE ESTABLISHMENT OF A JOINT ECONOMIC AND TRADE COMMITTEE BETWEEN THE REPUBLIC OF THE PHILIPPINES AND THE INDEPENDENT STATE OF PAPUA NEW GUINEA
17 November 2018, International Convention Centre, Port Moresby
Honourable Ramon M. Lopez, Secretary for the Department of Trade and Industry of the Philippines and Honourable Rimbink Pato, Minister for Foreign Affairs of PNG signed the Memorandum of Understanding on the Establishment of a Joint Economic and Trade Committee, or JETC, on behalf of the Philippines and Papua New Guinea governments.
The signing of the JETC is a milestone achievement for both economies and represents the first initiative to formally engage bilaterally on economic, trade and investment issues.
PNG and the Philippines are both developing member economies of APEC. Apart from continuing close cooperation at the multilateral level, both economies see great potential in enhancing relations at the bilateral level. Building on the long established friendly and cordial relations, the JETC will encourage more mutually beneficial exchanges and cooperation to further deepen existing relations and trade and investment linkages.
The JETC will be a platform to discuss areas of mutual interests and to broaden and intensify cooperation between both economies. Cooperation activities include exchange of information, participation in trade and investment-related activities and promotion of economic cooperation between bodies such as government institutions, professional organizations, business federations, and chambers of commerce and industry.♦
Date of release: 19 November 2018
Press Statement of Secretary Ramon M. Lopez on the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI)
On the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI)
Joint Statement by Philippine Secretary of Trade and Industry Ramon M. Lopez and U.S. Trade Representative Robert E. Lighthizer
Press Statement of Secretary Ramon M. Lopez on the Issue of Congestion in the Port of Manila
Press Statement of Secretary Ramon M. Lopez on the Price Setting Approach for Cheaper Rice and Sugar
This is in response to President Rodrigo Duterte’s Administrative Order No. 13 which instructs the Executive Branch to find ways in facilitating importation and availability of basic commodities especially rice and sugar.
Import permits can be given for a specific volume per period and at the targeted price so they won’t import to sell at other price points other than the set price. These importers will just pay tariff for their revenues as a way to protect the local farmers.
We have an immediate solution in providing the rice, and the reason why we prefer on buying in supermarkets is because we have greater control as to their sales record and this is not for major profit for them. We computed a reasonable return based on costing and have arrived at a price of Php38 per kilo.
Supermarkets will make the traders and palengkes can continue to sell local rice even at Php44 per kilo if they want because local rice is known to taste better. The good harvest local rice can go down also at Php39 per kilo but at least we don’t have wait for that as consumers are complaining everyday.
Consumers who prefer local rice can also pay premium because it tastes better. It was imported at Php80 per kilo but when you go to local stores the prices starts at Php120-180. But basic rice should be made available so consumers always have a choice.
As I end, I want to make it clear again that this will give only to those who will commit to sell at the targeted price. I sincerely hope this is one quick solution for everyone while we are waiting for rice tariffs. In that way, it will keep traders on their toes.♦