Tourism: Malaysia can; why can’t PHL?

WITH all the excitement of local politics and the global financial markets in total chaos, maybe it is time to just lay back and relax on a beach.

Actually that is what a large percentage of the world has been doing, with international tourists reaching over 1 billion in 2014. And tourism to Southeast Asia is growing at over 10 percent per year.

The revenue that countries in our region are generating is phenomenal. Looking at the data for 2013, which we grant is outdated, Thailand brought in $42 billion from its tourist industry. Malaysia hit $21 billion and Singapore was right behind with $19 billion. Indonesia generated $9.3 billion and Vietnam posted $7.5 billion from tourist spending.

Naturally, the Philippines is at the end of the line with only $4.7 billion in tourism revenues. For the first four months of 2015, revenues from tourism activities of international visitors grew by 2.81 percent, amounting to P77.14 billion, or about $1.7 billion. If that trend continues, total revenues for 2015 will be about $5.5 billion.

But the final numbers for 2015 may be worse. Last week the Department of Tourism (DOT) announced that it has cut its outlook for tourists and was no longer optimistic about hitting the medium-term target of 10 million by next year.

At this point we would normally be inclined to mutter something under our breath, turn the page and blame “normal” government inefficiency. But we know that the DOT under Secretary Ramon Reyes Jimenez Jr. has been diligent and hard-working at increasing tourist arrivals. So what is the problem?

Then something caught our eyes. Tourism Malaysia Director General Dato Mirza Mohammad Taiyab said recently that Filipinos are among their top foreign visitors with over 600,000 Filipino visitors in 2014, an 11-percent rise from the previous year.

Could we then assume that since Malaysia is so popular with Filipinos, the opposite could also be true? Unfortunately in 2014, the Philippines attracted 50,425 Malaysian arrivals.

In 2014 44 percent of all tourists coming to Association of Southeast Asian Nations (Asean) countries came from other Asean countries—expect for the Philippines, of course. Our top markets are South Korea, the US, Japan, China and Australia.

Malaysia’s top markets are Singapore, Indonesia, Brunei Darussalam, China and Thailand, followed by India and the Philippines. Taiyab says that his country has an advantage since their top visitors can drive in by car but visitors must fly to come to the Philippines. We think that is a feeble excuse. If 600,000 Filipinos can fly to Malaysia, why can’t 600,000 Malaysians fly to the Philippines?

For Malaysia and Thailand, the DOT uses as its marketing representative a local Malaysian travel agent, Borneo Tours. That is hardly a dedicated marketing program.

In the Philippines, Malaysian tourism promotion is handled through its embassy just as the Philippines does in the US, the UK, Japan, China, Germany, Australia and South Korea. In Singapore, Indonesia, Dubai and Hong Kong, we also use local travel agents to represent our country.

Outsourcing has been good to the Philippines but maybe outsourcing our tourism is not such a good idea.

source:  Business Mirror

SSS looking to lease or sell assets next quarter

STATE-RUN Social Security System (SSS) plans to lease or sell a number of its assets next quarter to further boost its investments and generate more revenues for the pension fund.

“We’re looking at leasing HK Sun Plaza which is somewhere in Roxas Boulevard,” SSS President and Chief Executive Officer Emilio S. de Quiros said in an interview last week.

“We’re planning to lease it on a long-term basis because we know that there is good development in that area with Entertainment City. Land prices are going up. We think that SSS should keep it,” he added.

The lease may last between 15 to 25 years, Mr. de Quiros said.

The plaza, at present, houses various shops and restaurants, including SSS’ Pasay Branch.

“We’re in the process now of preparing the bid documents. Maybe this quarter, we’ll be able to issue,” Mr. de Quiros said.

Mr. de Quiros added that the SSS may likewise unload a number of its properties in North Harbor, also targeted to be auctioned in the third quarter.

Meanwhile, SSS said in a statement it has no plans to increase the contribution rate for members following news reports it would hike monthly dues to offset a proposed law raising benefit payments by as much as P2,000.

“Although a contribution hike is much needed to improve the actuarial soundness of SSS funds, we would like to assure the public, especially our members that we are not seeking for another increase in their contributions at this time,” Mr. de Quiros was quoted as saying in the statement.

The House of Representatives approved on third reading Rep. Neri J. Colmenares’ (Bayan Muna) proposal for a P2,000 across-the-board increase in the monthly pension of SSS beneficiaries.

SSS said an increase in benefit payments would cut its current 2042 fund life by 13 years unless contributions are hiked by at least 15%-16%.

The pension fund’s net revenue grew just half of a percent to P15.21 billion from January to April 2015 from P15.14 billion in the same period last year, based on SSS data.

Net revenue is the difference of the pension fund’s total revenues and expenditures. Revenues include contribution collections and investment and other income while expenditures are SSS’ benefit payments and expenses from its operations.

Data from the pension fund showed total revenues reached P54.35 billion in the first four months of 2015, up 7% from P50.77 billion last year.

Broken down, contribution collections totaled P42.69 billion, up 9.7% from P38.91 billion last year. Investment and other income shrank to P11.66 billion from P11.86 billion.

Benefit payments went up by 10.1% to P36.57 billion from P33.21 billion. Operating expenses totaled P2.58 billion, up 6.6% from P2.42 billion.

Total expenditures reached P39.14 billion in the first four months of the year, up 9.8% year on year from P35.63 billion.

SSS manages over P428 billion in investment reserve funds at the end of April 2015. These are invested in various instruments, with P155.3 billion placed in government securities; P29 billion in corporate notes and bonds; P76.8 billion in member loans; P44.6 billion in bank deposits; P103.9 billion in equities; and P18.6 billion in real estate properties.

It plans to appoint three local fund managers in the third quarter as part of efforts to diversify the pension fund’s growing investment portfolio. Mr. de Quiros said last week that the fund managers could be appointed within the third quarter.

Each manager will handle a P1-billion investment portfolio from the SSS’ assets for two years, the pension fund’s head said. After which, the fund manager with the worst performance would be replaced.
Mr. de Quiros said SSS saw the need to tap fund managers as the pension fund continues to grow.

“This is the first time we’re doing it. Eventually once we get the experience from the local fund managers, we hope that the next administration can think of also doing it for foreign fund managers,” Mr. de Quiros had said

In 2014, SSS saw its net revenue rise to P44.47 billion, up 15.9% from the previous year. Despite its sluggish performance in the first four months, Mr. de Quiros said SSS can still hit its P40-billion revenue target this year.

source:  Businessworld

Enterprises need to fully use the function of trademarks

The contribution of micro-, small and medium enterprises (MSMEs) to our economy cannot be gainsaid. In the 2014-2015 Global Competitiveness Report of the World Economic Forum, we ranked 52 out of the 144 countries surveyed. Although we are behind our ASEAN neighbors Singapore (2), Malaysia (20), Thailand (31), and Indonesia (34), the study took note that the Philippines’ “gain of 33 places since 2010 is the largest” among all the 144 countries surveyed. It said that the main strengths of our “leapfrog” in the rankings lie in a sound macroeconomic environment, the size and sophistication of the market, and increasing efficiency and conduciveness of the finance sector to business activities. The Philippines has now been called a “breakout nation,” and is poised to be the new global economic miracle.

Based on statistics from the Department of Trade and Industry (DTI), there are around 780,000 business enterprises operating in the Philippines, with 96% or approximately 777,000 classified as MSMEs. Only around 3,000 are operating as large companies. Out of those 777,000 MSMEs, 92% or around 710,000 are categorized as micro-enterprises. A majority of the MSMEs are engaged in wholesale and retail (386,000); followed by manufacturing (112,000); hotels & restaurants (97,000); real estate & renting activities (47,000); and other community, social and personal services (44,000). In terms of employment, MSMEs generated more than 3.5 million jobs versus the two million jobs generated by large companies. Moreover, 25% of the country’s export revenues are attributable to MSMEs, with around 60% of the country’s exporters classified as MSMEs.

The government continues to create an environment conducive to the establishment and operation of MSMEs, what with the two primary laws that govern and regulate the promotion of MSMEs -- Republic Act No. 6977 or the Magna Carta for Small Enterprises (which was amended by Republic Act No. 8289), and Republic Act No. 9178 or the Barangay Micro Business Enterprises Act of 2002.

RA 9178 redefined the classification of business enterprises registered and operating in the Philippines as follows: (a) micro-enterprise, where capitalization does not exceed P3 million; (b) small enterprise, with a capitalization that exceeds P3 million but not more P15 million; (c) medium enterprise, with a capitalization that is more than P15 million but does not exceed P100 million; and (d) large enterprise, where capitalization is more than P100 million.

The law also encourages the promotion of micro-enterprises by extending fiscal and non-fiscal incentives (e.g., income tax exemption, exemption from the coverage of the minimum wage law, priority to a special window setup, technology transfer, production and management training, and marketing assistance programs).

RA 6977 mandates the government to help MSMEs by creating a conducive business environment, improving access to financing, providing adequate business support, providing training on entrepreneurship and worker skills, providing effective linkages between MSMEs and large companies, and strengthening government-private sector partnership. To oversee the programs for MSMEs, the MSME Development Council was created. The council developed the MSMED Plan 2011-2016, which serves as the blueprint for all projects geared toward the development of the MSMEs.

As a majority of the MSMEs are involved in wholesale/retail and service-oriented industries, effective branding/marketing strategies are essential. Data derived from the Intellectual Property Office of the Philippines (IPO) reveals a steady increase in the number of trademark applications filed by local owners -- from 7,048 in 2005 to 10,572 in 2011. In terms of our competitiveness ranking in the report, we ranked well in intellectual property protection at 87, as opposed to Thailand’s 101 and Vietnam’s 123.

The success story of Jollibee is a clear testament that the development of a sound brand strategy plays a crucial role in one’s business. Unfortunately, not all Filipino entrepreneurs possess this knowledge, or even how to pick the appropriate trademark for one’s goods and services. Not many local businessmen know that a trademark registration issued by the IPO is different from a business name registration issued by the DTI and from a corporate name registration issued by the SEC. More importantly, not many local entrepreneurs are aware that in the hierarchy of property rights, trademark protection is placed on a higher tier than the protection extended to a corporate name registration and business name registration.

With respect to choosing the correct brand, one must consider the brand or “look” that will come to carry not only the goods or services but the whole business as well. Factors such as availability for use in commerce, availability for registration, and inherent registrability of the chosen brand must be taken into account. One should conduct a trademark availability search using, among others, the publicly available searching tools of the IPO. Also, hiring the services of an intellectual property lawyer may be useful in order to secure a more informed opinion regarding a chosen brand or logo. These costs entailed during the initial business development stages may prove to be justified if, in the long run, litigation for trademark infringement, unfair competition, trademark opposition/cancellation cases are avoided, which are definitely more expensive and cumbersome.

Choosing the “right” brand is only half of the promise of success; how to market or make “notorious” one’s chosen brand is another matter. The traditional way of securing trademark registration from the IPO may not suffice to accommodate the marketing strategies available nowadays. With the prevalence of online and mobile communications, “going online” and “going mobile” are the way to go. In the report, the Philippines ranks better with most of its ASEAN neighbors in terms of degree of customer orientation (25) and availability of latest technologies (58). Coming up with a catchy Web site address (or domain name) and securing domain name registration are now business necessities. Moreover, apart from a regular trademark registration from the IPO and domain name registration secured from the domain name registry, one can also seek further registration of the same trademark as an Internet domain name also from the IPO. This type of IPO registration follows the same procedure as that of a regular trademark application filed with the IPO, only that the process is faster.

Opportunities for success among local MSMEs are limitless, provided that the foundation of sound business tools are laid early on. Selecting the right trademark to identify one’s business, goods and services is one of the factors toward attaining sustainability of any commercial undertaking. This promise of success to Filipino entrepreneurs is bright, especially to those who realize the importance of sound branding.

John Paul M. Gaba is a partner of the Intellectual Property Department of the Angara Abello Concepcion Regala & Cruz Law Offices.

jmgaba@accralaw.com

source:  Businessworld

INFOGRAPHIC: Where $26.92B of OFW remittances come from

Overseas Filipino workers around the world sent $26.92 billion (P1.20 trillion) back to the Philippines last year, up 6.2 percent from $25.35 billion (P1.13 trillion) in 2013, according to the Bangkok Sentral ng Pilipinas (BSP). 

 

It was a record high, according to the central bank officials.

 

Land-based workers remitted $18.7 billion, while seafarers transferred $5.6 billion.

 

The Philippine Overseas Employment Administration noted 1.6 million Filipinos were deployed abroad in 2014. Job orders increased by 10.7 percent to 878,609. Around 43 percent of the job orders were in the service, production, professional and technical sectors in Saudi Arabia, Kuwait, the United Arab Emirates, Taiwan and Qatar.

 

The Philippines was third, after India and China, in terms of the amount of remittances received in 2014, according to World Bank data. 

 

Remittances contributed as much as 8.5 percent to the Philippine gross domestic product (GDP) last year. 

 

In terms of sources of remittances, here are the top 20 countries from which OFWs transfer money to the Philippines.

source:  GMA News

December remittance level hits record high

MONEY sent home by Filipinos abroad hit its highest monthly level on record in December, enabling the full-year tally to surpass the 2014 growth target set by the Bangko Sentral ng Pilipinas (BSP).

Cash remittances which Filipinos coursed through banks jumped by 6.6% year-on-year to $2.317 billion in December -- the highest monthly level according to central bank data dating back to 1970.

The December result brought the 2014 tally up by 5.8% to $24.308 billion, higher than the $21.991 billion logged in 2013 and topping the upwardly revised 5.5% goal set by the BSP in November last year.

“Strong demand for skilled Filipino manpower contributed to the steady growth of remittances,” the central bank said in a statement.

Cash remittances from land-based workers made up the bulk at $18.7 billion, while those from sea-borne workers totaled $5.6 billion.

Major sources of cash remittances were the United States, Saudi Arabia, the United Arab Emirates (UAE), the United Kingdom, Singapore, Japan, Canada, and Hong Kong.

Citing Philippine Overseas Employment Administration data, the BSP said a total of 1.6 million Filipinos were deployed overseas last year.

At the same time, approved job orders from January to December stood at 878,609, up 10% from 2013.

About 43.6% were intended for service, production, and professional, technical and related workears in Saudi Arabia, the UAE, Kuwait, Taiwan, and Qatar, the BSP noted.

The BSP said that cash remittances accounted for 8.5% of the country’s gross domestic product (GDP) in 2014.

After achieving stellar economic growth of 6.8% in 2012 and 7.2% in 2013, the Philippine economy slowed to 6.1% in 2014, a few points shy of the government’s 6.5-7.5% target.

Crawling farm sector output and lower-than-programmed -- and at times even contracting -- state spending had weighed on GDP growth for much of last year. -- Daryll Edisonn D. Saclag

source:  Businessworld

Government to spend P162.1 million for industry surveys this year

The national government will be spending P162.1 million to conduct three industry surveys this year, according to the Philippine Statistics Authority (PSA).

The PSA said the industry survey that will take the lion’s share of the amount is the 2014 Annual Survey of Philippine Business and Industry (ASPBI) which will require P149.3 million to conduct.  The government said the cost for the ASPBI translates to a spending of P4,976.67 per establishment to be surveyed.

“[The cost will] cover expenses for training, field operations and data processing, as well as printing of questionnaires, publications and other survey materials,” the PSA said.

The ASPBI is a regular survey designated to be conducted on a yearly basis, except during the years when the Census of Philippine Business and Industry (CPBI) is conducted. The CPBI is conducted every 10 years.

The ASPBI said the survey will be undertaken from April to May 2015, covering 30,000 business establishments engaged in various economic activities.

These economic activities include agriculture forestry and fishing; manufacturing, mining and quarrying; electricity, gas, steam and air-conditioning supply; and construction, among others.

“Press releases of the results and tables of the ASPBI shall be issued by the PSA during the period February 2016 to June 2016,” the PSA said.

Meanwhile, the other two surveys are the 2015 Monthly Integrated Survey of Selected Industries (Missi) costing P9.1 million and the 2015 Producer Price Survey (PPS) worth P3.7 million. The Missi is a regular survey conducted every month to provide planners and policy-makers in both public and private sectors with timely flash indicators on the performance of growth-oriented industries in the manufacturing sector.

These indicators include the Value of Production Index, Volume of Production Index, growth rates of value and volume of net sales, and average capacity utilization rate.

The Missi collects data on employment, compensation, value of production, revenue/sales, inventories and capacity utilization of the establishment.

The conduct of the 2015 Missi covers 1,100 establishments with total employment size of 20 and over. Data collection will be employed every 10th to 20th day of each month after the reference month.

The PPS, on the other hand, is also a survey conducted monthly to collect producer price data of manufactured commodities for the generation of the Producer Price Index, which measures the average monthly and yearly changes in the prices received by domestic producers in the manufacturing industry.

The survey will be administered to 1,100 establishments with recorded total employment size of 20 and over.  PPS questionnaires are distributed to establishments every 10th to 25th of each month after the reference month.

Press releases on the PPI are scheduled to be published every 35th day after the reference month. An annual publication containing results of the MISSI and PPS will be issued on September 2016.

source:  Business Mirror

January-November FDI inflows up 61.6% to $5.7 billion

Foreign direct investments (FDI) from January to November 2014 amounted to $5.7 billion, higher by 61.6 percent compared to the net FDI inflows for the same period in 2013.

The Bangko Sentral ng Pilipinas (BSP) reported that for the month of November alone, FDI inflows amounted to $399 million, up from only $297 million in November 2013.

This is mostly due to a surge in net equity capital investments in November 2014, which increased by more than 28 times to $201 million, from only $7 million in net equity capital investments in November 2013.

This net equity capital investments in November was channeled to the financial and insurance sector, manufacturing, real-estate, transportation and storage, and wholesale and retail trade activities. The funds came mostly from the United States, Hong Kong, Singapore, Japan and Australia.

The BSP said, from January to November, the net inflows of FDI came from sustained lending by foreign parent companies to their local subsidiaries or affiliates to support existing operations in the Philippines or fund-expansion projects.

“Net equity capital investments surged by 114.8 percent to $1.6 billion from $723 million, mainly on account of the contraction in equity capital withdrawals [by 71 percent] which more than offset the 15.6-percent decline in equity capital placements,” the BSP said.

The BSP added that the increase in net inflows of FDI and the high net capital inflow in November “reflected investors’ confidence in the Philippine economy on the back of sound macroeconomic fundamentals and strong growth prospects.”

Meanwhile, reinvestments of earnings and investments in debt instruments posted positive balances from January to November 2014, although lower than what were recorded during comparable periods in 2013. Specifically, investments in debt instruments contracted by 37.1 percent, while reinvestment of earnings declined by 9.4 percent.

source:  Business Mirror