PIDS in the News Archived (December 2015)

CEBU, Philippines - In order for Small and Medium Enterprises (SMEs) to survive under the pressured environment of integration, advancing financial literacy is pushed, along with other strategies to sustain the lifespan of small businesses.
A report published by government-run think tank Philippine Institute for Development Studies (PIDS) indicated that the financial literacy that will be provided to SMEs should entail standard education and technical programs across economies to encourage SMEs to become better versed and more capable in dealing with the intricate business environment and regulatory framework.
The study also urged Asia Pacific Economic Cooperation (APEC) to consider facilitating franchising activities, such as in fast-food chains, hotel chains, car hire companies, and retailing, to further stimulate development of small enterprises.
The APEC has a big role in helping SMEs to survive and that one effective factor is to facilitate franchise activities within the region, bridging connectivity in inter-regional setting.
Franchising could address most of the constraints faced by SMEs, particularly the lack of skills and access to technology and know-how and, in the case of joint ventures, financial constraints, the study pointed out.
According to PIDS the best strategy for regional economic integration (REI) is one that adopts a comprehensive development plan for SMEs designed to help them thrive not just in the local setting but overseas too.
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Governments, should provide SMEs with the opportunities and the means to grow and evolve into major international players so they can boost the national and regional economy, it added.
Moreover, nurturing SMEs should not only be a separate undertaking by individual economies but a collective effort by regional trade groups like the APEC.
APEC leaders have long recognized the role of SMEs in economic advancement. They reiterated at the APEC Summit in Manila held this month their objective to foster SME participation in the international market.
SMEs in the region account for more than two-thirds of total employment, providing jobs to low-income workers in poorer areas within economies. The SME sector, thus, plays a huge role in poverty reduction and inclusive growth, said the report.
The PIDS report urged APEC to sustain all of its ongoing development measures for SMEs even as it recommended new initiatives.
It said two focus areas for further cooperation are the business environment and regulatory framework that are proving to be burdensome for SMEs and MEs.
However, SMEs are also facing barriers, both internal and external, to growth. Internal constraints include lack of access to technology, to skills training, and to finance, while external obstacles include poor physical infrastructure and a complex legal and regulatory framework.
In July, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) also released a study calling for government-initiated reforms that will make trade finance services more flexible and tailored to the requirements of SMEs.
The export sector in Cebu has been calling for the resolution of obvious disconnection between the players and the government, in terms of connection to credit access.
There are a lot of things happening, but we dont know that these programs exist. There should be a proper information dissemination directed for the players, said Gifts, Decors and Housewares Exporters Foundation Inc., (Cebu-GDH) president Venus Genson.
The government has so much plans, she said but some entrepreneurs like herself are not aware of these good support mechanisms.
Cebu Chamber of Commerce and Industry (CCCI) president Ma. Teresa Chan said that SMEs in Cebu on their own have started to connect with regional players to position themselves in the changing business paradigm brought about by regional integration, as well as globalization. (FREEMAN)

Author: Ehda M. Dagooc
Date: December 03, 2015
Source: Freeman

Access to post-harvest facilities (PHFs) can increase rice farmers income since using modern technology allows them to produce good-quality milled rice and reduce postharvest losses, a study by the Philippine Institute for Development Studies (PIDS) said.

The study looked into the effectiveness of the governments programs to address the problem of postharvest losses. These programs cover various stages of the food supply chain such as on-farm postharvest activities, processing, logistics, marketing, and trading.

Among these projects are the rice processing centers (RPCs) in the provinces of Pangasinan, Davao del Sur, Bohol, and Iloilo. These RPCs, which were established through a P 648-million grant by the Korea International Development Agency (KOICA) with counterpart investment from government and farmer beneficiaries, are equipped with modern milling and drying equipment.

Under the deal with KOICA, the government, through the Department of Agriculture (DA), provided counterpart investment of P20 million for each of the four sites while farmer organizations who are the beneficiaries of the projects were required to put in an additional P2 million per site as part of the working capital for these RPCs.

Nerlita Manalili, Kevin Yaptenco, and Alessandro Manilay, PIDS consultants who conducted the study, noted that overall, the PHFs assessed were found to have a positive impact in addressing postharvest losses and improving the marketing system for rice and high-value crops.

Farmers are assured of competitive prices for their wet paddies even during periods of oversupply since RPCs offer higher buying prices compared to private traders and millers, the study said.

The authors computed the total gain in farmers income due to higher buying prices at around P13.9 million. Without these facilities, farmers could easily lose some P 286.96 million.

The PHFs also helped in reducing losses during the drying and milling processes.

The use of flatbed dryers reduces grain deterioration or yellowing of rice grain during the rainy season as well as prevents physical losses from sun drying. The modern milling facilities at the RPCs also improve milling recovery, resulting in increased quantity of milled rice, the sytudy added.

Food terminals in these four provinces where RPCs are located were also found to be effective in helping provide agro suppliers with access to markets. As a result, availability of commodities and basic goods has improved.

The increased economic activities brought about by these food terminals have created more employment and business opportunities, the study said.

The PIDS paper, however, argued benefits from these facilities can still be improved if the operating capital for these RPCs is increased and if issues related to the management, operation, viability, and sustainability of these PHFs are addressed.

Based on their design capacities, each RPC can service 1,000 hectares of production area. But in order for these facilities to operate at full capacity, the authors suggested an investment of around P 80 million for each site.

Increasing the investment in RPCS will allow them to buy more rice paddies from farmers. To achieve this, RPCs should also invest in more cargo trucks for timely pickup of harvested paddy and delivery of milled rice, the authors proposed.

Additional investments in RCPs, however, should be subject to performance evaluation of factors such as the ability of an RPC to produce good-quality milled rice products, maintain healthy financial standing, and have a positive impact on farmers, the paper suggested.

In addition to lack of operating capital, other problems were also identified in the operational aspect of these RPCs. Farmers, for example, are unable to supply RPCs with their produce because they are tied up with traders, whom they are indebted for inputs and marketing. Also, some RPCs are not profitable due to management issues, lack of proper oversight, and local politics like delays in operational turnover to recipient farmer organization.//


Author:
Date: December 04, 2015
Source: Malaya

VICE President Jejomar Binay has received the support of the Kababaihan ng Maynila Foundation that its founder, Buhay Party-list Rep. Lito Atienza, claimed has 25,000 active members.

Ngayon ang kasama natin ay mga representative ng different barangays. Ito ay founded noong 1984, when we were struggling against the dictatorship of Mr. Marcos. They helped me in my Batasan struggle.

We won. They helped me in my vice mayors election. We won again. They helped me as mayor three times. We kept on winning, Atienza said. Lahat yan ay committed kay VP Binay. Sila ang aasahan ni VP Binay.

The foundation, a non-profit, volunteer non-government organization that provides livelihood and skills training programs for women from depressed communities in Manila, is headed by Atienzas wife, Evelyn, as executive director.

From the beginning, ang advocacy ng Kababaihan ng Maynila ay pro-life, pro-family, pro-good government. Nakita namin na si Jojo Binay ang most qualified maging Pangulo dahil siya ang tumutugon sa advocacy ng Kababaihan ng Maynila, she said.

Siya ang kailangan naming masuportahan sapagkat magmula noong umpisa, kasama na namin siya sa paglaban sa kalye. Sa pagsulong ng demokrasya, kasama namin si Jojo Binay. Hanggang ngayon sa public service, kasama pa rin naman siya, she added.

Tita Laparan, District III coordinator of Kababaihan ng Maynila, reiterated the groups support for Binay, saying his experience and proven track record sets him apart from other candidates.

May napatunayan na si VP. Subok na siya. Maganda ang kanyang pagpapaunlad sa Makati na gusto naming gayahin ng ibang namumuno. At higit sa lahat, gusto namin na siya na ang maging Pangulo sa 2016. Hindi na kami mag-aatubili. Wala na kaming iba pang susuportahan maliban sa kanya. Binay talaga, she said.

In his speech at the 31st anniversary of the foundation, Binay cited how women have contributed to the Philippine economy.

One-third o ikatlong bahagi ng mga small and medium enterprises ay pag-aari o pinamamahalaan ng kababaihan. Kabilang dito ang mga karinderya, tindahan, patahian at iba pa. Maliliit na negosyo, ngunit kayo ang bumubuhay sa ating ekonomiya, Binay said.

Binay said 60 percent of the countrys Gross Domestic Product (GDP) comes from the informal sector and cited data from the Philippine Institute for Development Studies showing 90 percent of Filipino businesses are small and medium scale industries.

Ang informal sector ay kinabibilangan ng tinderot tindera, maliliit na negosyante, mga tsuper, at iba na mga karaniwang mamamayan. Ibig sabihin, ang ating pambansang ekonomya ay binubuhay ng ating karaniwang mamamayan, he said.

According to Binay, it is imperative that the government strengthen the countrys small and medium enterprises and noted that 60 to 80 percent of the countrys labor force is employed by small business.

Binay also recalled how his mother brought out the best in him and urged members of the Kababaihan ng Maynila Foundation to remain committed in their advocacy of empowering women.

Siya ang aking gabay, ang aking unang guro. Sa kanya ko natutunan ang halaga ng edukasyon, ng pagsisikap, pananalig sa diyos at pagmamahal sa kapwa. Kung anong halaga ng ina sa buhay ng bawat anak, sya ring halaga ng ambag ng kababaihan sa paglilinang ng maunlad, payapa at makatarungang lipunan, Binay said.//


Author:
Date: December 07, 2015
Source: Malaya

There will be pain before gain for the Philippines under in free trade among the Association of Southeast Asian and six non-Asean countries, specifically Australia, China, Japan, South Korea, New Zealand and India.

Government think tank, Philippine Institute for Development Studies (PIDS) said a simulation study it did on the free area (Regional Comprehensive Economic Partnership (RCEP)) trade showed the Philippines will initially be a loser.

However exports will improve over time. In 2018, Philippine exports within the RCEP will improve by two percent relative to the baseline. In 2023, they are expected to increase by 3.8 percent, the study, authored by PIDS consultant Caesar Cororaton, said.

All of these effects will translate to higher Philippine real GDP growth of three percent in 2023, and will generate additional welfare of $3 billion, it added.

RCEP, it said can have a positive impact on the economy, as its trade-creation effects will ultimately increase Philippine exports within the region.

PIDS said the economies covered in the RCEP have a total gross domestic product of $21 trillion in 2013 and a population of 3.4 billion.

The PIDS policy note " Will the Philippines benefit from the RCEP? " examines the potential effects of the reduction in RCEP tariffs and non-tariff barriers on the Philippine economy using mathematical modeling.

RCEP negotiations were launched by the leaders of the 16 participating economies in the margins of the East Asia Summit on November 20, 2012.

They announced that the RCEP would be a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement establishing an open trade and investment environment in the region to facilitate the expansion of regional trade and investment and contribute to global


economic growth and development.

However, the PIDS paper said trade barriers continue to exist within the RCEP despite the progress achieved over the past three decades in reducing tariffs on international trade under the World Trade Organization and, subsequently, in the context of regional and bilateral preferential trade agreements.

The policy note said the higher export growth and the improvement in foreign investments will generate a chain of positive effects domestically such as higher wages to both skilled and unskilled labor, lower prices due to the reduction in trade barriers, higher household income and lower poverty incidence.

FTA usually facilitates the inflow of foreign investment. The simulation considers only minimal investment inflows of $2.5 billion over a 10-year period. The gain can potentially be higher because the Philippine
economy has a large absorptive capacity for foreign capital, the study stated.

The policy note said the inflow of foreign direct investment may be enhanced with improvements in infrastructure.

Significant amounts of investment are needed to improve its sorry state, which affect the countrys bid to sustain its present growth trajectory, the paper said.

Moreover, significant reforms in investment and corporate taxation are required to make the Philippines an attractive destination for foreign investments, it added.

The policy note said at present, corporate taxes are high relative to those in other countries in the region. In this area, the RCEP could help stimulate beneficial reforms in domestic policies.//



Author: Angela Celis
Date: December 07, 2015
Source: Malaya

MANILA, Philippines - A womens group has thrown its support to the presidential candidacy of Vice President Jejomar Binay in 2016.
Kababaihan ng Maynila Foundation executive director Evelyn Atienza said they believe in Binays commitment to promote the welfare of women.
We believe that Jojo Binay is the most qualified to become the next president because he responds to the advocacy of the Kababaihan ng Maynila, she said.
The group was founded by Binays ally and Atienzas husband, Buhay party-list Rep. Lito Atienza, in 1984.
Atienza said the Vice President can expect the support of the organizations 25,000 active members all over Manila.
Kababaihan ng Maynila Foundation is a non-profit, non-government organization that provides livelihood and skills training programs for women from depressed communities in the city of Manila.
In his speech at the foundations 31st anniversary last Saturday, Binay recognized the womens role in promoting Filipino values and improving the economy.
One-third of the small and medium enterprises are owned or managed by women. These include eateries, sari-sari stores, tailoring shops, etc. These are small businesses but are the ones boosting the economy, the Vice President said.
Binay said 60 percent of the countrys gross domestic product comes from the informal sector, citing data from the Philippine Institute for Development Studies showing that 90 percent of Filipino businesses are small and medium scale industries.
He said it is imperative that the government strengthens the countrys small and medium enterprises, noting that 60 to 80 percent of the countrys labor force are employed by small business.//

Author: Helen Flores
Date: December 07, 2015
Source: Philippine Star

MANILA - (UPDATE, 3:04PM, Dec. 6) Vice President and presidential aspirant Jejomar Binay, with his running mate Senator Gregorio Gringo Honasan, attended the 31st anniversary of the Kababaihan ng Maynila organization at the Folk Arts Theater on Saturday, and received a rousing endorsement from the 25,000-strong women's group and from Buhay party-list representative Lito Atienza.

A crowd of mostly women attendees, estimated at about 10,000 Manila's six districts, cheered Binay and Honasan.

Honasan told the audience that the Binay-Honasan or "BINGO" tandem would continue safeguarding the people's basic rights against all forms of oppression, abuses and corruption.

The major women's group cited Binay's commitment to promoting the welfare of women and recognizing their role in promoting Filipino values and improving the economy.

Kababaihan ng Maynila Foundation is a non-profit, volunteer non-government organization that provides livelihood and skills training programs for women from depressed communities in the City of Manila.

Atienza, whose stint as Manila's only three-term mayor was highlighted by a massive redevelopment program called "Buhayin ang Maynila," said Binay can expect the support of the organization's 25,000 active members all over Manila.

Meanwhile, Tita Laparan, District III coordinator of Kababaihan ng Maynila, said Binay's experience and proven track record sets him apart from other candidates.

In his speech at the 31st anniversary of the Foundation, Binay cited how women have contributed to the Philippine economy.

One-third of small and medium enterprises are owned or run by women. Among them are the small eateries, stories, tailoring shops, among others. Kabilang dito ang mga karinderya, tindahan, patahian at iba pa. Maliliit na negosyo, ngunit kayo ang bumubuhay sa ating ekonomiya, Binay said.

Binay said 60 percent of the country's Gross Domestic Product (GDP) comes from the informal sector and cited data from the Philippine Institute for Development Studies that shows 90 percent of Filipino businesses are small and medium scale industries.

The informal sector counts the vendors and small businessmen, drivers and other ordinary citizens. That means, our economy is bolstered by our small people," he said.

According to Binay, it is imperative that the government strengthen the country's small and medium enterprises and noted that 60 to 80 percent of the country's labor force are employed by small business.

He paid tribute to his late mother, who died when he was just a small boy but left an indelible imprint on character.

She was my guide, my first teacher. From her I learned the value of education, of striving and hard work, of faith in God and love for others. The value of a mother to the life of every child is matched by the contributions of women to the effort to build a prosperous, peaceful and just society," Binay said, speaking in Filipino.

Binay, meanwhile, said he intends to continue the Conditional Cash Transfer social welfare program for the underprivileged and also for senior citizens.

Addressing the women, he said he knows what is to be a poor: "I came from a poor family and my mother, just like everyone of you is my first teacher."

He told them he will make sure women will get the most benefits under a Binay-Honasan administration.//


Author: Bernard Testa
Date: December 05, 2015
Source: Interksyon TV5

MANILA, Philippines " A government study has indicated the modern post-harvest facilities increase farmers income.
The Philippine Institute for Development Studies (PIDS) said modern technology allows the production of good-quality milled rice and reduces post-harvest losses.
Accoring to the PIDS, farmers income went up to P13.9 million due to higher buying prices.
Without these facilities, farmers could easily lose some P286.96 million, PIDS co-authors Nerlita Manalili, Kevin Yaptenco, and Alessandro Manilay, said in the report.
The post-harvest facilities helped in reducing losses during the drying and milling processes.
The use of flatbed dryers reduces grain deterioration or yellowing of rice grain during the rainy season as well as prevents physical losses from sun drying. The modern milling facilities at the rice processing centers also improve milling recovery, resulting in increased quantity of milled rice, they said.
Food terminals in these four provinces where the centers are located were also found to be effective in helping provide agro suppliers with access to markets. As a result, availability of commodities and basic goods likewise improved.
The increased economic activities brought about by these food terminals have created more employment and business opportunities.
The PIDS, however, argued that benefits could be improved further if the operating capital for the rice processing centers is increased, and if issues related to the management, operation, viability, and sustainability of these post-harvest facilities are addressed.//


Author: Ted P. Torres
Date: December 06, 2015
Source: Philippine Star

Foreign direct investments (FDI) into the Philippines were once again the lowest among the ASEAN-6 (Association of Southeast Asian Nations) in 2014, at 5% of total Asean-6 FDI flows, only half of the proportionate share of the Philippines to the entire ASEAN-6 economy. Our investments to gross domestic product ratio at 20% is also well below the 25%-35% range in the other ASEAN-6.

This unhappy state of affairs of underinvestment by both domestic and foreign players persists despite unprecedented low international and domestic interest rates arising excess domestic savings from remittances and business process outsourcing. The investment response to surplus funds and improved credit rating has been relatively weak. What gives?

Analyst studies and global competitiveness surveys have pointed to three factors to explain this: (a) poor infrastructure, (b) unfriendly investment environment -- restrictions on foreign investments in the Constitution and certain laws and government policies, such as failed agrarian reform and rice policy, and (c) regulatory uncertainty and red tape. The first two have been well covered in earlier columns of my Introspective fellow columnists, Chikiamco, de Dios, and Fabella, and me. Allow me now to focus on the third. (See graphs)

Let me first cite some examples.

The 2016 Ease of Doing Business of the World Bank ranked us 103rd out of 189 countries; we are the second to the lowest among the ASEAN-6. To open a business, it takes 16 steps and 29 days. Best performing Singapore and Malaysia take 2.5 and 4 days, respectively. Even Vietnam, until recently a centrally-planned economy, is better at 20 days.

These surveys are based on what it takes to establish a small or medium enterprise. I dont know whether we should take comfort that big companies suffer as long. I have seen a chart prepared by a major power industry player on the number of signatures it takes to get a power plant started, around 200. No wonder it takes twice as long to build a power plant here vs. elsewhere -- contributing to thin reserves and high cost power.

In the latest World Economic Forum Global Competitiveness report, 2015-2016, inefficient government bureaucracy climbed to the top spot as the most problematic factor for doing business in the country, from last years fourth place. Moreover, complexity of tax regulations ranked fourth, whereas elsewhere in the ASEAN it is not in the top 5 concerns.

Im told that, under Revenue Memorandum Circular 7-2014, tricycle operators, farmers, fishermen and sari-sari store owners are now required to issue Bureau of Internal Revenue-registered receipts and sales invoices without any de minimis threshold. The World Bank has earlier warned that Certain tax policy regimes are both inefficient and detrimental to job creation. Enforcing the current weak tax design may yield more revenues but will have adverse impacts on jobs (World Bank, Philippine Economic Update, 2014).

Then there are the big disputes arising from sudden idiosyncratic reinterpretation by regulatory bodies of contracts after more than a decade of being implemented and celebrated as successful examples of public-private partnerships. I refer to the two water concessions of the Metropolitan Waterworks and Sewerage System, the Shell-Oxy Malampaya project, and the Manila North Tollways Corp.; all are now or about to enter international arbitration initiated by the private parties against government for non-implementation of contracts in amounting to several tens of billions of pesos.

I cannot recall there being so many concurrent international arbitrations at one time.

How can Public-Private Partnership (PPP) projects for infrastructure, in the platforms of all of the Presidentiables, take off unless government can provide greater regulatory clarity and stability?

Recognizing the importance of effective and sound regulations, other countries have pursued government-wide action in improving regulatory quality. Countries belonging to the Organisation for Economic Co-operation and Development (OECD) have adopted an explicit whole-of-government approach to regulatory reform, which requires stakeholder engagement in extensively reviewing regulations, use of regulatory impact assessment (RIA) by oversight bodies for an evidence-based policy-making, and conduct of effective ex-post evaluation of policies.

In our region, Vietnam has made great strides in overhauling its administrative procedures. They call this reform process regulatory guillotine. Vietnam, in 2007, established a Project 30 unit in their government, with the goal of simplifying administrative procedures and reducing administrative costs by at least 30%. It is no surprise then that Vietnam has continued to be ahead of us in the Ease of Doing Business rankings and has received 50% more FDIs than us.

Malaysia, in 2013, launched the National Policy for the Development and Implementation of Regulations, and has started implementing reforms in regulatory practice, such as requiring RIA for all new regulations.

Also South Korea, which was able to review over 11,000 regulations, in the process eliminating almost 50% of them, all within the span of 11 months. Over 1 million new jobs and $36 billion in FDIs were projected to be the economic gains of such regulatory cleanup.

To keep in step with our neighbors, a comprehensive regulatory package must be part of next administrations reform pillars.

In a recent Philippine Institute for Development Studies seminar (for more information, visit http://goo.gl/l2hvCj), NEDA Deputy Director General and University of the Philippines Professor Emmanuel F. Esguerra identified elements from OECD and ASEAN for best practices for good regulation. These are: internationally recognized processes, systems, tools and methods for improving quality of regulation, a system for implementing public consultation and stakeholder engagement and impact analysis of regulations to achieved desired policy objectives.

Beneath technocratic language is the political reality of bureaucratic inertia and entrenched interests in the status quo labyrinth that must be overcome.

Hopefully, our next leader will have the vision and political will and skill to take on this difficult but necessary task for the Philippines to truly travel the tuwid na daan to inclusive investment-led growth.

Romeo Bernardo is a Trustee of Institute for Development and Econometric Analyis and of the Philippine Institute for Development Studies.

romeo.lopez.bernardo@gmail.com


Author: Romeo Bernardo
Date: December 06, 2015
Source: Business World

A GOVERNMENT think tank in a statement yesterday cited a study in June on access to post-harvest facilities (PHFs) being a vital complement to rice farmers income.
The study titled, Rapid Appraisal of the Postharvest Facilities Projects in the Philippines, which forms part of the discussion paper series by the Philippine Institute for Development Studies (PIDS), evaluated the governments post-harvest loss reduction programs and noted too the considerable public investments in this area.

Commissioned by the PIDS and the National Economic and Development Authority (NEDA) to consultancy firm NEXUS Agribusiness Solutions, the study noted overall, the PHFs assessed were found to have a positive impact in addressing post-harvest losses and improving the marketing system for rice and high-value crops, the NEDA-attached institute said in its statement.

Farmers are assured of competitive prices for their wet paddies even during periods of oversupply since RPCs [rice processing centers] offer higher buying prices compared to private traders and millers, said the studys authors, PIDS consultants Nerlita M. Manalili, Kevin F. Yaptenco and Alessandro A. Manilay.

Among the projects cited in the study are RPCs in the provinces of Pangasinan, Davao del Sur, Bohol and Iloilo, equipped with such equipment as those for modern milling and drying.

These four sites were established through a P649-million grant by the Korea International Development Agency (KOICA) covering equipment, training and expertise. The Department of Agriculture provided P136 million as counterpart investment in terms of freight and taxes, site development and other expenses. An additional P2 million per site as additional operating capital was provided by farmer organizations who are the beneficiaries of these projects.

The use of flatbed dryers reduces grain deterioration or yellowing of rice grain during the rainy season as well as prevents physical losses from sun drying. The modern milling facilities at the RPCs also improve milling recovery, resulting in increased quantity of milled rice, the authors said in their report.

Food terminals in these four provinces where RPCs are located were also found to be effective in helping provide agro suppliers with access to markets. Barangay Food Terminals (BFTs) and Municipal Food Terminals (MFTs) were designed to function as food depots and distribution systems. Since each food terminal is located within a farming or fishing area, the Impact Evaluation Team concluded that the facilities can provide direct links between suppliers and consumers, the study said. Thus, layers of middlemen are reduced leading to improved income for producers.

As a result, availability of commodities and basic goods has improved, the PIDS statement said. Likewise, the increased economic activities brought about by these food terminals have created more employment and business opportunities.

This, in turn, has redounded to increased revenues for their local governments, which, among other functions in their partnership with this enterprise, took part in the administration of the food terminals.

After two years in operation, the KOICA-RPCs have recovered some P321 million or 37.14% of the total project cost of P865 million, said the study, which also noted, Determining returns on investment for projects approaching this amount usually has to consider a useful life of more than 15 years.

For purposes of this study, the appropriate method of analysis is the Capital Recovery Approach. This method treats the benefits obtained from the projects as repayment to the capital investment.

The study also called for additional support. Increasing the investment in RPCs will allow them to buy more rice paddies from farmers. To achieve this, RPCs should also invest in more cargo trucks for timely pickup of harvested paddy and delivery of milled rice, wrote the authors, who, the statement said, also recommended an investment of around P80 million for each site.

The study recommended appropriate financing and crop insurance services from government for farmers to reduce dependence on private traders, the statement said.//


Author:
Date: December 03, 2015
Source: Business World

Promoting free trade and harnessing innovation -- those are my key takeaways from the recently concluded Asia-Pacific Economic Cooperation (APEC) Summit, but with special emphasis on the role of small and medium enterprises (SME) in the global economy.

The APEC SME Summit 2015 showcased a roster of speakers who are founders and chief executive officers (CEO) of successful start-ups. With the theme Innovation and Big Ideas: Pushing Boundaries, the conference featured inspiring stories as well as innovation insights and experiences from entrepreneurs.

SMEs need to innovate to compete in the regional market especially with the impending ASEAN Economic Integration. With 99 percent of the businesses in the country classified as micro, small, and medium enterprises, the public as well as the private sector, as Alibaba founder Jack Ma pointed out, need to help the small guys.

But how do we teach business owners to innovate when they are hounded by many issues? SME growth in the country remains muted, if not outright stagnant, as SMEs fare poorly in terms of access to credit, technology, and skills compared with peers in other Association of Southeast Asian Nations (ASEAN) member states based on a recent study of the Philippine Institute for Development Studies.

In my dealings with businessmen, advising start-ups, and teaching graduate business courses to entrepreneurs and professionals, Ive simplified the concept of innovation into its practical application.

A practical innovation framework I use is that of Keeley et al. called the 10 Types of Innovation, which can help SMEs take a methodical, disciplined approach. The framework is divided into three areas where innovation can happen: configuration, offering, and experience.

Configuration involves all the internal workings in the organization that enable the production of products and services. Under this are four components:

Profit model -- this is how the company makes money

Network -- this is how companies build connections to create value

Structure -- this is the alignment of the companys talents and resources to deliver greater value

Process -- this involves superior methods that the company uses

One great example of a company that innovated its configuration is Uber.

One of the speakers in the SME Summit was David Plouffe, a senior executive of Uber, who described how the five-year-old company scaled to service more than 300 cities in the world. Its innovative profit model enables it to earn from private vehicles booking without even owning its own fleet. It was able to do this by connecting an expansive network of private vehicles. Its lean structure focuses on getting feedback from social media to further improve its operations.

The next two types of innovation are under the offering group, namely:

Product performance -- this defines the distinguishing features and functionality of a product

Product system -- this involves complimentary products and services that enhance the value of a product

An example of innovation in offering is the young, inspiring speaker during the summit, Alok Shetty, the founder of Bhumiputra Architecture, the firm behind several innovative architectural designs of houses that shelter poor people. One of his projects is a slum housing that has bamboo walls, plastic tarpaulin sheets resting on bamboo for roofing, and wooden shuttering sheets for the floor that would cost only Rs. 35,000 for a 100-square-foot house without compromising product performance. His other projects involve reused 40-foot shipping containers transformed into a 250-seat auditorium with aisles, staircase, and screen. All these create a wonderful product system that can be configured, attached, and transformed to enhance the value of each design.

The last four types of innovation are under the experience group, such as:

Service -- this includes support enhancements that surround a firms offerings

Channel -- this includes how offerings are delivered to customers and users

Brand -- this includes representation of offerings and business

Customer engagement -- this involves the distinctive interactions the firm fosters

Tony Fernandes, CEO of AirAsia, personifies the innovation in experience. He turned around the company by looking at non-traditional marketing campaigns and using social media and merchandising. His company also uses social media channels to directly interact with customers and potential customers and to gain feedback about its products and services. The effective branding has opened doors for negotiations across different regions and channels.

How we use the 10 Types of Innovation framework further is to identify potential shifts in the industry and focus on innovating in areas where competition is weak, if not absent.

Furthering on the AirAsia example, in the past decades, regional carriers focused their innovation initiatives primarily on the offering and secondarily on the experience; e.g., routes to many countries, amenities, and loyalty programs. Fernandes realized this innovation gap in the no-frills budget airline market and focused on a configuration and business model that capitalizes on this opportunity. The rest is history.

SMEs can benefit from innovation initiatives. But they need to demystify the concept of innovation into a practical, methodical, and actionable framework.

Reynaldo C. Lugtu, Jr. is a senior executive in an information and communications technology firm. He also teaches strategy, management, and marketing courses in the MBA Program of the Ramon V. Del Rosario College of Business, De La Salle University.//

reylugtu@gmail.com


Author: Reynaldo C. Lugtu, Jr.
Date: December 02, 2015
Source: Business World

The development of small and medium enterprises (SMEs) in the Philippines can be achieved by improving marketing and network capabilities through trade missions, international trade exhibitions, and export assistance, a study released by the Philippine Institute for Development Studies (PIDS) showed.

The policy note titled, What factors affect the business success of Philippine SMEs in the food sector?, discussed the success factors of SMEs, particularly the food manufacturing and food service sector.

The study, authored by Elaine Borazon, also provided implications on how SMEs can be assisted to achieve business success and, therefore, enhance their capacity to engage in international trade.

Small enterprises in the Philippines are those with 10 to 99 employees or have a total asset value of P3 million to 15 million, while medium enterprises, are businesses with 100 to 199 employees or have a total asset value of P15 million to P100 million.

The study said both marketing and network capabilities positively affect business success.

They contribute to the firms competitive advantage and business success because they are deeply embedded in the organization, which makes them rare, inimitable, and immobile, it said.

The report added firm size positively affects business success since bigger organizations are more visible. This leads to an increased cognitive legitimacy, which stimulates business success, it said.

Firm size positively influences business success because larger firms are more visible to regulatory agencies that force firms to meet their requirements, the policy note said.

Thus, regulatory bodies should have simpler frameworks to increase the compliance of SMEs with regulatory requirements that can enhance their local and global recognition, it added.

It also said firm age positively affects business success because it would take time for firms to become legitimate, to develop standardized procedures, and to build trust with business partners.

The government can give technical assistance to new enterprises in establishing such procedures. It is important that SMEs should first be locally competitive before they can integrate globally through trade and investments, the study said.

A total of 233 small and medium food enterprises from various parts of the country participated in the study.//

Author: Angela Celis
Date: December 02, 2015
Source: Malaya

WATER may be rationed in some parts of Metro Cebu in April and May next year, when surface water sources are expected to dry up and supply runs short because of the El Nio phenomenon.
Edgar Ortega, acting manager of the production and distribution department of the Metro Cebu Water District (MCWD), said the impact of the El Nio is expected to be fully felt in January to May 2016.
But Cebu will still have water from Buhisan Dam and Jaclupan weir in Talisay City, which produce about 40,000 cubic meters of water daily, in the first quarter.
Water supply from both facilities is expected to last three months even without rainwater replenishment.
By April, there will be around 34,000 cubic meters of water shortage, Ortega said. The figure was based on the 2010 production from the two facilities, which went down to 6,000 cubic meters a day.
To offset the projected loss, MCWD has commissioned the operation of five wells in Cubacub, Pit-os, Mandaue 1, Suba-basbas, and the Cabancalan well of Abejo Waters Corp.
The Cebu Manila Water Development (CMWD), Inc. has also been commissioned to supply 11,000 cubic meters per day starting January 2016. This will be on top of the 24,000 cubic meters that it supplies daily.
Together, all six wells will be able to produce 29,400 cubic meters of water a day.
MCWD will also implement a distribution management or rationing in affected areas, said Ortega.
The utility is looking into getting an additional three water trucks, each capable of holding as much as 10 cubic meters of water, for distribution. MCWD currently has three water trucks.
The utility also desilts Buhisan and Jaclupan regularly to decrease non-revenue water, or water that is lost due to pilferage, leaks and facility damage, and preventive maintenance for pumps. As of
September this year, non-revenue water has decreased to 21 percent from the previous 26 percent.
DEMAND
Demand for water is expected to peak in December 2015 and January 2016, said MCWD spokesperson Charmaine Rodriguez.
Demand will be high in January because of the IEC (International Eucharistic Congress) and Sinulog, she said.
MCWD is also the source of water for soft drink and beer companies, she added. Beverage companies normally have higher water requirements during holidays and festivals because of the higher demand for their products.
Metro Cebu requires around 220,000 liters of water daily.
Based on actual monitoring of our water facilities, water levels are good. There has been no decrease yet, said Ortega.
Rainfall has decreased because of the El Nio phenomenon.
The Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) Mactan weather station noted a 33. 4 percent reduction in rainfall in October.
From December 2015 to January 2016, a significant reduction of rainfall over most watershed areas is expected.
By the end March 2016, the weather bureau said 85 percent of the country, including Cebu province, will experience drought,.
Rodriguez appealed anew to households to each conserve at least 10 liters of water per person day.
Thats equivalent to two flushes in the toilet, said Rodriguez. If everybody does her or his part, Rodriguez said up to 8,619 cubic meters of water will be saved per day.
Based on data from the Philippine Institute for Development Studies, majority of water consumption in Filipino households is for personal hygiene (23 percent) and sanitation services (20 percent). These are two areas where consumers can conserve water, she added.
MCWD also advised consumers to check faucets, pipes and toilets for possible leaks.//

Author: Vanessa Claire Lucero
Date: December 02, 2015
Source: Philippine Daily Inquirer

MANILA, Philippines " A government study has indicated the modern post-harvest facilities increase farmers income.
The Philippine Institute for Development Studies (PIDS) said modern technology allows the production of good-quality milled rice and reduces post-harvest losses.
Accoring to the PIDS, farmers income went up to P13.9 million due to higher buying prices.
Without these facilities, farmers could easily lose some P286.96 million, PIDS co-authors Nerlita Manalili, Kevin Yaptenco, and Alessandro Manilay, said in the report.
The post-harvest facilities helped in reducing losses during the drying and milling processes.
The use of flatbed dryers reduces grain deterioration or yellowing of rice grain during the rainy season as well as prevents physical losses from sun drying. The modern milling facilities at the rice processing centers also improve milling recovery, resulting in increased quantity of milled rice, they said.
Food terminals in these four provinces where the centers are located were also found to be effective in helping provide agro suppliers with access to markets. As a result, availability of commodities and basic goods likewise improved.
The increased economic activities brought about by these food terminals have created more employment and business opportunities.
The PIDS, however, argued that benefits could be improved further if the operating capital for the rice processing centers is increased, and if issues related to the management, operation, viability, and sustainability of these post-harvest facilities are addressed.//


Author: Ted P. Torres
Date: December 06, 2015
Source: Philippine Star

MANILA, Philippines - The agri and fisheries lending program is not resulting in financial inclusion since it still excluded those that really need credit, a study undertaken by the Philippine Institute for Development Studies (PIDS) showed.
The financing program is failing due to the credit rationing behavior of conduit lending institutions, the state research agency said.
The government may be going back to an old approach that did not work"the direct credit programs (DCPs), the PIDS said.
PIDS is the government research institute under the guidance of the National Economic and Development Authority (NEDA).
The program design and guidelines of past DCPs resulted in low repayment rates, small number of program beneficiaries, unsustainable credit programs, and huge fiscal costs on the part of the government, it said.
PIDs economists Ma. Piedad Geron and Gilberto Llanto said the appropriate solution is to build and enhance the capacities of both the banks and the borrowers, if the farmers and fisherfolk are not able to borrow due to their inability to comply with stringent credit policies and requirements of banks.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1
Capacity building and adoption of effective credit enhancement mechanisms such as agricultural insurance and guarantee mechanisms may be better alternatives, said Llanto, who is also PIDS president.
Credit enhancements will encourage banks to be more comfortable with the risks associated with agriculture and thereby reconsider their stringent credit policies.
It will also enable them to take calculated risks and adopt innovative ways of meeting the credit needs of small farmers and fisherfolk, PIDs said.
Similarly, building the capacity of small farmers and fisherfolk to meet the basic loan requirements of banks, and implementing a financial literacy program with a particular focus on savings and basic borrower responsibilities, may lead to a bank-client relationship that will build their track record with the banks.
This will enable small farmers and fisherfolk to access credit and other formal financial services in the future.
In turn, this will help fulfill the goal of financial inclusion for our marginalized sectors, the PIDS authors said.
In 1998, the Agriculture Fisheries and Modernization Act (AFMA) was enacted, introducing market-based credit and financial policies. It also transferred all direct credit programs in the agriculture sector to the Agriculture Modernization Credit and Financing Program (AMCFP).
The program received a P1-billion flexible credit facility known as the Agriculture and Fisheries Financing Program (AFFP), to augment or fill in the credit gap since banks avoided extending loans to the agriculture sector.
The AFFP releases funds through government financial institutions (GFIs), which administers funds taken from the program for five-years, charges a management fee equivalent to 4.5-percent per annum of loans released, aside from other administrative expenses against the income of the AFFP.
They also have a pass-on fixed interest rate of 15 percent under the wholesale-direct lending scheme.//


Author: Ted P. Torres
Date: December 17, 2015
Source: Philippine Star

OR households and some sectors of the economy stand to benefit from a proposed trade partnership that seeks to deepen economic integration in the region, a study sponsored by a state think tank said.
The proposed Regional Comprehensive Economic Partnership (RCEP) will be beneficial in the long term, especially to those in the lower income bracket, the Philippine Institute for Development Studies (PIDS) said in a statement yesterday.

The partnership involves the 10 member economies of the Association of Southeast Asian Nations (ASEAN) and six of their current free trade agreement (FTA) partners. RCEP negotiations are underway toward eliminating tariff and nontariff barriers on goods and services, and facilitating investment flows.

The partnership would help reduce poverty incidence in the country over time and increase the governments welfare fund at $4.5 billion in 10 years, Dr. Caesar Cororaton, a consultant at the PIDS, said.

The Philippines would also see an increase in the income of poor households, a reduction in commodity process, and increased returns on wages and land rent, he added.

Dr. Cororatons study is part of a larger PIDS project focusing on the impacts of FTAs on the country. He applied several models that looked at a 10-year projection, from 2014 to 2023, and simulated how the RCEP would transform the local economy.

The PIDS said the results yielded a projected 90% decrease in applied tariffs in RCEP, a 10% drop in nontariff in the RCEP region, and an increase of $2.4 billion in foreign direct investments (FDIs) in the Philippines.

Once tariffs are significantly reduced, imports coming in will have varying effects depending on certain factors, it said. For example, if the domestically produced goods are more expensive than their imported alternatives, they are more likely to be displaced. But in the long run, interaction effects in the market would enable other sectors to produce more efficiently, it added.

The PIDS said that the sectors that would grow the most in an RCEP scenario are construction, transport and machinery equipment, and services.

Construction would benefit from higher FDIs, positively affecting the growth of transport and machinery equipment sectors, and the services sector, it said.



It singled out rice and textile as the sectors that were likely to benefit the least, if not elbowed out completely by the influx of cheaper goods. However, the cheaper imports would certainly benefit everyone else. The study also cited data that showed 22.5% of poor households income being spent on rice.

The flow of cheaper imported rice will not only reduce this percentage of income spent, but it would enable at least 800,000 poor families to climb out of poverty, it said. Furthermore, wages will rise, and rent will rise as well, while returns to capital will probably decline.

The RCEP, which began talks in 2012, aims to be completed in 2015. Its objectives include enabling equitable economic development and cooperation in the region. ASEAN member countries currently have FTAs with Australia, China, India, Japan, South Korea and New Zealand.

The RCEP negotiations also cover protecting intellectual property rights, promoting competition and technical cooperation, and establishing a dispute settlement mechanism. //


Author: Victor V. Saulon
Date: December 29, 2015
Source: The Standard

Ten Southeast Asian nations start an ambitious, U.S.-backed experiment on Thursday: integrating their economies in a bid to bring more global sway and prosperity to the regions 622 million citizens.
Their common market"more than a decade in progress"aims to forge a prominent regional bloc to rival China and Japan out of a hodgepodge of economies ranging from rich-and-open Singapore to emerging Myanmar.
Over time, the countries, all members of the Association of Southeast Asian Nations, or Asean, plan to boost economic ties by further lowering tariffs and allowing a freer flow of labor, services and capital across a region stretching 3,900 miles between the Pacific and Indian oceans.
The bloc"which also includes Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Thailand and Vietnam"is a fast-expanding home to a rising middle class, but also to widespread poverty and income inequality. The groups leaders hope their effort, which formally begins Thursday but will still take years to complete, will bring economic well-being to more people in a region where they expect a nearly $2.6 trillion combined economy to almost double by 2030.
Its a big milestone for us, said Le Luong Minh, secretary-general of the bloc, called the Asean Economic Community. Less than a half century ago some Southeast Asian countries were still at war, he pointed out. Weve made a lot of progress.
Economic integration within the region is also at the center of the Obama administrations rebalance of foreign policy toward Asia, in part to address Chinas increased military and economic assertiveness in the region. The U.S. has been aiding the effort, for example, by helping Asean countries to integrate their customs and trading procedures.

In the near term, the U.S. isnt likely to clinch major deals with the Asean community. Instead, American officials hope to launch the Trans-Pacific Partnership, or TPP, a 12-nation trade accord that includes Brunei, Malaysia, Singapore and Vietnam, and expand the bloc to other countries that have expressed interest, including Indonesia and the Philippines. The pact was completed in October but faces a difficult vote in Congress as early as next year.
The way the United States envisions this is you start with the TPP"you build the gold standard for trade"and you slowly build that in Asia to allow better integration, said Carl Baker, Hawaii-based director of the Pacific Forum of the Center for Strategic and International Studies. By working with them as they build the economy community, the United States sees that as an alternative to balance the Chinese economic influence.
Both the Chinese and Japanese governments also have expressed support for the Asean blocs integration efforts, as both jockey for power and influence among their neighbors.
The groups goals mirror the European Unions 1950s-era forerunner, another geopolitical bloc whose members suffered decades of strife before uniting. As in Europe, fuller integration could take decades.
The Southeast Asian group doesnt plan to have a common currency, such as the euro. It still limits cross-border travel, unlike the EUs passport-free Schengen area. Barriers to cross-border services"financial and transportation, for example"are a work in progress. And although Asean members have cut import tariffs in recent years, other barriers such as import quotas and language requirements for foreign workers will take years to dismantle, experts say.
The reality, we tell our members, is that you need to have both an Asean strategy and 10 individual strategies as well for now, said Alexander Feldman, who heads the U.S.-Asean Business Council.

The blocs debut is also stoking some fears.
On a recent December day on the Philippine sugar bowl island of Negros, a pall of slick, sweet air cloaked a mill which mashes 5,000 tons of cane a day. In the nearby fields, men worked 10-hour shifts cutting cane in the scorching sun for just $2.40.
Once the Philippine economys motor, the industry has been in decline since long before the trade talks began. Now, worries are rising that the bloc will worsen the plight of a sector that still employs 785,000 people, including 440,000 workers on Negros.
Like neighboring Indonesia, the Philippines has slashed its protective 38% import tariff to 5% in recent years to meet Aseans demands. Both countries are worried about Thailand, which the American Sugar Alliance says subsidizes its industry with $1.3 billion a year, resulting in artificially low prices. Asean doesnt regulate subsidies. Thailand denies it subsidizes its sugar industry.
Cheap imports will come in, prices will fall, and our workers and farmers will suffer, said John Lozande, secretary-general of the National Federation of Sugar Workers. Despite the already lower tariffs, however, he acknowledges this hasnt happened so far.
Other industries are wary too. Trinh Minh Anh, deputy head of a Vietnamese government panel for international economic integration, said this month that the countrys car-assembling industry will suffer due to competition from Indonesia and Thailand, especially after 2018 when the bloc eliminates auto import tariffs.
In Indonesia, some businesses worry that the blocs formation will hasten a brain drain to richer countries such as Singapore and Malaysia. Im worried we could lose our best and brightest to better salaries overseas, said Haryadi Sukamdani, chairman of the Indonesian Employers Association. Those kind of concerns could slow integration, some experts say, as countries struggle to ratify measures agreed upon at a regional level.
The new trade group will not change our strategy dramatically, said Eddy Setiawan, who heads Dow Chemical Co. s Southeast Asian unit. We have a similar analogy to the EU, where the company employs individual strategies to reflect the very different dynamic in each country.
The bloc has its origins in Asean, a union of mostly developing countries forged in 1967 during the Vietnam War by pro-U.S. governments in the region. The drive for Southeast Asian integration grew during the Asian financial crisis in the late 1990s, when countries whose currencies collapsed felt unfairly treated by global rescue institutions.
Asean hopes to build on that progress not only by boosting trade but in coordinating policies that will benefit its citizens by, for example, lowering cellphone roaming charges and allowing skilled workers to travel freely.
Any work that gets done to reduce the frictional costs, tariff and trade barriersis just going to allow us and companies like ours to put more people in and do more, said John Rice, a General Electric Co. vice chairman who directs the companys global operations.
Back in Negros, the province is trying to diversify away from sugar by producing bioethanol and electricity from cane, shifting to higher-value crops, solar farms and real estate and welcoming new outsourcing companies, said Alfredo Maraon, the governor of one of the islands two provinces. Asean integration may help Negros by quickening this diversification push, Mr. Maraon said. Still, that threatens many uneducated sugar workers.
There will be winners and losers, said Roehlano Briones, a fellow at the Philippine Institute for Development Studies, a research group. Consumers and industry will benefit from lower prices, but there is a big pool of very low wage workers who will struggle.//
"Will Mauldin in Washington and Nopparat Chaichalearmmongkol in Bangkok contributed to this article.


Author: Ben Otto and Trefor Moss
Date: December 29, 2015
Source: Wall Street Journal

The Philippines needs to improve the quality of its education which is necessary to make its graduates and workers competitive with their counterparts in the Asean and take advantage of the significant economic advantages of increased cross-border movement of skilled labor in the region.

A study published by the Philippine Institute for Development Studies (PIDS) underscored the benefits of implementing the mutual recognition arrangements (MRAs) to facilitate freer flow of professional workers among the Asean member states (AMS).
It said the MRAs for professional workers can enhance the exchange of skills and expertise within the region in support of the Asean Economic Communitys (AEC) targets of achieving a single market and production base in the region.

Increased cross-border movement of skilled labor has significant economic advantages both for sending and receiving countries, including alleviating unemployment and underemployment, increased remittances, technology transfer and business and professional linkages.

Citing an earlier study, the PIDS said the AEC is projected to generate 14 million additional jobs between 2015 and 2025.

The MRAs will be a boon for the more advanced countries but a bane for the less advanced like the Philippines unless they address their weak spots aggressively and consistently, the PIDS said in its reports sent to select organizations, including this newspaper.

The Philippine government sees the K to 12 educational reform as an important step to harmonize the countrys educational system with that of the AMS and other countries.

MRAs enable the qualifications of professionals from one country to be mutually recognized by other signatory countries. They promote mutual agreement on standards, licensing and certification of professional workers among AMS.

Currently, MRAs are in place for eight professional categories: engineering services, nursing services, architecture services, land surveying, medical practice, dental practice, accountancy and tourism.
However, these are in varying levels of implementation due to the different competencies among the AMS.

Harmonizing labor regulations in the region is crucial, as well as proper implementation of quality assurance frameworks and accreditation mechanisms, the PIDS added.

It also stressed the need to expand MRAs in due time to cover unskilled and low-skilled labor.
This can pave the way for the proper management of unskilled labor movements that requires serious attention. If Asean leaders really want the AEC to result in inclusive growth, no one should be left behind. Everyone-skilled or unskilled, high or low skilled-should benefit from the Asean integration, the study added.//


Author: Ed Velasco
Date: December 30, 2015
Source: The Daily Tribune

The government should review the program and implementing guidelines of the P1-billion Agriculture and Fisheries Financing Program, the state-run think tank Philippine Institute of Development Studies said Monday.
PIDS economists Ma. Piedad Geron and Gilberto Llanto said in a policy note the government should not go back to the old scheme that did not work out in micro-financing before.
The foregoing remarks and observations point to one thing: the government may be going back to an old approach that did not work"the past DCPs, the authors said.
As presently formulated, the program guidelines seem to resurrect some of the arrangements under the failed directed credit programs, or DCPs, of the past, they added.
The P1-billion flexible credit facility aims to help over 1 million farmers and fisherfolk who were non-agrarian reform beneficiaries and engaged in priority commodities identified by the Department of Agriculture in the 20 poorest provinces.
It seeks to ensure the availability of financing for small farmers and fisherfolk and increase their access to loans from formal sources.
The AFFPs aims to contribute to the attainment of inclusive growth by facilitating the financial inclusion of the marginalized sectors.
The participating government financing institutions are paid management fees for implementing the AFFP.
PIDS said the GFIs in the current arrangement did not have the necessary stake and incentive to properly screen and evaluate prospective borrowers. The arrangement is similar to past failed credit program where the GFIs served as mere conduits of funds.
Just like in past DCPs, this will lead to moral hazard problems that may result in loan portfolio delinquencies and difficulties in sustaining the availability of credit funds, the study said.
There is a need for a better way to incentivize GFIs to implement the program in a sustainable way. They have to be made more accountable for the funds transferred to them by the government, it added.
PIDS said the program design and guidelines of past DCPs resulted in low repayment rates, small number of program beneficiaries, unsustainable credit programs and huge fiscal costs on the part of the government.
To avoid the past DCPs, PIDS said the capacities of the borrowers and lenders should be enhanced.
If the farmers and fisherfolk who need credit are not able to borrow due to their inability to comply with stringent credit policies and requirements of banks, the appropriate solution is to build and enhance the capacities of both the banks and the borrower, the study said.
Credit enhancements will encourage banks to be more comfortable with the risks associated with agriculture and thereby reconsider their stringent credit policies.
Credit enhancements will also enable them to take calculated risks and adopt innovative ways of meeting the credit needs of small farmers and fisherfolk.//


Author: Gabrielle H. Binaday
Date: December 14, 2015
Source: The Standard

THE Philippines will experience economic gains should the Regional Comprehensive Economic Partnership (RCEP) push through, with the export industry benefiting except for two sectors, according to a new study released by a government-run think tank.
RCEP would have favorable effects on the economy by bringing in more foreign direct investments (FDIs) and lifting overall exports except for rice and textile, said the report published by the Philippine Institute for Development Studies.
Based on projections over a 10-year period using 2014 data, there will be a US$2.4 billion increase in foreign direct investments (FDIs) in the Philippines by 2023 if the RCEP is achieved, said the paper, entitled "Will the Philippines Benefit from the Regional Comprehensive Economic Partnership?"
Study author Caesar Cororaton in a presentation on December 1 said total exports by RCEP members to the region is expected to increase, while exports to non-RCEP areas will decline because of trade diversification as tariffs come down.
Since the RCEP was broached in November 2012, negotiations have been ongoing to realize a free trade area (FTA) for the 10 members of the Association of Southeast Asian Nations (ASEAN) and the group's six dialogue partners-Australia, China, Japan, South Korea, New Zealand, and India.
In 2013, the countries within the proposed RCEP had an estimated total gross domestic product (GDP) of US$21 trillion, and a population of 3.4 billion, said the paper.
The RCEP is seen to propel exports by ASEAN members (Brunei Darussalam, Indonesia, Laos, Myanmar, Malaysia, Philippines, Singapore, Thailand, and Vietnam) except for Cambodia.
The Philippines is projected to become the third biggest exporter to RCEP after Vietnam and Indonesia.
"In the Philippines, the effects on export growth of the RCEP are initially negative; these exports will improve over time," said the study. It projects Philippine exports within RCEP to improve in 2018 by 2% and by 3.8% in 2023.
"All of these effects will translate to higher Philippine real GDP growth of 3 percent in 2023, and will generate additional welfare of USD 3 billion."//


Author:
Date: December 12, 2015
Source: Sun Star Cebu

The Association of Southeast Asian Nations economic community came into force on the last day of 2015, heralding a regional free trade which is expected to boost the economies of the 10 member states with a combined population of over 600 million.
The Asean Economic Community, a single market with a free flow of goods, capital and skilled labor across borders, officially starts today as provided for under the 2015 Kuala Lumpur Declaration.
Malaysian Prime Minister Najib Razak, who hosted the 2015 Asean meeting, said in November the 10 member countries created a single market and production base with freer movement of goods and services with common standards, far greater connectivity and removal of barriers.
In practice, we have already virtually eliminated tariff barriers between us under the Asean Free Trade Area, Razak said earlier. We now have to ensure that we create a truly single market and production base, with freer movement of goods and services.
AEC has a combined market of more than 600 million people with total GDP of $2 trillion across 10 countries, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
An Asean scorecard showed that as of end-October, the grouping had implemented 79.5 percent of measures committed under the AEC. Among prioritized measures, the rate was 92.7 percent.
Asean leaders in November unveiled another road map to a common community for the next decade even as the bloc missed targets for economic integration this year.
A study by state-run think tank Philippine Institute for Development Studies showed the Philippines agriculture and fisheries was well-positioned for the Asean integration but should increase the volumes of the sectors primary products bound for export.
PIDS said in a policy note titled Improving the readiness of A and F industries to the Asean integration the country should work harder to increase the volume of export-oriented products.
These products include coffee, cocoa, tuna, seaweed, shrimp and onions.
PIDS said in a separate study the Philippines should speed up the implementation of mutual recognition arrangements to allow the freer flow of professional workers.



A survey undertaken for the AEC [Asean Economic Community] scorecard project, which measured the Philippines readiness to ASEAN integration, underscored the slow progress of MRA implementation due to a number of deterring factors, PIDS said.
MRAs enable the qualifications of professionals from one country to be mutually recognized by other signatory countries. They promote mutual agreement on standards, licensing and certification of professional workers among the Asean member-states.
The Asian Development Bank and the International Labour Organization predicted that within the next 10 years, AEC would generate 14 million additional jobs. //


Author:
Date: December 30, 2015
Source: The Standard

A global budget payment (GBP) or an allocated yearly budget for inpatient services for members of the Philippine Health Insurance Corp. (PhilHealth) will be more efficient that the current case-based payment (CBP) scheme, according to the Philippine Institute for Development Studies (PIDS).
In a study commissioned by the PIDS, it was noted that the CBP scheme has drawbacks, as it works as a retrospective payment mechanism where hospitals are reimbursed a given amount after filing a claim for a given case, taking some four to five months.
"As CBP replaced the fee-for-service, it was found out that the amount reimbursed by PhilHealth from the case rates was not sufficient to cover hospital expenses. Majority of the admissions in which patients shoulder the remaining expenses not covered by the CBP scheme goes to balance billing," Hilton Lam, the author of the study, said.
Lam also pointed out that the CBP scheme has high administrative costs of screening cases. It may also decrease the quality of care due to providers avoiding complex cases or not giving the appropriate level of care.
"The PIDS study is therefore recommending for PhilHealth to consider the GBP as an alternative payment mechanism for improving efficiency and decreasing transaction costs," it said in an emailed statement.
"This should be implemented together with an efficient and improved CBP and strict implementation of the no balance billing (NBB)," the PIDS added.
The CBP, implemented by the PhilHealth in 2011,currently covers 23 of the most common conditions and procedures which represent 50 percent of the total claims to PhilHealth.
However, it did not translate into the increase in reimbursement efficiency expected by PhilHealth.
On the other hand, the GBP was formulated in 2012 and covers all PhilHealth members in nonprivate accommodations, but was not implemented due to lack of hospital capacity.
Under the GBP scheme, government hospitals are required to submit applications to be considered under the program. Priority will be given to facilities that meet qualifications"those with at least 90 percent bed capacity dedicated to nonprivate accommodations, centers of quality and referral hospitals.
Hospitals will also be prioritized if they are connected to eClaims facility, and if they are local government unit hospitals implementing province-wide programs.
"Unlike the CBP, BGP would be a prospective payment mechanism in which hospitals would be given funds to cover future claims," PIDS said.
"This prospective mechanism could cut administrative costs and make payment to providers more efficient by giving funds in advance to avoid reimbursement delays," it said.
The study also proposed that PhilHealth give ample time to be able to comply with global budget requirement, given that most hospitals will not be able to meet the qualifications.
"There should be an analysis of the investment needs of hospitals to comply with the global budget requirements," Lam said.
"Based on the assessment of PhilHealth, hospitals cannot comply with the technology with the technology requirements of the GBPP. If PhilHealth still plans to implement GBPP, hospitals should be given adequate preparation time and resources to meet these requirements," he said. "


Author: Jon Viktor D. Cabuenas
Date: December 30, 2015
Source: GMA News