Foreign investors decry counterfeiting in the Philippines

The multibillion-peso product and brand counterfeiting industry in the Philippines is starting to worry the international investor community due to the damage that the illegal trade is doing not only to potential revenues but to product and corporate reputations.

This was disclosed by lawyer Gilbert Reyes of the Poblador, Bautista and Reyes Law Offices, who said the losses that the country is incurring in terms of withheld investments due to fear of product and brand counterfeiting "may have already reached alarming levels."

"The illegal trade is also damaging the employment generation trusts of government because withheld investments also mean shelved jobs for the local work force," Reyes said.

He pointed out that "product and brand counterfeiting in the Philippines has moved up from a backyard industry to organized cross-border operations."

Local counterfeiters import goods from countries that manufacture them cheap and then stamp these goods with counterfeit labels of internationally famous brands, he explained. The cross-border nature of the operations of local counterfeiters take away the argument that they are helping the local economy since their products are made elsewhere, he added.

Reyes said the usual targets of local counterfeiters are global brands of clothing and personal items.

He cited the experience of US-based Caterpillar, Inc. which has lost an estimated $20 million to local counterfeiters over past five years alone.

Counterfeit Caterpillar products are sold in local malls and outlets for almost the same price as the original Caterpillar products, which in the Philippines can only be bought in duty-free shops at present.

Reyes said the pricing scheme of counterfeit products such as the fake Caterpillars "is also an assault against local consumers since they are made to believe that they are buying the authentic product because of the expensive tags."

This is unlike the lucrative market of counterfeits in other countries where people buy what they know are merely imitation brands of items such as watches, luggage and computers and which they purchase for a cheaper price.

There is definitely a successful effort to cheat local consumers here, Reyes said.

Among the counterfeited Caterpillar products are high-end shoes, shirts, belts, wallets and other personal items.

Reyes said several US and Europe-based firms have previously planned to put up regional manufacturing bases in the Philippines. These could have translated into jobs and revenues and a boost to the country’s image as a rising manufacturing hub for these firms, he pointed out.

Caterpillar, Inc. and the other companies, however, have expressed reservations over the said plans in view of the "stiff competition from local businessmen selling counterfeits," Reyes said.

He explained, however, that "there are sufficient laws in the country to safeguard the intellectual property rights of companies both local and international." Need to be enforced strictly and with the all-support of law enforcement agencies, he added.

He said the government "has to act expeditiously in this issue before the country’s image is further damaged by the product counterfeiting industry that has no value at all to the country and the local work force."