Good business in 2013!

As is our wont at the start of the year, we gathered capsule assessments from top business leaders for the past year and how they see 2013 unfolding for the industries/sectors they represent. We have had pleasant dealings with all of the resource persons who have very kindly given our TV staff at B&L (Business & Leisure) their inputs for our year-end report.  In fact all of them are regulars on B&L, the TV show, and we are extremely grateful for their constant support. We are pleased to give them space in this New Year Special for them to air their pleas/advise to the pertinent government sectors for more harmonious relations with them in 2013. Cheers to the New Year, gentlemen and ladies, and good business to you all.

First on our list is the coffee industry. We may not realize it but according to Ms. Chit Juan, president of the Philippine Coffee Board (PCB), the Philippines is the biggest coffee-drinking nation in Southeast Asia. It’s time we take our coffee (industry) seriously.

Last year, coffee consumption was even higher, at 100,000 metric tons, but our coffee farmers produce only 30,000 MT per annum, making us a net importer of this prized bean. Importation has likewise increased. At an average price of P90 – P120/kilo of coffee, the 70,000 MT that we import roughly translates to P8 billion/year, currently the highest import bill for coffee in Southeast Asia. And to think that we ranked among the top coffee producers in the region, once upon a time. Our soil and climate are certainly ideal for certain variants, notably Arabica, Excelsa and Libereca (barako).

The Coffee Board has tirelessly worked on promoting coffee production among our farmers because clearly there is money in this crop, but sadly urbanization and industrialization has caught up with our coffee farmers especially in the Cavite area where the price of land has gone up. Families with big tracts of land planted to coffee would rather sell to property developers for instant cash rather than toil the land, so much of our coffee trees in this area have been cut down.

For 2013, the PCB is working closely with the ASEAN Coffee Federation to study new trends in coffee, and will continue to work on the Philippine Chapter of the International Women’s Coffee Alliance as well as the Women Vendors Exhibition Forum that will empower our Filipino women coffee farmers and give them more access to international markets and to multinational companies.

From the government, the Coffee Board hopes that with whatever small production they have at the moment, they can be supported through post-harvest machinery, from pulping to hulling and roasting, that will add value to Philippine coffee.

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It was an interesting yearend presscon that the Philippine Chamber of Commerce & Industries (PCCI) held last December. The organization’s officials had their own valuable inputs (and questions). From Ambassador Donald Dee: we need clear decisions from government as to who owns certain rights of way and franchises. “Who owns for example the right of way between Buendia up to the skyway?” The two big players, MVP’s (Manuel V. Pangilinan) and Ramon Ang’s groups cannot seem to come to terms, resulting in huge delays in vital infrastructure projects. On power, the country needs a clear restructuring policy: nobody wants to put up power plants without the authorized Purchase Agreements.

From Mr. Jose Alejandro, “We must have a very strong regulator if we are to succeed in our privatization plans.”  He noted that we have never penalized a large corporation for serious infractions, so the signal we are sending to the world is we are not ready, and serious, in enforcing regulations. He also asked, “Who is monitoring if the tax holidays/perks the government gives to locators in the eco zones are recovered by government in the long run through tax revenues?” For now, what the ecozones do for us is merely to generate employment, which we also direly need. 40 percent of the country’s exporters are located in these ecozones; the 60 percent located outside do not get incentives. Mr. Sergio Ortiz-Luis added, “For the last quarter of 2012, only one foreign investor was registered. Direct foreign investments are starting to dry up.”

On the sunshine industry that is the BPO (Business Process Outsourcing), “The acceptance rate for applicants in this industry is very low especially in relation to our educational system, with a very high rate of turnover. We clearly need to move out of the voice-related BPO and shift to the knowledge sector: accounting, engineering, medical technology. Businessmen from India are starting to buy up the call centers in the Philippines, a move seen to protect their own prosperous call center industry. Are our government leaders aware of this?”

For 2013, we will continue to have a consumer-led economic growth especially with the PPP projects seeing fruition, but policy changes are necessary for energy and other utilities, and we have to monitor our labor rates as well. They foresee a growth of five percent – seven percent in 2013.

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For the export sector: Mr. Sergio Ortiz Luis and Ambassador Donald Dee of the Export Development Council reported that the target growth for export in 2012 was between nine percent- 10 percent, but though final figures are not in yet, his realistic expectations lie more in the seven percent-eight percent range because September and October results were not so good, bringing down the year’s average.

 For 2013, however, their projection is 11 percent growth, with the figure going up every year. By 2016, they hope to double up the current export sales of P60 billion to P120 billion.

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The Meat Importers & Traders Association (MITA) reported a dismal 2012. MITA president Jesus Cham says their industry was seriously hurt when the Dept. of Agriculture (DA) adopted the policy of (in effect) requiring market vendors to have chillers available on site if they sell chilled/frozen meat products. Mr. Cham claims that imported meat is “less than 10 percent or five percent of total production”, and says that their imported special cuts are aimed at the marginalized sector who cannot afford premium meat cuts produced locally. The market will adjust to the DA policies in 2013, or so he hopes, but he still sees a bleak year ahead.

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From the Semiconductors & Electronics Industries of the Philippines (SEIPI) through recently deceased association president Mr. Ernest Santiago: there was flat growth for this erstwhile highly profitable industry for 2012 mainly due to the bad global economy, the strong peso and the rising cost of power in the country. In the first six months, they registered (-6), but November and December exports pulled up the yearend figures.

For 2013, they expect the investments made in 2011 and 2012 (over $2 billion worth) to be operational in 2013, so this year looks bullish for them. “We expect the smart phones, the ultra notebooks, apple products, etc. to drive the industry back in the market,” said Mr. Santiago.                

This series continues next week.

Mabuhay!!! Be proud to be a Filipino.  

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