Good business in 2013 (Part 3)

This column will, for the whole month of January, focus on our business leaders’ assessment of 2012 for the particular sector they represent and their outlook for 2013. This is part three of the series.

For the first two parts, we had the Philippine Coffee Board, PCCI, Meat Importers & Traders Association, and the Semiconductors & Electronics Industries of the Philippines (SEIPI); last week, for the second part, we had the Philippine Wood Industries Association of the Philippines (PWPA), the Association of Vehicle Importers & Distributors (AVID), Chamber of Real Estate & Builders Association (CREBA) and the Federation of Philippine Industries (FIA).

From the Board of Investments: Undersecretary Cristino Panlilio minced no words, the country’s economic development and progress clearly outpaced 2011. Though we still do not have the official figures, the undersecretary predicted the resultant figures anyway, and said that the country’s GDP growth would be somewhere between 6.5 percent to 6.8 percent average.

For the third quarter, we hit a high of 7.1 percent, making us the best performer in Asia.  For 2011, the country averaged 4.9 percent in GDP growth.

The growth rate has been spiked basically by the manufacturing sector which caught up somehow with the service sector. Though manufacturing, agribusiness and agriculture took a back seat several years ago, demand for goods and agricultural products have started catching up because of our improved economy, so the manufacturing sector grew substantially in 2012.

This isn’t to say that the service sector has slackened.  This sector which includes the BPO, banks, transportation, insurance and the booming airline industry contributed over 50 percent to our GDP. BPOs continue to grow, according to BOI records. While 2011 registered P369 billion, 2012 approached the P300 billion mark. They also chalked up 10 highly successful outbound missions in 2012.

For 2013, USec Panlilio sees fuel and energy products, electronics, tourism and entertainment centers leading the pack. A big electronics plant has recently been inaugurated in Carmelray Industrial Park in Canlubang.

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For the country’s rural bankers, 2012 was a flat year, not changing much from the previous year though the microfinance sector showed some improvement. This industry is a P170 billion industry, but last year there was a slight decrease in the over-all loan portfolio.

2013 looks bullish for them, riding on the over-all economic projection of the country, and Leandro Garcia, president of the Rural Bankers Association of the Philippines, is looking at a positive growth for the country’s rural banks.

From the government, they hope to be able to push for the bill allowing foreigners to invest substantially in rural banks.  Unlike commercial and thrift banks, rural banks are not allowed to accept foreign equity to boost capitalization which, Garcia said, is much needed by our rural banks. Being mostly family-owned, rural banks rely only on family money, so many of them are under-capitalized. The House has thus far approved only a 40 percent-60 percent equity, so he hopes the Senate will approve a 60-40 ratio.

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It has not been a good year for the country’s poultry growers, this according to the president of the United Broilers and Growers Association (UBRA) president Gregorio San Diego. Although the industry has increased their production capacity, in response to the government’s call to their association members to scale up their production in order to fully supply the domestic needs, other problems have come into play for this local industry. Mr. San Diego says UBRA is vehemently protesting the “special treatment and incentives” given to a big foreign competitor that has started operating in the country in 2012, Charoen  Pokphand. This is a huge conglomerate that is Thai-owned but has reached far across the globe with their extensive businesses. He pointed out that this company already has undue advantage over the local growers in terms of capitalization and technology, and giving them incentives and perks like tax holidays are prejudicial to the local poultry industry.

The Board of Investments has since answered this allegation, saying that under their guidelines for such incentives, Charoen has definitely passed their criteria for incentives because of their “pioneering technology”.  USec Panlilio further added that currently, there are around 45 registered businesses under agribusiness, and of these, only three are foreign-owned.  The 42 Filipino-owned companies are enjoying similar incentives being given to Charoen.

Because of their stepped-up production last year, the UBRA official sees some growth in 2013 (a double-digit one in fact), provided there is a good balance between local production and legitimate importations.

From the government, UBRA has been in talks with the Department of Agriculture which has promised them support by way of funding for their much-needed dressing plants.  However, UBRA hopes that the government can assist them further in enhancing their production and marketing chains as well.

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Now for the local automotive manufacturers.

2012 was a very good year for CAMPI (Chamber of Automotive Manufacturers of the Philippines, according to CAMPI president Rommel Gutierrez.

Last year, the industry saw the full recovery of supply which came critically low in 2011 following the Japan and Thailand debacles. The association reported record sales in October following the disrupted supply a few months before (July), resulting in a positive figure at the end of the year.

CAMPI members were fully represented in the Auto Focus Motor Show & Auto Expo in November 2012, and sales prospects for the four-day show, according to the members, were highly encouraging.  Gutierrez added that the “balance between the completely built-up units and the locally-manufactured units was also evident.”

For 2013, the local automotive manufacturers are even more optimistic as the country’s economic prospects continue to shine brighter.

From the government, they hope to see more consistent policies in place by next year “so that the industry could prosper even more”. This figures in the wish lists of all the industry leaders we have interviewed. And I mean all.

Next week, we shall have the fourth and final part of this month-long series.

Mabuhay!!! Be proud to be a Filipino.

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