Philippine business— past and future

I am confident that Christmas was good this year for many Filipino families as the tradition we grew up continues to burn – the simbang gabi and the serenity of the Christmas eve mass, the frenetic shopping, the nightly carolling, the family reunions and gift-giving, and the Noche Buena. We still have a few days before the New Year, the official end of the Christmas season, and then we buckle down to work again.

So how did 2015 go for the country’s major industries? Every year, we get the assessments of the different umbrella organizations representing specific business sectors.  Almost all of these sectors now have their own roadmaps, and while some may have successfully met their goals and targets, others have dismally failed.

For the automotive industry, Rommel Gutierrez, president of the Chamber of Automotive Manufacturers in the Philippines (CAMPI), this year appear slightly better than 2014 judging from figures as of October this year.  The CARS program  initiated by the Board of Investments, which will be in place next year is indeed a very ambitious one, doable by the bigger manufacturers. But the conditions, they acknowlege, are very, very challenging. Only three manufacturers can enroll in the program and as of now only two are confirmed.

For 2016, the CAMPI president foresees production targets will breach the 350,000 units mark.

The information technology/business process industies are the best-performing this year, as it has been for the past few years.  Their projected growth for 2015 is between 15 percent - 18 percent and they are on track not only to meet it but in fact to beat their target.  Last year, they posted a 16 percent growth, so the figures keep climbing, and for 2015, they have thus far contributed $21 billion to the Philippine economy. 

The president of IT-BPAP (Information Techology-Business Process Association of the Philippines) Jose Mari Mercado says their industry’s roadmap will end next year, and they are confident they will be able to meet the P25 billion revenue target in their roadmap, and meet as well the direct employment target of P1.3 million.

There are a lot of opportunities for employment in this sector, but the problem is the talent pool.  Every year, our schools turn out about 500,000 graduates, but the level of skills is below what the industry requires. They have a working partnership now with TESDA for scholarships on areas like English which, according to JM Mercado generated 70,000 jobs.  For the longer term, they initiated a 21-unit specialization track to address certain competencies that students lack before they graduate from college. This is called the Service Management Program (SMP) and tackles business communication, critical thinking, even computer literacy. SMP was rolled out in 17 colleges and universities across the country and the first 686 interns last year chalked up 600 hours of internship with BPO companies under the association.

The IT-BPAP credits the efforts and cooperation of the government under President Aquino for their continued success, particularly the Department of Trade & Industry under Sec. Greg Domingo, Joel Vllanueva of TESDA, and the Dept. of Science and Technology.

The Philippines continues to remain on top of the heap in this industry, but our biggest competitor is still India whose biggest sector is IT software.  In this sector alone where the Philippines posted earnings of $2.5 billion, India’s figures ran up to $40 billion.  With a population of 1.1 billion, it is understandable they have a much bigger talent pool than the Philippines which has a population of 100 million. 

India is also big in animation and the creative arts.  While we may have the talents for this, the cost of putting up facilities for animation is too high.  For the software for 2D animation, the license alone costs P500,000! The association hopes the government can step in to provide assistance to the stakeholders, perhaps in terms of financing or incentives.  We could be the next hub in animation, if we can have the right infrastructure.

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The non-life insurance industry, represented by Michael Rellosa,  chairman of the Philippine Insurers and Re-insurers Association (PIRA), assesses 2015 as a good year, better in fact than 2014.  This sector covers motor car and property insurance, and since there are more cars every year, the motor car part of it is thriving well.  On the property coverage, 2015 had a lot less calamities, I.e., super typhoons, flooding and earthquakes than 2014, so the industry was not paralyzed by huge claims.

On the plan of the LTO to virtually dictate on the compulsory third party liability insurance to all motorists registering their vehicles, the association has cried foul, saying that with the Insurance Commission’s stipulation of requiring insurance companies to have a net worth of P500 million by 2016, the capital build-up project of the government weeds out the fly-by-nights.

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This series will run till next year.  Here’s wishing everyone a happy and prosperous 2016.

Mabuhay!!! Be proud to be a Filipino.