Exporters and foreign businessmen’s wish list

The incoming administration would have to address domestic-industry concerns as the country faces an uncertain global economy.
Countries all over the world are recovering from the impact of a global recession stemming from a financial crisis that began in the US about two years ago.

But recent financial turmoil in Dubai and Greece might slow down the expected recovery of markets abroad.

Philippine exporters were especially hit badly by the global economic slowdown. Exports last year contracted steeply, by about a fifth year-on-year, as the country’s major export markets such as the US and Japan were impacted by the global economic meltdown and financial crisis.

By the later part of last year until the first quarter of this year, however, green shoots of growth began manifesting as our markets abroad started to rebound.

Philippine exports in March were up 43.7 percent from the previous year—the highest year-on-year increase posted since the government began to compile exports data in 1991.

This high growth was mainly because of the strong orders forsemiconductors and electronics, which compose more than half of the country’s merchandize exports.

But while export revenues on the whole is on the rise, small and indigenous exporters are hurting from the strength of the peso, which early this year hovered on the P44:$1 level.

Hence, the Philippine Exporters Confederation Inc. (Philexport)—an umbrella organization of exporters in the country—has a wish list composed of “three quick decisions” that the group said the incoming administration should implement in its first 100 days in office to aid exporters.

Institutionalize an ESF

Philexport asked that an Export Support Fund (ESF) be institutionalized and annually be allocated a budget via the

Department of Trade and Industry to finance exporters’ marketing and promotions as well as development efforts.

Also, Philexport requested that the next administration review the mandate of the Bangko Sentral ng Pilipinas, so that it would “make the exchange rate policy a weapon in speeding up and sustaining economic growth and development, not just a tool for reining in inflation.” This would address the exporters’ concerns about the strong domestic currency.

The exporters’ group added that the next president should find ways to reduce the costs of power, domestic shipping and port handling.  They also wish the next president to get rid of the “hidden costs” paid for when applying for business permits.

Local businessmen as well as foreign businessmen have similar concerns, mostly on improving Philippines’ competitiveness and making the business environment attractive to investors.

The Joint Foreign Chambers of the Philippines (JFC), for instance, has come up with specific policy recommendations on the so-called “Seven Big Winners”—sectors that could generate high growth in investments and jobs. The deeply hope these would be implemented by the next Philippine president.
The seven sectors are: agri-business; business process outsourcing (BPO); creative industries; infrastructure; manufacturing and logistics; mining; and tourism, medical travel and retirement.

JFC says about $75 billion in foreign direct investments could be generated and 10 million jobs could be created in the next 10 years if its recommendations are put in place.

For agribusiness, headline recommendations include lowering the cost of farm inputs via improved infrastructure, lower transport costs, cheaper inputs, and ramping up of agricultural education, training and research and development; expansion of the government’s export development projects; and lifting the Comprehensive Agrarian Reform Program as well as abolishing the limits on landholding.

For the BPO sector, JFC recommends the passage of key legislation. These include the laws creating Department of Information and Communications Technology bill, laws on cybercrime, data privacy, holiday rationalization as well as amendments to the Labor Code to remove onerous anti-business provisions; laws giving greater government assistance through incentives for infrastructure projects and international marketing campaigns.

The JFC also wishes the new administration to do something to improve the English-language competencies of the labor force.

For creative industries, recommendations include: creating a  “Philippine Creative Industries Master Plan,” “Creative Industries Development Council,” and “Creative Industries Association;” encouraging local talents to stay in or return to the country; as well as encouraging foreigners to practice in the local creative industries, by, for instance, the removal of restrictions on foreign equity in advertising.

For airports, JFC recommended prioritizing investments in terminals, runways and communications facilities; making the Diosdado Macapagal International Airport the international gateway; and prioritizing international tourism and increasing international carrier services by  reducing costs and implementing the pocket open skies policy.

For seaports, JFC recommends a transportation master plan that would cover Metro Manila and Central and Southern Luzon; reducing shipping fees; bringing up local shipping standards to match international practices; and passing a new maritime law.

For power, recommendations include formulation of policies and plans to finance new power generation projects; transferring management and control of 70 percent of independent power producers’ contracts with the National Power Corp. to IPP administrators within 2010; and initiating a Wholesale Electric Spot Market (WESM) in the Visayas and Mindanao no later than next year, and integrating them with Luzon’s WESM. For water, recommendations include enhancing the credit-worthiness of water supply agencies via performance undertakings, or entering take-or-pay contracts for bulk water supply projects; rationalizing water supply administration and policy by passing a water reform act; and encouraging the private sector to invest in irrigation via the Build-Operate-Transfer (BOT) Law or joint ventures with the government.

For road and rail infrastructure, recommendations include accelerating construction of limited access roads, preferably by the private sector; accelerating rail construction in Luzon by both the public and private sectors; amending the BOT Law and reviewing all major projects; and increasing transparency and reducing controversy over infrastructure projects.

For manufacturing, JFC recommended developing an industrial master plan; reducing costs of doing business; and establishing an export development fund.

For logistics, JFC recommends: developing the Subic and Batangas ports; and allowing direct consolidations of cargoes to Philippine Economic Zone Authority  bonded warehouses.

For mining, recommendations include: removal of redundant approvals and non-performing claims; increasing dialogues between mining firms and community stake-holders; and working closely with indigenous peoples.

For tourism, JFC’s recommendations include improving international connectivity; developing and implementing national and destination master plans; and reducing costs of doing business and mobility for travel and tourism enterprises as well as tourists.

For medical tourism and retirement, JFC recommends that a national policy on wellness and medical travel be developed and implemented; issuance of longer visas for patients and their companions; liberalization of restrictions on foreigners in tourism and retirement zones; and investing in infrastructure development.
Some of these recommendations would entail relaxing restrictions on foreign businesses, so amendments to the Philippine Constitution may be required.

But more than the introduction of programs to boost the country’s industries, foreign businessmen want to see reforms in governance.

In an interview, Hubert d’Aboville, European Chamber of Commerce of the Philippines president, said the incoming president should create confidence among businessmen by showing that that he could steer the country into growth and development.

“The first 100 days in office will be very critical. It is a good time to introduce reforms,” D’Aboville said.

D”Aboville added that a team of good administrators and managers should help lead the country. “Foreign businessmen are eager to see who the next president will appoint to the Cabinet. The Cabinet appointees must be professionals who have integrity and a good track record. They should be people who are unafraid to introduce reforms,” he said. –Ben Arnold O. De Vera Reporter, Manila Times