A blessed and Merry Christmas to everyone!

As 2016 comes to an end, it is good to review the year and see how the different business sectors fared.  It has been a tradition with B&L to talk with some of our business leaders representing their sectors for their assessment of their performance for the year as well as their fearless forecasts for the following year.

For the export sector, Philexport president Sergio Ortiz-Luis (SOL) shared that with a worsening world market, the Philippines registered negative growth for fifteen months until September 2016 when the sector registered a positive growth of five percent for merchandise exports. Although the numbers for the last quarter are not in yet, SOL said it is unlikely that their forecast of six – eight  percent growth for 2016 will be met.  At best, Philexport hopes for a three  percent growth.

SOL expressed confidence in President Duterte’s administration, optimistic about the surge in foreign direct investments that started in August, emphasizing that this will continue to increase with China as a driving force.

His message to the current administration for 2017 is to re-align the budget allocation for the conditional cash transfers which is now P70 billion and set aside even 10 percent of this for the funding requirements of our MSMEs.

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Philippine Chamber of Commerce & Industry (PCCI) president George Barcelon remains optimistic about the country’s economy with our GDP that registered 7.1 percent higher than the last quarter.  2017, says George, will be another banner year.  However, he admits that we still lag behind our ASEAN neighbors as far as manufacturing is concerned.  Even comparing our foreign direct investments with others, Malaysia, Indonesia and Thailand have Foreign Direct Investments (FDI) twice as much as ours, not to mention Singapore which has FDIs five times higher than ours.

For 2017, PCCI will continue with their advocacy of helping our MSMEs who cannot access funding from commercial banks with their banking needs. The organization recently signed a MOA with Bank of China to hold a series of forums for the financial education for these entrepreneurs. They will also work together with the Philippine Bankers Association through its president Nestor Tan on how our traditional financial institutions can help our MSMEs.

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At the start of B&L interview, the president of the Federation of Philippine Industries (FPI) Jess Arranza shared that many Filipino businessmen are happy with Pres. Duterte’s governance, mainly because of his aggressive drive against drugs, crime and corruption. Business-wise, FPI appreciates his direction towards industrialization which allows the use of coal alongside alternative power sources. As far as our trade relations with countries like China, the FPI head’s view is that we should allow investments to come in for businesses where they have better technology than us so that we can benefit from the transfer of technology.  Foreign investments may come in only if these do not supplant our existing businesses.

He also shared his frustration at the very weak performance of DTI’s Bureau of Standards, specifically citing the agency’s preferential treatment of imported steel bars as against our locally-manufactured ones. He ended the interview with the information that he is filing a case against DTI for this in 2017.

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Indefatigable CREBA (Chamber of Real Estate & Builders Association) president Charlie Gorayeb laments that nothing has been done to address our housing backlog this year.  Every time a new administration takes over, they dutifully submit their 5-point agenda which they crafted 25 years ago but the backlog keeps piling up, signalling that nothing has been done over that long period. Their proposal includes mortgages of at least 25 years with 3 percent interest for socialized housing of units under P1.5 million.

His appeal to the government in 2017:  although Cabinet Secretary Leoncio  Evasco Jr. is a very capable man, a dedicated housing czar must be named, preferably one who has no political ambitions to distract him from his serious job.  Another is to reconsider the position of the Dept. of Agriculture totally banning the conversion of agricultural lands into property development, saying this is actually anti-poor. He cited the Philippines’ total acreage of agricultural lands which are considerably higher than Cambodia and Vietnam, both countries now exporters of rice while we remain to be among the biggest importer of this staple grain.  Sen. JV Ejercito seems to be their ally, hoping to pass the housing legislation in the 17th congress in 2017.

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The Chamber of Mines of the Philippines is still hurting from the audit results of the mining operations of their members.  For 2016, nickel mining saved the year as our nickel exports surged this year with China as our biggest market but only because Indonesia ordered a total ban on nickel exports. Metal prices remain down in the global market, according to the association’s VP for Legal Affairs Atty. Ronald Reidoro, but our copper exports are still viable with Japan, Hong Kong and Singapore as our major buyers while most of our gold goes to Hong Kong.

For 2017, the country’s miners hope that with 4,000 applications pending, new mines will be allowed to operate, and for a comprehensive mineral plan to finally be drafted by the government.  Also, all of our metal output is exported because we have very little mineral processing here, which is a pity.  If we can only address this need, we can export the higher value processed minerals.

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Semi-conductors and electronics continue to be our biggest export, according to SEIPI (Semiconductors & Electronics Industries of the Phil. Inc.) president Dan Lachica and there is no problem hitting their target growth of 2-5 percent for 2016. He also reported expansions, particularly in the Cebu area, although generally, the electronics industry has contracted and margins continue to reduce every year.  Among the challenges he cited were the high cost of power and the lack of power supply security and good quality power; infrastructure especially the urgent need for a modern international airport, and the need for a better band width. The industry directly employs some 350,000 but this could translate to seven times more in indirect employment. They are working closely with DOST which has an advanced materials testing lab and TESDA which provides training for the high school graduates they hire.

The SEIPI head also shared that a miscommunicated presidential message during a China visit of severing ties with the US has rattled their US customers and resulted in order cancellations but Trade Secretary Mon Lopez issued an official statement to clarify the issue.

MABUHAY!!! Be proud to be a Filipino.

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