The Chamber of Furniture Industries of the Philippines

The Chamber of Furniture Industries of the Philippines (CFIP) has urged the Philippine government to undertake a timber tracking system.   

 CFIP executive director Salvio Valenzuela said the system is meant to discourage cutting of trees in residual and natural forest areas and ensure chain of custody and legality of sources entering and delivered to wood-processing plants.

Valenzuela said the private sector will also work closely with the government to push for the passage of the Sustainable Forest Management Bill.

The proposed law includes timber tracking and chain of custody with improved governance capabilities in all levels of bureaucracy.

 Valenzuela underscored the need for the Philippines to undertake more efforts to increase awareness on timber legality system. 

Furniture exporters are also asking the government to issue a certificate that the timber they are using come from a legal and sustainable source.

This measure is among the recommendations made by the Philippine delegation to the recent subregional workshop on Timber Legality Assurance System (TLAS) held in Kuala Lumpur.

To continue serving the European, US and Australian markets, the Association of Southeast Asian Nations (ASEAN) has committed to develop national standards on timber legality.

An ASEAN study highlighted ongoing work undertaken by these countries concerning trade integration, including work on an ASEAN single market and national single customs windows as well as the importance of linking this work to trade in timber and timber products.

Inter-agency program benefited Quezon province in Luzon

An inter-agency development program on economic development has benefited the province of Quezon with 100 new small and micro-enterprises and 5,000 new jobs were created.

The International Labor Organization (ILO), Food and Agriculture Organization (FAO) and the Office of the Presidential Adviser on the Peace Process (OPAPP) implemented the program in partnership with the government of Japan and the UN Trust Fund for Human Security.
 
In Bondoc Peninsula, south-eastern part of Quezon province in the Philippines, people earn less than US$1 per day.

Lack of decent work, extreme poverty and armed conflict pushed people to vulnerable forms of employment and forced them to accept whatever work is available just to survive.

In 2009, the magnitude of poor people in Quezon Province reached over 580,000 or 32.5 per cent of its population.

The program also benefited over 4,000 farmers and fisherfolks through training, seed banking including fishing and farming inputs for increased income and productivity.

Through a local economic development approach, the partnership used local resources and invested in developing skills and creating opportunities at the community level.
These included industries such as buri weaving, coco-sugar, coco-coir and geo-nets.
 
In Unisan, a municipality in Bondoc Peninsula, the Buri industry created over a hundred jobs and extended income opportunities for inmates in the provincial jail.
 
These products were featured in a trade fair on 10 June 2013 at the Rockwell Tent, Makati City. Local communities from Bondoc Peninsula brought their products made out of buri and raffia.
 
The trade fair also showcases upland rice, native swine and organic lechon, coco sugar and vinegar, organic soap, arrowroot cookies and flour and vermi-compost products.

Philippines urged to adopt strategic positioning to Asean integration

A top official of the ASEAN Business Advisory Council (ABAC) has stressed the need for the Philippines to adopt same strategic positioning as other Southeast Asian peers to prepare itself for the Asean Economic Community (AEC) in 2015.

Jay Yuvallos, a member of ABAC has expressed confidence that the country’s strategic positioning will be developed after industry roadmaps are reviewed and consolidated.

“The different ASEAN countries in the region have very clear strategic intent. Thailand want to be a hub in Asia. Indonesia want to attract investments. We need to be very smart and start creating our strategic intent,” said Yuvallos.

Yuvallos said the Philippines also needs to communicate its strategic intent not only to the region but also to the rest of the world.

“The intent of the ASEAN is to integrate the ASEAN economy into the bigger world stage. While we move forward towards integration in the world market, we also need to think our own backyard,” he noted.

Yuvallos underscored the importance of industry roadmaps as these address value chain analysis that will create competitive advantage to the small and medium enterprises (SME) and other players.

The SME sector comprises about 99.6 percent of all registered firms nationwide, employs 69.9 percent of the labor force and contributes 32 percent to the economy.

Yuvallos said roles of each sector should be streamlined “because after all, integration happens meaningfully in the sectors.”

To get ready for regional integration, Yuvallos also urged companies to start creating their direction.

“We can move forward towards maximizing, optimizing the opportunities that will come about ASEAN 2015,” he added.   

For his part, Edilberto De Jesus, director and professor emeritus of Asian Institute of Management, said that instead of looking it a threat, the country should consider the benefits of ASEAN integration. 

The AEC aims to transform ASEAN into a single market and production base, integration into the world economy and enable easier movement of capital, investments and people.

“All these are theoretically good for a country. But beyond that, we need to achieve these goals for the AEC so that the Philippine can have this inclusive and sustained growth,” said de Jesus.

More investments in human resources to boost productivity

The Aquino administration has to invest more in human resources which can translate to higher productivity and can help bring higher wages for workers.

This was stressed by UP professor and economist Benjamin Diokno, adding that the country’s growth and development is not only based on gross domestic product alone but can also be attributed to human development.

 
Diokno has agreed to the recent Human Development Report that “few countries have sustained rapid growth without impressive levels of public investment, not just in infrastructure, but also in health and education”.

The report also noted that “rapid expansion of quality jobs is a critical feature of growth that promotes human development”.

In January 2013, the unemployment rate of the country posted 7.1 percent, a slim improvement of 0.1 percent compared to 7.2 percent posted in January last year.

The country still has the highest unemployment among the ASEAN 5 member-countries. In the 1980’s, the country ranked number one in terms of human development index (HDI) among the ASEAN 5 member-countries at par with Malaysia. Today, it ranked behind Malaysia and Thailand, only slightly ahead of Indonesia.

The country has lagged the most among ASEAN member-countries in reducing its shortfall relative to the maximum HDI score.

 
Diokno noted that this is a major challenge for the Aquino administration and the government has to step up its efforts to reduce the shortfall in the years ahead.

To help address this issue, Diokno said that there is a need to revive the manufacturing sector to provide decent jobs for new entrants into the labor force.

This can be achieved by addressing a number of binding constraints in the sector such as lack of infrastructure, high cost of doing business in the country, unreliable power supply, policy inconsistency and the lack of highly skilled manpower.

Philippine inflation rate remains stable at 2.6% in 1st quarter

The Philippine inflation rate remained stable at 2.6 percent as most commodity groups recorded slower growth of prices in May 2013.
 
Socioeconomic Planning Sec. Arsenio Balisacan said the stable general inflation rate in May 2013 relative to the previous month was a result of the slower price increases of major commodity groups, counterbalancing the higher growth in prices of selected food items and lower cutbacks in domestic petroleum prices.
 
The headline inflation is of the same rate as in April 2013 but lower compared to the 2.9 percent rate in May 2012.
 
“This still leads us to an average inflation rate of 3 percent for the first five months of 2013, exactly at the low-end of the Development Budget Coordination Committee (DBCC)’s inflation target of 3.0 to 5.0 percent for 2013,” Balisacan said.
 
Slower growth in prices was recorded for major commodity groups such as alcoholic beverages, tobacco and narcotics (31.1% from 31.4%); clothing and footwear (3.5% from 4.2%); furnishings, household equipment and routine maintenance of the house (3.7% from 4.0%); health (2.7% from 3.1%); communications (0.1% from 0.3%); recreation and culture (1.7% from 1.8%); and restaurants, miscellaneous goods and other services (2.3% from 2.7%).
 
“The inflation rate of alcoholic beverages and tobacco remained elevated at 31.1 percent owing to the lingering effects of higher sin taxes that took effect early in the year. However, this rate was marginally lower than the previous month’s 31.4 percent,” explained Balisacan.
 
Meanwhile, core inflation, which excludes selected volatile food and energy prices, further eased to 3 percent in May 2013. This is slower relative to the 3.1 percent in April and 3.7 percent recorded in May 2012.  The average core inflation from January to May 2013 tallied at 3.4 percent.
 
Headline inflation in the National Capital Region (NCR) increased to 1.8 percent in May 2013, up by 10  basis points compared to 1.7 percent in April 2013, even though lower compared to the 2.3 percent rate in May 2012.
 
Similarly, the inflation rate in areas outside NCR at 2.9 percent in May 2013 was marginally higher compared to previous month’s 2.8 percent, although slightly lower than the 3.1 percent rate in May 2012.

Philippine economy posts strong growth of 7.8% in 1st quarter

The Philippine economy posted a 7.8 percent gross domestic product (GDP) growth in the first quarter of 2013 from 6.5 percent in the same period last year, fuelled by the strong performance in all major sectors.
 
With a sustained government capital spending and upbeat business and consumer sentiment, the first quarter GDP growth was the highest so far under the Aquino administration and also the third consecutive quarter of more than 7 percent growth.
 
Socio-economic Planning Sec. Arsenio Balisacan said the first quarter growth surpassed market and government expectations following robust performance in all major sectors of the economy and  also the highest among ASEAN economies, particularly Indonesia (6.0%), Thailand (5.3%), Vietnam (4.9%), even higher than that of the People’s Republic of China (7.7%).
 
“Business confidence and consumer optimism fuelled this growth, putting to rest doubts cast on the 2012 figures as being due to base effects only,” said Balisacan.
 
The development on the production side was broad based as all major sectors contributed positively to growth during the period. Services expanded by 7.0 percent; industry, by 10.9 percent; and agriculture sector by 3.3 percent.
 
“Impressive performance of these sectors prove that the country is already reaping the benefits of strengthening priority sectors that are potential growth drivers and employment generators,” said Balisacan.
 
Heightened domestic demand led to the local manufacturing sector growing at an impressive rate of 9.7 percent.
 
Also stirring is the construction sector that grew 32.5 percent from January to March this year, indicating a good positioning towards an industry-led economy.
 
“Initially, this was led by infrastructure spending of the government. By the second half of 2012, private construction started to rebound,” Balisacan explained.
 
Retail trade remained strong as the spending capacity of Filipinos continued to grow due to the improving employment situation, higher overseas Filipinos (OF) remittances, and stable inflation.
 
The agriculture sector growth is also catching up with a 3.3 percent growth rate as the fisheries subsector bounced back from a series of contractions to a growth of 5.5 percent during the quarter.
 
On the demand side, capital formation has primarily driven overall growth with its 47.7 percent expansion, surpassing the contribution of household consumption which grew by 5.1 percent.
 
“For the first time, expenditure in capital formation, including other private sector investments such as on durable equipment, contributed more to growth than household consumption expenditure,” said Balisacan.
 
Government consumption also grew by 13.2 percent due to state support for social programs such as the Pantawid Pamilyang Pilipino Program (4Ps), agriculture development programs, and the rationalized MOOE for public elementary and high school under the Department of Education (DepEd).
 
Net exports, however, contracted primarily due to a decrease in external demand for electronic components.
 
“While we recognize our robust performance in the first quarter, we will continue to be vigilant against downside risks and address critical constraints to maintaining this growth momentum,” said Balisacan.
 
He stressed the importance of creating conditions for sustained growth in other sectors or areas with high growth potential and link the poor to these growth centers. 
 
“The faster this can be done, the better it will be for the greater number of our people,” said Balisacan.
 
The government will put emphasis on innovation, technology and research and development as well as facilitate the improvement in labor productivity.
 
“What all these demands is a greater sense of urgency among us in government as well as better coordination between and among the various agencies charged with implementing programs and projects in order to maximize efficiency and effectiveness,” Balisacan explained.
 
The government is committed to maintaining macroeconomic stability through low and stable inflation, and sustainable levels of the fiscal deficit and the external performance indicators.
 
Balisacan stressed that investment grade rating from Fitch and Standard and Poor’s for the country is an opportunity for the business sector to expand their interests and generate more employment.
 
“We remain positive in our outlook and we will translate this into positive action to achieve inclusive growth.  We hope that the private sector will maintain a positive outlook as well, and translate this into greater participation in the growth process,” he concluded.
 

The continued inflow of remittances from our overseas workers accelerated the net primary income from the rest of the world to grow by 3.2 percent boosting the gross national income (GNI) growth to 7.1 percent from 5.7 percent in 2012.

 
On a seasonally adjusted basis, GDP is gaining momentum growing by 2.2 percent in the first quarter of 2013. GNI grew by 1.9 percent. 
 
All major sectors posted positive growth in seasonally adjusted terms for the first quarter of 2013.  In particular, the  agriculture sector posted a growth of 0.8 percent in the first quarter of 2013 from 0.4 percent the previous quarter. 
 
However, the industry slowed down to 2.5 percent growth in the first quarter of 2013 from 4.0 percent in the previous quarter. 
 
But the services sector accelerated to 2.2 percent in the first quarter of 2013 from 1.1 percent in the previous quarter as all its subsectors recorded positive growth.  Positive growth in seasonally adjusted terms across major sectors was noted since the fourth quarter of 2010.
 
With the country’s projected population reaching 96.8 million in the first quarter of 2013, per capita GDP grew by 6.1 percent while per capita GNI grew by 5.3 percent and per capita household final consumption expenditure (HFCE) grew by 3.4 percent.

Filipino business leaders want global cooperation from tax authorities

Majority of Filipino business leaders would welcome more global cooperation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders, according to the latest research from the Grant Thornton International Business Report (IBR).
 
Results released by audit, tax, advisory and outsourcing services firm Punongbayan & Araullo (P&A) showed that 92 percent of Filipinos surveyed would like more tax guidance, compared to 86 percent of ASEAN businesses and 68 percent globally.
 
According to P&A division head for tax Atty. Lea Roque, “The high percentage of Filipinos requesting for more tax guidance shows that taxpayers are at a loss when it comes to the various changes that are being implemented. Taxpayers would welcome more dialogue and consultation with the regulators. Compliance becomes difficult when there is not enough guidance available.”
 
Compared to their peers around the world, local business leaders seem more satisfied with their current tax regime: 76 percent say tax laws and policies are taxing the correct taxpayers at the correct levels, compared to just 28 percent globally; 68 percent believe these same policies are geared to stimulate economic growth, compared to just 31 percent globally.
 
An overwhelming 82 percent of Filipino business leaders also say current tax laws work towards encouraging tax compliance; globally, only 37 percent think so.
 
However, there are respondents who believe the current tax regime does not bring enough economic participants into the tax base: 62 percent of Filipinos polled say not enough people and entities are being taxed, compared to 49 percent globally. And 58 percent believe the tax regime does not facilitate the redistribution of wealth.
 
The survey also asked respondents what they think should be the main source of tax revenue for their government. Twenty-eight percent of local business leaders believe it should be sales tax, while 26 percent say it should be VAT.

MBC lauds Aquino government on strong economy

The Makati Business Club (MBC) has commended the Aquino administration for the continued strong performance of the Philippine economy, again surpassing expectations.
 
“We note that the 7.8% first quarter GDP growth is the highest since the second quarter of 2010, the third consecutive quarter of greater than 7% GDP growth, and the fastest in Asia for this period,” MBC said in a statement.
 
“Once again, this is a testament to the sound macroeconomic foundations of the country, the capable leadership of our economic managers, and the steadily growing confidence of investors in the economy.”
 
The more than double growth of the agriculture sector, from last year’s 1.1% in the first quarter to 3.3% this quarter, led by the recovery of the fisheries subsector from -3.8% to 5.5%; and of industry, from last year’s 5.3% to 10.9%, due to the acceleration of manufacturing and construction, are welcome developments.
 
Significantly, the industry sector outpaced the growth of the services sector. On the demand side, although household and government consumption decelerated and exports contracted, there was a remarkable recovery in capital formation from -31.3% to 47.7%, illustrating an increase in investment spending on construction and durable equipment.
 
MBC believes that the economy is on track to attain the 6%–7% target full-year GDP growth for 2013, and thus encourages greater partnership between the private sector and government in various areas to surpass this goal.
 
“Indeed, there is more work to be done, particularly in creating a policy environment conducive to a sustained increase in investments, which will address the challenges of unemployment and underemployment, and ultimately, inclusive growth,” said MBC.