One in 5 Filipino families is poor

One in five Filipino families was poor in 2012, slightly lower than the 2009 and 2006 poverty incidence figures, which were estimated at 20.5 and 21.0 percent, respectively, according to the National Statistical Coordination Board (NSCB).
 
NSCB Secretary-General Jose Albert noted that although the proportion of poor families has been practically similar between 2006 and 2012, on account of the country’s growing population, the estimated number of poor families has risen from 3.8 million in 2006 to 4.2 million in 2012.
 
The NSCB report points out that in 2012, a Filipino family of five needed P5,513 to meet basic food needs every month and P7,890 to stay above the poverty threshold.
 
These respective amounts represent the food and poverty thresholds, which increased by 12.4 percent from 2009 to 2012. Such increases can be attributed to inflation of about 4.1% on the average per year between 2009 and 2012, the report said.
 
The food threshold is the minimum income required by a family to meet its basic food needs and satisfy the nutritional requirements set by the Food and Nutrition Research Institute (FNRI), while having individuals in the family remaining economically and socially productive.
 
The poverty threshold is a similar concept, but this incorporates costs of basic non-food needs, such as clothing, housing, transportation, health, and education expenses, among others, in addition to costs of basic food needs.
 
The NSCB report noted that the subsistence incidence, which represents the proportion of Filipino families in extreme poverty, was estimated at 7.5 percent in 2012, which is almost the same in 2009 but the figure in 2012 is significantly lower than the 8.8 percent estimate in 2006.  
 
Despite the rise in the number of families in the country between 2006 and 2012, the estimated number of extremely poor families has remarkably remained steady at around 1.6 million.
 
In 2012, on the average, incomes of poor families are short by 26.2 percent of the poverty threshold. This means that a poor family with five members needed a monthly additional income of P2,067 to move out of poverty in 2012, the report said.
 
The NSCB estimates that if government were to provide a mere cash transfer to all poor households in terms of what they would require to cross the poverty line, a total of P124 billion in 2012 would be required to eradicate poverty.
 
The budget of the Department of Social Welfare and Development (DSWD) for the Conditional Cash Transfer (CCT), which provides support to poor households conditioned on these families sending their children to school and on pregnant women receiving pre and post-natal care, was P39.4 billion in 2012. 
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Sustained economic growth to reduce poverty incidence

The National Economic and Development Authority (NEDA) has underscored the need for a sustained high economic growth to further improve the lives of the poor.
Poverty incidence slightly declined in 2012 to 25.2 percent of the population from 26.3% percent and to 19.7 % from 20.5 percent among families in 2009.
Socio-economic Planning Sec. Arsenio Balisacan said: “This is still a slow decline, but we will take it as an indication of accomplishment or a work in progress in the fight against poverty.”
“The growth impact on the poor can be enhanced by deliberate programs and policies to enable the poor to participate in the growth process. The government has been implementing programs and projects like the Pantawid Pamilya Program, the community-based employment program, and the sustainable livelihood program to empower the most vulnerable sectors of our society,” said Balisacan.
Another strategy is to consider regional and provincial disparities in poverty across the country and the need to have more focused strategies based on geographical and spatial considerations.
“Deliberate strategies to promote growth outside NCR, through infrastructure development and investment in human capital provide a pathway towards equalizing development opportunities,” said Balisacan.
“For provinces with high magnitude of poverty but low poverty incidence, it is important to promote higher growth to create more employment opportunities and to improve human capital and introduce flexible work arrangements for the poor.”
Balisacan said that for areas with low magnitude of poverty but high poverty incidence, interventions in these areas should focus on providing social assistance programs that promote economic and physical mobility, while economic opportunities are being created.
“The logistics and distribution system also need to be improved in order to reduce the pressure on food prices.”
Balisacan also stressed the need for an urgent and deliberate focus on disaster risk reduction and mitigation coupled with social insurance protection and income diversification.
The impact of natural disasters on poverty has the power to negate gains in economic growth and development, he said.
From 2010 to 2012, there were eight typhoons that have brought tremendous damages and losses in terms infrastructure and economic activity, Balisacan added.
The National Statistical Coordination Board (NSCB) reported that 13 out of 17 regions across the country experienced a reduction in poverty incidence in 2012 compared to 2009.
The brightest spot is the region of CARAGA, dropping a remarkable 14.2 percentage points in poverty incidence among families.
“This marked improvement reflects the impact on poverty of CARAGA’s robust growth of 10.6 percent in 2012, the second fastest gross regional domestic product growth among all regions, coming from an 8.5 percent growth in 2011,” said Balisacan.
“The increase in poverty incidence in the four regions – SOCCSKSARGEN (XII), the Autonomous Region of Muslim Mindanao (ARMM), Eastern Visayas (VIII) and NCR could be explained by the weak economic growth in these regions and/or the occurrence of major calamities.”
Poverty incidence in the ARMM increased by 6.3 percentage points than the figure in 2009. This could be partly explained by the weak growth in the region’s output.
ARMM’s economy contracted by 0.3 percent in 2011 and grew by a meager 1.2 percent in 2012. Added to this is the high food inflation, averaging 7.1 percent over the 3-year period in the region.

Loyalty programs encourage most Filipino consumers to visit retailers

Majority of Filipino consumers said that loyalty programs available in retail stores where they shopped are more likely to visit retailers, according to a new study by Nielsen, a leading global provider of information and insights into what consumers watch and buy.
 
About 61 per cent of local respondents said that loyalty programs were available in stores where they shopped.
 
Loyalty programs are most prevalent in Thailand and Vietnam, where 69 percent of respondents indicated loyalty programs were available in stores where they shopped.
 
Vietnam and Thailand consumers were also the most likely in Southeast Asia to be enticed by loyalty programs, with 94 percent and 92 percent respectively indicating they were more likely to shop at a retailer that offers a loyalty program, followed by the Philippines, Malaysia, and Singapore (91%) and Indonesia (86%).
 
Globally, 59 percent of consumers said retailer loyalty programs were available at the stores where they shopped and 84 percent said they were more likely to shop at a retailer that offers a loyalty program.
 
“Similar to the rest of Southeast Asia, retail loyalty programs are growing significantly in the Philippines in recent years, both in terms of availability and popularity. These programs are influencing consumers’ choice of store, with Filipino consumers saying that they more likely to be enticed by loyalty program offerings,” says Stuart Jamieson, Managing Director of Nielsen Philippines.
 
“Through these loyalty programs retailers can customize their offers to individual customer needs, thereby increasing the frequency of visits to their stores as well as the amount spent.”
 
The offer of discounted or free products was viewed by 85 per cent of Filipino respondents as the most valuable loyalty program benefit, consistent with other Southeast Asia markets surveyed.
 
More than half of Filipino respondents ranked enhanced customer service as the second most valuable program benefit while Singapore and Vietnam respondents viewed exclusive deals as the second valuable benefit.
 
Of the 16 categories covered in Nielsen’s survey, Filipino respondents showed the highest level of loyalty to mobile phone brands and mobile service providers, a sentiment shared with the rest of Southeast Asian respondents.
 
Health and medical products, and personal computer products also secured high levels of loyalty from Filipino respondents. Conversely, alcoholic beverages were ranked by respondents in the region as the category to which they attributed the lowest level of loyalty, along with online retailers.
 
“Loyalty of consumers to mobile brands and mobile service providers presents clear opportunities to gain and keep the trust of customers. This signifies the importance of developing and nurturing long-term customer relationships,” said Jamieson.
 
According to Nielsen’s survey, quality is the attribute offered by brands, service providers and retailers which would encourage Filipino consumers to switch. This is the highest is the region with 51 per cent.
 
Singaporean and Vietnamese consumers showed the highest price sensitivity, with 52 percent of consumers in both markets indicating they would switch to an alternative brand, service or retailer if it offered a better price.
 
“Filipino consumers placed the highest premium on quality while the rest of the consumers in Southeast Asia also gave importance to quality—higher than the global average,” said Jamieson.
 
“This emphasizes the shifting focus of consumers as incomes increase and their purchase drivers move away from price alone,” he added.

Philippines sustains export growth

The increase in overseas shipments of mineral, coconut, garments and electronic products has helped sustain the Philippine exports growth.
 
Socio-economic Planning Sec. Arsenio Balisacan noted that the growth in exports of mineral products has more than offset the decline in shipments of manufactures, petroleum, agro-based and forest products.
 
Coming from a contraction of 4.6 percent in September 2012, the receipts from mineral products significantly increased to 65.3 percent in the same period this year.
 
Copper metal (36.3%), copper concentrates (75.1%), gold (322.6%), and iron ore agglomerates (214.3%) compensated for the lower value of outward shipments of manufactures (-4.3%), petroleum (-41.4%), total agro-based (-6.5%) and forest products (-43.9%).
 
Agro-based coconut products (13.7%), particularly desiccated coconut (22.8%) and copra meal (78.3%), also supported exports growth, together with garments (12.1%) and electronic products 12.8%).
 
The earnings from electronics recovered from a 0.4 percent contraction in August 2013 and increased by 12.8% year-on-year in September 2013.
 
This was attributed to increased overseas sales of electronic data processing (EDP) (165.6%), control and instrumentation (27.7%), office equipment (11.9%), and communication radar (10.3%). This countered the year-on-year contractions posted by semiconductors (-3.9%), automotive electronics (-94.7%), telecommunications (-43.8%), consumer electronics (-15.9%) and medical/industrial instrumentation (-7.8%).
 
Sec. Balisacan said the increase in export earnings of EDP was buoyed largely by business purchases of personal computers in the third quarter of 2013 while the decline in exports of semiconductors was due to the less buoyant market in Japan, which recorded a 12.9-percent decline in domestic sales in September 2013.
 

“The country posted a positive export performance amid the sluggishness of the sector in some of its neighboring countries like Japan, Thailand, Taiwan, Indonesia, Korea, China, Malaysia and Hong Kong. This is notwithstanding the fact that we trailed behind Vietnam and Singapore,” Balisacan said.

 
Japan recorded the deepest decline of 12.2 percent in the total value of exports due to the depreciation of the Yen against the US dollar as the total value of Japan’s exports valued in Yen increased by 11.5 percent.
 
The exports performance of Thailand (-7.1%), Taiwan (-7.0%), Indonesia (-6.8%), Korea     (-1.6%), China (-0.3%), Malaysia (0.1%) and Hong Kong (3.4%) also lagged behind the Philippines.
 
Japan remained as the top destination of Philippine exports in September 2013, accounting for 22.4 percent of the country’s total export receipts. The US was the second largest export destination, with 15.0-percent share.

More investments in fisheries to enhance export competitiveness

The Philippine Institute of Development Studies (PIDS) has underscored the need for the government to invest more in the fisheries sector to enhance its export competitiveness and boost preparations for the 2015 ASEAN economic community (AEC) .

PIDS Senior Research Fellow Danilo Israel said additional funds in the construction and proper maintenance of port and roads infrastructures and cold chain is necessary.

Israel noted that cold chain and warehousing and specialized storage facilities are important particularly to exporters of frozen fish who need these to maintain the high quality of their exported products.

“While the General Santos Fish Port Complex and other major fishing ports have undergone expansion and improvement, including in the areas of infrastructure and cold chain, more government funds should be infused until adequate investment levels are attained,” he said.

Israel said relevant fisheries associations can help by actively promoting investment in such services among its members, and exploring joint venture with partner companies in other countries.

“In addition, connectivity between fish-producing and fish-processing islands should be pursued, such as by further improving roll-on roll-off (RORO) shipping,” he added.

The study identified the inadequate state of fisheries infrastructure and cold chain and problems related to internal transport and logistics among the chokepoints that constrain the ability of fish traders to effectively compete in international fisheries trade.

“While fish trade between the Philippines and other ASEAN countries is low at present, there is hope that if and when the AEC materializes, the situation could significantly improve. Effectively addressing the different chokepoints mentioned will help promote the chances of success.”

Other impediments in the supply chain cited were import or export clearance, certification and permit processes, transparency and awareness of regulations and non-tariff measures.

“With 2015 just around the corner, the government and the private sector must work together to address these chokepoints and prepare the country for ASEAN competition,” Israel said.

EC urges Philippines to deepen economic reforms

 
The European Commission has underscored the need for the Philippines to deepen economic reforms in order to make growth more inclusive.
 
European Commissioner for development Andris Piebalgs said: “I am pleased to see rapid economic growth in the Philippines in the past few years.”
 
Piebalgs has stressed that the European Union (EU) is ready to support the Philippines on its path to reduce poverty, strengthen the rule of law and support the peace process in Mindanao.
The EU has funded €18 million worth of development projects over the last 12 years aimed at improving laboratory facilities, enhancing control system for fisheries products, training of fish health management and quality assurance on export requirements to the EU.
 
To conform with the EU and internationally accepted standards, the harmonized sanitary and phytosanitary regulation projects were were implemented to ensure continued exports of Philippine fish products to the EU and securing many jobs in poor areas. Other EU-supported projects include trade integration, customs reform and competition administration.
 
Piebalgs is visiting Manila for the first time this week to explore ways on how to further advance bilateral development cooperation between the EU and the Philippines.
 
During his visit, Piebalgs will hold high-level meetings with Presidential Adviser on the Peace Process Sec. Teresita  Quintos Deles, Socio-economic Planning Sec. Arsenio Balicasan, Energy Sec. Carlos Jericho Petilla and Foreign Affairs Undersecretary Evan Garcia.
 
He will visit the Bureau of Fisheries and Aquatic Resources of the Department of Agriculture supported by the EU Trade Related Technical Assistance (TRTA) project and meet with the Asian Development Bank president to discuss on how to enhance collaboration between the EU and ADB in Asia, Central Asia and the Pacific.
 
 
Over the last  two decades, the EU has been a major development partner of the Philippines and has contributed P37 billion worth grants  to combat poverty. The EU development assistance is closely aligned with the Philippine Development Plan 2011-2016. 
 
The main sector of the EU country strategy is health, providing budget support to the universal health care agenda of the government, free health care to the poorest Filipinos and improving facilities and health services.
 
The strategy has helped the reduction of child mortality rate by 50 percent and increased life expectancy of poor Filipinos. 
 
The EU is working jointly with the Department of Health to address the remaining challenges particularly on maternal health and access to health services for indigenous people.
 
Other priority programs of the EU in the country include direct support to the good governance agenda of Pres. Aquino, trade integration and job creation with particular emphasis in conflict-affected Mindanao.

 

The bilateral EU-Philippine program is complemented by additional funding through civil society organizations to address specific aeas such as social issues, the environment, attention to indigenous peoples, human rights and migration with more than 30 ongoing grant projects.

Philippines continues as a strong contact center hub

The Philippines continues as a strong and steady contact center hub solutions in the region with US$10.1 million revenue recorded in the first half of 2013, a rise of 10 percent over the same period in 2012, according to IDC’s Asia Pacific collaboration and video tracker.
 
IDC Asia noted that contact center market ranked the second largest in the unified communication and collaboration (UC&C) space, dominating 28.8% of total revenues in the first half, followed closely behind enterprise telephony (41.0%) and has spearheaded collaboration apps and video conferencing solutions which recorded 22.7% and 7.6% respectively.
 
In a period when the country has undergone its elections in May 2013, the market has not undergone any slowdown in investments, IDC said.
 
“Conversely, it has maximized its potential to be the hotbed for many unified communication vendors, driven mainly by several factors behind the impressive growth rates of the Philippines business process outsourcing (BPO) sectors.”
 
“These include its strong adaptability of human resources, well-educated English speaking workforce, increase availability of commercial hubs, coherent telecommunications infrastructure, deregulation of the telecommunications market as well as tax exemptions incentives.”
 
As the market has gradually moved to higher-value knowledge process outsourcing services (KPO), IDC Asia expects contact center solutions will continue to gain traction in the country.
 
Correspondingly, the market  has accelerated the uptake of enterprise telephony, videoconferencing solutions and collaboration apps in a multichannel space, given that BPO service vertical is now the largest  unified communication ‘s revenue contributor which recorded approximately US$9.1 million in the first half of the year.
 
“The Philippine economy is on a higher growth trajectory and will continue to rise in popularity as a BPO and higher-value services hub. Vendors that have ventured into the contact center space like Avaya, Aspect Software, Altitude Software and Cisco have experienced an astounding growth during 1H13,” says Tan Hwee Xian, Market Analyst at IDC’s Asia-Pacific Communications Group.
 
“Other unified communication products like enterprise telephony, videoconferencing solutions and collaboration apps have also inched up with a double digit growth rate half-over-half which indicates that Philippines remains a sweet spot for IT investors, effectively countering the effects of a global and regional’s economy slowdown,” said Xian.
 
According to IDC’s Asia-Pacific forecast,  the Philippines’ unified communications solutions is estimated to hit US$110.3 million in vendor revenues by 2017, a 13% annual growth rate.  
 
Nevertheless, as cloud and “freemium” app services gradually make inroads into the market, such impact will have greater percussion towards the Philippine unified communication market during the forecast period, including contact center solutions.
 
For instance, Philippine Long Distance Telephone Co (PLDT), through its corporate enterprise arm PLDT ALPHA Enterprise, has recently launched the country’s first cloud-based contact center service targeting BPO and banking sectors.
 
With widespread availability of Unified Communications as a Service solutions in the marketplace, IDC is expecting more OpEx-friendly UCaaS offerings to appear in the Philippines market throughout various industries.