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Peso may drop on hawkish Fed

THE PESO may weaken against the dollar this week as developments in the European Union (EU) and United States are expected to boost safe-haven buying in favor of the dollar.
The local currency ended last week at P52.45 against the dollar, down four centavos from the previous day, as players covered their short dollar positions.
Week on week, however, it strengthened from the P52.715-per-dollar finish last Nov. 16.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar is seen to appreciate against the peso on safe-haven buying following the EU Brexit Summit as well as likely hawkish statements from US Federal Reserve Chair Jerome Powell.
In the first three days of the week, Mr. Dumalagan said the greenback might move sideways as members of the EU are set to finalize a deal on United Kingdom’s departure from the political bloc.
“However, even if the Brexit deal would be approved by the EU, it still has to hurdle the UK parliament, which is known to have numerous objections about the proposed agreement,” he said in an e-mail.
The dollar could strengthen further towards the end of the week, the market economist said, as Mr. Powell is expected to deliver a hawkish speech which will affirm views of more policy tightening ahead even as the central banker may continue to flag global slowdown in economic growth.
He also noted that the US personal consumption expenditure price index, the Fed’s preferred inflation gauge, may remain flat at 2% which is at par with the central bank’s inflation target. US third-quarter gross domestic product growth may likewise be affirmed at 3.5%, sending the same upbeat personal income and spending for October.
Meanwhile, Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said there might be “some slight upward correction” in the dollar-peso should the government’s budget deficit grew wider “as spending data could have increased beyond the state’s program as reported earlier.”
The government’s October fiscal performance data will be released today.
Meanwhile, Mr. Ricafort said the peso might decline if the US-China trade war continues to expand despite talks between its leaders Donald Trump and Xi Jinping later this month.
However, he noted that lower global oil prices, still at their best level in nearly six months, may offset the slight depreciation.
For this week, Mr. Ricafort expects the peso to trade between P52.10 and P52.40 this week, while Mr. Dumalagan gave a P52.10-P52.80 range. — K.A.N. Vidal

New Bai Hotel in Cebu hitting 79% occupancy

MANDAUE CITY, CEBU — Homegrown Bai Hotel in Mandaue City, which is barely a year in operation, is already enjoying brisk business with an occupancy rate of 79%.
“Normally, a newly-opened hotel has 40-45% occupancy rate and if you are lucky it will normally take you a year to break even. It only took us two months to break even in terms of cash flow and we are also enjoying a record-breaking 79% occupancy rate,” Bai Hotel Vice-President for Operations and General Manager Alfred M. Reyes said during the hotel’s official launch last Nov. 23.
Mr. Reyes said about 61% of their guests are from overseas, with majority from South Korea, followed by Japan, United States and Taiwan.
“India is another big market for the Philippines next to China although there is a challenge when it comes to visa issuance for the Indians,” he said.
The 23-story Bai Hotel has 668 rooms with 10 classifications from deluxe to presidential suite. It houses an executive club lounge, and fitness center, among other amenities. A casino, convention center, and shopping arcade will soon be built in front of the hotel.
“We aim to be a four-star hotel and we can compete with any international hotel given our facilities and services,” Mr. Reyes said.
Bai Hotel has partnered with World Hotels.
Mr. Reyes said Cebu is still best known as a leisure destination but the hotel is positioning itself as a “bleisure” (business and leisure) destination given its location in Mandaue City, which is an upcoming business district.
“Hopefully by next year, we shall have plans of expanding… its either Visayas or Palawan,” he said.
For the long-term Mr. Reyes said they are also looking at other areas like Davao and Cagayan de Oro, two of the main cities in Mindanao. — Carmencita A. Carillo

Organic wine market growing rapidly but to remain niche, study finds

PARIS — The market for organic wine will grow rapidly in the next five years as environmentally-conscious consumers increasingly favor pesticide-free wines, but their market share will remain relatively small globally, a study showed.
In a report released on Friday, wine and spirits consultancy IWSR forecast global sales of organic still wine will top 1 billion bottles by 2022, up from 676 million last year and nearly three times the 349 million bottles sold in 2012.
Growth in the five year period from 2017 to 2022 will be driven by the United States with a more than 14 percent rise followed by South Africa and Norway at 13.5 percent.
The share of organic wines — those produced on vineyards cultivated without chemical pesticides or fertilizers — of the global wine market would remain relatively low at 3.6 percent, compared with 2.4 percent in 2017, IWSR said.
“There is a big margin for organic wine to keep rising,” Jose Luis Hermoso, research director at IWSR told Reuters.
This is good news at a time when global wine consumption is stagnating, even declining in key markets such as France and Spain, he said.
Nearly four bottles out of every five of organic wine sold last year were in Europe, with the three leaders Germany, France and the UK accounting for 50 percent of the market, IWSR said.
In France, the surge in organic wine sales is particularly strong, with the market share seen reaching 7.7 percent by 2022.
Chateau Latour, one of the most prestigious Pauillac chateaux in the Bordeaux region, property of French billionaire Francois Pinault since 1993, obtained its certification as organic wine last month.
But other producers have abandoned their organic projects, often discouraged by growing criticism of the use of alternative pesticides such as copper and sulfur, permitted under organic farming rules, or after their unprotected vineyards were damaged by fungi attacks.
Hermoso said there was uncertainty among European producers about whether to continue using sulfur and he added that mildew did significant damage to the harvest in some regions.
Conversions of vineyards to organic wine in the main producing countries has slowed down recently and IWSR estimates that in 2022 there will be 545,000 hectares dedicated to organic wine in the world, compared to 408,000 hectares in 2017 and 284,000 in 2012. — Reuters

PSE index seen sideways after last week’s gains

By Arra B. Francia
Reporter
SHARES may trade sideways in the days ahead as investors take a breather after the main index’s 250-point increase last week.
The bellwether Philippine Stock Exchange index (PSEi) jumped 0.98% to close at 7,340.18 on Friday, pushing the main index 3.63% higher on a weekly basis.
The financials and property sectors lifted the market, after rising 4.65% and 4.31%, respectively. In contrast, the mining and oil counter dropped 6.43%, dampened by losses in Semirara Mining and Power Corp. and PXP Energy Corp.
Average daily turnover improved by 11% to P8.5 billion, while foreign investors were at a net buying position.
“Going into [this] week, we may see the index trade sideways with a positive bias due to the shortened trading week and investors taking a break after the massive gains we saw this week,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Mr. Mangun said the PSEi’s ability to hold the 7,200 level last week confirms a reversal from its negative trend for the previous nine months, adding that the next major resistance is at 7,500.
“Decreasing oil prices means lower inflation coupled with an appreciating currency will bring investors back into this market and push the index higher. The only concern is the heavy outflow of foreign funds this year,” Mr. Mangun explained.
“(H)owever with western market starting to correct after hitting historic highs this year, there is a possibility that we may start seeing foreign money flow back into our market which will fuel the rally.”
Online brokerage 2TradeAsia.com said catalysts include an indication from the US Federal Reserve’s chair that it would retain its status quo on interest rates. This should give central banks in the region time to fine-tune their respective monetary policies.
“An end to quantitative easing does not spell doom, but the tide has already shifted on the fiscal side. This explains why several are embarking on fiscal expansion mode, to support their respective infra growth story. Fund-raising exercises will top these initiatives, a pattern that will be active for both fiscal & corporate front,” 2TradeAsia.com said in a weekly market note.
The online brokerage also noted that the rise of the financial and property sectors has historically signaled the market’s recovery from a downtrend.
“The other contender is holding firms (+3.4%), specifically those with fortified initiatives on the infra side (i.e., energy, exploration, telco). We anticipate more tie-ups or M&As (mergers and acquisitions) being harnessed in the process, supporting top-line growth angles,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun placed the PSEi’s support at 7,000 to 7,200, and resistance is from 7,500 to 7,800.
Local financial markets will be closed on Friday, Nov. 30 for Bonifacio Day.

COD wedding gala features fashion show by Libiran

CITY OF DREAMS (COD) Manila will be holding a wedding fair featuring sought-after wedding experts including fashion designer Francis Libiran; Feng Shui expert Joseph Chau; wedding stylists Gideon Hermosa, Michael Ruiz, and Teddy Manuel; and its own event planners, food & beverage and culinary team.
“Dream Weddings: A Wedding Gala by City of Dreams,” directed by Robby Carmona, will be held at COD’s grand ballroom on Nov. 30, 6 p.m.
In lieu of a usual fashion catwalk for the presentation for Libiran’s fashion show, Carmona has conceptualized a huge tiered cake-like stage for the bridal fashion show which will include a contemporary dance performance about love and union.
The event also highlights COD’s banquet and signature restaurants with the chefs de cuisine of Crystal Dragon, Nobu, and The Tasting Room and executive chefs offering guests a taste of their respective specialties. Each restaurant’s offerings will be featured on table set-ups by Hermosa, Manuel, and Ruiz.
Meanwhile, Mr. Chau will provide couples with tips on how to add harmony in their married life. TV and event host Janeena Chan hosts the wedding gala.
While the Dream Weddings Gala is not open to the public, engaged couples who are interested in attending can call 800-8080 or e-mail guestservices@cod-manila.com on how to procure and invitation.

China approves Kazakhstan barley, corn to imports

BEIJING — China approved imports of barley and corn from Kazakhstan, the customs administration said on Friday, in a move aimed at diversifying the country’s sources of grain shipments.
The approval came the same week that China launched an anti-dumping probe into barley imports from Australia, its top supplier of the grain, amid strained ties between Beijing and Canberra.
The move will help China meet demand from its feed, spirits and energy sectors, the General Administration of Customs said in a statement on its website.
The agreement, signed on Thursday as Chinese Premier Li Keqiang met with his Kazakhstan counterpart Bakytzhan Sagintayev in Beijing, will have a limited impact on trade, though, said Chinese grains traders.
“It has more political meaning. Logistics will be an issue, and will restrict the volume flowing to China,” said one trader.
Australia exported 6.48 million tonnes of barley to China in 2017, close to three-quarters of China’s roughly 8.86 million tonnes of imports of the grain, worth about $1.5 billion, according to Chinese customs data.
The grain is used in both livestock feed and the brewing of alcoholic beverages.
China also imposed a 25 percent tariff on a list of U.S. products in July, including corn and sorghum, two other major animal feed ingredients, in response to similar moves by Washington.
China has an import quota system for its major grains including corn, wheat and rice. It set the 2018 corn import quota at 7.2 million tonnes. — Reuters

Yields on gov’t debt dip

YIELDS on government securities (GS) dipped amid lower inflation expectations after the bicameral panel approved the rice tariffication bill last week, putting it a step closer to enactment.
On a week-on-week basis, prices of government securities rose as debt yields declined by 8.57 basis points (bp) on average, according to the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s Web site on Nov. 23.
“The Bangko Sentral ng Pilipinas (BSP) seems to be done with the hiking of interest rates as inflation expectations turn to prices going down… [It] could also be due to supply side factors after rice tariffication got approved,” said Noel S. Reyes, first vice president and chief investment officer at Security Bank Corp.
Nicholas Antonio T. Mapa, senior economist at ING Bank NV-Manila Branch, agreed: “Market is clearly expecting [local] inflation to decelerate in coming months, especially with rice tariff bill passed and oil prices sliding.”
Last week, the House of Representatives and the Senate approved the consolidated version of amendments to Republic Act No. 8178, or the Agricultural Tariffication Act.
In the bill, quantitative restrictions on rice will be replaced by tariffs pooled to a Rice Competitiveness Enhancement Fund tasked to develop the domestic rice industry. Once ratified, the bill will be submitted to the President for signing.
Meanwhile, Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort attributed the increase of yields of the short-term notes to the “continued effects of the +0.25-hike in local policy rates, higher government spending data, some premium for short-term funds that cross the year as part of seasonal window dressing by some of the biggest financial institutions as accounting year-end draws closer.”
“Possible +0.25-Fed rate hike on December 19, 2018 despite more dovish comments by some Fed officials may have also led to some uptick on short-term local interest rates recently,” he added.
Yields on the longer-dated securities were at their lowest levels in 1.5-2 months, Mr. Ricafort noted, “amid prospects of easing inflationary pressures as global oil prices declined to new one-year lows recently and the peso strengthened to the best levels in 5.5 months.”
On last Friday’s closing, yields at the short end were the only papers to manage gains from a week ago. The 91-day debt paper gained the most, rising by 10.4 bps to 5.402%. Rates of the 182- and 364-day Treasury bills also climbed by 6.7 bps to end at 6.171% and 6.599%, respectively.
Meanwhile, yields on the two-, three-, four-, five- and seven-year bonds fell 4 bps, 7.3 bps, 8.9 bps, 9.8 bps, and 12.4 bps, respectively, to close at 6.733%, 6.871%, 6.961%, 7.03%, and 7.111%.
At the long end, Treasury bonds showed significant losses, with the 20-year paper recording the biggest drop of 33.4 bps to finish with 7.811%, while yields on 10- and 25-year bonds declined 20 bps and 22.3 bps to 7.135% and 7.945%, respectively.
Looking forward, RCBC’s Mr. Ricafort sees this downward yield movement to persist in the coming weeks.
“For [this] week, the momentum could continue for the easing of long-term interest rates, provided continued decline in global oil prices among one-year lows and sustained peso appreciation among the best in 5.5 months, as both factors may continue to support easing/lower inflation and inflation expectations.”
“Lower inflation in the coming months could lead to further easing of long-term interest rates, a trend that has been ongoing for a month already,” he added.
Security Bank’s Mr. Reyes also sees a “pretty flat” yield curve except for the short-end which he said might continue to rally. “High yields experienced in October might no longer be revisited,” he said.
For ING’s Mr. Mapa, the coming weeks are expected to “positive for bonds” after “BSP finally sounding dovish and done for the year.” — Marissa Mae M. Ramos

OUTLIER: Chelsea Logistics Holdings Corp.

By Mark T. Amoguis
Researcher
CHELSEA Logistics Holdings Corp. (CLC) was one of the most actively traded stocks last week following the official announcement of the Mislatel Consortium — of which CLC is a member – as the country’s new third telecommunications provider.
Data from the Philippine Stock Exchange showed a total of P450.74 million worth of 53.80 million CLC shares having exchanged hands on the trading floor on Nov. 19-23.
CLC shares went up 2% on a week-on-week basis to P7.79 apiece last Friday from the P7.64 finish on Nov. 16. Meanwhile, it shed by 10.3% for the year.
Propelling CLC’s market activity last week was the formal announcement of the National Telecommunications Commission (NTC) last Monday that the Mislatel Consortium — composed of Mindanao Islamic Telephone Co., Inc. (Mislatel), China Telecommunications Corp., and Dennis A. Uy’s Udenna Corp. and CLC — as the official third telecommunications provider in the country after being announced the provisional winner on Nov. 9 for completing the selection process.
The day after the official announcement saw 29.83 million CLC shares being traded compared to the 3.73 million shares having exchanged hands the day before, bringing the stock’s price to an intraday high of P9.5 per share before closing at P8.49 per share. Some traders then took profits the day after, bringing the stock’s closing price down to P7.81.
“The stock has been trading actively to the decision,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.
“As the news formally came out, there were both speculator and profit takers who bought into and sold the issue respectively,” he said.
Unicapital Securities, Inc. certified securities representative Cristopher Adrian T. San Pedro shared the same assessment, saying that the market reaction “was obviously a sell on news given the extended run that it went through since Nov. 7.”
“I believe the market already perceive them as the clear winner given their two competitors were disqualified on the day of the bidding,” he said, referring to the Sear Telecommunications Consortium — led by Mindanao-based TierOne Communications International, Inc. and LCS Group of Companies of former Ilocos Sur Governor Luis “Chavit” C. Singson — and Philippine Telegraph and Telephone Corp.
After last week’s confirmation, the Mislatel group has a maximum of 90 days to submit its business plans among other requirements before it may receive its Certificate of Public Convenience and Necessity (CPCN), which is needed to operate as a telecommunications provider.
A realistic schedule for Mislatel’s start of commercial operations would be by mid-2019, according to Department of Information and Communications Technology Acting Secretary Eliseo M. Rio, Jr.
As soon as Mislatel secures the CPCN, the government will award radio frequency bands of 700 megahertz (MHz), 2100 MHz, 2.5 gigahertz (GHz), 3.3 GHz, and 3.5 GHz to the new telco.
The consortium is also open to partner with smaller telco players as well as incumbents Globe Telecom, Inc. and PLDT, Inc. for faster roll out.
CLC is the holding company of the shipping and logistics business segments of Udenna Group of Companies. Its subsidiaries include Chelsea Shipping Corp., Trans-Asia Shipping Lines, Inc., Udenna Investments B.V., Starlite Ferries, Inc., and Work-link Services, Inc.
CLC’s gross revenues grew by 28.9% to P978.61 million in the third quarter from P759.29 million last year. This brought the nine-month revenue to P3.69 billion, surging by 60.9% from P2.30 billion a year ago.
Meanwhile, its net loss for the third quarter widened by 147.1% to P310.78 million from P125.77 million. Its earnings for the nine months ended September slipped by 71.7% to P43.01 million from P151.83 million last year.
For this week’s trading, Regina Capital’s Mr. Limlingan gave the stock support and resistance prices of P7.05 and P8.50, respectively.
Meanwhile, Unicap’s Mr. San Pedro expects CLC to consolidate between a support level of P7.10 and P7.35 and resistance between P8.50 and P9.00.

How PSEi member stocks performed — November 23, 2018

Here’s a quick glance at how PSEi stocks fared on Friday, November 23, 2018.
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Philippine Stock Exchange’s most active stocks by value turnover — November 23, 2018.
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Farmers wary of politicians getting hands on rice tariffs

By Reicelene Joy N. Ignacio
Reporter
A FARMERS’ organization said the agriculture sector stands to lose revenue worth P60 billion annually if the rice tariffication bill is enacted, and warned that politicians could get their hands on the collected tariffs.
According to the Federation of Free Farmers’ (FFF) national manager Raul Q. Montemayor, “With an annual palay output of about 19 million tons, of which two-thirds are sold in the market, every one peso decline in palay prices will mean P12.7 billion in (lost revenue) to rice farmers.”
“The NEDA (National Economic and Development Authority) is projecting that rice prices will decline by at least P7 per kilo, which will mean an equivalent P4.50 peso decline in the price of palay. Rice farmers therefore stand to lose nearly P60 billion every year. The P10 billion rice fund is very small compared to these potential losses,” Mr. Montemayor added.
Mr. Montemayor said that the tariffs could be diverted by politicians for their own pet projects, as only P10 billion would go to the rice fund.
“Even LGUs will be allowed to receive grants for machinery and farm equipment and compete for the funds with farmers. Only P10 billion from import tariff collections will automatically go into rice fund. Congress will decide how to use any excess tariff collection through the annual budget. This could open the door for politicians to dip their fingers into the rice fund for their pet projects or constituencies,” Mr. Montemayor said.
FFF also does not support the removal of the licensing authority of the National Food Authority (NFA), calling it detrimental to rice producers and farmers.
Ruben D. Presilda, FFF President, said: “They are saying that open competition among importers and market players will ensure that rice prices will go down. What if that does not happen? What if large traders collude to manipulate prices of palay or rice to maximize their profits?”
“Some well-financed groups could be aiming to control the lucrative rice market and would find it easier to do so if there is no NFA to monitor and counter their moves. The agency also has many prime real estate properties along highways and in strategic locations which could be used for malls, condominiums, and other buildings once the agency is abolished and its assets are privatized,” Mr. Presilda added.
Agriculture Secretary Emmanuel F. Piñol said last week that the NFA’s power to license should not be abolished and that the agency could co-exist with the implementation of the rice tariffication bill.
“I am not in favor of the proposal to abolish NFA because it will effectively deprive the poor families access to subsidized rice,” Mr. Piñol said.

PCC says third-player success to depend on regulatory reform

By Denise A. Valdez
Reporter
THE Philippine Competition Commission (PCC) said policy reforms are needed in the Department of Information and Communications Technology (DICT) and the National Telecommunications Commission (NTC) to ensure that the telecom industry’s third player can compete effectively with incumbents PLDT, Inc. and Globe Telecom, Inc.
In a phone interview last week, PCC Commissioner Johannes Benjamin R. Bernabe told BusinessWorld the regulator has flagged the need for reforms to the DICT and NTC, as early as the release of the terms of reference for selecting the third player.
“[W]e in the PCC sat down with NTC and DICT and emphasized to them that what they are providing in terms of frequencies, rights and assets for the third telco will not be sufficient to ensure the third telco will be as competitive and expand its business operations post-award. We pointed out critical regulations that need to be revisited,” he said.
Mr. Bernabe said some examples of these regulations are the distribution of spectrum among the telcos, the allocation of second generation (2G) frequency to the third player, and infrastructure sharing among service providers.
The government is giving the third player radio frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz. Despite this, Mr. Bernabe said PLDT and Globe still own more spectrum for their operations, raising the need to look into spectrum distribution.
“We are for a more rational spectrum (distribution) program. They’re (DICT and NTC) in agreement but the timeline and modality of implementing this program will take time,” he said.
Mr. Bernabe said some options it laid out to the NTC include a clawback option on some frequency currently owned by PLDT and Globe, via a mechanism like increasing the annual spectrum user fee to push the incumbents to give up underutilized frequency.
Another is the ongoing review of PLDT’s and Globe’s acquisition of the 700-mHz band from San Miguel Corp. “[I]n the approval process of NTC of the co-use of these frequencies, there are conditions attached, and among those are improved internet access, improved speed and quality… The natural consequence… is if there has not been significant improvement then NTC can also claw back some of these frequencies currently held by PLDT and Globe,” he said.
The commissioner also noted that the third telco will not be awarded frequency for 2G rollout, as these are exclusively held by the PLDT and Globe. He said PCC data shows only 60% to 70% of the population owns smartphones, and therefore the remaining 30% to 40% are limited to network services powered by 2G such as text and voice messaging.
“Because the third telco doesn’t have the frequencies to have these services, they’re not able to serve 30% to 40% of the market. One solution is come up with a circular which mandates PLDT and Globe to allow the third telco to co-use or engage in roaming,” he said.
With regard to infrastructure, Mr. Bernabe said the government must also start working on the infrastructure sharing policy that would allow more than two tower companies to operate. This way, the third player may start operations without deploying its own cell sites.
The government presented in September a draft policy on infrastructure sharing which limits the installation of towers to only two registered tower companies. Review of stakeholders’ comments on the proposed policy is still pending at the DICT.
Mr. Bernabe said although the commitments of the third player are time-bound, the PCC believes it is not impossible to fulfill, contrary to the doubts raised by PLDT and Globe.
“I think it’s fairly realistic… Of course it’s unrealistic to expect that in six months or one year that the third telco would pose a significant challenge already to the two dominant players. It will require time. But if they play their cards right and all these regulatory reforms are put in place, they can do it,” he said.
The government declared last week the consortium of China Telecommunications Corp., Dennis A. Uy’s Udenna Corp. and Chelsea Logistics Holdings Corp., as well as franchise holder Mindanao Islamic Telephone Company, Inc. (Mislatel) the third player. The group now has 90 days to submit its business and rollout plans to the NTC, among others, before it is given the frequency bands and Certificate of Public Convenience and Necessity (CPCN).
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

DICT to work with DTI to upgrade MSMEs’ e-commerce capabilities

THE Department of Information and Communications Technology (DICT) will soon partner with the Department of Trade and Industry (DTI) to promote best practices in e-commerce among exporters.
Undersecretary for DICTs Regional Operations and Countryside and ICT Industry Development Monchito B. Ibrahim said the partnership upgrades one of the agencies’ projects which currently links 2,000 micro, small and medium entrepreneurs (MSMEs) with strategic outsourcing partner-firms.
“We’ll be working with DTI’s Export Marketing Bureau… we think e-commerce will be more effective for the exporters,” Mr. Ibrahim told BusinessWorld on the sidelines of an event in Makati City.
“We’ll probably do the training. And then they will take charge of identifying which is the right market for our exporters,” he added.
He said DICT’s role will focus on honing exporters’ digital marketing strategies to help them be noticed online.
“More importantly, it’s not just trying to build online presence. It’s how to digitally market your products… Digital marketing is very important. They need to learn it. That’s where we can win,” Mr. Ibrahim added.
He said the growth of Philippine MSMEs is lagging those in other Southeast Asian countries due to the country’s “very very low adoption” of e-commerce technology.
“Look at Vietnam, what helped their MSMEs grow? It’s actually E commerce,” Mr. Ibrahim said, adding that MSMEs from Vietnam, Laos, Cambodia and Myanmar re active in e-commerce platform Lazada.
Although he noted that e-commerce may not be the solution for all MSMEs, especially those serving small targeted areas, “for exporters, it will be the most important multiplier, increasing the market access.”
The Asian Institute of Management’s research arm, Rizalino S. Navarro Policy Center Competition (RSN-PCC), recently released a 2018 SME survey, “Drivers of SME Competitiveness in the Philippines” which found that 94.8% of the 480 respondent-firms it surveyed use digital tools in their businesses to various degrees.
A total of 39% said digital tools are very important for finance and accounting purposes. Other important aspects that digital tools can improve are operations, customer relations and inventory management.
However, SMEs had limited exposure to more advanced technologies for business such as cloud-based tech, digital payments, credit and debit card transactions, and social media use.
“SME productivity can benefit more from levelling-up their usage of more advanced technologies such as cloud-based tech, digital payments, credit and debit card transactions, and company websites,” the RSN-PCC survey found.
“Increasing awareness of the benefits of these technologies, even the use of social media for business, can influence SMEs to use these technologies to increase their productivity,” it added.
Mr. Ibrahim said the DICT and DTI may first focus efforts in the Caraga region where exporters, based on the DICT’s own rural MSMEs-linking project, showed “tremendous” potential for e-commerce.
“We are still studying it but I think and really believe this will be a significant solution to be able to bring our MSMES to be significant global players.”
In 2016, MSMEs accounted for 99.6% of operating firms in the Philippines, while contributing 4.9 million jobs or 63.3% of the total that year, according to the Philippine Statistics Authority.
The PSE estimates that MSMEs account for 25% of the Philippines’ total export revenue while 60% of all exporters in the country belong to the MSME category.
Most MSMEs are able to export via subcontracting arrangements with large firms, or as suppliers to exporting firms. — Janina C. Lim