By. Raynan F. Javil

The Duterte administration has promised to decongest “Imperial Manila” and reduce its prominence in the country’s national life. In so doing, the government — led for the first time by someone from Mindanao — vowed to bring inclusive growth to the countryside.

While businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines’ sunshine industry?

That remains to be a work in progress.

But it doesn’t mean that the private sector and the government aren’t working together to enhance the capacity of cities and towns outside Manila.

If the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told BusinessWorld in an interview.

“Other provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,” said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.

Measuring capacities of towns, cities

To this end, IT-BPM has launched road map which serves as a “prescription” for cities across the country to assess their readiness for the sector’s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.

“We have been publishing what we call ‘The Next Wave City Report’ for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,” IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, “Accelerate PH.”

Mr. Hernandez added that aside from “The Next Wave City Report,” the IT-BPAP also named the top 20 emerging cities to watch out for.

In its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:

• Baguio City

• Cagayan de Oro City

• Dagupan City

• Dasmariñas City

• Dumaguete City

• Lipa City

• Malolos City

• Naga City

• Sta. Rosa City

• Laguna; and

• Taytay, Rizal

Moreover, the emerging cities seen to sustain the growth of the sector are:

• Balanga City

• Batangas City

• Iriga City

• Laoag City

• Legazpi City

• Puerto Princesa City

• Roxas City

• Tarlac City

• Tuguegarao City

• Zamboanga City

He said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.

“I was involved in the last one… in Dipolog. So again looking at what’s available here, how’s the talent, how’s the infrastructure so that’s gonna keep going. So our goal is to keep promoting ten if not 20 cities,” Mr. Hernandez said.

He also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.

Creating another million jobs

He also said that the Philippines’ IT-BPM is now about a tenth of the industry’s global size.

“Our ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There’s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,” Mr. Hernandez said on the new road map.

He also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.

Part of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.

Aside from contact centers, other services that have grown over the past years — and still has the potential to grow even more — are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.

Mr. Hernandez noted that 300,000 jobs — roughly 30% of the industry’s total work force — were provided outside the capital and “part of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.”

Current technological trends present significant opportunities for the Philippines, he said.

Labor pool tricky outside Manila

One of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool “that could actually work in an IT-BPO sector,” Premier BPO’s Ms. Muro also said.

Once you reach out and start expansion outside the capital, “the labor pool gets a little tricky,” Ms. Muro said.

In order to address this concern, Mr. Hernandez said that “the key is making sure human capital is able to get ready” as the landscape in the IT-BPM sector evolves through time.

Moreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.

She said that locating outside Manila is the trend right now for a BPO firm as it is the “cheaper way of expanding.”

BusinessWorld earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.

In a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.

New agency to help industry achieve milestones

Meanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) “will help the industry achieve the new milestones as recommended” in the new road map.

Mr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.

Mr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law – two laws seen to be critical in making the country more attractive in foreign investors.

Moreover the IT-BPAP said that it looks forward for a “strong partnership and collaboration” with the new administration.

The industry association further noted that “embracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.”

“Disruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,” IT-BPAP said.

Raynan F. Javil (@rajavil on Twitter) covers several beats — including the House of Representatives and the Office of the Vice-President — for BusinessWorld.

By Vince Alvic Alexis F. Nonato, Reporter

Within less than a month of President Rodrigo R. Duterte’s presidency, his economic managers have buckled down and began throwing around ideas to improve the flagship infrastructure program, which has been criticized for its slow pace and unenthusiastic response to unsolicited proposals.

Even before Mr. Duterte formally took office, Finance Secretary Carlos G. Dominguez III already issued a pronouncement that marked a reversal from the government’s previous stance.

“We will welcome unsolicited proposals. Government does not have a monopoly over innovative ideas,” Mr. Dominguez said in a June 29 forum organized by the Rizal Commercial Banking Corp.

This was in stark contrast to the position adopted by the government of President Benigno S.C. Aquino III, which had been unexcited about unsolicited proposals.

In fact, only one has so far been approved by the National Economic and Development Authority Board — the Metro Pacific Tollways Development Corp.’s P23.2-billion pitch to build a 13.4-kilometer, four lane road connecting the North Luzon Expressway and South Luzon Expressway.

Mr. Dominguez in the said forum also said the new administration will encourage local government units to “initiate their own development partnerships,” citing the recent inauguration of the P38.9-billion mixed-use reclamation project in Mr. Duterte’s hometown of Davao City.

The following week, National Economic and Development Authority Director-General Ernesto M. Pernia issued another pronouncement addressing the languid pace of the PPP program under the Aquino administration.

“We plan to reduce the time… from the start to bidding,”  said in a briefing after the administration’s first Development Budget Coordinating Committee meeting on July 5. “The average length of time spent from the consideration of project proposal to bidding is about 29-30 months. We will try to cut that down to a third maybe, so things will move faster,” he said.

Focusing on the expenditure aspect, Budget Secretary Benjamin E. Diokno in his first briefing on July 14 said that the government aims to eventually increase the threshold of infrastructure spending to 7% of the gross domestic output. The first Duterte budget, for one, will spend 5.2% of the GDP, or a record P891 billion in 2017.

This was in contrast to the 5% infrastructure-to-GDP ratio committed by the previous administration, which Mr. Diokno claimed was more like “around 2-3% only,” as data was “fudged” by adding capital outlay on top of “pure” infrastructure.

Mr. Diokno added that plans for 24/7 construction on major public works projects in urban centers would also boost expenditure.

Change would not likely come at the expense of stability in the infrastructure sector, with Mr. Dominguez assuring “there will be no hiatus with the PPP projects that are coming up.”

“We’ll go ahead with all of them; we’ll just assume the administration did the right thing and we will push ahead,” he said during the BusinessWorld Economic Forum 2016 on July 12.

PPP Center Executive Director Andre C. Palacios, during the same forum, said the sector was “very happy to hear the new President is saying that the PPP will be playing a key role in the infrastructure program of the Duterte administration.”

“We should understand not only is strong political support needed — sustained political support is necessary,” Mr. Palacios said. “We should understand that the average PPP contract has a life of 25 years, and will involve at least five Philippine presidents in the life of the project.”

Stain on Aquino govt’s infrastructure program

The PPP program basically taps into the third way of financing infrastructure projects — the private sector, as an alternative to direct government funding or foreign loans.

Mr. Palacios in his presentation before the BusinessWorld Economic Forum noted the “huge gap” between the $57 billion that the government of President Benigno S.C. Aquino III was able to budget and the $127 billion needed to address infrastructure needs according to the Asian Development Bank.

“The gap is filled by $5 billion in foreign loans and grants, and $35 billion in private-financed infrastructure PPPs,” he said. “There is still a gap of $30 billion. Now, government could either raise the money and put it in its budget or further tap the private sector.”

The PPP was pitched by President Benigno S.C. Aquino III during his first State of the Nation Address as “our solution” to the country’s pressing infrastructure needs, at a time when “our funds will not be enough to meet them.”

By the end of his term, however, his administration was criticized for various delays, culminating in the failure to reach its target of awarding at least 15 projects.

When Mr. Aquino bowed out of office, only 12 projects with a cumulative project cost of P191.2 billion were awarded.

Already completed were the P2.23-billion Daang-Hari SLEX Link Road (Muntinlupa-Cavite Expressway) Project, the P1.72-billion Automatic Fare Collection System (AFCS), and the P9.89-billion PPP for School Infrastructure Project Phase I.

Other awarded projects are the P17.93-billion second phase of the NAIA Expressway Project, P3.86-billion PPP for School Infrastructure Project Phase II, P5.61-billion Modernization of Philippine Orthopedic Center project, P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building, P64.9-billion LRT Line 1 Cavite Extension and Operation & Maintenance project, P2.5-billion Southwest Integrated Transport System (ITS) Project, P35.43-billion Cavite-Laguna Expressway, P5.2-billion ITS South Terminal Project, and P24.41-billion Bulacan Bulk Water Supply Project.

It was the Philippine Orthopedic Center project that stained the Aquino infrastructure legacy, as winning bidder Megawide Construction Corp. rescinded the contract in November 2015 over the government’s failure to turn over the possession of the project site.

Former Health Secretary Janette P. Loreto-Garin told reporters in March that there were no qualified proposals from interested service providers to take over the project, effectively shelving it.

This was because of the government’s commitment on allotting 70% of the specialty hospital’s capacity to indigent patients or those enrolled under the state-run Philippine Health Insurance Corp. program, with the remaining 30% going to paying private patients.  Private developers have not found the setup profitable enough to pursue.

One project was supposed to have hurdled the bidding stage already, but it ultimately ended in an auction failure.

None of the three qualified groups offered their bids for the P122.8-billion Laguna Lakeshore Expressway Dike Project in March. The developers have withdrawn from the project over qualms about the project’s viability.

Whether the project will have to go back to square one will depend on the feasibility review being done by the Department of Public Works and Highways, Mr. Palacios explained. If the original parameters that turned off developers are kept, the NEDA Board approval would still apply.

Registry project poised to be Duterte govt’s first PPP?

The awarding of the P1.59-billion Civil Registry System Information Technology Project Phase II narrowly missed being wrapped up by the Aquino administration. Instead, it is poised to be the first to be awarded by the Duterte government.

Only one bidder had submitted an offer and the Investment Coordination Committee would have to approve the lone bid first for compliance. Mr. Palacios said this was targeted for the first ICC meeting on Aug. 2.

Meanwhile, the submission of bids for ten projects remained pending. Five of these involve the development of regional airports: New Bohol (Panglao) Airport (P4.57 billion), Laguindingan Airport (P14.62 billion), Davao Airport (P40.57 billion), Bacolod Airport (P20.26 billion), and Iloilo Airport (P30.4 billion).

The other five were: the operation and maintenance of the LRT Line 2, the P18.99-billion Sasa Port modernization project in Davao City, the P298-million Road Transport IT Infrastructure Project, the P18.72-billion New Centennial Water Source-Kaliwa Dam Project, and the P50.18-billion Regional Prison Facility project.

Still in an equivalent stage is the aforementioned NLEx-SLEx Connector Road unsolicited proposal, which would be subject to a Swiss challenge this month.

These pending projects were not free of problems either, with several being beset by delays. For one, the regional prison facility, which will accommodate convicts to be transferred from the congested New Bilibid Prisons and Correction Institute for Women, has been postponed for almost a year over delays in the handover of land at the Fort Magsaysay military reservation.

Meanwhile, the P65.09-billion LRT Line 6 Project and the P170.7-billion North-South Railway Project are in the process of attracting prospective investors for prequalification.

Before the procurement for a PPP project takes off, a feasibility study would have to be prepared first and then evaluated by the concerned agency. Next, the ICC reviews and threshes out technical issues before it is submitted to the NEDA Board for approval.

When the Aquino administration ended, three projects P4.21-billion Integrated Transport System-North Terminal Project, the Rural Dairy Industry Development Project, and the Judiciary Infrastructure Development Project are undergoing feasibility studies. The P536.03-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project, meanwhile, is being evaluated by the DPWH.

The NEDA Board is currently evaluating five projects: the NAIA Development Project (P74.56 billion), the Plaridel Bypass Toll Road (P9.33 billion), the Philippine Travel Center Complex Project (P1.75 billion), the Batangas-Manila 1 Natural Gas Pipeline Project (P14.72 billion), and the New Nayong Pilipino at Entertainment City Project (P1.58 billion).

Delayed projects became political ammunition

In his last SONA, Mr. Aquino simply asked his constituents to “calm down” as the procurement process is long.

Instead, he defended the program by noting that his government has awarded more projects than the six accomplished by the preceding three administrations. Still, he did not elaborate how he planned to prevent further delays in the projects’ implementation.

“It doesn’t matter if I am unable to preside over the groundbreaking or ribbon-cutting. What is important is that these projects are well-planned and legal, so that when they are approved, construction can proceed quickly; the quality of the structure will withstand anyone’s scrutiny,” he said instead.

Perceived delays in the PPP program ended up providing ammunition for presidential candidates in decrying the inefficiency of the government. Opposition leader and former Vice-President Jejomar C. Binay even played with the acronym and repeatedly called the program a “Powerpoint presentation” that has been crippled by “paralysis by analysis.”

By the time Mr. Duterte has emerged as Mr. Aquino’s successor, his economic managers continued to echo the sentiment that the government fell short of reaching its PPP goals. Mr. Dominguez even used the “Powerpoint presentation” term to describe what had transpired under the previous government.

“This is first and foremost an opportunity to bring private sector participation in nation-building,” Mr. Dominguez said in June 29. “The PPP program will, in the new dispensation, no longer be merely a PowerPoint presentation.”

He assured the business sector that the implementation of the PPP program will be reviewed.

Mr. Palacios in a July 12 interview disclosed that the review is already underway, as the PPP Center started discussing with the NEDA how to streamline processes.

He explained that the PPP process tends to be slowest at the level of the ICC, because of its task to thresh out the technical issues before the NEDA Board evaluates a project’s policy implications.

Sustained political support necessary for infrastructure dev’t

On the issue of snail-paced processes, Mr. Palacios pointed out during the BusinessWorld Economic Forum on July 12 that momentum would have to be first built by the Aquino government, to be sustained by the succeeding administrations.

“We should understand PPP programs require strong and sustained political support. We have been successful so far over the past six years and we look forwarded to continuing these good experience of having speedy implementation while maintaining integrity,” he said.

Saying “the challenges to the program really started with the capacity of the agencies,” Mr. Palacios noted the government would have to adjust from a traditional mindset in which it decided the design of the project and took over the operation of the asset once it is built.

“We needed to build the capacity of the agencies to understand they have a different role when undertaking infrastructure with a private partner in the long term. So that took a while,” Mr. Palacios said.

“But, I think the idea of the private sector being a long-term partner for infrastructure has caught on already. So we are there. If we have sustained and strong political support, the momentum can be continued.”

Mr. Dominguez said as much during BusinessWorld’s July 12 forum. “To start with, they were just starting with a new system,” he acknowledged.

At the very least, the Duterte government will pick up on 17 projects that have not been finished when the Aquino administration bowed out.

“We will try to do all of those between now and the end of 2017, maybe even earlier,” Mr. Pernia said on July 12. “Unless there are problems with those projects, I think most of them can go.”

For Mr. Palacios, he looked back at the “sufficient experience in procurement and implementation which are then the basis for proposing policy reforms.”

“What we need to make sure is as we speed up the process we’re also ensuring the integrity of it, because at the end of the day, the cost will be shouldered by the Filipino people,” said Mr. Palacios.

Vince ALVIC ALEXIS F. Nonato (@VinceNonato on Twitter) is the court reporter for BusinessWorld. He breaks down court decisions and rants about anime on Twitter. MARGARITA GONZALES (@famamfa on Twitter) designed and updated the charts.

By Bienvenido S. Oplas, Jr.

Corruption takes place when a person has the power to dispense certain actions or render services that other parties needs. Voters who sell their ballots in exchange for money and politicians buying them are both engaged in electoral corruption. Similarly, procurement officers who favor certain suppliers even if others can offer the same products or services at lower prices are also committing corruption.

Elevate the scene to a city or country level, and we can see or suspect large-scale corruption in various levels. Like a cabinet secretary favoring a particular supplier of construction materials and equipment, or arms and soldier uniforms, or school buildings and textbooks, or hospital equipment and medicines, even if other suppliers can deliver those goods and services at a lower price and/or better quality, corruption occurs.

To reduce or eliminate corruption, the process of procurement and signing of contracts should be made as transparent as possible. And the possibility of prosecution and imprisonment for wrongdoing should also be made as certain as possible. Because while the punishment can be as severe like the death penalty but if the chance of being caught and prosecuted is very small, then people will remain corrupt.

During the BusinessWorld Economic Forum last July 12, 2016, Department of Finace (DoF) Secretary Carlos G. Dominguez III outlined some important anti-corruption measures of the Duterte administration. Among these are the following:

1. Reduce income tax (personal and corporate), raise the income tax exemption, all in at P1 million a year. This will reduce corruption in the payment and collection of income taxes, broaden the tax base and hence, can actually raise revenues overall.

2. Rationalize import permit papers, reduce the number of signatures, conduct random audit of shipments, and undertake certain processes outside Manila ports. This will reduce corruption at the Bureau of Customs (BoC).

3. Accelerate the Run After the Tax Evaders (RATE), Run After the Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs of the DoF. Undersecretary Gil Beltran was appointed as the anti-red tape czar of the Department tasked to cut the transaction processes at the BIR, BoC, and other agencies under the DoF.

4. Maintain transparency in all dealings — the Executive Order (EO) on Freedom of Information (FoI) that will cover the Executive Department will be signed very soon. This will encourage zero tolerance for corruption.

There are other proposals and programs to reduce corruption at the DoF and other agencies, but the above were highlighted in his speech that day.

These are good proposals. Few permits and bureaucratic signatures can lead to a leaner and smaller government. Instead of 8 or 10 directors in one bureau that require 8 or 10 signatures, make it 4 or 5 and the transaction procedures will significantly improve. The number of officials and their offices will also decline and hence, the need for taxes and fees to keep them going will also be reduced. If people have more money in their pockets because government taxation and mandatory fees have declined, that is already one form of public service. Concrete, down to earth public service.

The extent of corruption in the Philippines is captured in various international reports and studies that are reported annually. One such important report is Transparency International’s (TI) Corruption Perception Index (CPI). TI interviews thousands of expats in many countries worldwide and see their perception of corruption or absence of it in the countries where they do business.

Other selected reports are also included in a separate table by TI. For this piece, four of such reports are included in the table below. These are the (a) World Economic Forum’s (WEF) Executive Opinion Survey (EOS), (b) World Justice Project’s (WJP) Rule of Law Index (RLI), (c) Economist Intelligence Unit (EIU), and (d) IHS Global Insights (GI).

The Philippines has consistently scored only between 34 to 38 over the last four years of TI’s CPI annual reports. So out of 167 countries covered in the 2015 Report, the Philippines ranked 95th or within the lower half of the countries covered. And the Philippines’ low ranking is affirmed in its low score in the four other reports.

I am hoping that reforms initiated by the DoF and other departments of the Duterte administration will be implemented and sustained for the next six years. There will be significant improvement in the country’s corruption perception and reduction in actual practices of corruption in many government agencies, from local to national, and from the Executive to the Legislative and Judiciary.

Transparent and lean government is good. It will be beneficial for businesses and taxpayers and good for the officials and ordinary personnel in government. Trust and respect for both sides will also improve.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is the head of Minimal Government Thinkers and a SEANET Fellow. minimalgovernment@gmail.com

By Camille Anne M. Arcilla

Who says there’s no money in art?

Not the artists, their fans, and supporters in the Philippines’ art scene.

After all, experts and observers alike say that the local art market is “more vibrant than ever,” but not yet close to being saturated.

With the rise of social media connectivity and with more artist-entrepreneurs jumping into the bandwagon, the art scene continues to flourish, earning profits for establishments and — most importantly — delivering the creative industry’s rightful share in economic growth.

But just how much exactly has the creative industry contributed to the country’s gross domestic product (GDP)?

Former Cultural Center of the Philippines President Nestor O. Jardin has the answer, enumerating several pieces of data during in his talk, “Arts Management Speak,” held at the College of Saint Benilde in Malate, Manila on June 30.

According to Mr. Jardin, in 2008, the Intellectual Property Office of the Philippines, together with World Intellectual Property Office, commissioned a study to measure the contribution of the creative industry to the Philippine economy, specifically in terms of gross domestic product contribution. Overall, in 2008, the creative industry contributed 4.82% to the GDP while providing 11.1% of employment to the country’s total work force.

The same two organizations conducted another survey in 2014 and the economic contribution in terms of GDP has increased to over 7.34% and the employment rose to 14.4%.

The cultural creative industry (CCI), according to the International Confederation of the Societies of Authors and Composers, marked $2.25 billion or 3% of the world’s GDP in 2015. It produced 29.5 million jobs or 1% of the world’s population.

The Asia and Pacific region topped the world’s CCI contributors, the report said, having $743 billion in revenues or 33% out of total, and generated 12.7 million jobs or 43% of the overall.

“It just shows us that the creative industry has been contributing more in the Philippine economy,” he said. “In 2016, it would [possibly] shot up higher.”

Flourishing visual arts scene

Of all creative fields, the Philippines’ visual arts scene may emerge as one of the biggest contributors to the economy since it is experiencing an upward trend, according to Mr. Jardin.

That scene is flourishing due to “the number of galleries being established, artworks being sold, and Filipino visual artists’ [recognized] in international auction houses,” he said in an interview. Other “support mechanisms” favorable to Filipino visual artists include art fairs such as Art Fair Philippines in Ayala, Art in the Park in Salcedo, and art fairs in SM Aura, which is organized by the National Commission for Culture and the Arts (NCCA).

Art Fair Philippines and Art in the Park cofounder Trickie Lopa said both events are progressing fairly well.

“Art in the Park turned 10 this year and Art Fair Philippines will be celebrating its fifth edition in February 2017. I suppose it would it would not be irresponsible to say that both events are moving along nicely — progressing fairly well,” she said in an e-mailed interview.

Last February, Art Fair Philippines was participated in by 40 galleries, 11 of which are foreign, and was attended by 22,000 visitors. Art in the Park, on the other hand, was joined in by 60 exhibitors in April and was attended by 16,000 people.

“Certainly there is a marked increase from a decade ago — I’m only speaking of what I’ve observed for the visual arts. You have more people attending gallery shows, and there are definitely more galleries today,” she said.

Ms. Lopa added that the country now has a better defined art eco-system: galleries, museums, fairs, auction houses, and art schools. “These elements all contribute to a healthy art scene.”

These upbeat sentiments are also brought about by young Filipino artists who are up to date with global trends in their fields and have already made their presence felt in the international exhibition scene, ManilArt marketing and public relations director Tess Rayos del Sol said.

“With social media connectivity and our facility for the English language, they are able to join the discourse and exchange with artists from all parts of the globe… Much of emerging art draws from multicultural influences and contemporary issues,” she said.

Art as ‘blue chip’ investments

Auction houses have also reaped the benefits of the flourishing art scene.

Salcedo Auctions, which, according to its Web site, “sells work of leading local and international artists and artisans… with the theatricality and high drama of public bidding,” said support from patrons have been “phenomenal” ever since it was established seven years ago.

“We are elated that when we started this thing, it was not crazy after all. When we said we will open an auction house, everyone thought we were looney, that it wouldn’t work. Filipinos are shy, they won’t bid, and they won’t let go of their possessions,” Salcedo Auctions advisor Richie Lerma said.

The establishment’s steady growth can be attributed to two things: the Philippines’ overall economic expansion and the growing familiarity of the people to the auction process.

“[Collectors] are looking at the ‘investment’ quality of collectibles. It’s very important to underscore here that Salcedo Auctions has produced fine arts and collectibles in this scale in the Philippines,” he said.

Salcedo Auctions, which is run by and registered as KRM Management and Services, Inc. in the Securities and Exchange Commission (SEC), posted a gross income of P4,943,750 in 2014 — its latest available info on the SEC Web site — against P1,909,817 in 2013.

“Revenue has gone up year-to-year because we are now auctioning different categories such as jewelry and time pieces, furniture, books, maps, among other things,” Mr. Lerma said.

For his part, Jaime Ponce de Leon of Leon Gallery, another art auction house, said collectors are eyeing rare pieces in modern art and those works by artists who are considered as “blue chip” in the industry.

Leon Gallery reported P12,819,630 in revenues in 2014, the latest data available in SEC.

Mr. De Leon said the art scene in the Philippines has a direct relationship with how the West is doing, and has a positive effect in the Southeast Asia.

“Philippine art is growing. With the interest that is happening now, it should continue its path to be a center for art in Southeast Asia. The Philippine art is one, or if not, the most vibrant in Southeast Asia art scene,” he said.

In terms of survival, ManilArt Exhibitor Relations Director Silverio Ambrosio said auction houses will continue to prosper in the future.

“Auction houses will continue to survive, but keen selections and properly documented artworks will be the order of the day. Auction houses seem to enjoy keen competition amongst them,” he said.

“For as long as we get very good pieces, we encourage collectors to consign with us for as long as they have confidence with Leon Gallery, we will be able to sustain the operations. It’s all about confidence and relationship with collectors,” Mr. Lerma said.

Art market far from saturated

Contrary to what others may think, the Philippine art market is far from being saturated, ManilArt art fair Director Atty. Amy W. Loste said.

“The demand is growing as awareness spreads. In fact, Filipino galleries and artists should continue to actively vie for a bigger share of the international market, like Singapore and Hong Kong, as some areas are benefitting from the promotion of Filipino artists,” she said.

Ms. Loste also noted that countries that have a strong belief in their cultural dominance can actually capitalize on the arts and translate cultural development into the creative industry.

“I think France is a prime example. There is no reason why Filipinos cannot do the same,” she said. “We have a rich and distinctive cultural heritage in art, design, cuisine, music, etc. and with the Filipino diaspora all over the world, and there is no reason why Filipinos cannot claim our rightful place on the world stage.”

But even with a blooming art scene, Atty. Loste nevertheless emphasized the need for government support and policy.

“What we need more of is government support and policy that recognizes art and culture as being in the forefront of national life and integral to the development of our identity as a people,” she said.

Mr. Jardin echoed the same sentiment.

Governments in Asia have already focused on the creative industry and have seen its potential, unlike the Philippines where the creative industry is not even categorized as such in the Department of Trade and Industry.

“In Korea, the arts and culture is financed as an investment, rather than a grant, subsidy, or contribution, with an end view that the government will earn from this investment,” he said.

While creating a Department of Arts and Culture may add another layer of bureaucracy, it would help if someone on a “cabinet-level” would fight for the arts and culture, Mr. Jardin said. That person “can work on a bigger budget for the cultural agencies.”

Nevertheless, with Filipinos’ improved buying power and easy access to information, Mr. Ambrosio said the positive impact in the art scene will somehow continue in the coming years.

“More young Filipinos with money to spare will continue to support the arts. Acquiring art is no longer confined to the elites — it is now part of a lifestyle,” he said.

And with the new administration coming in, artists, art managers and enthusiasts are hopeful that this progress will be sustained and developed more in the future.

“The economic fundamentals are there for the general Philippine economy. The new administration promised to continue the successes of the Aquino administration and I think that would include the arts and culture sector,” Mr. Jardin said.

Camille Anne M. Arcilla (@cam_arcilla on Twitter) covers the arts and theater beat for BusinessWorld. She loves to travel when time and money permits. Margarita Samantha Gonzales (@famamfa on Twitter) designed the chart. BusinessWorld Researcher christine joyce s. castañeda (@cjscastaneda on Twitter) helped provide data to the infographic.