By Erika Denise L. Dizon, Special Features Writer

As the entire region waits for the ASEAN Economic Community (AEC) to get in full swing, affecting all sectors of the economy and millions of Filipinos, the accountancy profession is anticipating dramatic changes and implications for their industry.

In 2014, a pact to promote the mobility of accountants within the region was signed by the 10 ASEAN member states. With the ASEAN Mutual Recognition Arrangement (MRA) on Accountancy Services in the works, industry professionals are optimistic that accountants in the region will have better opportunities once the pact is fully implemented come 2017.

“The challenge is to upgrade and put the accountancy profession at a stage where they have to be globally competitive because we’re aiming to exceed global standards,” Professional Regulatory Commission-Board of Accountancy (PRC-BoA) Chairman Joel T. Torres said in an interview.

Managing Partner & Chief Executive Officer of Navarro Amper & Co. Greg S. Navarro said local accounting professionals are looking forward to the fulfilment of the MRA. “It is still a work in progress. There’s still many barriers or non-trade barriers that prohibit the free flow of people and skilled labor.”

Mr. Navarro said the Philippines is a top talent source for countries like Myanmar, Cambodia, and Laos that need skilled workers to aid their homegrown accountancy firms. With the AEC, the region becomes almost borderless, making the exchange of talent easier.

Asked about the possibility of having more foreign workers in the Philippines when the AEC comes into effect, Mr. Navarro said this may be viable as local conglomerates see how foreign service providers could offer new perspectives and, in effect, help them put their own firms on a par with companies in the region.

“On the other hand, let’s face it, we don’t pay very well. How do we expect a Singaporean to come here if they’re going to get less than a third of what they’re earning? That’s the constraint,” he said, adding that smaller economies within the region also do not have enough talent to send abroad.

INDUSTRY GROWTH

Still, the country’s accounting industry has continued to expand, which industry experts attribute to the sustained growth of the economy.

“As a professional services firm, we basically serve the business communities. If business is good, then it follows that our performance is good,” Mr. Navarro said, adding that his company has experienced double-digit growth.

In the past five years, Navarro Amper & Co., the local practice of the Deloitte Touche Tohmatsu Limited Global Network, has seen a 12-15% rise in revenue.

Meanwhile, Roberto G. Manabat, Chairman and CEO of R.G. Manabat & Co., Philippine member firm of KPMG International, said his company’s performance in the last three to five years was “excellent” as its annual compounded growth rate grew by double digits or more than 11%.

“If you benchmark our company’s performance against the Philippine economy, I’d say we are doing good,” said Mr. Manabat.

One facet that is still lacking, however, is the industry-wide implementation of a Quality Assurance Review (QAR) program, PRC-BoA’s Mr. Torres said.

Now categorized under the commission’s key priorities through its “Expanding Horizons (EH)” initiative and a major development in itself, the QAR aims to keep local auditors to their toes as it will regularly monitor the quality of their outputs.

“Maybe in a matter of months, it’s just probably another notch to exceed global standards. With this and other projects being put in place, I think we will now be in the position to hurdle that. There are more than 100 projects in that [EH] strategic plan. That can be the starting point,” Mr. Torres added.

The EH agenda is a six-point plan for the local accountancy profession. The strategies include instituting quality and governance measures; effectively regulating the profession; enhancing image and reputation of accountancy; enhancing stakeholders’ involvement and cooperation; instituting structural changes; and providing communication and assistance mechanisms

BRAIN DRAIN

But “brain drain” or the emigration of skilled people from a particular country is a serious hurdle to the future of the accounting profession in the Philippines, the industry officials said.

Mr. Torres said there is an ongoing shortage of accountants because demand for these skilled workers spans from national to worldwide. He said many of the Philippines’ young accountants go to the United States, Europe, and the Middle East to look for higher-paying jobs.

“We hope that there can be a reverse drain that will arise,” he said.

To prevent homegrown talent from going out of the country to practice their profession elsewhere, Mr. Torres said the industry should come up with the proper business climate and offer competitive salaries.

Navarro Amper’s Mr. Navarro said: “You really have to improve the economy and have inclusive growth. Even with the impressive growth, it does not really trickle down as we still have a lot of joblessness. The jobless rate does not really move too much so that’s still a challenge.”

The nation’s perennial problems of infrastructure, peace and order, sluggish internet connections, level-playing field, and traffic, among others, also hinder the industry’s growth prospects, as well.

“The constraints will be the constraints in the Philippine economy,” R.G. Manabat’s Mr. Manabat said. “When those have been addressed, everything will flow smoothly.”

Erika Denise L. Dizon (@erikadzn on Twitter) finished BA Journalism from the University of Santo Tomas.

By Keith Richard D. Mariano, Reporter

On several occasions, President Rodrigo R. Duterte has suggested that Algebra and Calculus be taken out of schools’ required curricula.

The president’s suggestion — proposed during one of his many moments of levity — was based on his experience of spending seven years, instead of the usual four, in high school where he hardly passed any of these two subjects.

“I’ll take out calculus. You all went through high school — what did you learn from calculus, trigonometry? Algebra should be replaced by Business Math,” said Mr. Duterte, who managed to graduate from law school, pass the bar exam, and even become a prosecutor.

Although he appears to be cracking a joke, his proposal to do away with algebra and calculus may make sense in a country of jobless and underemployed people.

In a survey conducted in January, the Philippine Statistics Authority found 2.47 million unemployed Filipinos another 7.88 million underemployed. They accounted for more than a fourth of the country’s 42.5 million labor force.

“We are so obsessed that a person must have a four-year degree before he’s worth anything,” Philippine Franchising Association Chairperson Emeritus Samson C. Lim said in a July 7 interview.

Mr. Lim, dubbed as the father of Philippine franchising, runs the Canadian Tourism and Hospitality Institute in the Philippines, a vocational school that offers one-year diploma and one-month certificate courses.

“We can train the person and in one month, we can get him an on-the-job training in a five-star hotel and my student is practically preferred over students who graduated with a four-year degree from a university,” Mr. Lim said.

The vocational school boasts of meeting international standards, a selling point that came in handy with the foreign education brand Mr. Lim brought to the Philippines through franchising in 2011.

The Canadian Tourism and Hospitality Institute is a franchise of the Canadian Tourism College, a private college established in Vancouver in 1980 to offer hospitality, tourism, airline and adventure programs.

Currently, the vocational school has 150 students enrolled in diploma courses and 300 in certificate offerings.

Mr. Lim ventured into the education business with a question that may have — more or less — prompted Mr. Duterte to push for an education free of algebra and calculus.

“For a developing country, what are the needs, what are the types of people that we need, what are the skills that we need to teach them. I think we have to focus on that,” Mr. Lim said.

“So, when I send you my students, on day one he is working already. He can work, you can put him in a front office, you can put him in a restaurant, you can put him in housekeeping, in the sales, telephone and what have you.”

Win-win situation for employers, workers

The need to acquire skills rather than a college diploma is creating interest from foreign education brands to expand into the Philippines and, at the same time, providing opportunities for Filipinos looking to have a business.

The Philippine has around 1,500 local and international franchise concepts, about half of which are in the food and beverage sector, U-Franchise Sales & Management President and Francorp Philippines Senior Vice-President Sam Christopher Lim said in a June 23 interview.

“Food is food — people will always be interested in food — but education is the next wave,” the younger Lim noted.

Education franchise brands in Singapore, in particular, are looking to expand into the Philippines and other Southeast Asian countries, Franchising and Licensing Association (Singapore) Chairman Donna Lee said in a June 23 interview.

Ms. Lee, who founded the KinderGolf franchise, noted the franchise concepts are mostly in the area of enrichment aside from skills development.

“When I came back from Singapore, I found this seriously addictive math. It’s teaching math in a new way — they actually give you a certain item you can relate that equation to, so that instead of just using your mind, you are using your eyes and other senses,” Mr. Lim said. “The problem there now is because they’re teaching these new math systems now in [Philippine schools], the parents or the grandparents like us can no longer tutor them because we don’t know how that works.”

Businesses offering enrichment programs will supposedly become increasingly important. And a foreign brand will make it a profitable venture.

“Most of my students are children or niece or nephews of OFWs [overseas Filipino workers]. They see the value of vocational schools, the value of an international diploma,” Mr. Lim said.

Keith RICHARD D. Mariano (@kdmariano on Twitter) covers the Philippine Stock Exchange and the Securities and Exchange Commission for BusinessWorld. On weekends, he tries to get some sleep and/or see controversial films.

By Joseph L. Garcia, Reporter

Only two bars in the country made it to Asia’s 50 Best Bars Awards by Drinks International, ABV (ranking at 14) and The Curator (ranking at 16) , both located in Makati. Oddly enough, both of the publicity-shy watering holes are hidden behind other establishments, making them to a certain extent reincarnations of the speakeasy, the secret bars that plagued Prohibition-era authorities in the US while blessing tipplers in the 1920s.

While speakesies began in the 1920s and the early part of the 1930s as a necessity (at least, from the perspective of a drinker), these days, speakeasies are now just for fun, creating an atmosphere of mystery and concealed glamor to accompany excellent drinks. If you’re breaking the rules, might as well look good doing it, right?

Of course, modern speakeasies bank upon the novelty and the surprise of having a bar concealed by a more prosaic establishment, such as say, a hotdog joint (as in the case of ABV). So how do you earn money in keeping a secret, as well as sustaining the growth and the glamor once the secret’s out?

BusinessWorld interviewed Pylon Partners, Inc. CEO and Founder F. Patrick Cuartero during the launch of one of its e-commerce platforms, bevtools.com. Pylon Partners is also the parent company behind ABV, so in terms of expansion and diversification, ABV, through its parent Pylon Partners, has that part down pat. Mr. Cuartero describes Pylon as a venture builder, telling BusinessWorld about 13 other food and beverage establishments in the planning stage, as well as five e-commerce companies, and a digital marketing creatives company. Soon, Pylon plans to open a bar in Boracay, as well as a bar in Kuala Lumpur. According to him, the Kuala Lumpur bar will be in a similar format as ABV, “but more grand in scale.”

ABV only opened last year, and as speakeasies were wont to do, was kept a secret for a while, holding private parties in its premises before going public. “Even… the press… we’d push [them] back for the first three months,” he said.

“While this is secret, if you give a person a really great experience, nobody’s ever going to want to keep it secret… that’s kind of how we grew. People just talked about it,” he said. “Literally, in my phone, I sent 12 text messages,” he said, reminiscing about the first few parties that started it all.

Meanwhile, The Curator doesn’t quite identify as a speakeasy — for one thing, it does serve coffee while the sun is up. Evenings are a different story altogether, with drinks crafted after cars, and other whimsies. For one thing, the place that conceals The Curator happens to be a wine bar, so boozing at this place was never exactly out-of-bounds. “I think it’s because people need to brand [us] as one, to [understand it],” said Jericson Co, Curator cofounder.

“The hidden part is not because we wanted to be cool… making money is cool; having a sign is cool — it’s just because this is the rent that we could afford,” said Mr. Co.

When BusinessWorld arrived for its interview late in June, renovations were under way to convert the wine bar into the coffee shop-side of The Curator — like making an honest person out of it, at last.

There are some commonalities between the two bars: aside from both are hidden, they have very little in line in terms of marketing. Said Mr. Cuartero, “We plan by… intentionally not marketing,” he said of his marketing plans.

“The way we do market though, this’ll be very honest, we market to the international crowd outside of the Philippines… honestly speaking, it [has] worked… people who… come in from Singapore, first place to visit. We have regulars from San Francisco, first place to visit. Literally, right off the plane, they bring their bags here — it’s pretty awesome.”

Mr. Co, meanwhile, guffaws at his marketing budget, ranking in at about P5,000, instead relying on word-of-mouth. As with Mr. Cuartero’s case, Mr. Co also has international clients, recalling trips to New Orleans and Singapore to promote the bar. Mr. Co also has a system of thank-you cards that customers can give to a friend to receive a free drink, and then recalling that one of the cards came back to them — from London.

As well, neither of the two bars accepted sponsorships from external companies (so yes, no cigarette-company ashtrays here, and neither are posters of branded drinks). Said Mr. Cuartero, “No — they tried, in the beginning; we took everything away… that’s the easy way out… my whole thing is, if we’re going to build a lasting brand, I want to make sure that ABV is at the forefront, not other people’s brands.”

Meanwhile, Mr. Co said, “It loses some of the independence… I want to sell alcohol based on its merit, rather than its branding. That’s our perspective.”

When the boys say alcohol, they mean it. The liquor behind the bar is like an adult version of a candy store. No supermarket brands here: in ABV, for example, Mr. Cuartero lists absinthes sourced from the US, France, Germany, and Switzerland, while The Curator boasts of rare whiskeys and odd additives (think liqueur extracted from violets).

Mr. Cuartero says that some of his bottles are sourced from trips abroad, as well as having some guests bring them a bottle, “Because they know that we’re really into it, which is really endearing, and I love that.” Meanwhile, Mr. Co said, “There [are] several companies that bring it in now; it’s getting more and more available.” Both serve cocktails priced at a premium: while Mr. Cuartero’s drinks jump between the P300-P600 levels, Mr. Co keeps his at a steady P450, figuring out the price of each cocktail via food-costing measures.

The business might sound shaky to some: inconsistent sourcing, little or zero marketing plan and budget, no sponsorships, and a deliberate concealment, but then, they made it. According to Mr. Cuartero, after opening last year, they have, “Maybe, a few more months to go,” before breaking even on ABV’s capital, and then pointing out that he average time it takes for food and beverage establishments takes about 30 months. Mr. Co says that his bar has broken even, being founded in 2013. It added of course, to their appeal, the novelty of discovering something new, but this is no longer the case for neither, seeing as the jig is up and everybody (at least, everybody in the know) knows about them. “The hidden part was great for marketing when it started… [but] it’s not what’s going to keep customers coming back,” said Mr. Co.

So what does keep these two afloat? “For us, the focus is really making sure that [that] experience’s is top-notch, or memorable, or top of mind,” said Mr. Cuartero.

Said Mr. Co,”Our idea is if you do something well, if you do it better than anyone else… if you do things that are interesting that [have] a voice, that voice will find its way out.”

Joseph L. Garcia (@josephjlgarcia on Twitter) covers the food and fashion beats for BusinessWorld. He usually has a drink in his hand. BusinessWorld Researcher Jochebed B. Gonzales (@jochebedgon on Twitter) helped provide data to the infographic.