DTI champions cause of MSMEs
Under the administration of President Duterte, the Department of Trade and Industry (led by DTI Secretary Ramon M. Lopez) will be defined by its overall mission to alleviate poverty and uplift the quality of life of all Filipinos. The DTI said this would be done through sustainable economic growth that generates more income opportunities through employment and entrepreneurship.
Lopez, who has been a champion of micro, small and medium enterprises (MSMEs) in the last 11 years with his Go Negosyo advocacy prior to joining the government, shares his insights about this mission.
Q1: Which industries do you consider globally competitive and innovative in the Philippines that are capable of generating quality employment and higher income opportunities?
A: Our mission is to develop innovative, competitive, job-generating and inclusive industries that will create employment and income opportunities and address inequality and bring prosperity for all. These would be industries where we have comparative advantage, and which our country should be known for.
We have studied the industry resource-based, their revealed comparative advantage indices, their job-generating capabilities and respective multiplier effect on the economy and we have come up with the following areas which we should develop and excel in: 12 priority sectors: In the industry: 1) Electronic manufacturing services (auto electronics, medical devices, telecommunication equipment, power storage, civil aviation/aerospace) and semiconductor manufacturing service 2. Automotive and auto parts 3. Aerospace parts 4. Chemicals 5. Shipbuilding: RoRo (rollon, roll-off) as well as small and medium-sized vessels
6. Design-oriented furniture and garments 7. Tool and die 8. Agri-business: food and resource-based processing (cacao, coffee, mangoes, banana, coconut, bamboo, fruits and nuts, palm oil, and other high value crops) In services: 9. Information Technology and Business Process Management ( IT-BPM): higher earning and more complex non-voice services, business process outsourcing (BPO), and knowledge process outsourcing (KPO) segments in medical, financial, and legal services, game development, engineering design in manufacturing, software development and shared services. 10. Transport and logistics 11. Tourism 12. Construction
Q2: What are your priorities in building an efficient supply chain ecosystem in order for producers to provide quality goods and services at affordable prices?
We need to have an efficient set of economic infrastructures such as farm-to-market roads, bridges, seaports, airports, railways for cargo, passengers and RORO vessels and service providers. We have aligned our goals with the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTr) to ensure that business infrastructures fit the needs of the industry sector, in terms of types and geographical location of industries.
There is a national logistics master plan being reviewed and finalized. We shall review policies and support bills that will further improve the air and shipping and inter-modal connectivity and policies to allow more competition in the logistics and transport industry that will further bring down costs.
Q3: Aside from President Duterte’s mandate to have a maximum-three-day turnaround time to get permits, what do you want to achieve to accelerate the ease of doing business in the Philippines?
Wehave streamlined the process and forms for acquiring business permits and licenses that should enable the [applicant to get everything] in two to three days. The form has been shortened to two pages, which is practically a one-pager simple form to fill out, and the second page for assessment. With a streamlined form, we can then automate the setup and further shorten the processing time to less than one hour. Other agency partners in this effort are the Department of Interior and Local Government and the Department of Information and Communications Technology.
Moreover, there is also an ongoing project called “Repeal” to review and rationalize over 25,000 government department orders, rules and regulations to remove inconsistent, irrelevant and old rules, streamline procedures. Thousands of memoranda and orders have already been repealed and the review continues. Moreover, there are reviews being done to prolong the effectivity of licenses issued in order to lessen the frequency of applications. Q4: Do you agree with Sen. Paolo Benigno “Bam” Aquino IV that new businesses should be tax-exempt for two years? Will this also apply to foreign invest- ments?
Yes. For micro businesses, they need to be encouraged to surface and register and not be afraid of the complexities of facing tax revenue officers. There is a need to simplify the tax due for micro businesses, let’s say, having a fixed rate of P500 or P1000 per year, and simplifying the reporting to once a year, rather than a monthly frequency of submitting reports and payments. This is one way to encourage micro businesses to formalize their businesses. Such programs shall also broaden the tax base and generate more revenues.
Q5: Which social enterprises, local or international, would you like to see more of and why?
Human Nature and R2R (Rags2Riches) are two ideal social enterprise models because they are sustainable as business models, innovative and competitive in the market and their products really excel. As they achieve triple bottom line, they really level up their products that become more marketable.
People will continuously purchase your products if they are really good and offer value, and not just for charitable purposes. It is a plus that the product sales will benefit a marginalized group, but the key is the unique value that the products offer.
Their businesses offer real good benefits to the consumers and the workers who would normally get salaries that are higher than minimum wage. Suppliers or farm producers would also get higher prices for their supplies since products are supplied directly, eliminating traders in the supply chain.
Q6: To push for export, you like to encourage clustering and value chain linkages that maximize MSMEs. What exactly do you mean by this?
In essence, the strategic approach is to work on the value chain of many of our key resources, in an effort to add more value to innovative products. Being resource-based, the Philippines stands to gain a potential unique advantage as a major supplier to the world market. Value chain linkages foster partnerships between the MSMEs as suppliers of goods and services and the large enterprises (LEs) as buyers.
It is also known as our inclusive business model, where we link the small farmer or entrepreneur to the value chain of the bigger businesses, to generate a sustainable business arrangement that will allow the small partners to hone their specialization and eventually level up as well. The process includes setting up platforms for MSMEs and large enterprises as a venue for discussion and exchange of information. This is now being done through various fora we hold around the country, or through the use of technology apps that directly link the small producers to the large enterprises. This also includes capacitybuilding to enable MSMEs to adequately comply with the requirements of the larger businesses.
This also involves access to credit for the upgrading require-
ments of MSMEs and establishment of common service facilities such as fabrication labs, coworking spaces, innovation centers, testing labs, and shared service facilities.
We also have corollary initiatives that encourage partnerships between multinational corporations (MNCs) and MSMEs by matching the needs and requirements of the former with the production capability of the latter.
Q7: One of your priorities is consumer protection against unfair trade practices. Over four million Filipinos have joined direct selling companies as independent distributors in the Philippines. Many have fallen victim to illegal pyramiding scams using binary plans that required them to balance recruits than sales volume, a violation of the Consumer Code of the Philippines. As a deterrent, how will you go after these increasing number of pyramiding companies?
Through our consumer protection group, we shall develop an accreditation system with the Securities and Exchange Commission and private groups such as the Direct Selling Association of the Philippines (DSAP) that will review and accredit and control all forms of multilevel marketing (MLM), direct selling and other similar forms of selling and investments/recruitment programs. DSAP is an organization of legitimate direct sellers, where the officers and members police each other as they are guided by an eight-point test on how to detect if the selling system is legitimate or not. Illegal distribution plans and any form of scams should stop since it victimizes a lot of ordinary people.
We should have a positive list of accredited companies involved in genuine and legal MLM after undergoing a process of review and program presentation to a panel of experts from government and private sectors. With the help of other agencies, the public shall be adequately warned of the risks involved in dealing with uncertified enterprises. The public will be encouraged to file appropriate criminal or civil complaints against concerned pyramiding enterprises.