By Erick A. Fabian
PNoy and his Liberal Party cohorts are moving forward in their plan to sell the Philippines, one train system at a time, to Chinese corporate interests.
Department of Transportation and Communications (DOTC) Undersecretary Rene Limcauco is being used as bait for the Chinese train companies, most probably with his consent, in a deadly game being played by Liberal Party appointees and presidential cousin Jorge Licauco.
Limcauco was one of the speakers at the 2013 Asia Pacific Rail, a rail industry event of which the speakers and attendees are mostly from China’s rail industry.
The deals that were made within and after the conference came into play as the MRT-3 expansion plans were rolled out.
Usec Limcauco is co-chair of the Philippine National Railways and scion of the Limcaocos, owners of the Lica business group. His interest in the matter stems from his family’s intent to expand into the lucrative railway industry.
The Lica Group is known for its car dealerships, as a supplier of farming vehicles, and as a real estate developer.
It’s hard not to imagine that direct involvement with the MRT-3 operations will be of utmost profit for the group.
It’s a strategic move for expansion, and Chinese companies are scrambling for the kill.
News publications like South China Morning Post have given out the impression in its report last year that there is a billion-dollar gold rush in the Philippines.
Local transport systems are slowly being doled out by the Aquino administration via the DOTC to Chinese companies with close links to the government of China, as in the case of Dalian Locomotive and Rolling Stock Company.
That President Benigno Aquino is being used as a spineless lackey for Liberal Party agenda is no secret. That he is a willing accomplice to their plans to squeeze and strangle the country’s economy dry of its lifeblood is nothing new either.
But what very few in mainstream media address is that PH Trams’ sudden appearance into the MRT-3 bidding scene looks like a trick orchestrated with deft hands by Aquino’s cohorts and their Liberal Party friends, so that they can keep the MRT -3 pie to themselves.
In Broad Daylight
It seems that very little effort was made by the incorporators of PH Trams to conceal the fact that it was made up of the same people who were either Liberal Party appointees or involved in the alleged Inekon extortion scandal.
It is very telling of how these people think of the public: they assume that the Filipino people are so used to being robbed that doing it outright would make not much of a difference.
This is an act of robbery because Filipino workers and commuters who rely on the train to get to work are not going to get the quality service that they deserve.
Public Safety, High Stakes
Our public safety is being played around in a game of high stakes that favors China’s plans for economic and political expansion in Southeast Asia.
The question still remains as to whether the trams to be supplied by Dalian Locomotive are safe enough to be used with the old Czech-supplied train technology.
The overcrowding in the stations might prove to add to the hazards, not to mention potential casualties should the Dalian trams fail.
PH Trams, despite its partnership with Comm Builders & Technology Corp., still has to create a track record, as it is barely a year old.
The CB & T partnership seemed like it was done as an afterthought, to provide credibility to PH Trams.
After all, the concerned public found it unbelievable that the bidding was awarded to a new company that does not even have a website as of this time.
The practice of government insiders creating a new company to compete in government biddings, under the guise of being a privately incorporated outfit, has long been considered de-rigeur despite being questionable.
Some do it to cut costs, others to make kickbacks.
It often happens when an agency wants public biddings to play out in their favor. Quality of service is often sacrificed in such as practice, and the recipients suffer.
But those things do not matter when those who intend to benefit from these transactions see the money coming into their bank accounts.
Former MRT-3 manager Al Vitangcol’s resignation and his uncle-in-law Arturo Soriano’s leaving from PH Trams sounded like it was scripted, both being part of the game played so that Aquino’s LP appointees can move in without much protest.
Chinese companies have been eyeing prospects in the Philippines and all over the ASEAN region since last year, and most of them involve transport and rail systems.
We should learn from history that those who control the trains, will control the country. The opening of the American ‘Wild West’ in the 19th century was done through robber barons who controlled railroads and trains.
The Aquino administration may end in 2016, but the Liberal Party’s people and system will then be well-established.
Even as the ASEAN starts opening up trade relations in 2015, investors in the region will find that China has already gained a foothold all over, and its political-economic influence is what they will have to deal with.
Remembering History: Connecting the Dots
By Erick San Juan
Recalling the words of the late Senator Claro M.Recto that “in the future, Philippines could be a province of China.” In the ’90′s, We were told by an American lecturer at the Heritage Foundation in Washington DC that the future war in South China Sea could spark between China and Vietnam and the Philippine involvement is inevitable. When my father was still alive, he told me the time will come that possibly the Philippines and many Asian countries will be ruled by China. Thus dividing the world into regions namely: Asia is for China, US controlling north, central and south America, USSR (now Russia) dominating Eastern Europe, Germany managing western Europe and Israel conquering Africa and the Middle East to create a Greater Israel in the process.
This flashback of events is now getting into a reality. In the Asian setting, it started with sweet talks from China’s leaders diplomatic steps in 2013 to reportedly improve Asean-China relations and bring back confidence in the region, charming it’s neighbors with promises of restraint and win-win cooperation. Foreign minister Wang Yi in May 2013, had raised hope in Asean that China was giving first priority to regional diplomacy and China viewed Asean as a valuable strategic partner.
Asean welcomed the visits of China’s President Xi Jinping and Premier Li Keqiang to South East Asia in October 2013. Pres. Xi’s historic remarks to the Indonesian parliament that Asean and China should build “trust and develop good neighborliness” and “stick through thick and thin”.
China also indicated that it’s ‘Maritime Silk Road for the 21st Century Initiative’ was inspired by Admiral Zheng He’s peaceful voyages to South East Asia in the 15th century, which was not about gaining new territories but about commerce and extending Chinese civilization. As a result of these diplomatic statements by Chinese leaders, Asean was hopeful that China was changing it’s approach to it’s maritime disputes with its neighbors. Asean leaders were closer to becoming convinced that the ‘China Dream’ could also be made ‘South East Asia’s Dream’.
Asean agreed to fully and effectively implement the Asean-China Declaration on the Conduct of Parties in the SCS-DOC and actively proposed confidence building measures.
The overall situation in the South China Sea went calmer with both sides exercising restraint.
(Casting Doubt on Neighborliness by Nguyen Hung Son of RSIS-Singapore 5/14/14)
What went wrong? Action speaks more than words.
China issued the 9 Dash line, the new Hainan fishing regulations and introduced an ADIZ(Air Defense Identification Zone) in the SCS.
It was a complete shock to the Asean and the international community when China sent it’s biggest oil rig near Vietnam, claiming the maritime area as it’s own. China even grabbed few reefs and shoals also claimed by the Philippines and installed military barracks. Nguyen concluded that China’s action was deliberate, well-planned and coordinated.
The worst, China even dismissed calls to resolve the dispute through dialogue and other peaceful means. Is this the current version of Sun Tzu’s Art of War?
The real agenda was exposed by Andrew Browne of the Wall Street Journal (5/21/14) citing CNOOC (China National Offshore Oil Corp.) launching it’s first deep water drilling rig in 2012. It’s chairman, Wang Yilin called it “our mobile national territory and a strategic weapon”. He claimed that an oil platform enjoyed sovereign rights wherever it floated, like an offshore island. The gigantic $1 billion rig was designed to roam across the SCS, which China claims almost in its entirety.
It got the ire of the Vietnamese people, who resisted and rammed the Chinese ships. The fury of the Vietnamese continued and attacked the Chinese owned factories on shore. China evacuated thousands of its nationals, many injured and several died.
According to Jane Perlez and Keith Bradsher of Intl. New York Times (5/19/14), ” The deployment of the oil rig is a possible game changer. Its China’s determination to dominate the South China Sea. While Holly Morrow, a fellow in the geopolitics of energy program at Harvard University who served during the George W. Bush administrations National Security Council said, “China has been taking incremental steps, escalating and increasing its presence in SCS. CNOOC is a business but the program is not only about energy, its about sovereignty.”
Since two years ago, China was reportedly able to nudge aside the helpless Philippines from the disputed reefs without a fight. While many nations admired the Vietnamese standing up against perceived Chinese invasion. The world has not forgotten that the Vietnamese fought the Americans in the past and won.
Ken Fuller of the Daily Tribune asked a very timely question–”Will Washington Defend the Philippines? (5/20/14) He said that the US government clarified almost 40 years ago that it was under NO OBLIGATION that the US will honor the provisions of the Mutual Defense Treaty of 1951, nor will spring to the Philippines defense in the event of a Chinese incursion into areas of SCS claimed by this country.
On June 9,1975, US Secretary of State Henry Kissinger even sent a lengthy telegram to the Commander in Chief, Pacific Fleet, with a copy to the US Embassy-Manila stating Washington’s legal interpretation that MDT commitments do not apply in the event of an attack on Spratlys or on GOP(Government of the Philippines) forces stationed there.
The Spratlys were not included in the territory ceded by Spain to the USA in 1898 and excluded from the maps accompanying the presentation of MDT.( You have to read Fuller’s article in full and you will surely get ‘goose pimples’.
The worst revelation came from John Mangun, an American based in the Philippines and columnist at the Businessmirror(5/22/14). He believed that Beijing’s diabolical plan is not only to take over the Philippines power grid but….. It’s a fact: China is not going away and relations and actions must be based on REALITY, NOT FANTASY.
He said that the US government is so out of touch with what’s happening on the ground that US Sec. of State John F.Kerry might go to Beijing to offer to sell the Philippines to China using the same 1898 Treaty of Paris as the legal basis.
“Ano tayo, pambayad utang?” God forbid!
Ph Fastest Rice Producer In Asia
Despite strong typhoons that ravaged agricultural lands last year, Department of Agriculture Secretary Alcala told about 1,500 farmers that they had produced 18.44 million metric tons of rice, enlisting the Philippines as the fastest growing rice production country in Asia.
Alcala lauded the Central Luzon farmers for helping achieve the highest rice harvest in the Philippine history during the Farmers` Lakbay Palay hosted by the Philippine Rice Research Institute in Science City of Muñoz, Nueva Ecija, April 1-4.
The production also made the country 97-percent rice self-sufficient in 2013. Although three-percent short of the 100 percent target, the country, however, registered a 16-percent increase within three years. The country was only 81-percent rice self-sufficient in 2010.
With the rice sector`s performance last year, the agriculture secretary discouraged the public from focusing on the deficit in the 100-percent rice self-sufficiency target.
“We have tried hard. Nawa`y [mapahalagan] natin, lalo na sa mga nasa Manila, ang pagpupunyagi nating mga magsasaka. Hindi ho tayo titigil sa 97 percent. Magpupursige pa din tayo para ang isasaing ni Juan dela Cruz, dito ipupunla, dito itatanim, dito aanihin (May we, especially the city dwellers, value the efforts of the farmers. We’ll not stop at 97 percent. We’ll work harder so that the rice that we’ll serve on our table will be planted and harvested in the country),” Alcala said.
Alcala, who also unveiled the latest rice technologies, urged the farmers to be receptive of new farming practices as this may help them reduce production cost and make the price of rice more competitive in the market.
“We can`t solve problems such as rice smuggling in an instant. We still have a long way to go to stop rice smuggling. As long as our production cost is high, rice smuggling will always be around,” he said in Filipino.
He said that rice smuggling persists in the country because domestic rice prices are uncompetitive to Southeast Asian countries such as Vietnam.“Production cost in the Philippines is [about P11 a kilo] while in Vietnam, it`s around P6,” he said.
Alcala said that if farmers can peg production cost even at P8, rice smuggling will be minimized.At present, PhilRice is on its second season of implementing Palayabangan: 10-5 challenge, a nationwide farming competition that aims to produce 10 tons/ha yield at only P5 input cost per kilogram of palay.
Setting New Sails On Rp-China Relations
This is in the spirit of “Welcome” to the new Chinese Ambassador Zhao Jianua. I’ll highlight the significant elements from the excellent 4,862 word article written by the Chinese Embassy in Manila’s spokesperson and deputy chief of the Political Section, Mr. Zhang Hwa, in response to the Philippine’s filing of its “memorial” to the Arbitral Tribunal.
The Chinese Embassy spokesman’s paper made ten essential points:
1) The Philippines’ push for international arbitration undermined China-Philippines relations as it disregards China’s position;
2) China does not accept the arbitration because “direct negotiations is the most common and preferred way to resolve such disputes… “ and China has successfully solved the boundary issues with 12 of its land neighbors…. 20,000 kms. Of boundary… In 2000, China and Vietnam equitably delineated the maritime boundary in the Beibu Gulf and …. signed the Agreement on Fishery Cooperation….China sees no reason to abandon such successful practices….” Refusal of arbitration is a right under international law which many invoke, denying China this right is “double standard”;
3) China wishes disputes to be settled through bilateral negotiations … “Forcing the arbitration is not conducive to the settlement … “;
4) China’s Basic Position on the South China Sea issue… “the Chinese side has always adhered to resolving relevant disputes with sovereign states directly concerned…. through consultations and negotiations. … and conforms to the consensus that China and ASEAN countries reached in the DOC (Declaration of Conduct)… “;
5) On “The Nature of China-Philippines Disputes… China…. was the first to discover, name, develop and operate on the Nansha Islands….exercised… sovereign jurisdiction….Philippines’ territory was determined by a series of international treaties,… (that) state that the border line of… .the Philippines is 118° East in longitude.… Nansha … and the Huangyan… do not lie within…”
Distance Is Not Relevant
“Some people believe that these islands and reefs are closer to the Philippines, and therefore they belong to the Philippines. This has no basis in international law. Geographical proximity has never been a criterion that determines the ownership of territory. Many countries in the world possess territories far away from their mainland or closer to other countries. .…” 6) Focuses on previous “Consensus” reached in agreements between China and the Philippines … the Joint Statement-PRC-RP Consultations on the South China Sea …. in August 1995 …. The Joint Statement between China and the Philippines on the Framework of Bilateral Cooperation… in May 2000… In 2002, China and the ASEAN… signed the Declaration on the Conduct of Parties…. (DOC),… adhering to negotiations as the mode and not arbitration.
Territories Lost In R.P. Maps
The 7th, on the Huangyan Island (Scarborough Shoal) issue, the paper states “The Philippines once clearly stated that the island is not within its territory. First, a series of international treaties defining the domain of the Philippine territory provide that the Huangyan Island is outside the territory of the Philippines. The then Philippine ambassador to Germany explicitly stated in 1990 in his letter to German radio amateurs that the Huangyan Island is not within the territory of the Philippines. The documents issued in 1994 by the Philippine National Mapping and Resources Authority …. all confirmed …. The Philippine official map issued in 2011 also marked the Huangyan Island outside the Philippine territorial border limits.”
The 8th point on “The Issue of Ren’ai Reef (Second Thomas Shoal)” recalls the commitments of previous Philippine government administrations to “tow away” the stranded Philippine navy derelict there. But the DFA, China states, “on March 14 openly stated the vessel ‘grounded’ 15 years ago was actually meant to occupy the reef, which proves that the Philippine side has been lying for 15 years….The sitting Philippine government was not the one 15 years ago, but as a country, the Philippines is obliged to honor its commitment. A public denial …. will make it lose credibility to the international community.” The 9th point, “Freedom and Safety of Navigation”, states that the “…South China Sea is the main sealane for China’s trade and transportation .… actions taken by China in safeguarding its sovereignty and maritime interests …. do not affect other countries’ freedom of navigation and overflight….”
South China Sea Peace
The paper ends with a Commitment of China to “a South China Sea of Peace, Friendship and Cooperation”, highlighting a measure it proposes to the harmonious climate over the shared waters: China setting up US $ 500-Million maritime cooperation fund to promote maritime cooperation, science, navigation, safety, connectivity, and combating transnational crime; and establishment of a maritime emergency hotline. It concludes: “So long as all parties earnestly implement relevant consensus, adhere to consultations and negotiations, promote practical maritime cooperation and joint development, the South China Sea will become a sea of peace, friendship and cooperation. “
The winds of change in the China-Philippines relations seem to be rallying on change not only in theory but in reality. The surest sign of this was revealed in the April 2 AIM forum “Understanding 21st Century China: All Under Heaven?” sponsored by such big-named institutions as Asia Society, Harvard Kennedy School Alumni Association of the Philippines, Tufts Fletcher School Alumni Association-Philippines, the hangers-on Ramos Peace and Development Foundation Inc. (where did FVR get the money?), and Former Senior Government Officials (hangers-on to hangers-on-governments dragged along by Uncle Sam). Three speakers highlighted the forum: Prof. Marwyn Samuels of Syracuse University ; Dr. Liping Zheng of the Asian Development Bank; and Chito Sta. Romana , the fountainhead of wisdom on China for Filipinos.
Public reactions at the forum were emailed to us by Internet journalist Jerry Quibilan: from Alex to Jerry : “I noticed something very different from the forum today compared to the forum of anti-China activist Raffy Alunan, Roilo Golez and President Ramos also at the AIM in December … They got ex-commodores and ex-commanders of the US 7th Fleet to tell us Filipinos we have to prepare for war with China and shed our blood …We got videos on recycled airplanes and ships to buy for the coming war with China… videos on the Korean war where 10,000 Filipinos allegedly killed 40,000 Chinese. Today President Ramos laughed at the Philippines’ decision to buy 12 new jet planes …. That shook me up. My impression is that Raffy Alunan and President Ramos have noticeably lost their belligerence … They were as nice to China as apple pie. Both said Filipinos should try to understand China and restore normal relations soonest. I am quite puzzled to say the least.”
I suggested an answer to Puzzled Alex: The P20-billion deal to buy the used FA-50 from South Korea has already been signed and sealed; and so the syndicate can now relax the propaganda scare-mongering. Then came this quip from one reactor in the forum, Wilson Lee Flores: “We were colonized four times–the Spanish, the British, the Americans, and the Japanese … Filipinos were killed and …. plundered. On the other hand, what have the Chinese done in over a thousand years here? They just traded and gave us siopao, siomai, mami, and lomi.”
(Tune in to “Sulo ng Pilipino” on 1098 AM, dwAD, Tuesday to Friday, 5 p.m.; catch GNN’s Talk News TV with HTL on Destiny Cable Channel 8, SkyCable Channel 213, and http://www.gnntv-asia.com, Saturday, 8:00 p.m. and replay Sunday, 8 a.m., this week on “Meralco siphoning capital out of the country” with Butch Junia and “Consumer protection groups: Unite!”; visit http://newsulongpilipino.blogspot.com; text your reactions to 0917-8658664)
Entrepreneurship in Relation to ASEAN 2015
ONE more year and the member countries of the Association of Southeast Asian Nations (ASEAN) are gearing towards freer and wider market in its Economic Integration pushing for the realization of the ASEAN Economic Community (AEC). Such countries are Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Lao PDR, Myanmar and Cambodia; with China, Japan, and South Korea in the ASEAN Plus.
To those who are not so familiar with the ASEAN Economic Integration, let me put it in simple terms – “free-flow”. With it, people would be allowed to purchase, sell products and services, work and invest in any of the member countries of the ASEAN with lesser restrictions unlike what we are used to – strict protectionism. Instead of having to spend so much in terms of tariffs and complying with bloody requirements, strict procedures and other trade burdens, trading would be a lot easier, because the aim of the ASEAN is to have zero or near zero trade barriers. This would be enjoyed by all ASEAN member countries. In addition, Southeast Asians wanting to work overseas (in ASEAN countries) would experience easier processes. Free-flow of work-force would happen. Investors could capitalize their resources freely as they expand from one nation to another nation in the ASEAN.
Entrepreneurs would directly benefit from the ASEAN Economic Integration. There is a lot to be excited about for them.
The Philippines would be able to compete in the global setting through the one market and production base of the ASEAN. In this sense, there would be unity and more productivity among the member countries. Ironically, as member countries compete in terms of the ability to offer lower prices to consumers brought by removing or lessening trade barriers, the whole of ASEAN could benefit as a group – bonded together in creating economic progress. The free-flow would give reason for entrepreneurs to be able to cut costs for their production materials, equipment and manpower, because they would be able to get it at significantly cheaper amounts. They could have the needed edge to compete with the other larger companies in the whole world.
At a regional scale, the lending and borrowing from banks would be easier as it would have to adjust with the changes and accompany the needs for capitalization of entrepreneurs. I believe that bank transactions between and among ASEAN countries would be a lot busier compared before and it would mean significant money coming in and out of the country.
The country’s local government units (LGUs) are being improved to become business-friendly and competitive. LGUs have programs that streamline Business Permits and Licensing System (BPLS) and develop the economy through the Local Economic Development (LED) programs. In this way, the country’s budding entrepreneurs who would like to take the opportunity to do business in the ASEAN would have better access to acquire the necessary documents they need to possess in order to establish legitimate enterprises.
Free-flow could not flourish if not for state-of-the-art infrastructure as well. Entrepreneurs know the hassle of transporting precious goods from one point to another. Even though we already have some notable infrastructure, there is still so much that need to be improved. With the ASEAN Economic Integration, lagging behind would not be an option. The budget and plans in developing infrastructure would have to be applied, so that the country would be able to connect with the member nations internally and externally – roads, bridges and ports would have to be made. Entrepreneurs would be able to transport their products in the country more safely and accessibly, in all of its provinces and cities and of course out of the country to all other ASEAN countries. Consequently, entrepreneurs that focus on the tourism sector would benefit from the ease of travel. Good news for all businesses in our tourist spots.
The ASEAN Economic Integration would also mean more opportunities for the country to develop its communications and information technology facilities. In this age of high technology, entrepreneurs could benefit even more from the World Wide Web when they try to compete with the tigers and reach their customers in the global setting. We know of it as entrepreneurs have established their on-line stores which are gaining more and more attention from customers who would rather remain in the comforts of their homes and order the latest products at best deals! Entrepreneurs who are home-based and who are mostly just starting up do business on-line. Why not? Communications brought by the internet has proven to be very effective and efficient.
With free-flow, the market is even wider and tougher and we could expect even greater – tons of exportation and importation dealings happening from one corner of the world to another with the use of the internet. Imagine how else entrepreneurs could speed up the increase of their sales, but with the use of the continually developing communications and information technology! Almost everything could be just one click away from happening. In order to “go with the flow”, the free-flow would have to be accompanied with improved communications and information technology.
Investors coming in the country for expansion would provide entrepreneurs that sub-contract for more opportunities to do business. Entrepreneurs who would like to invest in another ASEAN country would be encouraged and would enjoy none, if not fewer restrictions.
The Philippines would have to adjust and better its competitiveness as it would need to keep up with the requirements of the AEC and integrate with all member countries. There would be no other sensible way, but to improve. Sink or swim they say, but I am confident, our country’s entrepreneurs would have what it takes to take advantage of the free-flow and run with the tigers.
“Rising as one: The Filipino Nation Towards The ASEAN Economic Integration” by Local Government Academy
Boon or Bane?
The Philippines is not ready for the Initiative for ASEAN Integration (IAI) in 2015. The Initiative for ASEAN Integration refers to reducing various forms of disparities among and within member States where some pockets of underdevelopment persist, which could narrow the development gap in the region.
With the integration, people would be allowed to purchase, sell products and services, work and invest in any of the member countries of the ASEAN with lesser restrictions unlike strict protectionism. This would be enjoyed by all ASEAN member countries.
But according to Asian Development Bank, the economic integration of the Association of Southeast Asian Nations (ASEAN) will likely not be attained by 2015. Although various reasons were cited for the continued difficulties of attaining the AEC targets, what stands out is the unawareness of the private sector.
Since 2010 when this integration was first hatched, the Philippine government failed to prepare for it. In trade relations alone, where products are supposed to be exported to a less-restricted environment, the recipient chooses which products to accept or to reject. Naturally the more superior product in terms of quality and price are allowed into the member country. How can we export cheaper products when the cost of production is high? Electricity and labor costs, which are factors to production, are high.
Also, promoting greater mobility of skilled workers and better regulation and management of unskilled labor movements are to be addressed. In the Philippines, unemployment and underemployment are pervasive. Skills do not commensurate with job requirements. Can we compete with our ASEAN neighbors in the labor market?
What about our infrastructure?
There are so many things that we have to prepare for in order to be competitive. If we are not competitive, what benefit can the Initiative for ASEAN Integration do for us? Nada.
The Travails of MSMEs (part 2)
by Miriam Tan-Fabian
LET us continue where we left off on the challenges, issues, and obstacles that MSMEs need to hurdle just to start, maintain, and sustain micro, small, and medium businesses.
Market transaction costs
Aside from financial support, MSMEs also need to contend with transaction costs. The Philippines is again mentioned as one of the countries with the most expensive power rates in the ASEAN. In fact, if you look at your electric bill, one of the items you are paying for are costs of transmission loss. Instead of customers shouldering this cost, should not Meralco shoulder such inefficiencies which the company should deal with and not customers? While this is already one concern for ordinary citizens like us, it is even a bigger headache for business owners whose power needs are several times more than individuals or even whole families.
In the electronics sector, currently one of the fastest growing industries, electricity is a major manufacturing cost. In the case of Myanmar which has an unreliable power and seasonal black outs, the cost of power is a real limitation even in the agro-processing industry, specifically, the edible nut industry which requires milling machines to process. More importantly, to ameliorate the inadequate power provided by the government, businessmen who own factories, mills, or some kind of machinery have to purchase diesel-powered generators, where the resulting costs of running them are four times the cost of government-produced electricity, just to maintain operations. Another country, Cambodia, also cited high energy cost as a barrier to business.
Another transaction cost is labor costs where the relatively high labor cost in the Philippines could well be losing us investments when compared to the lower labor costs for Vietnam and China. Thailand too, recently approved a minimum wage increase, prompting complaints from the private sector and the closing of several MSMEs.
What are ASEAN governments doing about it?
While it is true that MSMEs have many challenges to surmount, it would be unfair to assert the ASEAN governments are not doing anything about MSMEs. In fact, many of them have put up two to three, or even more government agencies, departments, or other instrumentalities to assist MSMEs. One of these would definitely have something to do with trade and or industry, investment, and what not. In the Philippines, we have the Department of Trade and Industry (DTI), which has a section totally devoted to MSMEs, while Vietnam has the Ministry of Industry and Trade (MOIT), and Indonesia has a Ministry of Industry.
Most governments to have a medium or long-term Development Plan for MSMEs or SMEs. Vietnam has the SME Development Plan of 2011-2015; Indonesia has a Strategic Plan for SMEs, and the Philippines has a Philippine Development Plan for SMEs for 2005-2009. While most strategic planners enjoin top public officials to plan long-term, meaning 10 or more years, the electoral reality is that top government officials, unless they are re-elected, will stay in power for only less than 10 years.
For example, in Vietnam, there is a Vietnam General Office of Statistics which monitors MSMEs.
Several ASEAN countries also have specific laws specifically designed to benefit MSMEs. The Philippines for example has the Magna Carta for SMEs. Indonesia has a Presidential Decree No. 7 of 2005 which includes items on SMEs, and Thailand has Small and Medium Enterprises Promotion Act, and the Tax code of Thailand. This Thai tax code was expanded by several royal decrees to promote SMEs. Although there are some countries though like Myanmar and Vietnam who have yet to craft specific SME laws, policies, and regulations, their governments are aware of this problem and are already in the process of drafting such laws.
Many countries also provide trainings for MSMEs. In the Philippines for example, the DTI’s training arm is the Philippine Trade and Training Center (PTTC) which offers training programs through three modes: 1) onsite or face-to-face, 2) customized in-company courses, and 3) through online training videos. Thus, as long as you have reliable internet access, you can even learn from your house.
On the other hand, if you tend to learn better with a group, you could take up the face to face trainings programs instead. PTTC’s onsite programs include such interesting and relevant topics like: Accounting for Non-Accountants, Analyzing Business Target and Business Buying Behavior (Dealing with Competition), and Basic Business Recording, topics which would be useful for most entrepreneurs. Further, these courses are affordable and competitive when compared to their private sector counterparts, costing anywhere from Php 250 to 500 for half-day affairs and Php 1,750 to Php 3,000 for trainings of 1 to 3 days.
It is unfortunate then that many MSMEs do not know of these programs. Thus, there is a need for the government to actively reach out to these businesses, through a stronger marketing campaign, the effective and active use of social media, and even through the LGUs which hold annual business registration activities for MSMEs and businesses in their jurisdictions. What better way for LGUs to ensure more taxes being paid by these businesses than by helping to improve their capabilities and capacities?
Moreover, since China and India’s economic influence and dominance are felt strongly by neighboring Asian countries, there is a need to seriously work towards the goal of ASEAN economic integration by 2015. We cannot expect to be more competitive if we remain insular, especially since many of the MSMEs in the ASEAN region suffer from the same challenges and obstacles. Hopefully, such a situation will enable some proposed common solutions to be effective in addressing these similar MSME issues and concerns across the region.
Two ways by which we can do this is first through actively enhancing and supporting the implementation of ASEAN Free trade agreements (FTAs) which should enable a regionally mobile workforce, open up foreign markets even to MSMEs, and promote technology transfer. This labor force too can be trained with the required minimum standards through a common labor certification program.
Such an initial step though presumes of course that the state will mainstream these FTAs into national development strategies.
A second way is through the creation of a regional MSME business registration system to facilitate enterprise identification for financing and/or credit guarantee programs and domestic and export market access. This tactic will also aid international organizations like the ADB design a more responsive credit risk profiling of MSMEs in the region.
- The Travails of MSMEs (part 1) (opinyon2010.wordpress.com)
- MSME dept to develop websites of MSEs (industrialloops.wordpress.com)
- Youths benefit from job creation programme (times.co.zm)
- $2Tr Financing Pap Faces SMEs In Developing Economies. (spyghana.com)
- MSME gets major policy benefits extended for 3 years even if they graduate to new category (industrialloops.wordpress.com)
- Syndicate Bank unveils 5 products for MSMEs (vancouverdesi.com)
- CII-IMRB Paper on ‘Adoption of Cloud Among MSMEs’ at CII Cloud Summit 2013 ‘Developing Cloud Strategy’ (hispanicbusiness.com)
- Syndicate Bank unveils 5 products for MSMEs (news.in.msn.com)
- SMEs in developing economies face $2 trillion financing gap – IFC (ghanabusinessnews.com)
- India, Mauritius ink MoU to develop policy framework for MSME (industrialloops.wordpress.com)
The Travails of MSMEs (part 1)
by Miriam Tan-Fabian
MSME’s relevant contributions to the economy
MSMEs or micro, small, and medium enterprises often have it hard even if these enterprises are considered the “backbone and the lifeblood of the economy” within ASEAN countries. These enterprises, depending on which ASEAN country you are looking at are firms are generally categorized either by number of employees, asset size, or revenue. In Cambodia, micro enterprises are defined as having less than 11 employees and less than 50,000 riel (Cambodia’s currency) in revenue. In the Philippines, micro enterprises have less than 20 employees and have assets of less than Php 3M versus Indonesia’s 500M and lower and revenues of 300M or lower in rupiah, Indonesia’s local currency.
These MSMEs account for a significant bulk of the GDP. For Indonesia, for example, the contribution of MSMEs lie anywhere from 56.53% to 60% of the country’s total GDP. Gross Domestic Product or GDP is the monetary value of all the finished goods and services produced within a country’s borders in a given time period, and is used as a common metric to measure the health of a country’s economy. Generally, the higher the country’s GDP, the better the economy and the lower the GDP, the weaker the economy.
Aside from a significant share of a country’s GDP, MSMEs also account for majority of the total number of establishments in a country. In Myanmar, a developing country, MSMEs account for 90 percent of the industrial sector and 99 percent of the manufacturing sector. Similarly, in Japan, a developed country and economic powerhouse, 99.4% of manufacturing firms are small and medium-sized firms, which employ three quarters (75.1%) of the manufacturing industry’s employees. Comparably, in the Philippines, the MSME sector accounted for 99.6% of total establishments and contributed 61.2% of the country’s total employment.
Thus, MSMEs contributes significantly to the country’s well-being, and anything to do with MSMEs will be significant.
It isn’t easy being an MSME
Imagine that you wanted to formally put up a small eatery, one example of an MSME. From the get go, you will already be facing many challenges, issues, and concerns just to jumpstart the eatery. There is the paperwork, certifications, and permits; a steady stream of predictable funds, the staff, and the location, among others. It should therefore come to no surprise why, despite the big numbers of MSMEs in all of the ASEAN countries, they die out naturally within the first year they are established, succumbing to these difficulties.
Moreover, despite all the contributions that MSMEs provide the local economy and the presence of government agencies and policies for MSMEs, across the ASEAN, MSMEs continue to be vulnerable to a list of challenges, issues, and concerns that read like a bad case of symptoms of someone really sick, many of these symptoms are repeatedly mentioned across the countries of the ASEAN region.
Several obstacles to hurdle
One of the major concerns is the financial support. More often than not, if you want to put up your own business, you will need to raise the initial capital on your own. Most big banks won’t touch you with a ten-foot pole because of a whole slew of reasons. The banks know little about funding MSMEs, MSMEs are considered too risky to provide loans for especially if the bank requires credit information, and the bank’s products are mismatched with the needs and conditions of MSMEs.
On the other hand, on your part, you might not also like dealing with banks because they require some collateral or a good track record, and unfortunately, you have neither of both. I find the track record condition unreasonable. If it is your first time to put up a business, you would naturally have no track record, so this condition alone is discouraging for anyone who’d consider loaning from a bank. Worse, commercial banks charge high interest rates of 10 to 18% per year for top banks. This means that for every Php 100,000 pesos you loan, that’s already Php 10,000 to Php 18,000 for the bank for every year until you finish off paying the bank.
Discrimination and preference by size or sector
There is also some discrimination on the part of banks, they prefer larger enterprises who are given more favorable interest rates, and certain sectors like agriculture (farming) and hospitality enjoy the highest loans. Consequently, if you are a micro or small enterprise that is neither into the agriculture or hospitality sector, while your size already makes you vulnerable compared to larger enterprises, your lower access to funds exacerbates your financial concerns.
Poor capability, skills, and lack of trainings
Another issue was the capabilities of micro and small enterprises. Many micro and small enterprises do not have sufficient know how, technical, and management skills. Thus, MSMEs are hard pressed to produce good business or marketing plans for financing. Most of these enterprises also have poor and sub-standard accounting systems because of self-operated accounting practices, the lack of historical accounting records, and weak financial reporting. While most skills remain poor, the lack of trainings and professional development opportunities further weakens the capabilities of MSMEs, thus lowering competitiveness and productivity.
With limited management and financial capabilities, many MSMEs are unable to quickly respond to both the local and foreign markets. MSMEs have a low ability to meet the threats of local and global competition because of their ignorance of information on market access and business environment; failure to attain scale economies needed to produce quality goods and services; and the sector’s laid-back approach to seeking new markets and responding to market needs.
Poor infrastructure and logistics
Yet another issue which MSMEs have little control over is poor infrastructure. This was one key issue identified by potential investors as a turn off when investing in the Philippines. They specifically identified the dilapidated roads and the horrible traffic in the CALABARZON area where some of the country’s economic zones are located.
Added to these woes is the poor logistics such as the lack of charter flights needed for cargo shipments, lack of direct shipping and air routes or linkages to export processing zones, inadequate cargo hub operations, and the high cost of freight and cargo handling services. These signs of inadequate or poor logistics lead to increased production costs.
The Philippines though is not alone in this issue. Laos, a land-locked country of a mere 6M people have to contend with the country’s largely mountainous terrain, a poor network of market access roads, together with cross-border trade impediments with neighboring countries, has meant high transport costs and fragmented markets. The generally poor condition of the road network results in high rates of damage to both trucks and cargo. (to be continued)
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- MSME gets major policy benefits extended for 3 years even if they graduate to new category (industrialloops.wordpress.com)
- MSME dept to develop websites of MSEs (industrialloops.wordpress.com)
- $2Tr Financing Pap Faces SMEs In Developing Economies. (spyghana.com)
- Syndicate Bank unveils 5 products for MSMEs (news.in.msn.com)
- The smaller companies are a custom brought close (hermesbag009.wordpress.com)
- Syndicate Bank unveils 5 products for MSMEs (vancouverdesi.com)
- MSME-and high bank interest (btinno.wordpress.com)
- Business Taskforce: “Cut EU red tape” (blasermills.co.uk)
- ”One-fourth of MSMEs do not have access to banks for credit” (news.in.msn.com)
- SMEs in developing economies face $2 trillion financing gap – IFC (ghanabusinessnews.com)
Malayvieng Sakonhninhom : Ambassador of Lao PDR to the Philippines
Experiencing the World
MALAYVIENG Sakonhninhom, Ambassador of Laos to the Philippines, is a woman ahead of her time.
Malayvieng wanted to become a journalist in a communist country—where journalism is seen as a ticket to experience the world. But her path took a different turn at the age of 19. Her Journalism scholarship to a French university—which she had kept secret from her parents—was accepted. However, she had to give up her dreams of being a journalist at the behest of her mother.
“[I] cried…very frustrated. But in our society at that time, that’s ok,” Malayvieng said in a newspaper interview at the parlor of the Lao PDR Embassy in the exclusive Magallanes Village in Makati City. Malayvieng said their society was very conservative during that time and mothers kept their daughters close to home where they could be protected adequately. With no local universities offering Journalism, Malayvieng took up Law and Administration instead. She specialized in administration, negotiation and diplomacy, and satisfied her writing bug by contributing to the school newspaper, focusing on women’s rights.
After university, she won a scholarship to the Soviet Union with Southam Sakonhninhom, a good college friend—who would later become her husband. This time Malayvieng took the trip Russia. “We studied together, we were in the same class, we shared notes and books…but no copying [during exams],” recalled Malayvieng. “The scholarship was six years, we helped each other. The Russian language is very difficult and it’s very cold there.”
Romance blossomed despite the severe Russian winters, perhaps because of the warmth Malayvieng and Southam drew from each other. They joined the Foreign Ministry in 1982 and, a year later, they had their first daughter, Souridahak. The baby was barely a year old when Southam was posted to Paris, and then to New York, and then Belgium.
Meanwhile, Malayvieng served in the MFA’s Home Office in Vientiane while he was away and served as mother and father to their girls—Souridahak and Sourignahak. “As diplomats we have to learn to live separately,” Malayvieng said. She saw Southam in February when he came over from Brussels and accompanied her on her official rounds within the Philippines. The life of a diplomat is exciting because of all the traveling, but it’s a life for which her daughters seem to have no interest.
“Ok, that’s interesting to travel, but they don’t like,” Malayvieng said with a chuckle. Souridahak now works for the World Bank in Laos, while Sourignahak is studying in De La Salle University. Distance hadn’t hampered their family ties, though. “There was no discussion to leave the MFA. We love our work,” Malayvieng said. Until five years ago in Laos, if both the husband and wife are serving with the Foreign Ministry, only one of them could get posted overseas. With the growing number of diplomat couples, the practice was abandoned so that both husband and wife would have an equal opportunity to get a foreign assignment.
In 2011, the Philippines became Malayvieng’s first posting.
Malayvieng acknowledged with quiet laughter that her husband’s gender was a factor in his promotion before hers: “Because he’s a man, because I’m woman…We [came from] the same school, same university, after that he has been promoted. Finally, we are in the level of ambassador. Same.”
“He went abroad three times…I just been posted for first time and straight to be ambassador,” she added.
There’s no real competition between the couple. They co-authored a book on international law in 2007, and wrote another on protocol. The second book’s cover shows a photo of her presenting her credentials to Malacañang. Malayvieng is now working on a third book about extradition. She recognizes that she is a far cry from the young girl who dreamt of becoming a journalist, the same one who occasionally lied to her parents so she could go out with her friends. Malayvieng recognizes she is also quite unlike her own mother.
Her daughters were born into a society that is now different from hers, and she has adjusted to this more modern society: “When I was little, at that time, the parents very conservative. My daughters’ time is different so I had to modernize. What I could not get, I give to my daughters.”
Asked if there is anything more she wants to achieve at this point, Malayvieng candidly acknowledged that her goal is to finalize President Benigno S. Aquino’s visit to Laos: “As ambassador, that’s what we all want [to achieve].”
PH-Lao PDR Relations
In a speech delivered during the Eight Ambassador’s Forum at the Asian Institute of Management last May 31, Malayvieng provided insights on the economic development trends in Lao PDR, and developments on the Lao PDR-Philippines relations. She opened her speech with background information on Lao PDR and its foreign policies. “Laos has been fighting for liberation and peace since the 18th century. After a long civil war that ended the constitutional monarchy under Sisavang Vong, the country established a single-party socialist republic in 1975. In 1986, the country undertook an open-door policy which aimed at improving the country’s economic condition. Being a landlocked country bordered by Myanmar and China to the northwest, Vietnam to the east, Cambodia to the south, and Thailand to the west, Laos PDR has always pursued the ‘foreign policy of peace, independence, friendship and cooperation.’ Laos PDR has desires to be a land-linked nation by connecting to its neighboring countries and enhancing regional and international integration.”
Although the Philippines and Laos have little history of cooperation, there are initiatives to change this. The visit of the Prime Minister of Laos in May 2012 was seen by many as a critical initial step towards improving Laos-Philippines relations. There are planned activities and programs that will help build closer friendship and cooperation. Laos will soon host the first Joint Commission on bilateral cooperation in 2013; and is also arranging for the visit of President Choummaly Sayasone to the Philippines.
Bilateral Consultative Mechanisms
A Memorandum of Understanding (MOU) between the Philippines and Laos was signed on May 6, 2008 establishing the Philippines-Lao PDR Joint Commission for Bilateral Cooperation (JCBC).
Laos offered to host the inaugural JCBC in Luang Prabang. The inaugural JCBC, however, has yet to be convened.
The Philippine Embassy in Vientiane recommends support of the establishment of the Philippines-Laos Parliamentarians’ Friendship Association as this will facilitate a dynamic and proactive parliamentarians’ dialogue between the two countries and contribute to strengthening cooperative relations.
It may be noted that the Philippines is among the countries listed in the Lao National Assembly website as having an existing Lao-Philippines Parliamentarians’ Association.
The Association was established by Resolution No. 156/ST of 14 November 2011 (Resolution of the Standing Member of the National Assembly on an Appointment of the implementation of the Lao-Philippines and Brunei Parliamentarians’ Friendship Association.
- EU Statement for Round Table (sombath.org)
- News story: Lord David Puttnam celebrates UK education links with the Lao PDR (gov.uk)
- Solar-equipped Environmental Education Vehicles Launched in Laos (eco-business.com)
- BasicNeeds: The Need to Train Psychiatrists in Lao PDR (huffingtonpost.com)
- World Vision prepares for arrival of Super Typhoon Haiyan in Vietnam and Laos (prnewswire.com)
- Amazing Tourist Spots On Laos Travel (bjakerion01.wordpress.com)
- Search continues for Lao air crash victims in Mekong River (democracyforburma.wordpress.com)
- Mekong River Sunset – Lao PDR (aquadoc.typepad.com)
- Lao PDR approves feasibility studies and increased capacity of Nam Ang Tabeng hydro project (hydro.energy-business-review.com)
- Lao PDR tackles poverty with World Bank Support (boletinmultilateral.wordpress.com)
Editorial : Not So Perfect Alibi?
DIFFERENT speculations came out as to why US President Barack Obama did not attend the important summits together with his Asian tour particularly in the ASEAN nations. Some pundits believe that the so-called partial US government shutdown was not the real reason. And the situation became more suspicious when even US Secretary of State John Kerry also cancelled his visit to the Philippines ‘due to bad weather’ (kuno). The mere fact that this visit of President Obama and Sec. Kerry to the region, is very crucial to US pivot to Asia, particularly to its allies, one will wonder—did the sudden change of travel plans of both Obama and Kerry have something to do with China? Is the Chinese pressure so strong that such important plans had to be cancelled?
Just asking because both alibis seemed quite shallow.As what Manong Ernie Maceda said in his column in the Philippine Star last week– the cancellation of US Secretary of State John Kerry’s visit to Manila because of storm Santi shows the low priority that the Philippines has with US officials. Ninoy Aquino International Airport (NAIA) was open. No flights were cancelled. The storm was coming in from Catanduanes, while the flight path from Brunei is through Mindanao.
Kerry’s visit was supposed to substitute for President Obama’s state visit. It should have gone through at all costs. Yes, at all costs, that is why the excuse he gave was not valid at all.We also have to consider the statement of President BS Aquino at the APEC about the Philippines-US Framework Agreement on Increased Rotational Presence. PNoy said the United States should be clear with the words they use concerning the said agreement.
“During negotiations, we always get entangled with all the semantics. Those words that are actually used to convey the thoughts.”He said that the words to be used in the agreement on increased rotational presence should “satisfy both parties needs and wants; and satisfy all or addresses all concerns and anxieties.”“Their language is geared to support the request for budget when they go to Congress,” the President pointed out. “Their language might be perfect in an American manner of speaking English but might be construed differently through a Filipino.” (Source: Aquino presses careful crafting of US rotational presence deal by Roy Mabasa mb.com 10.9.13)
If PNoy felt this urgency to discuss this executive agreement that entails another pact that will make the country beholden to a perceived master in the offing, it is very clear that our relationship with Uncle Sam is one way. So Manong Ernie is right, we are being given low priority by these US officials.
This is the sad reality I have been saying for so many times now, these so-called agreements and treaties we entered into with Uncle Sam are always for the benefit of their country than ours and in the process we are always shortchanged. When are we going to learn to assert our rights as a sovereign nation?
This is not a simple matter that we can just to ignore and let Washington craft the agreement to their own liking. This is about national security, and most of all, our sovereignty (what was left of it) is at stake here.
In the four rounds of talks that transpired regarding the access agreement, there are “gaps” in the “critical provisions” that need “more work,” according to Defense Undersecretary Pio Lorenzo Batino, who heads the Philippine panel.
The military-to-military agreement is expected to boost the defense capability of the AFP amid growing territorial threats, increase the training of its troops, and improve disaster response.
Batino said they have narrowed down the framework agreement to 5 key provisions namely: scope, agreed installations/AFP Facilities, prepositioning of defense equipment, supplies, and materiel, ownership and security. (Source: Bases access: PH, US disagree on ‘critical provisions’ by Carmela Fonbuena, rappler.com)Now that the chance for our President and other government officials to tackle the crucial decisions covering the new access agreement was postponed (until who knows when), methinks that this pact is already a done deal on Washington’s side for their Congress to release the budget, and will left us (again) to just accept it with open legs, as usual. So, what else is new?And don’t forget (as Reuters reported last October 3), also on the cards is the development of Oyster Bay, which lies about 550 km (340 miles) southwest of Manila.”It will be a mini-Subic,” Commodore Joseph Rostum O. Peña, the commander of the Philippines’ western navy, said in the first public comments about converting Oyster Bay into a major naval base.
“A future port here would extend the reach of the navy’s two frigates, both former U.S. Coast Guard cutters, over the disputed Spratly Islands, in the southern part of the South China Sea.” he said in an interview from his office overlooking the mouth of the bay.
Oyster Bay is about 160 km (100 miles) from the Spratlys.
“In Manila, the leaders must move behind rhetorical blandishments about a new spirit of partnership and start to detail specific actions that will strengthen Philippine defense capabilities,” said Patrick Cronin, an Asia-Pacific security expert at the Center for a New American Security in Washington DC.
That includes building a permanent home for the Philippines’ two big warships. It also means finding strategic areas where the United States could rotate troops, ships and naval aircraft — all within easy reach of territory claimed by Beijing. Oyster Bay may be the best choice,” said Cronin.
After reading this, the access agreement is already a done deal, to hell with the other critical provisions that we wanted to further discuss with Washington.
Need we say more?
- The Philippines is Building a New Naval Base in South China Sea (thediplomat.com)
- Food security & food aid as alibi, GMO being massively pushed into Africa (ethiopiaobservatory.com)
- Philippines Set to Reopen Zamboanga Airport as Fighting Recedes – Bloomberg (bloomberg.com)
- Rappler Newscast | September 2, 2013 (rappler.com)
- Temporary structures by US troops may be allowed, says PH panel (globalnation.inquirer.net)
- Friends of Aurora kidnapping suspect claim he has alibi (kdvr.com)
- May I Have More Bread With That Baguette? (kneedeeplife.wordpress.com)
- Finding Coupons for Alibi Pizza in Troy (coupons.answers.com)
- Environmentalists warn of destruction with increase in US troop presence, military facilities (bulatlat.com)
- PH, US tackling ‘gaps’ in defense talks (globalnation.inquirer.net)