commerce

(Mis)Taxes For Sari-Sari Stores

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“A bad beginning makes a bad ending” ~ Euripedes

Laoag City – The slow and tedious, not to mention expensive, processes of registering a business and compliance with tax requirements with the Bureau of Internal Revenue make Teresita* question her decision to open a sari-sari store to augment her husband’s, a tenant farmer, income. For the privilege of operating a sari-sari store, she has to issue official receipts and deal with the BIR every month, for percentage tax** among others.

“Issue an official receipt for every sale even if the buyer didn’t ask for it, but if the sale is below P25 and the buyer didn’t ask for one, then you don’t have to issue a receipt,” the BIR officer emphasized during the tax  briefing at the Revenue District Office No. 1 in Laoag City. “If you don’t issue a receipt, you will be fined P10,000! If your customer asked for a receipt and you didn’t give him, that’s a fine of P20,000!” she warned.

“Everything is very confusing,” Teresita told her seatmate at the briefing. “To travel to the city every month to pay taxes, I will spend an additional P184 for public transportation expense,” she added.

Additional transportation expense is not the only additional costs Teresita has to think of is she wants to open a sari-sari store. Not only will she need to pay 3% of her monthly sales to BIR, but she also have to pay for the cost of printing official receipts. For a farmer and a housewife, just the additional P184 in monthly transportation expense is a lot.

Isn’t there an injustice in this tax requirement for sari-sari stores? Is it really fair to ask them to issue official receipts? Is it fair that sari-sari store owners, who are mostly marginal earners, be burdened with monthly tax compliance? Is it fair that people who barely earn enough to buy for their necessities are burdened with additional costs in exchange for the privilege of owning a sari-sari store?

When asked why this so much tax compliance burden for sari-sari stores, the same BIR officer said that the official receipts will help BIR determine if sari-sari stores are truly earning marginally. She added that it is not enough for sari-sari store owners to declare they are marginal earners, but they have to show BIR receipts that they only sold so much.

I understand the country, through the BIR, needs to increase its tax collections so it can improve basic services to the country, but ensuring that all sari-sari stores report their actual sales and requiring them to pay taxes on these sales every month too much of a burden? The combined annual sales of all sari-sari stores in the country couldn’t possibly equal the one year sales of PLDT which, as of 2013, was P 164.1 billions. So isn’t BIR efforts more aptly rewarded if it focuses its efforts in policing the country’s biggest corporations and ensuring that they pay the right taxes?

The cost of ensuring that every single sari-sari store comply with this rule and the additional benefit, increase in tax collections, are clearly not commensurate. Isn’t there a better, less onerous way for the government to collect taxes from sari-sari stores? With the combined brilliance of the people at BIR, I am sure they can think of something.

The tax rules governing tricycle and jeepney drivers and operators are an example of this brilliance. I don’t know how it is in the other parts of the country, but in the boondocks I call home, our neighborhood tricycle driver earns more than the nearest sari-sari store. Why not require sari-sari stores to pay a fixed amount of taxes every quarter? If Teresita is required to pay P750, which is equivalent to a total sales of P25,000, a quarter in taxes, this would still be preferable to spending almost P600 every quarter in transportation expenses for monthly tax compliance.

What is it with sari-sari stores that they are dealt with differently? Could it be that requiring sari-sari stores to issue official receipt with the threat of thousands of pesos in fines if they don’t is a sign of a wider epidemic? Is this the beginning of the slow death of common sense in BIR?

What will be the next result of this slow death of common sense? Maybe, ask the fish vendor at the wet market to issue official receipts, too?

*Not her real name

**Percentage tax is a computed as 3% of total sales and is paid monthly to the BIR

Liza M. Gaspar is a wealth coach and personal finance enthusiast. She also volunteers for the Rotary Club of Makati McKinley (rcmmckinley.org) and the Gerry Roxas Leadership Awardees (grlawardees.org). Engage her in a discussion about anything you fancy at http://www.thegirlninja.com, liza@thegirlninja.com or www.facebook.com/annalizagaspar

 

 

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OFW Remittances Boost Economy’s Outlook

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Buoyed by surging remittances from Overseas Filipino Workers (OFWs), consumer sentiment improved moderately in this year’s first quarter, raising prospects of better times ahead.

Based on the Bangko Sentral ng Pilipinas (BSP survey, overall confidence index (CI) showed an upbeat trend because of some positive indicators spawned by a resilient economy.

These range from availability of more jobs to increase in the number of employed family members and the emergence of more investment prospects.

Consumer confidence is measured using three indicators–economic conditions of the country, family financial situation and family income.

By income group, consumer sentiment was mixed with respect to their views on family finances and income.

The low-income group showed a consistently more favorable outlook, but the middle-income group’s outlook weakened, but turned more bullish for the next quarter and the year ahead.

In the same BSP survey, the high-income group had a less upbeat outlook but anticipated financial conditions to improve in the next twelve months.  Across income groups, confidence on the economic condition of the country improved.

The survey results also showed that the number of households with savings continued to pick up at 28.9 percent in Q1 2014 compared to 26.2 percent in the previous quarter.

Consistent with the higher spending outlook on basic goods and services in Q1 2014, consumers anticipated higher inflation in the year ahead. They expected the inflation rate to settle at 8.4 percent compared to 7 percent in Q4 2013.  This indicates that inflationary expectations could be stronger in the next 12 months.

Respondents are also of the view that the peso would depreciate against the US dollar in the next 12 months. Their perception could have been influenced in part by the recent weakening of the peso against the dollar.

Of the 560 households included in the BSP survey that received OFW remittances in Q1 2014, 97 percent used the remittances that they received to purchase food.

More than two-thirds (68.9 percent) of the OFW households allocated part of their remittances for education, 62.9 percent for medical payments and 45.9 percent for debt payments.

 

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Reawakening of Subic

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Stung by the erosion of its competitiveness as an investment haven, the state-run Subic Bay Metropolitan Authority (SBMA is stepping up its infrastructure spending in what could be a reawakening from years of complacency.

This year, the SBMA’s capital expenditure (capex budget amounts to P617 million, an unprecedented 6,740 percent increase over last year’s P9 million.

A big departure from past allocations, the SBMA plans to embark on more projects to improve infrastructure and facilities, as well as to further promote the Subic Bay Freeport view of rise of new rival Freeport zones in Vietnam, China and Myanmar.

Approved by the SBMA board of directors, this year’s outlay came on the strength of the agency’s record-breaking financial performance for 2013.

The SBMA booked last year an all-time net profit of P1.079 billion, its highest in its entire 21-year history. The SBMA’s 2013 gross revenue of P2.09 billion and earnings before interest, taxes,  depreciation and amortization (EBITDA) of P992 million likewise became the highest in the agency’s history. The money will bankroll the acquisition of new dump trucks, service vehicles, and beautification of the Freeport, roads, and repair of infrastructure, airport, and other projects to make the Freeport more attractive to foreign investors.

According to figures released by the SBMA Finance Group, of the agency’s budget, P2.6 million will be spent on buildings and structures; P90 million on land and land improvements; P391 million on equipment outlay; and P134 million on information technology equipment, which received a budget of only P13,000 in 2013.

SBMA Chairman Roberto Garcia appealed to SBMA officials and employees to continue looking for new sources of revenue to further improve the agency’s financial performance.

“We are already here at this level where we can provide for what we need. We are committed to spend not only for equipment and facilities, but for our people most especially,” Garcia assured. “But we must help each other to take SBMA up to an even  higher level,” he added.

The SBMA is also strengthening its law enforcement capacity to make the Subic Bay Freeport more attractive to investors and more conducive to trade and tourism.

“Let us all practice Kaizen. Let us not be contended with what we have achieved. Let us always aim to surpass our achievement,” Garcia said.

Kaizen, Garcia explained, is a Japanese word that means continuous improvement.

Garcia said that even as the SBMA posted an impressive performance in 2013, it should aspire for even greater accomplishments in order to remain competitive as a trade and tourism hub.

He pointed out that in 2013, the SBMA board of directors approved a total of P27 billion in terms of investment pledges, which was 800 percent more than the P3 billion recorded in the previous year.

Topping all other investment pledges in 2013 was the Korean firm Resom Resort, which committed P21.4 billion out of the total P27 billion pledges.

Garcia also said that the SBMA will be developing more areas for investment this year following the turnover by the municipal council of San Antonio, Zambales of the 10,000-hectare San Antonio Economic Development Area for conversion into an additional secured area of the Subic Bay Freeport Zone.

Aside from this, the SBMA has also worked out with the local government of Subic, Zambales for the free port expansion into a 650-hectare coastal land in the municipality that will be ideal for shipbuilding and ship repair.

Both territorial expansion projects will be utilized to accommodate the growing investment proposals being received by the agency, Garcia said in a statement.

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Gaming is for Everyone

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By Miriam Tan-Fabian

IS IT gambling or gaming? The answer largely depends on who you are asking. A religious conservative or a mainstream church leader will have a different answer compared to that of a gaming executive. And whether gambling or gaming is illegal or legal will largely depend on the government. If the government has explicitly forbidden the activity (gambling or gaming), then it is illegal. That’s as simple as it gets.

After all, it is no secret that the government has the created the Games and Amusement Board (GAB) to regulate sports and games in the country and has two government corporations that are into gaming, namely the Philippine Amusement and Gaming Corporation (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO), both of which have been earning billions in revenue. The popularity of gaming in the country is undeniable, so much so that former Senator and Senate President, Ernesto Maceda labeled the Philippines, the “gambling capital of Asia.” And who can dispute such claims?

In fact, just this March, mega Casino, Solaire located in Roxas Blvd. just opened its doors to the public. The casino area of Solaire alone is a staggering 18,500 sq meters, it boasts of 500 rooms, suites, and bayside “villas”, and aside from an English version, its website also has Chinese, Japanese, and Korean versions. Moreover, 58 casinos can be found all over the country, from Luzon to Visayas, and even down to Mindanao, many of them operating 24/7. In Manila alone, there are 17 casinos, compared to nine (9) in Central Luzon, five (5) in the CALABARZON area, and two (2) in the Ilocos region. The whole of the Visayas though, only has five (5) casinos while Mindanao only has two (2) casinos in all.

On top of all these, there are 18 PAGCOR exclusive members and VIP clubs in major cities of the country. Although the games you can play in these casinos are no different than in any other international casino and in pokerblog.com or other online portals like the usual baccarat, blackjack, roulette, craps, bingo, big and small, Pai-Gow, stud poker, Sic Bo, and the ever-popular slot machines, some customers still swear that the Philippines offers some of the most intense gambling action for locals and foreigners alike.

PAGCOR too has contributed some innovative games like Red and White, Casino War, Super Six, Pontoon, Jazzbeme Baccarat, Rapid Roulette, and Electronic Horse Racing. And apparently, aside from the gaming/gambling, there is a whole culture thrown into the mix, where both casino and non-casino establishments have karaoke singing; daily live band shows, ballroom dancing, cultural shows, and concerts with special top national or international guests. While it is tempting to conclude that gaming / gambling is merely an activity for the filthy rich and or famous, this is just so far from the truth. Gambling/gaming is a Filipino past time and sports betting is big business.

We’ve got a new racetrack in Batangas and while racing days used to be only on weekends, the racetrack is now open 6 days in a week. Off track, betting stations and bookies dot the greater Metro Manila area, and cockfights are now held daily and simultaneously in the different cockpits all over the country. Bets have also not been limited to just horses, cocks, or any other animal that can either run or fight. You can be sure that there have also been a slew of bets in the recently concluded Paquiao-Rio fight in Macau. There is also the popularity of poker and bingo parlors, where the latter can be seen in many of our popular malls. The face of gambling/gaming too, has also been evolving and the lines have been blurring.

These activities are done not merely face-to-face but online and virtual as well. Since there are no laws against online gaming/gambling, an estimated 3,000 internet gambling / e-gaming parlors have popped up all over the country. And even in developed countries, team games for such popular fantasy-games like League of Legends have become hip and cool. Thus, hardcore gaming geeks and enthusiasts have started not only coming out of the woodwork, but also earning a decent pot prize in the unlikely case that they win. It should therefore come to no surprise that the government has failed to stamp out illegal gambling. Jueteng is still in full swing, while Masiao and Last 2 are operating in the Visayas and Mindanao.

While the lure of getting “rich” quick is one of the motivations for illegal gambling, there are also other enticements. Unlike “legal” gaming / gambling, you don’t have to go to a casino or gaming stand to bet. There probably wouldn’t be any long queues either. In addition, bets could go for as low as P6.00 a bet unlike the minimum betting in lotto for Php 20.00, which is already three times more, an amount which would easily discourage those from the class C, D, and E markets. Moreover, many religious conservatives have opposed gaming / gambling for its addictive properties.

It should be pointed out though that being addictive is not limited to gaming / gambling. At present too, especially in developed countries, there are standard procedures and best practices for gaming / gambling like an exclusion form which close family members can accomplish for the gaming / gambling addict. In addition, there are available services like counseling for gaming / gambling addicts, and even financial literacy seminars for those who have won big in lotteries, and similar games with sizeable pot prizes. More importantly, these gaming corporations are earning a lot, paying billions in taxes, contributing significantly to the government’s coffers, and have several initiatives in Corporate Social Responsibility (CSR) or Corporate Citizenship (CC), i.e. building public schools.

Rather than try to stamp out illegal gambling, it might be wise for the government to legitimize such games and earn from it in the process. In the Philippines at least, illegal gambling is earning billions more in comparison to legal gaming activities, thus eating into and competing with these legitimated gaming operations. Thus, this may be time to rethink our “legitimate” gaming models to earn more for the government, while offering positive gaming / gambling-related services, and doing good in CSR or CC while we are at it.

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Why Should Family Businesses Diversify?

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By Enrique Soriano

OVER a long period of time, the literature on corporate diversification has focused almost exclusively on large, publicly held firms. However, within the last few years, there have been some works published , dealing with diversification issues in small and medium sized firms but also in family businesses (Iacobucci & Rosa, 2005). Whereas some authors hold the view that family businesses engage in significantly less diversification than non-family firms, others describe diversification as a prevalent long-term strategy among family businesses.

Following Guillen (2005) and Granovetter (1995), we define a business group as a collection of legally independent firms that are connected by economic links (such as ownership, financial, and commercial) and social ties (such as family, kinship, and friendship) that lead to operational links. This definition distinguishes conglomerates or strategic alliances from buyer groups, in that the latter operate under somewhat unified entrepreneurial guidance, going beyond simple alliances among otherwise independent firms (Yiu, Bruton and Lu. 2005). In our case, the main social tie that links different firms into a business group will be that all those firms are under the control of the same family. The family business group (FBG), is the group of firms under control or managed by a group of people with family ties.

The usual criteria defining family firms, from the management side point of view, is that the institutional values of the firm should be identified with the family. Empirically this implies the involvement of multiple generations in a business group, the ownership of the group and voting control by family members, the effective management of the firm by family members and a large number of family members having board seats.

Examples of big family business groups in the Philippines are the Ayala Group, the Lopez Group, and the Gokongwei Group. Some of the most enduring family businesses started in one industry before growing into diversified companies with many lines of businesses.

Diversification is entering new markets with new products. Sometimes you just need to bust out and try something new like if you’re a tobacco firm, buying a packaged-food company; a cola firm entering the water business; or a chemical company going into the spa supply business.

Many companies appreciate the need to diversify but few use it as a way of relating to their markets. Fundamentally, this strategy is about creating new products with new product life cycles and making the existing ones obsolete. By doing so, firms launch new products that are developed not just for current customers but for new ones, too. To execute this strategy, you usually manage a merger, an acquisition, or a completely new business venture.

Well-known, highly innovative companies which include Intel, Google, DuPont, and all the pharmaceutical companies are into diversification. A company’s diversification strategy can be either related or unrelated to its original business. Related diversification makes more sense than unrelated because the company shares assets, skills, or capabilities. But many successful companies, such as Tyco and GE, continue to buy unrelated businesses.

We may distinguish among related and unrelated diversification, which in turn can be seen as a continuum in between single business units and fully diversified firms. Related diversification means entering in multiple industries that are able to share a common pool of corporate resources and capabilities. These are businesses where sales force, advertising, and distribution activities can be shared, exploiting closely related technologies.

We may safely assume that the family is directly involved in decisions regarding corporate diversification (in contrast with publicly held firms, where managers make these choices). Hence, to concentrate on FBG can be a useful way to analyse if diversification may be a valuable strategy for creating value.

To a family business, diversification is a way to extend their capabilities into new lines of business. The diversification will turn out profitable if the capabilities than were useful into one line of business are indeed also a capability in the new segment.
Diversification, on the other hand, may have two main costs for family business groups:

(i) The need of adding capabilities outside those of the family, be it through the hiring of professional managers, or through partnerships with other shareholders that incorporate the needed new abilities. (ii) An increase in complexity in the family group that may affect negatively its organization. In any case, the incorporation of outsiders to the FBG reduces the firm’s control by the family and may require an increase in monitoring effort.

Why Diversification Matters

Anyone who has invested money has heard about the importance of diversification in a portfolio to hedge against losing too much money when markets retreat. Diversification can be equally important to businesses that may face serious threats during turbulent economic times or when disruptive technologies enter the marketplace and big competitors move in. Although family businesses are known for their nimbleness and ability to react quickly to changing times, diversifying lines of business and expanding products and services can offer additional security when times get tough.

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LYDIA DE ROCA : From Sidewalk Peddler to Millionaire

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LYDIA’S Lechon is a household name here in the Philippines, But not many people know that its entrepreneur Lydia de Roca started her business by selling lechon in a small stall in Baclaran market.

In the late 60s, the family-owned lechon store—known as “Mang Turing and Aling Ingga’s Native Lechon”, was doing good business with a modest store located at the Our Lady of Sorrows Church in Baclaran. Lydia, helped out in the said store.

Benigno and Lydia de Roca

In 1969, after some courtship, Benigno de Roca (a son of another lechon business owner) and Lydia got married. The happy couple had a joyous occasion after their wedding and with PhP500 started their own lechon busiess–Lydia’s Lechon. In a television interview, Lydia related how she used to go with her father, who was a butcher, and how she started selling lechon in Baclaran at the age of 12. “Ito ang naituro sa akin ng tatay ko noong araw, hanggang sa nagtinda ako ng lechon. Twelve years old ako sa bangketa ng Baclaran,” she said. “Yung P500 na yon binibigay ko na sa tatay ko. Pinambili ko na ng baboy niya… Marami yun, P20 lang nun ang baboy eh,” she said. Aside from pigs, she used the money to buy charcoal and sauce for the lechon.

Hard Work

At that time, Benigno was a jeepney and bus driver, so they had to work hard to support their children. “Mahirap ang buhay namin. Pero nagtiyaga kami talaga. Pinagsumikapan namin… Naranasan ko pa yung bahay na nakatuntong sa ilog… Yun ang unang-unang inupahan ko, diyan sa may Tambo sa Paranaque, P35 ang upa sa isang buwan,” she said. Customer’s would flock to Lydia’s Lechon to sample the good food sold there. A big break for the couple’s business came along when one day when executives from the Hyatt Regency Hotel came along to buy some Lydia’s Lechon specialties. From that simple visit came daily lechon orders from the hotel.
“Maski nga di ko kinakaya kinakaya ko eh. Hindi pwedeng mahina ang loob mo. Sasabihin mo, ay ano kaya ang gagawin ko? Tatanggapin ko kaya? Mahirap kaya ito? Kaya ko kaya ito? Ako palaging yes,” she said.

The fame and praise for Lydia’s Lechon spread by word of mouth to many prospective clients, including other hotels and restaurants, and food caterers.

In the 1970′s, the Lydia’s Lechon boneless with paella recipe got the first prize in a competition for local chefs and it soon became one of the specialties of restaurant. It was a boost for the de Roca couple’s business.

One-Table Restaurant

After selling lechon from the market for 22 years, de Roca finally opened a restaurant–with a single table–along Roxas Boulevard in 1986.

“Talagang restaurant ang target ko. Kaya lang wala akong kapital pa eh. Hindi ko rin magagawang restaurant. Pero trying hard ako na maging restaurant, kaya naglagay ako ng isang lamesa at isang silya,” she recounted. Soon customers started coming to her restaurant and one of her frequent customers was mall tycoon Henry Sy, Sr., who always had lunch there on Sundays. “Nagkakwentuhan kami tapos meron daw siyang SM Food Court baka raw gusto kong magtayo ng ano… Sabi ko, oho gusto ko,” she said.

Lydia de Roca lechon

In April of 1989 the first branch of Lydia’s Lechon outside of the southern part of Metro Manila , in Timog Avenue, Quezon City was established. This was followed by other stores on the eastern part of the Metro. From there, fast food outlets of Lydia’s Lechon mushroomed within the popular malls of the metropolis. Although originally intended to be a close family corporation, the first franchise of Lydia’s Lechon was sold in 2005 for a fast food and retail outlet at SM Megamall in Mandaluyong City. Today, they are known as the biggest chain of lechon outlets in the country. Presently, there are 21 branches of Lydia’s Lechon located in the Greater Manila area and Cavite.

Hands On

Now, Lydia’s Lechon has some 15 branches in SM Food Courts, which account for some Php30,000 in daily sales.
The couple is now the proud owner of a 1,500 square-meter property in Baclaran, with a mansion and several luxury cars. It also houses the restaurant’s commissary and roasting area.

lydias lechon

The De Roca couple also have their own piggery in an 8-hectare property in Malvar, Batangas where they raise 800-1,000 pigs.
In 2011, De Roca was awarded by Go Negosyo as one of the most outstanding women entrepreneurs of the Philippines.
Despite her success, De Roca remains humble and thankful that her four children—who have all graduated from college—are not spoiled and have helped the business flourish.

“Seven years old pa lang sila dinadala ko sila sa bangketa, kaya ang pangaral ko sa kanila eh sinusunod naman nila ngayon,” she said.
Up to now, De Roca still wields a knife and deftly chops up a lechon at the restaurant.

“Dito nag-simula ang swerte ko sa buhay. Kung sa tingin mo di ako marunong mag-tadtad ng lechon, umasenso kaya ako,” she said.
The smallest lechon sells for PhP6,500, and the capital for each one is in the neighborhood of PhP3,000. Lydia’s Lechon is also famous for its signature sauce made using a special recipe, de Roca said, noting this is still something none of her employees know about. Lydia has kept her lechon naturally simple but with no short cuts. It’s slowly cooked for two hours over charcoal and flavored only with tanglad, pandan, and murang sibuyas.

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Lucio and Susan Co : The Next Big Thing in Retailing

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LUCIO and Susan Co—a husband and wife entrepreneurial team—has literally struck gold with their Puregold Price Club, a chain of over 150 “hypermarkets” across the Philippines. Starting with one store in 1998, the Cos have expanded at a rapid pace, lately through acquisitions, to build Puregold into the country’s second largest retailer, after Henry Sy’s SM Group.

‘Sari-Sari’ Concept

Contrary to what the name suggests, a Puregold outlet stocks not fancy goods but a range of cheap merchandise aimed at a rising population of middle-class shoppers and owners of neighborhood convenience stores, or the ubiquitous sari-sari stores.

LUCIO CO WITH PNOY

Since 2010 the retailer’s revenues have doubled to US$1.3 billion with net profits increasing fivefold to US$65 million—making the couple one of the richest Filipino entrepreneurs today. The Cos transferred most of their stake in Puregold, to listed holding company Cosco. Subsequently, Cosco did US$400 million offering at a 30 percent discount to fund expansion, driving share price down. They pocketed US$100 million as part of that deal. Lucio’s retailing background is linked to running duty-free airport shops, including Clark International Airport, a former American air force base northwest of Manila.

With Puregold, the Cos have earned both respectability and fabulous riches. Since 2011, when they took the company public, its shares have soared threefold. “Puregold is the country’s only pure play retail company, and it’s on an aggressive growth trajectory. Investors like that,” says Lauro Baja, country head of  Philippines UBS Investment Philippines, which was a lead manager in its IPO. Puregold’s meteoric rise is linked to a domestic consumption boom that has been the mainstay of the Philippines’ growth story. If consumer confidence remains upbeat, the retail market is expected to grow to US$75 billion by 2017.

New Subsidiary

In July, Puregold Price Club announced it is setting up a new subsidiary to hold investments in the food retailing business. In a disclosure to the Philippine Stock Exchange, Puregold said its new subsidiary Estenso Equities will house investments in other food retail outlets.

“Estenso Equities would hold interests in other grocery chains that would not necessarily be consolidated into Puregold, in cases where the existing owners would like to get a strategic or financial partner but maintain controlling interest,” Puregold president Leonardo Dayao said in an interview.

“There may be food retail businesses in which we may be acquiring certain equity position but are not going to be part of Puregold,” Dayao said. “It’s a vehicle to give us flexibility to go into something that is not on a full ownership basis, in case there are investment opportunities.”

The new subsidiary will thus represent Puregold’s portfolio investments in allied businesses. While earlier acquisitions were mostly businesses and brands that were consolidated into Puregold—such as S&R, Parco, Eunilane and 11GrocerE—this move signified Puregold’s willingness to take a non-controlling interest in prospective acquisitions.
On “non-food” specialty retail, those eyed by Cosco are pharmacy and construction/hardware materials retailing. Earlier, a privately owned Co company has acquired Visayan pharmaceutical chain ThreeSixty.

Energy Interests

A month earlier, Lucio’s newly acquired publicly listed company Mariwasa Siam Holdings, Inc. was officially transformed to Da Vinci Capital Holdings Inc.

This has thus become Co’s third publicly listed company after successfully taking retailing business Puregold Price Club Inc. public and creating a new holding firm Cosco Capital out of mining/oil arm Alcorn Gold Resources Corp. (APM).
In a disclosure to the Philippine Stock Exchange on Thursday, Mariwasa said the Securities and Exchange Commission had approved amendments to its articles of incorporation to change its name to “Da Vinci Capital” and extend its corporate term for another 50 years from Nov. 5, 2013.

Co has yet to officially announce his plans for Da Vinci but stock pundits expect Co to infuse energy-related businesses. His group’s privately held Union Energy Corp. earlier announced a partnership with renewable energy developer Sta. Clara Power Corp for an 8-megawatt mini-hyropower project in Oriental Mindoro costing about P1.9 billion. Union Energy is likewise undertaking a P1-billion investment in a 9.9-megawatt rice husk biomass power plant in San Jose City, Nueva

Mall Strategy

Last month, Cosco Capital Inc. bared plans to acquire shopping centers to fast-track its foray into community malls. Teofilo A. Henson, company director in charge of Cosco’s real estate business, said the firm is looking to build its first community mall in the province of Cagayan.“Right now, we are looking at Tuguegarao. That is a possible site. We have studies now ongoing,” Henson said in an interview during the company’s stockholders’ held in Muntinlupa City.He also said the firm may also acquire existing malls to move “faster” in this foray.“There are also existing malls that were offered to us. So we are evaluating [the offers],” Henson said while declining to name the malls, which according to him are located in Luzon.

Meanwhile, Cosco President Leonardo B. Dayao, in his report to stockholders that day, said the company plans to open its first community mall “in 2014.”Dayao said the company was looking to spend P400 million for each of the eight community malls it plans to build in the next three years. These malls will add to 192 supermarkets of Cosco subsidiary Puregold Price Club, Inc. as of end-June.Liquor Distribution.

At the same time, Dayao said the company has begun the “mass market” distribution of its imported liquor product, Excelente brandy.“We began the mass market [distribution] of Excelente in June,” he said.Dayao also said the company hopes to seal distribution agreements with other supermarkets aside from Puregold and S&R.The company targets to sell 500,000 to one million cases of Excelente brandy in the next two to three years, Jose Paulino L. Santamarina, president of Cosco unit Premiere Wine and Spirits, Inc., said on the sidelines of the meeting.“We just hope we can take 5% of the local market in two to three year,” said Dayao, who noted that the local market is dominated by Emperador Distillers, Inc.Cosco’s net income surged to Php488.30 million in the first half from Php1.42 million a year ago after absorbing various assets of the Co family early this year.

Cosco announced that it is expanding the distribution network for its liquor business in Visayas and Mindanao. The company said that it is looking to develop commercial retail establishments in the provinces. It has identified 8 sites for retail malls, each with a P450 million budget for construction and land acquisition.

Expansion

Cosco said it requires P12 billion to fund the expansion of its liquor, property, and oil storage businesses, as well as its diversification into non-food ventures. Cosco said that it plans on spending P6 billion to expand its real estate business. The company also earmarked P3 billion for debt financing, P1 billion for liquor distribution and P2 billion for its diversification into noon-food specialty retail.

Cosco earlier announced it would conduct a share sale to increase its public float to the level required Philippine Stock Exchange. The announcement also came after it got regulatory approvals to reorganize its business interests.
The Securities and Exchange Commission (SEC) approved an increase in the company’s authorized capital stock to P10 billion and infusion of over P70 billion worth of Co’s assets in the company, including supermarket chain Puregold Price Club Inc.

The infusion gave Co a 93.4% stake in Cosco.

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IDB: Live Music Mecca of South Metro

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[by Miriam Tan-Fabian]

FILIPINO indie musicians have it more difficult than their mainstream counterparts. They travel to great lengths both figuratively and literally just to be able to play. They get paid little, if at all, and oftentimes even refuse the little honorarium offered to them because most of them do it for the joy of playing music.

Indie musicians patiently wait their turn through a lineup of bands to be able to play anywhere from just 3-5 of their original songs, even. They lug their gear and equipment, sometimes through hours and kilometers to perform in an accessible venue with a good sound system, a cooperative and helpful sound man, and an appreciative crowd all in the pursuit of that elusive “perfect” performance. Thus, music venues are of primary importance to musicians.

Enter IDB, a cool and cozy venue located in Parañaque City, which hosts some of the best and most talented independent musicians from the local independent music scene.

IDB, a combined rehearsal studio, sound equipment rental, and bar is located on the third floor of Richland Commercial bldg. along Sucat and in front of Jaka Plaza in Brgy. San Isidro, Sucat, Parañaque. Although IDB is easy to miss, the gig entrance being small side entrance of Richland Commercial Bldg., it is now one of the happeningest place in the South, the equivalent of Makati’s Saguijo but without the relic feel and the pretentious hipster crowd.

Here’s the scoop on how IDB started.

Home is Where the Music Is

Sharen de Guzman, proprietor of IDB and rhythm guitarist of long-time indie/shoegaze/post-rock band Legarda and new super group The Skeleton Years, explained how he was inspired to put up a music venue. “It all started as a hobby really. We’ve been in the music scene for more than a decade now, and we know that gigs in the South are a bit limited due to the fact that there are only a few places that hold these kinds of events. Being in a band from the South that has to travel to northern parts of Metro Manila like Cubao or Timog Avenue, just to play, we’ve decided to open up our very own place that we musicians from the Metro South can call home.”
Sharen was very humble about the contributions of IDB when he said, “IDB is just your regular hangout spot but with some awesome music, great company, and overall great environment”. IDB continues to be one of the most accommodating places in the southern part of Metro Manila for bands and performers alike. Anyone who is anyone in the independent music scene who wants to hone their musical chops and get a boost in crowd support has to play in IDB.

idb

With its mix of quirky, gothic, and artistic interiors, including a wall-sized picture of Darth Vader’s head as a mural, a pencil rendition of a skull with a tentacle in one eye, a colorful wall of aliens and whimsical monsters, low tables, and even some old car tires turned into seats and tables, how could IDB not feel relaxing and cozy?
Sharen stressed that IDB’s ambience is one of its unique features and selling points as a live music venue when he said, “A lot of people who’ve been to IDB say that our place has this relaxed and homey feel to it. Chill lang daw, kahit nga daw nakaupo ka lang sa sahig, okay na e [It’s a chill place, they don’t even mind sitting on the floor to enjoy the show]. Also, the crowd can mosh (a style of dancing in rock shows) if they want to, which other venues do not allow. There are also these bands that say that IDB is like their home now.”

Indie Music Advocate

This hobby-turned-business has been running for three straight years now, promoting and giving actual performance opportunities to such non-mainstream but notable bands that push the envelope of Pinoy music, from electronic acts like Gentle Universe, a trio from Cavite specializing in ambient, ear-friendly, instrumental music; Cerumentric, an edgy synthrock band that uses computerized instruments instead of traditional guitars and drums; Names Are for Tombstones (NAFT), a one-man darkwave/synthpop band. It is a favorite venue of indie crowd darlings such as Walk Me Home, Neverdie, Pinstriped Rebels, Cebu’s raging girl-fronted outfit Tiger Pussy, The Sleepyheads, and acoustic-garage rock warblers Death To Puberty.

IDB has taken on a non-discriminatory and welcoming approach to organizers and bands alike, encouraging new musical styles to be performed where other typical venues won’t allow it. While it has welcomed mainstays and music veterans like The Youth, and Alfie Mela of acclaimed Pinoy new wave group Half Life Half Death, among others, it has also opened its arms to touring foreign acts, cover bands, fresh college bands, experimental musicians, and even new bands who are still exploring and developing their unique sound. IDB has had its share of being a venue of choice for touring foreign indie bands, such as when Grand Hotel Paradox, an acclaimed band from Dubai, played in the country. It has also hosted interesting events like flip top competitions. ‘Fliptop’ involves two spontaneous rap performers who try to outdo and tell off each other using rhymed speech, similar to the traditional art of balagtasan but delivered in sync to a hiphop beat. The recent one resulted to a fully packed and standing room only venue.

Since Sharen is a musician as well, he invested in a good sound system and soundproofed the venue himself. He is known to be hands-on and personal when he deals with the bands. He is also right in on the case when there are technical problems with the sound system.

One of a Kind

Before IDB, there was Al’s Bar along Aguirre Avenue in BF Homes, another venue for great music and good food where you can just chill with your friends and colleagues. For good or bad, when Al’s Bar closed, its regular patrons were displaced, and were looking for an alternative place to go. Luckily, IDB was there to take up the slack. Sharen was very candid about IDB’s potential competition when he said, “We don’t particularly have competition in our area to worry about, partly because there are really very few gig spots here in Paranaque to start with.”

Need: A helping Hand

When asked about his challenges in running IDB, since the venue operates as a small enterprise, Sharen answered, “We only have small crowds and we’re basically only open during the weekends”. He added, “One challenge for us is to fill up all the Saturdays and Fridays of every month. We need all the gigs we can get.” In light of this, it is probably no exaggeration to say that many gig places are a dime a dozen. IDB though, is a gem among gig places, and in its own small way has promoted Filipino music, creativity, and artistry. Unfortunately, places like these get little assistance from the government. Gig organizers may also be uninformed about the type of assistance they can ask from the government. Either way, there is a gap that needs to be filled.

Different Business Model

When asked about his plans for IDB, Sharen shared, “Nothing specific really. We just want to continue what we’ve started and just provide a place for bands to call their home, here in the South. He also understands that much of what he has achieved was because of the wellspring of support from the indie music scene when he said, “And if it weren’t for all the support we get from them, none of this would be possible”.
And when asked what insights and tips he can share with would-be entrepreneurs, he offered, “Just persevere and do what makes you happy”. We hope and pray that IDB gets more supporters so that it can do what it has always been doing: inspire more musicians, enrich music and culture, and create an audience that will appreciate it, while sustaining itself on the business side of things.

For event reservations and live gig updates, IDB can be reached at 09228678938. Visit IDB on Facebook: http://facebook.com/idbsouth

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Effects of New Technologies to the Family Business

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[by Enrique Soriano]

BUSINESSES that are handled by families need to be equipped with the proper set of tools. The members of the family are expected to contribute and support the operations of the company. The problem is, at some point, not all of the members in the family possess the necessary technical skills needed for the business. This is where the use of technology could take place. Business tasks could be completed through the use of machines, gadgets and other technology-based mediums.

 

http://www.phanchor.com
http://www.phanchor.com

Running a business requires technology in these times, because customers are now more knowledgeable and selective. They would like to receive value for money, which means a company would have the most satisfying products and services. Customers look for convenience and instant delivery of their orders and requests. These call for strong capabilities which could be achieved a lot easier through technology.

Any company that would not improve on technology would not be able to make it in the industry. If you are thinking that people is the greatest asset of a company, then yes, you are right. However, if you would be looking for uniform quality at the fastest and even the cheapest if not the most reasonable rate, in reality the use of technology could have things done twice as much of the same high quality and as fast as what people could ever deliver at the lowest cost. So, having the latest equipment by your side is an advantage. On a similar note, if you would not have internet access, then you might as well resort to limited sources of information or take longer periods of time just to get the attention of your target clients. Looking at the bigger picture, if that would be the case, it would be like a race between a turtle against a rabbit!

Technology is present in many areas of business. Beginning from human resources, accounting, sales, promotions/advertising, public relations, legal, purchasing and even to the production and all other departments, technology plays a major part. Some of the usual applications of technology that ease the work at the office involve the use of computer programs like Microsoft Office, which includes Microsoft Excel, Microsoft PowerPoint and Microsoft Word. What could be useful in these programs are the templates for presentation, business card making and charting that are already available for those who are always busy and need some organized material. Recruiting highly competitive staff could be laborious work for the old-schooled. Nowadays, there are softwares that sift through the pile of resumes sent by applicants, leaving only the ones that contain the criteria that the company requires and prioritizes. To those who are having difficulties with how to go about their businesses, say the basics of accounting (for the first timers in the business), electronic books are made to give the simplest explanations. Training the staff could be conducted through educational videos that capture all the important lectures that would not only teach step-by-step, but could also entertain the trainees. In the area of making a specific company’s branding known to the public, it is the development of a unique company website that would comprehensively provide the public with the impressionable, accurate and remarkable data on-line which technology proves its worth. Most companies utilize search engine optimization or SEO which uses specific keywords to make the search online fast.

The use of SEO could make websites appear right on the very top of the list. The use of electronic mail and on-line faxing are quick mediums for communication on the internet. All departments of a particular business could benefit from these means of fast communications in the virtual world. Paying bills of the company have never been easy through the use of online payment. Credit cards are widely used and electronic bank transfers are quickly done with just a few clicks. The use of cash registers makes your sales systematic and easily monitored. Using it could lessen the time customers wait on the line. The entry of robotics in the aspect of production made waves by improving quality and increasing output in tremendous quantity. The flaws of each product would be evaluated at an instant and specific features could easily be customized and installed.

The closed-circuit television or CCTV camera is another example of the many positive effects of technology to business. The security of the business establishment is closely observed. After the many unfortunate events that led to the closure of many businesses because of theft and other dangerous attacks, the use of CCTV cameras has become ever more important in the security department. It could uplift the sense of security of the clients, the employees, and the owners, because they would know that whatever unlikely happening occurs, they could be assured that significant evidence could be retrieved from these devices.

Technology has greatly impacted the way different businesses; including family businesses are operated. It has changed the way products are manufactured and services delivered. It has changed how people think and expect from companies. Moreover, through technology, many things have become possible, which would have never been possible in the previous decades.

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REY C. LAPID: The King of Pork… Chicharon

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REY C. LAPID: The King of Pork… Chicharon

Chicharrón (chicharon in Filipino), a dish made of fried pork skin, is popular in Spain and in Latin American countries. Part of the traditional cuisines of of Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Dominican Republic, Ecuador, Guam, Guatemala, Honduras, El Salvador, Mexico, Nicaragua, Panama, Peru, Puerto Rico and Venezuela—this tasty snack food has become a Pinoy favorite and a source of livelihood for many enterprising Filipinos like Rey Lapid.

Quiapo Roots

One of the biggest names in the local chicharon industry is Rey C. Lapid who founded R. Lapid’s Chicharon and Barbecue back in 1974.
Lapid started earning from chicharon when he was just nine. He would accompany his father to their stall at a market in Quiapo, where he noticed customers would often ask for the skin of pork to be removed.
Rey thought of bringing the pork skin home and have his father deep-fry it. Rey eventually sold his chicharon and people liked it. Business started in a small stall along R. Hidalgo street in Quiapo, Manila. At the age of 23, Lapid was on his way to success selling chicharon and, later on, barbecue, longganisa and tocino.
Lapid’s goal was to sell his products to retail stores, moviehouses, supermarkets, office canteens and bars in Manila. He registered with the NACIDA (National Cottage Industries Development Authority) as a food processor with shop address at 485 Verdad st., Sampaloc, Manila.
Soon, Lapid’s Quiapo stall started gaining patrons and from one shop he expanded into over a hundred branches all over the Philippines.

‘Laging Bagong Luto’

In 1996, Lapid registered the slogan “Laging Bagong Luto” for his brand of chicharon. As the slogan suggests, Lapid makes sure that his chicharon is always freshly cooked to maintain its crispiness and delicious flavor. The company mission practically reads the same: “To provide our customers with freshly-cooked, clean, delicious, and reasonably-priced food in a quick and friendly manner.”
Lapid also experimented with a new vinegar mix—flavored with more chili and garlic— to add to the experience of eating his chicharon.
To further improve product quality and to complete in the global market Lapid began importing raw materials from the United States and Europe in 1996. In the same year, R. Lapid’s opened its first branch at G. Tuazon Sampaloc, Manila followed by 10 more outlets within Metro Manila, to serve the increasing number of chicharon lovers.

Valenzuela Plant

To handle ever-increasing demand, Lapid put up a two-story building in Valenzuela City to handle his cold storage, warehouse, and food processing requirements. The site also serves as Lapid’s main business administration office.
The Valenzuela plant manages the company’s total chain process: from planning and acquisition of raw materials and ingredients, warehousing, manufacturing of processed food for the stores and wholesale clients, physical distribution and logistics.
The facility also received a GMP (Good Manufacturing Practices) Certification from the National Meat Inspection Service (NMIS)—the first-ever chicharon processor in the country to be GMP certified.
A great opportunity was gained by R. Lapid’s when it received the “Gintong Sikap Award” from the Federation of Filipino Consumers, Inc., in recognition of its remarkable increase of sales in its first mall outlet at SM South Mall, Las Piñas.
The award was the key in the development of good relationship with the management of the SM malls which eventually led to the establishment of ten (10) more additional SM outlets by the end of 1998.
In 1998, SM awarded R. Lapid’s with a Certificate of Recognition from the SM Management for Consistent Observance of Cleanliness, Safety and Sanitation.

Provincial Outlet

The first Provincial outlet located in Calamba, Laguna was opened on January of 1999 followed by an outlet in San Fernando Pampanga, Baguio City, Tagaytay and Lipa, Batangas. In the same year, Lapid introduced the Free Delivery Service to extend its customer reach.
A genuine Filipino entrepreneur, with passion to deliver to its customers high-quality products, R. Lapid’s has passed with flying colors the test brought about by stiff competitions, great sacrifices and hardships. However, after seven years, it has outlets serving not only its loyal customers but, in its modest way, contributing to the improvement of the country’s economy.
R. Lapid’s is not stopping here. It is taking its steps to continuously modernize its facilities, develop more products, make its systems more effective, and most importantly, harness more the capabilities of its human resources with the end in view of serving its customers from the four corners of the Philippines and neighboring countries.

Awards and Recognitions

1997 – Mr. Rey Lapid received the “Gintong Sikap Award” for being “Outstanding Businessman” by the Federation of Filipino Consumer’s Inc.
1999 – “Certificate of Recognition “for consistent observance of cleanliness, safety and sanitation inside the lease area for the months of February, March, April, May and August 1999 – SM Foodcourt – Ortigas.
2000 – Mr. Rey Lapid received the “Gintong Pilak Award” for being an “Outstanding Business Executive” by the Federation of Filipino Consumers, Inc.
2003 – “National Consumer’s Excellence Awardee” for being the “Most Outstanding Chicharon Maker”
2004 – “National Consumer Excellence Awardee” for being the “Most Outstanding Manufacturer of Chicharon & Barbecue”.
– “National Shoppers’ Choice Awardee” for being the “No. Chicharon (National)”.
– “Consumer Choice Awardee” for being the Most Outstanding Chicharon Maker
– “National Buyers’ Choice Awardee” for being the Most Chicharon
2005 – “National Consumers’ Excellence Awardee” for being the “Most Outstanding Manufacturer of Chicharon & Barbecue”.
– “National Shoppers’ Choice Awardee” for being the “No. 1 Chicharon”.
– “People’s Brand Awardee” for being the “No. 1 Chicharon Brand”.

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