[By Erick A. Fabian]
The Philippines has the best call center agents in the world. We shouldn’t be surprised when they are pirated by companies in Singapore, Malaysia and Thailand come ASEAN 2015.
All the foreign firms have to do is offer them better salaries and security of tenure.
There is one thing the government can’t stop — the continuous brain-drain of Filipino professionals which has been happening for several decades.
It started with our scientists. Then the doctors, nurses, teachers, and information technology professionals followed.
For a country relying on manpower as a major source of revenue, we will soon find ourselves empty-handed.
There is no question as to the competence of Filipino business processing operations (BPO) or call center employees. Being a former American colony for 50 years, the Philippines has produced a large pool of fluent English speakers.
Ability to mimic
Even India conceded when its BPO companies moved 70 percent of their operations here recently. Companies worldwide have attested to the Filipino’s natural ability to mimic a neutral, easy-to-understand Western accent.
With most of our industries outflanked by their counterparts in other Asian countries, the BPO industry is one of the most promising saviors of the Philippine economy.
Offshore business processing is expected to double its multi-billion dollar earnings in 2015, due to rising demand in the global economy.
As ASEAN 2015 looms, the emerging economies of Thailand, Indonesia and Vietnam will be joining the BPO bandwagon.
International investors keep complaining about the corruption, infrastructure, and the difficulty of setting up a business here, seen as a major bottleneck for would-be BPOs.
We cannot blame Filipino call center employees if they eventually move abroad. There is nothing wrong with prioritizing your family’s needs, and a better offer is always tempting.
Fresh graduates of electronics communications engineering from provincial colleges are already getting offers of double compensation abroad. BPO agents will soon follow suit, because investors will find fertile ground in other Asian countries.
In fact, even military junta-ruled Myanmar is loosening up policies so foreign investors will be attracted to come and stay. The current regime at least had the sensibility to admit that they need a lot of foreign investor money to sustain their country’s economy.
US-based BPOs are here simply because the costs are much lower, and the return on investment more than makes up for the initial capital of setting up a new operation.
But more and more Filipino professionals are slowly trickling into Thailand and Vietnam, buoyed by their innate English language proficiency.
A 2013 ZDNET.com report by finance analyst Ryan Huang confirms that the Thai call center industry is pulling up its sleeves to challenge BPO heavyweights Philippines and India.
Internet speed is the lifeblood of the BPO industry, and yet the Philippines has one of the slowest Internet speeds in Asia. This is what they call the digital divide: the one who gets the information first wins.
The country has supplied the initial amount of exceptional BPO employees, but it is now becoming more obvious that we cannot respond to the skyrocketing demand.
The availability of foreign BPO companies here is a drop in the bucket. There are more than three million eligible but unemployed Filipinos. The call center industry can only employ around 600,000.
There are recent reports of Filipino professionals doing well in Indonesia, Thailand and Vietnam. A quick sweep of online job listings shows random lists of companies in Asian countries recruiting Filipino call center agents with offers of better salaries and working conditions.
One gray area is that law enforcement can’t even ensure the safety of BPO workers in Makati and Ortigas who mostly work at night. Recent accounts of mugging and other crimes against call center workers abound.
Whether the government and the BPO industry can get their acts together is another story.
By Al Labita
NOTHING to crow about the Aquino government’s self-serving claim that under its watch, the economy has expanded at a rate faster than what its officials could imagine.
Reckoned with realities, however, the growth only perpetuated the perennial rich-poor gap, one of the world’s worst, despite Aquino’s much-ballyhooed reform agenda.
While statistics only tell half a story, they nonetheless betray the painful truths lurking behind a façade of lies and deceit.
The inclusive growth Aquino has been harping on has been largely inclusive only among the few moneyed elite to the exclusion of the vast majority – the poor.
As the economy grows, it also exponentially drives up the wealth of those in command and control of the lives of Filipinos.
The figures are grim — only 40 families such as the Ayalas, Sys and Tans account for nearly 80 percent of the economy as measured by gross domestic product (GDP), as OpinYon’s research shows.
In stark contrast, some Asian neighbors had managed to whittle down the rich-poor ratio as they gained headway in democratizing their economy over the past decades.
In Thailand, the same number of families account for only 33.7 per cent of the economy and in Malaysia, 5.6 per cent, indicating how the Philippines has lagged behind in addressing the urgency to spread out the nation’s wealth.
Ironically, the glaring disparity vis-à-vis sharing a nation’s wealth explains why the Philippines has more billionaires (in US dollar) than in more prosperous Thailand and Malaysia.
GDP and PPP
They are the same people who take advantage of lucrative contracts, including profit guarantees and tariff increases, under the government’s Public-Private Partnership program (PPP), Aquino’s centerpiece in pushing infrastructure projects.
“The regime has consistently favored the few billionaires while further marginalizing the poor. Aquino now wants to enrich them even more by giving them various perks for the PPP projects,” says the militant Bayan Muna in a statement.
Based on the account of US-based magazine Forbes, the combined net worth of the Philippines’ 50 richest totaled US$65.8 billion in 2012, more than a quarter of the nation’s GDP.
Mostly of Chinese origin, these families own companies which have grown—aided largely by generous government incentives—to become conglomerates with shares traded on the Philippine Stock Exchange and in some cases offshore, notably in cash-rich Hong Kong and Singapore.
Millionaires to Billionaires
Their vast and diverse corporate tentacles extend far and wide, catering to the lives of Filipinos, literally from womb to tomb, leaving them with no choice but to enslave themselves under the weight of an oppressive western-style economic system.
As shown in the list of Singapore-based UBS Billionaires Census 2013, the Philippines ranked 9th in Asia, with 13 billionaires with a combined net worth of US$35 billion.
In 10th place was Malaysia with 10 billionaires worth a combined US$37 billion, while Thailand ranked 11th with 10 billionaires worth US$25 billion.
As usual, ethnic Chinese taipans Henry Sy and Lucio Tan topped the list of the Philippines’ mega rich whose ranks had swelled as more of their kind continued to amass wealth at the expense of those marginalized by the government’s pro-rich, anti-poor economic policies.
Sy, who operates shopping malls, saw his assets surge 44 percent to US$7.2 billion in 2012 alone and remains the Philippines’ richest man.
According to the Forbes 2012 annual rich list, Sy and Tan whose businesses range from retail to property and other related ventures were worth a combined US$13.6 billion, equivalent to six per cent of the Philippine economy.
While GDP has undoubtedly risen over the past years, every Filipino’s share of it is unfortunately the lowest among Asean countries.
Based on the latest data of the National Statistical Coordination Board (NSCB), the Philippines’ per capita GDP) stood at only US$4,339 in 2012 compared with Singapore, $61,461; – Malaysia, $16,976; Thailand, $9,609; and – Indonesia. $4,971.
GDP is the amount of goods and services produced, while per capita is derived from dividing the population in relation to GDP.
While seemingly doubtful, the NSCB data hardly reconcile with Aquino government’s oft-repeated claims that GDP last year expanded by 6.8 percent and even bragged that it outpaced Singapore’s 1.3 percent, Malaysia’s 5.6 percent, Thailand’s 6.5 percent and Indonesia’s 6.2 percent.
Yet, the Philippines’ per capital GDP has been the lowest–and slowest—among its peer group since 2005 despite official claims that it is Asia’s fastest-growing economy.
In what could be an indicator of the country’s ever-widening rich-poor gap, NSCB data also showed that high-income households accounted for more than half, or 60 percent, of the GDP.
The balance of 40 percent of the economy’s income was shared by the bulk, or about 84 percent, of the country’s population.
To be poor meant earning less than 16,800 pesos a year or P1, 400 a month or P47 pesos a day which covers 26.5 per cent of the nearly 100 million Filipinos.
As gleaned from the official poverty data of NSCB, the proportion of poor Filipinos to the total population has been surging from 24.9 per cent in 2003 to 26.4 per cent in 2006, and 26.5 per cent in 2009, an issue Aquino promised to address under his “Daang Matuwid” program of government.
The Philippines has one of the highest poverty rates among emerging Asian economies. The poverty incidence stood at 27.9 percent as of the first semester of 2012, almost unchanged from the 28.6 percent in 2009.
Aware of the magnitude of the problem, the government wants to bring down poverty incidence to 16.6 percent by 2015, an ambitious target difficult to achieve as the rich get richer and the poor poorer, given the economy’s bias for the affluent and the powerful.
In more ways than one, the economy is basically lopsided in structure allowing the oligarchs to gain too much control of the country’s resources and creating one of the worst income inequalities in Asia.
One wonders whatever happened to Aquino’s oft-repeated term “inclusive growth” which seeks to create jobs and reduce poverty by spreading the economy’s gains to trickle down to lower-income segments of society.
More importantly, the rich-poor disparity also draws attention to Aquino’s anti-poverty conditional cash transfer program which has a budget of more than P40 billion this year.
Capitalist vs. Socialist System
The program seeks to see 15 million of the nation’s poorest people receive money directly in exchange for their kids going to school and mothers and children getting proper healthcare.
In releasing its data, NSCB risked incurring anew the ire of Aquino who once bawled out the agency’s officials for portraying the economy in bad light contrary to his government’s rosy picture.
Sign of compassion for the disadvantaged sector of society may be gleaned from how the tycoons responded to the clamor for aid of the hapless typhoon victims in the Eastern Visayas region.
While some, particularly Sy and Tan, handed out P100 million each, others were hardly in the news, apparently opting to work behind the scene with less fanfare.
Billionaire port king Enrique Razon deployed heavy equipment to repair the damaged piers in Tacloban city and Leyte, while the Ayalas and banker George Ty chipped in P10 million and P50 million, respectively, worth of relief supplies.
The cost of putting the typhoon-ravaged Eastern Visayas region back on its feet amounts to a whopping P250 billion, a window of opportunity for the tycoons to share their wealth with those they derived their profits from.
Overall, while there is evidence of progress in addressing the yawning rich-poor gap, it is too slow. One study says it would take dozens of decade for the bottom millions of the nation’s population to achieve 10 per cent of the national income under the current rate of change.
Similarly, it raises questions about the Philippines’ pro-capitalist economic model vis-à-vis the egalitarian-oriented socialist type.
By Ray L. Junia
RAPID changes are occuring in the economic front, hence OpinYon’s focus on its dynamics and how it shapes the fate–and future–of ordinary Filipinos as they plod on with their daily lives. In this week’s issue, we are delving into the widening and alarming rich-poor gap, often glossed over by the mainstream media in favor of sensational political stories. Research-based and interpreted in a layman’s language, the story aims to be a wake-up call for the decision makers, both in government and private sectors, to assess how and why policy measures failed miserably in stemming the surging tide of disparity in democratizing the wealth of the nation.
Our Asian neighbors like Thailand and Malaysia succeeded in scaling down the dominant control of their economy by few families and there’s no reason why we can’t do the same for the sake of millions of Filipinos who continue to languish in silence under the yoke of poverty and deprivation.
Certainly, the people are sick and tired of glowing and self-serving government statements that the economy is booming. To them, economic growth is an empty boast as it has failed to uplift the quality of their lives.
Our government takes pride in being democratic. But in reality, it’s a subtle form of dictatorship by proxy in disguise because it it allows the oligarchs to reign supreme in the economy.
Unless decisively addressed, the worsening rise of poverty incidence vis-a-vis the insatiable appetite of the rich to rake in more profits may be likened to a ticking time bomb.
If the economic system is flawed, then why the heck do we insist on it? The clamor for a drastic change is resounding and unless we heed it, we may find ourselves jolted again by an onslaught of an irreversible political upheaval.
- PH poverty almost unchanged since 2006 (rappler.com)
- A JP Morgan economist responds to Pope Francis (aei-ideas.org)
- The Mother Of All Bubbles? (etfdailynews.com)
- Film Screening: Saving Dolma (sanskritibirgunj.wordpress.com)
- Military labels global corruption survey as “baseless” attack on its reputation (minivannews.com)
- Muslim Cleric Incites Children to ‘Slaughter’ Christians and Alawites in Syria – Atlas Shrugs (2012zt.wordpress.com)
- Census: No sign of economic rebound for many in US (thehartford.com)
- In post-coup Honduras, rising poverty and inequality, report says (latimes.com)
- Blog: Venezuela tries to suppress reports of economic upheaval (cpj.org)
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)