TIME RIPE FOR ENTREPRENEURIAL REVOLUTION

TIME RIPE FOR ENTREPRENEURIAL REVOLUTION

Of Trees And Forest

By SENATOR MANNY B. VILLAR

January 8, 2013, 6:22pm

THE time is right for our people to become entrepreneurs and for the government and non-government organizations to help small businesses.

Our economy is awash with cash. A primary reason is the strong inflow of remittances from overseas Filipino workers (OFW). The Bangko Sentral ng Pilipinas said cash remittances amounted to $1.84 billion in October, 2012, up by 8.5 percent from the same month last year.

This brought total remittances for the first 10 months of 2012 to $17.49 billion, up by 5.8 percent from $16.53 billion year on year. By the end of 2012, cash remittances were expected to breach $21 billion, compared with $20.11 billion in 2011. And the World Bank estimates total remittances from overseas Filipinos to reach as much as $24 billion this year.

We also have a very liquid market. The Bangko Sentral recently reported that domestic liquidity grew by 8.6 percent year-on-year in October, faster than the 7.5 percent recorded in September, to reach R4.7 trillion. This indicates that liquidity in the financial system can amply fund the economy’s growth requirements amid ongoing strains in the global economy.

In addition, interest rates remain low, which should encourage more loans for businesses.

Our problem is how to translate these developments into more businesses and more livelihood opportunities.

For the past 20 years, I have been calling for an entrepreneurial revolution that will encourage micro, small, and medium enterprises. We should change our mindset: instead of aspiring to become employees we should strive to become employers.

My wish is for the Philippines to have a strong entrepreneurial class. Our gains from economic growth will not have a lasting impact, particularly in terms of raising the quality of life of Filipinos, unless we become a nation of entrepreneurs.

Even the world’s biggest economies recognize the role of small businesses in their development. According to online publication About.com, citing data from the US Small Business Administration, the US economy is not dominated by giant corporations but by independent enterprises with less than 500 employees, which employ 52 percent of all US workers.  During the period 1990 and 1995, small businesses generated 75 percent of new jobs in the US.

In China, which has dislodged the United States as the world’s biggest economy, is adopting new measures to help small businesses through loans and tax breaks. China.org.cn quoted Mike Bastin, marketing and management academic at Tsinghua University, as saying that he believes the measures were adopted because of the growing significance of small businesses to the country’s economy. Bastin noted that small and medium-sized enterprises generate 50 percent of China's annual tax revenue and contribute 60 percent of its GDP.

The government, he said, recognized that China’s future economy would depend more and more on the growth of small businesses.

In my view, the future of the Philippine economy will also depend on the success of our small businesses, which account for more than 90 percent of all registered enterprises in the country.

I continue to encourage OFWs and their families to set up small businesses instead of spending all of their money on gadgets and consumer items that they can do without.

The Villar Foundation and its partner NGOs offer skills training and counseling for OFWs and other people who are interested to become entrepreneurs.

Local banks should increase lending to small businesses and aspiring entrepreneurs, and the Bangko Sentral should increase its efforts to make it easy for small businesses to borrow capital.

We need more than lip service. According to the Bangko Sentral ng Pilipinas (BSP), the government is bent on increasing financial assistance to the microenterprises sector to attain an economic growth rate that will actually reduce the incidence of poverty.

The Credit Surety Program, a pool of funds from state-owned banks, local governments, cooperatives, and non-government organizations that was launched by the BSP in 2008 to make loans accessible for small businesses, is targeting total loan releases of P1 billion by the end of this year.

I believe the monetary authorities and the banks should do better. According to a BSP report, outstanding loans from commercial banks totaled R3.31 trillion as of October, 2012, including R142.14-billion credit card loans and R80-billion auto loans. These figures make the loans to microenterprises pitiful.

Let’s not waste the advantages that we have right now. While many of the wealthy economies are struggling through recession, let’s push the revolution that will transform the Philippines into a nation of entrepreneurs.

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(For comments/feedback e-mail to: mbv_secretariat@yahoo.com. Readers may view previous columns at www.senatorvillar.com)

Taipans in China, professionals in America

By: Artemio V. Panganiban
Philippine Daily Inquirer

Amid the rising tension in the West Philippine Sea (also known as the South China Sea) over the reputedly oil-rich Spratlys, my wife Leni and I visited China last week (together with Sen. Frank and Mila Drilon, PCGG Chair Andy and Tisha Bautista, bankers Nonoy and Cory Alindogan, and William and Barbara Go). Freely mixing with the locals, we did not encounter anyone inclined to discuss the Spratlys conflicts. People were keener on promoting harmony and prosperity.

Entrepreneurs in China. In between listening to Dr. Fu Lang, foreign affairs director of Guangdong, explain how his province attained its superhigh GDP of over 14 percent for several years, and being enthralled at the magical mountains of Zhangjiajie where the movie “Avatar” was filmed, I was equally amazed to know how some Filipino taipans have succeeded in China.

Perhaps, the most admired Filipino tycoon in the People’s Republic is Carlos Chan. His “Oishi” food products are processed in 13 factories all over the Middle Kingdom and employ over 7,000 Chinese workers, supervised by 80 Filipino managers. His China footprint easily dwarfs his Philippine operation, which has four factories and 4,000 workers.

Though he has opened subsidiaries in Vietnam, Indonesia, Thailand and other countries and though he sells his products worldwide, his Chinese operation is, by far, the most successful, eclipsing many foreign multinationals there like Frito-Lay, maker of “Lay’s” and “Doritos.”

Other Filipino taipans who have penetrated China’s markets include George S. K. Ty who recently opened Metrobank China, the first non-Chinese bank to be headquartered in Nanjing while maintaining its presence in Shanghai. Henry Sy’s SM operates the largest shopping mall in Xiamen and several stores in other locations. Lucio Tan has banking, real estate and beer interests in various Chinese cities, while John Gokongwei Jr. has set up thriving real estate and food businesses. Recently, Tony Tan Caktiong started 300 food outlets under a Chinese brand, not under his giant “Jollibee” that is popular here.

US professionals. In contrast, Filipinos in the United States veer not so much to business as to the professions—medicine, nursing, banking, education, etc. Some of those who have excelled in these fields are Joanne de Asis (investment banking), Loida Nicolas (advocacies), Josie Natori (high-end fashion), Sam Bernal (stem cell therapy), Felipe Tolentino (ophthalmology), Libertito Pelayo (journalism), Arthur Lopez (hotel management), Marilou Mabilangan (government), Jana Benitez (arts), and modesty aside, our son Jose Artemio III (quantitative risk management).

Diosdado “Dado” Banatao, a poor boy from Cagayan, has become a hi-tech legend in the Silicon Valley of California. Now a billionaire, he visits the Philippines regularly. A month ago, I had the pleasure of a private dinner with him, and of listening to his passion to set up, with the help of the Ayala and Lopez conglomerates, a P5-billion endowment to help brilliant Filipino science and technology students conquer the hi-tech industry.

Banatao is happy that the Philippines is becoming the world’s BPO capital. But beyond that, he thinks that with grit, proper education, tutoring and extensive training, Filipino scientists and engineers can, like him, rise to the top of the American totem pole.

* * *

Reckless accusations. Reacting to last Sunday’s column, a reader berated me for allegedly writing a Supreme Court decision that allowed Hong Kong-based First Pacific Company to purchase a huge block of PLDT shares that enabled it to control the phone company. As a result, First Pacific and PLDT boss Manuel V. Pangilinan allegedly rewarded me with an independent directorship in PLDT and Meralco. This is misleading and false.

The truth: Justice Conchita Carpio Morales penned that landmark decision (Yuchengco vs. Sandiganbayan, Jan. 20, 2006) which declared as ill-gotten a large block of PLDT shares and forfeited it in favor of the government. Later that year, the government auctioned the shares. A unit of First Pacific matched the highest bid, exercised its right of first refusal and paid government over P25 billion in a transparent public bidding. I had no participation whatsoever in that sale.

I met Mr. Pangilinan for the first time in 2007—after I had retired from the Court in 2006—when Inquirer Chair Marixi Prieto introduced him to me. He invited me to be an independent adviser (not director) of PLDT only in mid-2009. As an “independent” adviser, I do not represent management or any shareholder. I cannot propose or second motions in the board of directors. Neither can I vote. My advice may or may not be heeded by the company, but anyway I render it objectively in good faith and to the best of my modest knowledge of law and business.

I was elected an independent director of Meralco in mid 2008 at the invitation of Meralco Chair Manuel Lopez, not of Mr. Pangilinan who was not even connected with Meralco at the time. That said, I hope readers will verify facts before spitting venom on me.

Another reader asked why, despite my friendship with Justice Antonio T. Carpio, I still critiqued his ponencia on due process grounds. True, we have voted together in many cases, but—equally true—we have also disagreed. For instance, he strongly dissented from my decision in 2004 upholding the constitutionality of the Mining Law. Magistrates, incumbent and retired, can differ without being difficult.

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Comments are welcome at chiefjusticepanganiban@hotmail.com

Muslims share secrets of their trade

By Tina Arceo-Dumlao
Philippine Daily Inquirer

AMONG the Muslim tribes of southern Philippines, the Maranao of the Lanao provinces have long been known for their entrepreneurial spirit.

They have been buying and selling goods even before colonial powers came to the Philippines and trading has remained a main source of livelihood. Very few of them go into agriculture or other professions.

Such entrepreneurship is put in full display in the thriving Greenhills Shopping Center in San Juan City, where 90 percent of the Muslim traders, many of whom have been in Greenhills since the 1980s – are Maranao or “people of the lake.” The remaining 10 percent are either Tausug or from Maguindanao.

Not unlike the Chinese

All are members of the 1,000-strong Greenhills Muslim Traders Association headed by Grand Imam Ahmad M. Dimapuno, which subscribes to a set of business principles not unlike those of the Chinese.

Matanog tells the Philippine Daily Inquirer that like the Chinese, Muslim entrepreneurs can be counted on to provide start-up capital to their fellow Muslims interested in trade. And no interest is charged in keeping with the Shariah law, or the guidelines followed by the Muslims.

“We believe that the reward for helping others put up their own business will come later,” says Matanog, who sells rubber shoes, bags and watches at the Greenhills tiangge section.

“He also says that Muslims have institutionalized “paluwagan” system, under which they contribute regularly to a pool and take turns using the combined funds to start a new business or expand their existing venture.

Matanog says that groups with about 10 members each implement the “paluwagan” system among themselves, and each member can get as much as P500,000 when he gets his turn to use the pooled fund.

Lots of luck

“We consider this fund as a very good capital and will bring a lot of luck to Muslim trader,” he explains.

The Muslim traders are divided into three main groups: Jewelry, cellular phones and general merchandise. Most, however, are in general merchandise with 1,000 stalls, followed by the cellular phone traders (500 stalls) and then 200 stalls for jewelry.

Matanog adds that Muslim traders in Greenhills make sure they maintain a harmonious relationship with their Christian brothers, especially since they account for 80 percent of customers. Foreign visitors comprise another 10 percent and the other 10 percent are fellow Muslims.

“We treat all of our customers with respect and we keep a very good relationship with our sukis or frequent buyers. We do rely heavily on our Christian patrons,” he says.

“Matanog credits the Muslim traders’ success in business to their unity, their desire to help each other succeed in their trade.

Blessings

The traders, for example, change locations every month so that each will get the chance to get prime or corner stalls that get the most customer traffic.

The association is also active in organizing Islamic activities to foster camaraderie among the traders. The more successful members likewise take time to advise others just finding their way into the business.

Matanog shares that in the aftermath of deadly Tropical Storm Ondoy that struck Luzon in September last year, members of the association rounded up money, food and clothing to help the hard-hit families in Marikina, most of whom were Christians.

“We have always believed that if we are one, many blessings will come to us and if people feel safe and secure, they will continue to patronize our products,” he says.

Matanog stresses, however, that not all Muslims succeed in business, even with all the help and guidance provided by fellow Muslim entrepreneurs.

“At the end of the day, he says, it is the Muslim trader’s perseverance, hard work and flair for business that will ultimately determine if he or she will have a flourishing trade.

“Not everyone succeeds in business, in the same way that not all who studied law can be a good lawyer,” Matanog says.