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)

Overpopulation good for Filipinos, says bishop

By Jonas Cabiles Soltes
Inquirer Southern Luzon

12:55 am | Saturday, December 29th, 2012

 1849 20.3K 17K

Bishop Gilbert Garcera of the Diocese of Daet. CONTRIBUTED PHOTO/CBCP website

NAGA CITY—Bishop Gilbert Garcera of the Diocese of Daet, the capital of  Camarines Norte, believes overpopulation has been advantageous to the  Philippines and to the world because it has increased the number of  overseas workers and migrants who could send remittances back home while  taking care of ageing people abroad and spreading the Christian faith.

Contrary to the aims of the reproductive health (RH) bill, Garcera said the huge Philippine population could be part of “God’s plan for Filipinos to be caregivers to ageing nations whose populations had become stagnant.”

He also said many Filipino women would make “good wives” for foreigners in countries that have low population growth.

Garcera said many countries such as Germany and the United States had a stable but ageing population that would need people to take care of them, and that purpose could be served by Filipinos.

“Filipinos have a big mission to the world. Every Filipino child born is a blessing to the world. Let’s look at the increase in our population in a more comprehensive sense,” the 53-year-old prelate told the Inquirer in an interview at an orphanage in this city that he visited on Thursday.

In light of the Christian faith, Garcera said, the big number of Filipinos should not be seen as a problem but as an opportunity to help other people in the world.

“Filipinos have a duty to take care of them,” he said.

He said that the overpopulation that breeds poverty was not a problem because poverty itself was not a problem.

He said poverty even brought people “closer” to God and was instrumental in realizing God’s plan for Filipinos to take care of other nationalities by inducing migration and working abroad.

Economically, he said, the country also benefits from the “mission” because the migrants and overseas Filipino workers send back money from working as caregivers.

“When you help poor people they help themselves too. This is the reason we have so many pedicab drivers, for instance. Everyone, when given the chance, will strive to earn a living,” he said.

In fact, he said, poor people were more willing to help compared to the rich. Hence, a poor person was not a problem, he said.

“We should stop looking at poor people as a problem,” he added.

He said the diaspora of Filipinos was also a way to spread the Christian faith.

“There was this story of a babysitter in Dubai who started singing the Ama  Namin (Our Father) as a lullaby to the Arab baby she was caring for. The Islamic parents of the child found the song too good that they started learning it, without knowing that it was a Christian prayer,” he said.

He said there would come a time when nations that have decreasing populations would rely on the care of Filipinos.

He said the problem in the country was neither overpopulation nor poverty but corruption and the unequal distribution of wealth.

He admitted though that not all provisions of the RH bill were bad, but he also believed there were some proponents and supporters of the bill who “were against human nature and against what God wants.”

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Sovereign-wealth fund to speed up government programs

Written by Lito U. Gagni / Special to the BusinessMirror

(Conclusion)

The rationale for a Philippine wealth fund can be found in the host of Asian and other countries that have established their own sovereign-wealth funds (SWFs) just to induce economic growth. A rise in the level of economic activity, after all, induces a ripple of benefits that range from increased income to higher government revenues, exemplified by higher tax collections.

Vietnam conceptualized its own SWF on June 20, 2005, after its own reserve level rose. It started its own fund in August of the    following year and called it the Vietnam State Capital Investment Corp. (SCIC).

SCIC’s primary objectives are to facilitate reforms of state-owned enterprises and improve efficiency of the state capital utilization.  It was mandated to represent state capital interest in various types of business areas, including financial services, energy, manufacturing, telecoms, construction, transportation, consumer products, health care and information technology.

It has since contributed capital to various ventures and agreed in the equitization, or the reverse of privatization, of other enterprises.

This Vietnam model can serve as the Philippines’s own as the Aquino administration puts up a buffer fund that would contribute to the pursuit of public-private partnership projects.

There is, however, a legal hurdle that the Aquino administration would have to contend with as the present Bangko Sentral ng Pilipinas (BSP) charter frowns on constituting such a wealth fund as what other sovereign nations have done.

This, though, is easy to deal with, as Mr. Aquino appears to have a firm grip on both chambers of Congress, which can then allow the BSP, through legislation, to amend its charter. The members of Congress, we are sure, would not do anything to defer the advancement of the country’s economy and what better way to show this than by approving posthaste the first hint of the BSP that it wants to change its charter to enable it to put up a sovereign-wealth fund.

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The putting up of such a fund as soon as possible would be very timely. The recent signing of a framework agreement for the cause of lasting peace in Mindanao would need economic activities that could only be realized with the government having its own sovereign-wealth fund. By way of explanation, if the government has its own SWF, it need no longer suffer the consequences of agreeing to a disastrously high investment return as in the case of the MRT 3 project. That private endeavor, not too many may know, resulted in the punching of a huge hole in the government’s deficit levels as the ridership was not enough to pay for the costs of maintaining the line and assuring the 15-percent return.

The SWF acts as a buffer fund of sorts to insulate Filipinos from the consequences of lower allocations for government services, as the money intended for such, like the construction of schoolbuildings and new roads, is diverted to the MRT proponents.

Outside of Vietnam, the other Asian countries that have their own SWFs are Malaysia with its Khazana Nasional, New Zealand with its Super Annuation Fund, Singapore (Temasek Holdings), Indonesia (Government Investment Unit), China with its three SWFs, namely, the China National Security Fund, China Investment Corp. and China’s Africa Development Fund; Brunei with its Investment Agency and Australia with its Future Fund.

According to the influential Sovereign Wealth Fund Institute,  which charts the course of SWFs all over the world, there has been a shift from the “traditional reserve management to sovereign-wealth management.”

The institute said, “Many central banks possess reserves massively in excess of needs for liquidity or foreign-exchange management.”

Studies done by the BusinessMirror show that the BSP can apportion $20 billion as a start-up fund and still leave more elbow room for the monetary authority to flex its muscles in making sure that inflation does not rear its ugly head, its very reason for being.

After all, the start-up fund amounts to just a little over a year of remittances from the army of talented Filipinos.

The BusinessMirror extrapolations show that the remittances had an average growth of 14.2 percent in the last six years owing to a diversity of skills and destinations. In 2010 the record high of $18.8 billion in remittances accounted for 10 percent of the country’s gross domestic product. 

With a Philippine wealth fund, the overseas Filipino workers would be indirect participants in a government push to achieve double-digit growth. That alone would give the OFWs the added pat on the shoulder that they richly deserve.

Indeed, many bankers I talked to agree that the anti-corruption agenda of Mr. Aquino and the growth that the country is experiencing relative to the downturn in other economies, as well as the push for infrastructure projects, would have an added dimension when the Philippine wealth fund is established.

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How OFWs can grow their money back home

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By Mike Aquino for Yahoo! Southeast Asia

If you’re an OFW, you enjoy our most heartfelt gratitude: your remittances help support the Philippine economy in the global downturn, with inflows reaching record highs of $20.117 billion in 2011, as reported by the Bangko Sentral ng Pilipinas (BSP). But what happens to all that money when it hits our shores? If you’re wondering what else to do with your income after you’ve paid your kids’ tuition fees and built your house… where can you invest the rest?

With the Philippine economy on an apparent upswing, the opportunities for profit have also multiplied. Where you put your money depends on your appetite for risk and desire for return. Francisco J. Colayco, in his book Pera Mo, Palaguin Mo! suggests three factors that need to be evaluated prior to writing that check:

Appetite for risk: How safe—or how risky—is the investment? What are the risks that come with it? Colayco asks that you evaluate if “the financial return or income [is] commensurate to the risk [you are] taking,” while keeping in mind that the risks are not always financial.

“Sometimes it is not only money you are putting at risk,” Colayco reminds his readers. “It may also include family relations, reputation, your job security and other personal, professional relationships.”

Liquidity: “How long will my money be tied up?” Colayco suggests you ask. “May I withdraw anytime and convert it back to cash?”

Potential Yield: Is the advertised return on the investment higher than prevailing inflation rates?

You can take advantage of a wide variety of investment opportunities in the Philippines that offer the right mix of these three factors. These opportunities also have varying barriers to entry—mutual funds, for instance, may only require an initial minimum investment of about P5,000, while investments in medium-scale businesses or property may require that you sink in millions of pesos.

Let’s start with government securities, stocks and mutual funds. These short-term investments are good choices for investors with relatively modest sums to invest. Government securities are debt investments, i.e. you literally lend money to the government. Stocks represent units of ownership in companies, i.e. you buy a piece of a company. Mutual funds are collective investment schemes that trade in both government securities, stocks, and other securities.

You can buy government securities at any of the thirty-odd authorized government securities dealers (GSEDs) listed in the Bureau of Treasury. Banks and other financial concerns also offer a variety of mutual funds with varying degrees of risk and return. To get the most out of your investment, you’ll need to shop around for the right product.

It helps to ask the right people; personal finance blogger Fitz Villafuerte refers all such questions to his broker. “I always tell them, I’m not a stock market expert, so I’m not going to give you stock market advice. Go to Citisec online, they’re my stockbroker, and they offer free stock market investing seminars.”

Investing in businesses requires greater amounts of capital, know-how, and appetite for risk. Entrepreneurship carries with it a large potential for failure—“for the majority who are not truly prepared, their attempt to go into business, more likely, will fail,” says Colayco. For starter entrepreneurs, Colayco suggests buying a franchise instead.

“The advantage of getting a franchise is you minimize the risks involved in doing business,” explains Colayco. “[It’s] also one of the best ways to learn how to manage or run a particular business. When you buy a franchise you are also buying the opportunity to learn the whole business process, from sourcing of supplies to managing inventory and handling people, among other things.”

For starter tips on buying a franchise, read "Questions to ask before buying a red-hot franchise" 

Investing in property requires the largest amounts of capital, and is the least liquid option among the ones listed here. “Look at your house as a good short-term investment only if you are able to buy it below the market value,” writes Armando Ang, author of Tips and Traps when Buying or Building a Home. “If you buy at the market rate, then your costs of buying and selling will almost always end in a loss on the deal.”

Investment in property has one shining upside: its value tends to appreciate over time. “It is a passive investment that increases in value by allowing market forces to work for you without sweat,” says Ang. “It’s a tangible asset that can grow in value as time passes by. It also serves both for shelter and an investment for future generations.”

Published n Yahoo Philippines

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Second-class citizens

By: Oscar Franklin Tan
Philippine Daily Inquirer

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THIS Christmas season, thousands of overseas Filipino workers (OFWs) will have had their constitutional rights violated at the world’s worst airport.

I met Marc one Sunday evening at NAIA 1. He skipped dinner with his family, not wanting to risk a long Philippine Overseas Employment Administration (POEA) desk queue and miss the 10 p.m. flight back toSingapore. An elite Ateneo Management Engineering graduate now in a global investment bank, he is one of thousands of young professionals in Singapore and Hong Kong juggling priceless short trips home with an international career. He is one of thousands of young professionals resigned to sacrificing brief moments with their families for inane POEA queues.

After my first Christmas home, I found myself begging a POEA officer to issue my clearance because my plane was taking off in 30 minutes. Without looking up, he sternly ordered me to return to the queue and wait. I boarded only after staring down the guard at immigration, claiming to be a tourist.

It is an open secret that the POEA was formed by torturers left jobless by Edsa. In Singapore, I must travel during office hours to our embassy, not the most accessible of places, to purchase an Overseas Employment Certificate (OEC). My papers are never checked and I routinely write conflicting information in the forms. (I will try “drug mule” on my next OEC). I must then have the OEC certified at NAIA’s POEA desk because it might be fake.

Being the world’s worst airport, NAIA 1 requires Filipinos to queue outside to enter; foreigners have heralds who shout “Business class, business class!” and ask Filipinos, guards included, to make way. Because the POEA desk is brilliantly located outside the departure area, one better be early to first queue at the POEA desk then queue to enter NAIA 1 before one’s check-in counter closes. One may be forced to queue to enter, queue to check in, exit NAIA 1 to queue at the POEA desk, then queue yet again to reenter. Especially if a 747-load of travelers to Los Angeles intervenes, one can readily miss one’s flight and get fired.

The best part is check in, and immigration officers ask to see my Singapore employment pass anyway. Shown my hard-won OEC, they explain that it and the POEA certification may be fake.

Amid such silliness, picture OFWs clutching thick envelopes of documents and their last shreds of dignity as they make obeisance to the POEA. Picture a Filipino professional, trying to be taken seriously in an international team, forced to beg one’s colleagues to leave early for the airport because his OEC might be declared fake.

And this is just NAIA; imagine the hell that is the main POEA office that Stella Gonzales visited. (NB: The ultra-efficient Joseph Jose is the sole smiling POEA officer who never berated me for not printing my itinerary or not arriving three hours before my flight. Be sure to queue for the long-haired Malaysian rock star lookalike.) Ironically, an OFW may escape becoming a second-class citizen in one’s own airport by giving up his citizenship.

My parents walked to Edsa for our Constitution’s trivialized sentence: “Neither shall the right to travel be impaired except in the interest of national security, public safety, or public health, as may be provided by law.” The Supreme Court reiterates that the right to travel is a fundamental human right, and one recognized in the Universal Declaration of Human Rights. The ruling Silverio v. CA emphasizes that the explicit list of exceptions “national security, public safety, or public health” is “a reaction to the ban on international travel imposed under [Marcos] when there was a Travel Processing Center.”

Phil. Ass’n of Service Exporters v. Drilon, in upholding a selective ban on female OFW deployment to specified countries, categorically stated: “Had the ban been given universal applicability, then it would have been unreasonable and arbitrary.” Thus, the POEA’s blanket curtailment of the right to travel is blatantly unconstitutional. So disenfranchised are OFWs that the right to travel only received attention when Gloria Macapagal-Arroyo and her neck brace tried to invoke it; balls and chains on every single OFW have long gone ignored.

There are undeniably difficult policy issues. Our Singapore consuls regularly work miracles for desperate Filipinos with an unbound knack for getting duped, down to sobbing detainees in Changi Women’s Prison who were promised waitress jobs. The Singapore embassy ministers to an OFW population three times the size its staff can theoretically support. Nevertheless, convoluted, inutile procedures imposed on everyone are an unconstitutional placebo, not a solution.

Singapore’s OFW profile is evolving; even the CEOs of the Bank of Singapore and Credit Suisse are OFWs. The growing majority are now professionals who do not need or want the POEA’s so-called protection. OFWs remain treated as the perfect docile cash cows, voiceless in government as fee upon inane fee and procedure upon inane procedure are heaped upon us. It is not an option but a constitutional imperative to find a rational way to protect those who need protection while respecting the general population’s right to travel.

I have already accepted the burdens of proudly being a citizen of our screwed up country. But is it too much to ask that the POEA leave reunited families to have dinner in peace? The constitutional right to travel was intentionally strengthened after the Marcos-era abuse; is it too much to ask that it not be violated, in the cruelest of ironies, at the Ninoy Aquino International Airport?

Is it too much to uphold our right to be free from the POEA?

Oscar Franklin Tan was chair of the Philippine Law Journal in 2005 and student speaker at his 2007 Harvard Law School graduation. He twice won the Cortes Prize in Constitutional Law at the UP College of Law. He has worked as a corporate lawyer in London and Singapore and is an associate of Jones Day, one of the world’s largest law firms.