German business sentiment on PH economy improves

 BY BERNIE CAHILES-MAGKILAT

May 13, 2024 05:38 PM

  

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Despite key risks, German firms operating in the country are more bullish on their outlook of the local economy in the next 12 months, with both investment and employment figures showing optimism, according the latest survey conducted by the German–Philippine Chamber of Commerce and Industry (GPCCI – AHK Philippinen).

The Spring 2024 AHK World Business Outlook Survey released Monday, May 13, by the GPCCI also identified key risks that could impact future economic growth, which include economic policy conditions, high energy prices, and challenges related to supply chain disruptions and infrastructure. 

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The Spring 2024 survey reports that half (50%) of the German-Philippine businesses are still optimistic in their business situation. The same trend is reported on company expectations, which showed positive results, with a majority (61%) of the responding firms forecasting confidence in business development for the next 12 months. Notably, the local economic projections in the next 12 months significantly increased by 17 points at 55 percent. Investments and employment also followed this trend with increased projections at 44 percent and 61 percent, respectively (from 39% and 54% in Fall 2023).

“It's encouraging to see such confidence from businesses involved in German-Philippine relations, forecasting a bullish local economy. This optimism surely points to a thriving environment in the Philippines for both investment and job creation over the next 12 months," said GPCCI President Marie Antoniette Mariano. 

The GPCCI statement attributed the optimism to the series of events in the first quarter of 2024 that have evidently bolstered bilateral relations between the Philippines and Germany. These events include German Foreign Minister Annalena Baerbock's visit in January, President Marcos' subsequent visit to Germany in early March, and the convening the 2nd Joint Economic Commission in mid-March. 

In terms of top risks for German businesses, the survey showed that economic policy conditions topped the list due to complex regulations, frequent policy changes, and extensive bureaucracy creating an unpredictable environment. High energy prices also pose a significant concern, impacting profit margins and operational costs, particularly for energy-intensive sectors like manufacturing. 

Additionally, challenges such as supply chain disruptions and infrastructure are tied for third, with both factors contributing to operational inefficiencies.

“To capitalize on the current economic optimism, it's imperative that the Philippine government work closely with businesses to resolve these identified challenges,” said GPCCI Board Director and Policy and Advocacy Chairperson Dr. Marian Norbert Majer.

“Addressing these issues can help create a more predictable and favorable business environment and ensure that this bullish momentum translates into substantial outcomes that will help the Philippines attain its sustained economic growth,” Majer added.

GPCCI also said that survey respondents have taken proactive steps towards enhancing the resilience of their business operations. As part of their diversification strategies, they have reported expanding their supplier networks and exploring new sales markets to mitigate the risks of future disruptions. 

Efforts at diversification are likewise facing challenges with increased legal and regulatory issues ranked as their top concern, followed by difficulties in finding suitable suppliers or business partners, and the high costs associated with expanding business operations.

Notably, more than half (55%) of respondents said they are only averagely prepared to handle international crises and geopolitical risks. GPCCI pointed to a moderate level of resilience among the survey respondents with only 34 percent consider their readiness as good. “Our network continuously assesses the resilience of German companies' supply chains at their international locations, aiming to significantly mitigate the risk of future disruptions, such as transport interruptions or the sudden loss of production facilities.” said GPCCI Executive Director Christopher Zimmer. “We see that our respondents in the Philippines are actively enhancing the resilience of their operations by expanding supplier networks and venturing into new markets.”

Almost 70 companies related to German-Philippines business relations participated in the spring edition survey coming from the services (59%), trade (14%), and the manufacturing or construction sectors (27%). 58% of the respondents have less than 100 employees, 25% have 100 to 1,000 employees, and 17% have more than 1,000 employees. In terms of company type, 48% of the respondents are local companies without a branch in Germany, 28% are subsidiary/branch/representations of a German company, 9% are international companies without a branch in Germany, 8% are international companies with a branch in Germany, and 6% are local companies with a branch in Germany.

GPCCI / AHK Philippinen belongs to the international network of German Chambers of Commerce Abroad (AHKs) which is represented by 150 offices in 93 countries.

PCCI launches livelihood project for women

BY BERNIE CAHILES-MAGKILAT

May 5, 2024 08:27 AM

  

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Recognizing the need for equal opportunity for all in the workplace, the Philippine Chamber of Commerce and Industry (PCCI) launched a livelihood project dubbed as "Karunungang Pangkabuhayan Pangkababaihan" to reintegrate women into the workplace and provide them with the opportunity to earn decent incomes for their families through a capacity building program. 

LIVELIHOOD PROJECT FOR WOMEN -- Shown in photo (L-R) are  Dr. Erjan Malimban, Alay Buhay Foundation; Delia Jimenez, Co-Chair, Corporate Social Responsibility Committee (CSR); Soc Bautista, Chair, Membership Committee; Atty. Amalia Cayanan,  Area Vice President for PCCI - North Luzon; Joel Tugade, Chair, SDG and PR Committees; Sergio Ortiz-Luis, Honorary Chairman/Treasurer; Jude Aguilar, Vice President, International Affairs and Chairman, 50th Philippine Business Conference & Expo;  Alegria Limjoco, Vice President for Regional Affairs and Director, SDG; Arturo Guerrero, Director, Labor Committee; Singapore Ambassador Constance See; Ambassador of The Netherlands Marielle Geraedts; Australian Ambassador Hae Kyong Yu PSM;  Colombian Ambassador Marcela Ordonez; Ambassador of the French Republic Marie Fontanel; Malaysian Ambassador Dato Abdul Malik Melvin Castelino; Dr. Hernan Delizo, Area Vice President PCCI - NCR and Mr. Celestino Reyes, President and CEO, Reyes Hair Company International Inc.   

Launched on April 26, over 150 women from four Gawad Kalinga communities were chosen as the first beneficiaries of said project, which not only extended training on the basics of haircutting and styling but employment opportunities for successful trainees as well as health intervention through free tuberculosis screening for seniors aged 50 and up. 

PCCI Enunina V. Mangio said that this project will be rolled out nationwide through the PCCI regional chapters, in collaboration with the local government units. 

“We hope to teach and educate more women with new skills and hopefully, reintegrate them into the workforce,” she said, adding that gender inequality used to be a thing of the past. “Women are treated secondary to men for a position with the same qualifications as men and women. Mostly, men are preferred, but not anymore,” she added.  Mangio hopes that the project could generate support so that more women can benefit and be provided with the skills needed to earn for their families. 

In the latest Labor Force Survey, the percentage of employed women this year slightly went down at 45.53 percent compared to 45.8 percent of the same period last year.  

The project, an undertaking of the Office of the PCCI President together with the Committees on the Sustainable Development Goals (SDG) and Corporate Social Responsibility (CSR), was attended by ambassadors from Colombia, Australia, Singapore, France, the Netherlands, and Malaysia, in partnership with Gawad Kalinga and Alay Buhay Foundation, and supported by Jollibee Foods Corporation, EMS Group, Reyes Haircutters, Francorp Philippines, and Coolaire Consolidated Inc.   

The event included the signing of a Memorandum of Understanding between the PCCI and the Children’s First 1,000 Days Coalition led by Manila Hotel President Atty. Jose Lina Jr. he MOU seeks to undertake a community-driven approach to address the issue of malnutrition and stunting in the country.   The event, the first undertaking of this kind which provides capacity building, employment opportunities and introduces health interventions to the needy, addressed the following SDGs: 1 No Poverty, 2 Zero Hunger, 3 Good Health and Well Being, 5 Gender Equality, 8 Decent Work and Economic Growth, 10 Reduced Inequalities and 17 Partnership for the Goals.(Bernie Cahiles-Magkilat) 

German investments in PH hit P43 B

 BY BERNIE CAHILES-MAGKILAT

  

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German investments in the country reached P42.865 billion with more than 21,000 direct jobs created, the Philippine Economic Zone Authority (PEZA) reported. 

PEZA Director General Tereso Panga and GPCCI President Stefan Schmitz (middle) with other PEZA and GPCCI officials

PEZA Director General Tereso O. Panga reported following after his meeting with German-Philippine Chamber of Commerce and Industry, Inc. (GPCCI) President Stefan Schmitz as they discussed strengthened collaboration in promoting the Philippines as a smart investment destination for German investors. GPCCI officials made a courtesy visit at the PEZA Head Office last Tuesday, 22 August 2023, to present the results of their recent survey and discuss various issues and concerns.

Panga reported that PEZA currently hosts 40 registered German locator companies/projects which contribute P42.865 B investments (1.57% of the total PEZA investments), $412.664 million exports, and 21,005 direct jobs. 

GPCCI also raised some issues and concerns affecting German investors including the amendment of the CREATE and PEZA Laws.

Panga explained that President Marcos has already issued a compelling statement, directing concerned government offices to look into the CREATE Law, with the objective of amending it and provide relief to PEZA locators, which are unable to fully enjoy their incentives. 

These are the investors we have attracted to invest in the Philippines because of that promise of benefits and incentives as contained in the create and in our registration agreements with PEZA, he said. 

“I think that should be the starting point before we can echo the call of the President to global investors that the Philippines is the smart investment destination in the region and that the best time to invest in the Philippines is now. We need to honor our commitments,” he explained. 

Panga also mentioned that PEZA will ask the Congress to amend the 28-year-old PEZA Law to be able to cope with the demands of agile locators and remain competitive worldwide amid the fast-changing market trends.

During the meeting, the GPCCI also presented to PEZA the results of their bi-annual AHK World Business Outlook survey conducted among the GPCCI members.

According to GPCCI, the results of the Spring 2023 survey revealed that the Philippines generally exhibited a better/higher result in the areas of economy, investments, employment, overall situation, and expectations.

It is worth mentioning that in terms of investments, the survey revealed that 46 percent of the participating GPCCI members are likely to invest higher in the country within the next 12 months.

"Given the recent advancements in the EU-Philippines free trade agreement and the positive outcome of a successful economic briefing in Germany back in July, we are confident that many German businesses will increasingly consider investing in the Philippines," said Schmitz.

“I think this is a good opportunity for PEZA to look at and see that this is an upbeat for investments for the country [from German investors],” noted Yves Aguilos, the Head of the Government Affairs and Data Protection Officer of GPCCI. 

In response to this, Panga said the Philippines is projected to have the highest GDP growth rate, making the Philippines one of the best performing economies in ASEAN. “We need to take advantage of that. We don’t want to pass up on these opportunities. We can only realize these FDI leads if we’re able to improve some more our ease and cost of doing business,” he said. 

German business leaders call for new economic partnership with PH

BY BERNIE CAHILES-MAGKILAT

  

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German business leaders have called for the establishment of new partnerships and new economic alliance with the Philippines, stating that Germany is clearly “underrepresented” in the Philippines with untapped investment opportunities for German companies.

GERMAN BUSINESS LEADERS CALL FOR NEW PARTNERSHIP WITH THE PHILIPPINES -- Shown in photo (from left) , Board of Investments (BOI) Undersecretary Ceferino Rodolfo, Dr. Gunther Kegel, CEO Pepperl+Fuchs AG & ZVEI, Dr. Dan Lachica, SEIPI President, Mrs. Silke Sichter, ZVEI Senior Manager ; (from right) Commercial Counsellor Nicanor Bautista, Trade and Industry Secretary Alfredo E. Pascual, Ambassador Irene Susan Natividad, and DTI Undersecretary Kim Bernardo-Lokin discuss new cooperation following the Philippine-German Investment Forum in Berlin on July 3, 2023.

This was raised by members of the German Chamber of Commerce and Industry (DIHK) and Germany’s Electronics and Digital Industries Association (ZVEI) during the Philippine-German Investment Forum in Berlin on July 3 as part of the three-week investment roadshow by the Department of Trade and Industry (DTI) in Europe.

Dr. Volker Treier, member of DIHK, emphasized in an opening message at the forum that now is the time to strengthen Philippine-German ties and to explore cooperation amongst like-minded partners such as the Philippines.

Dr. Gunther Kegel, ZVEI president, urged that Germany must establish new partnerships and find new economic allies.  Referring to Germany’s stated goals of “automation, electrification and digitization.”

The German businessman stressed that Germany is clearly “underrepresented in the Philippines”, and that untapped investment opportunities exist for German companies.

In a statement, the DTI said that senior officials of at least 50 companies, including those from Siemens AG, Gamigo Group, Nivus GmbH, Continental AG, Lufthansa Group, Messer Group, Allianz SE, Telstra Limited, Bayer AG, Bauer Spezialtiefbau Gmbh, Synolytics GmbH, Pepperl + Fuchs and Voith GmbH attended the forum, which was organized by the Philippine Trade and Investment Center (PTIC) in Berlin in partnership with DIHK and the Asia Pacific Committee on German Business.

Pascual, together with Board of Investments (BOI) Managing Head Ceferino Rodolfo, and Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Dan Lachica, met with Kegel, who is also CEO of  Pepperl+Fuchs.

During the meeting, they discussed the possible outsourcing collaboration in the field of electronics manufacturing between ZVEI, SEIPI, and the Philippine government in creating Original Design Manufacturer (ODM), Original Equipment Manufacturer (OEM), and electronics manufacturing outsourcing opportunities in the Philippines.

The discussion on collaboration between Germany and Philippines industries was in light of the continuing challenges of the lack of skilled labor, the rising cost of production, and the diversification and de-risking aspirations in Germany.

ZVEI is one of the most important industrial associations in Germany representing the interests of a high-tech sector covering over 1,100-member companies. They employ around 90 percent of the employees and staff of the electrical industry in Germany. Its members include global players and medium-sized and family-owned companies. The sector also has 879,000 employees in Germany with a combined turnover in 2021 of approximately EUR 200 billion.

Meanwhile, Pepperl+Fuchs, a member of ZVEI, is a Tier I automotive supplier involved in electrical explosion protection and sensor technologies. The company’s Factory Automation Division is a manufacturer of industrial sensors.  It makes a range of inductive, capacitive, photoelectric, and ultrasonic sensors, identification systems, barcode and camera systems, rotary encoders, position measurement systems, cord sets, and other accessories. Pepperl+Fuchs employed over 6,000 in 2022 with revenues amounting to EUR 1 billion.

Furthermore, Luc Quisthoudt, Continental Temic Microelectronic GmbH’s Vice President Operations for Advanced Driver Assistance Systems and Autonomous Mobility, provided insights about the company’s various operations in the Philippines, which spans over 40 years.

These include its 100 percent-owned Philippine subsidiary—Continental Temic Electronics, Phils. Inc. (CTEPI) located in Calamba, Laguna.  Established in 2004, their local subsidiary currently manufactures radar and wheel speed sensors for the Korean and Japanese markets.  Quisthoudt said that CTEPI is committed to staying in the Philippines, highlighting that the Filipino workers are highly skilled, motivated, and tech-savvy.

In the meeting, Pascual emphasized the huge potential of the Philippines to create an enabling business environment for a manufacturing industry given its strategic location that covers the ASEAN market and nearby countries.

Pascual highlighted the Philippines’ economic gains that make the country an ideal market for German exports and a strategic hub for German manufacturing firms that intend to access the ASEAN region.

"From a GDP growth rate of 5.7% in 2021, our country registered an impressive growth rate last year, 2022, of 7.6%—one of the highest in the ASEAN region," Pascual said.

Further, amongst ASEAN economies, the Philippines grew the fastest for the first quarter of 2023 at 6.4 percent as compared to Indonesia’s 5 percent, Vietnam’s 3.3 percent, and Singapore’s 0.1 percent growth.

Pascual also cited several factors that make the Philippines a viable investment destination, such as the country’s large domestic market of 113 million, young and skilled workforce, strategic geographic location in East and Southeast Asia with access to significant shipping lanes, and abundant natural resources, including renewable energy potential of about 250 GW, with ample reserves of green metals such as nickel, copper and cobalt.

PH internet speed improves in February— Ookla

BY BERNIE CAHILES-MAGKILAT

Apr 2, 2023 08:46 AM

  

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The country’s fixed broadband internet speed improves in February, according to the latest Ookla Speedtest Global Index report.

Based on the report, the country’s fixed broadband median speed improved to 90.03Mbps from the 88.13Mbps registered the month before. Average fixed broadband speed registered at 142.57Mbps.The latest download speed represents an improvement of 18.95% since the Marcos administration began in July 2022.

Mobile median speed slightly dipped as the country yielded a download speed of 24.58Mbps from 24.59Mbps the month before. Average mobile speed registered at 58.66Mbps. The latest download speed represents an improvement of 9% since the Marcos administration began in July 2022.

The National Telecommunications Commission (NTC) said that ensuring improvement of internet speed remains a priority as the country fast-tracks its digitization. NTC Commissioner Ella Blanca B. Lopez said, “We are also happy that Elon Musk’s Starlink is also now available in the country to give Filipinos in underserved and unserved areas fast and reliable internet.”

Streamlining and speeding up the issuance of LGU permits in July 2020 generated a significant increase in permits granted to telcos from July 2020 to January 2023.

Improvement on internet speed is largely attributed to this development as telcos are able to fast-track building infrastructure (cellular towers and fiber optic network) necessary in boosting services and connectivity.

Higher bread prices take effect today

by Bernie Cahiles-Magkilat, MB

Big bakers will start implementing higher prices on Pinoy Tasty and Pinoy Pandesal today, Valentine’s Day, almost a week after the Department of Trade Industry announced price adjustments in the suggested retail price (SRP) on basic necessities and prime commodities (BNPCs).

Jerry Lao, president of the Philippine Baking Industry Group (PhilBaking), said the 450-gram Pinoy Tasty will have a new price tag of P40.50 with P2 price hike per loaf and the ten-piece pack Pinoy Pandesal at P38.50 with P1.50 increase starting today. 

“Effective day of increase is tomorrow,” Lao said, as he explained that the implementation schedule will depend on the cut off date of respective supermarkets that their group members are serving.

Lao, however, said that the price increase granted was only half of the amount they requested since last year with the DTI. This means, he said, they will still pursue the balance of their petition.

“We are going to appeal after the implementation of the first tranche, we will ask them (DTI) when is the next balance,” he said.

At present, he said, bakers are supposed to get P8 price adjustment because the price of flour already went up to P1,050 per bag of 25-kilogram wheat flour from only P800 before August last year. The price of flour went up due to several factors including supply chain disruption due to the Russian war in Ukraine and the depreciation of the peso. The rule of thumb is that for every P40 increase in flour prices is a corresponding P1 price hike in loaf bread.

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But PhilBaking members sought for a P6 price adjustment for Pinoy Tasty but got P2. They also sought for P3 price increase for Pinoy Pandesal but got only half of what they wanted based on the SRP released by DTI on Feb. 8. The price increase they sought did not yet include higher cost of fuel, sugar, and other ingredients, Lao pointed out.

Demand this year is also very uncertain although the full reopening of classes is expected to boost sales.

Sales in December last year was dismal compared to the previous 2021 as more people went home to the provinces and there was a marked decline in foot traffic at the supermarkets last Christmas season. January and February were also quiet, he said.

Personally though, his company’s Tiffany brand was able to post a 10 percent increase in sales last year.

“Hopefully, sales for the rest of the year would perk up with the opening of classes,” Lao said.

Meantime, the Filipino Chinese Bakery Association, Inc. (FCBAI) President Gerik Chua and past President Henry Ah and other officers announced the much-awaited “Bakery Fair 2023” on March 2, 3 and 4, 2023 at the World Trade Center on hopes to fully revive the baking industry in the country. 

“This is a comeback fair,” said Chua noting that the Bakery Fair 2023 is the first after four years and after the pandemic. “This signals the revival of the Philippine baking industry despite inflation and other challenges,” said Chua.

The “Bakery Fair” is the biennial (once every two years) civic project of the FCBAI to promote and uplift the Philippines bakery industry and support socio-economic development.

The biggest and most star-studded Philippine bakery event, Bakery Fair 2023 has 136 exhibitors covering 10,000 square meters or one hectare of the World Trade Center. There shall also be many educational technical seminars by different top bakery industry-related companies, bakers, chefs and experts.

One of the exciting events of Bakery Fair 2023 is the “FCBAI Bakers Cup Wedding Cake Competition 2023”, which is a comeback after the pandemic and it shall showcase exciting and awesome wedding cake creations of “Kasalang Pinoy” theme. Be mesmerized with the bakers’ amazing creations using fondant, royal icing, gum paste and many more. This is one of the most awaited events of the year, wherein the first prize winner will have a chance to receive a prize worth P80,000 pesos. Winners shall be announced on March 2 and the wedding cakes of finalists shall be on exhibit throughout Bakery Fair 2023.

Another important event in Bakery Fair 2023 is “Angel Cup 2023”. The Angel Cup-Bread Display Competition highlights the making of Bread Showpiece, Artisan Bread, Healthy Bread and Sweet Dough with dough filling.

PH jumps in global ICT readiness ranking

by Bernie Cahiles-Magkilat

The Philippines is the biggest mover in the Network Readiness Index (NRI) 2022 ranking 71st from 85th last year out of the 131 economies that highlighted impact as the country’s main strength and technology as its biggest concern for improvement.

The NRI 2022 released by the Portulans Institute, a Washington DC Board think tank, is one of the leading global indices on the application and impact on information and communication technology (ICT) in economies around the world. 

Based on the NRI, which has four major pillars, the Philippines ranked 85th under the technology pillar, 82nd on governance pillar, 73rd on people, and 50th on impact.

 

When it comes to sub-pillars, the strongest showing of the Philippines relates to economy, individuals, and future technologies, among others. But it also showed that more could be done to improve the economy’s performances in the businesses, inclusion and SDG Contribution.

The report cited the Philippines as the year’s “biggest mover”, with Impact as its main strength and Technology as greatest scope for improvement. The Philippines performed considerably well on e-Commerce legislation, High Tech exports, and ICT services exports.

The report also cited the Philippines as number number five among the 36 lower middle income economies included in the report, outperforming in ten sub pillars: access, content, future technologies, individuals, governments, trust, regulation, inclusion, economy, and quality of life. 

The Philippines was ranked 5th in the group of lower-middle-income countries. In terms of pillar performance, it has a score higher than the income group average in each of the four pillars. At the sub-pillar level, the Philippines outperforms lower-middle-income countries in ten of the 12 sub-pillars: access, content, future technologies, individuals, governments, trust, regulation, inclusion, economy, and quality of life.

The country also ranked 13th within Asia and the Pacific, but lags behind its region in each of the four pillars. With regard to sub-pillars, it outperforms the average in Asia and Pacific in two of the twelve sub-pillars: individuals and economy.

In a statement, Trade Secretary Fred Pascual said the Portulans Institute for recognizing the Philippines as one of the champions of digital transformation, this is a testament to the continuing efforts of the Philippine government to transform the country into a digital economy.

“It shows that we are a country composed of digital natives, and it indeed gives us a demographic advantage. We are mindful of this advantage and recognize that the digital economy is about people and technology, so we are ramping up efforts to promote science, technology and innovation, as our main strategy,” Pascual said. 

According to Pascual, several initiatives are on the pipeline. In terms of legislation, the enactment of the proposed Internet Transactions Act (ITA) and amendments to the E-Commerce Act are also underway. Digital transformation initiatives to address upskilling and reskilling of human capital and businesses are also being scaled up. Further, E-Government or the automation of government processes are also being pursued through a whole-of-government approach.

Pascual noted that the Department is driving the formulation of the updated eCommerce Philippines Roadmap 2023-2025 which is designed to be more inclusive—including the youth, women, senior citizens and PWD sector, to help build a more robust e-commerce industry.

The DTI also serves as a key partner of the Banko Sentral ng Pilipinas (BSP) on financial inclusion and digitizing merchant payments. Relative to this, the Department, through the E-Commerce Office launched the e-Bayad Mo! social media campaign including a pay drama series as part of the its initiatives toward acceleration of digital payments adoption in the Philippines.

Further ramping up the Campaign and in support of the BSP’s financial inclusion program, an e-Bayad Mo! Regional Caravan is set to be launched, which will provide financial literacy sessions to encourage and discuss the benefits of using digital payments.

In closing, Pascual said that “the report highlights that digital natives will build and manage the future of the world. Our country’s median age is 25 years old and about 40% of our population are digital natives (20 years and below). With our huge base of young, highly-mobile workforce and consumers, we have more than enough economic assets to inspire the government and incentivize the private sector towards Network Readiness.”

Filipinos prefer sari-sari stores during inflationary times – study

by Bernie Cahiles-Magkilat

More Filipinos, even the rich, are keeping their proximity stores, mostly sari-sari stores and small convenient stores and groceries as important source of supply, a trend that is expected to continue during the inflationary period, a new consumer survey revealed.

The latest survey by Kantar, the world’s leading marketing data and analytics company, showed that while the economy has fully reopened and consumers are also going out to the malls and the formal shopping channels, they also continued to source from the small proximity channels as they adopt to inflationary times. 

In the past 12 months, Laurice Obana, Shopper Insight Director at the Worldpanel Division of Kantar in the Philippines, said the lower class have increased their spending in sari-sari stores.

Since the economy is experiencing inflationary times, Kantar said the lower D and E or the socio-economic classes prefer to go to proximity store and buy only what they need depending on the size of their pockets.

Data showed that the D and E classes have been going to the small stores 18 times in a month from 15 times during the pandemic while the middle class are maintaining a 50:50 ratio between proximity stores and supermarkets and hypermarkets.

The upper class are going back to the big grocery stores, supermarkets and hypermarkets but they are not leaving the small stores, Obana added. 

“We are seeing a continuing trend (buying from proximity small store channel), it’s not faltering or decreasing. The small channel is very relevant during the inflationary period,” said Obana.

Kantar further said that to adapt to inflationary times, Filipinos have become more discerning in their choices when it comes to Fast Moving Consumer Goods (FMCG). They are opting for brands and retailers that offer the most value, convenience and product assortment to get their money’s worth.

Kantar tracks the FMCG purchases of 5,000 local households, the largest shopper panel in the Philippines.

“Filipinos put a premium on value. While value can be as straightforward as cheaper goods or paying less for the same quantity, other factors such as the increase in gas prices, traffic and uncomfortable modes of transportation have redefined value in more encompassing terms when it comes to shopping. What we have seen is that, in general for packaged goods, shoppers are coping with rising prices by being more open to value brands. To some extent, however, they also take into consideration where to shop. Nowadays, with multiple retailers and channel options within reach, shoppers can easily adapt to what would best fit their budgets and lifestyle that will address their needs at the moment,” explained Obana.

According to Kantar, there is a bit of pressure on Hypermarkets and Supermarkets as most Filipinos who are feeling the economic strain are buying their basic FMCG needs in smaller proximity stores. In fact, 41 percent of FMCG purchases in 2022 are made in neighborhood sari-sari stores. This is a six percent increase compared to purchases made in 2020. Meanwhile, a six percent value share decline in hypermarkets and supermarkets was noted from 34 percent in 2020 to 28 percent in 2022.

Obana added that Filipino shoppers are discerning on the choices they make when it comes to their channel and retailer of choice. Value delivery in forms of rewards, lower prices or promotions is a given. Convenience or the ease of access and availability of options are also important factors that shoppers now consider.

PH commits to comply 27 int’l conventions, seeks continued EU-GSP+ status

by Bernie Cahiles-Magkilat, MB

The Philippines committed to comply with the 27 international core conventions on human rights, labor, environment, and good governance as it sought to maintain its duty-free privilege for the country’s exports under the EU-Generalized System of Preferences+ (EU-GSP+).

Trade and Industry Assistant Secretary Allan B. Gepty, who represented the Department of Trade and Indusry during the One Country, One Voice virtual consultation on the EU-GSP+ on Wednesday, Oct. 19, made this commitment as the country is facing strong headwinds from the EU in its petition to maintain its status in the EU-GSP+ scheme. 

The EU, particularly members of the EU Parliament have been very vocal in their criticism against the Philippines, particularly on alleged human rights violations, extrajudicial killings, freedom of the press, freedom of association and labor rights, red tagging, and pending bills such as the death penalty. Compliance to these are major issues in the 27 international conventions is a major criteria for a beneficiary country’s continued status for duty-free benefits of its exports.

“The enjoyment of GSP+ is anchored on the country’s compliance with the 27 international core conventions on human rights, labor, environment and good governance, and the Philippines remains committed in making good its commitments under these international conventions. Our policy direction is clear on these areas, and the Philippines can well serve as a strategic and reliable partner of the EU in the region,” said emphasized.

He reiterated that the Philippines is open to work closely with the EU (EU Commission, EU Parliament, and EU Council) to ensure compliance with international core conventions.

Gepty noted that EU is one of the major trading and investment partners of the Philippines. Through the EU GSP+ scheme, Gepty said, local stakeholders as well as foreign investors get to enjoy preferential market access in the EU market for qualified products.

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“This arrangement gives our stakeholders comparative advantage and we want to maintain this,” Gepty stressed.

Gepty cited the benefits the EU-GSP has provided to the Philippine economy via its GSP+ program since December 2014. The Philippines’ current status in the EU-GSP Plus, which grants zero duty on 6,274 tariff lines, including the country’s top major exports such as tuna, processed fruits, and garments.

The EU Commission is currently evaluating the Philippines and is expected to come up with the report for the 4th Monitoring Cycle in the fourth quarter this year. The expected report will also be used as a springboard for the new assessment when the Philippines reapplies to the new GSP+ scheme in 2024.

Gepty further emphasized that he continuation of EU GSP+ is beneficial for the Philippines and the EU in driving inclusive growth and sustainable development.

As such, he said, “issues and concerns against the Philippines must be received with utmost circumspection, clarified, and contextualized.”

With EU as a big export market and as a key investment partner, the Philippines intends to continue availing EU GSP+ to boost inclusiveness for businesses, among others. Gepty also noted that the government and the business sector are calling for the resumption of the PH-EU FTA negotiations. 

In addition, Gepty said the Philippines can be the EU’s reliable and strategic partner in the Indo-Pacific region.

Philippine exports to the EU has been improving since it started enjoying the GSP+ scheme. Total Philippine exports to EU in 2015 reached 6.68 billion euros reaching a high of 7.63 billion euros in 2019, but it declined to 6.2 billion euros in 2020 due to the pandemic. The country’s exports to EU registered a strong rebound in 2021 to 7.77 billion euros.

In terms of EU-GSP+, data from the Eurostat showed that the country’s duty-free exports under the program reached 1.60 billion euros in 2015 and steadily climbed to 1.95 billion euros in 2019 before declining to 1.6 billion euros in 2020. The country’s GSP+ exports recovered hitting an all-time high of 2.03 billion euros in 2021.

Data also showed that of the country’s high utilization of the program from 68.3 percent in 2015 to 76 percent in 2021, making the Philippines 6th largest export market globally.

The GSP+ has saved 150 million euros in duty annually for Philippine exports.