IN THIS ISSUE • EMB Accomplishments • Export Trade News • Export Policy Updates • National Exporters’ Week 2015 • MSME Financing • Outbound Business Missions • Major EMB Programs • Frontline Procedure • Product in Focus

DECEMBER 2015 The Philippine Export Digest (PED) is the official newsletter of the Export Marketing Bureau (EMB), the export marketing arm of the Department of Trade and Industry (DTI).

MSMEs Take Centerstage in APEC 2015

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he micro, small, and medium enterprises (MSMEs), which make up over 97% of all enterprises and generate more than 70% of all jobs in the Asia-Pacific region, took center stage in this year’s Asia-Pacific Economic Cooperation (APEC) Meetings. “We recognize that MSMEs are an important force in economic activity, growth, job creation, community resilience, and innovation. We will complement APEC’s initiatives in promoting MSMEs’ participation in global value chains (GVCs) with an agenda that will support MSMEs as direct exporters,” Trade and Industry Secretary Gregory L. Domingo said. Two of the key action plans that the ministers across the 21 APEC membereconomies have adopted to help push MSMEs in global trade and investments were the Boracay Action Agenda to Globalize MSMEs and the Iloilo Initiative: Growing Global MSMEs for Inclusive Development. The Boracay Action Agenda, proposed during the APEC Ministers Responsible for Trade Meeting on 24-25 May this year, aims to foster the growth of MSMEs through capacity building programs, facilitating the participation of MSMEs in the global or regional trade -either through GVCs or as direct exporters of finished goods and services -- and providing greater opportunities for MSMEs. Priority areas identified for cooperation and action were trade facilitation, e-commerce, financing and institutional support, including those for women-led MSMEs. On the other hand, the Iloilo Initiative, a guiding framework for integrating MSMEs into international trade and GVCs, was adopted during the 22nd APEC SME Ministerial Meeting held last 25 September 2015. It lays down strategic actions to boost MSMEs’ growth and empowerment

by providing them with a “bigger voice” through dialogues among MSMEs, large businesses, and policy makers. The APEC Meetings, which culminated recently with the APEC Summit, were anchored on the theme: “Building Inclusive Economies, Building A Better World,” and focused on the four priority areas: 1. enhancing the regional economic agenda;

2. fostering MSMEs participation in regional and global markets; 3. supporting and investing in human resources; and 4. building sustainable and resilient communities. ■ (Editor’s Note: By the time this publication comes out of the press, the four priority areas that the Philippines was pushing will have been adopted by the APEC Head of States who have attended the APEC Economic Leaders’ Meeting in Metro Manila on 18-19 Nov. 2015.)

Boracay Action Agenda 1. Facilitate the access of MSMEs to free trade agreements/regional trade agreements (FTAs/RTAs) by simplifying and streamlining the rules of origin (ROO) procedural and documentary requirements and harnessing information technology (IT) to ease documentation and procedures streamline customsrelated rules and regulations and assist in the compliance of MSMEs 2. Streamline customs-related rules and regulations and assist in the compliance of MSMEs 3. Provide timely and accurate information on export and import procedures and requirements 4. Widen the base of Authorized Economic Operators (AEO) and trusted trader programs (TTP) to include MSMEs in order for them to contribute to security, integrity and resiliency in supply chains 5. Support measures to widen options on financing for MSMEs and further develop the infrastructure to facilitate lending to them 6. Expand internationalization opportunities for micro and small enterprises providing goods and services through ICT and e-commerce 7. Strengthen institutional support for MSMEs 8. Strengthen focus on MSMEs led by women

Iloilo Initiative 1. Providing bigger voice, better opportunities for MSMEs 2. Advancing policy frameworks to promote MSME participation in GVCs and international trade through the APEC MSME Marketplace

Included in this issue: Compilation of Euromonitor Digest 2015 Issues Philippine Export Digest 2015 • 1

EDITORIAL

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his year marks two milestones for the Philippines: First, the country played host, for the second time, to the Asia-Pacific Economic Cooperation (APEC) meetings, having hosted the event in 1996 the first time. Second, the country, as a member of the Association of Southeast Asian Nations (ASEAN) economies, will celebrate the official declaration of the establishment of the ASEAN Economic Community (AEC) by end-December 2015. Among the sectors in the country that are expected to benefit the most from the outcomes of these two landmark events are the micro, small, and medium enterprises (MSMEs) that comprise over 99.7% of the total business enterprises in the Philippines. The significant role of MSMEs in economic development has been more pronounced in recent times and there have been various initiatives to further strengthen their participation in trade activities in regional and global markets. For instance, the Philippine-led Boracay Action Agenda to Globalize MSMEs in APEC aims to foster the growth of MSMEs through capacity-building programs, facilitating the participation of MSMEs in global value chains (GVCs), and providing greater opportunities for MSMEs. Complementary to this is the Iloilo Initiative: Growing Global MSMEs for Inclusive Development, which provides a guiding framework for integrating MSMEs into international trade and GVCs. The Department of Trade and Industry-Export Marketing Bureau (DTI-EMB), guided by the Philippine Export Development Plan (PEDP), continues to run and promote its various banner programs

such as the Philippine Export Competitiveness Program (PECP), Doing Business in Free Trade Areas (DBFTA), Regional Interactive Platform for Philippine Exporters (RIPPLES), and Halal Export Industry Development Program to enable domestic industries establish their niches in the regional and global markets, thereby helping them become more competitive in the GVCs. Cognizant of the pivotal role of MSMEs in the country’s economic development, the Philippine government, through Presidential Proclamation 931, series of 1996 and House Resolution No.33, has declared the first week of December of every year as National Exporters’ Week to gain the total commitment of the government and the private sector to continuously work together for sustainable export promotion and development. Hence, the DTI-EMB, in partnership with the Philippine Exporters Confederation Inc. (PHILEXPORT) and the Export Development Council (EDC), has always been at the forefront in organizing the yearly celebration of the National Exporters’ Week, the highlight of which is the National Export Congress (NEC). For this year, the NEC, through a series of panel discussion, aims to better equip and capacitate MSMEs in trade facilitation through sector-focused marketing assistance and innovation. By itself, DTI-EMB cannot do the herculean task it was mandated to perform to attain its goals, including providing leadership in the roster of commodity agencies, without the able support and coordinative efforts coming from its partners in the government and private sectors, including the academe. Through the EDC, the lead agency for this private-public partnership, DTI-EMB shall continue working with various stakeholders to help orchestrate regulatory and policy reforms that would directly benefit the country’s exporters -- the reason for DTI-EMB’s existence. ■

Dir. Senen M. Perlada, DTI-EMB

EMB ACCOMPLISHMENTS

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he year 2014 was another banner year for EMB as the bureau attained significant accomplishments in its major programs, such as the conduct of Outbound Business Matching Missions (OBMMs) and Inbound Business Matching Missions (IBMMs), information sessions on the Doing Business in Free Trade Areas (DBFTA) and Philippine Export Competitiveness Program (PECP), and the handholding of exporters through the Regional Interactive Platform for Philippine Exporters (RIPPLES) Program. Last year, the Bureau organized 11 OBMMs that assisted 87 exporters for 240 buyers and generated US$ 114.20M export sales. Meanwhile, EMB serviced 43 Inbound Business Missions/ Foreign Buyer Servicing (FBS) from Singapore, United Arab Emirates (UAE), United States of America (USA), Austria, United Kingdom (UK), Australia, Japan, China, Nigeria, Kingdom of Saudi Arabia (KSA), France, Brazil, Qatar, Israel, Belgium, Indonesia, Italy, Russia, and Switzerland with total spot sales of US$660.00. As a result, EMB referred 262 exporters and generated an investment package for production and marketing of virgin cococunt oil (VCO) products worth Php4M. The EMB also conducted 195 DBFTA information sessions representing 130% completion rate based on the 150 sessions targeted for the whole year. The sessions were attended by 25,941 participants including representatives of companies, members of the academe, and government officials. DTI’s DBFTA Program was nominated in the 2014 Trade Promotion Organization (TPO) Network Awards Philippine Export Digest 2015 • 2

(3-5 November 2014 in Dubai World Trade Center, UAE) for outstanding process, practice and excellence as an Export Development Initiative under the Developing Country category. Other shortlisted winners in the same category were Brazil, China, South Korea, Ecuador, Kazakhstan, and Republic of Korea. Through the PECP, the EMB conducted 26 trade information sessions in Metro Manila, Baguio, Cagayan de Oro, Cebu, Palawan, Davao and Pampanga with 1,576 participants. Through the RIPPLES Program, which EMB implements in cooperation with the Regional Operations Group (ROG) and the Philippine Trade Training Center (PTTC), EMB mentored 37 individuals from company-exporters in Region XII (General Santos City, South Cotobato, Kidapawan and North Cotobato), Region 4-A (Cavite, Rizal, Batangas), and Region VII (Cebu City, Dumaguete City, and Bohol). In addition, 40 companies graduated to Export Pathways Program (EPP) Level 4, while 38 companies graduated to EPP Levels 5, 6, or 7. Meanwhile, the Export Development Council (EDC), primarily responsible for the preparation of the Philippine Export Development Plan (PEDP), held three consultation/workshops in NCR (11 April), Davao City (6-8 April) and Cebu City (27-29 April) with 250 participants. Overall, EMB assisted a total of 3,175 exporters through OBMMs, IBMMs/FBS, Business Matches, TOR servicing, RIPPLES, DBFTA, PECP sessions, accreditation and PEDP consultation/workshops. It also serviced a total of 4,093 clients through frontline, via fax/ email requests, and the Knowledge Processing Division. ■

EMB ACCOMPLISHMENTS IN 2014 OBMM

Outbound Business Matching Missions

IBMM

Inbound Business Matching Missions

DBFTA

Doing Business in Free Trade Areas

PECP

Philippine Export Competitiveness Program

RIPPLES Regional Interactive Platform for Philippine Exporters

• 11 OBMMs • 87 exporters assisted • 240 buyers • US$ 114.20M sales • 43 IBMMs/FBS • 262 exporters referred to buyers • investment package for production and marketing of VCO products worth Php4M • 195 DBFTA information sessions • 130% completion rate based on the goal of 150 sessions • 25,941 participants • nominated in the 2014 TPO Network Awards for outstanding process, practice and excellence as an Export Development Initiative under the Developing Country category • 26 trade information sessions • 1,576 participants nationwide • 709 companies • 241 exporters • mentored 37 individual from company-exporters • 40 companies graduated to EPP Level 4 • 38 companies graudated to Levels 5, 6, or 7

PEDP

• three consulations/workshops Philippine Export Development Plan • 250 participants

EXPORT TRADE NEWS Thai Finance Ministry Imposes Processing Fees for Advance Rulings

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n 19 October 2015, the Ministry of Finance (MOF) issued Notification 0518/Wor1303 (“the Notification”) to impose processing fees for advance rulings, which cover customs valuation, origin of goods and tariff classification. Under the Notification, processing fees for advance rulings on each type of service is THB 2,000 per application. This Notification comes seven months after Thai Customs began introducing advance rulings to cover customs valuation on 3 March 2015 (please refer to the W&C Thailand Trade Alert dated March 9, 2015) and origin of goods on 11 March 2015 (please refer to the W&C Thailand Trade Alert dated 13 March 2015), while Thai Customs has long provided advance rulings for tariff classification. In absence of the processing fees’ regulation, Thai Customs previously processed the advance ruling services free of charge. With effect of this Notification, however, traders must pay THB 2,000 per application for each product in question. Thai Customs will review the application and issue the advance ruling within 30 working days from the receipt date of the application. The ruling is legally binding for two years from the date of issuance. Applicants may request for an appeal of the decision within 15 working days from the receipt date of the advance ruling. The outcome of the review of the appeal’s decision is final and legally binding for two years. ■

PNP Issued Temporary Permits to Purchase, Import Chemical Substances

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he Philippine National Police (PNP) has issued last July temporary permits to sell, import, unload and purchase chemical substances, including those needed for operations of the country’s top export sector electronics. Controlled chemical substances are also widely used in the manufacture and processing industries of chemicals, furniture, rubber, paints, fertilizers, oleochemicals, beverages, shellcraft, gifts, decors, housewares and cosmetics & personal care. The issuance of the permit is valid for three months, from 24 July until 31 October 2015, good for one-time use only and is not subject to further extension. Stakeholder applicants for the temporary permits directly submit applications at the PNP’s Firearms and Explosives Office (FEO) in Camp Crame with submission of the required Form 6. ■

Philippine Export Digest 2015 • 3

EXPORT POLICY UPDATES DTI Supports the Extension of RO-RO Policy to Chassis RO-RO Service

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TI Secretary Gregory L. Domingo endorsed the proposed Executive Order (EO) expanding the coverage of E.O. No. 170 to include Chassis-Roro (CHA-RO) in the RO-RO service. The CHA-RO is a mode of RO-RO shipping where the container is mounted on a chassis and loaded on and off the cargo belly of the RO-RO ships by a prime mover or tractor. Unlike in the purely RO-RO mode, the container-mounted chassis is disengaged from the prime mover which is left at the port of origin. At the port of discharge, the container-mounted chassis is then engaged with and picked up by another prime mover from the cargo belly of the vessel.

The proposed E.O. will lower transport cost by at least 15-20% mainly because the prime mover, expensive equipment, is not required to travel with the chassismounted container onto/from the RO-RO ships. This will also support and complement the establishment of the Association of Southeast Asian Nations (ASEAN) RO-RO project network and address issues related to the movement of natural persons (i.e., the driver), Customs Immigration and Quarantine Services (CIQS), and technical operations. Other agencies such as the Department of Transportation and Communications (DOTC), Philippine Ports Authority (PPA),

Mindanao Development Authority (MinDA), and Pilipino Banana Growers & Exporters (PBGEA) also support the CHA-RO initiative. The implementation of CHA-RO to the RORO service is the realization of one of the strategies identified in the Philippine Export Development Plan (PEDP) 2015-2017 to “improve the efficiency of infrastructure services particularly energy, logistics, transportation and communication through continuous regulatory reforms”. This will help reduce cost of shipping and thereby increase the export sector’s competitiveness. ■

Foreign Co-Loading Law Boosts Competitive Shipping Market

Exporters Laud Scrapping of 2 Import Forms

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resident Benigno S. Aquino III signed on 21 July 2015 Republic Act (R.A.) 10668, otherwise known as the Foreign Co-Loading Law, which amends the Cabotage Law. The law allows foreign shipping lines to dock at Philippines’ multiple ports and co-load among themselves import and export cargoes after being cleared by the Bureau of Customs (BOC). Prior to the signing, foreign vessels were prohibited from carrying foreign cargoes bound to domestic port. The law aims to reduce logistics costs and provides transhipment services needed by exporters and importers that will lead to competitive pricing of goods. This reform will also help decongest Manila ports as most shipments normally have to unload first in Manila before shipping directly to other domestic ports around the country. ■

xporters who import raw materials and components for their export products are pleased with the move of the Bureau of Customs (BOC) to discard two import forms such as the Import Entry and Internal Revenue Declaration (IEIRD) and the Supplemental Declaration on Valuation (SDV). Customs Memorandum Order (CMO) 29-2015 dated 1 September 2015 eliminates unnecessary use of papers and expensive forms, reducing importers’ transaction costs with the BOC in the release of their imported items. Under CMO 29-2015, the use of IEIRD or BC Form 236 will be discontinued in favor of the Single Administrative Document (SAD), which will now serve as the entry declaration. The SAD is secured through the Electronic-to-Mobile (E2M) Customs system and printed in two copies. The information in the SDV will be indicated in Box 39 of the SAD which is considered mandatory field in the entry declaration. ■

FDA Simplifies Rules on Importation of Urban Hazardous Substances

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he Food and Drug Administration (FDA) issued Memorandum Circular 2015-006 which eases the ruling on importation of household/ urban hazardous substances (HUH), provided manufacturers will import these substances for their own use. Products considered HUH include paints (household/car paints), paint solvent, adhesives and sealants, disinfectants, and detergents. The FDA License to Operate (LTO) and Certificate of Product Registration (CPR)

Philippine Export Digest 2015 • 4

are no longer required from importers of these products. Instead, an Import Clearance shall be issued by the FDA for every shipment, provided the following documents are submitted to FDA: 1. Letter of Intent; 2. Notarized Affidavit of Undertaking stating that the imported product does not contain any banned ingredient/s and is intended solely for own consumption and not for marketing;

3. Copies of shipping documents such as bill of lading, commercial invoice, and packing list; and 4. Proof of payment (PHP 510.00/ shipment). Exporters welcome this deregulation as it will facilitate their importation of raw materials that will result in timely delivery of their export products. ■

Stakeholders Urge Passage of Customs Modernization and Tariff Act

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xporters, importers, and other stakeholders such as the Bureau of Customs (BOC) are urging both Houses of Congress to approve the Customs Modernization and Tariff Act (CMTA) during the 16th Congress. This bill, when passed into Law, will update the country’s existing outdated Tariff and Customs Code of the Philippines which was passed in 1957. The CMTA aims to modernize customs administration and facilitate trade through full automation of customs operations and implement policies conducive to legitimate trade. More importantly, it will reduce transaction cost, encourage more trade and investments, and reduce the opportunities for corruption and technical smuggling, thereby enhancing the country’s competitiveness. The CMTA also manifests the Philippines’ commitment to align customs law with international standards under the Revised Kyoto Convention (RKC), to which the Philippines has been a signatory since 2010. RKC is a blueprint for modern and efficient customs procedures which the World Customs Organization (WCO) promotes. By doing so, the Philippines will harmonize its procedures with 140 Customs administrations, thus making it easier for traders, importers, and exporters to comply with border requirements. Under the CMTA, the BOC is mandated to use information and communications technology (ICT) to enhance customs control and to support a cost-effective and efficient customs operations geared towards a paperless customs environment. For this purpose, electronic documents, permits, licenses or certificates shall be acceptable and shall have the legal effect, validity or enforceability as any other document or legal writing. Moreover, the CMTA introduces trade facilitation program such as strengthening risk management through audit-based controls and risk management systems and compliance measurement strategy to focus on high-risk importers. Highly compliant and low-risk importers and exporters may enjoy deferred payment of duties and taxes. The bill also provides clear rules for electronic lodgment of goods declaration of importation. A goods declaration may be for consumption, customs bonded warehousing, admission, conditional importation, or customs transit. When CMTA is enacted, importers will be allowed to lodge and clear their goods declaration and supporting documents in advance prior to the arrival of their goods. This gives importers ample time to prepare and clear required documents while their

goods are being shipped into the country. In current practice, importers can only lodge and clear their goods declaration only if the shipment has already arrived in the port. One of the provisions in the CMTA allows lodging of provisional goods declaration if the declarant does not have all the information or supporting documents required to complete the goods declaration. Assessment shall be completed upon final readjustment and submission by the declarant of the additional information or documentation required to complete the declaration. The Export Development Council (EDC) advocated the adoption of “exporter” as one of the declarants in the provision of CMTA. Exporters, who are mostly importers of raw materials, will be given the right to dispose of the goods and lodge a goods declaration with the BOC. In the Senate version, other declarants can either be importer or customs broker.

The CMTA aims to modernize customs administration and facilitate trade through full automation of customs operations and implement policies conducive to legitimate trade. Furthermore, the bill increases the de minimis value from Php10.00 to Php10,000.00. The de minimis is the value of shipment below which any duties and taxes are waived. This means that no duties and taxes shall be collected on imported goods which are valued at P10,000.00 or below. This amount shall be reviewed and adjusted every three years. On the administration of Customs personnel, the CMTA mandates BOC to pay overtime fees and other customs services rendered by customs officers. For many years, international and domestic airlines have been paying for overtime fees, meals and transportation allowances to Customs, Immigration, and Quarantine personnel. This practice emanates from outdated laws and has been subject of abuse, and contributes to the increase in the cost of doing business in the country. The CMTA enactment will enable the Philippines to keep up with today’s fastchanging global economy and international standards. As the ASEAN Economic Community (AEC) will officially come into effect in a few weeks, it is important to enact and implement the CMTA to be able to take full advantage of new opportunities that will be offered by the AEC. To be able to contribute in realizing this, the EDC is set to continue to relentlessly push for the CMTA passage. ■ Philippine Export Digest 2015 • 5

Enabling SMEs for International Markets

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his year’s theme of the National Export Congress (NEC), the highlight of the week-long celebration of the National Exporters’ Week (NEW), focuses on “Enabling SMEs for International Markets.” It is the Department of Trade and Industry-Export Marketing Bureau’s (DTI-EMB) primary goal to help improve the competitiveness of the country’s micro, small, and medium enterprises (MSMEs), particularly the exporters, so they can penetrate the global markets. One way of doing it is by enhancing their capabilities. This compels the National Government in general, and the DTI-EMB in particular, to provide local industries a supportive and favorable business environment conducive to the development of their global competitiveness. With this purpose in mind, the DTI-EMB continues to explore all possibilities to help improve the human, technical, and financial capacity of these MSMEs to better equip them to meet the demands and requirements of international markets. DTI-EMB also continues to partner with the various stakeholders, including the privates sector and the academe, to be able to come up with holistic approach in capacitating the MSMEs so they can become more globally competitive and sustain their operations in the long run. Harmonized Standards and Procedures By itself, DTI-EMB cannot do the work alone. It needs the cooperation and involvement of all interested parties nationally and internationally to provide the big push for MSMEs. It works with various local agencies and the private sector to ensure that MSMEs thrive in a competitive environment. This means finding ways to simplify and harmonize processes, regulations, and standards and align these with those of other economies it deals with bilaterally, regionally, and globally. Otherwise, no local companies can compete internationally if rules and regulations as well as processes are disparate, unpredictable, and inconsistent. Coupled with a sound legal and regulatory framework as well as a harmonized system for accreditation, certification and inspection, the proactive capacity building efforts that DTI-EMB exerts, in close

Philippine Export Digest 2015 • 6

coordination with all stakeholders, provide the impetus for MSMEs to improve their craft and products and turn these into something of world-class caliber. One aspect that DTI-EMB advocates is the strengthening of government-industry partnerships being done through various consultations and fora to support the process simplification by reviewing and identifying those regulations or policies, including the non-tariff measures, that limit market access and by highlighting the importance of a predictable business environment where rules are not deliberately changed in the middle of the game. Accessible Information One area where MSMEs lack resources is the access to information, especially if access comes with a price. Getting valuable information about, say, premium statistics, training opportunities, market access reports, financing sources, among others, can sometimes be time-consuming and costly. DTI-EMB’s role in facilitating market access through the provision of information to local exporters enables them to be abreast of and comply with the new regulations in other economies where they export their products, thus giving them the opportunity to conduct business and export their products. Automated Systems Another way government can help enable MSMEs is by automating its services and providing it online. DTI-EMB is gearing up towards this direction. It is now developing the improved Tradeline Philippines portal which will provide, among others, access to local exporters and foreign buyers to register online to facilitate business matching. Both will have the power to update their online profile anytime they need to at the comfort of their workplaces or homes. On a national scale, the government is exerting efforts to fully implement the Philippine National Single Window (NSW), an interagency initiative that seeks to help MSMEs facilitate trade through improving efficiencies and authorization processes in the Customs. The Internet-based system allows parties involved in trade

to lodge information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements. This provides the exporters and importers the following benefits: • Lower business costs; • Faster trade documentation process and release times; • Easier trader compliance; • More effective and efficient deployment of resources; and • Increased transparency and predictability of government processes. Innovative Services In a globalizing world, MSMEs in the country are faced with several challenges in coping with the rapid technological advancements and some of them cannot cope that they just close shops eventually. Added to this are the trade barriers, including non-tariff measures, which economies around the world have implemented as the global trading environment become more liberalized. However, the government does not stop thinking of and providing innovative services to help MSMEs hurdle all the challenges that hinder them from going global and sustaining their business in the international markets. Improved Infrastructure Improved and cost-efficient business infrastructure is a must if the country desires to push the global competitiveness of MSMEs. While telecommunications systems in the country are being updated, these are sometimes cost-prohibitive to most MSMEs. Developing a solid and high-technology infrastructure at lower cost considerably enhances the capability of MSMEs within these countries to trade internationally. In addition, providing better Internet connectivity, which offers high-speed access to a global network of consumers and producers, can dramatically boost MSME participation in international supply chains and the global marketplace, thereby giving them more opportunities to do business and earn profits. ■

NEW Schedule of Activities DATE

DECEMBER 1

DECEMBER 2

DECEMBER 3

DECEMBER 4

DECEMBER 7

EXPORTERS’ BAZAAR 8:00AM - 7:00 PM front of DTI International Bldg., 375 Gil Puyat Ave., Makati City

ACTIVITY

TIME VENUE

USAPANG EXPORTS • Tips and Pointers for SMEs on Gaining Access to International Markets • Organic and Halal Certification for Goods and Services • Integration of Goods and Services in the GVC • Current Initiatives in the AEC Strategic Action Plus for SMEs

USAPANG EXPORTS Non-Tariff Measures / Financing for SMEs • Overview of NTM • WTO-I-TIP database • Export Rediscounting Facility • Lending Program for SMEs • Financing Program for Medium Enterprise

8:00AM - 4:00PM

8:00AM - 4:00PM

NATIONAL EXPORT CONGRESS 2015

USAPANG EXPORTS • Exporting to the United States (US) and Canada • Exporting to the European Union (EU) • Exporting to Iran • Exporting to Thailand and Myanmar

USAPANG EXPORTS • Introductions to EDC Functions • Transport and Logistics Co-Loading Law • Financing: Trade2Cash • Trade Policies and Procedures Simplification: ASEAN Single Window • PNP Regulated Chemicals

8:00AM - 4:00PM

8:00AM - 4:00PM

8:00AM - 4:00PM Mariott Grand Ballroom, Manila Mariott Hotel, Newport City Complex, Pasay City

DTI International Bldg., 375 Gil Puyat Ave., Makati City

DTI International Bldg., 375 Gil Puyat Ave., Makati City

National Export Congress 2015 Program PART I: COMMODITY AGENCIES’ EXHIBIT • Inspirational Talks

• Opening of the Export Commodity Agencies’ Exhibit and Consultation Desks

PART III: TOP EXPORTERS AWARDS

◦◦ Beating the Giants; Conquering the World

PART II: PLENARY SESSIONS

PART IV: PANEL DISCUSSION

◦◦ Sustaining Innovations with Endless Possibilities

• Global Outlook and Prospects for Philippine Exporters • Maximizing Benefits of the APEC Boracay Agenda and Iloilo Initiatives for MSMEs

• EU Support to Exporters and Launching of Philippine Exporters Guidebook (PEG)

• Trade Facilitation: Key Enabler to Capture Global Markets • Sector-Focused Marketing Assistance • Quality and Innovation for Global Competitiveness

Top Exporter Awardees Continental Temic Automotive (Philippines) Inc.

Hamlin Industrial Corporation

House Technology Industries PTE Ltd

Ionics EMS, Inc.

Metro Wear, Inc.

Visaya KPO Corporation

Nestlé Philippines, Inc.

Wilmar Edible Oils Philippines, Inc.

Profood International Corp.

Raw Brown Sugar Milling Company, Inc.

Philippine Associated Smelting & Refining Corp. Malagos Agri-Ventures Corporation

Martsons Food Corporation

Pilipinas KAO, Inc. Nature’s Legacy

Max’s Restaurant

Texas Instruments (Philippines) Inc.

Philippine Export Digest 2015 • 7

MSME FINANCING New Financing Assistance Available to MSMEs

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he Small Business Corporation (SB Corp.) has introduced its innovative financing facilities to help the country’s micro, small, and medium enterprises (MSMEs). These are:

1. Trade Fair and Inventory Build-up Loan Fund to finance MSMEs participating in local and international trade fairs for inventory build-up, space/booth rental, and shipment cost

5. Halal and Kosher Certification Loan Fund - to finance MSMEs engaged in food processing and are seeking certification of products for export to Muslim and Jewish territories

2. Food and Drugs Authority (FDA) Licensing and Production Site Compliance Loan Fund - to finance the cost of licensing (direct and overhead cost) and physical assets or improvements that need to be acquired by the MSME to be granted the license

6. Loan Fund for Farm Development for Pocket FarmerEntrepreneurs - to finance the production requirement for long gestating and/or non-traditional high value crops by farmer-entrepreneur and corporate employees

3. Patents Licensing and Inventory Build-Up Equity Fund to finance patent licensing cost and inventory build up

7. Equity Financing for Corporatized Micro Enterprises to finance MSMEs operating in industry clusters with funding requirements from P50K to P200K

4. Commercialization of Innovation Awardees Equity Fund - to finance start-ups with outstanding product/ service concepts

8. Lending to MSME clientele of DTI’s Shared Service Facilities (SSF) Program - to finance the working capital requirement of DTI SSF beneficiaries

Interested MSMEs may contact SB Corp. at telephone nos. 751.1888, 894.1677 or 813.5726. ■

FINANCING PROGRAM Trade Fair and Inventory Build-up Loan Fund

TERM

8-12 months

INTEREST RATE

10% p.a.

LOAN LIMIT

SPECIFIC DOCUMENTATION

Local Trade Fair – P500K Int’l Trade Fair – >P500K

DTI-Center for International Trade Expositions and Missions (CITEM) approval to participate

Food and Drugs Authority (FDA) Licensing and Production Site Compliance Loan Fund

up to 36 months

10% to 12% p.a.

up to P2.0M

Duly received FDA application inclusive of the technical/production constructs of the business

Patents Licensing and Inventory Build-Up Equity Fund

up to 36 months

10% to 12% p.a.

up to P1.0M

Proof of the patent application

10% to 12% p.a.

up to P1.0M

Official recognition or award by an external organization (First up to third prize winners should be the pilot target of SB Corp.) Proof of application for certification

Commercialization of Innovation Awardees Equity Fund

up to 36 months

Halal and Kosher Certification Loan Fund

up to 6 months

10% p.a.

up to P200K per certification or up to P1.0M per borrower

Loan Fund for Farm Development for Pocket Farmer-Entrepreneurs

3-5 years exclusive of 3 years grace period of gestation

Credit Line – 10% p.a. Term Loan w/o grace period – 11% p.a. Term Loan w/ grace period - 13% p.a.

up to P1.0M

Proof of ownership or of lease of the pocket farm to be developed

Equity Financing for Corporatized Micro Enterprises

up to 36 months

10% to 12% p.a.

Group/Corporation – P2.0M Individual – P200K

Proof of membership in a group/association

up to P1.0M

DTI Certification that the MSME has at least six months track record in using the SSF facilities

Lending to MSME clientele up to 36 months of DTI’s SSF Program Philippine Export Digest 2015 • 8

10% to 12% p.a.

OUTBOUND BUSINESS MISSIONS Outbound Business Matching Mission to Dubai and Abu Dhabi, UAE for Contact Furniture and Furnishings

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he DTI-EMB conducted the Outbound Business Matching Mission (OBMM) to Dubai and Abu Dhabi, United Arab Emirates (UAE) for Contract Furniture and Furnishings last 04-10 September 2015. The OBMM was a pioneer event jointly co-organized and sponsored by the DTI-EMB with the Philippine Trade and Investment Center (PTIC) in Dubai. DTI-EMB engaged the support of the Chamber of Furniture Industries of the Philippines (CFIP), Pampanga Furniture Foundation (PFF), Cebu Furniture Industries Foundation (CFIF), and the Philippine Exporters Confederation, Inc. (PHILEXPORT) of Region III.

doors to new opportunities, increase export sales, establish and expand presence of Philippine exporters of furniture and furnishings in the Middle East region in the long-term.

The OBMM was a promotional activity/ mechanism for PH companies to search for and connect with potential business partners in the UAE through the one-on-one business networking meetings and obtain business partnerships, joint ventures or distribution arrangements. It was expected to generate and open

A total of 25 buyers came in to meet the PBD representing agents, retailers, wholesalers, distributors, hotel and resort developers, quantity surveyors, interior designers, architectural firms, and real estate in the UAE. Other PBD were construction project managers, outfitters, contractors, contract firms,

The Philippine Business Delegation was composed of ten 10 companies: Ann Pamintuan, Butuan Win-Win Timber Corp., Coast Pacific Manufacturing Corp., Dale Mathis Studio, Inc., Em-Vel Furniture Manufacturing, Insular Rattan & Native Products Corporation, More Than A Chair, Inc., Philiana Design, Philippine International Trading Corporation, South Sea Veneer Corporation and Venzon Lighting.

international hotel chains, hoteliers and raw materials suppliers in the UAE. These were: 2XL, Alabbas Interior Environment LLC, Alnabooda Interiors, Bond Interiors, Cinmar Design, Creative Builders, Four Seasons Ramesh Gallery, Homes R Us, H20 Concepts, Interiors LLC, Kudos Premium Outdoor Furniture, LTC International LLC, Murad Enterprises LLC, Nakheel, RAK Free Trade Zone, Rowaida Interiors DMCC, World of Furniture and Sultan Group Investment LLC. The OBMM was held in time of UAE’s hosting of the largest real estate show “2015 Cityscape Global Exhibition and Conference” on 08-10 September 2015 for maximum exposure and covered business matching meetings and networking sessions at the Grand Excelsior Hotel Bur Dubai; Abu Dhabi Chamber of Commerce and Industry; Cityscape Global Conference in Conrad Hotel Dubai; and Cityscape Global Exhibition at the Dubai World Trade Center. ■

EMB and PSIA in Japan’s SODEC 2015

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he DTI-EMB organized an Outbound Business Matching Mission (OBMM) with the Philippine Software Industry Association (PSIA) highlighting the Philippine Information Technology services at the Software Development Expo (SODEC) held at the Tokyo Big Sight last 11-15 May 2015 in Tokyo, Japan. The SODEC is Japan’s largest trade show featuring latest IT technologies/ solutions, wherein many IT professionals such as information systems managers, management and sales executives, system integrators and managers from IT system conduct business. This year’s theme “The Right Choice For Your Global Business” highlighted the Philippine capabilities in the IT sector. The mission was envisioned to intensify the country’s presence in the Japanese market . The Philippines has been participating for 13 consecutive years in the SODEC. The Philippine delegation was composed of 10 Philippine IT and IT-enabled services providers which are PSIA members. Member companies/ exhibitors that joined the mission were Advanced World Systems, Inc., Alliance Software Inc., Blast Asia, Inc., CyberTech Corporation Ltd., Gulliver Offshore Outsourcing, Inc., PNI Business Solutions, Inc., Pointwest Technologies Corporation, Tsukiden Global Solutions,

Inc., Ubiquitous Technologies, Inc., and Valtes Advanced Technology, Inc. The software companies showcased the Philippine-based, globally competitive software industry and their IT outsourcing (ITO) services. This year’s OBMM constituted four major activities, namely: 1) Site Visit to Japanese companies, 2) One-on-One Business Matching Meetings, 3) Philippine Software & ITO Industry Promotion Seminar and Networking Session, and 4) Exhibition in SODEC Japan IT Week 2015. The trade promotion activity strengthens the public-private partnership as exemplified by PSIA’s collaboration with the government agencies. The EMB, together with Philippine Trade and Investment Center (PTIC) in Tokyo and ASEAN Japan Centre, through Commercial Counselor Ma. Bernardita Angara-Mathay, supported the delegation by arranging the site visits to Japanese companies, one-on-one business matching meetings with potential clients, and hosting the Philippine Software and ITO Industry Promotion Seminar and Networking Sessions. Each Philippine company delegate presented their respective company services and promoted the country’s value proposition

in the global ITO market and was provided enough time for consultations with Japanese counterparts and potential clients for them to gain deeper understanding of each Philippine company’s capabilities. The continuous support from the Department of Science and TechnologyICT Office (DOST-ICTO) provided an opportunity for the Philippine delegation to mount the Philippine pavilion at the SODEC. The exhibitors met 94 potential buyers and gathered positive feedback from 191 survey responses. Some 85% of the respondents got to meet the companies first time during the exhibit, and considered outsourcing to the Philippines. The survey result proved that the consistent presence of the Philippines for the past 13 years in the IT trade show in Japan has gained considerable impact and positive business opportunities for the Philippines. The OBMM generated Php 29M (US$648,000) of IT services export sales consisting of contracts under negotiation and estimated potential leads). ■ Philippine Export Digest 2015 • 9

MAJOR EMB PROGRAMS DBFTA: DTI-EMB Exceeds 2015 Target Information Sessions goal of making existing and potential exporters aware of the rules and regulations of trade and the government programs and services that local manufacturers can avail themselves. Currently, the EMB’s public awareness campaign on its export development advocacy is anchored on its programs called “Doing Business in Free Trade Areas (DBFTA),”“Trade with the European Union under the Generalized Scheme of Preferences Plus (EU GSP+),” and the Integration of the Association of Southeast Asian Nations (ASEAN) 10-member countries into a single economy called the ASEAN Economic Community (AEC) starting this year. DTI-EMB Director Senen M. Perlada (standing) urges participants to the “Doing Business in Free Trade Areas (DBFTA)” information session to take advantage of the free trade agreements the Philippines has signed with trading partners.

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he Export Marketing Bureau (EMB) under the Department of Trade and Industry (DTI) has exceeded its 2015 target of 175 information sessions under the Doing Business in Free Trade Areas (DBFTA) Program by 11.4%, three months before December. During the first nine months of the year, EMB had successfully conducted 195 sessions for 5,695 companies and 17,217 participants. The participants represented exporters, business groups, the academe, individual companies, local government units, and government line agencies nationwide. EMB resource teams including their partners from the Bureau of Customs (BOC), Bureau of Internal Revenue (BIR), Tariff Commission (TC), and other government agencies and private organizations had conducted sessions in Laoag City, Pangasinan, Tuguegarao, Nueva Viscaya, Baguio, Nueva Ecija, Tarlac, Pampanga, Angeles City, Zambales, Bataan, Baler, Bulacan, National Capital Region (NCR), Rizal Province, Cavite City, Tagaytay, Laguna, Batangas, Quezon Province, Romblon, CAMSUR, and Albay. DFTA sessions were also held in Iloilo, Guimaras, Bacolod City, Cebu, Bohol, Dumaguete City, Tacloban, Ormoc,

Philippine Export Digest 2015 • 10

Zamboanga City, Cagayan de Oro, Davao, General Santos, Dinagat Islands, Agusan Del Sur, Butuan, Surigao Del Norte, and Surigao Del Sur. EMB also held an outbound mission to Manado and Jakarta, Indonesia in April this year, as part of the DBFTA Program. Senen M. Perlada, EMB director, expressed elation at the number of sessions and participants the EMB advocacy continues to generate. “The attendance and participation of companies - including exporters and would-be exporters, individuals, business groups, local government units (LGUs) - to these sessions, and the questions and clarifications they seek from the resource speakers are a testimonial to the tremendous interest our public awareness campaign regarding export opportunities abroad generates,” he said. Since the DBFTA program started in 2010, the EMB has conducted 735 sessions participated in by 83,858 people representing 25,370 companies (as of September 2015). The EMB conducts these information sessions at the request of its regional offices, private business groups, schools, and individual companies, with the end

To facilitate trade, the country has signed free trade agreements (FTAs) with other ASEAN member nations and with ASEAN partner economies, Australia, China, India, Japan, New Zealand, and South Korea. Sessions concerning these trading partners focus on particular products that can be exported to each country, trade rules and regulations in effect that need to be followed, and the competitive advantage Philippine exporters can exploit vis-a-vis these trading partners. In the case of Muslim countries, the EMB also conducts sessions on halal foods and products. The Philippines started to enjoy the GSP+ preferential status effective 25 December 2014. This gave the country, along with 12 other countries, the privilege of exporting to the EU’s member countries at zero or vastly reduced tariffs for more than 6,000 product lines. The EMB’s information sessions on EU GSP+ discuss specific EU standards on exports, rules of origin, tariffs, customs regulations, and other trade-related topics. On the other hand, sessions on ASEAN Economic Integration focus on doing business with the ASEAN as a group or as individual countries and their specific export requirements. ■

DTI-EMB Seeks to Boost MSMEs’ Export Capabilities through PECP

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ncouraging local companies to improve their global competitiveness through trade facilitation and provision of market opportunities, the DTI-EMB continues to conduct one of its major programs, the Philippine Export Competitiveness Program (PECP), that seeks to help local exporters develop their productivity, and teach them to be innovative and competitive in their field of business. Aside from exporters and would-be exporters, the PECP aims to reach freight forwarders, customs brokers and other export stakeholders. A major focus of the information sessions are the micros, small, and medium enterprises (MSMEs) which form the majority of domestic businesses operating in the country. While most of the sessions were held in the NCR, including the EMB’s main office in Makati City, information teams from the PECP also visited Baguio City, Cagayan de Oro City, Davao City, Cebu City, Palawan, and Pampanga.

Aside from local companies, the sessions targeted government officials, business groups and members of the academe. A special session was also held at the EMB’s main office in Makati City for Entrepreneurship students from the Tabaco City campus of Bicol University. Seminar topics were carefully chosen to ensure that the sessions for each group and location maximized the benefits for the participants. Among the seminars conducted were overviews and presentations of the second pilot project for the ASEAN self-certification program, Philippine Quality Award and the Philippine Quality Challenge, returned shipment and abandonment, Bureau of Internal Revenue regulations affecting exporters, Food and Drug Administration regulations and food products for exports, World Trade Organization (WTO) seminar-workshops on non-tariff measures, programs sponsored by the

PECP Quick Stats 2014 PECP Accomplishments 26 info sessions

1,576 participants

709 companies

241 exporters

Department of Science and Technology for MSME exporters, introduction to ASEAN integration, duty drawback, tax credit for exporters, how to prevent export-trade complaints, overview of export procedures, the free trade agreements signed by the Philippines with its trading partners, international trade policy updates for MSME exporters, the importance of the proper classification of goods, getting export products ready for the international market, doing business with specific locations and geographical groupings including the United Nations, maximizing productivity tools for SME exporters, product labeling and packaging, and financing for MSMEs. PECP info sessions are regularly held every last Thursday of the month at the DTI International Building, Sen. Gil Puyat Ave., Makati City. ■ For schedule and topic inquiries, contact the Export Assistance and Business Matching Division (EABMD) of EMB: Tel. No.: (+632) 465.3300 loc. 108, 110 Email: [email protected]

PECP Accomplishments as of October 2015 26 info sessions

1,955 participants

1,235 companies

787 exporters

FRONTLINE PROCEDURE Withdrawing the Inspection, Commodity and Export Clearance Requirements on Philippine Exports

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xecutive Order (EO) 1016 is a special law issued in 1985 recognizing the role of exports in hastening the attainment of economic stabilization and continuing the promotion of economic growth in the country. One of the premises of the law is: “The growth of exports can be better achieved where procedure and documentation requirements, that result in increased cost and sometimes in the loss of export opportunities, are at a minimum.” Identified as among the procedural and documentary requirements that maybe eliminated were the inspection, commodity clearance, and export clearance requirements of government commodity offices/agencies. Hence, said requirements were abolished with the approval of this law, except the following: 1. Those required as a result of the existence of the import quotas in

other countries, such as garments and sugar; 2. Those covering items which are banned for exports; 3. Those covering exports of logs, copper, and coffee; and, 4. Those covered by international agreements to which the Philippines is a signatory. The law is being implemented by an InterAgency Committee (IAC) composed of the representative from the Department of Trade and Industry (DTI) as Chairman, and the representatives from Department of Finance (DOF), Department of Budget and Management (DBM), and National Economic and Development Authority (NEDA) as members.

Every year, an updated List of Prohibited and Regulated Products for Export by Agency as of December is endorsed to the Bureau of Customs (BOC) for implementation. Consequently, the BOC issues a Customs Memorandum Circular to its ports, offices, and personnel for compliance and guidance. The list is published in two newspapers of general circulation and copies are also submitted to the Office of the National Administrative Register (ONAR) in compliance with Section 3 of Book VII of the Administrative Code of 1987. ■ The current List of Prohibited and Regulated Products for Export by Agency as of December 2014 can be viewed at: http://www.dti.gov.ph/dti/index.php/ resources/listings

Any proposal for new or a reinstatement of an export regulation by any government commodity agency should be submitted to the IAC on EO 1016 for approval. Philippine Export Digest 2015 • 11

PRODUCT IN FOCUS Single Origin Coffee – A High-Value Export Product from the Philippines to International Niche Markets

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he term “single origin” stands for the specific source of a particular product. But for coffee, single origin denotes uniqueness and distinct flavors. The single origin concept is a breakthrough of the so-called “second wave” in the coffee world that highlights the quality and taste of specialty coffee from a single farm (or geographically connected farms with standard planting practices), pre-blended, and then roasted in a specific processing method”. One single origin variety is the microlot, with the coffee product coming from a specific part of the farm, cupped and graded to find the best parts of the farm for producing coffee, and roasted with one roast profile. This makes a specific portion of a farm producing better coffee than other parts and singling that out brings the best of the best. Another variety is the roast blended -a selection of coffee beans from a single coffee farm, processed in one or multiple ways, and roasted with multiple roast profiles. The Philippines’ geographical set-up of coffee-producing areas is very ideal for the single origin concept. Traceability is much clearer and easier to manage because coffee is grown in very specific regions like Cavite and Batangas in Region 4A; Abra, Benguet, Ifugao, Kalinga in CAR; and Sultan Kudarat, and Mount Apo in Mindanao, among others.

At present, there are only few local coffee companies engaged in the production of single origin in the Philippines as the concept remains a big challenge for the majority of coffee producers. The existing traditional planting practices of members of organized farmers’ groups with geographically interconnected farms need to be standardized and enhanced to meet the required criteria of the single origin standards. The National Coffee Association, USA (NCA) notes that what adds more distinction to single origin coffee is the planting system, especially if it is at the same time organically grown, with good plant or seedling variety and soil quality; favorable weather condition, ideal altitude of the coffee farm, and excellent pre-harvest and post-harvest methods. Markets for single origin coffee continue to grow, with the US and the UK as top importers. China is a growing market. According to a recent survey, Chinese consumers are willing to pay a 22% price premium for fair-trade coffee, or even more in the case of female consumers.

Consumers who make their own coffee are reported to be likely to increase the trend the following year. Australians are moving up their appreciation of high-quality coffee that continued in 2013 with off-trade value sales increasing by a strong 6%, taking the category to A$1 billion. Australia has become a prolific coffee-drinking nation, with coffee being a popular drink for both out-of-home and in-home consumption. The sophistication of coffee drinking has become apparent, with consumers’ palates maturing, becoming more discerning in terms of flavor and origins of coffee beans. This is evident by the copious numbers of premium coffee types available, including organic, fairtrade, sustainable, singlesource, carbon-neutral, and micro-roasted artisanal coffee. All these developments make coffee an increasingly lucrative business not only for coffee shop owners, but more importantly, for producers and farmers as well. ■ Data Source: Rainforest Alliance Photo credit: Google Images

EDITORIAL BOARD DIR. SENEN M. PERLADA Editor-in-Chief

EXPORT MARKETING BUREAU 1st and 2flr DTI International Building 375 Sen. Gil Puyat Avenue, Makati City 1200 Philippines Telephone No.: (+632) 465.3300 Fax No.: (+632) 899.0111 E-mail: [email protected] http://www.dti.gov.ph/emb/

Philippine Export Digest 2015 • 12

AD AGNES PERPETUA R. LEGASPI Managing Editor VICTORINO S. SORIANO Associate Editor LOUISE KAYE G. MENDOZA Layout Artist

LEAH C. ALEJANDRO ASNIA R. BAYABAO MICHAEL G. BOCTOT FENINA M. BONOAN RESIE A. MACARIO FILIPINAS G. MANTILLA MARIA LUZ S. MEDIALDIA CHARITY ANN O. MENDOZA GRACE T. MIRASOL FRANCLEM C. PEÑA VICTORINO S. SORIANO Contributors