Q1 domestic trade value, volume climb

The domestic trade in goods grew by 46.7% year on year in the first quarter to P199.72 billion, the Philippine Statistics Authority (PSA) said on Tuesday.

However, this amount was smaller than P283.71 billion in the fourth quarter of 2022, preliminary data from the PSA’s Commodity Flow in the Philippines report showed.

The first quarter’s 46.7% annual growth in trade value was slower than the 59.9% expansion in the fourth quarter of 2022.

By volume, domestic trade jumped by 56.7% to 5.34 million tons in the January-to-March period, from 3.41 million tons in the same period a year ago.

But this was lower than 6.14 million tons logged in the fourth quarter last year.

Commodity flow includes all goods transported by water, air, and rail transport, with shipping accounting for the bulk of the commodities.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said that the domestic trade performance mirrors the country’s slower annual economic output in the first quarter.

“Strong robust domestic demand continued and has kept domestic trade elevated for [first quarter].

Purchasing Managers’ Index numbers in the first quarter do support this positive trend,” Mr. Asuncion said.

The Philippines’ gross domestic product (GDP) expanded by 6.4% in the first quarter, the slowest in eight quarters or since the 3.8% decline in the first quarter of 2021.

Meanwhile, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa, said in an e-mail that the “year-on-year numbers continued to benefit from base effects.” Mobility curbs were tightened in the first quarter of 2022 due to an Omicron-fueled spike in coronavirus cases.

All of the 10 commodity categories monitored by the PSA showed annual expansion in trade by value. This was led by beverages and tobacco (83.7%); food and live animals (67.6%); chemicals and related products (59.7%); manufactured goods classified chiefly by material (46.4%); and mineral fuels, lubricants and related materials (40.8%).

Annual growth was also recorded for commodities of machinery and transport equipment (40.3%); crude materials, inedible except fuel (35.5%); miscellaneous manufactured articles (22.1%); animal and vegetable oils (8.9%); and commodities and transactions not classified elsewhere in the Philippine Standard Commodity Classification (7.9%).

The machinery and transport equipment had the largest value of traded commodities amounting to P68.24 billion, accounting for 34.2% of the total. It was followed by food and live animals at P51.10 billion (25.6%) and manufactured goods classified chiefly by material at P28.77 billion (14.4%).

By value, Central Luzon recorded the largest trade surplus in the first quarter amounting to P11.25 billion, after recording P11.95 billion in outflows and P700.07 million in inflows.

Western Visayas accounted for the most goods traded by value with an outflow value of P44.70 billion.

Central Visayas posted the largest inflow value of P44.33 billion.

The trade balance is the difference between the outflow value and inflow value. A surplus happens when trade outflows exceed inflows, while the opposite occurs in deficit.

Analysts expect the growth of the domestic trade to slow in the second quarter.

“With the economy now open, we can say that activity will expand, however, we note a slowing pace of gains as high inflation and elevated borrowing costs begin to bite,” Mr. Mapa said.

While there will be a slowdown, Mr. Ricafort said demand will remain strong and lift domestic trade. He noted the anticipated disinflation and a pause in the Bangko Sentral ng Pilipinas’ monetary tightening bodes well for domestic trade prospects in the next few months.

BSP Governor Felipe M. Medalla earlier this month signaled an extended pause on interest rates. At its May 18 meeting, the Monetary Board decided to keep its policy rates unchanged.

The BSP’s next policy-setting meeting is on June 22.

Source: Business World

Startups should be encouraged

The Philippine startup ecosystem has improved substantially in recent years but more can be done to foster innovation and grow the sector, a new Asian Development Bank (ADB) report said.

Released on Friday, the ADB's "The Philippines' Ecosystem for Technology Startups" report noted that the country currently had about 700 startups — defined as "a young company that innovates technologies or applies existing technologies in innovative ways to provide a new product or service" — from just 100 in 2015.

"Promoting innovation is seen as a key strategy for the Philippines to recover from the pandemic, accelerate its growth and achieve high-income status by 2040," the report said. "Through their innovative capabilities, startups can play an important role in these processes."

Financial technology and e-commerce startups currently dominate the landscape, but the report highlighted the need for agritech (agriculture), edtech (education), cleantech (environment) and healthtech (health care) ventures, seen having a high development impact.

The current startup ecosystem was found to be supportive, with the government said to have put in place policies and programs such as the Innovative Startup Act and the Philippine Innovation Act. Many incubators have also been established and grants are also available.

Amid this, "policymakers — and other nongovernment players — can continue to strengthen the ecosystem to encourage startup growth and thereby contribute to the dynamism of the economy," the report recommended.

At the top level, it called for annual reviews of Innovative Startup and Philippine Innovation Acts, and the appointment of startup champions to the National Innovation Council.

As for programs and regulations, requirements for grant programs were said to need streamlining while a co-financing scheme to support local governments in building ecosystems also has to be set up.

Incubator quality and management, meanwhile, need to be improved while the establishment of accelerators should be promoted. Digital infrastructure also has to be improved along with digital literacy.

With regard to procurement and endorsement, startups must be made aware of opportunities in the public sector, healthtech startups endorsements should be promoted and the government should adopt startup solutions.

Startup investors, meanwhile, should be given their own tax credit system, and the government should reduce the need for foreign registration of startups to attract venture capital.

Lastly, talent can be fostered via a voucher system to encourage students to choose science, technology, engineering and mathematics (STEM) degrees. STEM elements in agriculture courses should also be increased, the report said.

In a statement announcing the release of the report, the ADB highlighted the financing constraints faced by startups.

Venture capital provided by large corporations remains the primary source of funding for startups in the Philippines, it noted. The country was said to have at least 40 venture capital firms but with most investments focused on fintech, media and entertainment, and e-commerce.

"There is a need to attract investors for agritech, cleantech, edtech and healthtech to give these sectors a greater chance of development," ADB economist Paul Vanderberg said in the statement.

"Investors need to understand a sector before they feel comfortable," he added. "If they don't know a sector, it's considered higher risk, and they are less likely to engage."

Many of the startups interviewed for the report were said to have joined incubator programs, which provide them with mentors and networking opportunities.

"Incubators cater to early-stage startups, whereas advanced-state startups seek more customized mentorship and support," the ADB noted.

"In the Philippines there is currently no mature accelerator that offers such a customized approach."

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Source: Manila Times

Majority of Filipinos want to be self-employed

A Majority of Filipinos are inclined to start their own business where they can manage their own time and be their own boss, the latest OCTA Research survey released on Thursday showed.

The survey, conducted from March 24 to 28 and which polled 1,200 respondents, showed that 78 percent of Filipinos would choose to go into business and consider mentorship as an important element for small businesses.

Reasons cited by the respondents include wanting to manage their own time/schedule (31 percent), having no boss to report to/get along with (30 percent), no limit in profit/bigger salary (16 percent), daily income/money (12 percent), and ability to work/earn at home or anywhere (11 percent).

OCTA also found that Filipinos appear to be more attuned to entrepreneurship as evidenced by the high awareness rating of the non-profit Go Negosyo, which advocates for micro, small and medium enterprises in the Philippines.

The survey showed a 68 percent awareness rating for Go Negosyo, the highest being in the Visayas at 78 percent.

Go Negosyo's founder, Jose Maria "Joey" Concepcion 3rd, also enjoyed a 60 percent awareness rating among the respondents.

"We welcome OCTA's findings that more Filipinos are considering entrepreneurship. If there is one sector that has been active and striving during the pandemic, it is the micro, small and medium enterprises, and they are the ones poised to lead the Philippines' economic development, especially as we recover from the pandemic," Concepcion said about the OCTA survey.

He noted that "the growing number of Filipinos willing to explore entrepreneurship means that our advocacy at Go Negosyo is getting across to all Filipinos from all the socioeconomic classes and all over the country."

"We have been doing this for almost 18 years now and we will continue to reach out through our online and in-person platforms for entrepreneurs, whether they are aspiring or active entrepreneurs, are into retail or agriculture, are nano-entrepreneurs or small and micro entrepreneurs," he said.

The same survey found that respondents had a high level of awareness of what the Go Negosyo does.

More than half of the respondents (54 percent) see Go Negosyo as a partner of, or supporting, small enterprises, while 42 percent see Go Negosyo as an organization that teaches how to run a business.

Two elements — capital and mentorship — were seen by respondents as the support that small entrepreneurs need from the government, at 82 percent and 67 percent, respectively.

Mentorship was seen as important to small businesses by 95 percent of the respondents, 67 percent of whom consider it very important and 28 percent as somewhat important.

The survey used face-to-face interviews and had a ±3 percent margin of error at a 95 percent confidence level.

Source: Manila Times