Anvil Business Club’s Special Exchange Forum with Mr. Willie Tan

Message of Senator Loren Legarda

Anvil Business Club’s

Special Exchange Forum with Mr. Willie Tan

4 November 2014 – Makati Shangri-la Hotel

Foremost, I wish to thank the Anvil Business Club for inviting me to take part in this forum. The business sector is a vital partner of the government in carrying out the needed programs and reforms for a progressive nation. As such, the government ensures that its policies and programs would create a more conducive environment for business.

In the Senate, several proposed measures aimed at improving growth and productivity of the private sector are being considered, such as simplifying the provision and administration of fiscal incentives in the country; amending the Productivity Incentives Act to make the law more responsive to the situations prevailing in labor and employment; and strengthening competitiveness of the construction and motor vehicle manufacturing industries, among many others.

But as we work on these bills and await their enactment into laws, we have a multitude of laws passed many years ago that need only to be fully implemented so that we can actually reap their benefits.

In the Philippines, Micro, Small, and Medium-sized Enterprises (MSMEs) comprise 99.6% of the total business enterprises operating in the country. I have wholeheartedly supported MSMEs because I believe that they are the future of business and investment in the country.

In 2008, we succeeded in enacting Republic Act No. 9501, also known as the Magna Carta for Micro, Small and Medium Enterprises, which I authored.

The MSME Law provides more assistance to entrepreneurs by requiring lending institutions to allocate at least eight percent (8%), an increase from the previous six percent (6%), of their total loan portfolio to micro and small businesses. It also provides access to new technologies and regular entrepreneurship training programs for workers to ensure the viability and growth of MSMEs in the country.

We also have the Barangay Kabuhayan Law or RA 9509, which I likewise authored. It aims to establish a Livelihood and Skills Training Center in fourth, fifth and sixth class municipalities, empowering local governments to enhance the productive capabilities of their large yet untapped human resource and to open doors for employment and entrepreneurial opportunities in the countryside.

MSMEs must be supported because the sector is a significant driver of development and innovation not only in the Philippines but also in the Asia-Pacific region.

In December 2015, we expect the emergence of the ASEAN Economic Community (AEC). The AEC will set the stage for ASEAN as a single market and production base that would create opportunities for business complementation, thereby transforming ASEAN into a vital segment of the global supply chain.

ASEAN, as a regional group, has the third largest market in Asia, after China and Japan.  It has a huge and young market, with a rising middle class.

In terms of trade, it is the fourth largest in the world, trailing only the European Union, North America, and China. And if ASEAN were a single entity, it would rank as the eighth largest economy in the world.

ASEAN is rich in natural and human resources.  Its GDP has grown over 170% over the past decade, amounting to USD1.8 trillion by 2011.

As we pursue the pathway that will bring the economies and people of ASEAN under a single economic community, we need to ensure that the Philippines’ business community, especially our MSMEs, is ready for this integration.

A survey done by the Asian Development Bank in 2013 suggests that 55% of businesses in ASEAN are not aware of the ASEAN Economic Community. The conclusion suggests that “there is a general lack of awareness of ASEAN Economic Community 2015.” More alarming is the result of a survey done by ASEAN and the Japan-ASEAN Integration Fund which says that 76% of the people in ASEAN Member States lacks a basic understanding about ASEAN.  There is huge familiarity in the ASEAN name but the people’s knowledge of ASEAN stops there.

If played out wisely, ASEAN’s bold vision of achieving the free flow of goods, services, investment, and skilled labor in the region may help us achieve higher productivity and economic diversification; but we have to play our cards well.

Clearly, innovation and creativity play a significant role in transforming small businesses into competitive components of the ASEAN value chain.  We need to develop industries that will be innovators, rather than consumers, of technology. We need to build internal innovation competencies given the nascent stage of research in ASEAN.

The government and the private sector must work hand in hand to make sure that our nations contributes to and benefits from the AEC. Much work obviously needs to be done in order that this community that we all seek to build will be relevant and will help usher in a higher quality of life for our people.

Lastly, allow me to share with you another advocacy – disaster risk reduction and climate change adaptation – that I have been espousing and I will continue to do so within and beyond the halls of the Senate.

We have been experiencing stronger and more frequent natural hazards in recent years. Beyond the loss of lives, disasters have massive impacts on our economy. It has been reported that economic losses from disasters have increased 18-fold since the 1970s.

With each disaster that we allow to happen in our communities, Filipinos are dragged even deeper into poverty. With each disaster, money from government coffers that ought to be used to reduce poverty, support rural livelihoods, provide universal primary education, and improve the health of women and children is diverted to relief, reconstruction, and rehabilitation.

Through the Climate Change Act, the Disaster Risk Reduction and Management Act, and People’s Survival Fund law, which I authored, proactive climate change and disaster preparedness measures were legislated.

But as disaster risk reduction is everybody’s business, a more visible action from the business community is required.

Businesses need to make plans with the general population in mind. A massively decimated market will not allow businesses to thrive. It is therefore in the private sector’s best interest to strengthen its support to climate action and DRR initiatives.

Private companies should be encouraged to come up with their business continuity plans that will showcase how prepared they are to face disasters and be back in business as soon as possible. This is already being undertaken in Japan that is why recovery from the 2011 earthquake and tsunami has been fast and efficient. The business community in the Philippines must begin to think about this.

In closing, I wish to stress that the higher value of corporate business is not found in the monetary profit it brings neither in the wealth it creates, but in the nobility of purpose—to improve the quality of life of the people and to build a sustainable and resilient human society.

Thank you and good evening.