LIM, speaking on the Philippines’s
positioning in an integrated Association of Southeast Asian Nations (Asean) in
end-2015, expressed reservation on the country’s preparedness due to its
profile in attracting FDI; but championed the franchising sector’s prospects
come the Asean integration.
Lim
cited the Philippines being a “bottom-dweller” in terms of FDI tally in 2013,
despite exhibiting the highest growth compared to Asean nations.
The PFA
chairman emeritus also noted that despite successive credit-rating upgrades in
the past year, the Philippines fared poorer than fellow Asean countries that
are below investment grade. The Philippines gained $2.7 billion in investments
in 2013 compared to Vietnam’s $8.13 billion and Indonesia’s $19.5 billion
during the same year.
Nontariff
barriers also serve as a deterrent to foreign investment, Lim added, such as
layered bureaucratic processes and underdeveloped infrastructure. The public-private
effort to improve the ease of doing business, Lim said, while gaining headway,
is not enough to make the Philippines “an investment Mecca.”
Despite
these disadvantages, the franchising sector is going against the norm, said the
franchising icon.
“The
study of the Edwards Global Services, an international consultancy and service
agency, showed the Philippines is ranked the highest in Asean in terms of being
the most attractive for franchise investments,” Lim said.
The
ranking, he said, is due to several factors such as the young and expanding
population, Filipinos’ penchant for shopping and dining, and the well-educated
and English-speaking labor force.
The
country is also poised to enter a “sweet spot” in terms of working-age
population and rising income, which, Lim added, may make the Philippines an
investor’s gold mine in the years to come.
Such
strengths are slowly making the Philippines’s goal of becoming the franchising
hub of Asia a reality, he said.
However,
despite the optimism, the PFA chairman emeritus stressed that ramping up
competitiveness must be a priority among small and medium enterprises (SMEs),
or they will lose market share with the Asean becoming a single market.
Lim
also called for continued government support to buttress the SME’s
competitiveness, saying other Asean governments have gotten a head start in
recognizing the promise of the franchising sector.
“Admittedly,
our Asean counterparts have the edge in terms of government support. Our Asean
neighbors recognized early that franchising is a recommended entry strategy for
SMEs to go international,” Lim said.
Franchising
can also help manufacturers go global, if the government would move to help
make producers of low-value export products to being original-equipment manufacturer
(OEM) subcontractors, and ultimately high-value products of a branded
franchise.
Promoting
these branded franchises for exports is essentially exporting a whole store
that sells hundreds of products sourced from farms and SMEs.
The
Asean integration will mean more opportunities for Philippine businesses, Lim
said, and franchising will further expand the said businesses domestically and
regionally.
Lim
said the PFA is eyeing the exports of products and services of the franchising
sector to grow by 25 percent, and has established an Asean integration
committee to achieve the goal.
Trade
Secretary Gregory L. Domingo pledged continued government support to the
franchising industry, saying “we, at the DTI, will continue our efforts to
provide services to help the franchising industry thrive in an increasingly
global competitive market. In particular we, at the DTI, will take a look at
how we can support Philippine companies in international franchise shows.”
Domingo
affirmed the contribution of the franchising industry to the economy, with the
number of workers ballooning from a quarter of a million in 2000 to over a
million in 2011.
In the
same period, Domingo said, the number of brands grew from 600 to 1,300, while
outlets increased from 30,000 to about 125, 000. Local brands make up about 66
percent of the total franchising industry.
“For
the franchising sector, you form an important segment of the economy and we
encourage you to fully embrace the Asean Economic Community and global
competition. Markets are opening up, especially around Asean the region, and
take advantage of those opportunities by adopting international best
practices,” Domingo said.
Catherine
Pillas
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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