1. MSMEs turn down job orders due to regulation of manufacturing chemicals

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1 PHILEXPORT News and Features This Media Service is brought to you by the Philippine Exporters Confederation, Inc. (PHILEXPORT). Articles from PHILEXPORT News and Features may be reproduced without permission in accredited newspapers and magazines. The editors will appreciate receiving clippings of PHILEXPORT News and Features articles used. January 20, 2017 CONTENTS 1. MSMEs turn down job orders due to regulation of manufacturing chemicals Micro, small, and medium-sized enterprises (MSMEs), particularly handicraft entrepreneurs, are appealing to the government to immediately remove from the list of regulated chemicals two commonly used substances in their industry, saying their business survival is at stake. 2. Wood producers asked to partake in forest certification, industry roadmap initiatives The Philippine Wood Producers Association (PWPA) is being enjoined to engage further in government programs designed to improve the forestry industry s standards and competitiveness through certification and an industry roadmap. 3. Promotion of distinct tourist districts pushed The Philippines needs to promote major and distinct tourist districts to attract more tourists despite the traffic condition. 4. WTO Trade Facilitation Agreement moves closer to entry into force The World Trade Organization (WTO) Trade Facilitation Agreement (TFA), which can lower trade costs and increase global merchandise exports, is expected to come into force in the near future. FULL STORIES 1. MSMEs turn down job orders due to regulation of manufacturing chemicals

2 Micro, small, and medium-sized enterprises (MSMEs), particularly handicraft entrepreneurs, are appealing to the government to immediately remove from the list of regulated chemicals two commonly used substances in their industry, saying their business survival is at stake. In s, Floro Salinas, proprietor of FNDG Shells and Handicrafts based in Batangas, sought the help of the Philippine Exporters Confederation, Inc. (PHILEXPORT) in asking the Philippine Drug Enforcement Agency (PDEA) and Philippine National Police (PNP) to deregulate the use of muriatic acid. He also urged the PNP to delist hydrogen peroxide, which is a substance not regulated by PDEA. These two chemicals are most commonly used by our small handicraft business owners and should be available at most convenient markets as it was before for them to continue their way of living and for the handicraft industry to survive, he wrote Ma. Flordeliza C. Leong, PHILEXPORT assistant vice president for advocacy and communications. At the same time, he said that an added burden has come up with the new set of requirements for registering or renewing a business permit that is now imposed by local government units. [Small handicraft makers] have been having too much problem with our production using hydrogen peroxide. Our suppliers informed us that to purchase even a liter of hydrogen peroxide requires PNP permit, said Salinas. He said that with government control over these chemicals, some retailers have simply stopped selling because they do not care to apply for the PNP Permit. As a result, small handicraft suppliers have had to turn down job orders involving these chemicals. Salinas said he has to cease production of capiz products because of the supply problem. This year, our product development does not include capiz and other bleached items using hydrogen peroxide, he said. Most handicraft suppliers are forced to get their supply of hydrogen peroxide from the black market, which charges as much as 200% more, he continued. For the small handicraft industry, this deregulation is oppression, a sabotage against our small legal ways of earning a living. We understand the problem that our PNP is facing but we are not convinced and cannot accept that we are part of the solution they [are thinking of in order] to solve their problem.

3 Another manufacturer of handicrafts and bags is seeking clarity from the Department of Trade (DTI) on allowance limits for hydrogen peroxide and sulfur powder, which are used as bleaching agents in handicrafts. The export manager explained that calls to chemical supply stores that they used to buy these from said their permits were still pending. Last June, the Implementing Rules and Regulations on controlled chemicals was signed by the PNP chief. The IRR reduced from the original 101 to just 32 the list of regulated chemicals, after PNP consultations with protesting MSMEs and other stakeholders. However, hydrogen peroxide, a chemical regularly used in manufacturing, was not among those delisted, and is still considered among the high-risk controlled chemicals. The government a few years ago began a clampdown on dangerous chemicals in the wake of increasing terrorist attacks. On the new requirements of local government units, meanwhile, Salinas described the current business requirement to get a clearance from the Laguna Lake Development Authority as too hard to process for small entrepreneurs. Moreover, the Department of Environment and Natural Resources certificate of noncoverage can be done online, but most small or starters do not have access/knowledge to online facilities, he said. And the technical description is too complicated for simple business owners to accomplish, while the requirement for a blueprint of the floor plan of the facility to be signed by the city engineer was not doable as MSMEs do business in their backyards or makeshift workshops. Salinas appealed to the government to simplify business requirements to support MSME development. Doing business is one noble thing a citizen can do and I just feel the burden that our micro and small entrepreneurs have to pass before going into business. 2. Wood producers asked to partake in forest certification, industry roadmap initiatives The Philippine Wood Producers Association (PWPA) is being enjoined to engage further in government programs designed to improve the forestry industry s standards and competitiveness through certification and an industry roadmap. At a recent policy forum on sustainable forest management through forest certification, the Department of Environment and Natural Resources (DENR) invited wood producers and forestry stakeholders to participate actively in consultations and help formulate and draft a national forest certification system.

4 Environment Undersecretary Marlo Mendoza said at the business gathering that forest certification is one of the top priorities of the DENR. He stated that the certification system will be putting emphasis on policy predictability, social justice, and ecosystem integrity. Mendoza also recommended that legality of source, chain of custody, and different criteria for controlled wood should be taken as important considerations in crafting the certification system. He likewise asked the PWPA, non-government organizations, civil society, and other stakeholders to support the program, as he emphasized the need for transition policies and the promotion of entrepreneurship to ensure sustainability of the industry. Meanwhile, Gualberto Tortoza and Diosdado Paler, consultants for the United Nations Food and Agriculture Organization (FAO), met with officials of the PWPA to discuss the association s role in the renewed Forest Law Enforcement, Governance and Trade (FLEGT) program of the Philippines. Tortoza and Paler noted that the European Union s recent FLEGT action plan highlighted the need for private sector involvement in different sectoral strategies for achieving legality and sustainability in forest production. The FLEGT program aims to reduce illegal logging by strengthening sustainable and legal forest management, improving governance, and promoting trade in legally produced timber. In the Philippines, Tortoza and Paler proposed that the country s FLEGT program also develop a strategy to engage the private sector, particularly the local small and medium forest enterprises. Tortoza said the new engagement program will be done in three phases, with situational analysis as the first phase, followed by a two-day multi-stakeholder dialogue or workshop, and to be concluded with a country roadmap which will identify priority areas for support. PWPA executive director Maila Vasquez reiterated the association s support for such projects that seek to improve the plight of the wood industry. Vasquez added that there are currently many efforts being done to help the forestry sector, but they would be more effective if consolidated so actions can be aligned and issues and concerns tackled collectively. This will also ensure that overlaps and conflicts will be minimized, if not totally avoided, she added.

5 3. Promotion of distinct tourist districts pushed The Philippines needs to promote major and distinct tourist districts to attract more tourists despite the traffic condition. Samie Lim, Vice President for Tourism and Retailing of the Philippine Chamber of Commerce and Industry (PCCI), identified these districts as the Bay Area Tourism District, the Makati/Bonifacio Global City District and the Ortigas/Araneta Tourism District. The tourist is just a few blocks away from where they shop, where they do business, shop, dine and be entertained. There are cultural, historical and religious site to visit and even a golf course in the vicinity. It is all there and if they want more, then they have to take overnight trip to the other tourism districts in and outside Metro Manila, he said. Lim noted that each of these three self-contained tourism district has everything that will take the whole city of Jakarta and Bangkok to offer, and are conveniently located in a cluster. (These are) anchored by large scale regional shopping center clustered with Central Business District and huge residential and tourist accommodation development, he added. Lim proposed 8As to improve tourism, which he deemed another engine of economic growth. These are Arrival, Access, Accommodations, Attractions, Activities, Advertising, Academic linkage, and Assurance of safety. He said the Philippines now ranked only number six out of the 10 ASEAN members in terms of international tourist arrival. We have been overtaken by Indonesia and Vietnam. If we do not build our capacity for at least 20 million tourists by 2026, we will probably be overtaken by Cambodia and Myanmar and slide down to number 8 position. Even at 20 million for international tourist, we will have only 3.7-percent market share of the Asian market of 530 million by 2030, he added. Lim said the country continues to attract mid-low end tourists who spend less than $1,000 for their trip. He thus underscored the need for the country to upgrade facilities to attract the mid and high-end market which spends $2,000 to $4,000 per visit. We are missing out on the biggest generators for tourism revenue which is shopping. A tourist can buy several shoes, bags, clothing, jewelries, gadgets, but our prices are not

6 competitive because we do not have the VAT (value-added tax)-refund system for tourist like those offered by top tourist destinations, he said. 4. WTO Trade Facilitation Agreement moves closer to entry into force The World Trade Organization (WTO) Trade Facilitation Agreement (TFA), which can lower trade costs and increase global merchandise exports, is expected to come into force in the near future. This, after Saint Vincent and the Grenadines submitted its instrument of acceptance to the WTO early this month, making it the 106th WTO member to ratify the TFA. Only four more ratifications from members are needed to bring the TFA into force. These will complete the two-thirds of the WTO membership which would have formally accepted the Agreement. Already several WTO members have also accepted the TFA, including the Philippines, Hong Kong China, Singapore, the United States, Japan, Chinese Taipei, China, the European Union (on behalf of its 28 member states), India and Canada. Concluded at the WTO s 2013 Bali Ministerial Conference, the TFA aimed to streamline and simplify customs procedures to cut the cost of doing business across borders. The Agreement is also expected to reduce the time to import and export goods by 47 percent and 91 percent, respectively, over the current average, according to a 2015 study carried out by WTO economists. WTO Director-General Roberto Azevedo earlier said these reforms would bring a higher level of predictability and transparency to customs processes, making it easier for businesses, especially smaller enterprises, to participate in the global value chains.