Borderless Business for Msmes from LOCAL to GLOBAL BORDERLESS BUSINESS for Msmes

From Local To Global Borderless Business for MSMEs FROM LOCAL TO GLOBAL BORDERLESS BUSINESS FOR MSMEs

THIS PRIMER is addressed particularly to Filipino MSMEs open to reaching beyond borders to grow their business. It explains the opportunities opened to MSMEs by the different free trade agreements that the Philippines is part of; and also lists various government support programs to assist MSMEs, from starting a business to reaching out overseas. We hope that this publication can help expand the number of small Filipino firms that are already reaping the benefits of reaching beyond the domestic market. From Local To Global Borderless Business for MSMEs

Table of Contents

MSMEs in the Philippines 1

Doing Business Beyond Our Borders: Internationationalizing MSMEs 2

Tapping Preferential Markets 8

Government Support Programs for MSMEs 17

References and Links 31 1 From Local To Global Borderless Business for MSMEs 2

MSMEs in the Philippines Doing Business Beyond Our Borders: Micro, small and medium enterprises fall under any of the following categories (MSMEs) comprise 99.5% of all registered indicated in the table below. businesses in the Philippines, employing almost 62% of the workforce. MSMEs Definition of Micro, Small & Medium Internationalizing account for 25% of the country’s total exports Enterprises in the Philippines revenue, and comprise 60% of all Philippine exporters. They play an important role in Number of Category Assets Employees MSMEs the growth of the economy by contributing to the following: Micro Less than 3 1— 9 Enterprise million pesos l business numbers l employment generation Small 3 million to 15 10 — 99 Internationalization is the process of ex- Wider options for sourcing inputs Enterprise million pesos l output growth panding business involvement beyond the Impetus for improved product quality, l export growth Medium More than domestic market, and into the international 100 — 199 increased efficiency and use of new and l supply of products and services Enterprise 15 million to markets. 100 million available resources l to businesses big or small pesos MSME internationalization means pro- l poverty alleviation Improved business resilience in the do- viding smaller businesses the opportunity l economic empowerment mestic market Further, as shown above, MSMEs are to access markets abroad and to participate l wider distribution of wealth also classified based on employment by the in global value chains through sustained Exposure to best practices and higher Republic Act (RA) 9501 or the Magna Carta Philippine Statistics Authority (PSA). Based partnerships with bigger and competitive standards for products and services for MSMEs defines MSMEs as any “business on 2015 statistics provided by PSA, MSMEs businesses. For MSMEs, engaging the in- activity or enterprise engaged in industry, comprise 99.5% (896,839) of business esta- ternational markets entails determination, Advances in agribusiness and/or services, whether single blishments in the Philippines, with 90% dedication and dynamism. communication proprietorship, cooperative, partnership or (806,609) classified as micro enterprises, The desire to internationalize drives small corporation” whose total assets, exclusive of 9.6% (86,367) as small enterprises, and 0.4% technologies, rapid businesses to improve the quality of their “land on which the particular business entity’s (3,836) as medium enterprises. products and services as they begin catering decline in transporation office, plant, and equipment are situated” to consumers with higher expectations, and costs, and increasing Administrative and Support Services 15,056 markets with higher product standards. This physical connectivity Philippine Education 17,206 compels them to build capacity, engender MSMEs are Professional, Scientific, and Technical Activities 17,380 innovation, and enhance competitiveness to between cities and primarily Human Health and Social Work Activities 26,945 increase their chances for success! countries have created an Financial and Insurance Activities 34,384 engaged in Doing business beyond the domestic opportunity for the following Information and Communication 35,171 market provides MSMEs: Other Service Industries 56,904 MSMEs to access wider activities Manufacturing 113,949 Access to a much wider customer/buyer (no. of Accomodation and Food Service Activities 119,037 base, hence higher profits and greater markets and expand potentials for growth establishments): Wholesale and Retail Trade, 417,094 partnerships Repair of Motor Vehicles & Motorcycles 3 From Local To Global Borderless Business for MSMEs 4

How can MSMEs connect overseas? How can MSMEs connect overseas? There are THREE MAIN MODES by which an A SIMPLE BUSINESS-TO-CONSUMER MSME can connect to overseas markets: TRANSACTION THROUGH E-COMMERCE Sell to buyers abroad of the easiest and most common ways to and/or source inputs reach overseas markets. Micro-Seller Registered Seller At the same time, E-commerce also MODE 1 from abroad makes it easy for MSMEs to search, With the predominance of e-commerce compare, and buy production inputs abroad platforms and social media, selling to or at competitive prices, possibly with better buying from abroad can be easily done and quality as well. Post and advertise your new Post and advertise your new or secondhand products via an products via an established commonly undertaken through various online classifieds website e-marketplace online platforms such as Etsy, Alibaba, Otto, and Rakuten. In the Philippines, Facebook Potential E-Commerce Advertises your products Markets your products online has become one of the top platforms where Market For Philippine MSMEs online upon online (some have posting charges) registration MSMEs, especially aspiring entrepreneurs, Connects you to customers post visuals and specifications of the Global Philippines Connects you to customers (some charge payment products they sell. for free (additional cost for service fees) featured advertisements) What is E-Commerce? Active Online submission of BIR internet users 3.03 billion 44.2 million No business documents 2303/COR, Mayor’s permit, E-commerce is a business transaction required and DTI permit Active primarily done remotely or online. This has social media 2.13 billion 42 million been made possible by the rise of mobile users No online payment system Submit bank account details (your payments will be made applications, internet portals, and social Mobile users 3.68 billion 114.6 million* No delivery system via bank transfer by the media platforms that allow small business e-commerce company) Active mobile 1.75 billion 36 million owners to reach buyers of its goods and Seller and buyer usually social users meet in person to check services online, receive orders and feedback, Complete the training *mobile connections product/s and for payment session for new sellers Source: We Are Social, March 2015 and process online payments; making it one upon delivery offered by the e-commerce company Increased De Minimis Value For Imported Shipments The e-commerce company will pick up the products and The Customs Modernization and Tariff Act (RA 10863), signed into law in May deliver to customers 2016, increased the de minimis level (i.e., shipment value below which customs duties do not apply) from P10 to P10,000. This benefits both final consumers and small firms, who may now import inputs in small quantities without having to pay duties on them. The Act further aims to modernize Customs rules and procedures for faster trade, reduce opportunities for corruption, improve Customs service delivery and improve the supply chain. Filipino Global Consumers Consumers 5 From Local To Global Borderless Business for MSMEs 6

How can MSMEs connect overseas? How can MSMEs connect overseas?

Be part of a “cluster” of same-product Sell to a domestic value-adding suppliers that pool together to service volume firm that is linked to a global orders that usually come from distributors or MODE 3

MODE 2 value chain overseas institutional buyers In this mode, large companies source WHAT IS A VALUE CHAIN? These are deliberate efforts to cluster that help lower the cost of processing raw materials or intermediate products from producers – such as small farmers, and production. The DTI’s Shared Service small producers, rather than take control of A value chain is defined as a set of cooperatives or manufacturers of similar Facilities (SSF) program provides equipment their entire production chain through verti- actors, suppliers, processors, and aggre- products — often facilitated by a third for MSMEs in various parts of the country cal integration into large-scale farming, for gators who conduct a linked sequence of party, which can be a government or non- such as 3D printers, and drying and example. The DTI’s Kapatid Program fosters value-adding activities involved in bring- government entity. Through clustering, processing equipment, among others. such “small brother-large brother” value ing a product from its raw material stage producers can utilize shared service facilities chain relationships through deliberate busi- to the final consumers. ness matching efforts. Business Highlight MSMEs can be suppliers of large companies by providing goods or services in their value chain. Virgin Coconut Oil by Barangay Liptong Small Coconut Farmers Association (BLISCOFA) In 2003, coconut farmers in Barangay Liptong in Valencia, Negros Oriental decided to organize themselves and formed the BLISCOFA. During its preliminary operation, the 30 farmer members would sell their coconuts to the association for processing to VCO. In 2005, the DTI assisted the association in promoting their products to local and international buyers through trade fairs for MSMEs where they bagged their first institutional client from Boracay. They also benefited from product development that INPUTS PRODUCTION LOGISTICS DTI conducted and from market matching and linkage activities. In 2010, BLISCOFA acquired an electric pressing machine under DOST’s SETUP Program in the amount of Php 250,000.00. In 2013, BLISCOFA was granted by DOLE Php 700,000.00 worth of equipment to process Geonets (extracted coir from coconut husks that are used CONSUMPTION DISTRIBUTION PROCESSING to prevent the occurrence of erosion, protect river banks, and even be a medium to beautify the area where it is installed.). BLISCOFA was given License to Operate as a Food Manufacturer by the Food and Drugs Administration in February 2015. The association’s market now includes Europe, US, Canada and other Asian countries. From 14 employees, BLISCOFA now has 110 full-time workers and has 170 farmer members.

* Source: Department of Trade and Industry 7 From Local To Global Borderless Business for MSMEs 8 What does it take for MSMEs to Tapping compete globally and join global value chains? Preferential Markets The opportunities for MSMEs in global value chains are enormous, but these come with The Philippines is a founding member of corresponding challenges, especially if businesses are not adequately prepared. For them to In 2012, ASEAN crossed the threshold of the Association of Southeast Asian Nations seize these opportunities, MSMEs need guidance and assistance to better anticipate, adjust having over 50% of its population living (ASEAN), a geographically tight regional bloc and prepare for bigger market demands and competition. The following are areas where in urban areas. created in 1967, composed of ten (10) cul- MSMEs typically need support: ASEAN has a diverse market! It is home turally distinct nations committed to foster to major religions, it has vast natural CONNECTIVITY stronger economic, socio-cultural, political resources, and it has a rich culture. — Technology application toward improving business operations and security relations. Philippine businesses — Availability of and access to E-commerce platforms can maximize the opportunities ASEAN offers — Access to efficient transport infrastructure especially in trading goods and services. The ASEAN vision of an integrated economic Ten (10) ASEAN Member States: Brunei COMPETITIVENES community: — Deliver high quality products and services Darussalam, Cambodia, Indonesia, Laos, (i.e. meet standards and certifications) Malaysia, Myanmar, Philippines, Singa- A single market and — Improve product innovation and design pore, Thailand, and Vietnam production base — Apply flexibility in the business Population: 630 million GDP: US$2.5 trillion SKILLED LABOR Highly competitive Approximately 60% of ASEAN’s popula- — Access to educated and skilled labor force region — Continuous training and self-learning on entrepreneurship tion is under the age of 35, and 43% under age 24. Region of equitable CUSTOMER RELATIONS ASEAN’s middle class is expected to more economic — Establish strong customer relationship and expand business network than double in size from 135 million (24% development — Appreciate different cultures and adapt products and services to of ASEAN’s population) in 2015 to 334 capture other markets million (51% of the population) in 2030.

AMBITION Age Distribution in 2015 (percent) ASEAN Member Population Annual Per Capita — Readiness of owner to take risks Economies 2015 Population Pop’n. Aged Pop’n. Below GDP, PPP 2015 — Openness to improve and flexibility to adapt (thousand) growth % 15—64 Age 15 (constant 2011 US$) Brunei Darussalam 417.2 1.3 72 23 78,369.3 KNOWLEDGE Cambodia 15,405.2 1.5 64 32 3,490.4 — Know the AEC-related concessions and other PH agreements and Indonesia 225,461.7 1.3 67 28 11,057.6 policies that offer preferential market access Lao PDR 6,902.4 1.4 61 35 5,691.3 — Understand global competition Malaysia 30,485.3 0.7 69 25 26,950.3 — Know and respect the laws (e.g., intellectual property rights) Myanmar 52,476.0 1.9 67 28 5,249.7 ACCESS TO FINANCE Philippines 101,562.3 1.7 63 32 7,387.3 — Proper financial reporting and information disclosure Singapore 5,535.0 1.2 73 16 85,382.3 — Access to SME financing: informal, internal, equity, debt, asset-based, Thailand 68,979.0 0.5 72 18 16,340.0 leasing, and government grants and subsidies. Vietnam 91,713.3 1.1 70 23 6,034.3 — Availability of supply chain finance and trade finance * Source: The World Bank 9 From Local To Global Borderless Business for MSMEs 10

The ASEAN Economic Community (AEC) The ASEAN Economic Community (AEC)

So if qualified products from ASEAN countries can get reduced or zero tariff rates, how will they determine if the product is made in the Philippines and/ Taking Advantage of the AEC or ASEAN countries when inputs to produce traded goods are sourced from different parts of the world nowadays? Take for example, the puzzle below! To open broader economic opportunities for the ASEAN people, the ASEAN Economic Tariff is a tax or RULES OF ORIGIN (ROO) determine the ‘nationality’ of the product, i.e., where it was Community (AEC) was envisioned as a single duty to be paid on a grown, obtained or manufactured. In ASEAN, there are 4 acceptable measures to deter- market and production base that allows the particular class of mine the real origin of a good. free flow of goods, services, investments, imported from abroad. capital, and skilled labor in the region - thus, Rules of Origin in ASEAN: making its economies more dynamic and 1. Wholly-Obtained (WO): Only the Phil- Made in Made in competitive. 0%-REDUCED TARIFFS FOR CHINA THAILAND ippines has been involved in the produc- IMPORTED PRODUCTS FROM Made in The ASEAN Trade in Goods Agreement tion of the good. PHILIPPINES ASEAN COUNTRIES (ATIGA), which took effect in 2010, con- 2. Regional Value Content (RVC): At least Made in solidated all Common Effective Preferential The Philippines’ average applied PHILIPPINES 40% of inputs are from the Philippines or Made in Tariff/ASEAN Free Trade Area commitments tariff including preferences is 6.27%, total content from ASEAN countries, and CHINA related to Trade in Goods. ATIGA focuses on Made in lower than the ASEAN average at 8.07%. the final process of production is- per PHILIPPINES tariff liberalization and non-tariff measures, More than half of the Philippines’ tariff formed in the Philippines. trade facilitation, simplification of rules of lines (58%) are dutiable at 0% to 5%, Made in 3. Change in Tariff Classification (CTC): PHILIPPINES origin, and establishment of an ASEAN Trade while 36% have tariffs of 7% to 15%, and Made in Repository. Specifies that the materials used to pro- Made in the remaining 6% have 20% to 65%. INDONESIA THAILAND duce a good have undergone a change in Under the ATIGA, the ASEAN-6 (Phili- Certain sensitive agricultural pro- tariff classification, or have undergone ppines, Singapore, Malaysia, Indonesia, Thai- ducts such as rice, sugar, live swine, a specific manufacturing operation, or For more information on the process of land, and Brunei Darussalam) eliminated live chicken, meat of swine, meat of satisfies an RVC criterion. securing a Certificate of Origin, visithttp://cb- import duties on almost all products traded chicken, manioc (cassava) and sweet asec-project.de/wp-content/uploads/2014/ among them and, by 2015, with flexibility 4. Product Specific Rules: Where spe- potatoes, and maize are exempt from CD-RulesofOrigin/chap5/index.html. cific rules are applied to a defined set to 2018, for Cambodia, Laos, Myanmar, and duty elimination. Vietnam (CLMV). of products based on the RVC-based ONLINE INFORMATION ABOUT ASEAN or CTC-based rule of origin, a specific LAWS ON TRADE AND INVESTMENTS manufacturing or processing operation, or a combination of any of these. In line with ATIGA, the ASEAN Trade Repository Across (ATR) provides exhaustive information on the 10 ASEAN Pursuant to the Customs Modernization trade and customs laws and procedures of all and Tariff Act, an importer or exporter may ASEAN Member States. This allows for greater transparency and helps MSMEs through the Member file a written application for an advance process of doing business in ASEAN. The ATR is an States ruling on the tariff classification of goods electronic interface through which the public can with the Philippine Tariff Commission. access the information available in National Trade 96.01% of all tariff Submission of Certificate of Origin Form D Repositories (NTRs) of each ASEAN Member State. lines have been This is the link to the ATR online portal: CMLV ASEAN-6 is required in order to avail of reduced or eliminated 90.9 % tariff lines eliminated 99.2 % tariff lines eliminated http://atr.asean.org/ eliminated tariffs from trade agreements. 11 From Local To Global Borderless Business for MSMEs 12

The ASEAN Economic Community (AEC) The ASEAN Economic Community (AEC) Muslim Population in Business Highlight Business Highlight: the World and AEC Trade In Services Muslim Population Population (in million) CINCO CORPORATION (POTATO CORNER) (in million) ZEENOH, INC. Zeenoh, Inc., an entertainment software Cinco Corporation is the company 1994, and reached more than a hundred after WORLD 7407.78 2142.13 company that specializes on Internet of behind the Philippines’ beloved flavored three years. The company experienced major Africa 1199.99 635.67 Things, video games, animation and other french fries, Potato Corner. The first Potato setbacks due to the 1998 Financial Crisis, but Asia 4434.85 1438.88 software applications, started when its Corner stall opened in 1992 at a shopping bounced back to business in 2000s. It opened Europe 737.69 56.52 owner, a full time software engineer, took one mall in Mandaluyong City. Known for its its first international outlet in Indonesia North America 488.70 8.25 of DTI’s free business courses in 2007, which cheese, barbecue, and sour cream-flavored in 2006 and since then, has continued to South America 508.51 2.15 prepared him with the basics of setting up fries, the team behind Potato Corner rode establish its presence overseas – Singapore, his own enterprise as a sole proprietor. A Oceania 38.04 0.66 on the flavored popcorn trend in the 1990s Thailand, Australia, United States and year later, Zeenoh was founded on September and found a way to deep fry potatoes in a Panama. ASEAN REGION 632.10 274.82 10, 2008 as a pioneering game development small space, allowing them to raise their company in the country. Zeenoh started as To date, there are 800 Potato Corner stalls Brunei own business with a modest capital of Darussalam 0.40 0.04 an outsourcing partner for top video game across the globe and plans are underway to P150,000.00. Cambodia 15.80 1.11 studios from Japan, Korea and USA. As an bring the brand to other ASEAN territories such end-to-end service provider for developing Indonesia 259.40 228.27 Franchising was the key to business as Myanmar and Vietnam. The company hit video games, it evolved into developing expansion. By sharing the brand to those a record Php 1 billion sales in 2015, cementing Lao PDR 7.10 0.07 its own original content (and intellectual who wanted to run their own Potato Corner its leadership in the food cart industry. Cinco Malaysia 30.80 18.88 property). The company started with mobile, kiosks, the company was able to quickly Corporation seeks to share with other MSMEs Myanmar 52.40 7.86 web, PC, console and is now developing expand and secure its dominance in the its experience in international expansion, by Philippines 102.60 10.26 virtual reality applications. Zeenoh’s notable games developed are Patintero Playtime, food cart business. From only one stall in participating in various fora organized by Singapore 5.60 0.87 1992, the number of outlets grew to 70 by business associations. released for mobile in 2010, and Nightfall: Thailand 65.30 6.53 Escape, the first globally known full-3D game Vietnam 92.70 0.93 that is locally owned and made. Tapping The ASEAN and * Source: Muslim Population In 2016, Zeenoh, Inc. received an award Global Halal Industry The Philippines and Brunei as the Best Innovative SME at the ASEAN Darussalam have a Memorandum Export of Business Awards 2016 held in Vientiane, Laos. As a predominantly Islamic market, ASEAN of Understanding that aims to has great demand for Halal products and ser- foster cooperation in the field of SERVICES Philippine producers also have preferential vices. The Philippine Halal Export Develop- There are opportunities in the ASEAN access to other major economies in the region Halal industry and Halal products ment and Promotion Act (RA 10817) of 2013 cre- market for firms engaged in selling services, due to ASEAN’s existing free trade agreements ated the Halal Export Industry Development development, reduce technical particularly for industries where products or with the following: and Promotion Program, aimed to support the barriers to trade, and facilitate outputs are easily transmitted online, such Australia and New Zealand (ASEAN-Australia- growth of Halal industries for domestic and bilateral relations, particularly as the business process outsourcing (BPO) New Zealand Free Trade Agreement) export markets. The DTI Export Management with respect to Halal export industry. Unlike trade in goods, trade in services China (ASEAN-China Free Trade Agreement) Bureau assists Philippine Halal certifiers to ob- across the ASEAN economies remains limited Japan (ASEAN-Japan Comprehensive development and promotion tain recognition from various Islamic markets, and subject to national legal restrictions, but Economic Partnership Agreement) and assists SMEs to become Halal-certified to programs. is the object of greater liberalization under the Korea (ASEAN-Korea Free Trade Agreement) be able to export their products. ASEAN Economic Community 2025 Blueprint. India (ASEAN-India Free Trade Agreement) 13 From Local To Global Borderless Business for MSMEs 14

The ASEAN Economic Community (AEC) The ASEAN Economic Community (AEC)

ASEAN+1 FTAs: Benefits For Philippine Businesses SECTOR & SAMPLE PRODUCTS FTA RATE

4% in 2012 SECTOR & SAMPLE PRODUCTS FTA RATE l Other Coal 0% by 31 Dec 2018 4% in 2012 ASEAN- l Processed food, beverages, minerals, inorganic and organic 0 l Ammonium Sulphate 0% by 31 Dec 2018 Australia FTA chemicals, leather goods, footwear, basketware, ceramics, fine 4% in 2012 l Ammonium dihydrogenphosphate and mixtures thereof 0% by 31 Dec 2018 and costume jewelry, appliances, auto & auto parts, ships & boats, 8% in 2012 furniture, women’s undergarments, cotton jackets/blazers and l Special lenses of other materials 0% by 31 Dec 2018 dresses, overcoats of wool, trousers of synthetic fiber, hosiery, socks, 8% in 2012 l Plated or coasted with aluminum 0% by 31 Dec 2018 gloves, shawls, ties, cotton men’s shirts, and babies’ garments. l Flat-rolled products of iron or non-alloy steel, of a width of 600 mm 8% in 2012 l All other articles of apparel and clothing, carpets, and wooden or more, cold-rolled, not clad, plated or coated 0% by 31 Dec 2018 0% by 2020 office furniture 9% in 2012 l Static converters 5% by 31 Dec 2022 l Processed food, beverages, minerals, inorganic and organic ASEAN- 0 l chemicals, basketware, ceramics, fine and costume jewelry, auto, Other anionic washing preparations and cleaning preparations 8% in 2012 New Zealand FTA 0% by 31 Dec 2018 ships & boats, air conditioners/refrigerators/freezers, upholstered including bleaching, cleansing and degreasing preparations

seats, marble, furniture of cane/bamboo/metal, Christmas decor l Radial. New pneumatic tires of rubber, of a kind used on motor 9% in 2012 5% by 31 Dec 2033 l Leather coats, belts and gloves, carpets, knitted/crocheted cars (inc. wagons and racing cars) 0% by 2017 l fabrics, articles of clothing & apparel, footwear ASEAN-Japan Refined coconut oil, crude coconut (copra) oil, other plywood and 0 l Chewing gum, sweet biscuits, soy sauce, wooden doors, CEPA veneered panels, dried pineapples, other smoked fish, yellow fin tuna, furniture of plastics, other articles of clothing & apparel 0% by 2020 frozen poultry meat cuts, builders’ woodwork, fresh mangoes, other plastic packaging, copper foil, other non-wired glass, ceramic roofing l Resource and Agro-based Products: ASEAN-China tiles, and boot/shoe lasts w Bananas 0 FTA l Resource and Agro-based Products w Crude Coconut (copra) oil, Mineral oils and fuels 0 ASEAN-Korea 0 w Desiccated coconuts, sweet biscuits, copra/coconut oil- — Naptha, reformate or preparations for preparing spirits 0 FTA cake and residues, tobacco (unmanufactured, not stemmed or — Other fuel oils 5 stripped), tobacco extracts and essence, petroleum condensates, — Other coal (e.g. briquettes) 5 marble tiles and slabs, and articles of asbestos-cement — Propylene, butylenes and butadiene 0 l l Chemicals & Plastics: Chemicals 0 w Xylol (xylenes), Lauryl alcohol, Washing and cleaning w Selenium, Lauryl alcohol, Industrial fatty alcohol, and Plastic scrap 0 preparations (inorganic), and Industrial fatty alcohols l Metals: l w Tinned iron or steel scrap 0 Metals 0 w w Copper : Iron or steel nuts, copper cathodes, copper wire, and tin alloys — Copper cathodes 0 l Machinery 0 — Waste and scrap copper 0 w Parts for radio broadcast receivers, parts for electric — Copper foils, backed 0 sound or visual signaling apparatus, and electrical particle l Machinery and mechanical appliances: accelerators w Parts of air conditioners 0 Source: DTI-Export Marketing Bureau w Parts of other machinery, plant & equipment of heading 84.19 0 Queries related to l Electrical machinery and equipment: For more information about Philippine trade agreements: w Uninterrupted Power Supply 0 ASEAN+6 FTA Rules of Origin: w Part of ballast and other inductors 0 Bureau of International — ASEAN-Australia-New Zealand FTA l Vehicles incl. parts and accessories 0 Trade Relations, Department http://aanzfta.asean.org/wp-content/uploads/2016/09/ASEAN_RulesOfOrigin7.pdf l Other parts and accessories of motor vehicles 9% in 2012 of Trade and Industry ASEAN-India FTA 5% by 31 Dec 2022 — ASEAN-China FTA 8% in 2012 https://drive.google.com/file/d/0B0ilL7KAK3i5SUZVejdORzdCX1k/view 4F DTI International l Gear boxes and parts thereof 0% by 31 Dec 2018 — ASEAN-India FTA Building, 375 Senator Gil l Other newsprint, in rolls or sheets 4% in 2012 0% by 31 Dec 2018 https://drive.google.com/file/d/0B0ilL7KAK3i5cHBJX2tiUk9ESWc/view Puyat Avenue, Makati City l Baby and clinical diapers 8% in 2012 — ASEAN-Japan CEPA 0% by 31 Dec 2018 Tel: (632) 465-3300 ext. 407; http://www.mofa.go.jp/policy/economy/fta/asean/annex2.pdf l Mineral and chemical fertilizers containing nitrogen, phosphorus 4% in 2012 897-1719; 465-3355 0% by 31 Dec 2018 — ASEAN-Korea FTA and potassium http://akfta.asean.org/uploads/docs/trade-in-goods-topic-annex3.pdf 15 From Local To Global Borderless Business for MSMEs 16

Philippines–Japan Economic ment (PH-EFTA) with the Philippines in Bern, and chemicals. The products expected to The United States’ Generalized Partnership Agreement (PJEPA) Switzerland, on April 28, 2016. The PH-EFTA benefit most from zero tariff are: covers trade in goods, trade in services, in- System of Preferences (GSP) Product Regular GSP GSP+ The Philippines and Japan entered into an vestment, competition, the protection of intel- The United States GSP provides economic partnership agreement in 2008. It Tuna 20% 0% lectual property rights, government procure- Pineapple 15% 0% preferential duty-free treatment for over 3,500 covers, among others, Trade in Goods, Trade in ment, and trade and sustainable development. Bicycles 10.5% 0% products from the Philippines. This opens the Services, Investments, Movement of Natural Per- Textiles & garments 9.6% 0% opportunity to expand the reach of Philippine sons, Intellectual Property, Customs Procedures, In the area of trade in goods, EFTA abolished Footwear, headwear, all customs duties on industrial products at the umbrellas 9.6% 0% products to the US, and cultivate opportunities Improvement of the Business Environment, and for our exporters and MSMEs to participate in entry into force of the Agreement, while the For Philippine products listed under zero Government Procurement. the global market. The top GSP imports from Philippines will gradually lower or abolish its tariff under GSP+, the goods must fulfill three With PJEPA, almost 95% of Philippine the Philippines in 2015 included automobile duties on the vast majority of industrial products. conditions: exports to Japan (in terms of value) face zero tires, telescopic sights, measuring and checking duties. These include fruits and vegetables, Rules of Origin under EFTA: 1. The goods must originate from Philippines instruments, coconut water, and appliances marine products, sugar, poultry, and wines Philippine products are eligible under EFTA if: based on the EU GSP+ Rules of Origin; and machines. However, the program excludes and drinks. Tariffs on almost all textiles and textile, apparel, and footwear. 1. These have been wholly obtained in a coun- 2. During transportation from a beneficiary apparels have been mutually eliminated. try that is a signatory (“Party”) to the agree- country to the EU, the goods must not be al- Rules of Origin under US GSP: ment, in accordance with the agreement; tered, transformed or subjected to operations Rules of Origin under PJEPA: Philippine products are eligible under US other than operations performed to ensure Philippine products are eligible for zero 2. The non-originating materials used in the GSP if they satisfy any of the following: their good condition; and, production in a Party satisfy the requirements tariff under PJEPA if these: 1. The product must be grown, produced, or provided for in the agreement; 3. A valid proof of origin must be submitted 1. Are wholly obtained in the Philippines manufactured in the Philippines and must (Certificate of Origin Form A, issued by the 3. These have been produced in a Party ex- meet the value-added requirements; or, 2. Undergo change in tariff classification (CTC): Bureau of Customs, or invoice declaration, or clusively from materials originating in one or The materials used originating from outside statement on origin). 2. Value of materials produced in the Philippines more Parties; or, plus the direct costs of processing must equal Japan or the Philippines have undergone Rules of Origin under GSP+: sufficient manufacturing or processing into a 4. These have been produced in a Party exclu- at least 35 percent of the appraised value of the different product. sively from materials. Philippine products are eligible under article at the time of entry into the United States. GSP+ if they are either: 3. Fall under value-added rules: Value added The European Union’s An importer, exporter or producer who is un- 1. , or to goods originating from outside Japan or the Generalized System of Wholly obtained in the Philippines certain about whether a particular imported arti- Philippines in the manufacturing or processing 2. Sufficiently worked or processed in the cle satisfies the rules of origin requirements may done in the country exceeds a specified limit. Preferences Plus (GSP+) Philippines: The condition is that the non- check the U.S. Customs and Border Protection’s searchable database, http://rulings.cbp.gov/. For further inquiries and concerns regar- EU-Generalized System of Preferences originating materials used (or the materials ding the implementation of PJEPA, contact the Plus (GSP+) is a preferential tariff scheme imported into the Philippines) have undergone An interested exporter/importer must re- Department of Trade and Industry’s Bureau granted by the European Union to developing “sufficient working or processing.” quest duty-free treatment under the US-GSP of International Trade Relations (DTI-BITR) at countries that qualify under certain More on the GSP Rules of Origin: by placing the appropriate GSP Special Program [email protected] or at telephone stringent application requirements. Under http://ec.europa.eu/taxation_customs/ Indicator (A, A+, or A*) before the Harmonized numbers (+632) 465-3300 ext. 401/402. GSP+, Philippine producers can export 6,274 sites/taxation/files/resources/documents/ Tariff Schedule of the United States (HTSUS) number that identified the imported article on products to any of the 28 member countries customs/customs_duties/rules_origin/pre- the shipping documents. The complete HTSUS Philippines–European Free of the European Union (EU) at zero tariff. ferential/guide-contents_annex_1_en.pdf can be downloaded from the USITC website Trade Association (EFTA) Products that may avail of the duty free For more information, contact the DTI- http://www.usitc.gov/tata/hts/index.htm). Free Trade Agreement access include coconut and marine products, Export Marketing Bureau (EMB) at phone For more information, contact the DTI-Ex- The Philippines and the member states of processed fruit, prepared food, animal and number +632-465 3300; email PH_GSPPLUS@ port Marketing Bureau (EMB) at phone number the EFTA — Iceland, Liechtenstein, Norway, vegetable fats and oils, textiles, garments, dti.gov.ph or visit the EU Export Helpdesk: (+632) 465-3300. and Switzerland — signed a free trade agree- headwear, footwear, furniture, umbrellas, http://exporthelp.europa.eu 17 From Local To Global Borderless Business for MSMEs 18

Government Support Below are listed and described various government programs to assist MSMEs in the various aspects of support they require. Programs for MSMEs Starting a Business and Paying Taxes The Philippine government, through the Mentoring, Money, Machines, Market Access Department of Trade and Industry (DTI), and Models. The elements of the 7Ms strategy PHILIPPINE BUSINESS REGISTRY pursues a wholistic strategy to support the toward enabling and fostering the country’s The Philippine Business Registry (PBR) Revenue (BIR), Social Security System (SSS), development of MSMEs, summed up in seven MSMEs are described in the table. is a web-based system that serves as a one- Home Development Mutual Fund (Pag-IBIG), Ms, namely: Mindset Change, Mastery, stop shop for entrepreneurs who need to Philippine Health Insurance Corporation MINDSET CHANGE MASTERY MENTORING MONEY transact with several agencies to be able (PhilHealth), Local Government Units (LGUs) Embracing the right Mastering the know- Continuous business Alternative sources to start operating a business. It facilitates and other permit/license-issuing agencies. positive entrepreneur- how & how-to’s of guidance, with help of finance for MSMEs business registration-related transactions Sole proprietors can validate existing busi- ial attitude entrepreneurship from private sector that are easy to by integrating all agencies involved in business names or register their business names partners access and available DTI’S Negosyo Center Negosyo Centers at reasonable cost ness registration, such as the Department of with the DTI. seminars, the SME facilitate mentoring on Partners through Kapa- Roving Academy setting up a business, tid Mentor ME include DTI’S Pondo sa Trade and Industry (DTI), Bureau of Internal (SMERA) and the spotting market Go Negosyo, Philippine Pagbabago at Kapatid Mentor ME opportunity, product Chamber of Commerce Pag-asenso (P3) Contact: Department of Trade and Industry — 361 Trade & Industry Building, program help intuse positioning and & Industry, Philippine microfinance Senator Gil J. Puyat Avenue, Makati City, Metro Manila, Philippines 1200 an entrepreneurial differentiation, product Franchise Association, program, through the mindset that is suc- & market development, Association of the Small Business Corp. Phone: (+632) 751-0384 • Email: [email protected] • Website: www.business.gov.ph cess- and innovation- basic business Filipino Franchisers driven, collaborative, planning and finance, Inc., and Federation of Facilitate access and proactive. and developing a Filipino-Chinese Cham- to micro-finance ONLINE PAYMENT OPTIONS FOR PAG-IBIG AND PHILHEALTH institutions (MFls) system for continuous bers of Commerce & On paying taxes and payroll-related For PhilHealth, employers reporting innovation. Industry Inc. payments, Pag-IBIG and PhilHealth have payment of premium contributions may made it easier for companies employing access the Electronic Premium Remittance MACHINES MARKET ACCESS MODELS ten or more workers to pay monthly System (EPRS) by submitting electronically Equipping MSMEs Linking MSMEs to Providing business to upgrade their big companies or to models that new contributions through various online and posting in the EPRS the remittance list technology to boost government as po- entrepreneurs can payment systems. Pag-IBIG’s “Employers’ report. The remittance list report contains productivity and tential buyers of their readily adopt to start competitiveness products; promoting a business Online Payment Facility” assures employers payment details and information (i.e., Official e-commerce plat- of accurate recording of contributions and Receipt Number and the date appearing Provide knowledge on forms for direct reach Negosyo Centers can equipment and right to domestic and assist with getting premiums, faster transactions, payments on hereon, as well as the Name of Collecting tools to ensure quality foreign buyers started in businesses short term loan amortizations can be made Agent where payment was remitted) for the production under ranging from DTI’s Shared Services DTI helps promote traditional enterprises, anytime and anywhere, while saving time particular Statement of Premium Account Facility (SSF) and MSME products to direct selling and and transportation costs. (SPA) generated thru the EPRS. This must be the Small Enterprise through provincial franchising Technology Upgrading and national trade done within five (5) days after payment. DTI and non-govern- Program (SETUP) fairs, OTOP (One- ment partners also of the Department Town, One Product) Contact: Home Development Mutual Fund help link small firms/ of Science and shows, Go Lokal! dis- producers with larger Phone: (+632) 724-4244 • Email: [email protected] Technology (DOST) plays in major malls, and the intemational- firms for possible Website: http://www.pagibigfund.gov.ph/payments/paymentfacilities.html DOST also provides ly-recognized Manila value chain partner- general technology FAME (Furnishings ships, under inclusive Contact: PhilHealth — Citystate Centre, 709 Shaw Boulevard, 1603 Pasig City, Philippines upgrading support not and Apparel Manufac- business models Phone: (+632) 441-7443 • Email: [email protected] necessarily associ- turers’ Exchange). ated with machines. Website: https://www.philhealth.gov.ph/partners/employers/registration.html 19 From Local To Global Borderless Business for MSMEs 20

ELECTRONIC TAX FILING AND E-PAYMENT OF ACCESS OF SMALL ENTERPRISE THE BUREAU OF INTERNAL REVENUE (BIR) & TO SOUND LENDING OPPORTUNITIES (ASENSO) THE SOCIAL SECURITY SYSTEM (SSS) The Access of Small Enterprise to Sound Development Bank of the Philippines (DBP), Lending Opportunities (ASENSO) Program, Small Business Corporation (SBC), Philippine The BIR’s electronic tax filing and contributions and loan repayments through formerly SULONG Program, is an initiative of Export-Import Credit Agency (PhilEXIM), and e-payment through G-cash allows taxpayers partner banks (auto debit) and accredited government financial institutions (GFIs) that Quedan and Rural Credit Guarantee Corpora- to use mobile phones to remit payments payment centers. The portal also allows aims to give SME greater access to short and tion (QUEDANCOR). GFIs extend loans to mi- instead of queuing in BIR offices and banks. employers to make online transactions, set long term funds by simplifying and standar- cro and small and medium enterprises provid- Similarly, SSS’s online payment scheme, appointments with their SSS serving branch, dizing the lending process. These GFIs in- ing them with manageable terms to help them My.SSS, allows companies to remit SSS and request copies of their records. clude Land Bank of the Philippines (LBP), expand and grow their businesses.

Contact: Bureau of Internal Revenue National Office Building, Agham Road, Diliman, Quezon City, Philippines Movable Collateral Strategy Phone: (+632) 981-7000 • Fax: (+632) 925-1789 • Email: [email protected] One way to help MSMEs gain better access to bank financing is to expand the range of Website: https://efps.bir.gov.ph/ acceptable loan collaterals beyond real properties, to include movable collaterals like motor Contact: Social Security System vehicles; standing crops like rice, sugarcane, tree crops, and other agri-aqua commodities; SSS Building East Avenue, Diliman Quezon City, Philippines equipment, etc. The Philippines has had the legal framework for this since 1906 under the Phone: (+632) 920-6401, 920-6446 to 55 • Email: [email protected] Chattel Mortgage Law, and a document-based movable collateral registry managed by the Website: https://www.sss.gov.ph Registry of Deeds, recognizing a diverse set of movable assets acceptable as collateral for loan purposes, as above. However, in practice, such assets have not been favored by banks as loan collateral, except for motor vehicles. The Department of Finance is looking into measures INCENTIVES AND FINANCIAL SUPPORT that will lead to greater acceptance of such movable collateral by the banking system. FOR MICROENTERPRISES

The Barangay Micro Business Enter- Contact: Land Bank of the Philippines enterprises registered in the barangay level. prises (BMBE Act), signed into law in 2002, 1598 M.H. Del Pilar corner Dr. J. Quintos Streets, Malate, Manila Other incentives include financial support provides support to microenterprises and Phone: (+632) 522.0000 (632) 551.2200 locals 2448, 2589, 2728, or 2650 from government financial institutions and the informal sector. Incentives such as Telefax: (+632) 405-7640 / 522-0000 loc. 2589 • Email: [email protected] technological assistance from government. exemption from income tax, reduction in Interested MSMEs may contact the nearest local taxes, and exemption from payment SMALL BUSINESS CORPORATION (SB Corp.) DTI office. of minimum wages are granted to micro The Small Business Corporation (SB Corp.) operations and the issuance of debt instru- offers a wide range of financial services, spe- ments, among others. SB Corp. is the National cifically for small and medium enterprises Government’s third largest provider of SME engaged in manufacturing, processing, agri- financing, with a lending portfolio of over P2.5 Financial Support and Assistance business (except crop level production) and Billion. They have over 2,937 clients and 143 services (except trading). Financial services active partner financial institutions. SB Corp. MANDATORY BANK LENDING TO PHILIPPINE MSMEs include direct and indirect lending, financial has 5 full service area offices, and 18 desk of- leasing, secondary mortgage, venture capital fices strategically located across the country. Pursuant to Republic Act 9501 (Magna total loan portfolio for micro and small en- Contact: Small Business Corporation Carta for Micro, Small, and Medium Enter- terprises and at least 2% for medium-sized 17th & 18th Floors, 139 Corporate Center, Valero St., Salcedo Village, Makati City, Philippines 1227 prises), all banks and lending institutions business. Phone: (+632) 751-1888, (632)894-1677 • Email: [email protected] are required to set aside at least 8% of their Website: https://www.sbgfc.org.ph/ 21 From Local To Global Borderless Business for MSMEs 22

PONDO PARA SA PAGBABAGO AT PAG-ASENSO (P3) 3. Warehouse receipts — farmers and other collateral to access a loan from an appropriate value chain enterprises receive a receipt from BSFI against the security of goods in an Pondo sa Pagbabago at Pag-asenso and at a maximum interest rate of 2.5% a certified warehouse that can be used as independently controlled warehouse. (P3) is a funding program to provide per month with no collateral requirement. microenterprises an alternative source Target loan beneficiaries are the small VENTURE FINANCING PROGRAM of financing that is easy to access ata business entrepreneurs like market vendors The Department of Science and MSMEs, provides funding to start-up and reasonable cost or low interest rate. Loan and agribusinessmen who usually borrow Technology-Technology Application and technology-based projects to hasten the amounts range from P5,000 to P100,000, from “5-6” lending sources. Promotion Institute (DOST-TAPI) Venture commercialization of new and emerging Contact: Small Business Corporation Financing Program, primarily catering to technologies and inventions. Phone: (+632) 813.5711; 751.1888 • Email: [email protected] Contact: Venture Financing Program and CAMPI Website: http://dti.gov.ph/programs-projects/pondo-sa-pagbabago-at-pag-asenso Phone: (+632)837-3186 • Email: [email protected] • Website: http://tapi.dost.gov.ph/

CREDIT SURETY FUND BE INFORMED The Credit Surety Fund Program (CSF) is credit knowledge and credit track records. Republic Act No. 9474 or the Lending Company Regulation Act of 2007 a credit enhancement scheme developed by The CSF pools contributions of cooperatives prohibits “informal lenders” or persons who engage in lending without the Bangko Sentral ng Pilipinas that aims to and NGOs, LGUs and partner institutions such primary registration (of incorporation) and secondary license (to extend loans increase the credit worthiness of MSMEs ex- as DBP and Land Bank. These contributing co- to the public) from the Securities and Exchange Commission. Violators will periencing difficulties in obtaining loans from operatives and their members who are MSMEs banks due to lack of acceptable collaterals, may take out loans from the CSF Program. be imposed a fine of not less P10,000 or imprisonment of not less than six months but not more than 10 years or both. Contact: Department of Loans and Credit, Bangko Sentral ng Pilipinas Phone: (+632) 708-7238, 306-2450, 306-2460, 306-2353 • Telefax: (+632) 306-2002 Website: www.bsp.gov.ph/loans/loans_csf.asp ACCESS TO TECHNOLOGY & RESEARCH FACILITIES AGRICULTURE VALUE CHAIN FINANCING SHARED SERVICES FACILITY (SSF) The issuance by the Bangko Sentral ng The following products and financial The Shared Services Facility (SSF) Project cooperatives, associations, corporations or Pilipinas (BSP) on agricultural value chain services may also be made available to is a major component of the Micro Small and organizations. The SSF addresses processing financing addresses the associated credit agricultural value chain actors/players: Medium Enterprise Development Program and manufacturing gaps or bottlenecks risks with the agriculture and fisheries 1. Trade-receivables finance — a BSP-super- which provides machineries, equipment, brought about by any of the following: sector by shifting the focus of lending from vised financial institution (BSFI) advances tools, systems, skills and knowledge to — Absence of the necessary facility individual farmers and fisherfolks to the working capital to agribusiness (supplier, deserving MSMEs through SSF Cooperators. — Lack of capacity of an existing facility whole value chain. To encourage engagement processor, marketing and export) companies Beneficiaries of the project are the actual — Cost of services of an existing facility in the lending scheme, incentives are also against accounts receivable or confirmed or- and potential users of the SSF which should is expensive provided to financial institutions that ders to producers be predominantly cooperatives, associations — Inadequate technical and administra- comply with the regulatory expectations. or groups of MSMEs or individual tive services to promote and facilitate These include compliance with agri-agra 2. Factoring — a financial transaction whereby entrepreneurs who may not be members of the growth of MSMEs requirement and an additional 25 percent a business sells its accounts receivable or increase in the single borrower’s limit for contracts of sales of goods at a discount to an Contact: SSF Project Management Office, DTI-BSMED loans granted to actors in the agricultural appropriate. BSFI, called a factor, who pays the 6F Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, Makati City value chains for a period of three years. business minus a factor discount and collects Phone: (+632) 751-0384 locals 2101/2059, 890-4968, 897-1693 the receivables when due; and Website: http://www.dti.gov.ph/programs-projects/shared-service-facilities 23 From Local To Global Borderless Business for MSMEs 24

SMALL ENTERPRISE TECHNOLOGY UPGRADING PROGRAM (SETUP) Contact: Department of Science and Technology Gen. Santos Avenue Bicutan, Taguig City Metro Manila Philippines The Department of Science and Tech- logical interventions for better product Email: [email protected] nology’s (DOST) Small Enterprise Technol- quality, human resources development, cost Website: https://oneexpert.gov.ph/visitors/resource_persons#panel-stevpp ogy Upgrading Program (SETUP) encourag- minimization and waste management, and es and assists SMEs to adopt technological other operation-related activities. STEPUP ONELAB - REGIONAL SCIENCE & TECHNOLOGY innovations that will improve their opera- concentrates on its six priority sectors: LABORATORY SERVICES (RSTLs) tions, increase productivity and enhance Food Processing; Furniture; Gifts, Decors & competitiveness. The program facilitates Handicrafts; Marine and Aquatic Resources; OneLab Regional S&T Laboratory Ser- facilities all over the country. This is in su- technology transfer and provides techno- Horticulture; and Metals and Engineering. vices (RSTLs), a DOST program that pro- pport of initiatives for enhanced competi- vides laboratory and testing services for in- tiveness through quality improvement and Contact: SETUP National Program Management Office: Department of Science and dustries, academe, local government units, to meet international standards for goods Technology — DOST Compound, Bicutan, Taguig, Metro Manila and private institutions that complements and services. Phone: (+632)-837-7531 • Email: [email protected] • Website: http://setup.dost.gov.ph/ and increases the presence of S&T testing SCIENCE AND TECHNOLOGY EXPERTS Contact: DOST Regional Offices to inquire about their RSTLs: VOLUNTEER POOL PROGRAM (STEVPP) http://www.dost.gov.ph/products-and-services/regional-offices-s-t-services The S&T Experts Volunteer Pool Pro- operating expenses of MSMEs by: reducing INTELLECTUAL PROPERTY (IP) ADVISORY SERVICES gram (STEVPP), incorporated with DOST’s wastes; increasing product yields; improv- The Intellectual Property Office of the Innovation and Technology Support Offices OneExpert program, aims to bring scientists ing quality; providing safer workplaces; and, Philippines (IPOPHL) has 11 IP Satellite Offices (ITSOs) to strengthen local institutional and experts to the countryside. It provides protecting the environment through clean- (IPSOs) that provide basic information on IPR, capacity, access patent information for use experts’ services, technical assistance/advi- er production assessment and intervention. assistance in trademark search and in the in research, education, idea generation, sory services, troubleshooting, trainings and • Consultancy for Agricultural Produc- registration of logos, trademarks or brands, and general business development. IP seminars to activities that support technol- tivity Enhancement (CAPE) Program - including technical and advisory services for advisory services and capacity building ogy transfer and commercialization, produc- Provides consultancy teams to undertake IP stakeholders, particularly MSMEs. Together programs motivate MSMEs to modernize tivity enhancement and technical capability technology improvement and enterprise with universities, research institutions, and their operations and build their competitive development/skills upgrading. MSMEs and productivity studies in MSMEs in the agri- government offices, IPOPHL established 85 capacities through the use of the IP system. cooperatives may tap the S&T Exports on the cultural and aquaculture sectors. following specialized programs: • Packaging and Labeling Assistance - Contact: Intellectual Property Office of the Philippines • Manufacturing Productivity Extension Transforms locally-produced goods into Phone: (+632) 238-6300 • Website: http://www.ipophil.gov.ph/services/ip-satellite-office/about-ipso (MPEX) Program - Improves the efficiency globally-competitive products through im- Contact the nearest IPOPHL Satellite Office or Innovation and Technology Support Office and profitability of MSMEs by reducing op- provements in the packaging technologies for more information. erational expenses, encouraging more proof MSMEs. INVENTOR ASSISTANCE PROGRAM (IAP) ductive and safer workplaces, and develop- • Consultancy for Agriculture and Man- ing more appropriately-skilled manpower. ufacturing Productivity Improvement The Inventor Assistance Program of patent to protect their inventions). The IAP • Food Safety Program - Assures the safety (CAMPI) Program - Provides consultancy the IPOPHIL matches Philippine inventors aims to alleviate the burden on patent filers and quality of food products, prevents food- services to MSMEs to attain higher produc- and small businesses with limited financial who are charged exorbitant professional borne illnesses, promotes a responsible en- tivity through the identification of produc- means with patent attorneys who provide fees by linking eligible inventors and small terprise image and protects consumers. tivity improvement concerns in the agricul- pro bono legal assistance in securing patent businesses with experts who are willing give • Energy Audit Program - Reduces the ture and manufacturing sectors throughout protection (free legal advice on how to file a their services for free. operating costs of MSMEs by conserving the country. The CAMPI is a level-up strat- Contact: Intellectual Property Office of the Philippines and using energy more efficiently. egy that provides focused S&T consultancy Phone: (+632) 238-6300 local 5301 • Email: [email protected] • Cleaner Production Program - Cuts the intervention/s for MSMEs. Website: http://www.ipophil.gov.ph/services/patents/inventor-assistance-program 25 From Local To Global Borderless Business for MSMEs 26

DOST FOOD INNOVATION CENTERS (FIC) ONESTORE.PH DOST’s Food Innovation Centers (FIC) changes in color and flavor. The spray dryer OneSTore.PH is an e-commerce web ap- and retailers with simple and direct access to provide five DOST-developed technologies, transforms liquids into powder instantly. The plication that helps DOST-assisted MSMEs one of the largest customer bases in the Phil- these are: (1) vacuum packaging machine, freeze dryer produces dried materials which expand their market, while providing cus- ippines. MSMEs may apply online at One- (2) water retort, (3) vacuum fryer, (4) spray prolongs shelf life and makes transporting tomers an effortless shopping experience, STore.PH to be listed and featured in the site. dryer, and (5) freeze dryer. The water retort these materials more practical. As of 2016, Contact: machine improves shelf-life of food products DOST has established 10 FICs nationwide; Phone: +63917-598-2243 • Email: [email protected] even in non-refrigerated conditions. The these are located at the NCR and in Regions Website: http://onestore.ph/index.php/home/ vacuum fryer creates crunchy products that 2, 4B, 6, 7, 8, 9, 10, 11, with the main FIC are low in fat and high in fiber with minimal located at ITDI, DOST Compound. EXPORT MARKET CONSULTANCY AND BUSINESS MATCHING Contact: Industrial Technology Development Institute The Export Marketing Bureau (EMB) of Tradeline Philippines is an online database DOST Compound, Gen. Santos Ave., Bicutan, Taguig City, Philippines 1631 the DTI oversees the development, promo- service that contains a listing of thousands of Phone: Telefax: (+632) 837-2071 to 82 loc. 2182, 2218, 2180 • (+632) 8373167, 8376150, 8376156 tion, and monitoring of Philippine exports. It manufactured/exported Philippine products, Website: http://www.itdi.dost.gov.ph/ provides assistance to existing and would- complete with product specifications. It also be exporters on all export-related matters, provides product searches, allowing users to including information on export procedures contact Philippine exporters, suppliers and lo- Marketing and Networking Assistance and documentation. cal/foreign buyer details, including products/ services they manufacture/provide and export. Contact: Export Marketing Bureau NEGOSYO CENTERS DTI International Building 375 Senator Gil J. Puyat Avenue Makati City, 1200, Philippines The Go Negosyo Act mandates the established a total of 537 Negosyo Centers Phone: (+632) 897-7605; 465-3300 local 107 • Email: [email protected] establishment of “Negosyo Centers” in which provide business registration Website: www.tradelinephilippines.dti.gov.ph/ all provinces, cities and municipalities assistance, business advisory services, to promote ease of doing business and and business information and advocacy to TRADE FAIRS and EXHIBITIONS (such as MANILA FAME & TRAVEX) assist MSMEs. As of June 2017, the DTI has entrepreneurs. The DTI organizes and participates in local DTI through the Center for International Contact: Department of Trade and Industry—Regional Operations Group (DTI-ROG) and international trade fairs and exhibitions Trade Expositions and Missions (CITEM), is 6F Trade & Industry Building, 361 Sen. Gil J. Puyat Ave., Makati City that promote the “best of the best” products of the second longest-running trade show in Phone: (+632) 751-3334/751-4626/890-4898 • Fax: (+632) 890-4685/895-3582 Philippine entrepreneurs. Participation in such the Asia-Pacific, and is the only trade event Website: http://www.dti.gov.ph/programs-projects/negosyo-center fairs primes MSMEs for national and global in the country that is approved by Union des market opportunities, assisting them in devel- Foires Internationales (UFI), or the Global GO LOKAL! STORE PROJECT oping, packaging and marketing local products. Association of the Exhibition Industry, DTI’s regional offices conduct region-focused a Paris-based association of trade fair Go Lokal! is a retail concept store and marketing these products, serves as a trade exhibits and fairs, and industry-specific organizers founded 90 years ago in Milan, that showcases quality and innovative marketing platform for MSMEs, and provides conferences which bring together industry Italy in April 1925. It is a bi-annual showcase Philippine products crafted, designed, and free testing of product marketability in stakeholders that enables entrepreneurs to of craftsmanship, design innovation, produced by Philippine MSMEs. The store partner retail outlets. provides assistance in branding, designing expand their network, learn about oppor- and artisanship in Philippine products, tunities in other markets, and upgrade their featuring finely selected furniture and home Contact: Department of Trade and Industry—Regional Operations Group (DTI-ROG) knowledge about their own industry. furnishings, holiday gifts and décor, and 6F Trade & Industry Building, 361 Sen. Gil J. Puyat Ave., Makati City fashion accessories designed and crafted in Phone: (+632) 751-3334/751-4626/890-4898 • Fax: (+632) 890-4685/895-3582 Manila FAME (Furnishings and Apparel the Philippines for the global market. Website: http://www.dti.gov.ph/programs-projects/negosyo-center Manufacturers’ Exchange), organized by the 27 From Local To Global Borderless Business for MSMEs 28

QBO INNOVATION HUB BY DTI Business Highlight: The DTI- Export Marketing Bureau (EMB) and private sectors. The Hub is DTI’s su- and IdeaSpace Foundation established the RED CLAY POTTERY CRAFT pport mechanism for the startup commu- QBO Innovation Hub in 2016 to link inno- nity, particularly targeted at startups with Locally known as “Damili” the pottery industry is the major source of livelihood of the “Man- vators, explorers, investors, academic in- viable business propositions, and provides namilis” of Barangay Taboc, San Juan, La Union. Clay pots, jars, stoves, and gangis (little clay tub) stitutions, start-up mentors, funders and a venue for facilitating collaboration among are some of the conventional pottery products offered by promising entrepreneur, Dozen Baduyen. enablers, along with a broad spectrum of the various concerned stakeholders. He enrolled in DTI’s entrepreneurial trainings and seminars, joined DTI Region 1’s Rimat ti Ami- partners and stakeholders from both public anan Trade Fair and other DTI exhibition fairs, until a big manufacturing company noticed his products and brought these to Europe, New York, and the Middle East. In addition to his collection Contact: of contemporary products, Dozen also established the Red Clay Pagdamilian, a place where tour- G/F DTI International Building, 375 Sen. Gil J. Puyat Avenue, 1200 Makati City, Philippines ists can engage in pottery making and take a tour of the products. Phone: (+632) 890-4660 • E-mail: [email protected] • Website: www.qbo.com.ph

KAPATID MENTOR ME PROGRAM CAPACITY-BUILDING, MENTORING & The Kapatid Mentor Me Program of the owners and practitioners. It is an 11-week ENTRePRENEURSHIP TRAINING PROGRAMS DTI and the Philippine Center for Entre- program with modules covering Marketing, preneurship (PCE) assist MSMEs to scale up Financial Management, Human Resource EXPORT PATHWAYS PROGRAM (EPP) and sustain their businesses through weekly Management, Operations Management, The Export Pathways Program of the provides assistance through 7 stages. The first coaching and mentoring on different func- among others. DTI-Export Marketing Bureau aims to assist four stages are assisted by the SME Roving tional areas of entrepreneurship by business existing and new exporters by offering client- Academy, while stages 5 and 6 are covered by Contact: focused interventions to fit their requirements the RIPPLES Program, until the MSME reaches Department of Trade and Industry - Regional Operations Group (DTI-ROG) at any stage of their business. This program the Export Expansion stage. 6F Trade & Industry Building, 361 Sen. Gil J. Puyat Ave., Makati City Phone: (+632) 751-3334/751-4626/890-4898 • Fax: (+632) 890-4685/895-3582 Stage 7: Export Expansion Stage Regional Interactive Website: http://www.dti.gov.ph/programs-projects/negosyo-center Stage 6: Export Sustainability Stage Platform for Stage 5: Export Market Entry Stage Philippine Stage 4: Export Readiness Stage Exporters TECHNOLOGY BUSINESS INCUBATION (TBI)

Stage 3: Market Readiness Stage SME Roving The Department of Science and Techno- tainable, and able to compete in the market. Stage 2: Market Awareness Stage Academy logy (DOST) has facilities to host start-ups, An example of the TBI program is the DOST- Stage 1: Start-Up & Capability-Building Stage promote innovation and technopreneur- Philippine Economic Zone Authority (PEZA) ship in the country. The TBI program offers Open Technology Business Incubator ma- SME ROVING ACADEMY (SMERA) a variety of resources, services and facili- naged and recently upgraded by DOST-NCR. The SME Roving Academy is a markets. Interested entrepreneurs may ties needed by a start-up enterprise, par- The Open TBI is a specialized business incu- continuous learning program offered to register at the nearest DTI Provincial Office ticularly at its development stage. It aims to bator that focuses on assisting startups that would-be entrepreneurs and MSME owners – SME Center. An SME Counsellor will assist help start-ups graduate from the incubation use open technologies or enterprises that for enhanced competitiveness of their the registrant throughout the whole process program financially viable, operationally sus- are ICT-based or from an ICT-related sector. businesses in the domestic and international – from assessment to endorsement. Contact: Philippine Council for Industry, Energy and Emerging Technology Research and Contact: Bureau of Micro, Small and Medium Enterprise Development Development (PCIEERD) — 4th and 5th Level Science Heritage Bldg., Science Community 5/F, Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, 1200 Makati City, Philippines Complex, Gen. Santos Avenue, Bicutan, Taguig City 1631 Phone: (+632) 751-0384 • Fax: (+632) 896-7916 • E-mail: [email protected] Phone: (+632) 837-2926; 837-7516; 837-6154 • E-mail: [email protected] Website: http://www.dti.gov.ph/programs-projects/sme-roving-academy Website: http://pcieerd.dost.gov.ph/index.php/programs/59-technology-business-incubation-program 29 From Local To Global Borderless Business for MSMEs 30

SKILLS TRAINING REGIONAL INCLUSIVE PLATFORM FOR PHILIPPINE EXPORTERS Technical and vocational education Control Points (HACCP), Good Manufac- (RIPPLES) training programs are implemented through turing Practices/food safety, quality and The RIPPLES Program aims to develop and semiconductor manufacturing service; accredited schools, regional and provincial environment standards and assessment, new and existing exporters aligned with the automotive and auto parts; aerospace training centers, community-based training, management systems, and trade skills de- Philippine Export Development Plan’s key parts; chemicals; shipbuilding, Roll-on Roll and apprenticeships. Some of these are the velopment, among others. and emerging sectors. The interventions are off (Ro-Ro) as well as small and medium- following: • The DOLE’s National Wages and Pro- designed to prepare MSMEs to compete in sized vessels; furniture, wearables and gifts, • The Philippine Trade Training Center ductivity Commission provides training terms of volume, quality, price, packaging, decors and housewares (GDH); tool and (PTTC) – DTI offers specific courses on programs and technical assistance to im- compliance with market-entry requirements, die; agri-business; information technology- ISO certification, food-related programs, prove the capability and motivation of en- rules and regulations, and design leadership. business process management; transport web-based/computer literacy, and busi- terprises to adopt productivity-improving and logistics; tourism; and, construction. ness language, among others technologies under their “Productivity The priorities sectors of RIPPLES • Product Development and Design Cen- Toolbox.” include electronic manufacturing services ter (PDDC) — DTI provides training on • University of the Philippines Institute Contact: product and package design, and product for Small-Scale Industries (UP-ISSI) of- Bureau of Micro, Small and Medium Enterprise Development development. fers training programs on entrepreneur- 5/F, Trade and Industry Building, 361 Sen. Gil J. Puyat Avenue, 1200 Makati City, Philippines • DTI-Bureau of Philippine Standards ship development, marketing, operations Phone: (+632) 7510.384 • Fax: (+632) 896-7916 • Email: [email protected] (BPS) familiarizes MSMEs with the stan- improvement, harnessing technology, fi- dards development process, its benefits, nancial management, and leadership. Export Assistance and Business Matching Division, Export Marketing Bureau and how they can be active part of it. The • The Technical Education and Skills De- DTI International Building, 375 Sen. Gil J. Puyat Ave., Makati City DOST supports MSMEs through the Re- velopment Authority (TESDA) offers skill- Phone: (+632) 465.3300 local 110 gional Offices/Provincial S&T Centers specific and community-based specialized Website: http://www.dti.gov.ph/2016-03-29-02-27-23/ripples and the Research and Development Insti- trainings, and offers programs to equip tutes with technology needs assessment, MSMEs the capacity to train their workers training on Hazard Analysis and Critical via dual training and apprenticeships. EXPORT ASSISTANCE NETWORK (EXPONET)

The DTI Export Assistance Network procedures and documentation, import (EXPONET) helps exporters and prospective facilities for exporters, buyer linkages, export MSME INTERNATIONALIZATION PROGRAMS exporters’ access information and resolve financing and incentives, product raw material specific problems related to exporting. sourcing and other statistical information. EXPONET provides information on export The agency also assists exporters in export- DOING BUSINESS IN FREE TRADE AREAS (DBFTA) seminar schedules, export organizing, export related problems/trade complaints.

The Doing Business in the Free Trade Ar- of the Philippines. The DTI’s Export Market- Contact: eas program is a series of sessions that im- ing Bureau conducts these business informa- Export Assistance and Business Matching Division, Export Marketing Bureau part exhaustive information to various stake- tion sessions covering topics such as market DTI International Building, 375 Sen. Gil J. Puyat Ave., Makati City holders, particularly MSMEs, regarding free opportunities, tariff schemes, rules of origin, Phone: (+632) 465.3300 local 110 • E-mail: [email protected] trade agreements and preferential schemes and customs procedures, among others. Website: http://www.dti.gov.ph/30-main-content/emb-static/9101-export-assistance-network Contact: Export Marketing Bureau DTI International Building 375 Senator Gil J. Puyat Avenue Makati City, 1200, Philippines Phone: (+632) 897.7605; 465.3300 local 107 • E-mail: [email protected] Website: http://www.dti.gov.ph/2016-03-29-02-27-23/dbfta 31 From Local To Global Borderless Business for MSMEs 32

• Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=aifta • Rules of Origin: https://drive.google.com/file/d/0B0ilL7KAK3i5cHBJX2tiUk9ESWc/view References and Links • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5Ym5TT3hlQzc1SDg/view ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEPA) • Full Agreement: http://ajcep.asean.org/wp-content/uploads/2014/05/Agreement.pdf • Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=ajcepa http://dti.gov.ph/resources/publications I. Publications: • Rules of Origin (Product Specific Rules): http://www.mofa.go.jp/policy/economy/fta/asean/annex2.pdf Philippine Export Guidebook: https://drive.google.com/open?id=0ByoFpFM9THk1UGZSTlZhMkc4eW8 • Operational Certification Procedures: http://www.mofa.go.jp/policy/economy/fta/asean/annex4.pdf Your Guide to Doing Business in Free Trade Areas: https://drive.google.com/open?id=0B576YZJFE8EsVkpEb • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5QUVudjhlZlRfQms/view kttMUVZa2c ASEAN-Korea Free Trade Agreement (AKFTA) ASEAN-related Publications: https://drive.google.com/drive/u/0/folders/0ByoFpFM9THk1enJPX0tjeThVOVE • Full Agreement: http://www.asean.org/wp-content/uploads/2012/06/AK-TIG-Agreement-August-2006.pdf • ASEAN Consumer Complaints Leaflet: https://drive.google.com/open?id=0ByoFpFM9THk1dEFvT0dNckd5T0k • Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=akfta • AEC: The Philippine Game Plan: https://drive.google.com/open?id=0ByoFpFM9THk1X19jeUlXWThjNFU • Rules of Origin: http://akfta.asean.org/uploads/docs/trade-in-goods-topic-annex3.pdf • Business Beyond Borders: https://drive.google.com/open?id=0ByoFpFM9THk1VUQ4Tkc0SDkyejg • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5a2p0NzVxLXZmbEE/view • Understanding the ASEAN Economic Community Primer: https://drive.google.com/open?id=0ByoFpFM iii . references 9THk1RUhqSmZSSEVjdFE • Understanding the ASEAN Economic Community Quick Guide: https://drive.google.com/open?id=0Byo “2015 MSME Statistics.” Department of Trade and Industry. Accessed June 16, 2017. http://www.dti.gov.ph/ FpFM9THk1dnA4aUlMdHJCenc businesses/msmes/msmeresources/msme-statistics • Primer on the Philippine Chairmanship of ASEAN 2017: https://drive.google.com/open?id=0ByoFpFM9T “DTI Philippines’ Facebook Page.” Facebook.com. Last modified August 11, 2016. https://www.facebook.com/DTI. Hk1QUVEWk83UU1fYVk Philippines/posts/10154610536075116 Competition Law and Policy Primer: https://drive.google.com/file/d/0ByoFpFM9THk1Vzg1Tm5xWU1aT1E/view “World Muslim Population.” Muslim Population. Accessed May 12, 2017. http://www.muslimpopulation.com/ Philippine Competition Act Primer: http://phcc.gov.ph/wp-content/uploads/2017/03/PCC-Primer_WITH-COVER.pdf World/ http://dti.gov.ph/resources/trade-agreements II. The philippines’ trade agreements: “Zeenoh, Inc. Wins the Best Innovative SME Award.” Zeenoh. Last modified September 10, 2016.http://www. ASEAN Free Trade Agreement (AFTA) zeenoh.com/news/single_news/MjY=.html • Full Agreement: http://www.asean.org/wp-content/uploads/images/2012/Economic/AFTA/annex/ Department of Trade and Industry. Time for an Entrepreneurial Revolution: Know the DTI’S 7Ms Way of Uplifting ASEAN%20Trade%20in%20Goods%20Agreement,%20Cha-am,%20Thailand,%2026%20February%202009.pdf Micro, Small, and Medium Enterprises (MSMES). Handout, Department of Trade and Industry, 2017. • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5QXhQYzM0Yld6ekE/view Philippines-Japan Economic Partnership Agreement (PJEPA) Potato Corner. Our History. Accessed May 12, 2017. http://potatocorner.com/our-history/ • Full Agreement: http://www.mofa.go.jp/region/asia-paci/philippine/epa0609/main.pdf The World Bank. World Development Indicators. Washington DC: 2015. http://databank.worldbank.org/data/ • Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=pjepa reports.aspx?source=worlddevelopment-indicators • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5ZTdxcnpQRHFVU1k/view We Are Social. Digital, Social and Mobile in APAC in 2015. Singapore: 2015. https://wearesocial.com/sg/special- • Frequently Asked Questions: https://drive.google.com/file/d/0B0ilL7KAK3i5YzNEZ0tUbnhJRjQ/ reports/digital-social-mobilein-apac-in-2015 view?usp=sharing ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) • Full Agreement: http://www.asean.org/storage/images/2013/economic/afta/AANZFTA/Agreement%20 Establishing%20the%20AANZFTA.pdf • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5cV9LUU54eXJJSGs/view • Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=aanzfta • Rules of Origin: http://aanzfta.asean.org/wp-content/uploads/2016/09/ASEAN_RulesOfOrigin7.pdf ASEAN-China Free Trade Agreement (ACFTA) • Full Agreement: http://www.asean.org/wp-content/uploads/images/2013/economic/afta/ ACFTA/6-2002%20-%20Framework%20Agreement%20on%20Comprehensive%20Economic%20Co- operation%20between%20ASEAN%20and%20China.pdf • Tariffs: http://finder.tariffcommission.gov.ph/index.php?page=acfta • Rules of Origin: https://drive.google.com/file/d/0B0ilL7KAK3i5SUZVejdORzdCX1k/view • General Overview: https://drive.google.com/file/d/0B0ilL7KAK3i5SXN1Y1p6REVJSXM/view ASEAN-India Free Trade Agreement (AIFTA) • Full Agreement: http://www.asean.org/wp-content/uploads/images/2013/economic/afta/ASEAN%20 India%20TIG%20-%20CTC%20scan%20(complete).pdf From Local To Global Borderless Business for MSMEs

MAKATI BUSINESS CLUB BOARD OF TRUSTEES

Chairman EDGAR O. CHUA

Vice Chairman ROBERTO F. DE OCAMPO, OBE JAIME AUGUSTO ZOBEL DE AYALA II

Treasurer AURELIO R. MONTINOLA III

Corporate Secretary CIRILO P. NOEL

Trustees RAMON R. DEL ROSARIO, JR. CORAZON S. DE LA PAZ-BERNARDO JOSE L. CUISIA, JR DORIS MAGSAYSAY-HO GUILLERMO D. LUCHANGO WILFRED STEVEN UYTENGSU, JR.

Executive Director PETER ANGELO V. PERFECTO

Programs & Project Director MARIA ROXANNE V. LU