All consumers want convenience. In this fast-paced world, the industry of fast-moving consumer goods is perhaps, one of the many that goes side by side with it. One of the many innovations that Filipinos initiated was the introduction of the sari-sari stores, which could even be considered as unique to the country. Nonetheless, as the country continues to move forward, the popularity of sari-sari stores seem to be losing its luster, and is being slowly replaced by one of its great contenders.
In the recent Shopper Trends Report done by Nielsen market research firm, reported in the Philippine Daily Inquirer last July 20. 2013, it was headlined that Filipino consumers are now preferring to purchase from supermarkets instead of buying from the conventional and traditional sari-sari stores
. According to the Managing Director of Nielsen Philippines, Mr. Stuart Jamieson, this behavior is primarily because of the proliferation of the small convenience stores opening in places that tend to be nearer and nearer to consumer households. Also, it was reported that due to the convenience brought by proximity, there is the consequence of buying more frequently in smaller quantities than wholesale purchases (see Figure 1).
Rightly so, we have been hearing recent expansions of Philippine corporations which would want to penetrate the market more and more. One example would be Philippine Seven Corporation, which planned to put up 1,300 stores nationwide at the end of 2014 from their current establishments of 900 this 2013
From this news report, we can extract several insights. First, we can say the corporations in Philippine retail industry is putting much effort in order to reach its consumers thereby trying to capture the whole of the market. By penetrating the market more and more, they are able to gain the benefits of having a wider consumer market in order to maximize profits.
Second, there is also an effort to tap unexplored rural areas outside Metro Manila. This is because these corporations are realizing that consumers in NCR are not the only ones making up the whole of the market but other regions are also greatly contributing to the overall consumption of goods. One proof of this is the plan of the Philippine Seven Corporation to intensify construction of establishments in the Visayas Region such as in Cebu, Iloilo, and Negros Islands.
Lastly, we can also attribute this shift of consumer preference to the increase in the income of the consumers. Because of the growth in real income, people are now more confident to purchase and consumer products. According to the Kantar Worldpanel report on Asia Consumer Insights for the first quarter of 2013, the Philippine consumers from the middle income of the high income were the ones which had the highest growth of more than 5% for both sectors
. It should then be noted that an increase in income is good for the consumer market because it stimulates consumption and increases demand of consumer products. Sources:
 Lucas, Daxim. "Filipinos shifting from “sari-sari” stores to supermarkets | Inquirer Business." Inquirer Business | Philippine News for Filipinos. <http://business. inquirer.net/133509/filipinos-shifting-from-sari-sari-stores-to-supermarkets> (accessed July 25, 2013).
 Venzon, Cliff. "More 7-Eleven stores planned." Business World Online. <www.bworldonline.com/content.php?section=Corporate&title=More-7- Eleven-stores-planned&id=73629> (accessed July 25, 2013).
 "News - Emerging Market Consumer Insights Q1 2013 - Kantar Worldpanel." Kantar Worldpanel | Consumer Panel | Consumer behavior insights | Consumer panels - Kantar Worldpanel. <http://www.kantarworldpanel.com/vn/news/Emerging- Market-Consumer-Insights-Q1-2013> (accessed July 25, 2013).
Figure 1. Frequency of Grocery Shopping 2011-2012 (by AC Nielsen)
Figure 2. Filipino Preferences of Transportation when Purchasing Consumer Goods, 2012 (by AC Nielsen)
(Taken from Philippine Daily Inquirer, Business Section, Issue: July 20, 2013)
by: Emilio Antonio | Marcella Karaan | Julian Martinez | Ivy Zuniga
The food exports of the Philippines to the United States face potential losses of about $200 million annually with the passing of the US Food Safety Modernization Act (FSMA). This law – signed by President Barack Obama back in 2011 – aims to impose “stricter standards over local and imported food products.” Food Entrepreneurs and Exporters Organization of the Philippines (FEOP) president Jesus M. Tanchanco asserts that most of the Philippine exporters “will not be able to comply with the [act].” The passing of the law brings about complications and heavy implications to the exports of the country. Looking at the numbers helps create a better picture of the situation:
- 90% of food exporters are SMEs (small-medium enterprises).
- Almost 50% of locally processed food is exported to the United States.
- The Philippines exported around $500,000 to the US ($250,000 in North America) back in 2011, lagging behind other Asian competitors namely Thailand.
- 2012 exports show that although food exports grew by 11.56%, it only comprised 6.8% of the country’s total exports.
There is a glaring weakness in our country’s processed food industry. The US Food Safety Modernization Act further highlights this defect in this part of the market. Inability to cope up with increasing demands for modernization of food processing, as well a meager share in the country’s total exports show how this industry lags in providing a boost for our economy. In effect, the US FSMA is just like throwing salt in the wound, incapacitating the Philippines at an aspect that hardly posts exceptional performance.
The effects of this law reveal more than what we see as hindrances to growth and development. Aside from economic implications, one can draw out social inferences as well. The lag of SMEs in modernizing business processes draws either one of two things: lack of money to cope, or a conservatism favoring traditional practices, thus the resistance to evolve. The reasons may vary, but the effect to the economy remains the same: irrelevance of the processed food exports. The impending implementation of the US Food Safety Modernization Act should create a sense of urgency among the SMEs under the processed food industry. It is already bad for exporters that the Philippine peso is appreciating (because their earnings in dollars have lower peso value), and then the shrinking of opportunity posed by the US FSMA makes matters worse.
There is a need to modernize the approach in food processing should Philippine exporters continue to engage in the global market. The pressing call for higher standards in the processed food industry may either lift Philippine SMEs to new heights, or may ultimately be the cause for its demise. Hopefully, Filipinos opt for the former than the latter.
(Taken from Malaya Business Insight, Issue: July 10, 2013)
by: Emilio Antonio | Marcella Karaan | Julian Martinez | Ivy Zuniga
There is a common notion that in the television and broadcasting industry, high rating means profit, meaning, networks have to please the market in order to establish their credibility as a brand, hoping that eventually companies will choose to advertise through them. But how exactly do they please the market? There is one concrete answer to that: give them what they want. However, as people, we are subjected to whims and difference in our preference, so it’s really hard for the networks to know what exactly sells and what doesn’t. Eventually, these networks have developed a system, varying minimally but are still essentially the same. It can be easily describe as, “If it works, then let’s do it again.”
Aside from market research, which is not exactly a simple task or a probable sustainable strategy, there are only a few ways of determining what exactly the market wants. So, networks stick to what they know is effective. One strategy is when they bank, even sometimes solely relying, on specific personalities to carry the ratings of program for them, the network grows dependent on the celebrity rather than the quality of the show. As some people say it, it’s all about packaging. However, sometimes this strategy bites back; networks would have to pay for some costs when their talents go against them, even if it means putting it in legal hands.
Last July 15, a GMA actress filed a case against an executive of GMA-7 for alleged perjury, saying that the libel case against her was fallacious. In short, GMA’s strategy of honing, packaging and showcasing talents backfired. They are now facing a legal case from an internal conflict that should have been resolved even before it came public. This is not the first time that this type of disagreement came to surface newspapers and even to courts. We can recall how the 486 Million peso case of Willie Revillame against ABS-CBN for breach of contract, was such a big issue. Eventually, Revillame won but he had to find another network where he can make use of his popularity for profit. This case definitely took a toll on ABS-CBN and their financial statements.
Networks invest a lot in their talents, showed in how they are able to package it in such a way that the public will build a fan base. They have even built their own talent centers to easily facilitate workshops and trainings for artists; some networks even create shows specifically for their talents. However, as recent issues have surfaced, there is no assurance to the effectiveness of this. When a network relies too much on one strategy in increasing their ratings, sometimes, it poses problems to them. As how some people put it, they create their own enemies. So how can they avoid these internal antagonists? In the level of the artist-network relations, professionalism should still be observed, despite the nature of the industry; contracts, boundaries, due process and hierarchy should be respected when making transactions. Networks could also try to delineate from their original approach and develop quality shows as their main strategy to improve ratings.
The television industry is a ratings game; networks see celebrities as their main strategy in winning this competition. However, what drives ratings is public entertainment. Whichever that may mean to networks is of no concern to the public, as long as good quality entertainment is what they receive. Maybe networks should evaluate their approaches on how to provide this and they might be able to reduce legal costs and eliminate any possibilities of creating their own enemies.
News link: http://entertainment.inquirer.net/104603/gma-7-asks-court-to-summon-actress-sarah-lahbati-on-breach-of-contract-case
Members:Delos Santos, Reynaldo
Mertalla, Nathalie JoyMoraña, SarmielynZornosa, Maria Nauriz Rizel
Lloyd Edgar G. Reyes
Rizal Microbank, a microfinance arm of Rizal Commercial Banking Corp. (RCBC) is planning to expand. Currently, the bank has ten branches in Luzon and four in Mindanao. The expansion would focus on Mindanao because they said that Luzon is too saturated already. Microfinance institutions provide financial services to people in poorer areas. In the Philippines, microfinance banks are a new type of banking system that emerged in the Philippines. The plan of Rizal Microbank to expand would greatly help and benefit the less fortunate people especially in Mindanao.
The Mindanao region of the Philippines includes Region 9, 10, 11, 12, 13 and ARMM.
Photo from http://www.philippinen-reisen.com/amain/index.php/staedte-and-doerfer/mindanao/
Based from NSCB’s statistical data (first semester of 2012) regarding the state of poverty in the country, Mindanao region is still the poorest region in the Philippines, with poverty incidence ranging from 28-46% (see Table below). Through the expansion of Rizal Microbank in Mindanao, financial services would me more accessible in Mindanao. One important aspect of microfinance is granting loans to these people would be able to have an opportunity to open up a small business. Due to this, there is a possibility that poverty incidence of Mindanao especially if more microfinance banks would eye for Mindanao.
Keren del Rosario
According to the data released by the United Nations World Tourism Organization (UNWTO), Philippines remained to be the least favorite tourist destination when compared to other ASEAN member countries as of 2012. The country’s tourist arrivals only reached a total of 4.27 million in 2012, which records as the lowest when compared to other ASEAN members. The foreign tourist arrivals were highest in the country of Malaysia with a total of 25.03 million, followed by Thailand with 22.35 million, then Indonesia with 8.04 million and Vietnam with 6.85 million. Despite the famous “More Fun in the Philippines” campaign, the country still lags behind ASEAN neighbors in terms of having the most foreign tourist arrivals in the country.
However, in terms of big tourism spenders, Philippines is among the markets that recorded a substantial growth along with other eleven countries: Norway, United Arab Emirates, Switzerland, Malaysia, Kuwait, Poland, Thailand, Qatar, Ukraine, Egypt and Cambodia. The country’s inbound tourism expenditure still posted a significant increase probably because most tourists find prices of commodities cheap or relatively affordable. And although, the Department of Tourism (DOT) missed its 4.6 million - tourism target in 2012, the visitor arrivals from the first 5 months of 2013 increased by 10.54%, which amounts to 2.01 million compared to the 1.82 million arrivals in the first 5 months of 2012.
Philippines still continues to attract millions of tourists around the world due to its tropical climate, natural structure and varied coastal features. The Tourism Industry has truly made several improvements over the last decade. But as it had lagged behind its ASEAN members in 2012, this just shows that foreign tourists still hold certain doubts when visiting the country and this must be carefully addressed by the government. One of the reasons why the country had fewer numbers of foreign arrivals compared with other ASEAN countries could be because of the lack of awareness or the negative image perceived by other foreign countries. Oftentimes, media reveals bad publicity that emphasizes certain social issues related to crimes, poverty and corruption within the country.
The Tourism industry could further conduct projects that would resolve these problems and contribute to the country’s positive image and development. This would eventually bring more tourist arrivals and assure them of their safe and pleasurable stay in the country. Recently, the Tourism sector has made several developments in the establishment of infrastructures, the construction of airports and terminals which makes it more accessible for the tourists to travel around various places in the country. With this type of improvements, a positive effect occurred as reflected in the increasing gains during the first five months of 2013. Still, the industry has to make further steps in planning and innovating so as to convince the tourists that it is indeed “More Fun in the Philippines”.
Jose Vincent Lubat
Sarah Mar Reyes
Recently the "Business Insight" reported that Eton Properties Incorporated (Inc.) announced that they would be focusing on the development of more property-development plans particularly on Business Processing Outsourcing (BPO) offices and hotels in its succeeding five years in the business to cater the increasing demand for retail, leisure and outsourcing market. Mr.Danilo Antonio, the chief operating officer of Eton reported high occupancy and lease rates in office buildings. They will not compromise their residential-development business but they will all together sustain these properties while at the same time boosting its revenue stream and reinforcing its position in the industry.
Actually, Eton Properties Inc. was not the only firm that plans to focus on catering more of the non-residential products due to the increasing number of BPO in the Philippines who have great potential of becoming part of the real-estate consumers in the country. For instance, the House of Investments, Inc. who is prominent for catering high-end to affordable residential houses also expresses its desire to construct BPO's and other property developments in the next few years. Moreover, Hewlett-Packard, which is one of the oldest and leading companies that pioneered in harnessing the power of technology for business, is planning to partner up with BPO companies through Outsourcing Joint Ventures who needed help in addressing clients needs in terms of manpower requirements, infrastructure and other things. This especially caters for BPO companies and other multinational companies planning to expand in the country or put up satellite branches in offshore locations.
Today, Eton group as one of the key players in the Real Estate Industry has been also part of the great providers of offices for BPO in urban areas such as in Quezon City. They have CentrisCyberpod One, occupied by Wipro Technologies, Genpact Services, Unisys Philippines etc. Also, CentrisCyberpod Two has been fully leased to US-based Hewlett-Packard and has a scheduled 6th BPO office building for completion by the year-end which would become the CentriesCyberpod Three. The increased in rental income from these BPO offices has pulled up the firm's revenue in the first quarter of the year to P137.9 million.
Given that this property group has already been expanding BPO office as part of the business ever since and is actually earning comparatively large enough as compared with its other competitors due to the increase rental income, the question for Eton now is would it give advantage for Eton group to still focus and to expand offices meant for BPO companies despite the tight competition for non-residential properties supply? What could be the edge of Eton group having its properties located in Quezon City from the other local real estate firms?
Gartner Datarequest defines BPO or Business Process Outsourcing as "the delegation of one or more IT-intensive business processes to an external provider that, in turn, owns, administrates and manages the selected process based on a defined and measurable performance metrics” (Malaya Business Insights, 2013). Call centers and information agencies that are now sprouting in the metro belongs to the BPO industry. Eton has a valid reason to focus on meeting the demand of this market because in the latest annual ranking of the top 100 global outsourcing destinations of Tholons, Manila and Cebu achieved the 3rd and 8th spots accordingly. Some reasons mentioned by Tholons why Philippines is included in the list are: "region's maturing outsourcing brand, improving macroeconomic environment, and expanding domestic markets". (Malaya Business Insights, 2013).Indeed, there is a growing number of BPO companies here in the Philippines. All of which would not happen that easily without the improvement of property developers and their openness and accommodation for BPO’s. Therefore, Eton is just one of the many developers who lay hands to BPO companies by offering space for lease as area for their business processes but at the same time the group benefit from them by giving additional income to Eton group.
There are many real estate developers who are indulging themselves to the improvement and construction of more of BPO offices; does Eton have the edge to compete against many other firms in the industry? In the case of Eton, they began their development of BPO's. In this light, I would like to apply the 5 factors enumerated by MeloPorciuncula, head of the Business Operations and Capital Markets of KMC MAG Group real estate services firm with the audience of the 6th Money Summit and Wealth Expo at SMX Convention Center in Pasay City last July 13, 2013 to answer the crucial concern that Eton group has to consider in its decision of expanding BPO offices. First, location when choosing where to build an office building or a non-residential space for rent is important as the increase for people also indicates increase in space as Porciuncula said. Second, the ownership structure of the developer matters. There must be an estate and succession planning for assurance. Also, the firm must have the capacity to maintain the property since these BPO companies open their businesses to a huge number of employees. The size of the spaces also matters, from 40 square meter and above up to 150 sq. meter is the most in demand size for the BPO firms. Another element involves cash flow, usually the maintainance of the rent and longer tenancy are considerations for these BPOs. Lastly, the exit plan or the alternative plan entails good strategies in any situation the developer might face with their clients. As she mentioned, "You really do not lose money in commercial real estate but there are times that it is not prosperous."(Corpuz, 2013).
For the case of Eton, they are actually already met some of the standards/factors mentioned by Porciuncula as tips to be considered by a real estate developer offering BPO offices. Eton has began developing Quezon City with its Eton CyberpodCentris facilities. It competes with UP-Ayala Technohub, AranetaCenterCyberpark, Eastwood City, which are all strategic locations for the BPO industry. These places are accessible to potential employees of these BPO and there are also improvement in the services being offered in these areas such as utility services, transportation etc. Though there are still room for improvements for these areas in Metro Manila. Eton is already established in the business and it can be assumed that their company structure and ownership is alreaady stable. Lucio Tan as a long-time businessman has already gained a lot of experience on how to deal with many types of situations/challenges as a real-estate developer. The essential matter for them is whether they have the capacity to increase/expand in this sector as of the moment in preparation for the next five years. Based on the Eton’s annual report of 2012, from P722 million pesos of net income last 2011, Eton’s net income has gone down to P44 million. However they possess more assets in their records by 2012 as compared to 2011. Another rental income for 2012 reached to estimated amount of more than P400 million. The net income decrease could be associated with the large cost expenses and tax by 2012. However there are no recorded threats yet with regards the company’s financial status since they have large real property investments at present. With increase rental income and the completion of the Cyberpod Three this year, there is a great potential for their revenue to increase largely which would suffice the cost for expanding their business especially targeting the BPO industry.
Malaya Business Insights.Eton Focusing on BPO market. 2013. http://www.malaya.com.ph/index.php/business/business-news/36492-eton-focusing-on-bpo-market. (accessed July 24, 2013).
Corpuz, Lynda. 5 Factors to consider when investing in office condos.Eton’s 2012 Annual Report. 2013. http://www.eton.com.ph/pdf/annualreport/2012.pdf. (accessed July 23, 2013).
Syrell BarlamRafael ManaliliJosh MiguelRhenz Perdido
Australian firm Otto Energy Ltd began drilling for oil at the Duhat-2 exploration well, a site located northwest of Leyte. The process is expected to take place for 31 days. Duhat-2, which is covered by oil and gas exploration and development service contract (SC) 51, is estimated to contain a mean prospective resource oil volume of 34 million barrels of oil with a range of 1-88 million barrels of oil. Otto Energy is also part of the consortium that operates the Galoc field, which is the Philippines’ only commercially producing oil field.
The latest venture of Otto Energy Ltd is very timely and significant for the oil industry, as well as for the whole country. In 2012, actual crudes and petroleum products closing inventory for the month of December was reported at 13, 085 thousand barrels (MB)
while the country’s total demand of finished petroleum products was 110, 991 MB. This is equivalent to an average daily requirement of 303.3 MB
. Since there is not much upstream activity in the Philippines, the local supply of oil pales in comparison to the growing demand for the commodity. Because of this, a significant portion of the supply of oil is sourced from abroad, making local oil prices vulnerable to external shocks and conflicts. Oil extraction in the country only currently takes place in the Galoc oil field located in Palawan. Upstream activity refers to the drilling and exploration, while downstream activity pertains to refining and distribution.
The Duhat-2 exploration well, thus, is one step towards making the country less dependent on oil imports. The oil that can be extracted from the site can augment oil supply in order to satisfy local demand. Though the Philippines is still far from being self-sufficient when it comes to oil, the Duhat-2 exploration well provides a positive outlook that oil reservoirs can be possibly discovered in the different parts of the country, if only advancements in oil exploration would be given priority. If oil explorations turn out to be successful, then the country can enjoy low prices in oil and will no longer need to import oil.
German de la Paz III
"having a large market attracts them
into starting their businesses here"
The Fashion retail industry here in the Philippines has most certainly been going strong over the past two years. The 
industry is empowered by a vast group of young consumers and a swiftly expanding middle class that have high disposable wages. These groups show much interest to the Western type of clothing and are very much well aware of foreign brands.
In the article that we found entitled, 
“Why foreign giants are coming to Manila” by Jica Lapena, we learn more about the different global brands that have been opening different branches in our country. These international brands were no less of big names, such as Uniqlo from Japan, Forever21 from the United States, Miss Selfridge from the U.K., Basic House from Korea, and Cotton On from Australia. These brands are brought to our country by some of the different leading retail investment corporations found here such as SM Investment Corp., The Bench Group, and Robinson’s Specialty Stores, Inc.
Throughout the article, we were able to see the different driving forces for these brands to start opening shops in our country. First and foremost, the Filipino people really have been positively receptive of the different styles that these brands have to offer. Consequently, having a large market attracts them into starting their businesses here knowing that Filipino consumers are very much more than willing to spend for their products. Next is that these brands believe that Filipinos have a good sense for fashion, its trends, and value. The styles that the people of the Philippines appreciate greatly manifests what these brands particularly want to bring out in their products. Lastly, there is no question that Filipinos are greatly attracted to sales. Once sales are announced, people almost always grab the opportunity to shop and look for the different apparel that they prefer. They crowd the numerous retail outlets and have a sort of ‘shopping frenzy.’
As much as these brands want to open stores here in the Philippines, it is also important to take note that the different leading retail investment corporations also knew of the whole situation regarding our country’s awareness and preferences in fashion. The Philippines being a good market for the products that these brands have to offer led them in to promoting these global brands in our home country.
Overall, the article helped in a way that we were able to find out brief but significant information about the different players in the Philippine Fashion retail industry. The different driving forces behind the ideas of both the different international brands and the country’s leading retail investment corporations provide us a good background in our study of the industry. 
"Retail Sector in the Philippines." Philippine British Business Council. 
Lapena, Jica. "Why foreign clothing giants are coming to Manila." February 6, 2013, http://www.gmanetwork.com/news/story/292455/lifestyle/design/why-foreign-clothing-giants-are-coming-to-manila (accessed July 19, 2013).
Note: The photo attached to this article was taken from http://philippinestreetfashion.com/wp-content/uploads/2012/06/cast.jpg
Aquino. Coromina. Mendiola.
The extension insurance license under the amendment to the Insurance Code is expected to be signed into law by next month. With the current Insurance Code that expires on the last day of June each year and annually renewed upon application, the new Insurance Code will now make licenses valid for three consecutive years (January-December terms).
Insurance Commission (IC) Deputy Commissioner Vida T. Chiong said in a telephone interview that this amendment’s purpose is to bridge the gap, with this year’s licenses expiring in June 2014 and the new licenses that will be issued in January 2015. She also mentioned two ways in attaining this issue, either they will issue circularly or give extensions to settle effectivity dates. Another purpose of this amendment is to address the “over tedious” licensing of insurers. According to Ms. Chiong, they deliberated over 40,000 licenses last year, through this amendment they will now deliberate every three years that is similar with the Land Transportation Office (LTO) that gives them more time to divert their work to other issues.
They (IC) may now be able to conduct regular inspections or “warrant onsite examinations” to life and non-life insurers through a mandatory monthly and quarterly reports. With the new structure that will be implemented this August the insurance industry will be performing on their toes, meaning they will be more alert on their activities and to ensure that they work on reputable playing field.
From being one of the top importers of rice in the world, having imported 2.5 million MT in 2010, the Philippines has started exporting premium rice abroad. This signifies that the country has already moved towards 100% rice self-sufficiency that the government is aiming for by the end of this year. This is in part of the Food Staples Sufficiency Program (FSSP) of the Department of Agriculture. Source: philrice.net
45 MT of aromatic rice was exported to Singapore last July 22, 2013, which would cater to the high demand of rice of the Filipinos as well as of the other nationalities. 25 MT of this bulk was from the Firmus Service Cooperative (FSC) situated in Koronadal City, South Cotabato, while the other 20 MT was provided by the Magtutumana ng Sta. Rosa Multi- Purpose Cooperative (MSC-MPC) located in Nueva Ecija.
It might seem like this is not really a big achievement on our part, but as I have mentioned in the first paragraph, the Philippines is showing positive results in its plans of having 100% rice self-sufficiency by the end of this year. It is also a remarkable event that our actual exports would most likely supersede that of the country’s target rice export of 200 MT. To date, the Philippines have already exported 106 MT as of July, halfway through the year. Another batch of export to Russia, Italy, Middle-East and the US are to be expected before the year ends.
This shows that the Philippines is already in the way of tapping the international market of rice. It is really ironic that we rarely export when in fact we are one of the most rice producers in the whole world, having produced 18 million MT of palay last 2012. And we are gearing towards a 2 million MT addition in the production to achieve our goals in the FSSP. Higher production would lead to more income for the farmers; and with more incentives comes the drive to farm more palay, therefore raising the standards for our rice industry. Utilizing our rice production to export to our neighboring countries and also to the western countries will be a great contribution to our foreign exchange.