APEC 2015: 20,000 PH firms engaged in development work
MANILA, Philippines – At a high-level dialogue on Thursday, November 12, government officials and leaders from the private sector agreed that the Philippine economy provides a huge opportunity for inclusive businesses.
Of the around 1 million firms in the Philippines, about 20,000 are engaged in development work with 100 different inclusive business models and perhaps only 50 investable model, said Dr. Armin Bauer, principal economist at the Asian Development Bank (ADB)
“That means that the potential for the inclusive business market is huge,” he said.
About 1/4 of the Filipinos live below World bank’s $1.25 (P 58.79) income per day poverty line based on its latest statistics in 2012. They are joined by more than 700 million throughout the Asia Pacific region.
Bauer was one of the participants the Dialogue on Inclusive Business which discussed the development of business models that could bring about inclusive growth. It kicked off a week which will also see the Asia Pacific Economic Cooperation (APEC) leaders meeting on November 18 and 19.
Inclusive growth is the main theme of the Philippines' hosting of APEC this year, and the forum aims to cap off a year’s worth of meetings on the topic.
Some of the key outcomes of these meetings include the Boracay Action Agenda and Cebu Action Plan both of which aim to help micro and small enterprises (MSMEs) as they have been identified as key agents of inclusive growth.
Eriko Ishikawa, global head of inclusive business at the World Bank, disclosed that in the next few days the G20 will embrace a framework for Inclusive Business at the G20 summit in Turkey.
“Key to creating effective models is to be able to look at poor communities not as beneficiaries of philanthropy but actual agents of economy,” she said.
Makes business sense
Ayala Corporation chairman Jaime Augusto Zobel de Ayala put in another way, stating: “We realized that in order to be relevant in this country with the products and the services we have, we had to touch people at whole different income levels. Simply put, inclusive business makes business sense.”
One good example of this is Ayala Corporation subsidiary Manila Water, which changed its whole model of business in order to tailor it to lower income communities though its "Tubig Para sa Barangay" program.
It effectively lowered the price of water from P150/cubic meter to P7/cubic meter for 1.6 million low-income residents of Manila, and gave these communities an uninterrupted supply of potable water.
It also improved network efficiency, recovering 700 million liters of water per day while at the same time increasing its number of customers.
Another example is Kennemer Foods' Cacao Growership Program. Under this program, smallholder farmers are tapped to supply cacao beans to Kennemer Foods under growership agreements of 8-10 years, helping them increase their income by 7 fold.
The technology and technical support provided by Kennemer to the farmers also lead to fourfold increase in crop yield that boosts the firm’s supply of cacao for the company's global customers.
Infrastructure not rules needed from government
One of the aims of the dialogue is to give government the chance to listen to the private sector to help craft a policy environment to drive inclusive business forward.
“Our focus is on encourage businesses to develop different inclusive models by Integrating inclusive business into public policy,” said Department of Trade and Industry Undersecretary Adrian Cristobal Jr.
Cristobal, who also serves the Board of Investments (BOI) head, also said that the agency has included inclusive businesses strategy in its latest Investment Priorities Plan.
Zobel de Ayala, however, said that the “best way the government could help is by providing infrastructure to help this growth to breathe.”
Additional infrastructure would help tangibly by helping farmers in the Cordilleras, for example, to reach markets like Metro Manila through better roads, Zobel De Ayala explained.
“I don’t think you need rules and regulations. You just need the overweight of infrastructure to make that happen and that in and of itself will bring the change,” he said. – Rappler.com
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