FILIPINO businesses should explore more opportunities to compete in the global market and take advantage of the upcoming Asean Economic Community (AEC) to make the country Asia’s franchise hub, a senator said on Wednesday.
“The fast-approaching Asean economic integration, just like most changes and new developments do, will bring about opportunities and challenges. The key is preparedness and enhanced competitiveness,” Senator Cynthia Villar said during the opening of Franchise Asia Philippines 2015 in Pasay.
“There is no question that the AEC will present investment opportunities for Philippine companies not only locally, but also in the 10 member states,” she said.
Villar said that the Philippines, with the second largest population next to Indonesia and the highest growth rate, is in the best position to become Asia’s franchise hub.
“I urge all of you to seize the opportunities and possibilities that will come our way as a result of AEC. In the same way that foreign franchises are expanding their business in our country, I urge Filipino franchisers to explore other regional and international markets as well,” she said.
She added that franchises are a major driver of the growth of micro, small and medium enterprises (MSMEs).
Wealth and jobs are created by small businesses, started out by entrepreneurially minded individuals, many of whom go on to create big businesses, she said.
Dominated by home-grown brands
The Philippine Franchise Association (PFA), organizer of Franchise Asia Philippines 2015, noted that PFA members alone already employ hundreds of thousands of people.
The Philippine franchising industry is dominated by home-grown brands, which comprise more than half of the franchisors in the country, an increasing number of which are already expanding into the international markets.
“It is also a welcome development that franchising is spreading outside of Metro Manila and into the provinces, which will really boost countryside development. I am really encouraging entrepreneurs to tap the rural market in order to slow the trend of urbanization, which is placing stress on public services in urban areas, which are really getting congested as the population increases,” she said.
Villar, who is also the chairperson of the Senate Committee on Agriculture and Food, also urged businessmen to explore business and franchising opportunities in the agriculture sector.
“About two-thirds of the country’s population live in agricultural areas and are involved in agriculture. There is still a lot of untapped potential in the agriculture sector. And that dormant force could very well be one of the major contributors for our goal of making growth more inclusive. Particularly for Filipino farmers and fisherfolk who have always been considered as among the poorest in the country. They need our support,” she added.
Half of MSMEs in the country are involved in the food and beverage sector.
Ponciano Manalo , Department of Trade and Industry (DTI) Undersecretary for Trade and Investment Promotions Group (TIPG), said the government is putting emphasis on MSMEs and their role in inclusive growth.
“In Asean, MSMEs are the backbone of economic development, accounting for 96 percent of all enterprises and 50 percent to 85 percent of domestic employment,” Manalo said
He said SMEs contribute between 30 percent and 53 percent to GDP, and between 19 percent and 31 percent to exports in the Philippines. Of the almost 945,000 registered business enterprises in the Philippines as of 2012, 99.6 percent of these were MSMEs.
“The number of additional jobs generated by SMEs in the same year—almost 5 million, roughly 61 percent of the country’s total employment —as compared to only 2.6 million jobs generated by large enterprises. Indeed, SMEs have more impact on the economy when it comes to inclusive growth,” he added.
Major contributor to growth
According to Manalo, the Philippine franchising is a major contributor to country‘s economic performance with a growth rate of 20-25 percent and an estimated turnover of $3 billion to $7 billion annually since 2011.
In 2014, local brands accounted for two-thirds of the revenue generated by our franchise industry while international brands account for the other one-third, he said.
“Franchising activities by PFA opens the door wide open to a truly global Philippine brand, recognized for quality, consistent product performance and availability. It guarantees a truly competitive environment, an environment where being significantly better than the competition is paramount,” he said.
Manalo urged local businesses to take advantage of DTI services for Business Name Registration (BNRS), Micro, Small, Medium Enterprise (MSME) Counseling, and Patents, Copyrights, Trademark Registration at the Intellectual Property Office, Foreign Trade Service Corps (FTSC), and Export Marketing Bureau (EMB) to kick-start their own businesses.
Last year, the PFA together with the Center for International Trade Expositions and Missions (CITEM) participated in the Franchise and License Expo Jakarta 2014, Indonesia’s biggest franchising show that attracts more than 10,000 visitors annually. The highlight of the Philippine showcase was a fashion show that featured brands such as Bench and Plains & Prints.
“The Philippine’s initial foray into the Indonesian fashion retail scene was a successful mission and we are looking forward to replicating this with future events,” Manalo said.
This November, the PFA will again be working together with CITEM to showcase Philippine brands at the upcoming Dubai International Branding and Licensing Fair from November 3-4 2015 in Dubai, the UAE.