Archive for July, 2008

Superwoman at the SONA

Thursday, July 31st, 2008

This time, there was something special in the SONA for Go Negosyo. I was asked to attend since the President will be acknowledging the efforts of Go Negosyo in helping spur entrepreneurial development in the Philippines.

For the past two and a half years, Go Negosyo has touched the lives of so many people, especially the micro and small entrepreneurs and young Filipinos. PGMA’s acknowledgment in the SONA felt like receiving the Ramon Magsaysay Award. But, this acknowledgment is not for me but for the cause we represent. For our country to progress, we need to change the attitude of our kababayans into something positive and entrepreneurial. This is our advocacy. This means finding opportunities in every crises, finding solutions rather than dwelling on the problems… in “lighting a candle instead of cursing the darkness”. This is the cause our community of entrepreneurs, advocates, the Micro SME Council members, and our corporate partners have firmly believed in.

This recognition is for the trustees of Go Negosyo who share the same vision: Tony Tan Caktiong, Joselito Campos, Felipe Gozon, Dr. Rolando Hortaleza, Carla Limcaoco, Ramon Lopez, Imelda Madarang, Socorro Ramos, Harley Sy, Vivienne Tan, Gov. Lray Villafuerte, Myla Villanueva, and Vicente-Andres Zaragoza and to the hundreds of active advocates and mentors who are dedicating time to reach out and ‘pay forward’ this time to the other aspiring entrepreneurs.

People ask me – how did I find the President’s speech and why did she cite problems affecting the world such as the oil and food crisis. PGMA, in a way, reminds me of ‘Superwoman’, full of energy and with nerves of steel. She came face to face with the men and women in congress, even with what the news earlier stated that she has one of the lowest ratings. The President definitely has nerves of steel. I have to give it to her. She has gone through a lot of external challenges and survived. She deserves credit for helping this country attain record growth in 2007, sustaining the gains of earlier years.

In this year’s SONA, PGMA was stressing that the Philippines is ready to weather the worst that could be brought about by the economic problems in America. In one of my previous columns entitled “Superman meets a kryptonite economy”, I likened America to Superman, trying to save the world but ended up being in trouble.

The high price of oil and commodities are beyond our control. It is true that the economies of the world’s highly-populated countries like China and India are growing and their people’s purchasing power are increasing, affecting world demand. But the current hike in commodity prices are led mainly by hedge funds who bet on oil and commodities as they move higher, adding to their speculative nature.

Let’s admit that the Philippines is in a much better situation in facing global challenges, since it is close to balancing its budget and has achieved a current account surplus. Pockets of opportunities in certain growth sectors like tourism, business process outsourcing, call centers, telecommunication and information technology niches have kept the country’s growth potentials at high levels. I remember Mar Roxas, who was then the Trade Secretary under PGMA. He made these developments as one of his priorities, as he was supported by his boss PGMA. Moreover, overseas workers continue to contribute a lot to the country’s GNP.

Today, positive developments have helped erase an oversupply in office space and have spurred the growth of more office condominiums, call centers and BPO buildings. Residential condominiums also continue to grow, since more people can now afford to buy homes. So, yes, the Philippines is in a much better situation in spite of a global slowdown. The growth in the real estate sector is a testimony that more people can now afford to buy homes. But, what happens to the people who cannot afford? This is where the VAT on oil can go to. We agree that government has to help provide the basics to specially-targeted poor communities. It is important that their basic needs are met, before they can think of getting into negosyo. Of course, the more enterprising one would take on a negosyo at once to improve his condition, starting very small, but working her/his way up the ladder, with sheer determination, financial discipline and creativity.

This is where government policies and programs must continue to support an entrepreneur-friendly environment, like tax relief for the microentrepreneurs, increase in micro-lending programs (with the passage of the Magna Carta for Micro Small and Medium Enterprises), or have bills that would provide tax exempt to coops and micro-lenders for a period of time. The VAT on oil will cover for any shortfall and would allow government to provide help to specific sectors in most need. We cannot keep changing the rules. With market forces influencing prices, eventually the price of oil will go down as it has gone down to 120 dollars and by year end, we may even see oil at levels of 100 dollars. Who knows by next year, it can be down to 80 dollars. High oil price will force people to change lifestyle, force people to save energy, ride the MRT, do carpooling, plan travels better, buy smaller cars. We can prod the government to develop more public transport systems, more LRT’s, MRT’s covering wider areas. Developing the north and south railways to bring down freight and transport costs are needed, following the models of America, Japan and even Europe. There is merit in accelerating the development of alternative energy source, or push for more exploration which we now see in Galoc, and others to follow. Even now, taxi’s and private vehicles convert to LPG. Without oil being this high, we wont see an acceleration of efforts in this direction. This crisis situation, as we can see, presents new opportunities for entrepreneurs. As the whole world goes in this direction, there is no way but for oil prices to go down.

In a democratic environment, which we have today, it is almost difficult to please everybody. In the end, the real judgment of achievement is not measured through ratings but through factual successes in economic targets. The final report card will come in 2010, when she does transfer her leadership to the next Philippine President. You can only imagine the kind of report card President Bush will have as he transfers his leadership to the next American president. America, today, is at the brink of the worst recession or depression, with a humongous trade and budget deficit that so many generations of Americans will have to pay for. The almighty dollar which was once 85 cents to the Euro is now 1.57 to the Euro – close to 100% depreciation.

PGMA has to continue to move on, even if her decisions are not popular. She has nothing to lose as she is not running for re-election. She has to pursue the infrastructure development of more super highways and more airports. This will further allow the transportation of goods at lower prices and open great opportunities for the negosyantes, in terms of tourism and agriculture. Farmers will benefit the most, with their products being able to reach the market on time and at the lowest cost. By allowing greater competition in airlines, we see now lower prices of airline tickets despite jet fuel going up. Now with Fred Yao, one of Go Negosyo supporters, buying into Asian Spirit, we will see further competition and hopefully more areas of the Philippines will be covered.

The next area which PGMA mentioned in her SONA is self sufficiency in rice. Henry Lim Bon Liong, a Go Negosyo advocate, has always been pushing for high yielding varieties and hybrid rice. He has proven that farmers using hybrid rice have higher yields per hectare. PGMA has also mentioned in her SONA how her government’s relentless pursuit of completing new irrigation systems in vast track of lands have helped Edwin Bandila of Carmen, Cotabato increased his irrigated farmland and rice yield from 35 to 97 cavans per hectare. While I am a believer of free trade, I support the position to allow protection of certain industries, if it means ensuring sufficient supply of basic items especially rice. Free trade must also mean fair trade. Some countries would export items that are in effect subsidized and thus are exported at lower prices, thus unduly hurting local producers.

PGMA is indeed a superwoman, an avid scuba diver who releases her stress under the sea. Maybe the silence underwater gives her the tranquility and peace even for just that moment. She has one and a half years to go, lets help her succeed, because her success is the Filipinos’ success. To those who just cannot resist, it might help to read the nice email being sent around, entitled “Ducks quack, Eagles fly”.

Ducks quack, Eagles fly:

“Years ago, my friend, Harvey Mackay, told me a wonderful story about a cab driver that proved this point. He was waiting in line for a ride at the airport. When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine. Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey . He handed my friend a laminated card and said: “I’m Wally, your driver. While I’m loading your bags in the trunk I’d like you to read my mission statement.” Taken aback, Harvey read the card. It said: Wally’s Mission Statement:”To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment.

This blew Harvey away, especially when he noticed that the inside of the cab matched the outside. Spotlessly clean!

As he slid behind the wheel, Wally said, “Would you like a cup of coffee? I have a thermos of regular and one of decaf.” My friend said jokingly, “No, I’d prefer a soft drink.” Wally smiled and said, “No problem. I have a cooler up front with regular and Diet Coke, water and orange juice.” Almost stuttering, Harvey said, “I’ll take a Diet Coke.” Handing him his drink, Wally said, “If you’d like something to read, I have The Wall Street Journal, Time, Sports Illustrated and USA Today.”

As they were pulling away, Wally handed my friend another laminated card. “These are the stations I get and the music they play, if you’d like to listen to the radio.”

And as if that weren’t enough, Wally told Harvey that he had the air conditioning on and asked if the temperature was comfortable for him. Then he advised Harvey of the best route to his destination for that time of day. He also let him know that he’d be happy to chat and tell him about some of the sights or, if Harvey preferred, to leave him with his own thoughts.

“Tell me, Wally,” my amazed friend asked the driver, “have you always served customers like this?”

Wally smiled into the rearview mirror. “No, not always. In fact, it’s only been in the last two years. My first five years driving, I spent most of my time complaining like all the rest of the cabbies do. Then I heard the personal growth guru, Wayne Dyer, on the radio one day. He had just written a book called You’ll See It When You Believe It. Dyer said that if you get up in the morning expecting to have a bad day, you’ll rarely disappoint yourself. He said, ‘Stop complaining! Differentiate yourself from your competition. Don’t be a duck. Be an eagle. Ducks quack and complain. Eagles soar above the crowd.'”

“That hit me right between the eyes,” said Wally. “Dyer was really talking about me. I was always quacking and complaining, so I decided to change my attitude and become an eagle. I looked around at the other cabs and their drivers. The cabs were dirty, the drivers were unfriendly, and the customers were unhappy. So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more.”

“I take it that has paid off for you,” Harvey said. “It sure has,” Wally replied. “My first year as an eagle, I doubled my income from the previous year. This year I’ll probably quadruple it. You were lucky to get me today. I don’t sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine. If I can’t pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action.”

Wally was phenomenal. He was running a limo service out of a Yellow Cab. I’ve probably told that story to more than fifty cab drivers over the years, and only two took the idea and ran with it. Whenever I go to their cities, I give them a call. The rest of the drivers quacked like ducks and told me all the reasons they couldn’t do any of what I was suggesting.

Wally the Cab Driver made a different choice… He decided to stop quacking like ducks and start soaring like eagles.

“Calabasa” No More

Thursday, July 24th, 2008

It seems that I don’t hear the end of it, with my friends saying that my column about the “Secret of My ‘Success'” (the mushy column dedicated to my wife) has created so much pressure from their wives. I promised them these things only happen every 25 years, so don’t expect it again to happen so soon.

Meantime, the kryptonite economy column last week was well received by many, using superman as the symbol for the US, which can also be hit hard by a crisis. Well unfortunately, rates were still increased by half a point and hopefully this would be the last. I firmly believe we need to keep lending rates low to push the economy forward. Anyway, the Peso has appreciated back, which is good for importers while bad for exporters and BPO’s.

Last week, I met an entrepreneur coming from the ‘second generation’. I guess people our age would still remember the Collezione shirts. We used to buy these shirts until designs became more exciting with newer brands. But, what recently caught my eye is the rebirth of the second generation Collezione shirts with new and amazing but simple design. A Philippine map is on the left part of the shirts, something like the big Polo emblem, but now with a nationalistic flavor. (My sister gave me the first two shirts.) Looking at it, I saw it was different. I started to wear them and people kept asking me where to buy one.

Joey Qua is the son of the founder of Collezione shirts. He has recently named it Collezione C2. I guess the C2 stands for second generation. For the first time, it feels good to be wearing something, which shows that we can be proud of the Philippines.

Manny Pacquiao has helped build the same patriotic feeling through his championship fights, or shall I say victories. More international artists, like Lea Salonga, continue to do well. International entrepreneurs such as Monique Lhuillier, Josie Natori, Tina Maristela-Ocampo, Bea Valdez and Dado Banatao continue to build our image and pride in the Filipinos.

Despite what people say about the rating of the President, she still has the enterprising spirit in her. I guess having the right work habits and discipline helps. She is always on time and never late in all engagements. She has attended most Go Negosyo activities and she was never late. In fact, I was the one almost late at one time. The President works hard and is very passionate with what she does in the midst of adversities and limited resources. She is passionately focused on common goal to spur economic development and uplift conditions of the Filipinos.

Sometime early this year, actually during Good Friday, PGMA thru Sec. Cerge Remonde, tried to call me when I was in Japan. When I returned his call, Sec. Cerge relayed PGMA’s announcement. Go Negosyo was asked to help get the private sector to mentor and assist the Benguet State University with their vegetable processing center. This assistance will develop and market vegetable-based products like noodles, bread, juice, and other formats. The task was to develop noodles and other products enriched with nutrients from vegetables, which in the end should help the farmers get more demand for their produce. In fact, she already announced this intention in TV, with RFM to help in this task. I responded to Sec. Cerge that we will work on this.

Our PCE – Go Negosyo Executive Director Mon Lopez worked with the inter-agency MSME council of Sec. Cerge on the planning and implementation of this project, and they were able to develop as a first output, a Pancit Canton product using Calabasa. We proposed to brand it “Proud Harvest” and have the packaging with the Philippine flag in dedication to the hardworking Filipino farmers.

Meantime, Oishi-Liwayway Marketing and Lucky Me – Nissin Monde have also joined us in developing the use of vegetables in snacks and instant noodles.

We see the role of the private sector complementing what the government can provide. The private sector like RFM Corp., can take projects to commercial levels with economies of scale and assuring quality. Private companies will have to ‘adopt the project’ and provide needed working capital, raw materials, expertise in building the brand and spending behind marketing activities. For the project to prosper, the products should use the private corporations’ sales infrastructure. This can push the products to the mainstream market and improve the chances for its continued viability. In the “Proud Harvest” project, the business model provides for these corporations to toll process or buy from the Benguet State University and other small toll processors. This can provide income opportunities to these institutions as well as market for farmers’ produce.

This is an example of how the private sector and the government can work together. In the end, a crop like Calabasa, which was considered to have limited use, is now in “Proud Harvest”. Calabasa may now become one of the most in-demand crops, encouraging more farmers to plant it. Now, the Calabasa vegetable, which is sometimes associated to an insulting ‘calabasa award’ connotation, will now have a new improved image.

There are a lot of things we should be proud as Filipinos, from the Collezione C2 shirts projecting the Philippine Islands and hopefully to the “Proud Harvest” veggie-canton noodles. PGMA deserves the credit for this effort in finding ways to help the Filipino farmers. We also give credit to the cooperating government agencies and private institutions. Rather than complain or criticize, everyone is given the chance to help. As my father has always reminded us in his NAMFREL advocacy, “It is better to light a candle, than to curse the darkness”. In the end, what is truly important as we all get older is how we do our own share, no matter how small, in helping improve the lives of the people around us. Thousands of farmers will surely benefit from their ‘proud harvest’.

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Our Teen Negosyo Edition III kicks of next week as we head back to the City of Pines to share to the youth the good news of finding solutions to poverty through Negosyo.

Together with the Department of Education – Center for Students and Co-Curricular Affairs, Department of Trade and Industry – Philippine Trade Training Center, and The Master’s and Lighthouse Foundation, the Third YECS Entrepreneurship Training and Conference dubbed as the Teen Negosyo will be awarding the 2008 Go Negosyo-Dep Ed Most Inspiring Student Entrepreneurs and Entrepreneurship Educators. This award will recognize the best high school student entrepreneurs and entrepreneurship educators who have successfully implemented the YECS programs at the secondary level.

Go Negosyo will also be awarding Most Inspiring CAR Micro Entrepreneurs. We will be recognizing Cordillera’s micro-entreps who gave positive contributions to their community and inspired others with their negosyo stories. They are the micro entrepreneurs who rose from the challenges of life, serving as role models in their own businesses.

With the theme “Young Entrepreneurs Taking Charge”, the third edition of Teen Negosyo will be on July 26 to 30, 2008 at the Teachers Camp, Baguio City. Activities during the event include plenary sessions, interactive break-out sessions, contests, and entrepreneurial showcases. High school students and educators are invited to join.

Superman Meets A Kryptonite Economy

Thursday, July 17th, 2008

In last week’s column “Sailing through the Perfect Storm”, I mentioned the possibility of the Dow hitting the 10,000 index. A number of readers asked if this is really possible.

With the problems of both Fannie Mae and Freddie Mac, which is in the trillions of dollars, the problems of America are getting worse. The Dow Jones is now below eleven thousand – at 10,900 levels to be exact. Both Bernanke and Paulson are doing their best to calm the markets. America is the biggest borrower. A lot of countries have lent to or invested in America, so their problem becomes the world’s problem.

This time, superman suddenly has kryptonite on his hands, which makes him weak. America has been the “superhero” of the world or safe to say, one of the world’s powerful countries. (Some may not agree with me on this.) For the Philippines, the Americans somehow helped us gain independence from over 300 years of Spanish rule; and have again rescued us during the Japanese war, with General Mac Arthur fulfilling his promise of “I shall return”.

This time, the world needs to save America. The countries that have lent America will be in the same boat if they don’t help out. Many of these countries have bought bonds of Freddie Mac, etc. That to me is the good news for the Philippines. I guess with all the problems we have had, not much reserves are exposed to the financial crisis, unlike other countries that have huge exposures. Nobody really knows how long this crisis will last. All I can say, this is surely one of the most severe crises that I have ever seen, even larger than the Asian crisis.

Will the new President be able to save the American economy? Big question. The problems of America are basically coming from a low saving rate, people who borrowed beyond their means (the dangers of credit card) and easy availability of funds then. Problems were also caused by financial ‘geniuses’ who have created a lot of derivative products that allow people to short the markets. In Asia, especially in the Philippines, markets do not allow shorting of stocks.

How can the Philippines sail away from the perfect storm? I do not believe that the government should adjust the VAT just because oil is going higher. Commodities go up, but they eventually go down.They are cyclical. We see now people starting to adjust as market forces dictates.The higher cost of commodities would naturally cool down the demand levels that would then temper the price levels. We now see more people taking the MRT and other public transportations, carpooling and buying smaller vehicles. People will adjust to consume less. Development of alternative sources of energy, likewise become more feasible at these oil price levels. As the whole world does this, oil consumption will definitely go down.

If we see the American dollars getting stronger towards the end of this year, oil is headed for 100 dollars and probably even lower if economies in America and Europe cool down. We should use the windfall gain coming from the vat on oil, in order to support the people who are most hurt. This can be done perhaps by targeting the poorest of the poor communities and extending subsidies for their basic requirements on food, shelter, utilities and transportation. We can enhance the mass transit systems by adding more MRT and LRT trains and more frequent maintenance with the increase usage of these transport systems. Any effort to alleviate the difficulties of the bottom of the pyramid should be followed through.The bill that was recently signed into a law exempting the minimum wage earners from taxes is a big help.All moves to encourage and provide incentives for the increase in lending to the micro and small entrepreneurs will go a long way in accelerating the growth of the small Negosyos.The recent signing also of the Magna Carta for micro, small and medium enterprises would hopefully fulfill its objective of realizing a bigger allocation of banks loan portfolio to the micro SME, wherein the ratio was increased from 6% to 8% of banks lending activities.

We also support the bill that is being pushed by Cong. Liwayway Vinzons-Chato. Any tax reprieve or support to microfinance institutions is badly needed in these trying times. Her proposed bill would like to exempt the Microfinance NGOs from taxes, at least for the next five years, and ultimately tax the operations like a GRT. The five year moratorium was patterned after what was given to the Rural and Thrift Banks, as well as to the Cooperatives with the application of GRT. This should help a lot in encouraging more lending to microentrepreneurs, which could lead to greater multiplier effects in income and employment opportunities nationwide. We hope the BIR, which is the implementing the rules, would likewise extend their support to these sectors.

The prices of oil and food commodities are not demand driven, but caused by factors beyond our control as world prices push the increase. Instead of pushing for increase in interest rates, we need to push for more growth. WE SHOULD HOLD INTEREST RATES. THIS IS NOT THE TIME TO INCREASE. We need to support a Negosyo climate. For me, growth rates are very important, especially for the Philippines to attract more investors.

I believe that as we are close to a balanced budget, maybe this is also the time for the government to spend more in creating the proper infrastructures to provide greater efficiency. I am glad that we will now see an expansion of our Southern Luzon road systems, and hopefully plans to connect to the north with the Subic superhighway will start. We hope to see more of this development, leading towards Baguio and the Ilocos regions, and eventually the Northeastern areas like the Cagayan Valley. Good roads will allow our farm products to reach the market areas at least possible cost (eliminating as well the unauthorized ‘tolls’). Accessibility will likewise allow tourism to flourish even more.

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Today, the Ten Outstanding Students of the Philippines (TOSP) will be chosen among 30 finalists. I am happy to see that among the 30 finalists; about eight are entrepreneurs or entrepreneur advocates at their young age. To my surprise, one of them works for the Philippine Center for Entrepreneurship – Go Negosyo. Her name is Bennette Alinduza, a graduate of Mass Communication – Summa Cum Laude. Every year, the RFM Corporation Foundation, together with its partners National Bookstore, PLDT and CHED, recognize the TOSP as a tribute to the young and future leaders, and to make them good role models.These are the students who excelled in school and more importantly managed to balance their academic pursuits with deep involvement towards community service. My father Joecon founded the TOSP on June 19, 1961 (the 100th birthday of our national hero). It was stopped during the Martial Law years. When Joecon joined government in 1986, I decided to renew this project, as I felt that this is the time when we need to inspire people. My father, Joecon, has been named Mr. Namfrel and a strong advocate for love of country. I guess this is what I inherited from him. One of our partners in this project is National Bookstore. Fred Ramos, like his mother Nanay Coring who is really an inspiring woman, continuously sees the need to improve education and enhance accessibility to learning in this country. This is why the National Bookstore goes beyond just selling books and supplies. They have the passion to really help students learn. Our new partner, PLDT, has also been helping the youth pursue their dreams. Eric Alberto and Poly Nazareno continue to be a big supporter of Go Negosyo and, now, TOSP. My sister, Marie Young, is now playing mother hen to all these students who are truly all inspiring. This year, our judges are Hon. Franklin Drilon, Antonio Meloto, Engr. Rodolfo Penalosa, Rebecca Jean De Guzman and Cecille Alvarez. Congratulations to all of our 30 finalists. May you continue to be catalysts of change. Continue to inspire the youth in making the Philippines a great nation. Now is the time for the youth in all of us to shine. TOSP Finalists: Janill Magano, Magna Cum Laude, BS Biology (Mariano Marcos State University) Kristine Mila, BS Accountancy (St. Paul University Philippines) Mark Articulo, Magna Cum Laude, BS Public Administration and Legal Management (St. Paul University Philippines) Mc Allen Sebastian, BS Computer Science and Information Technology (St. Paul University Philippines) Sheryl Paringit, Cum Laude, BS Pharmacy (University of La Salette) Noorain Sabdulla, BS Nursing (College of the Immaculate Conception) Crismer Tiria, Cum Laude, BS Accountancy (Republic Central Colleges) Kaye Dela Cruz, Magna Cum Laude, BS Pharmacy (Centro Escolar University) Marnela Pasamba, Summa Cum Laude, BS Nursing (Sacred Heart College) Ernilyn Brown, Magna Cum Laude, BS Chemical Engineering (University of the Philippines) John Rex Jardinero, BS Environmental Science (Palawan State University) Arvy Osma, Summa Cum Laude, BS Customs Administration (Mariner’s Polytechnic College) Ira Howard, Cum Laude, BS Secondary Education (Ateneo de Naga University) Acela Padua, BS Accountancy (Universidad de Sta. Isabel) Nea Quiachon, Magna Cum Laude, BS Biology (University of St. La Salle) Janus Dellava, AB Broadcast Communication (University of the Philippines in the Visayas) Jahleel-An Burao, Cum Laude, BS Accountancy (University of the Philippines in the Visayas) Rolando Villamero, Magna Cum Laude, BS Secondary Education (Siliman University) Lycar Flores, Magna Cum Laude, BS Business Administration Major in Management (Siliman University) Mark Agana, BS Computer Science (Notre Dame of Marbel University) Adrian Atonducan, Summa Cum Laude, AB Philosophy (Saint Louis University) Erwin Dopiawon, Cum Laude, BS Criminology (Ifugao State College of Agriculture and Forestry) Carmelo Madinno, Magna Cum Laude, BS Secondary Education (Benguet State University) Bennette Alinduza, Summa Cum Laude, AB Mass Communication (University of Baguio) Benjo Delarmente, Cum Laude for BS Medical Science, Doctor of Medicine (University of the Philippines) John Uminga, Magna Cum Laude, AB English Language (Far Eastern University) Marie Dizon, Magna Cum Laude, BS Psychology (Assumption College) Clark Cue, Magna Cum Laude, BS Management Engineering and AB Economics (Ateneo De Manila University) Richardson Navor, Magna Cum Laude, BS Accountancy (University of the East) Zakariya Muripaga, Magna Cum Laude, BS Chemistry (Mindanao State University)

Sailing through the Perfect Storm

Thursday, July 10th, 2008

About three months ago, I somehow described the problems in the United States similar to the perfect storm, wherein a sub-prime crisis affected the willingness of banks to lend, with a weaker property market and stock market while consumer spending started to weaken. At that time, oil price was gradually increasing, causing a higher inflation level.

About three days ago, we saw oil price hit a new high of 146 dollars, and there is a greater possibility of oil hitting 180 dollars to 200 dollars. Frankly, oil price can rise to these levels if war breaks out between Iran, Israel and America. For the world’s sake, let us pray that this does not happen, because America cannot afford a war and the world could also plunge into great depression. I was not even born then when that happened in the 1930s. This is where the power of prayer needs to come to work.

Sometimes, it is very hard to predict the future with our complex financial markets. These complex markets are made by financial geniuses creating derivatives, which allow people to place larger bets by using leverage. This has caused the world to be in a mess. To those who have watched the movie “Perfect Storm”, America could be headed towards the same chaotic scenario.

What can the Philippines do to prepare or protect ourselves from the possibility of suffering from the whiplash of the perfect storm? What can ordinary people do to at least minimize the impact of these uncertainties? Well, in simple terms, people can consider living close to their school or place of work. This is big advantage since less gasoline is used. I have a friend who lives in Alabang. He told me that he bought a 1.3 liter car, because the cost of gasoline is so high that it is already close to his amortization.

While the Catholic bishops have called for the review of the VAT in light of the higher prices of oil and food, perhaps government, in case it does not revise the VAT provisions, can instead use part of the VAT revenues to subsidize those at the minimum wage levels, or have direct food and health program interventions to help the poorest of the poor communities.

Any assistance to help the micro and small entrepreneurs will mean a lot in the creation of livelihood and income opportunities at the bottom of the pyramid. Any tax reprieve or support to microfinance institutions is badly needed in these trying times. We were told that Congresswoman Vinzons-Chato (former BIR Commissioner) is about to file a proposed bill exempting the Microfinance NGOs from taxes, at least for the next five years, and ultimately tax the operations like a GRT. The five year moratorium was patterned after what was given to the Rural and Thrift Banks, as well as to the Cooperatives with the application of GRT. This should help a lot in encouraging more lending for microentrepreneurs, which could lead to greater multiplier effects in income and employment opportunities nationwide, even during these hard times.

To me, it is food that will have the greater impact, since we all have to eat. Because of oil price to some extent, the prices of commodities all over the world including food have gone up – wheat, corn, rice, soybean, milk, etc. However, the prices of commodities have cycles and I believe that we are close to the high end of the cycle. If the oil price bubble does burst, we will see commodity prices going down. The question is when. Hopefully, before the end of the year or by next year, prices should start going down. Hopefully, we also see a stronger US dollar, which is the culprit of high oil and commodity prices as people use this as an excuse to speculate on higher prices.

All these show us that the government and private sectors should work towards a food self-sufficiency program. I am glad to see that the SMC and Kuok groups have started working on large tract of lands to plant crops that will hopefully lead us to self sufficiency. Import liberalization has its price to pay and this has to be balanced with respect to critical food commodities. We cannot discourage people to invest in the business or farm land planting rice or corn. How to achieve that balance is quite tricky. We need the brightest minds to figure out how to develop an industry without overprotecting it and without resulting in becoming uncompetitive. Sec. Arthur Yap is a good friend and this is a big challenge for him and I know he can make a difference.

Should the government increase interest rates at this point? I would not push for higher rates. Current inflation is not caused by strong demand-pull, but rather by cost-push. This is caused by uncontrollable prices of basic inputs and commodities. These are beyond our control as these are dictated by world prices, and (we can also say) by speculators who play it in the financial market.

What we need is to continue supporting the engines of growth, by having the right Negosyo climate. I believe the USA will neither increase nor lower their rates this year, as they are more concerned about growth than inflation. This should also be our position.

We need to push for growth. Entrepreneurs need all the support at this time. Providing reprieves or lower taxes for microfinance lenders and micro entrepreneurs will be a big boost in keeping a healthy level of economic activities and opportunities at the bottom of our economy. We should also encourage the banks to continue lending more aggressively. Keeping rates low will encourage this. I am not an economist but an avid viewer of Bloomberg, CNBC, etc., especially at times like this. We need to recognize that a perfect storm exist out there and we must be able to frequently monitor the direction it is taking and manage that well. I am sure Sec. Teves and Gov. Tetangco will do their best to create the right Negosyo climate.

* * * * *

From the success of our last two Teen Negosyo events, we are heading back to the City of Pines to share to the youth the good news of finding solutions to poverty through Negosyo. This event serves as a training ground for students and educators, aimed to prepare the youth to take on active and responsible roles in entrepreneurial endeavors.

Together with the Department of Education – Center for Students and Co-Curricular Affairs, Department of Trade and Industry – Philippine Trade Training Center, The Master’s Lighthouse Foundation and Entrepreneurs School of Asia, the Third YECS Entrepreneurship Training and Conference dubbed as the Teen Negosyo will be awarding the 2008 Go Negosyo-Dep Ed Most Inspiring Student Entrepreneurs and Entrepreneurship Educators. This award will recognize the best high school student entrepreneurs and entrepreneurship educators who have successfully implemented the YECS programs at the secondary level.

Go Negosyo will also be awarding Most Inspiring CAR Micro Entrepreneurs. We will be recognizing Cordillera’s micro-entreps who gave positive contributions to their community and inspired others with their negosyo stories. They are the micro entrepreneurs who rose from the challenges of life, serving as role models in their own businesses.

This Teen Negosyo event is only one among the many, which we aim at creating a nationwide entrepreneurial revolution by promoting an optimistic and entrepreneurial mindset among Filipinos.

With the theme “Young Entrepreneurs Taking Charge”, the third edition of Teen Negosyo will be on July 26 to 30, 2008 at the Teachers Camp, Baguio City. Activities during the event include plenary sessions, interactive break-out sessions, contests, and entrepreneurial showcases. High school students and educators are invited to join.

* * * * *

Thomas Fernandez, Singaporean entrepreneur and author of “Secrets to Dominate Your Niche”, is in town to meet and greet avid readers and supporters of his book. His latest title is a big success in Singapore that had entrepreneurs and book aficionados lining up in bookstores. His book offers incisive and fresh approaches to making it to Number One. Blended with the right business attitude and entrepreneurial mindset, it could help any aspiring negosyante to clinch that big time moment.

* * * * *

Thomas shares a common cause with Go Negosyo. In fact, he is credited for championing the same cause in Singapore. He was given the Entrepreneur of the Year (2001) and the Sprit of Enterprise (2004) awards for his efforts and contribution to promoting a culture of entrepreneurship. Also, his writings caught the attention of international business leaders and industry players. “Secrets To Dominate Your Niche” has been consistently on the Sunday Times Bestsellers List alongside other popular titles and is enjoying a tremendous success in bookstores.

We are inviting everyone to join us in the book launch of “Secrets To Dominate Your Niche” today at 6:00 pm in Fully Booked in Bonifacio High Street.

Teen Negosyo 2008 Programme

Wednesday, July 9th, 2008


July 26-31, 2008, Teachers Camp, Baguio City


Day 0 – Orientation
Day 1 – Mastery of Self
Day 2 – Master of Environment
Day 3 – Master of Enterprise
Day 4 – Culminating Activities / Awarding Ceremonies


26 July 2008, Saturday

8:00    Registration/Billeting   
6:00    Dinner

7:30    Orientation Program    MR. JOEY G. PELAEZ (Executive Director, DepED-CSCA)
            Entertainment    KITCHIE NADAL

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27 July 2008, Sunday

6:00    Breakfast   

8:00    Opening Ceremony   
            Message    MAYOR REINALDO BAUTISTA JR.
            Inspirational Message    DIR. TERESITA INCION, DepEd Region IV
            Keynote Speaker    SEN. MAR ROXAS
9:00    Forum with Young Go Negosyo Entrepreneurs

BRIAN TENORIO (Tenorio Manila), MICHELLE ASENCE (Zen Zest), DENNIS BALAJADIA (Natural Laboratories), ALVIN TAN (Technominds), ERIC PAPA (Global Tour Management Company Ltd.), JAYCA SIDDAYAO (Ten Outstanding of the Philippines – CAR and Agribusiness owner)
Hosts and moderator: Eco dela Sala and Luane Dy (Hosts of Go Negosyo Bigtime TV Show)

10:30    Forum with Go Negosyo Celebrity Entrepreneurs

Hosts and moderator: Eco dela Sala and Luane Dy (Hosts of Go Negosyo Bigtime TV Show)
12:00    Lunch   
1:00    Breakout:

Knowing The Traits Of An Entrepreneur
–  Personal Entrepreneurial Competencies Test (PECs)
–  Guided interview and mentoring session with Go Negosyo Entrepreneurs
–  Integration of learnings from Go Neg Entrep

–  Personal Entrepreneurial Competencies Test (PECs)
–  Entrepreneurship Framework in the Curriculum

3:30    Talk: What is Entrepreneurship?    MR. ANDY FERRERIA (Asian Institute of Management)

4:30    Talk: Bridging Self with Concept of Entrepreneurship    PALOU ABUSTAN (Center for Small Entrepreneurs)

6:00    Dinner / Entertainment    GAME SHOW with Edu Manzano OR Miriam Quiambao

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28 July 2008, Monday

6:00    Breakfast
8:00    Talk: Entrepreneurship & Self-Mastery    PING SOTTO (Shell Group of Companies)
9:15    Talk: How to Go Negosyo    DEAN PAX LAPID (Entrepreneurs School of Asia)
10:30    Talk: Road to Responsible Entrepreneurship    FRANCIS KONG
12:00    Lunch   
1:00    Breakout: Critical Thinking, Foreseeing, Predicting Trends
“What is a good business to put up in your region?”

GAME, Briefing, Mind Mapping based on issues/crises the country faces today
Coming up with an action plan specific to their region/province

Action plan on how to teach entrepreneurship in their respective schools
Initial Presentation and Evaluation of Action Plans for Students and Teachers

6:00    Dinner

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29 July 2008, Tuesday

6:00    Breakfast   

8:00    Talk: Financial Management    TOPACS COLAYCO (Colayco Foundation)
9:30    Talk: Marketing    ARLYN ONTE (Yehey Corporation)
11:00    Talk: Operations & Supply Chain    DTI-PTTC
12:00    Lunch   
1:00    Breakout: Preparation of Action Plans for Students and Teachers    DTI-PTTC
6:00    Dinner   

Variety Show

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30 July 2008, Wednesday
6:00    Breakfast   

8:00    Talk: The Secrets of the Truly Rich    BO SANCHEZ
10:00    Post Evaluation: Written Self-Assessment Test   
To be facilitated by DTI-PTTC
11:00    Plenary: Final Presentation of Students’ and Teachers’ Action Plans
12:00    Lunch   
1:00    Plenary: Continuation of Presentation of Students’ and Teachers’ Action Plans   
3:00    Judging of Action Plans
6:00    Dinner   
7:00    Awarding Ceremonies

  • Most Inspiring Student Entrepreneurs and Entrepreneurship Educators (MISEEE)
  • Most Inspiring CAR Microentrepreneurs
  • Best Action Plan Winners and Runners-Up, Students and Teachers

9:00    Entertainment    BAMBOO

*Times, programme flow and speakers subject to change without prior notice.

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For information, please contact

Mr. Joey G. Pelaez


636-3603 / 6318495

For reference:

DepED Memorandum No. 277, s. 2008

DILG Memorandum Circular No. 2008-109

Center for Students and Co-Curricular Affairs
In partnership with the Philippine Center for Entrepreneurship, Department of Trade and Industry and The Master’s Lighthouse Foundation


Recession or Depression?

Thursday, July 3rd, 2008

After turning 50 years old, my male friends called me Mr. Mushy for dedicating last week’s column to the secret of my “success” – my wife, as we also celebrated our 25th wedding anniversary last Thursday. Many of them teased me for raising the standards in giving anniversary greetings, so their wives now expect nothing less from them.

That column elicited one of the highest responses through email and SMS messages sent to me. Of course, I earned a lot of points from my wife for writing it and surprising her. Still, the greatest challenge of our times is really keeping a marriage. With much temptation out there and stories of separated couples, 25 years is an achievement but still far from what my parents have achieved. Today, they are a happily married couple for 51 years, even though for the last few years they have been “fighting” daily. I guess that’s part of getting older together. But, they still always patch up things quickly and continue to stay together.

Funny how those who would still be turning 50 years old this year and a year from now were asking how different it feels to be 50. It’s all in the mind actually. Some people would maybe get into a mild depression or mid-life crisis or, well, even rediscover their fountain of youth. Last week was tiring for me, nursing a bad allergic cough. Luckily, my doctor since childhood days, Dr. Celdran, was able to help me get well, to be able to manage my twin celebrations.

Many in our Negosyo community joined us in our thanksgiving celebration and just to name a few, since it would be impossible to list all, let me thank Isaac Belmonte, Sec. Cerge Remonde, Joey and Vicky Cuisia, Grace Glory Go, Lance Gokongwei, Fred Uytengsu, Victor Tan, John Lu Koa, Harley Sy, Vicki Belo, Pax Lapid, Ping Sotto, Dennis and Tessa Valdez, Ronald Pineda, Ray Gapuz, Jo Magsaysay, Dave Valdez, Sanjiv Vohra, Karen Davila and hubby DJ, Anthony and Marixel Pangilinan, Gary and Angeli Valenciano, Kat Luna-Abelarde, Gabby Cui and many more. We recognized once again that night Marx Melencio, whom we awarded in Cebu, as he continues to serve as an inspiration to many Filipinos. We thank everyone who joined us in our celebration, which I actually mounted just to thank the many friends and supporters of the Go Negosyo advocacy.

* * * * *

Now back to the real world… Is America and the rest of the world facing a recession or a depression similar to the one in the late 20’s?

While we were in America this summer, I have noticed a big change in how banks have been lending. Well, basically, they have practically stopped lending. Being an investor in some small real estate projects for the last 15 years, it was very easy to borrow money in America. With a down payment of five to 10 percent, you could be allowed to borrow before, with very little income verification.

America lives on credit. Without a credit card in that country, you can not move and you are even encouraged to pay using credit cards. Thus, Americans have the lowest savings. You can say that most of America’s growth over the years is basically through borrowed money. Today, they are one of the largest borrowers, as individuals and as a nation. In a way, America is a leveraged economy.

Now, with the real estate bubble burst, it has caused a sub-prime problem wherein banks were buying these loans with high leverage. While not all these loans are defaulting under the new accounting rules, banks have to adjust down their value given the market levels today. Basically, people bought houses because of the very aggressive financing given to them, even though they could not afford one. Now that the aggressive mortgage lenders are gone and banks all hurt, lending standards have been tightened overnight with home equity loans removed. It’s now a whole new era of how banks lend out money.

I remember the times prior to the 911 tragedy; traveling in America was lax. But, when 911 hit the airports, security reminded me of our travel to Israel, having to remove shoes and belts — removing almost all our clothes. This will also happen in America’s credit market within years to come. This is why a recession, at worst a depression, may happen because people in America will have to de-leverage. People will not be able to borrow as much. Credit card companies will even be stricter. As a result, consumer spending will be affected.

One of the causes of America’s problem is the high price of oil. Since the Iraq invasion, the price of oil has started to increase. Just last year, oil was at 50 dollars per barrel. Today, it’s in the $140 level. Some people even say that it will hit $180 to $200. The price of oil at these levels will kill the American economy, and may even push towards a depression.

I have told my friends and even my bankers that we are headed towards a Dow index around 10T. It’s funny because earlier this year in Bloomberg, there was a debate between a chartist and a fundamentalist as to where the Dow Jones was headed. Of course, the chartist said that he sees Dow at 9500, which made no sense at that time since the Dow was still at the high 13T levels. And, after spending time in America, I did feel that we will surely see Dow at 10t.

Asia has already gone ahead of America, with China and Hong Kong dropping by as much as 50 percent. Even here in the Philippines, we have dropped close to 50 percent. But, with all these downtrends, the market eventually bounces back. It is about the holding power or staying out until the market stabilizes.

I still believe that America’s present situation will benefit the Philippines, as America will have to find ways to manage cost and stay afloat, so we can expect them to heighten their outsourcing of their expensive labor. This is why our country’s business process outsourcing and call center industries should continue to do well.

We must also really focus on creating more farmer entrepreneurs, as the food shortage in the world may continue, with highly populated countries like China and India experiencing rapid growth in purchasing power. It is time that we accelerate a joint government and private sector partnership to ensure a viable food security program in the country. While we are for free trade, there are basic sectors that we must develop in terms of increasing efficiencies in production to ensure sustainable supply at lowest cost possible. As we have seen, in times of shortage, exporters of basic goods like rice and corn would prioritize their local requirements before sharing their produce to other importing countries. It is about time that we become self sufficient again in rice and other basic commodities. The Philippines has so much idle land. Let’s push for greater irrigation of land (or stricter conversion of irrigated land into other uses), as well as push for higher-yield seed varieties and modernization of farming techniques. We should have a closer review of the land reform law into one that would encourage more corporate farming.

* * * * *

The highly successful Cebu Go Negosyo two weeks ago was also capped by a very nice gathering of Cebu’s high powered SME negosyantes in the evening. Go Negosyo would like to thank PLDT SME Nation led by Eric Alberto, Katrina Luna-Abelarde, Jerameel Azurin and Gabby Cui. We would also like to once again thank the government and private sector advocates who helped in Go Negosyo Cebu and for doing their share in developing entrepreneurship in the country.