Next DTI chief wants to cut poverty via inclusive business

SOURCE: Business Mirror

HE incoming chief of the Department of Trade and Industry (DTI) said he is keen on encouraging the growth of more “inclusive” businesses (IBs) to create more jobs, produce cheaper goods and cut poverty.

Incoming DTI Secretary Ramon Lopez said he intends to continue the Aquino administration’s thrust of supporting micro, small and medium enterprises (MSMEs), particularly those that have adopted the IB model.

According to the World Bank, inclusive businesses are those that provide goods, services and livelihood on a “commercially viable basis to people at the base of the pyramid by making them part of the value chain of companies’ core businesses as suppliers, distributors, retailers or consumers.”

“The focus of the incoming President is uplifting the poor and their quality of life through entrepreneurship. The priorities would be programs that help MSMEs,” Lopez told reporters in a chance interview, following the Philippine Retailers’ Association’s 2016 Outstanding Filipino Retailers and Shopping Centers Awards held last week.

“We would accelerate further the rollout of Negosyo Centers, shared service facilities [SSFs], and the training to go along with operating these,” he added.

Lopez said he and current DTI chief Adrian S. Cristobal Jr., had informal discussions about the transition to the new leadership and outlined the programs that the new government will continue in the next six years.

The incoming DTI head said there is an ongoing review of the agency’s programs to determine, which will be prioritized and will be put on hold. However, Lopez declined to cite specifics.

Lopez, executive director of non-governmental organization Go Negosyo, said he sees the potential of the IB model championed by Cristobal in creating more jobs and encouraging entrepreneurship.

“We talked about inclusive business—orienting how big business can help small ones through strengthening forward [stores] or backward [suppliers] linkages, and putting them into the value chain,” he said.

Lopez said he plans to provide incentives to enterprises that will adopt the IB model. “When we say we will prioritize [inclusive businesses], we mean all possible help, although we have to review what kind of incentives will be provided to them.”

“We have to find out if the grant of fiscal incentives will make a difference or if it’s relevant,” he added. Enterprises that adopt the IB model incorporate poor communities in their core business and are not mere beneficiaries—similar to how corporate social responsibility projects work today.

Poor communities are also targeted as new markets for goods and services under the IB model.

IB models are directly within a company’s value chain, or it can be a single business model of a small company.

The Board of Investments (BOI) and the Asian Development to create a framework for the IB model in the Philippines. The BOI has already piloted an IB accreditation system. The IB model, the BOI said, will be rolled out in the housing, agribusiness, and tourism sectors in the pilot stage.

Earlier, Cristobal said a separate accreditation and registration process for the IB enterprises could be set up, but he assured that the government will not burden the private sector with more rules.

“We’re studying it carefully and that it’s really going to be useful and not add more burden the company,”
he added.

The IB model is currently in the 2014 Investment Priority Plan (IPP) of the BOI not as a specific economic activity eligible for incentives but as a general “economic strategy.”

Among the existing IB models identified by the BOI and the ADB are the Ayala’s Manila Water’s “Tubig Para sa Barangay” program, which effectively lowered the price of water from P150 per cubic meter to P7 per cubic meter for 1.6 million low-income residents of Manila.

Kennemer Foods’ Cacao Growership Program has also been noted by the two agencies as a successful IB model, as they’ve enlisted smallholder farmers to supply cacao beams under growership agreements.