Thursday, August 19, 2004 DTI to Pinoys: Choose carefully biz to open
THE Department of Trade and Industry is helping small and medium enterprises (SME) in the country grow, but the government agency also urged would-be entrepreneurs to be discriminating in their choice of business.
During a visit to Cebu, Trade and Industry Secretary Cesar Purisima said Filipinos were fond of “rentier” type of businesses. For example, they have their tricycles and jeepneys rented out, and simply collect a boundary (fee).
“More than financing, they (SMEs) need something else. They’re in businesses that make our economies inefficient,” he said. “We like to be middlemen. We need to direct them where they can add value.”
He suggested that Filipinos instead go into the semiconductor manufacturing business, where the value added is 30 percent.
“For medical and information technology (businesses), it’s about 100 percent,” he said.
Value added refers to what the businessman can add to the product. The higher the value added, usually the bigger the money the businessman can earn.
In a forum for accountants at City Sports Club Cebu, the trade chief also encouraged investments in retirement homes, saying, “We want to get the private sector to turn this into reality.”
Purisima revealed that SMEs need help in technical training, packaging, product quality and product design.
He said laing, a traditional Filipino dish of taro leaves, pork, chili peppers and coconut milk, is now being exported all over the world after their makers learned to can it with the help of the Department of Science and Technology, through the intervention of the DTI.
For financing, Purisima said the DTI was working with banks “to have more venture-type financing rather than asset-based lending.”
To ensure a market for their products, SMEs were advised to join reverse trade fairs to find out what the market wants. At reverse trade fairs, buyers show the wares they want to buy. This would prevent SMEs from producing something that nobody wants.
Another type of assistance being offered is the Big Brother concept, where large companies are encouraged to involve more SMEs into their supply chain.
Purisima gave the example of Manila Water, which he said now has 40 SMEs working with it.
He encouraged Filipinos to get into business, saying this was a way to help President Arroyo create jobs in the country.
He cited the Association of Filipino Franchisers composed of 37 entrepreneurs who had been in business for an average of 11 years. “They now have P5.4 billion in sales and 10,300 employees.”
He held up the example of the hugely successful Jollibee Foods Corp., which now employs 26,000 people, saying, “Can you imagine if (founder) Tony Tan Caktiong had decided to work in a bank instead of become an entrepreneur)?”
But the trade official also acknowledged that culture may have played a role in stifling the entrepreneurial spirit.
“We need changes in our culture. We must be more tolerant of failure. Entrepreneurship is not risk free.” (CTL)
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