Policy Notes Series


PN 2022-04 Empowering Women-led MSMEs to Engage in Cross-border E-commerce Trade through RCEP

Jean Clarisse T. Carlos, Jill Angeli V. Bacasmas, and Jovito Jose P. Katigbak

The Regional Comprehensive Economic Agreement (RCEP) is envisioned to pave the way for the internationalization and deeper participation of micro, small, and medium enterprises (MSMEs) in global value chains. This Policy Note observes the rise of e-commerce among women-led MSMEs (WoMSMEs) during the COVID-19 pandemic and its positive impacts to WoMSMEs' performance in terms of sales growth, customer base, customer satisfaction, and process enhancement. However, there is a low level of awareness among WoMSME entrepreneurs on cross-border trade and government programs that support access to the global digital economy. Thus, this Policy Notes recommends that the government should raise awareness of and strengthen programs that promote e-commerce adoption and internationalization among WoMSMEs. Further, it proposes that there should be gender-disaggregated data on cross-border e-commerce participation to help identify challenges and barriers to e-commerce adoption and possible policy interventions. Lastly, the Philippines should consider investing in further research and conducting a national survey on WoMSMEs' e-commerce adoption and propensity to engage in cross-border e-commerce, which could help in the formulation of national development plans.

Link: https://www.pids.gov.ph/publications/7646


PN 2022-03 How Can the Philippines Seize Opportunities in Services Trade under RCEP?

John Paolo R. Rivera and Tereso S. Tullao, Jr.

The Regional Comprehensive Economic Agreement (RCEP) entered into force on January 1, 2022, linking the 10 member-states of the Association of Southeast Asian Nations (ASEAN) with their neighbors in the Asia-Pacific region, namely, Australia, China, Japan, New Zealand, and South Korea, into a unified free trade agreement (FTA). However, RCEP is considered a marginal regional trade agreement because it simply compiles the previous commitments between the ASEAN member-states and their FTA partners. A closer look reveals that the RCEP includes improved commitments from ASEAN's FTA partners in trade in services, which the Philippines can exploit. To seize these opportunities, this Policy Note stresses that the Philippines manage its market access limitations by maximizing its strengths and mitigating its weaknesses. Further, it argues that addressing inadequacies in infrastructure and relaxing constitutional restraints, particularly on allowing the entry of foreign participants to critical sectors, are necessary for the country to do well in services trade. This Policy Notes also maintains that the RCEP can be an avenue for upgrading the country's human capital.

Link: https://www.pids.gov.ph/publications/7645


PN 2020-09 Are Marine-protected Areas Sheltered from Plastic Pollution?

Maria Kristina O. Paler

The Philippines is one of the top three major contributors of plastic marine debris in the world. Despite this, microplastic pollution remains understudied in the Philippines. This Policy Note looks into microplastics as the culmination of larger plastics often used and discarded in the marine environment. It specifically focused on the Tanon Strait, the country's largest marine protected area located between Cebu and Negros Islands. The study found a relatively high microplastic occurrence in Tanon Strait. This proves that the Philippines has been contributing a substantial volume of plastic debris into the marine ecosystem. To address this, the study calls for proper waste disposal to mitigate the problem of plastic pollution. It also suggests that these pollutants are most likely generated from single-use plastic items, hence the need to shift from the current throw-away society.

Link: https://www.pids.gov.ph/publications/7146


PN 2020-08 Mitigating Climate Change through Mangrove Forest

Madonna C. Daquingan

This Policy Note emphasizes the role of mangroves in sequestering significant amount of CO2 by harnessing their potential as CO2 capture and storage (CCS). It zeroed in on the Bued Mangrove Forest Park in Pangasinan and assessed the diversity of its mangroves, sediment carbon, mangrove distribution and carbon stock, and vegetation index. Its analysis revealed that this forest has a potential as CCS, which can lead to notable strategies for climate change mitigation and provide adaptation measurements. To sustain this benefit, it calls for the adoption of policies and regulations that can mitigate the impact of human actions on the forest. It also urged the government to establish a sustainable funding and concrete incentive systems to balance the conservation of mangrove ecosystem and sustainable livelihood for coastal inhabitants and regulations for tourism.

Link: https://www.pids.gov.ph/publications/7132


PN 2020-04 Aligning Higher Education with Demands for Data Science Workforce

Brenda A. Quismorio, Maria Antonette D. Pasquin, and Claire S. Tayco

Amid the Fourth Industrial Revolution (FIRe), there has been an increasing demand for data science and analytics (DSA) workforce in the Philippines. Sadly, DSA skills remain underdeveloped among the Philippine workforce. This Policy Note provides evidence on the current DSA skills gaps in the Philippines in light of the country's preparation for FIRe. Among others, it finds a scarcity of DSA competencies in the current workforce and a misalignment between the demand and supply of DSA workforce in the country. To address these issues, the study urges the government to adopt a framework to define the practice of DSA in the country. It also recommends the promotion of government-industry-academe linkages. These three actors can work together in establishing standards for degree programs in DSA or updating DSA-related degree programs. Government agencies can also make use of the industry's DSA job requirements in consolidating their efforts to effectively manage the supply and demand for these talents.

Link: https://www.pids.gov.ph/publications/6959


PN 2019-12 Improving Human Resource through Mutual Recognition in ASEAN

John Paolo R. Rivera, Cynthia P. Cudia, and Tereso S. Tullao, Jr.

Mutual recognition arrangements (MRAs) facilitate the movement of skilled labor within the Association of Southeast Asian Nations (ASEAN). This Policy Note reviews these MRAs and provides an alternative lens in analyzing the mobility of skilled workers in ASEAN. Among others, it finds that while MRAs have inspired continuous improvement of professional competencies to be at par with the international competition, benchmarking of best practices is lacking. Mobility of professionals, in reality, may not ensue because nearly every country has visa, residence, and work permit restrictions, which can impede the movement of professionals to country locations where they are needed. There is hesitation among ASEAN member-states to give up their domestic regulation and nationally defined standards toward accrediting and licensing professionals. Hence, there is a need to reform domestic regulations to liberalize highly restrictive professions. For ASEAN to realize free trade in services, member-states are urged to harmonize their regulatory frameworks in order to have convergence of regulations, establish a harmonized and streamlined process of identifying the training needs and addressing the competency gaps of professionals, and promote a multistakeholder approach to curriculum design and quality control.

Link: https://www.pids.gov.ph/publications/6903


PN 2018-11 Barriers to Internationalization of Philippine SMEs

Jamil Paolo S. Francisco, Trista A. Canera, and Jean Rebecca D. Labios

Small and medium enterprises (SMEs) are important in many developing countries, including the Philippines. One factor that can help SMEs achieve higher productivity is through internationalization by connecting them to global value chains (GVCs). However, SMEs face a host of obstacles in doing so. This Policy Note identifies the challenges and enablers of connecting SMEs to GVCs. Among others, it finds that Philippine SMEs are weakly linked to GVCs. Meanwhile, the challenges and enablers can be grouped into five themes: (1) competition in ASEAN and East Asia; (2) international standards, regulatory requirements, and local institutions; (3) role of the government; (4) international market demand and inputs supply; and (5) entrepreneurial mind-set. To address these issues, this study recommends the enhancement of port and airport operations as well as the improvement of credit terms of SME loans. It also encourages SMEs to find new market niches where competition is not yet too tough.

Link: https://www.pids.gov.ph/publications/6162


PN 2018-13 Duration of Export Relationships of Philippine MSMEs

Mark Edison Baustista and George N. Manzano

The Philippines has been recognized as a champion of micro, small, and medium enterprises (MSMEs) within the Association of Southeast Asian Nations (ASEAN) region. Sadly, even its own enterprises do not seem to survive once they enter international trade. For instance, this Policy Note finds that only 6 in every 10 Philippine MSMEs engaged in export trade manage to survive after their first year of operation outside the Philippines. This figure further dwindles to less than 4 in every 10 by the end of their fourth year. This study likewise finds that, on the average, the fourth year is critical in the trade duration, where the average decrease in survival rate is lowest. Given the findings, it urges the government to extend support to Philippine MSMEs that export products to ASEAN countries and other trade partners, strategically during the identified critical years of export survivability. Focus should be directed toward assistance in increasing the capability of the firms, targeted appropriately, to reach larger orders, either through financing or through consolidation with other similar firms that have successfully complied with the product standards required by foreign buyers.

Link: https://www.pids.gov.ph/publications/6164


PN 2018-15 Supply Chain Integration in Philippine SMEs

Elaine Q. Borazon and Vivien T. Supangco

This Policy Note delves into possible approaches the government and small and medium enterprises (SMEs) can adopt to enhance the business performance and competitiveness of Philippine SMEs, with emphasis on the supply chain integration. It identifies three main dimensions of supply chain integration, namely, internal, customer, and supplier integration. While all kinds of integration are important, it finds that particular attention should be given to internal integration given that both customer integration and supplier integration work through it. This implies that the impact of external integration (customer and supplier) on business performance and competitiveness will only take effect if the internal integration is in place. To aid SMEs in terms of strengthening their internal integration, this study recommends the provision of support for human capital development (e.g., education, training, consultation, coaching) that will enhance the SMEs' application of management skills, such as the generation of effective operational and production plans and functional coordination. It also calls for the education of SMEs on the use of information systems that will aid in the integration of various internal processes and for the government to invest in technologies to facilitate such integration.

Link: https://www.pids.gov.ph/publications/6489


PN 2017-24 Strengthening Capacity Building for RTA/FTA Negotiations in APEC

Ronald U. Mendoza, Tristan A. Canare, and Alvin Ang

The World Bank ranks almost 200 countries in terms of their ease of doing business (EoDB) to underscore the importance of a thriving private sector in promoting high and inclusive growth. Its Doing Business Report uses several criteria in scoring and ranking EoDB: starting a business, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. In the 2015 Report, which is discussed in this Policy Note, Singapore is once again on top, a place that it has maintained since 2007, followed by New Zealand and Hong Kong, both APEC economies. The Philippines registered moderate to impressive gain in its ranking, from 108th to 95th. There is obviously a wide variation in the performance of the APEC member-economies. As the ASEAN Economic Community progresses, and as the Philippines takes a crucial role in this year`s APEC 2015 Summit, comparing the EoDB metrics of the ASEAN countries becomes highly important. With their diverse economic conditions, APEC member-economies that are performing well in EoDB can share their expertise with the ASEAN and other developing country members. Better-performing economies can support lower-ranked ones through the sharing of best practices.

Link: https://www.pids.gov.ph/publications/5531


PN 2017-24 The Value of Labor Market Information Systems on International Labor Mobility

Leonardo A. Lanzona, Jr.

This Policy Note analyzes the Asia-Pacific Economic Cooperation (APEC) Labor Market Portal and its role in advancing labor mobility among APEC economies through a freer exchange of information. It highlights two main labor market information issues, namely, the information asymmetry and transaction costs. In terms of information asymmetry, the study finds that workers can be misallocated to tasks and sectors in case their employers do not have access to their measures of productivity. Meanwhile, it asserts that the presence of transaction costs such as high remittance fees may negatively affect the resources of poor migrants and their families in the countries of origin. Given these problems, the study recommends the adoption of national and regional qualifications frameworks as compilations of reliable data on the stocks and flows of qualifications. It also encourages the expansion of the policy of the Association of Southeast Asian Nations on visa-free entries to all APEC economies as one of the ways to address transaction cost issues.

Link: https://www.pids.gov.ph/publications/5882


PN 2017-02 Australian SME Micro-Offshoring in the Philippines: Opportunities and Challenges

Mike O’Hagan and Peter K. Ross

An increasing number of Philippine-based business process outsourcing (BPO) centers are targeting Australian small and medium enterprises by offering micro-offshoring services that reduce their costs. This Policy Note examines the sector and considers the potential economic and social gains of this expanding market. While the Philippine BPO sector has competitive advantages for Australian firms, this study found it still has to address several challenges, such as government red tape, poor infrastructure and traffic management, and biased adjudication of labor cases before the National Labor Relations Commission. It calls on the BPO sector to move up the value-added chain and provide more sophisticated services to generate greater labor productivity growth and longer-term lift in living standards.

Link: https://www.pids.gov.ph/publications/5784


PN 2015-10 Mainstreaming SMEs through Social Enterprises

Leonardo A. Lanzona, Jr.

Social enterprises (SEs) are crucial both for the development of small and medium enterprises (SMEs) and labor generation. The goal of SEs is to provide public goods to communities. In the Philippines, SEs are linked to social entrepreneurship as a process of creating spaces and transforming markets toward the goal of poverty reduction and sustainable development. This Policy Note discusses the findings of a study that explored the key policy variables necessary to support SE and SME development. The study also examined the extent to which nongovernmental organizations, as well as international trade arrangements, such as the Asia-Pacific Economic Cooperation, can improve the business environment for SEs and SMEs. Results indicate that the business environment affects the revenues and incomes of these enterprises. To support SEs, it is crucial to link them to global value chains and to provide them with the necessary global public goods that can help address poverty directly.

Link: https://www.pids.gov.ph/publications/5534


PN 2015-11 Liberalizing Trade of Environmental Goods and Services: How to Address the Free-rider Problem

George N. Manzano and Shanti Aubren Prado

Reducing trade barriers in environmental goods and services (EGS) makes adoption of environmental technologies cost effective for different industries. The Asia-Pacific Economic Cooperation's (APEC) contribution to foster trade in EGS is to put forward its own list of 54 environmental goods (EGs) slated for sectoral liberalization. This Policy Note explores how APEC can liberalize trade in EGs based on the most-favored-nation (MFN) principle. Liberalization of these EGs on an MFN basis, however, generates free-rider problems. Using the predominant supplier approach could address free riding and provide the stimulus needed to foster free trade in EGS. The results show that APEC has a dominant supplier role in renewable energy and clean technology production. These are followed by waste water management and potable water treatment, management of solid and hazardous waste and recycling systems, and natural risk management.

Link: https://www.pids.gov.ph/publications/5550


PN 2015-21 What Factors Affect the Business Success of Philippine SMEs in the Food Sector?

Elaine Q. Borazon

This Policy Note discusses the success factors of small and medium enterprises (SMEs) in the food manufacturing and food service sector. It also provides implications on how SMEs can be assisted to achieve business success, thus, enhancing their capacity to engage in international trade. The results of the study show that marketing capability, network capability, firm age, and firm size positively influence the business success of small and medium food enterprises in the Philippines. Hence, SME development can be achieved by, among other things, improving the marketing and network capabilities through trade missions, international trade exhibitions, and export assistance.

Link: https://www.pids.gov.ph/publications/5630


PN 2014-21 Establishing the Linkages between Human Resource Development and Inclusive Growth

Christopher James Cabuay, Daniel Hofilena, and Tereso Tullao Jr.

The 21-member economies of the Asia-Pacific Economic Cooperation (APEC) have different levels of economic development and, in turn, differentiated stages of human resource development. Given this asymmetry, the benefits of complementation and learning from the experiences of economies that have achieved a certain degree of inclusive growth are worth exploring. This initiative can provide avenues for addressing the development gaps within the Asia-Pacific region, which can contribute to achieving inclusive growth. This Policy Note is an output of a research project on APEC 2015 commissioned by the Department of Foreign Affairs to the Philippine Institute for Development Studies. It discusses the linkages between human resource development and inclusive growth. It also provides policy recommendations on possible cooperative measures in human resource development for APEC member-economies.

Link: https://www.pids.gov.ph/publications/5432