3. dietrich - results of the philippine ib country study

7/29/2019 3. DIETRICH - Results of the Philippine IB Country Study

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Results of the Philippine IB Country

Study

Presentation at the 2nd IB Forum on 16 September 2013

For further questions, please contact

Markus Dietrich, ASEI, Tel 02-2398216, [email protected], or

Armin Bauer, ADB, Tel: 632-5550; [email protected]

The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of

Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their

use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.
mailto:[email protected]:[email protected]


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There is high growth in the Philippines

but it is not inclusive:

High level of poverty in the ASEAN context

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Singapore

Malaysia

Thailand

IndonesiaVietnam

Philippines

Poverty Incidence (2009)


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High growth but no poverty reduction


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High and rising inequality

0.34 0.36 0.38 0.4 0.42 0.44 0.46

Vietnam

Malaysia

Indonesia

Singapore

Thailand

Philippines

Gini Coefficient (2009)


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Persistent and high un- and underemployment


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The private sector can make growth

more inclusive

Decent jobs and income Goods and services relevant, affordable and accessible for the poor

Strong Social Consciousness Weak Engagement as Business

300,000 NGOs20,000 Social Enterprises

70% of companies haveCSR programs

50% of companies havecorporate foundations

70 companies in ADB studywith inclusive businessmodels


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Reasons to engage the BoP

1. Increase growth and profitability

2. Localize supply chain3. Strengthen reputation and brand

1. Poor regulatory environment forIB and lack of targets

2. Problems to access capital

3. Lack of government incentives4. Lack of social appreciation on

the role of IB in inclusivegrowth (media, government,civil society)Benefits to the company

1. Create shared value2. Improved sales3. Improved reputation

Private sector engagement in IB

Benefits Obstacles


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18.4% = 16.9 millionUS$ 1.25 per day/capita(Philippines poverty line)

41.7% = 38.1 million

US$2 per day/capita(self rated poverty (SWS) /minimum wage; ca PhP12,000 per family per month)

62.5% of population = 57.4million people withincome/expenditure of lessthan US$3 per day/capita(ca 18,000 PhP per familyper month) in internationalPurchasing Power Parity

Source: PovcalNet / 2005 PPP USD, 2009 data

What is the Base of the Pyramid

(BoP) in the Philippines?

62% of the Philippine Population (57 million)with family income below PHP 18,000


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Source: FIES, 2009 data, Top 10 expenditure items

Base of the Pyramid (BoP) Market

BoP consumes US$ 33.4bn (48% of total PH expenditure)

16,292

5,830

3,077

1,935

1,437

677

507

506

490

435

0 5,000 10,000 15,000 20,000

Food

Rent/Rental Value of Dwell ing Unit

Fuel, Light and Water

Transportation and Communication

Personal Care and Effects

Clothing, Footware and Other

Medical Care

Gift and Contributions

Household Operations

Education

US$ Million


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Findings of ADBs IB Country Study

IB in the Philippines is in a nascent state

Low awareness of IB among business community Many IB models are early stage IB eco-system does not exist 70 IB companies of which only 30 are investable at the moment

Low awareness in finance community Only 3 deals with total of US$ 5 million in last 3 years

Low awareness among government and donor community

BUT, there are good examples demonstrating potential of IB


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IB Potential in Key Sectors Job generation

Agriculture and Agribusiness Coffee for Peace sourcing coffee from indigenous HH MCPI sourcing seaweed from fisherfolks Coco Technologies sourcing coco fiber from coconut farmers

Food & Beverage Jollibee Farmer Entrepreneurship Program Nestle sourcing of coffee beans Kennemer Foods sourcing of cacao

Manufacturing All Home Design Subcontracting handicraft production Gandang Kalikasan Sourcing for Human Nature cosmetics


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IB Potential in Key Sectors Job generation

Retail Microventures Hapinoy Sari-Sari store program Julies Bakeshop Micro kiosk franchising program

Tourism Islands Banka Cruises Small boat operators


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IB Potential in Key Sectors Provision of Products and

Services

Finance Climbs affordable life and non life insurance

Globe BanKO mobile microfinance products

Energy Powersource Group Rural electrification SURE Rural electrification plus job generation

Health Generika Drugstores low cost medicine Family Vaccine Clinic affordable rabies vaccination


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IB Potential in Key Sectors Provision of Products and

Services

Information Technology Smart and Globe Mobile Phone plus

Encash Deployment of ATMs in rural areas

Education STI technical and vocational courses Phinma quality and affordable education

Urban Development Phinma Properties On-site relocation PPP with Q.C. Clean Engines affordable retro-fitting of motorcycle engines

R d ti f IB C t


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Recommendations of IB Country

Study

1. Development of enabling environment

Business associations Promote IB among members

Government Remove barriers promoting ease of doing business Integrate private sector in development planning and

implementation with meaningful target setting

Legislators

Incentives for IB

Development Partners Support with Technical Assistance

R d ti f IB C t


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Recommendations of IB Country

Study

2. Facilitating impact investment into IB

Medium Scale Companies

Debt rather than Equity

Debt: 0.5Mio to 10Mio USD, IRR 4%-8%, 8 years tenure

Equity: 0.5Mio to 10Mio USD, IRR 10%-20%


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Progress Report

IB is gaining momentum

More companies identify themselves as IB

Business associations are committed to inclusive businessand inclusive growth agenda PBSP and LCF

Government is working with private sector DAR

Senators with social entrepreneurship agenda were elected

Impact investors are focussing on the Philippines


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Conclusion

A lot still needs to be done

Aligning inclusive growth agenda with inclusive businessinitatives

Bringing investment to inclusive business

=> 2nd Philippine Inclusive Business Forum


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Maraming salamat po

For further questions, please contact

Markus Dietrich, ASEI, Tel 02-2398216, [email protected], or

Armin Bauer, ADB, Tel: 632-5550; [email protected]
mailto:[email protected]:[email protected]

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