university of northern iowa cedar falls...

UNIVERSITY OF NORTHERN IOWA

CEDAR FALLS

MBA _____ - Business Opportunities, Environment and Practices in the Philippines

COURSE SYLLABUS

Georgina J. Bordado, DBM

Dean, College of Economics and Management Central Bicol State University of Agriculture

Bicol, Philippines E-MAIL: [email protected]

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Course Description:

This is a 1-credit course/seminar, which aims to provide students with a deeper understanding of the

country’s economic and political system and increased appreciation of its rich cultural background. We

will explore the evolution of these factors as well as show how it collectively shaped the character of

businesses and our operating environment.

The business terrain has considerably changed when the Philippines became a signatory to the WTO in

the early 1990’s. Since then, the headway of globalization, free trade and liberal investment policies

affected the business environment and practices in the country.

Course Objectives and Learning Outcome:

Upon completion of this course, you should:

1. be more knowledgeable about the business environment, tradition and opportunities in the Philippines;

2. understand how free trade and investment affects the nature, type and way of doing business in the Philippines;

3. recognize factors which can push or impede economic growth of the country; and 4. formulate strategies on how businesses in the country can overcome cultural, spatial,

technological obstacles to trade and investment.

mailto:E-MAIL:

Overview of Learning Activities

This course is designed to be interactive with group learning activities, presentations and complemented

by short video clips about the Philippines.

Course Requirements

Class Attendance: Attendance and participation is strongly encouraged. If you must be absent, please

inform the lecturer in advance. Failure to notify the lecturer in advance will lead to loss of participation

points.

Class Discussion/Participation: Each student is expected to actively participate by sharing their insights

and questions with the rest of the class. Each class member will be evaluated based on the quantity and

quality of their participation. If you have information, materials, items, previous experiences that relate

to our topics/discussion, you are highly encouraged to bring and share those materials for discussion

purposes.

Reading: Reading materials have already been provided. It is expected that each student will have read

the assigned material prior to each class session.

Written Reports: As part of your experiential learning, you are given three tasks/assignments to work

on hence; you would need to prepare 3 papers based on the identified tasks. REMEMBER that the

report needs to be done on a continuing basis and it all builds upon the previous papers

presented/submitted.

PAPER 1. External Audit.

PAPER 2. Business Opportunity Identification

PAPER 3. Scenario Building

Grading:

Your final grade will be determined as follows:

Class Discussion/Participation/Presentation - 200 Points

Task 1 (External Audit) - 100 Points

Task 2 (Business Opportunity Identification) - 100 Points

Task 3 (Scenario Planning) - 100 Points

Letter grades for assignments equate to numerical grades as follows:

A (4.00) 94-100% performance

A- (3.67) 90-93%

B+ (3.33) 87-89%

B (3.00) 83-86%

B- (2.67) 80-82%

C+ (2.33) 77-79%

C (2.00) 73-76%

C- (1.67) 70-72%

D+ (1.33) 67-69%

D (1.00) 63-66%

D- (0.67) 60-62%

F anything lower than 59.9

Outline and Schedule of sessions

Session Topics

1 – April 11, 2013 5:30-9 pm

Rediscovering the Philippines: its economic and political system This would introduce the key macroeconomic sector of the country. Focus would be on the growth sectors and business opportunities Frontline video: Video clip about the Philippines, Bicol and the Central Bicol State University of Agriculture Readings: The Philippine Economy

Philippine Economy Strong but More Jobs

Needed

Task 1: External Audit Key Questions:

1. Where the growth did came from? 2. What are the drivers of growth?

There would be breakout sessions where students would be grouped into three for their External Audit.

2 – April 12, 2013 5:30-9 pm

Business Culture and Practices in the Philippines Culture is defined as shared meaning interpreted in institutions in patterns that are best analyzed through a complex adaptive systems framework (Redding, Bond, Witt 2012). Knowledge of culture is important in the building of business relationships hence this session would look at culture and how it becomes interweaved in our business traditions and protocol. Readings: Filipino Culture and Business Management Curse to the Filipino Culture Filipino Culture in Evolution Task 2: Business Opportunity Identification Key Question:

1. How has culture shaped the nature of businesses in the country?

2. What internal variables contribute to the strength of Filipino business and poses threat to sustainability of Filipino businesses?

3 – April 13, 2013 9 am – 3 pm

Business Systems in the Philippines This session would look at the different businesses operating in the country and would present the cost of doing business – across sectors. Further, this session would look at the essential

nature, origin, characteristics and management of a typical Filipino business. How has their strategy evolved given globalization and changes in its external and internal environment? Readings: Doing Business in the Philippines Task 3: Scenario Planning Question:

1. Is there a need for a new business paradigm in the Philippines

2. What has been the impact of globalization on Filipino businesses?

4 – April 14, 2013 1-4 pm

Philippine Investment Climate under the P-Noy Administration This section looks at the enabling policies and the political and government impact on businesses. Discussion would include the registration process for new businesses, land ownership, structure requirements. Readings: Cost of Doing Business in the Philippines Question:

1. What are the challenges of doing business in the Philippines?

2. What is distinctive about Filipino business strategy, management systems and corporate culture?

Session 1: Rediscovering the Philippines: its economic and political system This session would run for 3 hours and would provide the students with a glimpse of the key

macroeconomic sector of the country. We recognize that businesses do not operate in a vacuum and

over time, our economic and political systems have changed given the highly dynamic global business

environment and changes in our internal environment as well. Focus would be on the growth sectors

and business opportunities in the country.

Towards the end of the session, students would be asked to prepare a one-page written report (in bullet

form only) on Opportunities and Threats any foreign investors wishing to operate in the country might

face. The report will be presented to the rest of the class.

Task 1: External Audit

Given the readings and the presentation, students would be asked to identify Opportunities and Threats

any foreign investor might encounter if they decide to invest in the Philippines. The PESTLE diagnostic

framework could be used to classify and make sense of the macroeconomic factors.

Issue to consider in the analysis might include:

Key Questions:

1. Where the growth did came from? 2. What are the drivers of growth?

Readings: The Philippine Economy

“Philippine Economy Strong but More Jobs Needed”, An ADB Report

Population: A Factor for Economic Growth

The Philippine Economy

The Philippine economy as measured by gross domestic product (GDP) may grow at a faster pace in 2013, according to the February issue of The Market Call. The Philippine economy may expand close to 7 percent on the first quarter of 2013, according to the latest newsletter published by the First Metro Investment Corp. and the University of Asia and the Pacific Capital Markets Research. The March issue of The Market Call said that the country’s first quarter growth will be supported by a manageable inflation, strong government and private election spending, booming construction, and a modest rebound of exports. It projected that inflation until March may reach 3.3 percent but a quick reversal is expected in the second quarter to below -3 percent. The think tank added low inflation can be attributed to the expected downward prices of crude oil after the winter season, adding that ample food supply is also projected by the Department of Agriculture. The publication said that the slight acceleration in electricity sales in December, the continued government spending focused on infrastructure and election spending were some of the factors for the faster economic growth in 2013. “Heightened election-related spending in first quarter and part of second quarter, should provide the momentum to keep the economy humming at a similar or even faster pace than in the fourth quarter of 2012,” it stated. In terms of external trade, it continued that the fruits of the government in forging the country’s relations with Australia, Italy, United Kingdom, and other countries can be reaped in 2013, reviving the exports industry especially the shipments of electronic products. “The revival of China’s economy and the expected stimulation of Japanese exports would most likely contribute as they are the major absorbers of our products,” The Market Call stated. On spending, the think tank reported that the country’s fiscal sector is expected to continue its deficit spending spree in the first quarter, but will temper this in the second quarter. “Above target deficits may be expected in the H1 [first half], but this will be brought back to earth in H2 [second half] so that full year targets will be easily reached,” it said. The Market Call also noted that the Philippines peso may start off on a mild depreciation mode as foreign investors pull out profits, especially in the second quarter to pay off their income taxes. “Due to BSP [Bangko Sentral ng Pilipinas] and other government actions, we do not expect further appreciation of the peso in Q2 [second quarter],” it stated. Moreover, the think tank mentioned that the bias by a number of foreign investors toward the peso would most likely continue, as the United States decided to use sequestration, and France and Germany have low first quarter gross domestic product growth forecasts. It added that the appreciation of the local currency is also supported by the rise in both foreign portfolio

investment and foreign direct investment, as Japanese and other multinational companies are firming up operations in the Philippines. The Market Call further projected that the BSP may cut the Special Deposit Account rate by another 50 basis points to signal its determination to the market. “BSP and other government officials have become wary of the peso appreciation and appear ready to apply stronger means to curb the negative impact of large portfolio capital inflows,” it stated.

GDP grew at 6.8 percent in the fourth quarter of 2012. The Market Call also projected that inflation may settle at 3 percent level in the first two quarters of the year as good weather condition may stabilize food prices. “Stable food prices as a consequence of better harvests and less devastating typhoons will offset the slight temporary upswing in crude oil prices and bring inflation rates for the first quarter in the low 3 percent level, and back to below 3 percent in the second quarter,” it added. Appreciating peso However, despite the positive outlook for the economy, the publication still warned the public about the appreciating peso. “But there’s a fly in the ointment for the long-term sustainability of the growth, which is the peso’s appreciating trend. This is because it puts exports, business process outsourcing industry [BPO], and OFW [overseas Filipino workers] remittances under serious threat,” it further said. The Market Call continued that after having a 6.8 percent year-on-year appreciation in 2012 by averaging P41.01 a dollar in December, the peso had momentous strength in January by landing on the P40.73 a dollar plane. “At the current run, the peso looks like it has the tendency to settle at below P40:$1,” it said. The publication also mentioned that a spate of positive onshore news and negative offshore news provided cushion for the peso. It cited that Standard and Poor’s credit upgrade of the Philippines from BB+ “stable” to BB+ “positive” provides a favorable setting for the Philippine peso. The Market Call also reported the 13 times record high of the Philippine Stock Exchange index in January alone also lifted the value of the peso, as well as the weaker-than-expected US housing data and the uncertain recovery in the eurozone further strengthened the stance of peso against the greenback. “Given this, the BSP [Bangko Sentral ng Pilipinas] has often intervened to prevent the peso from breaching P40:$1,” it said, noting that this level was considered an undesirable level because it posted a great threat for exporters, OFW workers and the BPO industry, since it could lower their peso incomes while peso costs remain the same. On the other hand, the publication also projected that exports are likely to remain at single-digit growth

in the first quarter of 2013, in view of the euro zone weakness and the deceleration of Japan’s GDP expansion. “This outcome is expected since the continuing but weak recovery in the US and improved demand from China and Asean [Association of Southeast Asian Nations] will not be sufficient to offset the dark clouds in the horizon, which exacerbate the negative impact of the peso appreciation,” it added.

The 2012 Outlook

Expect acceleration of public expenditures to continue well into 2012 and beyond, as well as substantial acceleration of disbursements, including those for infrastructure and capital outlay, in the coming months.

Investment is expected to post a strong growth in 2012 despite the global economic uncertainties, as we anticipate strong investments from both public and private sectors. The construction sector will get a boost from public construction in 2012 due to continued spending for the government’s Disbursement Acceleration Program’s projects that were carried over from the previous year, and from the faster budget execution process of government. Construction will also get a boost from the acceleration of the implementation of the Private-Public Partnership program this year.

In addition, expect that private construction will remain robust, particularly in the property sector, given the upward momentum in the office sector, and the relatively high BPO office demand in strategic areas across the country. Also expect the residential sector to remain supported by the demand from families of overseas Filipinos.

There is likewise an expected expansion of investments in energy; mining; low-cost housing and office buildings; and the industries in the priority areas – agribusiness, consumer durables, information technology (IT), health and wellness, transport, telecommunications, and especially tourism to contribute positively to the country’s economic growth in 2012.

The performance of the real estate sector will be complemented by the continued robust performance of the business process outsourcing industries. Meanwhile, the performance of the other services sector will benefit from the surge in tourism as we improve our infrastructure, intensify our tourism marketing campaigns, and maintain a favorable peace and order situation.

Food manufacturing will benefit from stronger consumer demand spurred by government spending, softening prices of raw materials, and better weather conditions. In the second half of 2012, the manufacturing sector is expected to post a remarkable growth as the food sector further expands, election spending provides an impetus up to the national and local elections in 2013, and the electronic industry registers higher growth.

On the expenditure-side, the resilient domestic economy will support a continued expansion in household consumption expenditure. Household consumption will be spurred by the continued

tripartite efforts of the government, private employers and workers to improve the country’s labor and employment situation; a sustained inflow of overseas Filipinos remittances which has been counter-cyclical in the past; and the implementation of social protection programs.

While NEDA is optimistic that 2012 will be substantially better than 2011, it remains vigilant and continues to closely monitor external developments that continue to pose significant risk to the country’s growth. As many analysts expect, global economic recovery might stall in 2012 mainly due to the growing concerns over Europe. The International Monetary Fund projects the Euro area will suffer a mild recession due to lingering concerns on how to appropriately and quickly restore confidence in the economy in order to support growth while at the same time addressing fiscal imbalance and providing more liquidity and monetary accommodation. Similarly, the government is also watching closely developments in the U.S. economy, whether the recovery will gain momentum or will remain fragile. Likewise, the government recognizes the risk that China could slow down or even experience a hard landing.

Economy - overview:

Philippine GDP grew 7.6% in 2010, spurred by consumer dema nd, a rebound in exports and investments, and election-related spending, before cooling to 3.9% in 2011, and 4.8% in 2012. The economy weathered the 2008-09 global recession better than its regional peers due to minimal exposure to troubled international s ecurities, lower dependence on exports, relatively resilient domestic consumption, large remittances from four - to five-million overseas Filipino workers, and a growing business process outsourcing industry. Economic growth in the Philippines averaged 4.5% during the MACAPAGAL-ARROYO administration (January 2001 - June 2010). Despite this growth, however, poverty worsened during her presidency. The AQUINO administration is working to reduce the government deficit from 3.9% of GDP, when it took office, to 2% of GDP in 2013. The government has had little difficulty issuing debt, both locally and internationally, to finance the deficits. The AQUINO Administration reduced public debt to below 50% of GDP and obtained several ratings upgrades on sovereign debt so that the Philippines is now close to investment grade. However, the lack of government spending, especially on infrastructure, was one of several factors which slowed GDP growth in the second half of 2011, leading the government to announce a stimulus effo rt and increased public spending on infrastructure in 2012. AQUINO's first budget emphasized education, health, conditional cash transfers for the poor, and other social spending programs, relying mostly on the private sector to finance important infrastru cture projects. Weak tax collection, exacerbated by new tax breaks and incentives, has limited the government's ability to address major challenges. The AQUINO administration has vowed to focus on improving tax collection efficiency, rather than imposing n ew taxes, as a part of its good governance platform. The economy still faces several long -term challenges, including reliance on energy imports and foreign demand for overseas Filipino workers.

https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html#2116

GDP (purchasing power parity) :

$416.7 billion (2012 est.)

country comparison to the world: 33 $397.5 billion (2011 est.) $382.5 billion (2010 est.) note: data are in 2012 US dollars

GDP (official exchange rate) :

$240.7 billion (2012 est.)

GDP - real growth rate:

4.8% (2012 est.)

country comparison to the world: 64 3.9% (2011 est.) 7.6% (2010 est.)

GDP - per capita (PPP):

$4,300 (2012 est.)

country comparison to the world: 162 $4,100 (2011 est.) $4,100 (2010 est.) note: data are in 2012 US dollars

GDP - composition by sector:

agriculture: 12.4% industry: 31.3% services: 56.4% (2012 est.)

Labor force:

40.73 million (2012 est.)

country comparison to the world: 15

Labor force - by occupation:

agriculture: 33% industry: 15% services: 52% (2010 est.)

Unemployment rate:

6.9% (2012 est.)

country comparison to the world: 78 7% (2011 est.)


https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryName=Philippines&countryCode=rp&regionCode=eas&rank=33#rp












Population below poverty line:

26.5% (2009 est.)

Household income or consumption by percentage share :

lowest 10%: 2.6% highest 10%: 33.6% (2009 est.)

Distribution of family income - Gini index:

45.8 (2006)

country comparison to the world: 36 46.6 (2003)

Investment (gross fixed):

19.7% of GDP (2012 est.)


Budget:

revenues: $35.16 billion expenditures: $41.57 billion (2012 est.)

Taxes and other revenues:

14.6% of GDP (2012 est.)


Budget surplus (+) or deficit ( -):

-2.7% of GDP (2012 est.)


Public debt:

50.6% of GDP (2012 est.)

country comparison to the world: 61 50.9% of GDP (2011 est.) note: data cover central government debt, and includes debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intra-governmental debt; intra-governmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions

Inflation rate (consumer prices) :

3.4% (2012 est.)

country comparison to the world: 94 4.7% (2011 est.)
















Central bank discount rate:

3.8% (31 December 2010 est.)

country comparison to the world: 96 3.5% (31 December 2009 est.)

Commercial bank prime lending rate :

7.2% (31 December 2012 est.)

country comparison to the world: 135 6.66% (31 December 2011 est.)

Stock of narrow money:

$36.67 billion (31 December 2012 est.)

country comparison to the world: 55 $32.18 billion (31 December 2011 est.)

Stock of broad money:


country comparison to the world: 52 $126 billion (31 December 2010 est.)

Stock of domestic credit:



Market value of publicly traded shares :

$202.3 billion (31 December 2010)

country comparison to the world: 37 $130.5 billion (31 December 2009) $85.63 billion (31 December 2008)

Agriculture - products:

sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish

Industries:

electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing

Industrial production growth rate :

1.1% (2011 est.)


















Current account balance:

$12.15 billion (2012 est.)

country comparison to the world: 27 $7.078 billion (2011 est.)

Exports:

$52.17 billion (2012 est.)


Exports - commodities:

semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits

Exports - partners:

Japan 18.5%, US 14.8%, China 12.7%, Singapore 8.9%, Hong Kong 7.7%, South Korea 4.6% (2011)

Imports:

$63.42 billion (2012 est.)


Imports - commodities:

electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic

Imports - partners:

Japan 10.8%, US 10.8%, China 10.1%, Singapore 8.1%, South Korea 7.3%, Thailand 5.8%, Saudi Arabia 5.4%, Malaysia 4.4% (2011)

Reserves of foreign exchange and gold :



Debt - external:

















Sources:

CIA Factbook

Market Call, a newsletter published by the First Metro Investment Corp. and the University of Asia and

the Pacific Capital Markets Research.

Philippine British Council taken from www.philippinebritish.com

Stock of direct foreign investment - at home:



Stock of direct foreign investment - abroad:



Exchange rates:

Philippine pesos (PHP) per US dollar - 42.56 (2012 est.) 43.313 (2011 est.) 45.11 (2010 est.) 47.68 (2009) 44.439 (2008)






Philippine Economy Strong but More Jobs Needed - ADB Report (This article was taken from an Asian Development Bank Report last October 3, 2012)

Positive first half performance has bumped up gross domestic product (GDP) growth forecasts for the

Philippines from 4.8% to 5.5% in 2012, but the economy needs to create more job opportunities to link

economic growth to poverty reduction, the Asian Development Bank (ADB) said in its update of Asian

Development Outlook 2012.

“Increased business confidence bodes well for investment and future jobs,” said ADB Chief Economist

Changyong Rhee. “But the Philippines must guard against weaknesses outside its own economy that

could have a knock-on effect.”

The Philippines economy continues to show its strength despite global and regional economic

slowdown. Stronger than expected economic growth in the first half of 2012 was broadly based. Private

consumption was buoyant, fixed capital investment quickened, public spending rebounded, and net

exports contributed to growth. Inflation remains under control at 3.5% for 2012.

GDP growth for 2013 is forecast at 5.0%, unchanged from early projections. In 2013, inflation is forecast

at 4.1% on the back of higher global food prices, as well as pressures from sustained strength in

domestic demand. But softer demand from industrialized countries than forecast in the report could

undermine export and investment prospects for the Philippines.

The service sector is expected to continue to benefit from robust private consumption and investment.

The Business Process Outsourcing industry employed approximately 638,000 Filipinos in 2011 and this

number is expected to rise by at least 20% by year end.

Although the number of new jobs has grown by one million over the past year, this only slightly exceeds

overall growth in the labor force, and mainly reflects a rise in part time employment with 1.5 million

positions created. Full-time jobs fell by 500,000 in the same period.

“The key challenge is to link economic growth to poverty reduction. Despite solid economic growth, job

generation remains inadequate, reflected in rates of unemployment and underemployment. The

incidence of poverty remains high at 26.5% in 2009, compared to 26.4% in 2006 and 24.9% in 2003,”

said Neeraj Jain, ADB's Country Director for the Philippines.

http://www.adb.org/publications/asian-development-outlook-2012-update-services-asias-future-growth

http://www.adb.org/publications/asian-development-outlook-2012-update-services-asias-future-growth

Manufacturing will also benefit from a gradual recovery in exports and growth in domestic demand.

Construction, meanwhile, will benefit from public infrastructure spending and implementation of public-

private projects.

Population: A factor for economic growth

HSBC Global Research sees that the increasing population of the Philippines will be a major factor for economic growth until 2050. “By the end of the year, the UN [United Nations] projects that the Philippine population to reach 100 million. Currently, in our population we have 70 percent, that’s younger than 35 years old and this population will continue to extend,” Trinh Nguyen, HSBC economist for the Asia-Pacific Global Research told reporters. Nguyen also projected that by 2050, the Philippine population is expected to reach 160 million. “The population is expected to expand rapidly into 2050, allowing the working age population to reach almost 70 percent of the total population by that year,” she said. She added that, “the country is highly urbanized [48.8 percent] and the high underemployment rate and rapid population growth means that it could gain significantly from absorbing manufacturing jobs from China.” HSBC data shows that within the Association of Southeast Asian Nations, Indonesia has the best demographic profile. The population of the largest Muslim nation and fourth most populous country in the world is growing rapidly. It currently has 165 million working age people and by 2020 this will expand to 183 million. Meanwhile, HSBC’s main economic forecast for 2013 says that gross domestic product will reach 5.9 percent.

Session 2: Business Culture and Practices in the Philippines

Culture is defined as shared meaning interpreted in institutions in patterns that are best analyzed

through a complex adaptive systems framework (Redding, Bond, Witt 2012). Knowledge of culture is

important in the building of business relationships hence this session would look at culture and how it

becomes interweaved in our business traditions and protocol.

This session would focus on the differences in our cultures and on how we can manage and work

productively regardless of our differences.

Readings: What about the Philippines (Hofstede’s Dimension)

Filipino Culture and Business Management

Curse to the Filipino Culture

Filipino Culture in Evolution

Task 2: Business Opportunity Identification

This is a continuation of the 1st activity where students were asked to identify opportunities and threats.

This is a take-home exercise where each group would be asked to identify appropriate businesses for

any potential investors (given the existing culture in the country). Be ready to present your group

output the following session.

Key Question:

1. How has culture shaped the nature of businesses in the country? 2. What internal variables contribute to the strength of Filipino business and poses threat to

sustainability of Filipino businesses?

What about the Philippines?

(This article is taken from the website http://geert-hofstede.com on National Cultural Dimensions)

If we explore the Philippine culture through the lens of the 5-D Model, we can get a good overview of the deep drivers of the Philippine culture relative to other world cultures. Power distance This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. At a score of 94, The Philippines is a hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat Individualism The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘in groups’ that take care of them in exchange for loyalty. The Philippines, with a score of 32, is considered a collectivistic society. This is manifest in a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link), hiring and promotion decisions take account of the employee’s in-group, management is the management of groups. Masculinity / Femininity A high score (masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organizational behavior. A low score (feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A feminine society is one where quality of life is the sign of success and standing out

http://geert-hofstede.com/

from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (masculine) or liking what you do (feminine). The Philippines scores 64 on this dimension and is thus a masculine society. In masculine countries people “live in order to work”, managers are expected to be decisive and assertive, the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out. Uncertainty avoidance The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the UAI score. The Philippines scores 44 on this dimension and thus has a low preference for avoiding uncertainty. Low UAI societies maintain a more relaxed attitude in which practice counts more than principles and deviance from the norm is more easily tolerated. In societies exhibiting low UAI, people believe there should be no more rules than are necessary and if they are ambiguous or do not work they should be abandoned or changed. Schedules are flexible, hard work is undertaken when necessary but not for its own sake, precision and punctuality do not come naturally, innovation is not seen as threatening. Long term orientation The long term orientation dimension is closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view. The Philippines score 19, making it a short term orientation culture. Societies with a short-term orientation generally exhibit great respect for traditions, a relatively small propensity to save, strong social pressure to “keep up with the Joneses”, impatience for achieving quick results, and a strong concern with establishing the Truth i.e. normative. Western societies are typically found at the short-term end of this dimension, as are the countries of the Middle East.

Filipino Culture and Business Management

INTRODUCTION

The visitor to Metro Manila commonly sees the Philippines as the most westernized of Asian countries

and in many ways it is. But there is also a rich underlay of Malay culture beneath the patina of Spanish

and American heritage. National cultural life is a happy marriage of many influences, as the indigenous

Malay culture is assimilated and adapted to different strains in a practice typical of Malay temperament.

An upsurge of Philippine nationalism stimulated a desire to preserve the ancient heritage without

restricting its openness to foreign artistic influence.

The Philippines is an archipelago of 7,107 islands. It stretches from the south of China to the northern tip

of Borneo. The country has over a hundred ethnic groups and a mixture of foreign influences which have

molded a unique Filipino culture.

Before the Spanish explorers came, Indo-Malays and Chinese merchants had settled here. In 1521 the

Spaniards, led by Ferdinand Magellan, discovered the islands. The Spanish conquistadores established a

colonial government in Cebu in 1565. They transferred the seat of government to Manila in 1571 and

proceeded to colonize the country. The Filipinos resisted and waged Asia's first nationalist revolution in

1896. On June 12, 1898, Emilio Aguinaldo declared the Philippines independent from Spain and

proclaimed himself president. After ruling for 333 years, the Spaniards finally left in 1898 and were

replaced by the Americans who stayed for 48 years. On July 4, 1946, the Americans recognized

Philippine independence.

The Philippines is the third largest English-speaking country in the world. The country is divided into

three geographical areas: Luzon, Visayas, and Mindanao. It has 17 regions, 79 provinces, 117 cities,

1,501 municipalities , and 41,982 barangays. (Barangay - The smallest political unit into which cities and

municipalities in the Philippines are divided. It is the basic unit of the Philippine political system. It

consists of less than 1,000 inhabitants residing within the territorial limit of a city or municipality and

administered by a set of elective officials, headed by a barangay chairman or punong barangay)

Philippine Culture

The culture of the Philippines reflects the complexity of the history of the Philippines through the

blending of cultures of diverse indigenous civilizations with characteristics introduced via foreign

influences.

The Philippines is a mixed society. The nation is divided between Christians, Muslims, and other religio-

ethno-linguistic groups; between urban and rural people; between upland and lowland people; and

between the rich and the poor. Although different in many ways, Filipinos in general are very hospitable

and will give appropriate respect to anyone regardless of race, culture, or belief.

These traits are generally positive but these practices also have the tendency to be applied in the wrong

context. Close familial ties can foster nepotism.

Pakikisama

Pakikisama is a non confrontational way of doing life, business, and interpersonal group relationships. In

the Philippines, pakikisama is the ability of a person to get along with others to maintain good and

harmonious relationships. It implies camaraderie and togetherness in a group and the cause of one’s

being socially accepted. Pakikisama requires someone yielding to group opinion, pressuring him to do

what he can for the advancement of his group, sacrificing individual welfare for the general welfare.

Consensus takes precedent over individual needs or opinion.

Pakikisama has many manifestations in Philippine society, one of which is extending support or offering

help to neighbors who are in need. This comes from the still relevant necessity to bind together to

survive as a group. When food is scarce and rice is expensive, all eat, for the good of the group.

Pakikisama reflects the bayanihan spirit, which involves cooperation among fellow men to come up with

a certain idea or accomplish a certain task. While bayanihan refers to a community-support action,

pakikisama has a more individualized sense. Nonetheless, feuds, vendettas, and violence are not

unknown in Philippine society.

Utang na loob

A debt of gratitude (utang na loob) is sometimes repaid by giving special favors to the other person

regardless of the moral outcome.

Philippine personal alliance systems are anchored by kinship, beginning with the nuclear family. A

Filipino's loyalty goes first to the immediate family and personal identity is deeply embedded in the

matrix of kinship. It is normal that one owes support, loyalty, and trust to one's close kin and, because

kinship is structured bilaterally among relatives, one's kin can include quite a large number of people.

With respect to kin beyond this nuclear family, closeness in relationship depends very much on physical

proximity.

Family

It should be emphasized that close familial ties are upheld to the highest extent. The primary social

welfare system for the Filipino is the family. Many Filipinos live near their family for most of their lives,

even as independent adults. A nuclear family is very common among Filipinos. Divorce does not exist in

the Philippines. President Gloria Macapagal-Arroyo has stated that divorce is "un-Filipino, immoral,

unconstitutional and a danger to the Filipino family.” Others point out that in the past ancestral tribes

did practice divorce and that the "reign of the Pope via the Spanish crown" is the source of current law.

Courtship among the Filipino people is heavily influenced by Spanish and Roman Catholic traditions.

Many parents disapprove of girls visiting boys' homes. Usually, the boy comes to the girl's house to

formally introduce himself to her parents and family. The Filipino must win the Filipina's parents'

approval. At home, painful corporal punishment is almost always practiced among the Filipino family as

children are often hit as a form of discipline. Filipinos use their belts, hands and canes to hit their

children.

Community

The creation of alliances with neighbors and a helping attitude whenever one is in dire need is what

Filipinos call bayanihan. This bayanihan spirit can be seen in action when a bus gets a flat tire.

Bystanding or surrounding Filipinos will assist the bus driver in whatever is needed to get the bus back

on its way. This can be contrasted with the individualistic attitude more prevalent in some other

societies.

Filipinos get around by riding in jeepneys, buses, and cars. In urban areas, there are trains such as the

LRT and MRT as well as boats, taxis, and ferries. In rural areas, carabaos are often used for transport.

Bus transportation is used to get from one major city to another. Taxis or tricycles are used to get from

place to place within a city. The driving style in the country follows that one honks the horn to warn of

an oncoming vehicle.

Religion and Superstition

Before the arrival of the Spaniards and the introduction of Roman Catholicism in the 1500's, the

indigenous inhabitants of the Philippines were adherents of a mixture of animism, Hinduism, and

Vajrayana Buddhism. Bathala was the supreme God of the Filipinos, represented by the langit, or sky,

but not all Filipinos believed in it. The Ninuno, or the ancient ancestors, were the people who taught

Filipinos/Tagalogs who will be in the future; they believed in the supreme God. For the Bikolanos, the

supreme God was Gugurang. Other Filipino gods and goddesses include araw (sun), buwan (the moon),

tala (the stars), and natural objects (such as trees, shrubs, mountains, or rocks). However, they were not

the Western kinds of gods and goddesses; they were representations for some Filipinos/Tagalogs; or

they were representations as gifts. As the Abrahamic religions began to sweep the islands, most Filipinos

became Christians, consequently believing in only one God. Other Filipinos became Muslims, especially

in the southern islands of the country such as Mindanao. Spirits such as the aswang (ghoul), the

tikbalang (a creature with the head of a horse and the physique of a man), the kapre (a giant that is seen

smoking tobacco), the tiyanak (monster-like, vampire-esque child), the santelmo (fireball), duwende

(dwarves and elves), the manananggal (witches that can split their bodies at their torsos and feed on

baby's blood), engkanto (minor spirits), and diwata (fairies/nymphs), are believed to pervade the

Philippines. Aside from that, voodoo practices (such as pangkukulam) and witchcraft were practiced by

pre-colonial inhabitants. Beliefs such as usog (a child greeted by a stranger will get sick) and lihi (unusual

craving for something during pregnancy) are also present. These beliefs have been carried up to the

present generation of Filipinos, which has led some foreign authors to (incorrectly) describe them as

'Pagano-Christians.'

Wealth and beauty

The belief that "white is beautiful" is held by many Filipino women, leading them to stay out of the sun

to keep their skin from getting dark. Even at a young age, children are taught and practice this belief.

Furthermore, many of these women use bleaching or whitening skin products to keep their skin white,

and also use anti pimple or anti blackhead products. This bias towards favoring white skin came from

the influential occupations of the Spanish and the Americans, and continues among many Filipinos to

this day. Fatness may also be associated with wealth, while being too skinny may be seen as a sign of

poverty.

In formal gatherings, men wear the Barong Tagalog, a translucent pearl white shirt, usually made of piña

(pineapple) fibers or jusi [hoo-si] (banana) fibers. But in informal settings, such as at home or at picnics,

Filipinos either go barefoot or wear slippers due to the humid tropical climate.

Communication

Some urban and rural Filipinos often call for attention by saying "hoy!" (meaning: Hey!, in the Tagalog

language) or use a rising hiss like a snake by saying "psst."

To greet a friend, or express "what's up," one usually whips his head upward for acknowledgment.

The use of lips to point is widely practiced. Instead of using their pointer fingers, Filipinos may point with

their lips extended out to indicate the position of an object.

Telecommunications and e-mail are popular as well as the usage of cell phones. Many Filipinos, even

those who live in poverty, own mobile phones. Sending SMS messages is a common way of

communication, as it is cheaper than making a call. The Philippines is considered to be the Txt capital of

the world sending millions of SMS messages a day. Sources:

Curse to the Filipino culture

Written by Archbishop Oscar V.Cruz Thursday, 21 February 2013

The Philippines is a pluralist society with diverse cultural heritages with various cultural emphasis. This reality is readily and particularly verified by the many Philippine languages spoken in the country — without denying the reality of a national language being formally taught in schools although people still prefer to speak their own native language. There is, however, the phenomenon of a generic Philippine culture with a common structuring of social and ethnic values. This truth is distinctly based on the fact that the country remains one Republic, despite its many islands accommodating people of different customs and traditions plus different spoken languages as above said. The most common social and basic ethnic trait of the Filipinos nevertheless remains one and the same: Their family concerns and pursuant perspectives such as family bonding together with family care and affection. The fact is that this distinct domestic orientation is one of the first Filipino features that foreigners in particular readily notice and marvel at. It is not a secret that the Philippines has long been an exploited nation by the so-called “First World Countries.” This is especially why, notwithstanding all claims and declamations to the contrary, a great number of Filipinos are still poor and wanting. This is precisely why millions of Filipinos continue to seek work abroad despite the many hardships they live with, plus the big dangers they face. Among other explanatory factors behind it, even the overseas Filipino workers phenomenon finds its rationale in the Filipino culture in favor of the family, viz., its financial support and security. Considering the basic family orientation of the Filipino culture together with its conjugal and parental dimensions, there is ample reason and cause for the people of the Philippines to worry about the anti-family desire and design of the present administration. There is now a curse in the making against the Filipino culture in terms of its family orientation. For the record, since the Philippines became a Republic, the said administration has the lamentable distinction of gradually and purposely destroying such a precious Filipino cultural family feature. Under not only the influence but also the mandate of the Chief Executive, the administration has already succeeded in passing the blatantly anti-family legislation of population control. This is not all. The same Chief-in-Command has another anti-family legislation at heart: Divorce. That is not all. Exactly the same Chief Commander has another counter-family legislation in mind: Same sex marriage. Pray tell with sincerity and candor: Are such blessings or curses to the Filipino culture?

http://www.tribune.net.ph/commentary/itemlist/user/82-archbishoposcarvcruz.html

Filipino Culture in Evolution

Learn about the Filipino culture for easy adaptation and pleasurable stay in the country.

Literacy Affects Culture Evolution

Filipinos’ high literacy rate is a major factor in the evolution of our Filipino culture and values. Adult literacy rate of 95% is the highest among Asian nations. Those of us with high level of education evaluate, keep and pass on to our children relevant culture and traditions which now form part of our families’ prevailing values. All families do not uphold identical values. However, those who are in the rural areas and those who have not been to school are preserving several old Filipino lifestyles and traditions for fear of ill fortune.

Mergers of Other Culture

Present Filipino values are mergers of ancient Filipino, Malay, Spanish, American, Japanese and Chinese traditions. These people came to the Philippines and influenced our culture including Filipino clothing.

Our ancient forefathers believe in potions, herbal treatments, body massage or “hilot” and amulets among others. Some of these herbal medications, however, are still used today because of their proven powers.

Roman Catholicism is the major religion in the country. Around 85% of the population embraces this religion. This is a Spanish contribution to our culture. Catholics also support fiesta celebration in honor of the town’s patron saint. Many Filipinos still celebrate fiestas today. This is especially true in Bohol Province which holds fiesta for the whole month of May, one day fiesta for one town.

American culture shared suffrage, English language, the Bible, Protestantism including the Baptist group, movies and other western culture. Children learn English in school. School textbooks use English language. It is no wonder that Filipinos are the most conversant in English among Asian nations. American foods which have generated top ranking food chain in the country are French fries and hamburgers.

American Food Influence. Photo Courtesy of McDonald's.

http://www.filipino-heritage.com/filipino-lifestyle.html

http://www.filipino-heritage.com/filipino-lifestyle.html

http://www.filipino-heritage.com/filipino-clothing.html

http://www.facebook.com/photo.php?fbid=10150930589967014&set=a.10150930589112014.398646.50245567013&type=3&theater

The evident influences of Chinese in our Filipino culture are the presence of variety stores, use of martial arts and eating noodles.

Prevailing Filipino Culture

We will be citing examples of prevailing Filipino values which can be good and bad, if abused. One value may be applicable to one family and may not be to another.

Filipinos are known to be super hospitable persons. We try to please visitors and offer them the best we can even at our discomfort.

Filipinos have deep sense of loyalty to our families. This could have been due to strong family bonding facing circumstances through thick or thin.

We hold a deep sense of gratitude or “utang na loob” to benefactors. This sense of gratitude is passed on to our children.

We esteem persons who are highly educated and those with talents. We get sick when we expose ourselves to extreme heat then immediately to extreme cold. Children can stay with their parents even after 18 years old. It is the duty of the children to support their old parents until their demise. The practice of “Filipino Time” which means going to an appointment late. The high esteem for word of honor or “palabra de honor”. The Filipino wedding tradition of the fiancé together with his parents going to fiancée’s home

to seek approval and to discuss about marriage.

Source: Downloaded from filipinoheritage.com

http://www.filipino-heritage.com/filipino-wedding-traditions.html

Session 3: Business Systems in the Philippines

This session would look at the different businesses operating in the country and would present the cost

of doing business – across sectors.

Further, this session would look at the essential nature, origin, characteristics and management of a

typical Filipino business. How has their strategy evolved given globalization and changes in its external

and internal environment?

Readings: Scenario Planning

Doing Business in the Philippines

Task3: Scenario Planning

In this particular activity, the students would be asked to explore the implications of the O/T and trends

they have identified by projecting them forward and generating a range of scenarios for the future. As

part of the scenario planning process, students are requested to study the historical development in the

country and to plot progress/changes made. If you are to invest in the country, what factors can be

forecasted (although you cannot influence it) and what can neither be forecasted nor influenced.

Prepare a 2-page scenario about possible futures for the country and which any investor has to carefully

consider. Again, be ready for class discussion on the scenario created.

Question:

1. Is there a need for a new business paradigm in the Philippines 2. What has been the impact of globalization on Filipino businesses?

Scenario Planning

Traditional forecasting techniques often fail to predict significant changes in the firm's external environment, especially when the change is rapid and turbulent or when information is limited. Consequently, important opportunities and serious threats may be overlooked and the very survival of the firm may be at stake. Scenario planning is a tool specifically designed to deal with major, uncertain shifts in the firm's environment.

Scenario planning has its roots in military strategy studies. Herman Kahn was an early founder of scenario-based planning in his work related to the possible scenarios associated with thermonuclear war ("thinking the unthinkable"). Scenario planning was transformed into a business tool in the late 1960's and early 1970's, most notably by Pierre Wack who developed the scenario planning system used by Royal Dutch/Shell. As a result of these efforts, Shell was prepared to deal with the oil shock that occurred in late 1973 and greatly improved its competitive position in the industry during the oil crisis and the oil glut that followed.

Scenario planning is not about predicting the future. Rather, it attempts to describe what is possible. The result of a scenario analysis is a group of distinct futures, all of which are plausible. The challenge then is how to deal with each of the possible scenarios.

Scenario planning often takes place in a workshop setting of high level executives, technical experts, and industry leaders. The idea is to bring together a wide range of perspectives in order to consider scenarios other than the widely accepted forecasts. The scenario development process should include interviews with managers who later will formulate and implement strategies based on the scenario analysis - without their input the scenarios may leave out important details and not lead to action if they do not address issues important to those who will implement the strategy.

Some of the benefits of scenario planning include:

Managers are forced to break out of their standard world view, exposing blind spots that might otherwise be overlooked in the generally accepted forecast.

Decision-makers are better able to recognize a scenario in its early stages, should it actually be the one that unfolds.

Managers are better able to understand the source of disagreements that often occur when they are envisioning different scenarios without realizing it.

The Scenario Planning Process

The following outlines the sequence of actions that may constitute the process of scenario planning.

1. Specify the scope of the planning and its time frame. 2. For the present situation, develop a clear understanding that will serve as the common

departure point for each of the scenarios. 3. Identify predetermined elements that are virtually certain to occur and that will be driving

forces.

4. Identify the critical uncertainties in the environmental variables. If the scope of the analysis is wide, these may be in the macro-environment, for example, political, economic, social, and technological factors (as in PEST).

5. Identify the more important drivers. One technique for doing so is as follows. Assign each environmental variable two numerical ratings: one rating for its range of variation and another for the strength of its impact on the firm. Multiply these ratings together to arrive at a number that specifies the significance of each environmental factor. For example, consider the extreme case in which a variable had a very large range such that it might be rated a 10 on a scale of 1 to 10 for variation, but in which the variable had very little impact on the firm so that the strength of impact rating would be a 1. Multiplying the two together would yield 10 out of a possible 100, revealing that the variable is not highly critical. After performing this calculation for all of the variables, identify the two having the highest significance.

6. Consider a few possible values for each variable, ranging between extremes while avoiding highly improbable values.

7. To analyze the interaction between the variables, develop a matrix of scenarios using the two most important variables and their possible values. Each cell in the matrix then represents a single scenario. For easy reference in later discussion it is worthwhile to give each scenario a descriptive name. If there are more than two critical factors, a multidimensional matrix can be created to handle them but would be difficult to visualize beyond 2 or 3 dimensions. Alternatively, factors can be taken in pairs to generate several two-dimensional matrices. A scenario matrix might look something like this:

Scenario Matrix

VARIABLE 1

Outcome 1A | V

Outcome 1B | V

V A R I A B L E

2

Outcome 2A -->

Scenario 1 Scenario 2

Outcome 2B -->

Scenario 3 Scenario 4

One of these scenarios most likely will reflect the mainstream views of the future. The other scenarios will shed light on what else is possible.

8. At this point there is not any detail associated with these "first-generation" scenarios. They are simply high level descriptions of a combination of important environmental variables. Specifics can be generated by writing a story to develop each scenario starting from the present. The story should be internally consistent for the selected scenario so that it describes that particular future as realistically as possible. Experts in specific fields may be called upon to devlop each story, possibly with the use of computer simulation models. Game theory may be used to gain an understanding of how each actor pursuing its own self interest might respond in the scenario. The goal of the stories is to transform the analysis from a simple matrix of the obvious range of environmental factors into decision scenarios useful for strategic planning.

9. Quantify the impact of each scenario on the firm, and formulate appropriate strategies.

An additional step might be to assign a probability to each scenario. Opinions differ on whether one should attempt to assign probabilities when there may be little basis for determining them.

Business unit managers may not take scenarios seriously if they deviate too much from their preconceived view of the world. Many will prefer to rely on forecasts and their judgment, even if they realize that they may miss important changes in the firm's environment. To overcome this reluctance to broaden their thinking, it is useful to create "phantom" scenarios that show the adverse results if the firm was to base its decisions on the mainstream view while the reality turned out to be one of the other scenarios.

Recommended Reading

Wack, Pierre. "Scenarios: Uncharted Waters Ahead." Harvard Business Review 63, no. 5 (1985)

Session 4: Philippine Investment Climate under the P-Noy Administration

This section looks at the enabling policies and the political and government impact on businesses.

Discussion would include the registration process for new businesses, land ownership, structure

requirements.

Readings: Cost of Doing Business in the Philippines


Where did Growth Go?

Question:

1. What are the challenges of doing business in the Philippines? 2. What is distinctive about Filipino business strategy, management systems and corporate

culture?

WHERE DID GROWTH GO? Philippines' elite swallow country's new wealth - economists

By: Cecil Morella, Agence France-Presse March 3, 2013 12:54 PM This article is downloaded from InterAksyon.com and is the online news portal of TV5

MANILA - Optimism is soaring that the Philippines is finally becoming an Asian tiger economy, but critics caution a tiny elite that has long dominated is amassing most of the new wealth while the poor miss out.

President Benigno Aquino has overseen some of the highest growth rates in the region since he took office in 2010, while the stock market has hovered in record territory, credit ratings have improved and debt ratios have dropped.

"The Philippines is no longer the sick man of East Asia, but the rising tiger," World Bank country director Motoo Konishi told a forum attended by many of Aquino's economic planning chiefs recently.

However economists say that, despite genuine efforts from Aquino's team to create inclusive growth, little progress has been made in changing a structure that for decades has allowed one of Asia's worst rich-poor divides to develop.

"I think it's obvious to everyone that something is structurally wrong. The oligarchy has too much control of the country's resources," Cielito Habito, a respected former economic planning minister, told AFP.

He presented data to the same economic forum at which Konishi spoke, showing that in 2011 the 40 richest families on the Forbes wealth list accounted for 76 percent of the country's gross domestic product (GDP) growth.

This was the highest in Asia, compared with Thailand where the top 40 accounted for 33.7 percent of wealth growth, 5.6 percent for Malaysia, and just 2.8 percent for Japan, according to Habito.

According to the Forbes 2012 annual rich list, the two wealthiest people in the Philippines, ethnic Chinese magnates Henry Sy and Lucio Tan, were worth a combined $13.6 billion.

This equated to six percent of the entire Philippine economy.

In contrast, about 25 million people, or one quarter of the population, lived on $1 a day or less in 2009, which was little changed from a decade earlier, according to the government's most recent data.

Some of the elite families have dominated since the Spanish colonial era that ended in the late 1800s.

Prominent Spanish names, such as Ayala and Aboitiz, continue to control large chunks of the economy and members of the families are consistent high placers on Forbes' annual top-40 wealth list.

http://www.interaksyon.com/

Their business interests range from utilities to property development to banking, telecommunications, and the booming business process outsourcing industry.

Many of the ethnic Chinese tycoons, such as Sy and Tan, got their start soon after the country gained post-World War II independence from the United States.

The tendency for the same names to dominate major industries can be partly attributed to government regulations that continue to allow near monopolies and protections for key players.

For decades after independence from the United States in 1946, important sectors such as air transport and telecommunications were under monopoly control, according to a Philippine Institute for Development Studies paper.

Despite wide-ranging reforms since 1981, big chunks of the market remain effective oligopolies or cartels, it said.

Habito said the path to riches for the few is also helped by a political culture that allows personal connections to easily open doors.

The Aquino government's mantra since succeeding graft-tainted Gloria Arroyo's administration has been good governance and inclusive growth, and their efforts have been applauded by the international community.

The government is spending more than $1 billion this year on one of its signature programs to bridge the rich-poor divide.

The conditional cash transfers program will see 15 million of the nation's poorest people receive money directly in exchange for going to school and getting proper health care.

However Louie Montemar, a political science professor at Manila's De La Salle University, said little had been done at the top end to impact on the dominance of the elite.

"There's some sense to the argument that we've never had a real democracy because only a few have controlled economic power," Montemar told AFP.

"The country dances to the tune of the tiny elite."

Nevertheless, the government and economists say there are many other reforms that can be taken to bring about inclusive growth.

Analysts said the most direct path out of poverty was improving worker skills, using higher tax revenues to boost spending on infrastructure, and rebuilding the country's manufacturing sector.

To this end, many economists endorse the Aquino government's cash transfer program as well as reforms to the education system, which include extending the primary and high school system from 10 to 13 years.

But for people such as mother-of-five Remy del Rosario, who earns about 1,500 pesos ($36) a week selling cigarettes on a Manila roadside, talk of structural reform and inclusive growth mean little.

With her bus driver husband out of work, the family has no savings and her income is barely enough to cover food, bus fare, and prescription medicines.

"Other people may be better off now, but we see no improvement in our lives," she said.

Cost of Doing Business in the Philippines

Note: Please insert material for Cost of Doing Business in the

Philippines, a publication of the Bureau of Investment


Note: Please insert material for Doing Business in the Philippines, a

publication of BDO

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