PH not fully using inclusive firms for growth

The government is barely making use of Inclusive Business (IB) companies to promote poverty reduction and social services delivery to the poor, according to the findings of a recent Asian

Development Bank (ADB) study, which was discussed during the First Inclusive Business Forum on Monday.

The study entitled “Inclusive Business Market Scoping Study” assessed about 70 IB firms and 14 funds, as well as macroeconomic environment for IB in the Philippines.

The study explained that IB is a type of private sector investment that targets the low-income market. It contributes to poverty reduction by including poor people in the chain of activities that the company carries out in order to deliver a product or service, while retaining a profit-making motive.

“Inclusive Businesses may engage poor people by directly employing them, developing suppliers and service providers from low-income communities, and offering affordable basic goods and services, such as health care, education, clean water and nutritional food. An Inclusive Business need not sacrifice high financial rates of return while providing positive social benefits to low-income markets,” it added.

The study found that fewer than 100 non-government organizations, social enterprises and corporate social responsibility (CSR) programs active in the Philippines, can be classified as IB, and only a very small number would be ready for investment on commercial terms.

It also stated that the agroprocessing, finance, insurance and information technology sectors are examples of Inclusive Business ventures in the country, however, there are also some examples in the energy, education, health and transport and logistics sectors.

“Most of the viable companies are larger companies that need support to make their business case more inclusive and present it as part of their core business,” the study said.

Furthermore, the study showed that while the Philippines’ capital market is relatively liquid, investment in IB remains minimal.

Given the small size of such potential funding facility for the Philippines, the study recommended to enlarge the proposed Mekong Fund to a Southeast Asia IB Fund to also integrate the Philippines.

The study also suggested that IB opportunities must be supported through technical assistance focusing on business development and impact assessment.

It further recommended that selected family businesses in the Philippines need to engage into a discussion to upscale their CSR work toward IB, adding that if a subregional fund covering some Association of Southeast Asian Nations were created, it should integrate the Philippines.

Govt, business position
Meanwhile, in a speech at the ADB forum, National Economic and Development Authority Director General Arsenio Balisacan discussed how Inclusive Business can promote inclusive growth agenda of the Philippines.

Balisacan said that he is confident in Inclusive Business in the country, because the government prepared to do such as providing market information on the poor; streamlining business procedures and processes; implementing programs to upgrade knowledge and skills; improve peace and security conditions; and conducting policy dialogue with businesses, basic sectors and local governments.

However, the NEDA chief said that there are still constraints in promoting IB in the country, such as inadequate infrastructure, the high cost of doing business and other regulatory challenges.

“The government is aware of the cost of doing business in the country, and we are discussing these constraints to expand opportunities for new businesses,” he added.

Balisacan revealed that the infrastructure bottleneck in the country is so huge resulting to lack of investments, which leads to the erosion of the country’s competitiveness.

Reacting to discussions in the ADB forum, Ayala Corp. Chairman Jaime Zobel de Ayala said that Inclusive Business is a partnership between the private sector and the government.

“The private sector has to change its paradigm, but it will not happen if the government wouldn’t set the right framework in promoting Inclusive Business,” he said.

Ayala also remarked that the government has a vital role, especially in creating infrastructure that would allow people in moving in and out. However, the government must also allow the private sector to do its part.

Refer http://www.manilatimes.net/index.php/business/top-business-news/36121-ph-not-fully-using-inclusive-firms-for-growth

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PH not fully using inclusive firms for growth


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