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About three months ago, I somehow described the problems in the United States similar to the perfect storm, wherein a sub-prime crisis affected the willingness of banks to lend, with a weaker property market and stock market while consumer spending started to weaken. At that time, oil price was gradually increasing, causing a higher inflation level.
About three days ago, we saw oil price hit a new high of $146, and there is a greater possibility of oil hitting $180 to $200. Frankly, oil price can rise to these levels if war breaks out between Iran, Israel and America. For the world’s sake, let us pray that this does not happen, because America cannot afford a war and the world could also plunge into great depression. I was not even born then when that happened in the 1930s. This is where the power of prayer needs to come to work.
Sometimes, it is very hard to predict the future with our complex financial markets. These complex markets are made by financial geniuses creating derivatives, which allow people to place larger bets by using leverage. This has caused the world to be in a mess. To those who have watched the movie “Perfect Storm”, America could be headed towards the same chaotic scenario.
What can the Philippines do to prepare or protect ourselves from the possibility of suffering from the whiplash of the perfect storm? What can ordinary people do to at least minimize the impact of these uncertainties? Well, in simple terms, people can consider living close to their school or place of work. This is big advantage since less gasoline is used. I have a friend who lives in Alabang. He told me that he bought a 1.3-liter car, because the cost of gasoline is so high that it is already close to his amortization.
While the catholic bishops have called for the review of the VAT in light of the higher prices of oil and food, perhaps government, in case it does not revise the VAT provisions, can instead use part of the VAT revenues to subsidize those at the minimum wage levels, or have direct food and health program interventions to help the poorest of the poor communities.
Any assistance to help the micro and small entrepreneurs will mean a lot in the creation of livelihood and income opportunities at the bottom of the pyramid. Any tax reprieve or support to microfinance institutions is badly needed in these trying times. We were told that Congresswoman Vinzons-Chato (former BIR Commissioner) is about to file a proposed bill exempting the Microfinance NGOs from taxes, at least for the next five years, and ultimately tax the operations like a GRT. The five-year moratorium was patterned after what was given to the Rural and Thrift Banks, as well as to the cooperatives with the application of GRT. This should help a lot in encouraging more lending for microentrepreneurs, which could lead to greater multiplier effects in income and employment opportunities nationwide, even during these hard times.
To me, it is food that will have the greater impact, since we all have to eat. Because of oil price to some extent, the prices of commodities all over the world including food have gone up – wheat, corn, rice, soybean, milk, etc. However, the prices of commodities have cycles and I believe that we are close to the high end of the cycle. If the oil price bubble does burst, we will see commodity prices going down. The question is when. Hopefully, before the end of the year or by next year, prices should start going down. Hopefully, we also see a stronger US dollar, which is the culprit of high oil and commodity prices as people use this as an excuse to speculate on higher prices.
All these show us that the government and private sectors should work towards a food self-sufficiency program. I am glad to see that the SMC and Kuok groups have started working on large tract of lands to plant crops that will hopefully lead us to self sufficiency. Import liberalization has its price to pay and this has to be balanced with respect to critical food commodities. We cannot discourage people to invest in the business or farm land planting rice or corn. How to achieve that balance is quite tricky. We need the brightest minds to figure out how to develop an industry without overprotecting it and without resulting in becoming uncompetitive. Sec. Arthur Yap is a good friend and this is a big challenge for him and I know he can make a difference.
Should the government increase interest rates at this point? I would not push for higher rates. Current inflation is not caused by strong demand-pull, but rather by cost-push. This is caused by uncontrollable prices of basic inputs and commodities. These are beyond our control as these are dictated by world prices, and (we can also say) by speculators who play it in the financial market.
What we need is to continue supporting the engines of growth, by having the right Negosyo climate. I believe the USA will neither increase nor lower their rates this year, as they are more concerned about growth than inflation. This should also be our position.
We need to push for growth. Entrepreneurs need all the support at this time. Providing reprieves or lower taxes for microfinance lenders and micro entrepreneurs will be a big boost in keeping a healthy level of economic activities and opportunities at the bottom of our economy. We should also encourage the banks to continue lending more aggressively. Keeping rates low will encourage this. I am not an economist but an avid viewer of Bloomberg, CNBC, etc., especially at times like this. We need to recognize that a perfect storm exist out there and we must be able to frequently monitor the direction it is taking and manage that well. I am sure Sec. Teves and Gov. Tetangco will do their best
to create the right Negosyo climate.
From the success of our last two Teen Negosyo events, we are heading back to the City of Pines to share to the youth the good news of finding solutions to poverty through Negosyo. This event serves as a training ground for students and educators, aimed to prepare the youth to take an active and responsible roles in entrepreneurial endeavors.
Together with the Department of Education — Center for Students and Co-Curricular Affairs, Department of Trade and Industry — Philippine Trade Training Center, The Master’s Lighthouse Foundation and Entrepreneurs School of Asia, the Third YECS Entrepreneurship Training and Conference dubbed as the Teen Negosyo will be awarding the 2008 Go Negosyo-Dep Ed Most Inspiring Student Entrepreneurs and Entrepreneurship Educators. This award will
recognize the best high school student entrepreneurs and entrepreneurship educators who have successfully implemented the YECS programs at the secondary level.
Go Negosyo will also be awarding Most Inspiring CAR Micro Entrepreneurs. We will be recognizing Cordillera’s micro-entreps who gave positive contributions to their community and inspired others with their negosyo stories. They are the micro entrepreneurs who rose from the challenges of life, serving as role models in their own businesses.
This Teen Negosyo event is only one among the many, which we aim at creating a nationwide entrepreneurial revolution by promoting an optimistic and entrepreneurial mindset among Filipinos.
With the theme “Young Entrepreneurs Taking Charge”, the third edition of Teen Negosyo will be on July 26 to 30, 2008 at the Teachers Camp, Baguio City. Activities during the event include plenary sessions, interactive break-out sessions, contests, and entrepreneurial showcases. High school students and educators are invited to join.
Thomas Fernandez, Singaporean entrepreneur and author of “Secrets to Dominate Your Niche”, is in town to meet and greet avid readers and supporters of his book. His latest title is a big success in Singapore that had entrepreneurs and book aficionados lining up in bookstores. His book offers incisive and fresh approaches to making it to Number One. Blended with the right business attitude and entrepreneurial mindset, it could help any aspiring negosyante to clinch that big time moment.
Thomas shares a common cause with Go Negosyo. In fact, he is credited for championing the same cause in Singapore. He was given the Entrepreneur of the Year (2001) and the Sprit of Enterprise (2004) awards for his efforts and contribution to promoting a culture of entrepreneurship. Also, his writings caught the attention of international business leaders and industry players. “Secrets To
Dominate Your Niche” has been consistently on the Sunday Times Bestsellers List alongside other popular titles and is enjoying a tremendous success in bookstores.
We are inviting everyone to join us in the book launch of “Secrets To Dominate Your Niche” today at 6:00 pm in Fully Booked in Bonifacio High Street.
For feedback, email me at firstname.lastname@example.org or thru SMS at 09175591245. For free business advice, visit www.gonegosyo.net. Watch the Go Negosyo Bigtime Show in its new home, QTV, every Saturday and Sunday 8-8:30 a.m., with replays in NBN every Sunday 9:15 to 10 p.m.]