Philippine Country Report (10th FAGAT)

By: Mr. Benito J. Brizuela
President, Philippine Printing Technical Foundation

I would like to welcome all participants to this forum and extend my heartfelt gratitude to all of you for attending this memorable event. The Philippine Printing Technical Foundation, Inc. (PPTF) is greatly honored to host the 10th Forum on Asian-Pacific Graphic Arts Technology (FAGAT). New and scientific revolution represented by information technology is developing fast, globalization is progressing at an accelerated speed and the age of the knowledge economy has arrived. For the global printing and graphic arts industry, this is indeed a rare opportunity to gather together giants of the printing industry and we are challenged to do our best.

The holding of the 10th FAGAT in the Philippines bears, therefore, a significant impact on the development of the industry in our Region as well as in other parts of world where our counterparts live and do business.

Last year, during the 9th FAGAT held in China, I presented a brief situationer on the Philippine Printing and graphic arts industry. At that time, my report stated an estimated 5,0000 printing companies in the Philippines, of which are small –scale firms with assets of P500,000 (US$10,000) or less.

Thirty-five percent (35%) are medium scale with assets between P500,000.00 to P5 Million. The total size of the industry is US$100 Million.

  Since these data were gathered in 2007 and we had to wait till the year is over to get the complete 2008 profile., it is safe to assume that the aforementioned figures can either increase or decrease from five to ten percent (5-10%)based on two factors: First, it could decrease because some, especially the micro and small business, have folded or closed down due to the effects of the global economic crisis brought about by the current roller coaster hikes in oil price, high food prices and looming economic recession in the US and other markets.

Please note that the year 2007 was a banner year for the country as the economy performed well, posting unprecedented growth and achieving a stronger fiscal and external position. According to President Gloria Macapagal Arroyo’s State of the Nation Address (SONA) last July 28, 2008, the Gross Domestic Product (GDP) in 2007 grew by 7.2%, the highest since the 8.8% in 1976. With the net Factor Income from Abroad (NFIA) expanding by 16.5%, the Gross National Product (GNP) grew by 8.0%, stronger that the 6.1% in 2006. In the first quarter of 2008, although GDP growth slowed down to 5.2% compared to the 7% GDP growth during the same quarter in 2007, we still consider this significant, noting the global increase in inflation and the economic slowdown in the Philippines’ major export markets. Meanwhile the robust gains of 30.3% in NFIA pushed GNP to grow by 7.3% in the first quarter of 2008.

Growth remained broad-based in 2007 as all sectors accelerated while the major engines of growth in the first quarter of 2008 were the services sector in the production side and capital formation in the expenditure side. Growth in services was brought by the strong performance of the trade, finance and transportation and communication sectors.

The industry sector also posted a 7.1% growth in 2007, higher than the 4.5% growth in 2005, as mining ad quarrying, construction and utilities offset the weakness in the manufacturing sector.

With the resources in the coffer mainly coming form the value-added tax (VAT) collections and focused direction by government in pushing its economic agenda of creating ten million jobs (including support for 3 million entrepreneurs and development of 2 million new agribusiness land), the country was able to mitigate or cushion the impact of the global rise in oil and food prices.

Hence, we can also assume that conversely, there is a probability of 5-10% increase from the number of printing companies presently operational in the country. The increase must have been due to the Government’s push for entrepreneurship and the implementation of Republic Act 9178 for the benefit of Barangay Micro business enterprise engaged in production processing or manufacturing of products, including agro processing, as well as trading and services, with total assets of not more than P3 Million. Such assets shall include those arising from loans but excluding the cost of the land on which the plant and equipment are located. In a nutshell, the law encourages the formation and growth of barangay micro business enterprises by granting them incentives and other benefits such as (1) income tax exemption from income arising form the operations of the enterprise; (2) exemption from the coverage of the Minimum Wage Law; (3) priority to a special credit window; and (4) technology transfer production/management training as well as marketing assistance program.

History

Printing has not only played a major role in pushing forward the development of the country’s ancient and glorious history but also exerted significant and far reaching influence on civilization and the advancement of society as a whole. Here’s a glimpse of Philippine printing history. As one sage puts it, “we cannot appreciate the present and the future with understanding the past.

In 1637, Tomas Pinpin, the “Father of Filipino Printing.” Printed the 1st newspaper called “Successos Felices (Fortune Events) which probably signaled the birth of the printing industry in the Philippines. The publication was written in Spanish and contained a 14 page report on current events. This was followed in 1799 by the “Aviso Al Publico” (Notices to the Public) or the “Flying Sheets” which had a role comparative to a “town crier.”

It took quite a while till the 1st newspaper in the Philippines was issued (1811-1832) by the Spanish Governor, Fernandez del Forqueras. In 1876, the 1st licensed and registered printer granted by the king of Spain was Carmelo & Bauermann who started theirs printing and press lithography was shop Azcarraga, now known as Claro M. Recto Avenue.

In 1964, the first four-color offset press in Asia was installed at the General Offset Press, Inc. at Balintawak, Quezon City which was revolutionary at that time.

During the martial law years (1972-1982) restriction were imposed and publication was controlled by the government

Trends, Issues and Challenges

The versatility and economy of digitalization opened the floodgates of societies bound by distance and economics. The question is no longer how we can do it, but what we can do about it. What we see at work in the industry today are the very forces that drive economic progress – advancing technology and competition among firms in search of new markets and innovation in doing business, in production processes, and in products and services.

  The widening technology gap is a response to the transformation brought about by the “digital divide.” Tech-savvy consumers, workers and costumers are very demanding. Companies who deliver faster, print better quality jobs and offer lower prices win the bid. One’s quotation can be compared with competitors all over the globe at the flick on button. Loyal customers have ceased to exist. Their only loyalty is to price, assuming workmanship and speed are givens.

Whether a customers are across the globe or across the street, the challenge is to provide them with what they need, where they need it and when they need it, giving rise to the concept of turning a printing establishment into a one-stop shop.

At the same time, with double-digit growth forecast in a number of markets across Asia, demand for accurate and reliable work is at a premium.

The trend to expand and integrate the printing industry into other industries are continuing to grow in the Philippines which give expansion opportunities not only to printers but also to manufacturers and suppliers of materials and machines especially with the increasing demand for products and services form domestic and international markets. There is now a more active interaction and cooperation among printers, ink/paper/chemical suppliers and manufacturers/dealers of machines and equipment, Hence, a paper manufacturer of machine trader is also a member of the printing association as in the case of the PPTF. A “network of networks” – a living community of print professionals learning form each other and working to address the needs of its members and the industry as a whole, is gaining more adherents.

I hope that the 10th FAGAT would pave the way for joint venture opportunities between local and foreign printers in terms of capital, technical information and skills, and raw material sourcing.

Another trend affecting the industry, amplified by the digital revolution is globalization. This means we are facing increased competition from all sides. On the other hand, globalization would open the door for Filipino printers to compete in the international market following modernization and technology increased the demand for printing on paper, board and flexibles. We are expecting a 5%-6% annual growth for the industry in the years to follow. Plastic based packaging which has lower finishing costs, endangered profits for the printing sub-sector but the push for environmental sustainability or the “new green” initiatives is changing the nature of demand for printing services, printing equipment and supplies.

The world is undergoing a major transformation from a “throwaway” to a “recycling” world. The Philippines, being a newly industrialized country, some micro and small printers are still using banned chemicals prohibited in other countries, either due to non –awareness, force of habit or cost considerations. We need government support to prohibit the importation of banned chemicals. (This situation is currently being addressed by government authorities.) We depend on Europe for the supply of “green” environment-friendly printing chemicals such as those which are soybean-based-

Value-added services offer the promise of higher margins and additional revenue growth. But, if we are going to build our services rather that our size, that growth is going to center around talent. You may have the resources to buy the most modern machines but if your people remain untrained or lack the necessary skills, you will not be able to cope with the demands of global efficiency. In the end, all business operations can be reduced to three words; People, Product and Profit. People come first. Intellectual assets are very important if you want to differentiate for competition.

The growing demand for skilled professional workers is of national concern. The Philippines worker is of national concern. The Philippines cannot compete on the basis of slow skill. Our edge rests with the production of high value added, high quality products and services that incorporate the latest in technology-thus, meeting diverse customer needs.

I cannot overemphasize the need for a printing school that will ensure the global competitiveness lf local printers and raise the awareness of the Filipinos, especially the youth on the vast potentials of the industry. Hence, while we have a continuing training program on various printing topics such as printing production management, production planning and control, etc., I am all for a more complete educational process-because the more you understand your business, the better your business will be. I am proud and happy to say that PPTF has acquired a 420 sq.m lot in MakatiCity where we plan to build our dream printing school. What has begun as a dream has been started and continues to take shape.

Last February 22, 2008, the much awaited tie-up between a state-owned printing school, the TechnologicalUniversity of the Philippines (TUP) and the private sector represented by the PPTF, came to finality. Dr. Godofredo Gallega, TUP President and yours truly, signed a Memorandum of Understanding (MOU) formalizing the establishment of a printing school in the country. The sad part is that while we have talented and creative technical people whom we can pool and develop, we are losing them to foreign competitors. Lack of formal training has resulted in a limited supply of skilled workers while the few well trained and experienced are being lured into accepting foreign jobs because of better pay and employment incentives.

As rightly said by Faye Wattleton, “The only safe ship in a storm is Leadership.” Under my leadership, blueprints for the printing school’s advancement to a new and larger horizon in education will be consistently crafted and implemented.

Yes we are in a down market and yes, growth has slowed down. But move on, we will, to ensure that the future is better and faster for every person on the planet. The biggest variable is time, the biggest impediment is lack of unity and the biggest sin is believing that our competitors know our customers and the industry better that we do.

The printing industry is a powerful engine of economic prosperity. In hosting the 10th FAGAT, we are given the opportunity to do something meaningful for the country’s future and in helping chart the future direction of FAGAT. I hope history will record that we seized this opportunity.