Policy changes have big impact on inclusive business in the Philippines
Felicitas Agoncillo-Reyes (ASec. Fe) is the Assistant Secretary for Investments Promotion at the Board of Investments, the agency spearheading investments generation in the Philippines.
Why do you think the development of inclusive business models in the Philippines is important?
The Philippines has undergone remarkable growth in recent years; however, progress has not been felt at the base of the pyramid. 21.6% of the country’s population of over 106 million live below the national poverty line. Key sectors, like agriculture and tourism, directly and indirectly engage a large portion of this country’s poor. The development of these sectors into something dynamic and more inclusive can be a means to reduce poverty and also be a significant contributor to the attainment of the country’s commitment to the Sustainable Development Goals. I look at IB as one of the most viable options towards the development of these sectors.
Did you always feel this, or has your philosophy on business evolved over time?
It has evolved over time. Having been in government service for several decades, I have seen and implemented many social and economic interventions, but I feel that progress is still not happening as fast as we would want to see.
I once visited a facility in a rural area where people outside the gate and walls of that facility were poor and unemployed. Even if that facility is doing well, its presence in the area does not help in improving the lives of the people there since it does not hire people nor source materials locally.
We have conducted seminars and trainings on MSME development and on how to engage with the communities directly. Some businesses seem to not care whether they create impact in the areas where they operate. Something must be done to attain that progress that we have been dreaming of.
When I moved to the Board of Investments (BOI), I saw that there was an opportunity for big businesses to help in the development of the country. BOI was previously known as “pro-big”, but a lot of changes have happened in recent years. MSMEs are now given incentives, with a much faster processing time than large businesses. Priority activities for incentives became more focused on innovation and inclusion. By giving incentives for adopting IB models, we are hoping that more businesses will be motivated to take an active role in integrating people from the marginalised sectors into the companies’ value chains. Big businesses should not leave behind smaller ones.
What motivates you to champion inclusive business? Did you have a “Eureka” or “A-Hah” moment that led you to this work?
I first heard of IB during the 1st Inclusive Business Conference conducted by Asian Development Bank (ADB) in 2012. I immediately felt that inclusive business (IB) might be the solution to the issues facing the Philippines. We had been developing MSMEs for a long time and we kept on promoting the “push from the bottom,” but progress was slow. It is quite tiring to do the same thing repeatedly, expecting different results. With IB, we focus on the “pull from the top,” by getting companies to directly engage with the marginalised sectors as part of their core businesses.
The Board of Investments deals with businesses from all sectors that can address gaps and provide jobs and livelihoods. I felt that the agency could do a lot to promote investments that will bring added value to the country—investments that can provide jobs and increase the incomes of the people, especially those in the marginalised sectors. This is where IB comes in. We had to think of a way to entice medium and large businesses to take an active role in pulling micro and small enterprises to be part of the big businesses’ value chains. The incentives help to convince businesses to take on the challenge of engaging low-income communities and individuals in a long-term and more sustainable manner.
Seeing our efforts bear fruit is enough motivation to keep on pushing for IB. Within a year, we have registered five IB projects wherein medium and large companies have to source Php2.91 billion (US$56 million est.) worth of goods and services from micro and small enterprises to integrate into the companies’ core business.
What advice would you give to others who want to successfully make a pitch for “inclusive business” within the policy arena?
It takes a lot of patience, perseverance and time to get the results out of promoting IB. The change in mindset does not happen overnight. You have to plan carefully on how to convince the government to include Inclusive Business in national policies.
We had to actively campaign for IB, locally and regionally. Regionally, we worked on including IB in the regional agenda and organized events on IB hosted by the Philippines—like the APEC in 2015 and the ASEAN in 2017. Once IB gained traction in the region, we then advocated for it domestically by talking to government officials to get IB included in the Philippine national development plans. The most crucial part is the government’s role in getting companies and communities to develop and adopt IB models. The government can do a lot in this arena—it can establish a good enabling environment through policies, rules and regulations conducive to IB, enhance access to financial resources and support services, provide incentives, strengthen the capacity of the communities for IB engagement, and work on increasing awareness on IB, among other things.
Video: Felicitas Agoncillo-Reyes on how to promote inclusive business in the Philippines
Have you ever changed someone’s mind on inclusive business? What did you say or do that was most effective?
In advocating for something like IB, you need to change the minds of a lot of people, and it is not easy. To convince people, it helps to have documentation. The Philippines started with an ADB-funded market scoping study of IB in 2013, which was used as ground work for IB criteria and policy recommendations.
IB can be compared to fashion trends; whatever is popular abroad or globally tends to drive the trends locally. Locally, we had a lot of difficulty in convincing people to go for IB. When IB was featured in 2015 in various forums in APEC including the Investments’ Experts Group, Women and the Economy, and High Level Dialogue, as well as in the G20, and the Philippines was featured as one of the pioneers of IB in the region, many people suddenly wanted to take part in it. We took that opportunity to talk to a lot of government officials and development partners to get IB included in their development plans. BOI started to broadly encourage IB investments through the 2014-2016 Investment Priorities Plan. Since then, the BOI has continued to push for greater inclusion every chance it could, which has led to great momentum. We were lucky to have Trade and Industry Secretary Ramon Lopez as an IB advocate.
What more is needed to make inclusive business become mainstream?
A lot of work needs to be done to mainstream IB. Public awareness on IB is still low, so information campaigns to increase awareness are very crucial. IB should be a crosscutting initiative of national government agencies. To push for the adoption of IB by the different agencies, we are looking at the development of an IB roadmap to serve as a guide to different stakeholders on how to work together in implementing IB projects more efficiently and effectively. We need to work closely with the regional and provincial offices of the Department of Trade and Industry and the Regional Development Councils to help us in advocating for IB and in the actual IB project implementation in their respective areas.
Is there anything you would still like to add?
I appreciate the effort that iBAN does in the promotion of IB and the support that it gives to policymakers across Southeast Asia to get governments to push for the adoption of inclusive business models in their respective countries. I hope that more development organizations will make IB as one of their priority activities.