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sourced capital equipment and raw materials. Export traders are entitled to tax credits for imported raw materials required for packaging.

Financing is available to all Philippine exporters and Chere is no preferential rate for domestic companies. Without prior BSP approval, exporters may avail themselves of foreign currency deposit unit (FCDU) loans from local commercial banks up to 100 percent of the letter of credit, purchase order or sales contract. To cushion the impact of a strong peso (between January and August 1994 the peso appreciated against the US dollar by five percent from 27.724 to 26.313), the BŚP further eased export financing rules. Recently, FCDU loans were made available also to indirect exporters who are now allowed to spend the dollar loan to cover not only their dollar requirements, but also their peso requirements provided proceeds of the loans will be used for the production of export goods.

An Export-Import Banking Program of the Development Bank of the Philippines, launched primarily to address the needs of the exporting community, reduced interest rates from 13 to 11.5 percent between August and September 1994. In particu, lar, export-oriented activities that are labor-intensive and which will utilize local raw materials benefit from this program. The Philippines is a signatory to the GATT Subsidies Code. 7. Protection of U.S. Intellectual Property

While Intellectual Property Rights (IPR) protection is improving, serious problems remain, and the issue remains a bilateral trade concern. Current penalties for infringement and counterfeiting are not real deterrents. Insufficient funding hampers the effective operation of agencies tasked with IPR enforcement. Joint governmentprivate sector efforts have improved administrative enforcement, but when IPR owners must use the courts, enforcement is slower and less certain.

In February 1993, President Ramos created the Inter-agency Committee on Intel. lectual Property Rights as the body charged with recommending and coordinating enforcement oversight and program implementation. The Philippine government is a party to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, and the Bern Convention for the Protection of Literary and Artistic works. It is a member of the World Intellectual Property Organization.

The Philippines was moved from the U.S. Trade Representative's special 301 "pri. ority watch list" to the “watch list,” following a bilateral IPR agreement signed in April 1993 which commits the Philippine government to improve its legislative protection and to strengthen enforcement significantly. The Philippine government has generally complied with the agreement, except for legislative improvements. Legislation incorporating all legislative commitments under the bilateral was targeted for submission to Congress before June 1994. The government did not, however, meet the deadline, but remains committed to submitting the legislation.

Patents: The present law recognizes the possibility of compulsory licensing two years after registration with the Patent, Trademark and Technology Transfer Board, if the patented item is not being utilized in the Philippines on a commercial scale, or if domestic demand for the item is not being met to an "adequate extent and on reasonable terms." Compulsory licensing is easier for pharmaceutical and food prod. ucts, because use, inadequate production for domestic demand, etc. need not be established. In the bilateral IPR agreement of April 1993, the government committed to submit to the Philippine Congress an amendment to the patent law which will allow importation to satisfy "working requirements" for patented goods. Starting March 15, 1993, rules on royalty payments were relaxed somewhat, granting automatic approval for royalty agreements not exceeding five percent of net sales. Roy. alty rates higher than five percent may be allowed in meritorious cases. Naturally occurring substances (plants or cells, for example) are not patentable.

Trademarks: Trademark counterfeiting is widespread. Many well-known international trademarks are copied, including denim jeans, designer shirts, and personal beauty and health care products. Some US firms—for example Disney-have had success in curbing piracy in cooperation with Philippine enforcement agencies. The National Bureau of Investigation (the Philippine equivalent of the FBI) has been cited by the private sector for its excellent cooperation recently in conducting raids against trademark violators. Under the terms of the U.S. Philippine IPR agreement, the government will seek amendments to the Philippine trademark law to provide protection for internationally well-known marks.

Philippine law requires trademark owners_to file an affidavit of use or justified non-use with the Patents, Trademark and Technology Transfer Board every five years to avoid cancellation of trademark and registration. Non-use of a mark must be for reasons totally beyond the control of a registrant. (Import bans, for example, constitute justified non-use.) Current practice provides that internationally wellknown marks should not be denied protection because of non-registration or lack of use in the Philippines. Pending legislation seeks to incorporate this practice into Philippine law. Trademark protection is limited to the manufacturing or marketing of the specific class of goods applied for, and to products with a logical linkage to the protected mark.

Copyrights: Philippine law is overly broad in allowing the reproduction, adaptation or translation of published works without the authorization of the copyright owner. A presidential decree permits educational authorities to authorize the reprint of textbooks or other reference materials without the permission of the foreign copyright holder, if the material is certified by a school registrar as required by the curriculum and the foreign list price converts to 250 pesos (about US $10) or above. This decree, especially for textbooks, is inconsistent with the appendix of the 1971 text of the Berne Convention. However, the Philippine government is expected, under the terms of the bilateral IPR agreement with the U.Š. reached in April 1993, to correct these deficiencies through accession to the Paris Act of the Berne Convention, and through amendments to its domestic legislation.

Video piracy is a serious problem, but has declined from about 80 percent of the market a few years ago to about 60 percent now. The government's Videogram Reg. ulatory Board (VRB) is tasked with lighting video piracy. Due to budget constraints, the bulk of its efforts are focused in Metro Manila. Copyright protection for sound recordings, currently 30 years, is shorter than the internationally accepted norm of 50 years. The government has committed to submitting amendments to the Phil. ippine Congress to bring the term of copyright protection into conformity with international norms. Industry sources estimate that piracy of recorded music-mostly cassettes, although imported pirated CDs from the UAE and China are starting to show up in Metro Manila shops/has fallen to an average of about 40 percent. About 98 percent of all computer software sold is pirated. Computer shops routinely load software on machines as a free "bonus" to entice sales. The Philippine government is probably the largest user of pirated software, although some agencies are reportedly considering shifting to legitimate versions.

New Technologies: Many shops rent video laser discs purchased at retail stores in the United States without payment of commercial rental fees. More recent issues involve copyright infringement complaints against cable television stations which retransmit copyrighted works without authorization from or payment to the copyright owners. The bilateral IPR agreement of April 1993 commits the government to fully enforce the protections afforded to audio-visual works under Philippine laws and regulations. 8. Worker Rights

a. The Right of Association.—The right of workers, including public employees, to form and join trade unions is assured by the Constitution and legislation, and is freely practiced without government interference throughout the country. Trade unions are independent of the government and generally free of political party control. Unions have the right to form or join federations or other labor groupings. Subject to certain procedural restrictions, strikes in the private sector are legal. Unions are required to provide strike notice, respect mandatory cooling-off periods, and obtain majority member approval before calling a strike. A 1989 law stipulates that all means of reconciliation must be exhausted, and the strike issue has to be rel. evant to the labor contract or the law.

b. The Right To Organize and Bargain Collectively.—The right to organize and bargain collectively is guaranteed by the Philippine constitution. The Labor Code protects and promotes this right for employees in the private sector. The same right is extended to employees in government-owned or controlled corporations. A similar but more limited right is afforded to employees in most areas of government service. Dismissal of a union official or worker trying to organize a union is considered an unfair labor practice. Nevertheless, employers sometimes attempt to intimidate workers by threats of firing or closure. Although labor law and practice are uniform throughout the country, including export processing zones (EPZs), unions have been able to organize workers in only one of the EPZs. Work stoppages and total mandays lost to labor strife have been trending downward, with 64 work stoppages (in. volving 390,000 workdays) recorded in the first 8 months of 1994. On an annualized basis, this suggests current year totals some 20 to 30 percent lower than those in 1993.

c. Prohibition of Forced or Compulsory Labor:—The Philippines prohibits forced labor. As the world's foremost “exporters of both unskilled and trained labor, it is sensitive to reports of abuse of Philippine workers overseas.

d. Minimum Age for Employment of Children.-Philippine law prohibits the employment of children below age 15, except under the direct and sole responsibility of parents or guardians, or where employment in cinema/theater/radio or television is essential. The parent/guardian or employer is required to ensure the child's health, safety, and morals, to provide for the child's education or training, and to procure a work permit. The Labor Code allows employment for those between the ages of 15 and 18 for such hours and periods of the day as are determined by the Secretary of Labor but forbids employment of persons under 18 years in hazardous work. However, a significant number of children are employed in the informal sector of the urban economy or as field laborers in rural areas.

e. Acceptable Conditions of Work.—The Minimum Wage Act of 1989 authorized Tripartite Regional Wage Boards to set minimum wages. Rates were last revised in late 1993, with the highest in Manila and lowest in rural regions. The minimum wage for workers in the National Capital Region (NCR) was approximately US $5.60 (145 pesos) per day. Wage boards outside the NCR, in addition to establishing lower minimum levels, also exempted employers according to such factors as establishment size, industry sector, involvement with exports, and level of capitalization. This approach excludes substantial numbers of workers (especially agricultural workers, domestics, laborers, janitors, messengers, and drivers) from coverage under the law. Detected minimum wage violations surged in the immediate aftermath of 1993 rate revisions, when inspectors found one in four employers paying less than the minimum. The standard legal work week before overtime is 48 hours for most categories of industrial workers and 40 hours for government workers. The law mandates a full day of rest weekly and overtime for any hours worked over an eight per day limit. Employees with more than one year on the job are entitled to five days of paid annual leave. A comprehensive set of occupational safety and health standards exists in law. Enforcement statistics suggest a downtrend in "technical safety standard” violations, from 20 percent of inspected units in 1992 to 18.2 per. cent in 1993, and 15.4 percent in the first five months of 1994. Statistics on work. related accidents and illnesses are incomplete, as incidents (especially in regard to agriculture) are under-reported.

f. Rights in Sectors with U.S. Investment.-American and other established multinational firms apply U.S., European, or Japanese standards of worker safety and health to meet the requirements of their home-based insurance carriers. They also treat their work force according to professional employee management principles. Firms in the EPZs have resisted efforts to unionize their workers.

Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis—1993

(Millions of U.S. dollars)

[blocks in formation]

Petroleum
Total Manufacturing

Food & Kindred Products
Chemicals and Allied Products
Metals, Primary & Fabricated
Machinery, except Electrical
Electric & Electronic Equipment
Transportation Equipment

Other Manufacturing
Wholesale Trade
Banking
Finance Insurance Real Estate
Services
Other Industries
TOTAL ALL INDUSTRIES

275
386
27
-2
161

0
114

...............

151 368

(1) - 196

6 1,170

1 Suppressed to avoid disclosing data of individual companies.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.

SINGAPORE

Key Economic Indicators
(Millions of U.S. dollars unless otherwise noted)

1992

1993

1994 1

98

....................................

1.8

....

Income, Production and Employment:
Real GDP (1985 prices)?

39,761 44,072 51,301 Real GDP Growth (pct.)2

6.0
9.9

9.5 GDP (at current prices) 2

48,547 55,085 66,462 By Sector: (1985 prices) Agriculture .....

100

111 Energy/Water

831

898 1,598 Manufacturing

10,981 12,161 14,659 Construction

2,707 2,947 3,510 Rents

N/A N/A N/A Commerce

7,218 7,892 9,061 Transport/Communications

5,843 6,453 7,573 Financial/Business Services

10,391 11,849 3,868 Government Health Education/Other Services

4,053 4,315 4,839 Net Exports of Goods & Services

1,164 512 4,104 Real Per Capita GDP

12,504 13,519 15,360 Labor Force (000s)

1,620 1,634 1,675 Unemployment (pct.)

2.7
2.7

2.1 Money and Prices (annual percentage growth): Money Supply (M2)

8.9
8.5

12.0 Base Interest Rate 3

5.6
5.3

5.9 Personal Saving Rate 3

1.6

2.15 Retail Inflation 4

-6.8 - 3.8 -3.2 Consumer Price Index

2.3
2.4

4.0 Exchange Rate (SD/USD)

1.63
1.62

1.52 Balance of Payments and Trade: Total Exports (FOB) 5

40,723 44,661 58,311 Exports to U.S.

11,234 12,744 14,656 Total Imports (CIF)

49,427 57,881 64,573 Imports from U.S.

8,949 10,655 12,897 Aid from U.S. .....

0
0

0 Aid from Other Countries

0
0

0 External Public Debt

14.9
7.2

3.0 Debt Service Payments

10.6
10.2

3.6 Gold and Foreign Exch. Reserves

40,386 48,191 53,145 Trade Balance 5

-5,782 --8,066 - 3,820 Trade Balance with U.S.

1,497 1,932 2,332 NIA-Not available.

1 Data for 1994 estimated based on first half of 1994 data and current expectations for second half of 1994.

2 Based on market prices, factor cost data not available. Growth is based on local currency to remove exchange rate effect.

3 Average of rates quoted by 10 leading banks. * Based on retail sales.

5 Merchandise trade. 1. General Policy Framework

Sitting astride one of the major shipping lanes of the world, Singapore has long adopted export-oriented free-market economic policies that encourage two-way flows of trade and investment. These policies have allowed this small country to develop one of the world's most successful open trading and investment regimes. Over the past decade real GDP grew at average annual rate of seven percent; 1993's economic growth rate was 9.9 percent. Singapore actively promotes trade liberalization in the region through its activities in APEC and ASEAN. It ratified the Uruguay Round GÅTT agreement in October 1994 to become one of the founding members of the World Trade Organization.

Taking into account a lack of natural resources and a small (3.2 million popu. lation) domestic market, Singapore's policies have created a climate encouraging economic growth, including an open trade environment, a corruption-free pro-business regulatory framework, political stability, public investment in infrastructure, high savings and prudent fiscal management, a trained labor force, and significant tax concessions to foreign investors. Singapore's fiscal policies have enhanced export and investment growth. The government has had a budget surplus for most years since the 1970's. The country's reserves (US $48.2 billion in 1993)

are conservatively invested by the Singapore Government Investment Corporation. The Central Provi. dent Fund (CPF) compulsory savings program is the basis for the national savings rate of 47 percent of GDP.

The Monetary Authority of Singapore (MAS), the country's central bank, engages in limited money-market operations to insluence interest rates and ensure adequate liquidity in the banking system. Strict financial discipline is the government's most important tool for controlling inflation. Although inflation is moderate by international standards (2.4 percent last year and 3.5 percent so far this year), an acute labor shortage and rising property values have intensified inflationary pressures. The MAS maintains a strong currency to check inflation, particularly imported in. flation, given Singapore's extreme exposure to international trade.

Singapore has become a major center for electronics, oil refining and financial services, acting as a hub for the growing southeast Asian market. Singapore's sound economic policies which promote private investment have attracted about 900 U.S. companies to Singapore, with cumulative investments of US $18.9 billion in 1993. The United States is Singapore's largest trading partner, accounting for 18 percent of total trade in 1993. U.S. imports to Singapore in 1993 were US $10.7 billion and Singapore's exports to the United States were US $12.7 billion. 2. Exchange Rate Policy

Singapore has no exchange rate controls. Exchange rates are determined freely by daily cross rates in the international foreign exchange markets. The MAS uses currency swaps and direct open market operations to keep the Singapore dollar within a desired trading range, guarding against the internationalization of the Singapore dollar 80 as not to lose control over its monetary and economic policies.

The Singapore dollar appreciated 17 percent against the U.S. dollar from 1989 to 1993. Since the end of 1993 to mid-October 1994, the Singapore dollar has strength. ened another 8 percent. This has not adversely affected Singapore's economy as nearly all of its production inputs are imported. The strong Singapore dollar has helped to make U.S. products more competitive in the Singapore market. 3. Structural Policies

Singapore's prudent economic policies have allowed for steady economic growth and the development of a reliable market, to the benefit of U.S. exporters. Singapore was the ninth largest customer for U.S. products in 1993, up from 11th in 1992. Prices for virtually all products are determin by the market. The government lets bids by open tender and encourages price competition throughout the economy.

Singapore's tax policy is designed to maintain its international competitive position. Foreign firms are taxed on the same basis as local firms. The corporate tax is currently at 27 percent. The government aims to bring the corporate tax down to 25 percent in the next few years. There are no taxes on capital gains, turnover, or development. The Government implemented 3 percent value-added Goods and Services Tax (GST) in 1994 but reduced corporate and personal taxes. Tariffs exist for only a few products. Excise duties are levied on cigarettes, alcohol, petroleum products and motor vehicles primarily to control social behavior and restrict motor vehicle numbers. There are no nontarisf barriers to foreign goods.

Many of Singapore's public policy measures are tailored to attract foreign investments and ensure an environment conducive enough for their efficient business operations and profitability. Although the government seeks to develop more high-tech industries, it does not impose production standards, require purchases from local sources, or specify a percentage of output for export. 4. Debt Management Policies

Singapore's external public debt was a negligible US $7.2 million at the end of 1993, and its debt service ratio is less than 0.1 percent. Singapore's budget surpluses and mandatory savings have allowed the government wide latitude in sup. porting infrastructure, education, and other programs contributing significantly to national development.

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