By Joseph Sedfrey S. Santiago, Esq.
Seafarers are likely to prepare early for their retirement compared to their land-based counterparts. This is one of the findings in a study I recently did with Manuel Ricardo Sacramento and Jose Atanacio Estuar for the Institute of Philippine Culture (IPC) of the Ateneo de Manila University.
Titled "Overseas Filipino Workers (OFWs) As Entrepreneurs: Performance Benchmarks and Policy Implications," the research was conducted from 2005 to 2006 in Cebu, Bohol, Palimbang in Sultan Kudarat, General Santos City, Tupi in South Cotabato, Cotabato City, and a few other places in Luzon. The study required us to do in-depth interviews with 26 entrepreneurs who used to work or are still working abroad, either at sea or on land, and four OFW dependents.
Entrepreneurial biographies were written based substantially on the interviews, with the objective of determining when and why the OFWs chose to become entrepreneurs, their reasons for deciding on what business to engage in, how they funded their startups, who provided them technical support, who their initial clients were, what difficulties they have had to face, their present issues and what the current best practices of the entrepreneurs are.
Other interesting findings include:
1) Many OFW entrepreneurs' business decisions are largely influenced by social capital—close personal networks that kin and pseudo-kin provide; and many businesses are embedded in social networks. Seafarers who started their businesses while still active in their profession have had to rely on their wives to take on a managerial role, with the exception of one who tapped his brother's support.
2) A few returning land-based workers subsequently found income from employment, whether local or foreign, rather limited; hence, the decision to become entrepreneurs. Some went into business after their arrival as they were not able to find local employment, nor were they able to go back abroad.
3) The range of chosen businesses is wide-ranging—from food vending to poultry and rice-farming, fruit-growing (mango and banana), bee-keeping, contract-growing, soft drinks distribution, the usual tricycle and sari-sari store enterprises, production of bahalina (wine derived from fermented coconut juice), and even a (failed) fast-food franchise. A good number of the interviewees considered availability of natural resources, like those in Palimbang, which forms part of the Philippines's tuna corridor.
4) Despite the livelihood program of the OWWA, the greater number of interviewees used private funds to start their businesses, and most of them dipped into their savings for the purpose. Those who obtained start-up loans from the OWWA had to augment these with borrowings from SSS or private sources like siblings.
There were those who had wanted to borrow from the OWWA, but were dissuaded by their perception that borrowing terms were rather stringent, and interest rates high. The OWWA program is relatively underutilized, and could be further promoted. Only one interviewee availed himself of the lending facilities of the Small Business Guarantee and Finance Corp. (SB Corp.).
5) For technical support, regional offices of OWWA and the Department of Agriculture proved useful for those who went into lakatan- and rice-farming, honeybee production and goat-raising. There is reliance also on social capital—for instance wife, friend and business partner—for such support.
6) One entrepreneurial couple (French husband and Filipina wife) had as initial clients their comembers in Le Club—the French Chamber of Commerce in the Philippines; while another sold his initial honeybee produce to his brethren in the Baptist Church. At least two others relied on contacts previously established by their parents. Those who had no existing personal networks had to make do with walk-in clients. Exceptionally, an egg-producing couple in Bantayan Island did not have any marketing plan, but proved lucky when they were found by their initial big client through serendipity.
7) Book-keeping is hardly practiced. Of the 30 interviewees, only two perform acceptable methods of financial record-keeping. Business expenses and revenues are confused with private transactions. Often, the profitability of the business is measured by its ability to directly provide money for food and other everyday expenses, and pay for school tuition of children and even grandchildren.
Consequently, while OFW entrepreneurs who have substantially relied on their savings and social capital may have successfully put up their businesses, their inability to address issues with precise managerial courses of action could adversely implicate the viability and sustainability of the business even in the short-run.
And why do seafarers decide early to go into business?
Compared to their land-based counterpart, seafarers have a relatively shorter employment period, which could be as brief as 10 months; hence, the anticipated preparation, according to Dr. Peter Payoyo of the Rotterdam-based Philippine Seafarers Assistance Program. Seafarers are also usually more well compensated and have better terms of employment; hence, they are able to remit, and are in fact, required to remit a substantial portion of their salary, a part of which is eventually used in business.
Joseph Sedfrey S. Santiago is assistant professor at the John Gokongwei School of Management of the Ateneo de Manila University. Manuel Ricardo Sacramento is presently taking his graduate studies at the National University of Singapore, while Jose Atanacio Estuar is a doctorate student (on leave) of the Ateneo de Manila University.
Business Mirror
January 8, 2007
