Political Environment

The government, under its “Build Build Build” program, has significantly increased spending on

infrastructure and has ambitious plans to build new rail lines, a subway, highways, and bridges in the

coming years. To finance spending on infrastructure and social services, the government has embarked

on a multiphase tax reform program which is the TRAIN LAW.

The law increases the Documentary Stamp tax and imposed a 20% tax on winning tickets which highly

affects the Price and Prize of our products.

Analysis:  This issue could pose a negative impact on the country's booming automotive industry as such
may discourage Filipinos to purchase vehicles because of the additional tax imposed. 
Automotive companies may need to rehash their sales strategies to convince people to purchase new
vehicles.  FORD may find it even more difficult to gain market share as its competitors like Honda,
Toyota, and even Hyundai are gaining the upper hand in the market shares, and given the imposition of
excise taxes, they may find it more difficult to persuade the market to prefer FORD over the other
Japanese-made cars.  Foremost, FORD is an American brand, and the perceptions is that it is more
expensive than the Asian-made vehicles.  Add excise tax to the purchase will even deter the market to
opt for FORD.  Ford Focus is  also lagging behind Honda Civic, Toyota Altis, and Mazda 3.  This will be a
hurdle for Focus to tap and wrestle the Market Shares of Civic, Altis, etc.

PD 1062 or the decree PRESCRIBING STIFFER PENALTIES ON ILLEGAL GAMBLING was already in placed

enumerating all the types of illegal gambling. This was amended by RA 9287 to expand the limited

coverage of the decree and increase the penalties for illegal gambling. The law also centralized the

authority of enforcing all illegal gambling activities in the country through Amusement Gaming Board

(AGB). Full enforcement of the law is lacking that is why Filipinos are still patronizing illegal games. Full

implementation and strict enforcement of the law should be addressed.

Economic environment
The government two principal economic priorities have been to accelerate economic growth and make

it more inclusive and to significantly increase spending on much-needed infrastructure. In 2017, GDP

growth was 6.7 percent and about 6.2 percent in 2018. Strong GDP growth does not necessarily result in

rapid improvements in the incomes of poor Filipinos. Instead, inflation - has an immediate and tangible

impact on consumers

Inflation has been increasing last 2018 averaging 4.8 percent for January to August and reaching a nine-

year high of 6.7 percent in September and October. Higher oil and food prices, excise taxes associated

with tax reform, and the weak peso have all fueled inflation. For the year 2019, it is gradually decreasing

up to the 2nd quarter of 2019. We are still on recovery phase from last year inflation rise as the salaries

of the workers has not increased and the economy is slow moving. The direct of the inflation is the

spending power of the consumers. They would likely buy basic necessities rather than leisure products.

In terms of inequality, it’s not only present across income classes but also across regions. NCR still

dominates the economic landscape, with Calabarzon and Central Visayas also contributing to the
inequality. If we combine these three regions, they account for two-thirds of GDP. In terms of

population, these three regions have only 37% of the population. The per capita incomes of these

regions also dominate the rest of the regions. This only shows the untapped market for

a________________--____________

Analysis:  It is a positive result for the automotive industry because this may spell more job
opportunities presented to Filipinos, hence, augmenting their income purchasing power due to a
stronger economy.  Since cars are now considered a necessity in the  Philippines, people could allot a
chunk of their budget for car purchase.

Technology
Over the years traditional businesses are disappearing and new business taking over due to innovative

technologies. Adopting new technologies will be a good way to increase sales. This strategy gives any

organizations a competitive edge from its competitors. Investing in technology to improve operations

and processes will be a big advantage to our products.

In 2017, the number of smartphone users in the Philippines is estimated to reach 30.4 million. This

would mean that around 32 percent of the population in the Philippines would use a smartphone. This

number is expected to rise to 40 percent by the year 2021.

This statistic shows the number of Facebook users in the Philippines from 2017 to 2023. In

2023, the amount of Facebook users in the Philippines was expected to reach 49.9 million,

up from 41.2 million in 2016.

With more than 2 billion monthly active users, Facebook is the most popular social network

worldwide. Popular activities on the social network include watching videos, liking content

via button, reading articles and messaging friends on 1-1 basis.. Facebook successfully

managed the transition from social network to mobile social platform, nearing one billion

monthly active users and with mobile accounting for 77 percent of the social network’s total

advertising revenue in 2015.

Mobile is also the keyword regarding the online market in the Philippines; in 2014, 41.28

million people accessed the internet through their mobile phone. In 2021, this figure is

projected to amount to 66.64 million mobile phone internet users. As of July 2016,

the internet penetration among the population in the Philippines was 43.5 percent. A total of

47 million users access social media via mobile on a monthly basis, making the country the

second-largest Facebook market in the Southeast Asian region.. The Philippines also

ranked second in terms of internet freedom in Asia according to the Freedom House Index

in 2015. It is high time that we use this platform in advertising and selling our products.

Analysis:  In this day and age when professionals are very much into multitasking and business is fast-
paced, having this technology in our vehicles is deemed helpful.  Added safety features brought about
by technology allows more convenience and added peace of mind for car owners.  Mobility and safety
adds up to the appeal.

Legal

I. RA No. 9287 – act increasing the penalties for illegal number games

Its effects on PCSO:

As gambling is allowable in the Philippines, there are certain laws in the Constitution
that people must obey and be aware of in order to avoid penalties. Republic Act No. 9287 is
an act increasing the penalties for illegal number games, amending certain provisions of
Presidential Decree No. 1602, and for other purposes.
 Despite this however, the problem of illegal gambling in the Philippines continues.
Even some of those unscrupulous operators of the state run Small Town Lottery manage to
evade and even manipulate the law. It has been somewhat ineffective and evident are its
effects on its legal counterparts particularly the Philippine Lottery of PCSO with the
downward trend in the sales performance of our games being the most obvious of which.
Hence, the strict implementation of the law and its effectiveness is something to be taken
into consideration if and when we decide to launch new games such as our own version of
the instant sweepstakes.

Its possible effects on the Instant Sweepstakes game

Since RA No. 9287 is not able to eradicate illegal gambling in the Philippines,
introducing and maintaining a game that appeals to both players of legal numbers game
and illegal comes with a risk. Illegal numbers games is seen to indirectly affect the Instant
Sweepstakes game by obtaining a potential wallet share among the gaming public and
even eating up a huge chunk of the Instant Sweepstakes’ potential sales.

II. Republic Act No. 8293 - AN ACT PRESCRIBING THE INTELLECTUAL

PROPERTY CODE AND ESTABLISHING THE INTELLECTUAL
PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS,
AND FOR OTHER PURPOSES

Its effects on PCSO:

As with any other countries, there exists a law on Intellectual Property rights. It is this
law that limits every business entity be it in the manufacturing, merchandising or service
industry to the use of a unique brand name, product concept that is not yet being used in
the market be it locally or internationally.
 4.1. The term "intellectual property rights" consists of:

[a] Copyright and Related Rights;

[b] Trademarks and Service Marks;

[c] Geographic Indications;

[d] Industrial Designs;

[e] Patents;

[f] Layout-Designs (Topographies) of Integrated Circuits; and

[g] Protection of Undisclosed Information (n) [TRIPS].

An example of this would be the use of mobile betting for our Lotto games. A
proposal to utilize mobile betting was made in order to provide greater access to the betting
public by allowing them to place their bets away from a lotto outlet, therefore increasing
sales. However, we are unauthorized to procure and utilize such technology since it is
patented by a different entity. Thus, we are confined within the conventional means of
placing bets in lotto outlets thereby limiting the potential of our games’ sales performance to
increase.

Its effects on the Instant Sweepstakes game:

Unless we are to develop a new type of game that is completely fresh and unique
here and abroad, our ambition of developing an Instant Sweepstakes – a game similar to
the POSC’s Scratch-It – shall be bound by the law on Intellectual Property Rights.
Therefore, Instant Sweepstakes game is limited to game features and brand names that are
unique from products of other businesses of similar nature. We must be keen on developing
our own version of the Scratch-It game since it is not our own. Hence, with all these in mind,
strict observance of the intellectual property rights law must be enforced in order to avoid
any legal conflicts that might tarnish PCSO’s good name.
 III. Tariff and custom duties

TARIFF AND CUSTOMS CODE OF THE PHILIPPINES (TCCP) VOLUME I

SEC. 104. Rates of Import Duty.

Its effects on PCSO:

Policy changes on the Import Duty rates especially an increase may affect the price

of the raw materials such as the paper used in the production of the thermal papers for our

lottery games. If such a thing happens, we could be looking at another necessary price

increase in order to somehow alleviate the cost of product importation. It will be the

consumers or the betting public who will be burdened and this will once again pull down our

games’ sales performance.

Its effects on Instant Sweepstakes:

Similar to lotto, our provider uses imported paper in the production of the Scratch-It

game tickets. Any vertical movement in the import rate will once again translate to a price

hike leaving the public disinterested towards the product. Considering this, we must find a

local raw material provider which is not affected by the existing custom law in the country.

Environmental

GLOBAL WARMING

Global warming refers to the increase of the Earth's temperature. It happens when
the greenhouse gases trap heat and light from the sun in the earth’s atmosphere, which
increases the temperature. Global warming is one of the main contributors to the continuous
increase of sea level, and when water covers the low land islands, it brings problems to the
people in the coastal area, plants, and animals. There are many things that cause global
warming. For some it is a natural event, however many believed that human activities are
contributing to an increase in average global temperature. In the Philippines, global
warming has become a big challenge. It changes the course of the government, economics,
and most of all, it greatly affects the environment.

            The effect on the world’s climate from increasing temperatures could be just as
devastating. Floods, droughts, and increasing sea level are some of the effects of global
warming that is currently happening in the Philippines. 

Global warming creates uncertainties for the Philippine's economy.  The Philippine is
known as one of the most hazard prone countries in the world. Disasters brought upon by
global warming derailed economic development of the country as funds are reallocated from
ongoing programs to finance relief and reconstruction assistance.  Soaring food prices is
one of the ill effects of global warming to the Philippine's economy. Food price inflation
severely stresses the most vulnerable groups.  High food prices are undermining the gains
of poverty reduction efforts in the Philippines and will make the achievement of the
Millennium Development Goals difficult.  Food price  inflation may have seriously eroded
their purchasing power, increasing the severity of food deprivation and malnutrition. These
effects will worsen if the food price surge persists.  

            It is now a big challenge for the government to maintain a stable income for its
people despite of price inflation. Through this, people will be able to supply their basic
needs without severely compromising their budget.  

(Source: Joel V. Bendijo Blog

https://joelvbendijo.blogspot.com/2012/02/global-warming-in-philippines-effects.html)

GEOGRAPHY

The Global Climate Risk Index 2015 listed the Philippines as the number one most
affected country by climate change, using 2013’s data. This is thanks, in part, to its
geography. The Philippines is located in the western Pacific Ocean, surrounded by naturally
warm waters that will likely get even warmer as average sea-surface temperatures continue
to rise.

To some extent, this is a normal pattern: the ocean surface warms as it absorbs
sunlight. The ocean then releases some of its heat into the atmosphere, creating wind and
rain clouds. However, as the ocean’s surface temperature increases over time from the
effects of climate change, more and more heat is released into the atmosphere. This
additional heat in the ocean and air can lead to stronger and more frequent storms – which
is exactly what we’ve seen in the Philippines over the last decad e.
 
The Philippines also lacks natural barriers; as a collection of over 7,000 islands there
is almost nothing standing between them and the sea. In addition to their coral reefs, one of
the best buffers against typhoons are the Philippine mangrove ecosystems. These
mangroves help mitigate the impact of storm surge and stabilize soil but have disappeared
by almost half since 1918 due to deforestation (an issue for another day).

Other natural factors, like regional wind patterns or currents, can also increase the
risk of tropical storms. Geography again plays a role here, as these factors affect different
areas of the country differently, due to their unique circumstances. The graphic below from
a report by the Philippine Department of Environment and Natural Resources shows how
the various regions in the Philippines can face a range of climate threats, based on where
they sit on the map.

What do these storms mean for the Philippines’ economy. According to a 2013

statement from government officials, a destructive typhoon season costs the nation two
percent of its gross domestic product (GDP). It costs another two percent to rebuild the
infrastructure lost, putting the Philippines at least four percent in the hole each year from
tropical storms.

Source: https://www.climaterealityproject.org/blog/how-climate-change-affecting-philippines
Its effects on PCSO:

In a country with a geographical location such as the Philippines, the economy is

largely impacted by natural disasters and calamities. A slowdown and even a negative
growth in the GDP is expected. As a remedy to this the Philippine government may
decrease interest rates in order to promote loans and borrowings thereby also increasing
spending which will lead to a high GDP. This will prompt inflation which weakens the
purchasing power of the Philippine peso. Filipinos will spend their hard earned money on
basic necessities instead of playing PCSO games among others.