Miscellaneous business activities (K74) received the largest amount of subsidies with Php184.4 million, equivalent to more than two fifths (46.7%) of the total figure. Research and development (K73) closely followed with Php121.2 million (30.7%). However, no subsidy was granted to establishments involved in renting of machinery and equipment without operator; personal and household goods (K71).

TECHNICAL NOTES

Scope and Coverage

The 2005 Annual Survey of Philippine Business and Industry (ASPBI) formerly known as Annual Survey of Establishments (ASE) was conducted to collect information on the structure and trends of economic activities in the entire country for the year 2005. Covered were establishments engaged in economic activities as defined under the 1994 Philippine Standard Industrial Classification (PSIC).

These establishments were classified into 14 sectors one of which is on Real Estate, renting and business activities (Sector K), which covered all establishments, except those engaged in letting and operating real estate such as residential and non-residential buildings and land rentals. The sector is composed of establishments engaged in five industry divisions, namely, real estate activities (K70); renting of machinery and equipment without operator; personal and household goods (K71); computer and related activities (K72); research and development (K73) and miscellaneous business activities (K74).

All real estate, renting and business activities establishments nationwide with average total employment (ATE) of 100 and over were covered on a 100 percent basis and those with ATE less than 100 were selected using simple random sampling; except business process outsourcing (BPO) establishments, all of which were taken as samples regardless of size (ATE).

Response Rate

A total of 2,417 or 97.2 percent responded out of the 2,487 samples drawn for the sector but effective response rate is 55.4% percent. Adjustments for non-responses were made through imputations.

Concepts and Definition of terms

Establishment - an economic unit, which engages under a single ownership or control, i.e. under a single legal entity, in one, or predominantly one kind of economic activity at a single fixed location. It is also defined as the unit that is engaged in the production of the most homogenous group of goods and services, usually at one location, sometimes over a wider area for which separate records are available that can provide data concerning the production of these goods and services and the materials, labor and physical resources used in the production.

Economic activity or business - is the activity of the establishment as classified under the1994 Philippine Standard Industrial Classification (PSIC). The main activity refers to the activity that contributes the biggest or major portion of the gross income or revenue of the establishment.

Effective response rate - is computed by dividing the total number of samples with good report, partial report, and report obtained from secondary sources, such as QSPBI, MISSI and financial statements from SEC and those extracted from consolidated report of related establishment; by the total number of samples for the sector.

Real estate establishment - Realtor, developer, agency, broker, lesser or companies engaged in the operating, developing, subdividing, buying and selling of real estate.

Renting of machinery and equipment without operator; personal and household goods establishment - Office or firm engaged in renting and leasing of transport equipment; agricultural, construction, engineering and office machinery and equipment; computers and computer peripherals equipment; wearing apparel; furniture; electrical appliances; audio-video machines, tapes and records; sports and recreational equipment; books, journals and magazines; ornamental plants and other personal and household goods.

Computer and related activities establishment - Office or firm engaged in hardware consultancy, software publishing, software development, data processing, database activities and on-line distribution of electronic content, maintenance and repair of office, accounting and computing machinery and others.

Research and development establishment - Office or firm engaged in research and development in natural sciences, engineering and technology, agricultural sciences, health sciences, social sciences, humanities and others.

Miscellaneous business activities establishment - Office or firm engaged in legal, accounting, bookkeeping and auditing; tax consultancy; market research and public opinion polling; business and management consultancy; architectural and engineering activities; land surveying services; technical and testing analysis; advertising; labor recruitment and provision of personnel; investigation and security services; cleaning of buildings of all types; pest control services; industrial cleaning activities; photographic activities; packaging activities; management and administrative services; bill collecting and credit rating services; business brokerage; stenographic, duplicating and mailing activities; fashion design; interior decoration services; call center activities; medical transcription and others.

Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provide and manage an organization’s critical and/or non-critical enterprise processes and applications. The most common examples of BPO are call centres, human resources, accounting and payroll outsourcing. Business process outsourcing may involve the use of off-shore resources.

Outsourcing (or contracting out) is the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.

Offshore outsourcing is the practice of hiring an external organization to perform some or all business functions in a country other than the one where the product or service will be sold or consumed.

Total Employment - is the number of persons who worked in or for the establishment as of November 15, 2005.

Paid employees - are persons working in the establishment receiving regular pay as well as those working away from the establishment when paid by and under the control of the establishment. Included are persons working as full-time or part-time and those employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers and workers receiving commission only.

Unpaid workers - include working owners who do not receive regular pay, apprentices and learners without regular pay, and persons working without regular pay for at least one third of the working time normal to the establishment.

Salaries and wages - are payments in cash or in kind, prior to deduction for employee’s contribution to SSS/GSIS, withholding tax, etc. Included are total basic pay, vacation, sick, maternity leave pay, overtime pay, and other benefits.

Revenue - refers to cash received and receivables for goods sold and services rendered.

Cost - refers to all expenses excluding compensation incurred during the year whether paid or payable. Valuation should be at market price including taxes and other charges, net of discounts, rebates, returns and allowances. Goods received from and services rendered by other establishment of the same enterprise are valued as though purchased.

Gross additions to fixed assets - refer to the cost of acquisition of fixed assets acquired in 2005 less the value of sales of fixed assets during the year.

Fixed assets - are physical assets expected to have productive life of more than one year and intended for use and/or being used by the establishment. Included are land, buildings, fixtures, machinery, tool, furniture, office equipment, vehicles, and the like.

Capital expenditures - refer to the cost of acquisition of fixed assets acquired in 2005 whether or not full payments have been made.

Subsidies - are special grants in the form of financial assistance or tax exemption or tax privilege given by the government to develop an industry or production and to protect it against competition.

Inventories - refer to stocks of goods owned by or under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation should be at current replacement cost in purchaser’s price at the indicated dates. Replacement cost is the cost of an item in terms of its present price rather than its original price.

Change in Inventories - is a derived indicator, computed as the value of ending inventory less the value of beginning inventory.

Value Added - is equal to the sum of total revenue, cost of fixed assets produced on own account, change in inventory of real estate for sale and change in inventory of materials, supplies and fuels less the following items: cost of materials and supplies purchased; cost of real estate purchased for sale; cost of fuels purchased to run motor vehicles, machinery and other equipment; cost of electricity purchased; cost of industrial services done by others; cost of non-industrial services done by others; cost of computer software expenses; cost of research and experimental development; and other costs (for real estate activities).

Value Added is also equal to the sum of total revenue, cost of fixed assets produced on own account and change in inventory of materials, supplies and fuels, less the following items: cost of materials and supplies purchased; cost of fuels purchased to run motor vehicles, machinery and other equipment; cost of electricity purchased; cost of industrial services done by others; cost of non-industrial services done by others; cost of computer software expenses; cost of research and experimental development; and other costs (for industries other than real estate activities).