THE Department of Trade and Industry (DTI) said it partnered with the Film Development Council of the Philippines (FDCP) to support the winners of the Young Creatives Challenge (YC2), which is intended to promote young talent in creative fields.

鈥淭hrough the Malikhaing Pinoy Program, we are committed to fostering the next generation of Filipino creatives,鈥� Trade Undersecretary Rafaelita M. Aldaba said.

鈥淭he YC2 is a testament to our dedication to nurturing talent and providing them with the necessary support to thrive in the global arena,鈥� she added.

Under the partnership, the FDCP will help produce the entries of the top 10 winners in the YC2鈥檚 screenwriting category, which the FDCP will solely fund.

According to Ms. Aldaba, the DTI will co-fund production of the films of the winners in the succeeding YC2 rounds.听

Meanwhile, the FDCP will also provide the top 3 winners with P1.7 million worth of support, including workshops, mentorships, resources, and networking opportunities.

FDCP Chairman and Chief Executive Officer Jose Javier Reyes said that the initiative can help give the next generation an environment that fosters their improvement.

鈥淔or the very first time, our government is recognizing the importance of creative industries, and because of that, the challenge has become more magnified,鈥� Mr. Reyes said.

The DTI said that season 2 of the YC2 will take place in September in collaboration with the office of Senator Maria Imelda Josefa Remedios R. Marcos. 鈥� Justine Irish D. Tabile

THE National Government鈥檚听(NG) debt as a share of gross domestic product (GDP) was 60.9% in the听second quarter, down from 61% a year earlier but rebounding from the 60.1% posted a quarter earlier, the Bureau of the Treasury (BTr) said on Thursday.

The government set a debt-to-GDP ratio target this year of 60.6%. It aims to bring this down to 56% by 2028.

The threshold considered by multilateral lenders to be manageable for developing economies is 60%.

At the end of June, the NG鈥檚 outstanding debt rose 0.9% from a month earlier to a record P15.48 trillion听due to the impact of a weaker peso.

The deficit as a share of GDP was 5.3% in the three months to June, picking up from 4.46% a quarter earlier and 4.8% a year earlier. The reading remained below the government鈥檚 5.6% deficit ceiling听set for this year.

In the first half, the deficit-to-GDP ratio averaged 4.9%, the BTr said.

The NG鈥檚 budget deficit narrowed 7.24% year on year to P209.1 billion in June.

In the first six months, the budget gap widened 11.2% to P613.9 billion. In the听first quarter, the听deficit widened 0.65% to P272.6 billion. 鈥� Beatriz Marie D. Cruz

THE WEST PHILIPPINE Sea, or South China Sea, is a major trade route, a source of potentially massive oil resources and a home to abundant marine life. It is also the site of the ongoing multiple island and maritime disputes involving China, Taiwan, Brunei, Malaysia, Vietnam, and the Philippines. The latter four are members of the Association of Southeast Asian Nations (ASEAN).

Each claimant asserts that it is the rightful owner of a portion of the sea, except China, which insists that it has rights over almost the entirety of the expanse of water, creating a regional row which is likely to go on for the foreseeable future.

These disputes were the subject matter of one of the sessions of the 大象传媒-PAL ASEAN Regional Forum, held last Nov. 24, in Pasay City. The session featured the discussions of three experts, namely Bonji Ohara, director for policy research at Tokyo Foundation, a Japanese think tank; Dr. Thanh Hai Do, senior fellow at the Diplomatic Academy of Vietnam; and Victor Andres Manhit, managing director of the advisory firm Stratbase Group.

During his remarks, Mr. Ohara pointed out the economic motive behind China鈥檚 aggressive expansion in the West Philippine Sea. The Chinese economy needs to grow so that the governing political group, the Communist Party of China, can maintain a stable rule over the country. If it doesn鈥檛 grow, the ensuing societal instability will harm the ruling party鈥檚 authority.

The activities of the China in West Philippine Sea can also be interpreted as the country鈥檚 challenge to the international order and rules, which, Mr. Ohara noted, have not been fair to Chinese economic development.

Mr. Ohara clarified that every country has the right to challenge the international order and rules — but only by discussion. 鈥淭he problem is China is using violent means,鈥� he said. And these measures, he added, should not be accepted.

Mr. Hai sees the dynamics of the West Philippine Sea conflicts as a 鈥渢ragedy of small and medium power politics鈥� in which the rights and legitimate interests of claimants like Vietnam, Brunei, and the Philippines are disputed. These countries, however, are short of the hard power needed to defend them.

Both Mr. Hai and Mr. Ohara agree that the ASEAN is a good platform for discussing the regional maritime issues. Mr. Hai said that the bloc can help avert the use of force in the waters. But the two experts have reservations. Mr. Ohara, for instance, noted that it鈥檚 difficult to get agreement from all the members of the bloc.

Mr. Hai said that there must be direct dialogue among Southeast Asian claimants, and that they should 鈥渟eek together and work out what their plan is if something happens at sea.鈥� He added, in a question-and-answer portion that followed the talks, that the South China Sea issue should continue to be raised within ASEAN.

In recent years, the Philippines has become the most outspoken critic of China鈥檚 belligerent expansion in the contested waters, lodging a high-profile case with the Permanent Court of Arbitration, in The Hague, Netherlands, which ultimately decided that China violated the country鈥檚 sovereign rights over several portions of the West Philippine Sea, and rejected its expansive claims.

President Rodrigo R. Duterte paid a visit to China last October with the aim of improving the Philippines鈥� economic ties with the superpower.

In the eyes of Mr. Manhit, this visit represents President Duterte鈥檚 giving China a chance to show that it can be a good partner.

However, Mr. Manhit cautioned that 鈥済ood ties can only be fostered if the Philippines can be confident that China will not escalate its activity in the West Philippine Sea.鈥�

He then reminded the audience of the country鈥檚 interests in the disputed sea.

鈥淓conomically, we have to remember鈥� that the role of government, aside from defending our maritime rights and defending our territorial integrity, is to ensure that it has sole ability to fully exploit our exclusive economic zone.鈥�

He said, moreover, that the continuing presence of Chinese military installations in certain parts of the sea should be a cause for great concern.

With regard to the victory handed to the Philippines by the Permanent Court of Arbitration, Mr. Manhit said, 鈥淭he Philippines must send, I believe, a continuing message that it values the ruling from the arbitral tribunal, that it will not agree to any resolution that does not abide by the terms of the ruling.鈥�

Not that average commuters will care.

Only a few years ago, taxis reigned with impunity. They refused to pick up passengers if they weren鈥檛 headed the driver鈥檚 way and demanded a premium for riding in their dingy vehicle while expressing uncouth behavior bordering on (one could say) presidential.

This explains why Uber, the rider-sharing service, found it easy to encroach into taxicab territory. Passengers, after all, were only too willing to pay extra for cleaner cabs and more congenial drivers.

Starting 2014, when Uber arrived in Manila, revenues of taxicab companies fell by double-digit levels, according to Jesus Manuel 鈥淏ong鈥� C. Suntay, who heads the Philippine National Taxicab Operators Association (PNTOA).

鈥淲e do not fear Uber. We don鈥檛 oppose them. We won鈥檛 oppose what鈥檚 going to be good for passengers,鈥� said Mr. Suntay, a former Quezon City councilor who owns Basic Taxi, which has a fleet of several hundred units.

鈥淲hat we oppose is the unequal treatment,鈥� he said.

What taxicab companies want is a fair shake from government, especially in issuing a franchise or a provisional authority (a temporary franchise).

Private cars can pick up and carry passengers as soon as Uber approves their registration, a process that takes only a day or two, including the issuance of temporary franchises.

In contrast, cab companies鈥� franchise applications aren鈥檛 processed quite as fast.

Unlike cars registered on Uber (which have reached 24,000, as of September 2016), cab companies have to wait three months to secure approval to operate taxis.

And this is where the story gets more complicated than your BFF鈥檚 Facebook relationship status.

To allow ride-sharing services, the Land Transportation Franchising and Regulatory Board (LTFRB) created a new transport category. Issued in 2015, the new rules covered what are now known as the Transport Network Vehicle Services (TNVS) to accommodate the likes of Uber.

But while the Philippines may have been the first in the world to issue ride-sharing rules, the new regulation provided a shortcut to securing a taxicab franchise 鈥� something the authorities stopped issuing years ago.

As a result, the ease of ride-sharing registration on Uber benefitted operators of 鈥渃olorum鈥� taxis that, for years, have been running without any franchise.

鈥淲hy run as illegal or unregistered when you can enroll in Uber?鈥� Mr. Suntay said.

Nevertheless, the industry official believes that the process of transferring franchises 鈥� some of which last 10 years 鈥� from old cabs to brand new replacements should be shortened.

After all, new cars acquired by taxicab companies, unlike Uber vehicles, can鈥檛 just be driven off the lot and pick up anyone waiting for a ride around the corner.

Besides securing franchises, these cars need to be fixed up. They need signages and logos painted and fare meters installed 鈥� all of which take up additional time, on top of the three-month waiting period.

And since these cars can鈥檛 pick up passengers during the wait, cab companies have to scramble for additional cash to meet monthly payments for the units, according to Mr. Suntay.

鈥淪ince [the government] allows Uber to use private vehicles to ferry passengers, why won鈥檛 it allow [cab companies] to use private vehicles to pick up passengers while waiting for our franchises? Why is it okay for Uber to use private vehicles and not okay for private taxi operators to use their vehicles?鈥� Mr. Suntay said.

The disparity, however, seemingly ended last July, when the LTFRB stopped accepting TNVS franchise applications 鈥� a move the taxi industry supports.

鈥淭here should be a study of passenger demand and road capacity because you don鈥檛 want to flood the streets with a particular mode of public transport. For Uber, it鈥檚 a free-for-all,鈥� Mr. Suntay said.

The LTFRB Board has yet to respond to queries on the matter, but Uber Philippines already warned that its service鈥檚 reliability may 鈥渟tart to go down鈥� if the suspension remains indefinite.

With fewer cars going online 鈥� since no new TNVS applications are being accepted nor processed 鈥� Uber users who previously left their cars at home might be prompted to take them out again.

鈥淭hat鈥檚 going to be unfortunate. We don鈥檛 want to have to buy more cars if we don鈥檛 have to,鈥� said Laurence L. Cua, Uber Philippine country manager.

鈥淚鈥檓 not saying that it鈥檚 bad to buy cars, people have the right to do that 鈥� it鈥檚 just it鈥檚 always more helpful if they have the option not to,鈥� he said.

So far, the LTFRB has given no indication as to when it will decide to lift the suspension on Uber franchises.

But there鈥檚 no question about it: passengers are better off, now that ride-sharing services have become widely available.

Next time they get rebuffed by taxis, they can always use their fingers 鈥� not for rude hand gestures against picky cabbies 鈥� but to tap on their smartphones to get rides. 鈥� Robert J.A. Basilio, Jr.

ON OCCASION, a fraternity gets big enough such that its members begin to establish cliques of their own, causing disunity in the organization. This, in turn, prompts the officers to initiate a 鈥渞umble鈥� with another fraternity. As a result, cliques are set aside and the frat moves as one in protecting their brods or beating up members of the other fraternity. This same logic may apply to China.

One of my dormitory roommates, a member of a fraternity, told me that anecdote while we were both students at the University of the Philippines in Diliman. While fraternities would seldom or never admit publicly that they initiated a rumble, it nevertheless is common knowledge to some members.

The same strategy may have been practiced by China in its continuing belligerence, particularly over secessionist regions and territories that it presumes to claim. The government in Beijing is increasingly becoming insecure with its more informed, more assertive citizens who dislike central planning and government-led intimidation. Some irreverent or potentially secessionist regions keep asserting their aspirations so it acts belligerently and court regional or global fallout in the process.

During the 大象传媒-PAL ASEAN Regional Forum held last Nov. 24, one of the sessions was 鈥淭he South China Sea or West Philippine Sea: The Economics of Competing Territorial Claims.鈥� Speakers were Bonji Ohara of Tokyo Foundation, Thanh Hai Do of Diplomatic Academy of Vietnam, and Dindo Manhit of Stratbase-Albert Del Rosario Institute in Manila.

The three speakers talked about non-military, non-confrontational schemes to resolve the territorial dispute. Rightly so. An insecure government like the China Communist Party (CCP) that bullies its own citizens will have no hesitance to bully other countries with smaller military capabilities.

What are the sources of insecurity by the CCP? First and foremost are the vocal and assertive potential secessionists.

The election of Ms. Tsai Ing-wen (DPP) in Taiwan last January has temporarily jolted the CCP and sounded another round of belligerence. Hong Kong pro-independence activists never went away, as shown by the Umbrella Revolution two years ago to the recent election of young legislators who are openly campaigning for HK independence from China.

The Uighur activists have figured in violent and fatal attacks in recent years. XUAR shares borders with five Muslim countries 鈥� Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, and Pakistan. And there are other potential rebel areas too like Macau and Manchu.

Second, a debt-fueled economy propped up by cronyism and dictatorship. As of 2015, China鈥檚 debt (government household + corporate debt) has reached 280% of gross domestic product (GDP).

Two papers have made the following observations:

鈥淯nsurprisingly, the lion鈥檚 share of the money has been funneled into China鈥檚 immense state-owned enterprises, which largely explains why they hold an outsize share of the country鈥檚 corporate debt,鈥� John Minnich said in a piece entitled 鈥淐hina鈥檚 economic problems will come to a head in 2017,鈥� published in Market Watch on Nov. 23. 鈥�(State-owned companies account for over 55% of that debt, despite contributing only 20% of GDP.) It also explains why, by comparison, China鈥檚 central government has an unusually low level of debt. (Beijing鈥檚 debt equaled only 22% of GDP in 2015.)鈥�

Similarly, in a May 10 piece for Fortune Magazine entitled 鈥淐hina鈥檚 Government Says It鈥檚 Over Debt-Fuelled Growth,鈥� Scott Cendrowski said that: 鈥淸C]redit ratings agency Moody鈥檚 noted that China鈥檚 total debt has climbed to 280% of gross domestic product, including China鈥檚 state-owned company liabilities that totaled 115% of GDP at the end of last year. For comparison, in Japan and South Korea, which also have large government-owned sectors, SOE (state-owned enterprises) liabilities were 31% and 29% of GDP in 2014.鈥�

Third, rich and intelligent people are leaving China, with a potential to come back as new reformists or outright becoming members of the opposition.

There was one survey in 2015 showing that more millionaires leave China than any other country in the past 14 years.

Here is another observation from the Wall Street Journal, two years ago: 鈥淐hina鈥檚 culture of corruption and abuse of power is a major reason so many of the country鈥檚 rich want to leave. A Barclays survey released Monday found that 47% of Chinese with more than $1.5 million in assets are planning to emigrate, and this is consistent with past research. Developed-country programs that allow investors to essentially buy residency continue to attract waves of Chinese,鈥� Hugo Restall said in a piece entitled 鈥淐hina鈥檚 Unhappy Rich鈥� for the WSJ鈥檚 Sept. 17, 2014 edition. 鈥淢any of China鈥檚 brainiest young people also want out. According to the state-run Xinhua news agency, the annual number of students who go abroad for study and don鈥檛 return reached 70,000 in 2012….鈥�

The CCP鈥檚 insecurity should rise through time because their own citizens inside and outside China hate heavy restrictions and dictatorship. To hide or temper this insecurity, China will try to be belligerent to hype up nationalist sentiments from its people.

China imploding someday, perhaps in one or two generations, will be a welcome news for the world. China may also break up into many new countries and governments. The main country may remain under the communist party, similar to what happened in the former USSR. But the newly formed countries will be more democratic.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET and ADRi.

minimalgovernment@gmail.com

CAPITAL AND INVESTMENTS are like water 鈥� they go where they are welcome and accommodated. Small water tributaries merge with others to become a big river, a lake, or drain into the seas. In the same way, capital congregates in areas where they are protected and allowed entry and exit with the minimum restrictions and prohibitions.

That is how some small countries and territories with fewer populations become wealthy and prosperous financial centers such as Singapore and Hong Kong.

The subject of multinational corporations in the Philippines was among the subjects discussed during the 大象传媒-PAL ASEAN Regional Forum last Nov. 24 at Conrad Hotel at SM MOA Complex. Session 4 was 鈥淚nvesting in the Philippines: Insights from Multinational Companies鈥� and there were five speakers: Rajiv Dhand, regional vice-president & general manager for operations of TELUS International Phils.; Laurence Cua, UBER country manager; Henry Schumacher, European Chamber of Commerce senior adviser; Jericho Go, Megaworld senior vice-president; and Alexander Cabrera, PwC Philippines chairman & senior partner.

Almost all speakers talked about their respective companies and their contributions to the country鈥檚 economic growth and job creation, among others. Mr. Schumacher, being the most experienced foreign businessman among them, provided the most direct answers to the theme. He said that what the foreign investors are looking for, among others, are (1) safe and secure investment locations like PEZA and other ecozones, (2) business-friendly local government units (LGUs), partnership between LGUs and businesses.

The turn off for businesses he said, are (1) corruption and unethical business practices, (2) no peace and order, and (3) changing rules and policies.

The World Economic Forum (WEF) produces an annual Global Competitiveness Report (GCR) where it measures 12 pillars of competitiveness of countries and economies worldwide. The pillars are grouped into three major subindices 鈥� basic requirements (pillars 1-4), efficiency enhancers (pillars 5-10), and innovation and sophistication factors (pillars 11-12). From these three subindices, the global competitiveness index (GCI) is computed and countries are ranked from highest to lowest.

Of these 12 pillars, the Philippines ranked badly in four measures: (1) institutions, (2) infrastructure, (6) goods market efficiency, and (7) labor market efficiency.

Institutions include property rights protection, corruption and bribery in government, judicial independence, wastefulness in public spending, burden of regulations, business costs of crime and violence, strength of investor protection, etc.

Infrastructure include the quality of roads, ports, railways, air transportation, electricity supply and telephone subscriptions.

Goods market efficiency cover intensity of local competition, anti-monopoly policy, business taxation, procedures and time to start a business, tariff and non-tariff barriers, prevalence of foreign ownership, customs procedures, etc.

Labor market efficiency includes flexibility of wage determination, hiring and firing practices, taxation on incentives to work, reliance on professional management, country capacity to attract and retain talent, female participation in labor force, etc.

Results are shown below for the two GCR reports 2014 and 2016.

These numbers show the following:
One, Singapore, Japan, and Hong Kong are in the top 10 most competitive economies in the world, with very high scores and ranking in infrastructure.

Two, the Philippines needs to improve efficiency and competitiveness in these four pillars because they have pulled down the country鈥檚 overall ranking. There was even a decline in overall ranking from 52^nd in 2014 to 57^th in 2016.

Three, there are lessons to learn from neighbors Malaysia, Thailand听 and Indonesia which have higher rankings than the Philippines. Vietnam and Cambodia鈥檚 overall ranks are improving and Vietnam may soon overtake the Philippines.

In the WEF鈥檚 Executive Opinion Survey 2016, these six factors are the most problematic: inefficient government bureaucracy, inadequate supply of infrastructure, corruption, tax rates, tax regulations, and Policy instability.

In short, government is mainly the problem.

There are three possible solutions here. One is to institute huge, large-scale professionalism in government, both elected and appointed bureaucracies, in both national and local government agencies.

Two, shrink the size and burden of government bureaucracies, regulations and taxation.

And three is to do both, improve the professionalism while shrinking the size of bureaucracies so that they can focus more on enforcing the rule of law and have little time and space for creating new regulations and taxation that tend to complicate if not contradict previous ones. Buy a good and start working on your report now.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a Fellow of SEANET and ADRi.

minimalgovernment@gmail.com.

MAKING SENSE of the younger generation is a reality that not everyone can fully grasp. Amid an integrated economic community where multi-faceted identities are determined to compete against the other to survive, there is a unique sub-market called millennials that is hastily influencing the way companies think and do business.

Millennials (or Generation Y) are those born between 1982 and 2004 and of the world鈥檚 7 billion population, they comprise at least 1.8 billion.

At the 大象传媒-PAL ASEAN Regional forum last Nov. 24, FINTQ President and Chief Executive Officer (CEO) Lito Villanueva stated that companies nowadays should become more 鈥渆dgy and progressive鈥� if they want to reach out their message to the young ones.

鈥淭he mind set of millennials would always be triggered by the requirements of the consumers,鈥� he said.

Understanding the behavior of millennials is admittedly not an easy task. Although Mr. Villanueva described them to be digitally adept and highly versatile, the younger generation is likewise known to have very short attention spans.

According to him, a recent study was conducted on the brain activity of human beings, which showed that the limited attention span of millennials has decreased from 12 seconds to 8 seconds. 鈥淲hat is very staggering to know is the fact that even goldfish would have a longer attention span of 9 seconds,鈥� he said.

Havas Media Ortega President and CEO Jos Ortega, on the other hand, stated that millennials are living rather patiently in a 鈥渃ompartmentalized鈥� world that is still governed by the Baby Boomers and Gen X-ers.

In spite of that, millennials are not very keen on being isolated into a single category as they lead very dynamic lives, whether it is online or offline. 鈥淔or them, it鈥檚 about the seamless existence between both worlds… They move from one to the other or they live both of them simultaneously,鈥� explained Mr. Ortega.

Millennials are torn between living the life their parents want for them and pursuing their passion. In effect, he challenged business heads to create services that would genuinely pique the interests of young people as well as become an 鈥渆xperience resource鈥� for them.

Mr. Ortega also noted that millennials have various personas across the social media outlets available, be it Facebook, Twitter, or Instagram.

鈥淲hen you want to understand the millennial today, it is not just looking at them in one platform, but looking at them across different platforms to get a 360-degree view and a true understanding of who they really are,鈥� he addressed the audience.

Brandwatch Vice-President for Asia-Pacific Christel Quek, meanwhile, shared the same sentiment on millennials having multiple personas. A root cause, perhaps, is the excessive amount of information and data being thrown at them. It is a blessing and a curse, she believes, because for the first time in history, all of the knowledge they want in the world is available at their fingertips via the Internet.

As a millennial herself, Ms. Quek openly shared that she had jumped from one job to another in the past 10 years 鈥� a typical scenario for many young people these days. Despite that, she said it鈥檚 not just about changing jobs for the sake of it.

鈥淚t鈥檚 that a lot of jobs that we try to do, we get bored with it because it鈥檚 always doing the same thing over and over again,鈥� she explained. 鈥淲e鈥檙e trying to do as many little things as possible in our jobs versus doing one same thing all the time.鈥�

She then asked those who claimed to not understand millennials, 鈥淗ave you actually tried to listen to them?鈥�

Ms. Quek said that over 95% of the information on millennials we see and read today were created in the past three years. Apart from that, she urged companies to research and get insights from qualitative and quantitative data if they want to see the younger generation in another light.

鈥淵ou can use technology for the better benefit if you don鈥檛 abuse it. But remember to try and listen more than you talk.鈥�

SELLING the unique Filipino experience to the world helped pave the success stories of local companies that made it big overseas as they bring the taste of the Philippines nearer to foreigners and the millions of Filipinos overseas.

Flag carrier Philippine Airlines (PAL) prides itself as an airline offering the best of the Filipino culture, making it a top-of-mind choice for those wanting to experience the country, even before actually setting foot here. The airline has branded itself as the 鈥渉eart of the Filipino鈥� offering seamless connection not just to local destinations but to nearby countries in the region.

鈥淧AL鈥檚 unique brand of customer service, buong pusong alaga or wholehearted service is the most important factor that shapes customer experience and differentiates us from the larger, international airlines,鈥� PAL President and Chief Operating Officer Jaime J. Bautista said in his speech at the recent 大象传媒-PAL ASEAN Regional Forum.

鈥淎s an international airline representing the Philippines to the world, [we bring] the best of the world to Filipinos. Our campaign, the heart of the Filipino, leverages on our hospitality and generosity as a people, our service that comes straight from the heart that鈥檚 truly Filipino, service that is characterized as magaling, maaasahan, maalaga, magalang, at maalalahanin.鈥�

The airline of taipan Lucio C. Tan currently serves 43 international destinations, including 20 regionally within East Asia, 10 in Australasia and the Pacific, seven in the Middle East, five in continental North America and one in Europe. It has 80 aircraft, operates in 30 domestic points, and ferry an average of one million passengers of different nationalities per year.

Philippine multinationals like PAL can stand parallel, if not directly compete with its foreign counterparts in by further modernizing its fleet, expanding its route network, improve flight availability, schedules, and increase codeshare partnerships; innovate products and enhance customer experience, Mr. Bautista said.

Aside from further expanding its long-haul flights, PAL will also focus on building its ASEAN network, with recent liberalization of open skies policy and noting that the region in the 鈥渇uture鈥� is now a fast developing economic driver in the world.

鈥淔or a legacy airline like Philippine Airlines, the question is not whether we grow regional rather the question is how do we commend this emerging market with the rest of our network. It makes more sense therefore for PAL to pursue its intended expansion to the rest of the world and showcase not only our beautiful places in the Philippines but also enabling the ASEAN countries,鈥� he said.

鈥淲ith its fast emergence, ASEAN is now looked at by many investors and some businesses with much interest. With the proximity of ASEAN points and at the same time diversity in language, politics, and culture in the ASEAN region, it is a very good product to offer that only ASEAN carriers like PAL can offer this. Some maybe skeptical considering [uncertainties overseas] but for many, the ASEAN region is the place to be and as an ASEAN member, I can proudly say that ASEAN is the future.鈥�

PAL launched it first international flight in 1946 to California.

Since then, it has fully developed its homegrown flights to the United States, servicing millions of Filipinos and currently competing 鈥渉ead-to-head鈥� with foreign players on other homegrown routes. The flag carrier noted that nearly half of its passengers are tourists to and from the Philippines, aside from the more than 10 million Filipinos it carry across the US, Canada, UK, Saudi, UAE, to as far as Australia and Japan, where it compete with both local and international low cost carriers and full-service legacy airlines that are 5-star rated.

To further support the local aviation industry, PAL said the government should also push the development of airport infrastructure 鈥� airport terminal and runway improvement; modern facilities; bigger space for increased capacity and leverage on enhancing technology for airport operations.

LOCAL COMPANIES鈥� FOREIGN EXPANSION
For Emperador, Inc., the liquor firm controlled by Andrew L. Tan, the strong Filipino base abroad also supported its initial expansion overseas.

鈥淲hen you go to liquor shops abroad, they [Filipinos] see Emperador and they feel connected with the Philippines,鈥� Glenn D. Manlapaz, managing director for Asia and International Markets Emperador Distillers, Inc. said separately during the forum.

The Philippine-listed company has expanded its footprint across 100 counties since it started its overseas expansion in 2013 with the acquisition of several liquor brands 鈥� brandy and sherry businesses of Beam Spain, S.L in February and the acquisition of other iconic brands Fundador Pedro Domecq, the Philippines鈥� largest selling premium imported brandy brand; Terry Centenario, Spain鈥檚 no. 1 selling brandy; Tres Cepas, Equatorial Guinea鈥檚 no. 1 brandy; and Harveys, United Kingdom鈥檚 no. 1 selling sherry wine.

It also took over Bodegas Fundador, known as Spain鈥檚 largest and oldest brandy cellars and brandy distillery in Tomelloso and acquired Scotch whiskey maker Whyte & Mackay Group Ltd. and its subsidiaries, the fifth largest Scotch whisky manufacturer in the United Kingdom.

Mr. Manlapaz said for Filipino companies going global means 鈥渋mproving the potential for expansion and growth; extending the product life cycle of the portfolio by finding new markets to sell them in; and reducing dependence on core markets.鈥�

鈥淚f the business is plagued by volatility due to seasonal demand cycles, you can even out your sales by tapping markets with varied or reverse fluctuations. Most importantly, learn to compete against foreign companies 鈥� take the battle to them.鈥�

Emperador recorded an annual sales of more than 30 million cases, controlling around 97% of the brandy market in the Philippines and approximately half the entire spirits volume in the Philippines. Emperador Brandy is the world鈥檚 best-selling brandy, and is the 2^nd biggest spirits brand in the world. It has grown its presence in 40 markets the last 24 months.

鈥淭aiwan has become our growth engine for overseas growth years in the last 24 months, Malaysia also and the Philippines has become one of the most promising markets in Southeast Asia,鈥� Mr. Manlapaz added. 鈥淭he biggest issue between doing business domestically and internationally is culture. Don鈥檛 think the whole world does business like you.鈥�

Emperador鈥檚 Mr. Manlapaz also has these pointers for local firms looking to expand overseas: 鈥淏uild a relationship before you get down to business; Don鈥檛 rush, be sensitive; bring an interpreter if needed; dress with authority and respect everyone you deal with, always…

Tycoon Andrew L. Tan, the chairman of the country鈥檚 largest liquor conglomerate earlier said apart from boosting 鈥渙ur long-term economic strength like other Asian economic powers, Philippine companies expanding overseas and going beyond our comfort zones or going to some uncharted territories, will definitely sharpen our skills as leaders.鈥�

Regina Capital Development Corp. Managing Director Luis A. Limlingan said bringing the Filipino brand differentiated the local multinationals in the global space.

鈥淭hese companies have been aggressively marketing their brand and services internationally for several years and have been reaping these benefits. In the case of Jollibee, they have been strategically opening stores in key locations, first with a strong Filipino base abroad and later adopting to their international preference. Emperador has already become one of the better known brands outside the Philippines, and they have acquired reputable names outside as well.鈥�

Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines for his part said in an e-mail 鈥渁 major factor that determines the success of a Filipino business overseas is the company鈥檚 ability to adapt to the taste and preferences of consumers in the foreign land. This is particularly true for Jollibee and Emperador which sells food and drinks.鈥�

JOLLIBEE FOODS CORP. (JFC), the biggest fast food chain in Asia, remains focused on expanding abroad to reach another milestone: Become one of the world鈥檚 five largest.

The company is buzzing past four giants 鈥� at the least 鈥� to join the top five publicly listed restaurant businesses in the world, Group President Jose Maria A. Mi帽ana, Jr. told the 大象传媒-PAL ASEAN Regional Forum in Pasay City last month.

Currently, JFC occupies the ninth spot in the global ranking based on market capitalization, a position that Mr. Mi帽ana deemed 鈥渋n step with our vision to be one of the Top 5 Restaurant Companies in the World.鈥�

In over four decades, the company has grown an ice cream parlor into a burger chain, a full quick-service restaurant, and a global brand currently with a store network of 4,000 branches inside and outside the Philippines.

鈥淥ur story dates back to 1975 as an ice cream parlor that evolved into a burger chain. We were incorporated in 1978 and went public in 1993,鈥� Mr. Mi帽ana recalled during the forum.

鈥淭hat paved the way for us not only to expand Jollibee the brand, but to expand our portfolio of brands in the Philippines, China, Vietnam and the United States, among other markets,鈥� the executive in charge of operations in North America noted.

The executive cited a piece of advice from Washington Sycip 鈥� the founder of auditing and accounting firm SGV. & Co. 鈥� that later kept the company on track to become a global brand: 鈥淒o not expand internationally at the expense of home.鈥�

鈥淪o, we focused our efforts at home,鈥� Mr. Mi帽ana said. 鈥淥ur six brands together in the Philippines with a total to over 2,500 stores is equivalent to around 60% of the market across 14 of the major quick-service restaurant brands.鈥�

JFC operates 239 stores under Greenwich, a pizza and pasta chain; 462 under Chowking, a Chinese restaurant; 381 under Red Ribbon, a cake and pastry business; around 451 under Mang Inasal, a grilled chicken concept; and 64 under majority-owned Burger King.

The company would eventually expand abroad, particularly in countries hosting a large population of overseas Filipino workers.

As of September this year, JFC operated 674 stores overseas.

Of this number, 321 are Yonghe King stores, 41 are Hong Zhuang Yuan outlets, 68 San Pin Wang outlets, 8 Dunkin Donuts establishments, 156 Jollibee, 33 Red Ribbon, 44 Chowking, and 3 Jinja Bar stores.

In addition, the company maintains a 50% interest in joint ventures for Highlands Coffee (with 147 stores), Pho 24 (with 33 outlets), 12 Hotpot (16) and other eight brands along with a 40% interest in Smashburger, which has 376 branches in the US.

鈥淎 couple of weeks ago, we opened our newest store in Vietnam in the Dong Da district of Hanoi. This is our 81^st store in Vietnam,鈥� Mr. Mi帽ana noted during the forum, adding that JFC also opened its third store in Hong Kong two weeks ago.

鈥淭he new store is located at Mongkok Commercial Center beside the MTR Exit Station, and is in the middle of Mongkok, considered by Guiness Book of Records as the busiest district in the world with a population density of 130,000 per square kilometer.鈥�

JFC is bringing its flagship brand Jollibee in more locations in Canada and the United States next year, Mr. Mi帽ana told reporters on the sidelines of the forum.

In Canada, the company is looking to enter the province of Ontario after opening a store in Winnipeg within the month. In the US, it intends to open a store in Florida and Manhattan as well as a second outlet in Chicago.

The fastfood giant also intends to introduce the homegrown brand to the European market. It intends to start with Italy, where many Filipinos work and live.

Mr. Mi帽ana noted that building a global brand requires 鈥渟uperior products鈥� tailor-fit to each overseas market but, in competing abroad, 鈥渢here鈥檚 not much difference with how we do it here at home in the Philippines.鈥�

Local companies seeking a global footprint, Mr. Mi帽ana said, needs to 鈥渦nderstand market using scientific market research with common sense; build a unique and differentiated product that will stand out; and replicate that superior product by systems from farm to fork in our case.鈥�

鈥淪ustain with purpose by building a palpable inspiring culture with a strong team; and where applicable, develop partners guided by my 3Cs of Leadership鈥� 鈥榣ook for competence, character, chemistry.鈥欌��

THE PHILIPPINES is proving to be a critical investment gateway to the emerging Association of Southeast Asian Nations (ASEAN) market, a role underscoring the need to expand its capacity to take in the inflows.

This, among others, was one of the insights shared by leaders of multinational companies at the 大象传媒-PAL ASEAN Regional Forum in Pasay City last Nov. 24, reaffirming the economy鈥檚 attractiveness to foreign investors.

鈥淸T]here are not many growth markets around the world anymore,鈥� Henry J. Schumacher, senior adviser at the European Chamber of Commerce of the Philippines, said in a presentation. 鈥淭oday it鈥檚 ASEAN, and the Philippines is very much part of that.鈥�

Mr. Schumacher cited the manufacturing and the information technology-business process outsourcing (IT-BPO) sectors among the growth drivers of the domestic economy.

In the BPO industry, more companies continue scouting for expansion opportunities in the Philippines particularly in the countryside, TELUS International Philippines Regional Vice-President Rajiv Dhand noted in a separate presentation.

鈥淲e鈥檙e looking at the idea of this administration to decentralize and regionalize. I think this is the question that I鈥檓 concerned with previously: How do people, how do business, in central Luzon and central Cebu move to the countryside?鈥� Mr. Schumacher said.

鈥淭he 10-point agenda makes it very clear that this is going to happen and should happen,鈥� Mr. Schumacher added, referring to the socioeconomic program of President Rodrigo R. Duterte鈥檚 administration.

The agenda includes continuing current macroeconomic policies that include fiscal, monetary, and trade thrusts. The government also aims to promote rural and value chain development to increase agricultural and rural enterprise productivity and rural tourism; and ensuring security of land tenure to encourage investments and address bottlenecks in land management and titling agencies.

Besides looking outside key cities, outsourcing companies are moving to higher-value and more sophisticated IT-BPO services, Mr. Dhand said.

In its socioeconomic program, the Duterte administration committed to investing in human capital development and match skills and training to meet the demand of businesses and the private sector; and promoting science, technology and the creative arts.

PRIVATE SECTOR HELPS ECONOMY ABSORB MORE INVESTMENTS
In expanding the economy鈥檚 capacity to absorb more investments, the private sector plays an equally important role.

Listed property developer Megaworld Corp., for instance, attracts investments beyond the traditional business districts in the National Capital Region through its pioneering mixed-use properties called townships mostly located outside the metropolis.

鈥淚n 1997, we brought a new concept and we presented it to the Philippine Economic Zone Authority (PEZA) about having an IT Park,鈥� Megaworld Senior Vice-President Jericho P. Go said.

鈥淲hat PEZA had before was an industrial park and that is very different because it鈥檚 outside Metro Manila, so we provided them research of what we鈥檝e done in Bangalore in India. We also went to Singapore and this allowed us to make a proposal to the government to be the very first IT Park which is now known as Eastwood City.鈥�

The township model, which Megaworld has since adopted in 21 developments across the country, include residential, commercial and leisure spaces catering to the needs of the employees.

鈥淲e have already expanded this proof of concept to other parts of the Philippines, particularly in Fort Bonifacio, where we have one of these developments. I think this is very important because it provides opportunities for growth, as we encourage more of the BPO companies to locate in the Philippines.鈥�

Meanwhile, ride-hailing application Uber seeks to help solve the worsening traffic situation in Metro Manila, which the Japan International Cooperation Agency estimated to have cost the economy P2.4 billion a day in 2014.

Uber Country Manager Laurence Cua attributed the congestion of the metropolis鈥� roads to the growing number of Filipinos who can afford to buy their own cars.

Vehicle sales in the Philippines have supposedly tripled over the last 10 years, with 300,000 new cars hitting the road in 2015 alone.

鈥淎nd you know what, when we looked at the data, that problem isn鈥檛 really going to stop because every developed economy in the world has seen that when their GDP per capita starts going above $4,000, people start buying their cars,鈥� Mr. Cua said.

To ease traffic in the region, Uber has made ridesharing and carpooling among Filipinos through its mobile application.

GETTING 鈥楻EAL鈥� ABOUT FOREIGN INVESTMENTS
At the regulatory front, the member firm of PricewaterhouseCoopers (PwC) in the country, Isla Lipana & Co., noted that foreign investors actually have less to worry about.

鈥淲hile foreign investments are coming, the fact is the Philippines remains to be an investment laggard in Asia,鈥� PwC Philippines Chairman and Senior Partner Alexander B. Cabrera said in a presentation to the forum.

鈥淎nd while everybody gets very excited about the possible lifting of foreign equity limitations or most hindrances to foreign investment, the fact is, even the government admitted that it may take about three more years thereabouts before anything can happen with the amendment of our constitution to lift these constitutional limitations.鈥�

In the meantime, businesses can live with 鈥渢he realistic things鈥� as in the case of Uber, Mr. Cabrera noted.

鈥淭his is a rider app that鈥檚 providing transport services 鈥� one example of a 100% foreign entity engaged in that general area without engaging in that restricted area of servicing the public. Uber provides the app and booking service while the drivers own the cars and provide the public service.鈥�

Mr. Cabrera also cited the possible rationalization of incentives given to businesses among the concerns of foreign investors. Yet, registering with PEZA could supposedly offer a solution.

鈥淐orruption is still an issue for multinational corporations in the Philippines,鈥� Mr. Cabrera further noted. 鈥淢y message really is you can do business in the Philippines everything above board on parallel dealings.鈥�

Businesses supposedly have a part to play in fighting corruption by sticking to the rules and shutting down under-the-table dealings, according to PwC Philippines.

鈥淏ecause we have always dealt on an above-board basis, we fear no one. We go to Malaca帽ang, we go to Supreme Court, we fear no one. This is also a message to multinational companies,鈥� Mr. Cabrera said.

The PwC Philippines executive allayed concerns about Mr. Duterte鈥檚 bias against labor contractualization as well, saying: 鈥淚鈥檇 like to tell you that the labor law has not changed. The basic law did not change.鈥�

The country鈥檚 labor laws allow companies the flexibility of contracting of labor when the need for a bigger work force arises, provided that workers under such an arrangement receive the benefits due them.

Nevertheless, the Duterte administration has committed to implementing reforms aimed at making doing business in the Philippines easier. And the private sector continues banking on that promise.

鈥淚 am convinced that this is something that we are really trying to get across, that the Philippines is an ideal jumping board into the ASEAN market,鈥� Mr. Schumacher said.

A SHOWDOWN looms among the President鈥檚 men over the ticklish matter of prolonging the country鈥檚 rice quota.

Department of Agriculture (DA) Secretary Emmanuel F. Pi帽ol has expressed preference for extending the quantitative restriction (QR) on rice by another two years, or until 2019, in a bid to give the government鈥檚 self-sufficiency program another try.

An extension of the QR however doesn鈥檛 sit well with President Rodrigo R. Duterte鈥檚 two main economic managers, namely Finance Secretary Carlos G. Dominguez and National Economic and Development Authority (NEDA) Director-General Ernesto M. Pernia, both of whom cite the failure of past administrations鈥� self-sufficiency programs.

The QR is a non-tariff barrier that limits the amount of rice that can enter the Philippines, which is the world鈥檚 biggest importer of the grain.

Under global trading rules, countries are supposed to phase out such barriers and replace them with tariffs, the schedule for reduction of which was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT).

When it signed up for the World Trade Organization (WTO) in 1995, the Philippines sued for more time to strengthen its rice sector against foreign competition. In exchange for keeping its QR for 10 years, Manila granted concessions to countries that would incur opportunity costs arising from the Philippines鈥� import restriction on the staple.

The country successfully negotiated for two extensions of the WTO waiver on the tariffication of rice, the second such extension ending in July next year.

When it secured the 10-year waiver from the WTO in 1995, Manila had agreed to a minimum access volume (MAV) of 119,460 metric tons (MT) of rice with an in-quota tariff of 50%. The MAV is the amount of rice that the Philippines committed to import at the lower tariff.

Upon securing the first extension, which lasted seven years or until 2012, the Philippines committed to increase the MAV to 350,000 MT and lower the in-quota tariff to 40%.

During the negotiations for the second extension, which was granted in 2014, the Philippines had agreed to, among others, increase the MAV to 805,200 MT and reduce the in-quota tariff to 35% corresponding to the Asean Trade in Goods Agreement (ATIGA) duty and a most-favored nation (MFN) rate of 40% for volumes imported outside the MAV.

The MFN tariff is the minimum duty imposed on an import from another WTO member with whom the importing country has no preferential trading arrangement. ATIGA is an example of a preferential trading arrangement involving members of the Association of Southeast Asian Nations.

鈥淲e need to go back to 350,000 MT,鈥� Assistant Secretary Mercedita A. Sombilla said, referring to the MAV prevailing during the first extension.

鈥淒efinitely, the same scheme will be set up. There will be in-quota, and there will be out-quota,鈥� said Ms. Sombilla, who is director of the NEDA鈥檚 Agriculture, Natural Resources and Environment Staff.

The reversion to the pre-2012 tariff levels is contained in Executive Order (EO) 190, which was issued last year by then President Benigno 鈥楴oynoy鈥� Aquino III.

According to Sec. 2 of the said order, 鈥渢he concession entered by the Philippine government shall cease to exist upon the expiration of the waiver.鈥�

After more than two decades of maintaining the QR, the government has yet to attain its goal of self-sufficiency in rice. Local production averaged 3.9 MT a hectare a year, lower than the 7 MT average of neighbors Thailand and Vietnam, both of which are the world鈥檚 top suppliers of the staple.

The Agriculture department鈥檚 Mr. Pinol, however, is keen on a third extension of two years, or until 2018, for one last attempt at attaining rice self-sufficiency.

鈥淔armers are unprepared for the lifting of the quantitative restriction,鈥� he told a Senate hearing last month. Any extension would have to go through Congress, and given a politically sensitive commodity like rice, mustering enough votes is not a problem for proponents.

CHICKEN NUGGETS, HOTDOGS
Should the Philippines fail to secure an extension of the QR, the consequences go beyond the rice sector. This as the concessions Manila granted in exchange for the WTO waiver involve other agriculture products.

Think chicken nuggets or hot-dogs, a key ingredient of which is mechanically deboned meat (MDM).

To appease other countries that stand to lose from its rice QR, the Philippines agreed to cut tariffs on MDM to 5%. An end to the QR would result in a 700% increase in the duty on MDM imports.

鈥淚f you remove the QR, the tariff on mechanically deboned chicken would rise to 40%,鈥� Simeon C. Amurao, Jr., director of the DA-Bureau of Animal Industry (BAI), said, adding that meat processors import bulk of their raw materials to manufacture their products.

This is why a group of meat processors has echoed the Agriculture chief鈥檚 call for another extension of the QR, citing the dire impact on their production costs. Without the extension, meat processors are bracing for skyrocketing prices next year.

鈥淭hat鈥檚 very damaging to the processed meat industry,鈥� said Francisco J. Buencamino, executive director of the Philippine Association of Meat Processors Inc. (PAMPI).

鈥淭hat鈥檚 why our association is negotiating for a status quo, [that] the QR be retained and the 5% be also retained for the arrangement not to lapse,鈥� he said.

鈥淲e don鈥檛 have local substitutes since there is no production of MDM here in the country so we really have no choice but to just pay higher duties for our use of mechanically separated meat. That means that most processed products will have to go up in cost,鈥� he added.

Another option for PAMPI members, which number 35, is to reformulate their products so they cut down on MDM use.

鈥淪o the likelihood is we will be re-tailoring our formulations to reduce the use of MSN (mechanically separated meat) so the impact on prices is not much,鈥� said Mr. Buencamino.

Data from the National Meat Inspection Service show that the Philippines imported 110.19 million kilos of MDM from chicken and 1.51 million kilos MDM from turkey in the first nine months of this year. These comprise 96.98% of the country鈥檚 total MDM imports.

Last year, the Philippines ordered 157.55 million kilos of MDM from chicken and 3.59 million kilos of MDM from turkey. Another 729,277 million kilos of MDM from pork entered the country last year.

Major sources of MDM from chicken are the US, Brazil, and the Netherlands, while MDM from turkey is mostly imported from the US, Canada, and the Netherlands.

Processed meat production last year stood at an estimated 800,000 MT, according to Mr. Buencamino.

TECHNICAL SMUGGLING
The meat processors鈥� clamor for a status quo, however, has not gone unchallenged.

Local meat producers said the end to the rice QR and the accompanying trade concessions would help address the growing incidence of technical smuggling.

鈥淪ome of the importers 鈥� not all though 鈥� they use this as a cover for technical smuggling,鈥� Pork Producers Federation of the Philippines, Inc. (PPFP) President Edwin G. Chen said, referring to the low tariff on MDM and pig fat.

鈥淭hey will misdeclare the shipment as fat or offal so the tariff rate is very low at 5% to 10%. But they will mix in some prime cuts, which otherwise should be slapped a 30% tariff,鈥� he said.

Mr. Chen said part of the problem is the Bureau of Customs鈥� (BoC) lack of technical capacity to inspect thoroughly the container vans that bring in the meat products 鈥� a weakness that some importers take advantage of to falsely declare imports.

Should the government push through with the rice QR extension, then pork products should be removed from the list of concessions, he said.

PPFP has been lobbying for an increase in the tariff on offal, skin, rind, fat and MDM 鈥� all of which are sources of misdeclaration 鈥� to a range of 30% to 40%.

The previous administration stalled the country鈥檚 tariff reductions, passing on to the Duterte government the burden of proceeding with the country鈥檚 commitments to open up the agriculture sector to greater foreign competition.`

Despite significant concerns about its economic and social implications, the movement of people across the world鈥檚 borders boosts global productivity. The countries that prioritize integration stand to make the most of this potential 鈥� improving outcomes for their own economies and societies as well as for immigrants themselves.

More than 90% of the world鈥檚 247 million cross-border migrants moved voluntarily, usually for economic reasons. The remaining 10% are refugees and asylum seekers who have fled to another country to escape conflict and persecution. Roughly half of these 24 million refugees and asylum seekers are in the Middle East and North Africa, reflecting the dominant pattern of flight to a neighboring country.

But the recent surge of arrivals in Europe focused the developed world鈥檚 attention on this issue.

Roughly half of the world鈥檚 migrants have moved from developing to developed countries, where immigration is a key driver of population growth. From 2000-2014, immigrants contributed 40%-80% of labor force growth in major destination countries.

Workers moving to higher-productivity settings boosts global GDP. McKinsey Global Institute (MGI) estimates that migrants contributed roughly $6.7 trillion, or 9.4%, to global GDP in 2015 鈥� some $3 trillion more than they would have produced in their origin countries. North America captured up to $2.5 trillion of this output while up to $2.3 trillion went to Western Europe. Migrants of all skill levels make a positive economic contribution, whether through innovation, entrepreneurship, or freeing up natives for higher-value work.

Employment rates are slightly lower for immigrants than for native workers in top destinations, but this varies by skill level and by region of origin. Refugees typically take longer than voluntary migrants to integrate into the destination country. Immigrants generally earn higher wages by moving, but many studies have found their wages remain some 20%-30% below those of comparable native-born workers.

Extensive academic evidence shows that immigration does not harm native employment or wages, although there can be short-term negative effects if there is a large inflow of migrants into a small region, if migrants are close substitutes for native workers, or if the destination economy is experiencing a downturn.

The costs of managing entry are typically less than 0.2% of GDP across major destinations but can escalate when there is a large wave of refugees. Most studies indicate that immigrants have a small but net positive fiscal impact in their destination countries and play a positive role in easing pension burdens.

The economic, social, and civic dimensions of migrant integration need to be addressed holistically. An examination of 18 major destination countries reveals that not a single one is addressing all three of these aspects effectively. We identify more than 180 promising interventions from around the world that can improve integration outcomes. Some of their guiding principles include changing the narrative to recognize the economic opportunity inherent in immigration; beginning integration interventions early and sustaining them over the long term; empowering local stakeholders to implement initiatives that work for their communities; making integration a two-way process between native-born and immigrant communities; and building partnerships with the private sector and NGOs.

Narrowing the wage gap between immigrant and native workers from 20%-30% to 5%-10% through better economic, social, and civic integration would translate into an additional $800 billion to $1 trillion in global output annually. The success or failure of integration across areas such as employment, education, health, and housing can reverberate for many years, influencing whether second-generation immigrants become fully participating citizens or remain in a poverty trap.

(This is taken from a 136-page report entitled 鈥淧eople on the Move: Global Migration鈥檚 Impact and Opportunity鈥� issued in December 2016 by the McKinsey Global Institute. To download the full report, please visit: www.mckinsey.com/mgi.)

Fernando Zobel de Ayala,
President and COO
of Ayala Corporation

AT A听TIME听of enormous volatility in various parts of the world, we are indeed fortunate to be operating within ASEAN which has shown consistent growth and has become such a dynamic region.

Today, I would like to touch on why we believe Philippine enterprises are in a unique position to compete regionally and globally. And how we can continue to harness the country鈥檚 growing momentum to our advantage as we look at the international markets.

As we all know, the Philippines has been on a sustained growth trajectory for more than a decade. We have stayed resilient in spite of enormous headwinds from global, political, and economic uncertainty, as well as external shocks and natural disasters. Investments have increased and there has been a dramatic improvement in the credit ratings and in the overall confidence of the business sector in the country.

I鈥檓 sure many of you will agree that this is a special time in our country鈥檚 history. A unique window of unprecedented sustained economic growth. A unique window that we should never take for granted.

So how did the Philippines get to this stage? It wasn鈥檛 so long ago that the country was deemed an unpredictable and volatile market. We lag behind our peers in attracting foreign capital and investing in industrial development. Domestic businesses were not as goodish as they are today. Many of the local companies did not have the resources necessary to aggressively invest in large-scale opportunities. Moreover, interest rates were very restrictive, access to capital was a challenge, and investment opportunities were not very transparent.

We have seen just how much the situation has transformed in recent years. Much has been said about our country鈥檚 demographic dividend and our consumption-based growth fueled by overseas remittances and the growing BPO sector. However, it is also important to know that our country鈥檚 growth has been enabled by a stable, conducive environment that inspires business and investor confidence. We have been very fortunate to have had consistently sound macroeconomic management under recent administrations. A disciplined fiscal and monetary policy and well-managed interest and inflation rates has created and continues to create an enabling ecosystem for business. This produced huge inflows, generated improved credit rating scores and a positive global attention.

In turn, Philippine businesses grew more confident with stronger valuations, greater access to funding, and increased liquidity to investors.

With stronger balance sheets or well-capitalized banking system at the lowest cost of capital in modern Philippine history, businesses looked for opportunities to diversify, expand, and deploy their capital locally or overseas.

As a result, value creation has grown significantly over the past decade. Our largest publicly listed companies have at least doubled their market capitalizations from 2006 with some even growing by more than nine times during that period.

This has given Philippine businesses an even stronger advantage to invest overseas using dramatically improved valuations, more access to capital, and lower interest rates to find growth opportunities regionally and globally.

The point that I鈥檓 going to highlight is that without the radical transformation of our economy, Philippine businesses would not be in such an excellent position for regional and international expansion. We need to sustain this unique economic environment.

To cite an anecdote from our own experience in Ayala, greater access to capital and stronger valuations have given us a strategic advantage for international investments. These allowed us to invest in a real estate company in Malaysia, various water and infrastructure businesses in Vietnam, and to acquire industrial technology businesses in Europe.

In addition, we have been backed by Philippine banks with internationally competitive rates. This is a unique time in our business history where Philippine banks have both the liquidity and the competitive rates to back the expansion of Philippine business. This brings me to my second point, that given the heightened competitiveness of Philippine businesses ASEAN economic integration clearly presents a natural compelling opportunity for regional expansion.

Aside from geographic proximity and a certain cultural alignment, ASEAN represents tremendous potential. ASEAN today consists of a very large market of 625 million people. This is expected to reach nearly 700 million by 2025. The region also has the third largest labor force trading only China and India. It enjoys a demographic dividend with 60% of the population below the age of 25. Moreover, higher-skilled workers are younger with a median age in the mid-20s suggesting an increasingly well-educated population. A productive labor force and increasing consumption have bolstered Southeast Asia鈥檚 economic expansion with the region growing at over 5% in the past decade.

Further implementation of the ASEAN Economic Community or AEC could boost the growth of countries by up to 7% by 2025. Despite challenges in the global economy ASEAN has remained resilient. In 2015, ASEAN accounted for $120 billion in global FDI inflows, around 18% of which can be attributed to intra-ASEAN investment. We should note that the Philippines was one of the countries that received the higher levels of intra-regional investment last year. This leads to the advantage that ASEAN has over other trading blocks, its pragmatic and outward-oriented approach to regionalism. The AEC takes into account the heterogeneity of the region as opposed to a common trade policy and legally binding frameworks that may not consider differences in market maturity or some of the problems that others have encountered. Clearly, ASEAN presents significant opportunities for growth.

This brings me to my last point.

Given the opportunities for regional expansion, how can Philippine businesses take advantage of this opportunity?

I believe that there are three key considerations.

First, we need to maintain a strong and sustainable business environment locally. This includes continuity in governance, structural, and fiscal reforms that spur the growth that were seen today. It also requires maintaining our traditional areas of strength in the services sector, particularly in the IT-BPO and tourism sectors while enabling other growth opportunities such as agribusiness and manufacturing. Moreover, this will also involve empowering our many micro, small, and medium enterprises (MSMEs) around the country to be able to compete and participate in the regional market.

In light of this, we believe that the implementation of the current administration鈥檚 10-point economic agenda will help maintain our growth trajectory. There are also significant efforts under way from our new government鈥檚 economic team to boost the competitiveness of local MSMEs and to support the services sector, the revival of the manufacturing industry and other priority areas.

Second, to be successful internationally, we must continue to harness the global Filipino work force to our advantage. There is no question in my mind that our human capital is one of the best in the world and is one of the strongest advantages that we have as a country. Filipinos are recognized worldwide for our high English language proficiency, intellectual talent, creativity, and productivity. In addition, we all know that Filipinos are among the best in terms of global adaptability. Overseas Filipinos have proven to be very resilient, respectful of other cultures and highly adaptable in international settings integrating well into other societies and foreign business environments.

Interestingly, today we find ourselves in another unique position. We鈥檙e seeing a reverse movement of Filipino talent. Because of the country鈥檚 strong growth and potential, we are now able to attract back Filipinos with the best global training and experience. Together with the local work force, this puts our businesses in an excellent position to extend our footprint overseas with Filipino leadership and skills as a core strength.

Finally, to be successful regionally, Philippine businesses need to develop in-depth local market knowledge and cross-border strategic relationships with ASEAN counterparts. Despite the advantages we have today, businesses will need to remain cognizant of the challenges of executing an ASEAN expansion strategy.

Allow me to highlight a few key challenges. Disparities in cultural, social, and political structures and development across nations will not accommodate a one-size-fits-all approach. These differences also give rise to challenges on opportunities that differ from nation to nation which should be matched with the capabilities of business. Second is the lack of a local network. Finding a suitable local partner especially one with the complementary set of values is especially helpful in navigating the business environment and understanding local culture and social norms.

Finally, the relative unpredictability of policy particularly the variance between legal and regulatory frameworks and their implementation on the ground. This is a far more complex challenge with no easy solutions. These challenges underscore the need for Filipino businesses to better understand the intricacies of local markets and to develop strategic partnerships overseas. These, together with the continued strength of Philippine business environment and our human capital advantage, can help us to remain competitive in overseas expansion.

In closing, it is clear that Filipino businesses are in an exceptional strategic position to compete on a regional and global scale. With stronger balance sheets, enhanced expertise, and more progressive thinking, Philippine businesses are increasingly diversifying overseas. Some pioneers of regional and international expansion were the SGV Group, Universal Robina Corporation, San Miguel, the Carlos Chan Group, Unilab and Philippine Airlines, all of whom made inroads into Asia long before the resurgence of the Philippines and the greater regional integration. Many others have followed including Jollibee, the Aboitiz Group, Alliance Global, retail groups like Bench and ourselves.

With regional integration presenting even more opportunities, I believe this list will only continue to grow. These are just a few examples but I believe they highlight the fact that these are exciting times for Filipino businesses.

With our large corporations or MSMEs, there are a vast number of opportunities available to us in ASEAN and beyond. I have no doubt that the discussions over the rest of the day will be invaluable in spurring further thinking and meaningful insight on how companies can seize these opportunities.

The stock market is one of several indicators that show how an economy or a country is doing because it represents the inflow and outflow of investments, which are mainly driven by outlooks over the short and medium terms. It is also an indicator of how the rule of law is respected or trampled by a government in power.

During the 大象传媒-PAL ASEAN Regional Forum last Nov. 24 held at Conrad Hotel, SM MOA Complex, among the sessions tackled was 鈥淯nity in Diversity: A Political-Economic Outlook.鈥� The speakers were Department of Budget and Management (DBM) Secretary Benjamin E. Diokno, Asian Development Bank (ADB) Country Economist Aekapol Chiongvilaivan, and McKinsey Managing Partner Suraj Moraje, and Philippine Stock Exchange (PSE) President and CEO, Hans B. Sicat.

Mr. Sicat said that year to date (ytd), there has been net foreign buying of P17.6 billion or $373.6 million.

But in the period from Aug. 23 to Sept. 23 or one month straight, there was sustained net foreign sell off. The peso-dollar exchange rate also experienced significant depreciation from mid-September, touching the P47-to-a-dollar level and never looked back until it reached the near P50 level in late November.

This is bad news because the PSE was among the best performing stock markets in the region over the past decade.

The table shows the following:

One, in terms of expansion of stock market values in just one decade from 2005 to 2015, the best performing was China, which expanded by more than 20 times, the Philippines with more than six times, Vietnam with five and a half times, and Indonesia with 4.3 times.

Two, in terms of stock market capitalization as percent of gross domestic product in 2015, first is Hong Kong, second is Singapore, third and fourth are Taiwan and Malaysia.

And three, global capitalism is generally more generous to emerging economies like China, the Philippines, and Vietnam. Their previously highly repressed financial sector when liberalized has posted fast growth and expansion in a short period as one decade.

Let us now check another piece of data, the annual growth rate of stock markets of the same countries and economies over the past six years.

Meanwhile, we also need to recognize several facts:

One, the Philippines has the best performing stock market in the Asia Pacific over the past six years. Despite its warts and problems, the past administration has done something that really improved business confidence in the country.

Two, China, Taiwan, Singapore, and Vietnam have experienced roller-coaster rides in their equities markets.

Three, this year, though, especially the second half of the year, is particularly bad for the Philippines, from the best performing to badly performing over the past few months.

It seems the current administration in the Philippines is reversing the business confidence built over the past six years.

The new President鈥檚 disrespectful, crass, and vulgar assertions with his frequent 鈥渒ill, murder, shoot鈥� pronouncements could have contributed to the possible reversal in business confidence, at least in the stock market.

A more civilized President, an anti-drugs war with sufficient respect for human rights of the accused, an explicit disavowal of possible declaration of Martial Law and suspension of the writ of habeas corpus, and a business environment conducive to investors is badly needed.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow.

minimalgovernment@gmail.com

The Philippines remains a market of choice for services, thanks to its educated and English-speaking residents but investors emphasize that it is Filipinos鈥� passion and warmth for their work that often seals the deal.

With a 43 million-strong work force churning out high-quality output, the country has cemented its position as among the key labor markets of the world, top corporate officials said during the recent 大象传媒-PAL ASEAN Regional Forum last Nov. 24. For them, the Filipino brand is service with a heart.

鈥淲hen we look at the BPO (business process outsourcing) sector and its success, it really is driven by the warmth of the Filipino population. A Filipino phone call is fundamentally more pleasant than most other nationalities in the world, and that鈥檚 just the service orientation that comes with the culture,鈥� said Suraj Moraje, managing partner at global consulting firm McKinsey & Co., Inc.

The burgeoning BPO sector currently employs about 1.15 million Filipinos. The industry is expected to remain growing, with present outsourcing firms pursuing expansion 鈥� with some even 鈥渧ery aggressive鈥� in terms of growth, said Jericho P. Go, senior vice-president of property developer Megaworld Corp.

鈥淚 have heard this somewhere: they say that in Asia, China is the muscle because of their manufacturing capacity, India would be the brain because they have a lot of intelligence in terms of software. The Philippines would be the heart, because we provide service and that鈥檚 what we鈥檙e known for,鈥� Mr. Go said during the forum, noting the quality of daily work stands as a Filipino鈥檚 comparative advantage.

鈥淚n terms of branding, it鈥檚 all about the quality that we produce鈥� Most often we are not the cheapest, but the way that we provide the service, the quality that we put into the products we export has been recognized by the international community.鈥�

Fernando Zobel de Ayala, chief operating officer at Ayala Corp., sounded off the need to pour more funds into human capital development by beefing up the skills of the Filipino workforce 鈥� a feat assured by Budget Secretary Benjamin E. Diokno, who assured that the national government is pursuing the same tack.

Services growth logged 6.9% during the third quarter, helping support a 7.1% climb in the country鈥檚 gross domestic product which was the fastest pace seen in over three years.

McKinsey鈥檚 Mr. Moraje said there鈥檚 room to broaden the scope of the Filipino brand of service to other fields beyond those covered by BPOs such as education and health care, given a pool of learned and fluent professionals.

Compassion and the unsinkable Pinoy spirit are also net positives, said Alexander B. Cabrera, chairman and senior partner at Isla Lipana & Co.: 鈥淥ne brand that resonates in our mother tongue is malasakit. There鈥檚 not even an exact translation in English.鈥�

鈥淭hey say that for Filipinos, floods won鈥檛 stop them from going to the office if there鈥檚 a way for them to get there. They鈥檙e also the type who will take care of the people they are serving as if they are part of their own family,鈥� Mr. Cabrera said.

Beyond quality of work, Filipino values also resonate well among foreign firms as a plus factor for the country鈥檚 work force.

鈥淚 think there鈥檚 something about the Filipino where we do not have a sense of entitlement. We earn our keep. We are always running the underdog mentality and we fight for what we think we should get,鈥� Jose Maria A. Mi帽ana, Jr., group president of Jollibee Foods Corp., also said when asked about the Filipino brand. 鈥淲e have to start somewhere, that鈥檚 where the humility is a strength of the Filipino which we have to continue.鈥�

https://www.youtube.com/watch?v=h4-FjlIdawU