![\"The](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-Farmer.jpg\")
The government’s move to focus on provinces is expected to help rural banks boost productivity of farmers. (AFP)
\nby Imee Charlee C. Delavin, Reporter
\nThe Duterte administration\u2019s push to develop agriculture and areas outside Metro Manila has cast a ray of hope on smaller lenders wanting to regain their footing, if not expand.
\nEven while campaigning for the Presidency, then Davao City Mayor Rodrigo R. Duterte has capitalized on the disparity in economic development between what he called \u201cImperial Manila\u201d and the rest of the country, especially the rural areas.
\nRural banks have mirrored the countryside\u2019s neglect, with a growing number of the industry\u2019s members driven to bankruptcy. This forced the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to launch a rescue package that includes tax and other incentives for third-party investors willing to avert closures, if not revive forlorn rural lenders.
\nDespite two extensions of the program, rural banks continue to fall by the wayside, erasing the little amount depositors had earned on their accounts, if not their trust in banks altogether.
\nRural Bankers Association of the Philippines (RBAP) President Antonio O. Pasia said rural banks are hoping to participate in the financial inclusion thrust of the new government.
\n\u201cWe’re hopeful, we definitely would like to participate in the programs of the new administration, we would be offering the rural banks to take part in the countryside development,\u201d said Mr. Pasia, who is also president of Batangas-based Malarayat Rural Bank Inc.
\n\u201cWe think the new administration is more receptive towards the needs of the farmers and fisherfolks that’s why we’re offering the services of the rural banks in those areas,” he said.
\nRural banks are front liners in countryside development and in financing the needs of farmers, fisher folks and micro, small and medium enterprises (MSMEs).
\nThese lenders serve as the platform for bigger banks to fulfill their required 25% credit quota to the farming sector, as mandated by the Agri-Agra Reform Credit Act of 2009.
\nThe small lenders could also serve as the platform for small and medium-scale enterprises to secure funding for their business expansions through microfinance.
\nWith stiffer competition in the banking space, rural banks would like to strengthen [their] position in [their] own areas and \u201chopefully compete in the delivery of credit to the countryside\u201d by merging to build stronger lenders, upgrading technology and forging partnerships, Mr. Pasia said.
\n\u201cEventually, there will be lesser number of rural banks because of consolidations and mergers but stronger players. I think for those that will stay on, there future will be better,\u201d he said.
![\"Tunas](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-fishers.jpg\")
Tunas are cleaned for export in General Santos City in this file photo. Rural and thrift banks are optimistic that the Duterte government’s focus on the countryside will help spur regional industries, which, in turn, will also further increase lending. (AFP)
\n<style=”text-align: left;”>Development of regional industries sought
\nEconomists have welcomed the Duterte administration\u2019s plan to hasten growth in the agriculture and fisheries sectors, which account for roughly 10% of gross domestic product (GDP) but employs almost a third of the country\u2019s workforce.
\nThe World Bank and the Asian Development Bank have said in previous reports that poverty can be addressed by improving the agriculture sector. Business leaders have also included in their recommendations to the administration the delivery of support services like financing, technology, and logistics to farmers and the adoption of value-chain development for rural-based enterprises.
\nIn line with the new government\u2019s thrust to develop the countryside, business leaders also recommended the development of regional industries.
\n\u201cThe Philippines\u2019 growing middle class and the Duterte administration\u2019s focus on promoting rural development could broaden the reach of the banking system, potentially resulting in more revenue streams,\u201d said Land Bank of the Philippines market economist Guian Angelo S. Dumalagan.
\nChamber of Thrift Banks President Rommel S. Latinazo said the sector remains \u201cvery optimistic\u201d given the new administration\u2019s thrust.
\n\u201cI think we continue to push for inclusive growth that means when there is development in the countryside, it means more opportunities for lending activities and there’s a need for financing, credit facilities as well as consumer financing \u2014 these are the two main businesses of thrift banks,\u201d Mr. Latinazo, who is also RCBC Savings Bank President and CEO, said.
\n\u201cOf course there’s also that pronouncement from the administration that they\u2019d like to push for the agricultural side and that’s where many thrift banks are positioned\u2026 [A]griculture means it\u2019s not going to happen in Metro Manila, it will happen outside Metro Manila, in the provinces and that’s where most of us are positioned like the stand-alone thrift banks, so that’s also an opportunity that makes us positive,\u201d he added.
\nMr. Latinazo said consolidations among smaller banks will become more sensible amid stiffer competition in the near term.
\n\u201cConsolidation remains to be the thrust of government. The BSP has been putting up incentives to encourage more integration, consolidation. That is happening [to] all sectors \u2014 rural banks, thrift banks and we see that continuing. Indications are there. A lot of foreign banks are looking at us, either by way of putting up their own or via investment in an existing bank,\u201d Mr. Latinazo said.
\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said mergers and acquisition \u201chas been quite attractive because there’s a lot of growth potential, as we’re very underserved and the banking space remains underpenetrated.\u201d
\n\u201cWe\u2019ve already seen a lot of big banks acquiring rural banks for the past years and there\u2019s been a lot and it’s still going to continue. We have over 600 banks in the Philippines and the consolidation would continue,\u201d she said.
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\nImee Charlee C. Delavin (@charleedelavin on Twitter) covers private banks for 大象传媒. She loves to travel.
![\"Like](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Jules-FOOLSANDFOES.jpg\")
by Julianne S. Ruizol
\nIt\u2019s not easy being an independent Filipino musical artist.
\nMost of the time fellow musicians, fans, and listeners argue about the intricacies of Original Pilipino Music (OPM). Some say OPM is dead while others insist it\u2019s alive but only in different reincarnations. After all, the local indie music scene is a hodgepodge of genres offering different flavors for everyone\u2019s listening preference: jazz, hip hop, electronica, alternative, industrial, metal, blues \u2014 you name it, somebody else is likely to play it.
\nBut the debate about OPM is just one part of living the independent musician\u2019s life.
\nTo survive, most local indie music artists and bands live off gigs and bookings and keep their day jobs, if only to stay true to being the \u201cindies\u201d that they are.
\nHowever, artistic integrity has its price.
\nTo be considered as a fully functional band, a lot of investments have to be made.
\nBesides setting aside cash to pay for rehearsal space \u2014 P250 an hour \u2014 independent artists also need to bankroll their own music productions with expenses shared between band manager, technical crew, and other helping hands.
\n\u201cThere is no support,\u201d Clarence Garcia, lead guitarist of tide/edit, an indie band, said in an interview. \u201cYou support yourself. Gone are the golden days of the music scene wherein you find a place you will regular play at and you will be discovered.\u201d
\nThis is exactly the reason why members of Oh, Flamingo! \u2014 a five-piece band which plays indie rock infused with tropical styles and elements \u2014 makes themselves available after gigs.
\n\u201cYou don\u2019t leave immediately after your set. Early on, during our first few gig, we made it a point to stick around and really talk to the people who invited us. We were still new and unknown so you have to stay and talk, to establish further rapport, so to speak,\u201d drummer Fries Bersales of Oh, Flamingo! said in a separate interview.
\nAnother technique to sell their music involves at least one member who takes a position near the bar.
\n\u201cThat way, you can be approachable or at the entrance or outside so they know that you [already] played. You\u2019re already available. Your defenses are down. You don\u2019t have friends around you. [People] can already approach you,\u201d Howard Luistro, Oh, Flamingo!\u2019s vocalist and guitarist said.
![\"Filipino](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Jules-OHFLAMINGO.jpg\")
Limited engagement with music labels
\nOn occasion, bands like Oh, Flamingo! sign up with labels but only for engagements involving limited production releases covered by profit sharing agreements.
\n\u201cWide Eyed Records came to us and let us release our EP (extended play) under their label, so instead of just being able to produce 100, around 750 CDs [were produced] and then we agreed on sharing the profit. Everybody\u2019s happy. Everything went back to us. It wasn\u2019t a lopsided deal,\u201d Pappu de Leon, Oh, Flamingo!\u2019s lead guitarist, said.
\nThe label also helped the band with the copyrights of their songs and with the distribution of their album to various commercial establishments including Team Manila and Satchmi. Other local bands who have enlisted the help of Wide Eyes Records are Halik ni Gringo and Ang Bandang Shirley, to name a few.
\nWhile their EP \u2014 a recording that\u2019s more than a single but isn\u2019t enough for a full album \u2014 is released under a label, the band themselves remain independent and do all the work themselves. A new contract would have to be signed if the band is seeking to release another album.
\n\u201cIt works for independent artists because we have creative freedom as compared to being signed to [major labels], you have a six-year contract,\u201d the band said.
\nMeanwhile, other groups \u2014 while striving to keep their artistic independence \u2014 also take advantage of label\u2019s e-commerce platforms to raise awareness and attract wider audiences.
\nGroups such as tide/edit and Fools and Foes are affiliated with A Spur of the Moment Project, along with other local indie bands including Run Dorothy and Tom\u2019s Story.
\nFools and Foes released their debut EP \u201cUnderneath the Roots\u201d on December 4, 2015, while tide/edit has released an EP (\u201cIdeas,\u201d August 2012) and two full-length albums (\u201cForeign Languages,\u201d June 2014; \u201cLightfoot,\u201d November 2015).
\nSigning up with A Spur the Moment Project allows groups to take advantage of the label\u2019s e-commerce platform.
\n\u201cThe e-commerce platform is a big help for us, for a band that doesn\u2019t do live shows too often,\u201d Lead guitarist Clarence Garcia of tide/edit said. \u201cWe\u2019re a band that doesn\u2019t really play live so it\u2019s important for us so it works. We get to ship stuff locally, provincial orders, we get to ship even in overseas. I\u2019m not sure why not everyone is doing it. It\u2019s a basic requirement if you have something to sell. You have to make it [products] accessible for everyone.\u201d
![\"Electronic](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Jules-TIDEEDIT.jpg\")
Using Spotify
\nAnd speaking of going online to popularize and sell their music, Oh, Flamingo! and Fools and Foes began using the Spotify with the help of their respective labels. Both of them also revealed that putting their music up on the site was mainly for exposure and audience reach and not for a secondary or tertiary source of income.
\nBeing self-made musicians, Oh, Flamingo! had their doubts using the platform at first saying they \u201cthought we could do that on our own through aggregator website, but we realized maybe we won\u2019t be able to manage that given our time constraints and resources.\u201d \u201cWe eventually saw Spotify as an opportunity to really exponentially spread our music because at least we can get people who not only buy the CD but [even] one with a smartphone can hear our music,\u201d they added.
\nFools and Foes said it \u201cdidn\u2019t really upload music in Spotify to get revenue, but to get exposure. For a new indie band like us, it\u2019s important to get our music out there.\u201d
\nWhile members of tide/edit remain unsure whether they got traction from Spotify, they nevertheless see tweets tagging them, telling them that their listeners heard them first on Spotify.
\nMoreover, both Fools and Foes and Oh, Flamingo! believe that streaming and CD albums could go hand in hand with each other.
\n\u201cIt could go two ways. Some listeners can opt to listen to an artist via Spotify instead, while others, because they discovered the artist via Spotify, they could be encouraged to buy the artist\u2019s physical CD. We definitely think online streaming is more rampant than listening to CDs. Technology as well is already phasing out the use of CDs,\u201d said Fools and Foes in an email reply.
\nIt may be too early to tell whether Spotify can help indie bands earn enough to keep them independent.
\nBut for the moment, the music service nevertheless helps them distribute their music despite risks of related investments they\u2019ve made.
\nSo for now, none of them are planning to quit the day job or leave the rat race.
\n\u201cOur goal is not how to make money,\u201d tide/edit said. \u201cOur goal is how not to lose money. It\u2019s fun to be in a band. We enjoy the process. We enjoy what we\u2019re doing and we want to do this over and over again.\u201d
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\nJulianne S. Ruizol (@sopraknows on Twitter) covers the Senate and the Department of Foreign Affairs for 大象传媒. Her wide music preferences range from 90s MTV to current Korean pop hits.
![\"The](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Ray-IT.jpg\")
by\u00a0Raynan F. Javil
\nThe Duterte administration has promised to decongest \u201cImperial Manila\u201d and reduce its prominence in the country\u2019s national life. In so doing, the government \u2014 led for the first time by someone from Mindanao \u2014 vowed to bring inclusive growth to the countryside.
\nWhile businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines\u2019 sunshine industry?
\nThat remains to be a work in progress.
\nBut it doesn\u2019t mean that the private sector and the government aren\u2019t working together to enhance the capacity of cities and towns outside Manila.
\nIf the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told 大象传媒 in an interview.
\n\u201cOther provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,\u201d said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.
\nMeasuring capacities of towns, cities
\nTo this end, IT-BPM has launched road map which serves as a \u201cprescription\u201d for cities across the country to assess their readiness for the sector\u2019s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.
\n\u201cWe have been publishing what we call \u2018The Next Wave City Report\u2019 for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,\u201d IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, \u201cAccelerate PH.\u201d
\nMr. Hernandez added that aside from \u201cThe Next Wave City Report,\u201d the IT-BPAP also named the top 20 emerging cities to watch out for.
\nIn its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:
\nMoreover, the emerging cities seen to sustain the growth of the sector are:
\nHe said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.
\n\u201cI was involved in the last one… in Dipolog. So again looking at what\u2019s available here, how\u2019s the talent, how\u2019s the infrastructure so that\u2019s gonna keep going. So our goal is to keep promoting ten if not 20 cities,\u201d Mr. Hernandez said.
\nHe also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.
\nCreating another million jobs
\nHe also said that the Philippines\u2019 IT-BPM is now about a tenth of the industry\u2019s global size.
\n\u201cOur ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There\u2019s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,\u201d Mr. Hernandez said on the new road map.
\nHe also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.
\nPart of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.
\nAside from contact centers, other services that have grown over the past years \u2014 and still has the potential to grow even more \u2014 are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.
\nMr. Hernandez noted that 300,000 jobs \u2014 roughly 30% of the industry\u2019s total work force \u2014 were provided outside the capital and \u201cpart of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.\u201d
\nCurrent technological trends present significant opportunities for the Philippines, he said.
\nLabor pool tricky outside Manila
\nOne of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool \u201cthat could actually work in an IT-BPO sector,\u201d Premier BPO\u2019s Ms. Muro also said.
\nOnce you reach out and start expansion outside the capital, \u201cthe labor pool gets a little tricky,\u201d Ms. Muro said.
\nIn order to address this concern, Mr. Hernandez said that \u201cthe key is making sure human capital is able to get ready\u201d as the landscape in the IT-BPM sector evolves through time.
\nMoreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.
\nShe said that locating outside Manila is the trend right now for a BPO firm as it is the \u201ccheaper way of expanding.\u201d
\n大象传媒 earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.
\nIn a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.
\nNew agency to help industry achieve milestones
\nMeanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) \u201cwill help the industry achieve the new milestones as recommended\u201d in the new road map.
\nMr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.
\nMr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law \u2013 two laws seen to be critical in making the country more attractive in foreign investors.
\nMoreover the IT-BPAP said that it looks forward for a \u201cstrong partnership and collaboration\u201d with the new administration.
\nThe industry association further noted that \u201cembracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.\u201d
\n\u201cDisruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,\u201d IT-BPAP said.
\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014
\nRaynan F. Javil (@rajavil on Twitter) covers several beats \u2014 including the House of Representatives and the Office of the Vice-President \u2014 for 大象传媒.
\n", "content_text": "The Philippines’ business process outsourcing industry \u2014 a sunshine sector \u2014 hopes to employ another million workers. (AFP)\nby\u00a0Raynan F. Javil\nThe Duterte administration has promised to decongest \u201cImperial Manila\u201d and reduce its prominence in the country\u2019s national life. In so doing, the government \u2014 led for the first time by someone from Mindanao \u2014 vowed to bring inclusive growth to the countryside.\nWhile businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines\u2019 sunshine industry?\nThat remains to be a work in progress.\nBut it doesn\u2019t mean that the private sector and the government aren\u2019t working together to enhance the capacity of cities and towns outside Manila. \nIf the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told 大象传媒 in an interview.\n\u201cOther provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,\u201d said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.\nMeasuring capacities of towns, cities\nTo this end, IT-BPM has launched road map which serves as a \u201cprescription\u201d for cities across the country to assess their readiness for the sector\u2019s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.\n\u201cWe have been publishing what we call \u2018The Next Wave City Report\u2019 for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,\u201d IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, \u201cAccelerate PH.\u201d\nMr. Hernandez added that aside from \u201cThe Next Wave City Report,\u201d the IT-BPAP also named the top 20 emerging cities to watch out for.\nIn its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:\n\nBaguio City\nCagayan de Oro City\nDagupan City\nDasmari\u00f1as\u00a0City\nDumaguete City\nLipa City\nMalolos City\nNaga City\nSta. Rosa City\nLaguna; and\nTaytay, Rizal\n\nMoreover, the emerging cities seen to sustain the growth of the sector are:\n\nBalanga City\nBatangas City\nIriga City\nLaoag City\nLegazpi City\nPuerto Princesa City\nRoxas\u00a0City\nTarlac City\nTuguegarao City\nZamboanga City\n\nHe said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.\n\u201cI was involved in the last one… in Dipolog. So again looking at what\u2019s available here, how\u2019s the talent, how\u2019s the infrastructure so that\u2019s gonna keep going. So our goal is to keep promoting ten if not 20 cities,\u201d Mr. Hernandez said.\nHe also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.\nCreating another million jobs\nHe also said that the Philippines\u2019 IT-BPM is now about a tenth of the industry\u2019s global size.\n\u201cOur ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There\u2019s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,\u201d Mr. Hernandez said on the new road map.\nHe also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.\nPart of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.\nAside from contact centers, other services that have grown over the past years \u2014 and still has the potential to grow even more \u2014 are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.\nMr. Hernandez noted that 300,000 jobs \u2014 roughly 30% of the industry\u2019s total work force \u2014 were provided outside the capital and \u201cpart of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.\u201d\nCurrent technological trends present significant opportunities for the Philippines, he said.\nLabor pool tricky outside Manila\nOne of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool \u201cthat could actually work in an IT-BPO sector,\u201d Premier BPO\u2019s Ms. Muro also said.\nOnce you reach out and start expansion outside the capital, \u201cthe labor pool gets a little tricky,\u201d Ms. Muro said.\nIn order to address this concern, Mr. Hernandez said that \u201cthe key is making sure human capital is able to get ready\u201d as the landscape in the IT-BPM sector evolves through time.\nMoreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.\nShe said that locating outside Manila is the trend right now for a BPO firm as it is the \u201ccheaper way of expanding.\u201d\n大象传媒 earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.\nIn a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.\nNew agency to help industry achieve milestones\nMeanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) \u201cwill help the industry achieve the new milestones as recommended\u201d in the new road map.\nMr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.\nMr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law \u2013 two laws seen to be critical in making the country more attractive in foreign investors.\nMoreover the IT-BPAP said that it looks forward for a \u201cstrong partnership and collaboration\u201d with the new administration.\nThe industry association further noted that \u201cembracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.\u201d\n\u201cDisruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,\u201d IT-BPAP said.\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\nRaynan F. Javil (@rajavil on Twitter) covers several beats \u2014 including the House of Representatives and the Office of the Vice-President \u2014 for 大象传媒.", "date_published": "2016-07-31T14:44:08+08:00", "date_modified": "2016-07-31T14:44:08+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "BPO", "business process outsourcing", "call center", "employment", "IT", "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147125", "url": "/succession-transition/2016/07/28/147125/govt-business-set-sights-outside-metro-manila-for-inclusive-growth/", "title": "Gov\u2019t, business set sights outside Metro Manila for inclusive growth", "content_html": "by Krista Angela M. Montealegre, National Correspondent\u00a0
\nPresident Rodrigo R. Duterte has so far been saying the right things: accelerating infrastructure spending, cutting red tape, and reforming the tax system. The tough-talking leader has made believers out of the business elite, but more work must be done to achieve his goal of reinvigorating the countryside to spread benefits of rapid economic growth.
\nSpeaking before some of the country\u2019s biggest names in business,\u00a0Finance Secretary Carlos G. Dominguez III said the government aims to accelerate infrastructure development in the rural areas, lining up \u201cquite a number\u201d of projects for implementation either through the public-private partnership (PPP) or government budget methods.
\nThis sentiment was also expressed by Socioeconomic Planning Secretary Ernesto M. Pernia during the 大象传媒 Economic Forum on July 12 at the Shangri-La at The Fort in Taguig City.
\n\u201cWe\u2019ll continue the good macroeconomic policies, but we want to make a big push toward regional and rural development, which was not given too much emphasis in the previous administration,\u201d Mr. Pernia said.
\n![\"Freshly](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Krista-Mindanao-769x1024.jpg\")
Freshly harvested bananas are processed in Davao del Norte province in Mindanao as shown in this file photo. The country’s second-largest island is expected to become a major food basket under the Duterte government. (AFP)
\n\n
The next big thing: Mindanao
\nUnder former President Benigno S.C. Aquino III\u2019s watch, the Philippine gross domestic product expanded by an average of 6.2%\u00a0\u2014 the\u00a0fastest pace since the 1970s\u00a0\u2014\u00a0but\u00a0his failure to\u00a0make the economic gains felt by majority of the Filipinos has tainted that legacy.
\nMr. Duterte \u2014 who transformed Davao once notorious for crime into a gold mine for corporates during his 22 years as mayor \u2014 plans to lure businesses to far-flung provinces in an effort to lift a fourth of the population out of poverty.
\nThe \u201cbig story\u201d within the next six years will be Mindanao, which is envisioned to become the country\u2019s \u201cmajor food basket,\u201d Mr. Dominguez said.
\nDecades of under-investment, corruption, and violence have plagued the major southernmost island in the Philippines, leaving most parts of it impoverished.
\nDeveloping the necessary power, water, communications and transport infrastructure will be crucial to realize the government\u2019s goal, with the Asian Development Bank (ADB) projecting that the Philippines must invest up to $127 billion in infrastructure from 2010 to 2020.
\nThe Duterte administration intends to continue projects under the public-private partnership program \u2014 the cornerstone strategy of his predecessor to boost spending on major infrastructure that would spur economic activity nationwide.
\nThe\u00a0PPP\u00a0Center \u2014 the central coordinating and monitoring agency for big-ticket infrastructure projects the government is undertaking with private companies \u2014 has\u00a053\u00a0infrastructure projects in its pipeline, 12 of which cumulatively worth some P217.4 billion have been awarded so\u00a0far.
\nFirst Pacific Co. Ltd. Managing Director Manuel V. Pangilinan said the gaping deficits in the economy such as infrastructure present investment opportunities for local and foreign companies.
\nMetro Pacific Investments Corp., which has interests in power generation, toll roads, water utility, and hospitals,\u00a0 is one of three Philippine subsidiaries of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. \u2014 a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. \u2014 maintains interest in 大象传媒\u00a0through the Philippine Star Group, which it controls.
\n\u201cWe all know there is poverty standing in the way so addressing it must be the business of business, not only of government\u2019s. The optimum approach to poverty is creating jobs,\u201d Mr. Pangilinan said, during the same event.
\n![\"Vehicles](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Krista-Traffic-1024x683.jpg\")
Vehicles in a traffic jam make their way along a highway in Manila in this photo taken in 2013. Traffic in the metropolis has gotten worse, thanks to economic growth and easy credit, allowing millions to buy cars. (AFP)
\n\n
Decongesting Metro Manila
\nInfrastructure woes have come in the way of the Philippines reaching its economic growth potential and the improvement of quality of life, AC Energy\u00a0Holdings, Inc. President and Chief Executive Officer John Eric T.\u00a0Francia, who led the Ayala group\u2019s foray into the transport infrastructure and energy sectors.
\n\u201cWe believe this is solvable with the help of the private sector,\u201d Mr. Francia said.
\nProperty developer Megaworld Corp. Senior Vice-President Kevin L. Tan said an expansion to the countryside will provide growth opportunities for the tourism and the business process outsourcing (BPO) industries. The real estate firm plans to unveil two more townships in Mindanao.
\n\u201cWe believe in the vision of the President\u2026The key to decongest Metro Manila is to drive development to rural areas,\u201d Mr. Tan said.
\nBut bringing the private sector out of the lucrative capital may come with several challenges. Companies are chasing returns and the government must provide incentives for businesses to cater to the communities offering lower average revenue per user versus those in urban centers.
\n\u201cThe challenge is basically that there are densities for projects to be viable in these places. Clearly, there is a need for a lot of basic infrastructure such as electricity, water, fixed telephone, and mobile telephone and the only way they are going to develop is for these infrastructure to reach these areas,\u201d said Aboitiz Equity Ventures, Inc. President and Chief Executive Officer Erramon I. Aboitiz.
\nGlobe Telecom, Inc. President Ernest L. Cu said the government must help the private sector build the infrastructure in the marginalized areas to make it viable for businesses to operate there.
\nMr. Cu recommended the construction of a fiber optic network in areas such as the Autonomous Region in Muslim Mindanao (ARMM) that telecommunication companies can rent from the government.
\n\u201cIf government builds roads, they should also be building the information highway. It\u2019s as vital as farm to market roads,\u201d Mr. Cu said.
\n\u201cOur returns are predicated on a much shorter return in terms of time, but the government has a very long period of return and their basis case is not only predicated on the particular fiber optic it will rent [out] but also on the benefits of the community that will be sustained,\u201d he added.
\nEven the President\u2019s dream project \u2014 a major railway in Mindanao that will be linked to Luzon \u2014 may face some issues if he decides to undertake it through a PPP.
\n\u201cIt\u2019s going to be missionary in nature. Rail, in itself, is already non-economic on a standalone basis for a private sector investment let alone in Mindanao,\u201d Mr. Francia said.
\n![\"The](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Krista-Taxes.jpg\")
The government has enabled online filing of income tax returns, reducing queues such as this one shown by a 2006 photo. However, the Philippines’ personal and corporate taxes remain one of the highest in Asia. (AFP)
\n\n
Red tape, high taxes, and foreign ownership
\nThe government\u2019s focus on streamlining the bureaucracy and reducing the tax burden on companies and individuals will make the Philippines more competitive versus its neighbors in the region, said\u00a0Rustans Supercenters, Inc. President Bienvenido V. Tantoco III.
\n\u201cIf taxes are more competitive and more efficient, corporations will invest more and consumers will also spend more. There may be a period where things might get worse but on a medium term that will be beneficial for corporations and businesses,\u201d Mr. Tantoco said.
\nRed tape and high taxes \u2014 not the Constitutional limits to foreign ownership \u2014 have been the main deterrent for foreign companies to invest here, said Sun Life of Canada (Philippines), Inc. President Rizalina G. Mantaring.
\n\u201cIf you are a company and you want to build a strong industry and strong capabilities for manufacturing, why will you locate in the Philippines when you can operate much more cheaply and efficiently elsewhere?\u201d Ms. Mantaring said.
\n\u201cThose are the things we need to address because once markets open up, consumers, revenues and investments flow to where it is most efficient,\u201d she added.
\nAt a time of lingering global uncertainty, the Philippines must take advantage of its robust growth momentum to attract more job-generating foreign direct investments \u2014 one of the lowest in the region.
\n\u201cIf we\u2019re able to simplify processes, make it easier to do business in the Philippines, then we are setting ourselves up for success,\u201d said Alaska Milk Corp. President Wilfred Steven Uytengsu, Jr.
\nVice-President Maria Leonor \u201cLeni\u201d G. Robredo said companies must embrace \u201cbusiness unusual\u201d where shared value \u2014 not profit \u2014 is the driver of growth.
\n\u201cAs the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time,\u201d Ms. Robredo said.
\nCiting data from the Organization for Economic Cooperation and Development, Ms. Robredo said rising inequality took away 10 percentage points of growth rates in Mexico and New Zealand, while cumulative growth rates in Italy, the United Kingdom and the United States would have been 6-9 percentage points higher had income disparities not widened.
\n\u201cWe need growth for all, not just for a select few. Progress that benefits only the elite is no progress at all,\u201d she said.
\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014
\nKrista Angela M. Montealegre (@_kmontealegre on Twitter) has been writing about the corporate scene for nearly a decade, the last few years or so for 大象传媒.
\n", "content_text": "by Krista Angela M. Montealegre, National Correspondent\u00a0\nPresident Rodrigo R. Duterte has so far been saying the right things: accelerating infrastructure spending, cutting red tape, and reforming the tax system. The tough-talking leader has made believers out of the business elite, but more work must be done to achieve his goal of reinvigorating the countryside to spread benefits of rapid economic growth.\nSpeaking before some of the country\u2019s biggest names in business,\u00a0Finance Secretary Carlos G. Dominguez III said the government aims to accelerate infrastructure development in the rural areas, lining up \u201cquite a number\u201d of projects for implementation either through the public-private partnership (PPP) or government budget methods.\nThis sentiment was also expressed by Socioeconomic Planning Secretary Ernesto M. Pernia during the 大象传媒 Economic Forum on July 12 at the Shangri-La at The Fort in Taguig City.\n\u201cWe\u2019ll continue the good macroeconomic policies, but we want to make a big push toward regional and rural development, which was not given too much emphasis in the previous administration,\u201d Mr. Pernia said.\n\nFreshly harvested bananas are processed in Davao del Norte province in Mindanao as shown in this file photo. The country’s second-largest island is expected to become a major food basket under the Duterte government. (AFP)\n \nThe next big thing: Mindanao\nUnder former President Benigno S.C. Aquino III\u2019s watch, the Philippine gross domestic product expanded by an average of 6.2%\u00a0\u2014 the\u00a0fastest pace since the 1970s\u00a0\u2014\u00a0but\u00a0his failure to\u00a0make the economic gains felt by majority of the Filipinos has tainted that legacy.\nMr. Duterte \u2014 who transformed Davao once notorious for crime into a gold mine for corporates during his 22 years as mayor \u2014 plans to lure businesses to far-flung provinces in an effort to lift a fourth of the population out of poverty.\nThe \u201cbig story\u201d within the next six years will be Mindanao, which is envisioned to become the country\u2019s \u201cmajor food basket,\u201d Mr. Dominguez said.\nDecades of under-investment, corruption, and violence have plagued the major southernmost island in the Philippines, leaving most parts of it impoverished.\nDeveloping the necessary power, water, communications and transport infrastructure will be crucial to realize the government\u2019s goal, with the Asian Development Bank (ADB) projecting that the Philippines must invest up to $127 billion in infrastructure from 2010 to 2020.\nThe Duterte administration intends to continue projects under the public-private partnership program \u2014 the cornerstone strategy of his predecessor to boost spending on major infrastructure that would spur economic activity nationwide.\nThe\u00a0PPP\u00a0Center \u2014 the central coordinating and monitoring agency for big-ticket infrastructure projects the government is undertaking with private companies \u2014 has\u00a053\u00a0infrastructure projects in its pipeline, 12 of which cumulatively worth some P217.4 billion have been awarded so\u00a0far.\nFirst Pacific Co. Ltd. Managing Director Manuel V. Pangilinan said the gaping deficits in the economy such as infrastructure present investment opportunities for local and foreign companies.\nMetro Pacific Investments Corp., which has interests in power generation, toll roads, water utility, and hospitals,\u00a0 is one of three Philippine subsidiaries of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. \u2014 a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. \u2014 maintains interest in 大象传媒\u00a0through the Philippine Star Group, which it controls.\n\u201cWe all know there is poverty standing in the way so addressing it must be the business of business, not only of government\u2019s. The optimum approach to poverty is creating jobs,\u201d Mr. Pangilinan said, during the same event.\n\nVehicles in a traffic jam make their way along a highway in Manila in this photo taken in 2013. Traffic in the metropolis has gotten worse, thanks to economic growth and easy credit, allowing millions to buy cars. (AFP)\n \nDecongesting Metro Manila\nInfrastructure woes have come in the way of the Philippines reaching its economic growth potential and the improvement of quality of life, AC Energy\u00a0Holdings, Inc. President and Chief Executive Officer John Eric T.\u00a0Francia, who led the Ayala group\u2019s foray into the transport infrastructure and energy sectors.\n\u201cWe believe this is solvable with the help of the private sector,\u201d Mr. Francia said.\nProperty developer Megaworld Corp. Senior Vice-President Kevin L. Tan said an expansion to the countryside will provide growth opportunities for the tourism and the business process outsourcing (BPO) industries. The real estate firm plans to unveil two more townships in Mindanao.\n\u201cWe believe in the vision of the President\u2026The key to decongest Metro Manila is to drive development to rural areas,\u201d Mr. Tan said.\nBut bringing the private sector out of the lucrative capital may come with several challenges. Companies are chasing returns and the government must provide incentives for businesses to cater to the communities offering lower average revenue per user versus those in urban centers.\n\u201cThe challenge is basically that there are densities for projects to be viable in these places. Clearly, there is a need for a lot of basic infrastructure such as electricity, water, fixed telephone, and mobile telephone and the only way they are going to develop is for these infrastructure to reach these areas,\u201d said Aboitiz Equity Ventures, Inc. President and Chief Executive Officer Erramon I. Aboitiz.\nGlobe Telecom, Inc. President Ernest L. Cu said the government must help the private sector build the infrastructure in the marginalized areas to make it viable for businesses to operate there.\nMr. Cu recommended the construction of a fiber optic network in areas such as the Autonomous Region in Muslim Mindanao (ARMM) that telecommunication companies can rent from the government.\n\u201cIf government builds roads, they should also be building the information highway. It\u2019s as vital as farm to market roads,\u201d Mr. Cu said.\n\u201cOur returns are predicated on a much shorter return in terms of time, but the government has a very long period of return and their basis case is not only predicated on the particular fiber optic it will rent [out] but also on the benefits of the community that will be sustained,\u201d he added.\nEven the President\u2019s dream project \u2014 a major railway in Mindanao that will be linked to Luzon \u2014 may face some issues if he decides to undertake it through a PPP.\n\u201cIt\u2019s going to be missionary in nature. Rail, in itself, is already non-economic on a standalone basis for a private sector investment let alone in Mindanao,\u201d Mr. Francia said.\n\nThe government has enabled online filing of income tax returns, reducing queues such as this one shown by a 2006 photo. However, the Philippines’ personal and corporate taxes remain one of the highest in Asia. (AFP)\n \nRed tape, high taxes, and foreign ownership\nThe government\u2019s focus on streamlining the bureaucracy and reducing the tax burden on companies and individuals will make the Philippines more competitive versus its neighbors in the region, said\u00a0Rustans Supercenters, Inc. President Bienvenido V. Tantoco III.\n\u201cIf taxes are more competitive and more efficient, corporations will invest more and consumers will also spend more. There may be a period where things might get worse but on a medium term that will be beneficial for corporations and businesses,\u201d Mr. Tantoco said.\nRed tape and high taxes \u2014 not the Constitutional limits to foreign ownership \u2014 have been the main deterrent for foreign companies to invest here, said Sun Life of Canada (Philippines), Inc. President Rizalina G. Mantaring.\n\u201cIf you are a company and you want to build a strong industry and strong capabilities for manufacturing, why will you locate in the Philippines when you can operate much more cheaply and efficiently elsewhere?\u201d Ms. Mantaring said.\n\u201cThose are the things we need to address because once markets open up, consumers, revenues and investments flow to where it is most efficient,\u201d she added.\nAt a time of lingering global uncertainty, the Philippines must take advantage of its robust growth momentum to attract more job-generating foreign direct investments \u2014 one of the lowest in the region.\n\u201cIf we\u2019re able to simplify processes, make it easier to do business in the Philippines, then we are setting ourselves up for success,\u201d said Alaska Milk Corp. President Wilfred Steven Uytengsu, Jr.\nVice-President Maria Leonor \u201cLeni\u201d G. Robredo said companies must embrace \u201cbusiness unusual\u201d where shared value \u2014 not profit \u2014 is the driver of growth.\n\u201cAs the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time,\u201d Ms. Robredo said.\nCiting data from the Organization for Economic Cooperation and Development, Ms. Robredo said rising inequality took away 10 percentage points of growth rates in Mexico and New Zealand, while cumulative growth rates in Italy, the United Kingdom and the United States would have been 6-9 percentage points higher had income disparities not widened.\n\u201cWe need growth for all, not just for a select few. Progress that benefits only the elite is no progress at all,\u201d she said.\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\nKrista Angela M. Montealegre (@_kmontealegre on Twitter) has been writing about the corporate scene for nearly a decade, the last few years or so for 大象传媒.", "date_published": "2016-07-28T14:56:19+08:00", "date_modified": "2016-07-28T14:56:19+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "duterte", "Mindanao", "succession", "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147119", "url": "/succession-transition/2016/07/28/147119/philippine-banks-to-expand-despite-challenges/", "title": "Philippine banks to expand despite challenges", "content_html": "![\"A](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-Brexit-683x1024.jpg\")
A woman sits with a pro-Brexit placard as a group of people set up a counter demonstration to a group taking part in a picnic against Brexit organized by the General Assembly in Green Park in London in\u00a0July 2016.\u00a0The British government on Saturday formally rejected a petition signed by more than 4.125 million people calling for a second referendum on Britain’s membership of the EU. (AFP)
\nby Imee Charlee C. Delavin, Reporter\u00a0
\nThe next few years will be more challenging for Philippine banks amid headwinds from overseas, but the country\u2019s sound macroeconomic fundamentals are seen fueling the local financial sector\u2019s expansion, drawing in more foreign banks that want a piece of Asia\u2019s rising star.
\nSince the start of the year, local financial markets have been buffeted by the divergence in the fortunes of the world\u2019s biggest economies. In recent weeks, Britain\u2019s decision to pull out of the European Union added to this uncertainty.
\n\u201cWith the exit of Britain from the European Union, investors right now are on a wait-and-see mode, assessing the repercussions of Britain\u2019s decision on the health of the world economy,\u201d Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said.
\n\u201cBritain could potentially undermine global growth by dampening consumer and business sentiment. Although another worldwide recession is unlikely given the steady pace of the US economy, the separation of Britain could definitely aggravate global economic divergence, resulting in increased volatility in financial markets,\u201d he said.
\nThe divergence among the world\u2019s advanced economies has the US on the one hand raising interest rates to sustain its recovery from the Global Financial Crisis of 2008-2009. Japan and the Eurozone on the other hand are easing monetary policy to prevent their economies from sliding back.
\nAdd to the mix China, which has slowed down in recent years, pulling along with it some emerging economies in Asia that rode on the export boom of the world\u2019s second largest economy.
\n\u201cAdded stimulus would mean that interest rates may remain low, but very volatile, in the next few years,\u201d Mr. Dumalagan said.
\n\u201cAmid this global economic environment, Philippine banks might find themselves frequently adjusting their portfolios in response to mixed signals from abroad. Volatility offers profit opportunities, although market timing is critical. This could also mean that loan growth might remain strong, as relatively low interest rates could entice firms and households to borrow more,\u201d he added.
\n![\"Despite](\"http://www.bworldonline.com/wp-content/uploads/2016/07/BSP.jpg\")
Despite global headwinds, Philippine banks remain well-capitalized, the Bangko Sentral ng Pilipinas said. (AFP)
\n\n
Local lenders remain well-capitalized
\nDespite the external headwinds, Philippine banks remained well-capitalized, with a 14.91% capital adequacy ratio (CAR) at the end of last year, or well above 10% minimum set by the Bangko Sentral ng Pilipinas\u2019 (BSP) and the 8% floor under Basel III.
\nCapital buffers also were of high quality, mainly composed of common equity tier 1 (CET1) instruments, which represented 12.37% and 13.33% of risk-weighted assets on solo and consolidated bases, or more than double the minimum 6% share set by the BSP. The share of Tier 1 capital \u2014 composed of common equity and qualified capital instruments \u2014 also stood at 12.55% and 13.48% at end-2015, higher than the 7.5% requirement.
\nThe banking sector\u2019s total resources stood at P12.52 trillion at end-March 2016, up from the year-ago level of P11.37 trillion, as the public continued to place their savings in banks, thus supporting the industry\u2019s expansion.
\nUniversal and commercial banks\u2019 total resources stood at P11.25 trillion, up from the P10.24 trillion at end-March 2015. Thrift banks had P1.05 trillion at end-December, while rural banks held P213 billion.
\nThis was despite a drop in the number of banks operating in the country. At end-December, the number of lenders declined to 632 from 648 in 2014. However, total bank branches rose to 10,124 from just 9,713the previous year.
\nBig banks remained profitable in 2015, posting a combined net income of P120.275 billion.
\nAccording to the BSP\u2019s assessment, \u201cthe Philippine banking system remains resilient as it continued to support long-term economic growth, [adding that] banks\u2019 balance sheets were marked by sustained growth in assets and deposits.\u201d
\nInternational credit raters have said the Philippine banking system remains sound and stable, as banks remained well-capitalized against any financial shocks, having been supported by the country\u2019s strong fundamentals and rapid economic growth.
\n![\"Bangko](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-Tetangco.jpg\")
Bangko Sentral Governor Amando Tetangco Jr: “\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years.” (AFP)
\n\n
Positive economic outlook
\nBSP Governor Amando M. Tetangco, Jr. agrees that the country\u2019s solid macroeconomic fundamentals underpin the banking industry\u2019s strength, adding that the positive outlook for the Philippine economy lends support to lenders\u2019 resilience in the near- to medium-term.
\n\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years, which would indicate that there would be a need for funding increased economic activity during that period. That would augur well for the banking system,\u201d Mr. Tetangco said.
\nDespite the global uncertainty, the Philippines\u2019 gross domestic product (GDP) growth has averaged 6.3% annually since 2010. At 1.8 percentage points more than in the previous six years, the recent growth record is a bigger improvement than in any other country in the region, Capital Economics Ltd. earlier said.
\nLast year, GDP grew by 5.8% on the back of robust domestic demand and private investments, albeit missing a 7-8% target for 2015.
\nGDP grew by 6.9% in the first quarter of 2016, driven by an uptick in public disbursements, a surge in investments, and robust household consumption, which historically has contributed up to 70% of GDP. This year, the country is seen expanding by 6-7%, down from the initial target of 6.8-7.8%, but still above trend.
\n![\"Workers](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-Infrastructure-1024x681.jpg\")
Workers stay onsite to fix a flood control project in Metro Manila. Big-ticket projects are expected to boost the expansion of Philippine banks further. (AFP)
\n\n
Boost infrastructure spending
\nSeen boosting economic growth in the medium term is increased infrastructure spending \u2014 by at least 5% of GDP, going by what President Rodrigo R. Duterte\u2019s economic managers have been saying. This in turn will be a boon to the banking industry.
\n\u201cIt helps that the new economic team has announced that they will ratchet up infrastructure spending. This would create the conditions for more future growth,\u201d EastWest Banking Corp. President and CEO Antonio C. Moncupa, Jr. said.
\n\u201cAnd if the campaign against criminality starts to bear fruits and the peace processes take off, these could unleash more upbeat mood and eventually investments and hopefully translate to more job opportunities for our workers,\u201d he said.
\nIldemarc C. Bautista, assistant vice-president and head of research at Metropolitan Bank & Trust Co., described as \u201cunprecedented\u201d the Duterte administration\u2019s plan to ramp up infrastructure spending to as much as 7% of GDP.
\n\u201c[C]onsumer and business loans should pick up on the back of these government stimulus programs and strong consumer spending,\u201d he said, adding that, coupled with low global inflation and high domestic liquidity, \u201cthis should prove positive for the demand side.\u201d
\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said the government\u2019s emphasis on infrastructure, particularly public-private partnership (PPP) projects can address banks\u2019 compressing margins.
\n\u201c[T]hey are term loans… they are considered as project financing and project financing usually gives you higher rates so more PPPs then that should also help the banks\u2019 margin in the long-term,\u201d Ms. Tan said. \u201cThere would be more room for growth for the banking sector in the next six years [as] more PPPs, more project-financing type of loans then that would probably help improve your margins.\u201d
\nBack to basics
\nPatrick D. Cheng, first vice-president at China Banking Corp., said banks \u201cshould do reasonably well\u201d during the next few years.The government\u2019s PPP projects will boost the expansion of banks as \u201cmore conglomerates team up and share the risks and rewards\u201d of such projects, giving local lenders \u201cmore capital market deals to attend to,\u201d he said.
\n\u201cIf the country continues to grow by around 6% to 7% per year for the duration of the Duterte administration, then we should expect bank earnings to gain somewhere between 1 and 1.50 times GDP growth,\u201d Mr. Cheng said.
\n\u201cWith interest rates much lower, bank\u2019s trading gains will definitely be muted compared to where they were four to five years ago. It will really be a back to basics for banking. Making good loans… keeping within their respective bank\u2019s risk appetite and generating a good balance of fee income,\u201d he said.
\nBranch expansion \u201cmay be tapering off as banks and clients adapt better to technology and digital banking \u2014 non-branch banking \u2014 channels,\u201d Mr. Cheng said, adding that this should give banks \u201csome breathing space on operating expenses.\u201d
\n\u201cThese actions if properly executed should allow banks to generate and rebuild net income levels to offset the generally lower trading gains environment,\u201d he added.
\n![\"A](\"http://www.bworldonline.com/wp-content/uploads/2016/07/AR-Charlee-Sumitomo.jpg\")
A woman walks in front of a signboard of Japan’s Sumitomo Mitsui Banking Corp in Tokyo in this photo taken in 2013. The bank was one of eight that secured approval to operate in the Philippines (AFP).
\n\n
Entry of more foreign banks
\nAnd as success attracts rivals, the Philippine banking industry will be witness to more players from abroad, aided in no small way by the government\u2019s move to liberalize foreign ownership, and by the envisioned ASEAN Banking Integration come 2020.
\n\u201cAn expanding economy is always positive for the banking system,\u201d Mr. Tetangco said, adding that the country\u2019s \u201cstrong macroeconomic fundamentals and good economic performance\u201d is luring more foreign banks into the system.
\n\u201cGiven the positive prospects of continued growth and manageable inflation, the entry of foreign investments is expected to increase further, including investments in the banking sector which has actually been liberalized through the passage of RA [Republic Act] 10641 and also the passage of the law allowing higher foreign participation in rural banks,\u201d Mr. Tetangco said.
\nThe BSP has approved the entry of eight foreign banks since the passage of the Act Allowing the Full Entry of Foreign Banks in July 2014. The foreign lenders that got the BSP\u2019s green light to operate in the Philippines are Japan\u2019s Sumitomo Mitsui Banking Corp., South Korea\u2019s Industrial Bank of Korea and Shinhan Bank, Taiwan\u2019s Cathay United Bank and Yuanta Commercial Bank Co. Ltd and the Singapore\u2019s United Overseas Bank Ltd.
\nThis year, Korea\u2019s Woori Bank entered the local market by partnering with Gaisano-led Wealth Development Bank Corp., a thrift lender which targets to serve both Korean tourists and expats. In June, Taiwan\u2019s First Commercial Bank also got the central bank\u2019s approval to set up a branch in Manila.
\n\u201cThere are more applications that are being evaluated right now,\u201d Mr. Tetangco said.
\nEastWest\u2019s Mr. Moncupa said the outlook for the local banking industry in the next three to six years is \u201cdefinitely bright,\u201d notwithstanding greater competition.
\n\u201c[M]ore intense competition… normally happens when the mood is upbeat. Everybody will try to get a piece of the action. While that puts some pressure on bank spreads, it will be good for households and businesses in terms of access to credit, better services, and more competitive pricing,\u201d he said.
\nMr. Moncupa said the lower spreads and intense competition would put pressure on mergers and acquisitions, which would create higher efficiencies and economies of scale.
\n\u201cOverall, the industry will turn positive results although it could be tough for some banks.\u00a0 We expect to see more interest from foreign banks to get into the country. In general, in the next few years we see retail banking to continue to be the realm of local banks.\u00a0 Foreign banks will be mostly in corporate and wholesale banking. Foreign banks may try to get minority stakes in local banks,\u201d he said.
\nMetrobank\u2019s Mr. Bautista sees tighter competition playing out this way: \u201cThe big local banks will continue to leverage their national presence and create economies of scale while the smaller banks will focus on niche markets and consumer segments.\u201d
\n\u201cAlthough it looks like new entrants are more amenable to partnerships with local banks instead of going in solo… these foreign entrants will continue to seek partnerships with the mid-tier banks as they focus on niche markets and using technology solutions as a competitive tool,\u201d he said.
\nChoice of next BSP chief
\nLastly, any orderly adjustment by the banking industry to the new realities of broader competition and external volatility would require the steady hand of a central bank. Crucial to the financial sector, if not the entire economy\u2019s mid-term prospects, is the appointment of a new BSP chief by next year when Mr. Tetangco steps down.
\nNicholas Antonio T. Mapa, associate economist at Bank of the Philippine Islands (BPI) said one of Mr. Duterte\u2019s most crucial appointees will be his choice for BSP Governor in 2017.
\n\u201cPresident [Benigno S.C.] Aquino [III] did well in re-appointing the ace Governor who has earned international acclaim for his astute stewardship of the country\u2019s financial system,\u201d Mr. Mapa said.
\n\u201cNo doubt [Mr.] Tetangco helped keep the economy afloat in rough waters and ensured smooth and safe sailing in the times that the winds were full in our sails. Duterte would need to find a worthy successor to the outgoing Tetangco,\u201d Mr. Mapa said.
\nThe Philippine financial system is \u201cone of the most resilient in the region, if not the world\u201d as it \u201cadheres to stringent standards of risk management to ensure that the business of public trust remains whole and viable for all stakeholders involved,\u201d he said.
\nOne of Mr. Tetangco\u2019s legacies to the Philippine banking system is the implementation of an interest rate corridor system, \u201cwhich is precisely the framework that can stave off financial market volatility,\u201d Mr. Mapa said.
\n\u201cGiven how quickly global markets can turn from tempest to tranquil and back, the BSP\u2019s investment in such a system affords them the flexibility to deal with rapid changes in market sentiment and to calm the waters when they do get roiled,\u201d he said.
\n\u201cTheir ability to better get hold of liquidity will go a long way to deterring financial stress from the eventual [United Kingdom\u2019s] exit from the European Union, imminent, albeit delayed Fed rate hike cycle and possible renewed concerns about crude oil prices and China\u2019s economy,\u201d Mr. Mapa added.
\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014
\nImee Charlee C. Delavin (@charleedelavin on Twitter) covers private banks for 大象传媒. She loves to travel.
\n", "content_text": "A woman sits with a pro-Brexit placard as a group of people set up a counter demonstration to a group taking part in a picnic against Brexit organized by the General Assembly in Green Park in London in\u00a0July 2016.\u00a0The British government on Saturday formally rejected a petition signed by more than 4.125 million people calling for a second referendum on Britain’s membership of the EU. (AFP)\nby Imee Charlee C. Delavin, Reporter\u00a0\nThe next few years will be more challenging for Philippine banks amid headwinds from overseas, but the country\u2019s sound macroeconomic fundamentals are seen fueling the local financial sector\u2019s expansion, drawing in more foreign banks that want a piece of Asia\u2019s rising star.\nSince the start of the year, local financial markets have been buffeted by the divergence in the fortunes of the world\u2019s biggest economies. In recent weeks, Britain\u2019s decision to pull out of the European Union added to this uncertainty.\n\u201cWith the exit of Britain from the European Union, investors right now are on a wait-and-see mode, assessing the repercussions of Britain\u2019s decision on the health of the world economy,\u201d Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said.\n\u201cBritain could potentially undermine global growth by dampening consumer and business sentiment. Although another worldwide recession is unlikely given the steady pace of the US economy, the separation of Britain could definitely aggravate global economic divergence, resulting in increased volatility in financial markets,\u201d he said.\nThe divergence among the world\u2019s advanced economies has the US on the one hand raising interest rates to sustain its recovery from the Global Financial Crisis of 2008-2009. Japan and the Eurozone on the other hand are easing monetary policy to prevent their economies from sliding back.\nAdd to the mix China, which has slowed down in recent years, pulling along with it some emerging economies in Asia that rode on the export boom of the world\u2019s second largest economy.\n\u201cAdded stimulus would mean that interest rates may remain low, but very volatile, in the next few years,\u201d Mr. Dumalagan said.\n\u201cAmid this global economic environment, Philippine banks might find themselves frequently adjusting their portfolios in response to mixed signals from abroad. Volatility offers profit opportunities, although market timing is critical. This could also mean that loan growth might remain strong, as relatively low interest rates could entice firms and households to borrow more,\u201d he added.\n\nDespite global headwinds, Philippine banks remain well-capitalized, the Bangko Sentral ng Pilipinas said. (AFP)\n \nLocal lenders remain well-capitalized\nDespite the external headwinds, Philippine banks remained well-capitalized, with a 14.91% capital adequacy ratio (CAR) at the end of last year, or well above 10% minimum set by the Bangko Sentral ng Pilipinas\u2019 (BSP) and the 8% floor under Basel III.\nCapital buffers also were of high quality, mainly composed of common equity tier 1 (CET1) instruments, which represented 12.37% and 13.33% of risk-weighted assets on solo and consolidated bases, or more than double the minimum 6% share set by the BSP. The share of Tier 1 capital \u2014 composed of common equity and qualified capital instruments \u2014 also stood at 12.55% and 13.48% at end-2015, higher than the 7.5% requirement.\nThe banking sector\u2019s total resources stood at P12.52 trillion at end-March 2016, up from the year-ago level of P11.37 trillion, as the public continued to place their savings in banks, thus supporting the industry\u2019s expansion.\nUniversal and commercial banks\u2019 total resources stood at P11.25 trillion, up from the P10.24 trillion at end-March 2015. Thrift banks had P1.05 trillion at end-December, while rural banks held P213 billion.\nThis was despite a drop in the number of banks operating in the country. At end-December, the number of lenders declined to 632 from 648 in 2014. However, total bank branches rose to 10,124 from just 9,713the previous year.\nBig banks remained profitable in 2015, posting a combined net income of P120.275 billion.\nAccording to the BSP\u2019s assessment, \u201cthe Philippine banking system remains resilient as it continued to support long-term economic growth, [adding that] banks\u2019 balance sheets were marked by sustained growth in assets and deposits.\u201d\nInternational credit raters have said the Philippine banking system remains sound and stable, as banks remained well-capitalized against any financial shocks, having been supported by the country\u2019s strong fundamentals and rapid economic growth.\n\nBangko Sentral Governor Amando Tetangco Jr: “\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years.” (AFP)\n \nPositive economic outlook\nBSP Governor Amando M. Tetangco, Jr. agrees that the country\u2019s solid macroeconomic fundamentals underpin the banking industry\u2019s strength, adding that the positive outlook for the Philippine economy lends support to lenders\u2019 resilience in the near- to medium-term.\n\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years, which would indicate that there would be a need for funding increased economic activity during that period. That would augur well for the banking system,\u201d Mr. Tetangco said.\nDespite the global uncertainty, the Philippines\u2019 gross domestic product (GDP) growth has averaged 6.3% annually since 2010. At 1.8 percentage points more than in the previous six years, the recent growth record is a bigger improvement than in any other country in the region, Capital Economics Ltd. earlier said.\nLast year, GDP grew by 5.8% on the back of robust domestic demand and private investments, albeit missing a 7-8% target for 2015.\nGDP grew by 6.9% in the first quarter of 2016, driven by an uptick in public disbursements, a surge in investments, and robust household consumption, which historically has contributed up to 70% of GDP. This year, the country is seen expanding by 6-7%, down from the initial target of 6.8-7.8%, but still above trend.\n\nWorkers stay onsite to fix a flood control project in Metro Manila. Big-ticket projects are expected to boost the expansion of Philippine banks further. (AFP)\n \nBoost infrastructure spending\nSeen boosting economic growth in the medium term is increased infrastructure spending \u2014 by at least 5% of GDP, going by what President Rodrigo R. Duterte\u2019s economic managers have been saying. This in turn will be a boon to the banking industry.\n\u201cIt helps that the new economic team has announced that they will ratchet up infrastructure spending. This would create the conditions for more future growth,\u201d EastWest Banking Corp. President and CEO Antonio C. Moncupa, Jr. said.\n\u201cAnd if the campaign against criminality starts to bear fruits and the peace processes take off, these could unleash more upbeat mood and eventually investments and hopefully translate to more job opportunities for our workers,\u201d he said.\nIldemarc C. Bautista, assistant vice-president and head of research at Metropolitan Bank & Trust Co., described as \u201cunprecedented\u201d the Duterte administration\u2019s plan to ramp up infrastructure spending to as much as 7% of GDP.\n\u201c[C]onsumer and business loans should pick up on the back of these government stimulus programs and strong consumer spending,\u201d he said, adding that, coupled with low global inflation and high domestic liquidity, \u201cthis should prove positive for the demand side.\u201d\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said the government\u2019s emphasis on infrastructure, particularly public-private partnership (PPP) projects can address banks\u2019 compressing margins.\n\u201c[T]hey are term loans… they are considered as project financing and project financing usually gives you higher rates so more PPPs then that should also help the banks\u2019 margin in the long-term,\u201d Ms. Tan said. \u201cThere would be more room for growth for the banking sector in the next six years [as] more PPPs, more project-financing type of loans then that would probably help improve your margins.\u201d\nBack to basics\nPatrick D. Cheng, first vice-president at China Banking Corp., said banks \u201cshould do reasonably well\u201d during the next few years.The government\u2019s PPP projects will boost the expansion of banks as \u201cmore conglomerates team up and share the risks and rewards\u201d of such projects, giving local lenders \u201cmore capital market deals to attend to,\u201d he said.\n\u201cIf the country continues to grow by around 6% to 7% per year for the duration of the Duterte administration, then we should expect bank earnings to gain somewhere between 1 and 1.50 times GDP growth,\u201d Mr. Cheng said.\n\u201cWith interest rates much lower, bank\u2019s trading gains will definitely be muted compared to where they were four to five years ago. It will really be a back to basics for banking. Making good loans… keeping within their respective bank\u2019s risk appetite and generating a good balance of fee income,\u201d he said.\nBranch expansion \u201cmay be tapering off as banks and clients adapt better to technology and digital banking \u2014 non-branch banking \u2014 channels,\u201d Mr. Cheng said, adding that this should give banks \u201csome breathing space on operating expenses.\u201d\n\u201cThese actions if properly executed should allow banks to generate and rebuild net income levels to offset the generally lower trading gains environment,\u201d he added.\n\nA woman walks in front of a signboard of Japan’s Sumitomo Mitsui Banking Corp in Tokyo in this photo taken in 2013. The bank was one of eight that secured approval to operate in the Philippines (AFP).\n \nEntry of more foreign banks\nAnd as success attracts rivals, the Philippine banking industry will be witness to more players from abroad, aided in no small way by the government\u2019s move to liberalize foreign ownership, and by the envisioned ASEAN Banking Integration come 2020.\n\u201cAn expanding economy is always positive for the banking system,\u201d Mr. Tetangco said, adding that the country\u2019s \u201cstrong macroeconomic fundamentals and good economic performance\u201d is luring more foreign banks into the system.\n\u201cGiven the positive prospects of continued growth and manageable inflation, the entry of foreign investments is expected to increase further, including investments in the banking sector which has actually been liberalized through the passage of RA [Republic Act] 10641 and also the passage of the law allowing higher foreign participation in rural banks,\u201d Mr. Tetangco said.\nThe BSP has approved the entry of eight foreign banks since the passage of the Act Allowing the Full Entry of Foreign Banks in July 2014. The foreign lenders that got the BSP\u2019s green light to operate in the Philippines are Japan\u2019s Sumitomo Mitsui Banking Corp., South Korea\u2019s Industrial Bank of Korea and Shinhan Bank, Taiwan\u2019s Cathay United Bank and Yuanta Commercial Bank Co. Ltd and the Singapore\u2019s United Overseas Bank Ltd.\nThis year, Korea\u2019s Woori Bank entered the local market by partnering with Gaisano-led Wealth Development Bank Corp., a thrift lender which targets to serve both Korean tourists and expats. In June, Taiwan\u2019s First Commercial Bank also got the central bank\u2019s approval to set up a branch in Manila.\n\u201cThere are more applications that are being evaluated right now,\u201d Mr. Tetangco said.\nEastWest\u2019s Mr. Moncupa said the outlook for the local banking industry in the next three to six years is \u201cdefinitely bright,\u201d notwithstanding greater competition.\n\u201c[M]ore intense competition… normally happens when the mood is upbeat. Everybody will try to get a piece of the action. While that puts some pressure on bank spreads, it will be good for households and businesses in terms of access to credit, better services, and more competitive pricing,\u201d he said.\nMr. Moncupa said the lower spreads and intense competition would put pressure on mergers and acquisitions, which would create higher efficiencies and economies of scale.\n\u201cOverall, the industry will turn positive results although it could be tough for some banks.\u00a0 We expect to see more interest from foreign banks to get into the country. In general, in the next few years we see retail banking to continue to be the realm of local banks.\u00a0 Foreign banks will be mostly in corporate and wholesale banking. Foreign banks may try to get minority stakes in local banks,\u201d he said.\nMetrobank\u2019s Mr. Bautista sees tighter competition playing out this way: \u201cThe big local banks will continue to leverage their national presence and create economies of scale while the smaller banks will focus on niche markets and consumer segments.\u201d\n\u201cAlthough it looks like new entrants are more amenable to partnerships with local banks instead of going in solo… these foreign entrants will continue to seek partnerships with the mid-tier banks as they focus on niche markets and using technology solutions as a competitive tool,\u201d he said.\nChoice of next BSP chief\nLastly, any orderly adjustment by the banking industry to the new realities of broader competition and external volatility would require the steady hand of a central bank. Crucial to the financial sector, if not the entire economy\u2019s mid-term prospects, is the appointment of a new BSP chief by next year when Mr. Tetangco steps down.\nNicholas Antonio T. Mapa, associate economist at Bank of the Philippine Islands (BPI) said one of Mr. Duterte\u2019s most crucial appointees will be his choice for BSP Governor in 2017.\n\u201cPresident [Benigno S.C.] Aquino [III] did well in re-appointing the ace Governor who has earned international acclaim for his astute stewardship of the country\u2019s financial system,\u201d Mr. Mapa said.\n\u201cNo doubt [Mr.] Tetangco helped keep the economy afloat in rough waters and ensured smooth and safe sailing in the times that the winds were full in our sails. Duterte would need to find a worthy successor to the outgoing Tetangco,\u201d Mr. Mapa said.\nThe Philippine financial system is \u201cone of the most resilient in the region, if not the world\u201d as it \u201cadheres to stringent standards of risk management to ensure that the business of public trust remains whole and viable for all stakeholders involved,\u201d he said.\nOne of Mr. Tetangco\u2019s legacies to the Philippine banking system is the implementation of an interest rate corridor system, \u201cwhich is precisely the framework that can stave off financial market volatility,\u201d Mr. Mapa said.\n\u201cGiven how quickly global markets can turn from tempest to tranquil and back, the BSP\u2019s investment in such a system affords them the flexibility to deal with rapid changes in market sentiment and to calm the waters when they do get roiled,\u201d he said.\n\u201cTheir ability to better get hold of liquidity will go a long way to deterring financial stress from the eventual [United Kingdom\u2019s] exit from the European Union, imminent, albeit delayed Fed rate hike cycle and possible renewed concerns about crude oil prices and China\u2019s economy,\u201d Mr. Mapa added.\n\u2014\u2014\u2014\u2014\u2014\u2014\u2014\nImee Charlee C. Delavin (@charleedelavin on Twitter) covers private banks for 大象传媒. She loves to travel.", "date_published": "2016-07-28T14:52:36+08:00", "date_modified": "2016-07-28T14:52:36+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Bangko Sentral ng Pilipinas", "banks", "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147139", "url": "/succession-transition/2016/07/27/147139/the-duterte-dominguez-disconnect-is-another-golden-tide-headed-for-the-rocks/", "title": "The Duterte- Dominguez Disconnect: Is another golden tide headed for the rocks?", "content_html": "By Raul V. Fabella UPSE and NAST
\nThe eight-point program spelled out by Finance Secretary Carlos \u201cSonny\u201d G. Dominguez III before the election was duly welcomed by, signaling as it did to the business community, a continuity with the preceding administration. It correctly identified the government capital outlay of 5% and beyond as required for its economic goal of rapid \u2014 if not more rapid \u2014 growth and poverty reduction. It also acknowledged tax reform and perhaps new taxes as necessary for this target. It recognized the inherent good economic sense in the conditional cash transfer (CCT) program: the decoupling of re-distribution from production. It acknowledged how poorly we have performed in the foreign investment front. Its overall thrust confirmed the conventional wisdom that the gains of its predecessor were real even if it fell short in inclusiveness and in the forcefulness of implementation. More than anywhere else, it is in forceful implementation where the Duterte administration can make a big difference.
\nDuterte gov\u2019t has more room for boldness![\"Growth](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S4-Anniv-Mfg-and-Svc-administration-821x1024.jpg\")
In the June 20 conference call, the incoming economic cluster expanded the eight-point to a 10-point program, adding science and technology and reproductive health (RH) law implementation into the mix. Finance Secretary Carlos G. Dominguez III harped on the inclusion frailty of the Aquino watch and how reduced criminality should attract more investment. Economic Planning Secretary Ernesto M. Pernia reiterated the proximate goals of making the economy more investment- rather than consumption-led and a tilt towards manufacturing. Department of Budget and Management (DBM) Secretary Benjamin E. Diokno batted for an aggressive fiscal spending and revenue raising through reform of tax structure and incentives. Overall, the image is one of a leadership primed aspirationally to outdo the Aquino watch in inclusion and poverty reduction. As was repeatedly stressed by Dominguez himself, the Aquino watch has left the Duterte team much room for boldness not the least of which is the fiscal space. There are others beside.
\nWhen the Aquino legacy project \u2014 the Connector Road projects \u2014 are inaugurated in Duterte\u2019s watch, the traffic snarl will ease up considerably with the 18-wheelers overflying rather than clogging Manila roads. Duterte is inheriting a public works department thoroughly transformed by a modern-day hero, Rogelio \u201cBabes\u201d L. Singson, whose legacy is template for government reform. The PPP program, slowed initially by teething problems, is now over the customary J-curve hump; there is ample resources for health and universal insurance, thanks to the sin tax law. The credit ratings have improved. The sky is clearing for an investment takeoff.
\nYet another legacy worth building on: among all the past presidents since the 1970s, only Aquino\u2019s has managed to grow manufacturing faster than services. Figure 1 on the right\u00a0gives the comparative growth rates.
\nTo put this in proper perspective, Figures 2 and 3 gives the average annual growth rate (AAGR) of Services and Manufacturing for the four decades from 1973 to 2014 for three countries, Philippines, Thailand and South Korea.
\n![\"Manufacturing](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S4-Anniv-Mfg-and-Svc-historical_01.jpg\")
What comes out so clearly is that in countries that left the Philippines to eat their dust, manufacturing growth outstripped services by a mile; the opposite is true of the Philippines. The Philippines growth trajectory is what we call development progeria (the premature advance and dominance of the service sector in a low income country) that produces slow economic growth and low investment rate. There is ample evidence (see, e.g., Daway and Fabella, 2015) that manufacturing share correlates positively and strongly with investment rate while services share is the opposite. The Aquino watch has bucked long-term development progeria though six years is hardly enough to erase all the blights. But it is a start. That manufacturing grew faster than services is due to the increments, if still modest, in foreign investment hosted by Philippine Economic Zone Authority (PEZA) under the dynamic Lilia de Lima. That it was by just a meter rather by a mile is due to certain sectors of the economy, namely agriculture, industrial farming, and mining, being effectively closed to legitimate private capital. The horizon before Duterte is a golden \u201c…tide which taken at a flood leads on to fortune…\u201d (Brutus in Julius Caesar).
\nBut the Philippines has a storied tradition of turning golden opportunities into stinking muck.
\n\n
How not to turn off investors
\nDuterte\u2019s seeming iron fist idol, Ferdinand E. Marcos, was a prime example of an opportunity-buster-decree-making and massive foreign borrowing connived to support immense waste and immenser plunder! The precious opportunity in the Japanese foreign investment tsunami after the Plaza Accord in 1987 expired before reaching our shores poisoned, among others, by Honasan and his clique\u2019s persistent threat of a coup. To conclude Brutus\u2019 line \u201c\u2026omitted, all the voyage of their life is bound in the shallows and in miseries.\u201d Are we in for another let down?
\n![\"Martial](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S4-Anniv-Martial-Law-historical-GDP.jpg\")
What should give us pause this time is that, judging from Duterte\u2019s pronouncements, the 10-point program may just be a Dominguez-Economic Cluster (DEC) credo rather than a Duterte credo. Actions speak louder than words and Duterte seems to marginalize DEC.
\nInstead of building coalitions and rallying the nation behind the already challenging program, he issued vitriols and threats to factions and interests (e.g., the Catholic church, the press, the Commission on Human Rights, the other two independent branches of government) which did not show enthusiasm for his understanding of the rule of law. The subtext is unmistakable: I will do to you what I did to Davao City dissenters: Pusila! More worrying, Duterte embraced the Joma Sison and his Maoist clique as prodigal sons by putting three cabinet departments under their sway prior to a complete disarmament of the New People\u2019s Army (NPA). We know the realpolitik here: \u201cArmed divisions take the cake in negotiations.\u201d It sounds like Hitler because it should \u2014 it was the gist of the Fuhrer\u2019s scornful put-down of the Bishop of Rome.
\nThe hope is that this embrace will turn lifelong Maoists into docile democrats and allies. My heart hopes with Duterte, but my mind says that Hitler suckered British Prime Minister Neville Chamberlain into false peace in Munich in 1938.
\nThis tosses a monkey wrench into the Dominguez-Economic Cluster (DEC) program. The DEC program rests in the end on an exuberant investor response. How exuberant investing will fly in an airspace bristling with signals foul weather is a puzzle: \u201cnationalization,\u201d \u201cexpropriation\u201d and \u201cblood sucking foreign investors\u201d now broadcast not from street corners but from Cabinet offices will ground even hardened pilots. With social welfare, labor, and agrarian reform portfolios in their clutches, investor appetite for the Philippines, already so fragile because of a multitude of known reasons like high power cost and relatively high wages, is so easily sapped. Indonesia, Thailand, and Vietnam are running slick investment come-ons of utter investor friendliness. These countries, mind you, have themselves either completely physically routed the Maoists (Indonesia and Thailand) or completely repudiated the Maoist ideal (Vietnam) and have left us eating their dust. Duterte\u2019s embrace of time warp relics is helps their already strong case in the cut-throat competition for foreign investment.
\nWith the Department of Labor and Employment (DoLE) under the sway of the National Democratic Front (NDF) and inciting rather than mediating labor disputes; with the Department of Agrarian Reform (DAR) foisting Maoist expropriation and further fragmentation of farmlands (how ironic since the People\u2019s Republic of China, the birthplace of Maoism has initiated consolidation to improve farm productivity (Fabella, 2015), investors will find comfort elsewhere. The signals are there. The Department of Social Welfare and Development (DSWD) secretary-designate stated in an ANC interview that \u201cprivatization is profit\u201d with the undertone being the market should be hemmed in because profit is anti-people. Joma Sison has branded Loretta Ann \u201cEtta\u201d P. Rosales, human rights defender par excellence, who dared question the Communist Party of the Philippines\u2019 (CPP) support for Duterte\u2019s decision to bury plunder-king, Marcos pere, in Libingan ng mga Bayani, a \u201cconsistent traitor to the revolutionary movement\u201d [To read Filomeno S. Sta. Ana\u2019s June 13, 2016 piece entitled \u201cJose Maria Sison\u2019s malicious words,\u201d visit this link.]
\nFeeding frenzy might fritter away fiscal space
\nAnd what is the ultimate goal of Joma\u2019s revolutionary movement? The complete enthronement of the Maoist state in the Philippines. Yes, and shall we forget the summary executions ordered by Joma Sison of numerous suspected rejectionists in the underground upheaval of the 1980s? For the Maoists, the tango with Duterte is only a welcome and badly needed respite on the road to total subjugation. Now is the time to advance, not water down, the Maoist vision what with their Trojan horses within the ramparts of the coveted prize.
\nPutting wolves in charge of the chicken coop compounds the already formidable challenges facing the DEC program. Duterte\u2019s pronouncements have fanned a \u201cfeeding frenzy\u201d: higher entitlements, higher wages, higher pensions \u2014 in other words, \u201cEat, drink and be merry.\u201d The excuse: Fiscal Space. Fiscal space was built up on the supply side from the twenty-year slog of government disengagement from direct provision (e.g., abolition of Oil Price Stabilisation Fund (OPSF), the Metropolitan Waterworks and Sewerage System (MWSS) privatization, privatization of power assets, etc.) that plugged enormous traditional fiscal drains; the increase in the Value Added Tax (VAT); the adjustment of sin taxes; the end of Priority Development Assistance Fund (PDAF) and Disbursement Acceleration Program (DAP); the use of Public-Private Partnership (PPP) and (Overseas Filipino Workers) remittance. Government investment compression (2% of GDP throughout the period) pushed the build-up from the demand side. The nation paid dearly for government investment compression: bad infrastructure. Rebalancing means re-training the fiscal space towards infrastructure. While the 10-point program has got this right, the fiscal space could close quickly.
\nThe minefields are there for all to see. The Salary Standardization Law of 2015 approved by Aquino will spend P226-billion for the salary increase and mid-year 14th month pay of government employees from 2016 to 2019. The electric cooperatives un-reformed will have to be bailed out again soon to the tune of perhaps P20 billion. The badly-designed military pension fund (pensions rise pari passu with regular salaries) will run out in Duterte\u2019s watch and it will be a substantial hit on the budget. And so on. \u201cEat, drink and be merry\u201d; never mind that the next line goes \u201c\u2026for tomorrow we die!\u201d
\nThe imperative now is to obligate the remaining fiscal space towards a Government Capital Outlay of 6-7% of GDP before it gets frittered away in an orgy of entitlements. Talking of arterial highways, for example, the creaky and fragmented national power transmission grid needs upgrade and completion. For the latter, Negros Island should be connected to Mindanao to finally realize the Pan-Philippine power highway. Both projects will involve sizeable investments, but all Filipinos \u2014 not just Mindanaoans \u2014 will benefit from more stable and lower cost power.
\nMaoists threaten to throw a monkey wrench
\nSo, the DEC program seems to promise continuity with and to build on the gains of the predecessor president. But Duterte\u2019s actions show a sneaky disconnect. His embrace of Maoist buddies threatens to throw a monkey wrench to increased investment. His is choice for Commission on Higher Education (CHED) Chair is a complete sell-out. From the internet buzz, the said choice seems more at home in a circus or a shrink sofa than in CHED. Pol Pot showed his contempt for the educated by marching them into the Killing Fields\u201d; Duterte seems to show his contempt for science and technology (Point # 9 in the DEC program) by threatening to turn CHED over to Ringling Brothers. His choice of Environment secretary-designate of the \u201cno such thing as responsible mining\u201d fame means mining continues to be open only to unregulated informal miners. Keeping fertile avenues of investment closed will hamstring an investment-led growth. Lest we forget, the shady midnight cabinet of President Estrada blindsided his decent economic team!
\nIt is said that poverty is more in the mind than in the pocket. Most income-challenged nations are poor not because of scarcity of resources but because of inability to seize the opportunities in fleeting instances of plenty. Existence for most poor people and nations is, after all, never one long featureless march of abject indigence. It is a punctuated equilibrium of starts and stops. We now have a nice start in comfortable fiscal space and institutional gains by the Aquino watch. If poverty is in the mind, the gains and fiscal space will quickly close and the green shoots will wither away in the Gobi Desert. If poverty is in only in the pocket but not in the mind, the fiscal space will nurture the green shoots into a lush garden of arterial infrastructure that sustain the future. Would that the latter and not the former adorn the Duterte years!
\nReferences:
\nDaway, Sarah Lynne S. and Raul V. Fabella, 2015, \u201cDevelopment Progeria: The Role of Institutions and the Exchange Rate,\u201d Philippine Review of Economics, vol. 52, no. 2.
\nFabella, Raul, 2015, \u201cLiuzhuan: Small Steps to Farm Efficiency,\u201d 大象传媒, Introspective column, December 15, 2014.
\n—–
\nRaul V. Fabella is a Professor of Economics (ret) at the UP School of Economics where he still teaches advanced microeconomics. He is an active member of the NAST. When he has something to say (not often) he writes pieces for . He gets his endorphin fix from the guitar, for which his love is unrequited, from tennis with wife Teena and from working the pedals of a bike.
\n大象传媒 Senior Researchers Kia B. Obang (@kiaobang on Twitter) and Leo Jaymar G. Uy (@leouy037 on Twitter), and Researcher Christine Joyce S. Casta\u00f1eda (@cjscastaneda on Twitter) assisted in providing data. Margarita Samantha Gonzales (@famamfagonzales on Twitter) designed charts and tables.
\n", "content_text": "By Raul V. Fabella UPSE and NAST\nThe eight-point program spelled out by Finance Secretary Carlos \u201cSonny\u201d G. Dominguez III before the election was duly welcomed by, signaling as it did to the business community, a continuity with the preceding administration. It correctly identified the government capital outlay of 5% and beyond as required for its economic goal of rapid \u2014 if not more rapid \u2014 growth and poverty reduction. It also acknowledged tax reform and perhaps new taxes as necessary for this target. It recognized the inherent good economic sense in the conditional cash transfer (CCT) program: the decoupling of re-distribution from production. It acknowledged how poorly we have performed in the foreign investment front. Its overall thrust confirmed the conventional wisdom that the gains of its predecessor were real even if it fell short in inclusiveness and in the forcefulness of implementation. More than anywhere else, it is in forceful implementation where the Duterte administration can make a big difference.\nDuterte gov\u2019t has more room for boldness\nIn the June 20 conference call, the incoming economic cluster expanded the eight-point to a 10-point program, adding science and technology and reproductive health (RH) law implementation into the mix. Finance Secretary Carlos G. Dominguez III harped on the inclusion frailty of the Aquino watch and how reduced criminality should attract more investment. Economic Planning Secretary Ernesto M. Pernia reiterated the proximate goals of making the economy more investment- rather than consumption-led and a tilt towards manufacturing. Department of Budget and Management (DBM) Secretary Benjamin E. Diokno batted for an aggressive fiscal spending and revenue raising through reform of tax structure and incentives. Overall, the image is one of a leadership primed aspirationally to outdo the Aquino watch in inclusion and poverty reduction. As was repeatedly stressed by Dominguez himself, the Aquino watch has left the Duterte team much room for boldness not the least of which is the fiscal space. There are others beside.\nWhen the Aquino legacy project \u2014 the Connector Road projects \u2014 are inaugurated in Duterte\u2019s watch, the traffic snarl will ease up considerably with the 18-wheelers overflying rather than clogging Manila roads. Duterte is inheriting a public works department thoroughly transformed by a modern-day hero, Rogelio \u201cBabes\u201d L. Singson, whose legacy is template for government reform. The PPP program, slowed initially by teething problems, is now over the customary J-curve hump; there is ample resources for health and universal insurance, thanks to the sin tax law. The credit ratings have improved. The sky is clearing for an investment takeoff.\nYet another legacy worth building on: among all the past presidents since the 1970s, only Aquino\u2019s has managed to grow manufacturing faster than services. Figure 1 on the right\u00a0gives the comparative growth rates.\nTo put this in proper perspective, Figures 2 and 3 gives the average annual growth rate (AAGR) of Services and Manufacturing for the four decades from 1973 to 2014 for three countries, Philippines, Thailand and South Korea.\n\nWhat comes out so clearly is that in countries that left the Philippines to eat their dust, manufacturing growth outstripped services by a mile; the opposite is true of the Philippines. The Philippines growth trajectory is what we call development progeria (the premature advance and dominance of the service sector in a low income country) that produces slow economic growth and low investment rate. There is ample evidence (see, e.g., Daway and Fabella, 2015) that manufacturing share correlates positively and strongly with investment rate while services share is the opposite. The Aquino watch has bucked long-term development progeria though six years is hardly enough to erase all the blights. But it is a start. That manufacturing grew faster than services is due to the increments, if still modest, in foreign investment hosted by Philippine Economic Zone Authority (PEZA) under the dynamic Lilia de Lima. That it was by just a meter rather by a mile is due to certain sectors of the economy, namely agriculture, industrial farming, and mining, being effectively closed to legitimate private capital. The horizon before Duterte is a golden \u201c…tide which taken at a flood leads on to fortune…\u201d (Brutus in Julius Caesar).\nBut the Philippines has a storied tradition of turning golden opportunities into stinking muck.\n \nHow not to turn off investors\nDuterte\u2019s seeming iron fist idol, Ferdinand E. Marcos, was a prime example of an opportunity-buster-decree-making and massive foreign borrowing connived to support immense waste and immenser plunder! The precious opportunity in the Japanese foreign investment tsunami after the Plaza Accord in 1987 expired before reaching our shores poisoned, among others, by Honasan and his clique\u2019s persistent threat of a coup. To conclude Brutus\u2019 line \u201c\u2026omitted, all the voyage of their life is bound in the shallows and in miseries.\u201d Are we in for another let down?\n\nWhat should give us pause this time is that, judging from Duterte\u2019s pronouncements, the 10-point program may just be a Dominguez-Economic Cluster (DEC) credo rather than a Duterte credo. Actions speak louder than words and Duterte seems to marginalize DEC.\nInstead of building coalitions and rallying the nation behind the already challenging program, he issued vitriols and threats to factions and interests (e.g., the Catholic church, the press, the Commission on Human Rights, the other two independent branches of government) which did not show enthusiasm for his understanding of the rule of law. The subtext is unmistakable: I will do to you what I did to Davao City dissenters: Pusila! More worrying, Duterte embraced the Joma Sison and his Maoist clique as prodigal sons by putting three cabinet departments under their sway prior to a complete disarmament of the New People\u2019s Army (NPA). We know the realpolitik here: \u201cArmed divisions take the cake in negotiations.\u201d It sounds like Hitler because it should \u2014 it was the gist of the Fuhrer\u2019s scornful put-down of the Bishop of Rome.\nThe hope is that this embrace will turn lifelong Maoists into docile democrats and allies. My heart hopes with Duterte, but my mind says that Hitler suckered British Prime Minister Neville Chamberlain into false peace in Munich in 1938.\nThis tosses a monkey wrench into the Dominguez-Economic Cluster (DEC) program. The DEC program rests in the end on an exuberant investor response. How exuberant investing will fly in an airspace bristling with signals foul weather is a puzzle: \u201cnationalization,\u201d \u201cexpropriation\u201d and \u201cblood sucking foreign investors\u201d now broadcast not from street corners but from Cabinet offices will ground even hardened pilots. With social welfare, labor, and agrarian reform portfolios in their clutches, investor appetite for the Philippines, already so fragile because of a multitude of known reasons like high power cost and relatively high wages, is so easily sapped. Indonesia, Thailand, and Vietnam are running slick investment come-ons of utter investor friendliness. These countries, mind you, have themselves either completely physically routed the Maoists (Indonesia and Thailand) or completely repudiated the Maoist ideal (Vietnam) and have left us eating their dust. Duterte\u2019s embrace of time warp relics is helps their already strong case in the cut-throat competition for foreign investment.\nWith the Department of Labor and Employment (DoLE) under the sway of the National Democratic Front (NDF) and inciting rather than mediating labor disputes; with the Department of Agrarian Reform (DAR) foisting Maoist expropriation and further fragmentation of farmlands (how ironic since the People\u2019s Republic of China, the birthplace of Maoism has initiated consolidation to improve farm productivity (Fabella, 2015), investors will find comfort elsewhere. The signals are there. The Department of Social Welfare and Development (DSWD) secretary-designate stated in an ANC interview that \u201cprivatization is profit\u201d with the undertone being the market should be hemmed in because profit is anti-people. Joma Sison has branded Loretta Ann \u201cEtta\u201d P. Rosales, human rights defender par excellence, who dared question the Communist Party of the Philippines\u2019 (CPP) support for Duterte\u2019s decision to bury plunder-king, Marcos pere, in Libingan ng mga Bayani, a \u201cconsistent traitor to the revolutionary movement\u201d [To read Filomeno S. Sta. Ana\u2019s June 13, 2016 piece entitled \u201cJose Maria Sison\u2019s malicious words,\u201d visit this link.]\nFeeding frenzy might fritter away fiscal space\nAnd what is the ultimate goal of Joma\u2019s revolutionary movement? The complete enthronement of the Maoist state in the Philippines. Yes, and shall we forget the summary executions ordered by Joma Sison of numerous suspected rejectionists in the underground upheaval of the 1980s? For the Maoists, the tango with Duterte is only a welcome and badly needed respite on the road to total subjugation. Now is the time to advance, not water down, the Maoist vision what with their Trojan horses within the ramparts of the coveted prize.\nPutting wolves in charge of the chicken coop compounds the already formidable challenges facing the DEC program. Duterte\u2019s pronouncements have fanned a \u201cfeeding frenzy\u201d: higher entitlements, higher wages, higher pensions \u2014 in other words, \u201cEat, drink and be merry.\u201d The excuse: Fiscal Space. Fiscal space was built up on the supply side from the twenty-year slog of government disengagement from direct provision (e.g., abolition of Oil Price Stabilisation Fund (OPSF), the Metropolitan Waterworks and Sewerage System (MWSS) privatization, privatization of power assets, etc.) that plugged enormous traditional fiscal drains; the increase in the Value Added Tax (VAT); the adjustment of sin taxes; the end of Priority Development Assistance Fund (PDAF) and Disbursement Acceleration Program (DAP); the use of Public-Private Partnership (PPP) and (Overseas Filipino Workers) remittance. Government investment compression (2% of GDP throughout the period) pushed the build-up from the demand side. The nation paid dearly for government investment compression: bad infrastructure. Rebalancing means re-training the fiscal space towards infrastructure. While the 10-point program has got this right, the fiscal space could close quickly.\nThe minefields are there for all to see. The Salary Standardization Law of 2015 approved by Aquino will spend P226-billion for the salary increase and mid-year 14th month pay of government employees from 2016 to 2019. The electric cooperatives un-reformed will have to be bailed out again soon to the tune of perhaps P20 billion. The badly-designed military pension fund (pensions rise pari passu with regular salaries) will run out in Duterte\u2019s watch and it will be a substantial hit on the budget. And so on. \u201cEat, drink and be merry\u201d; never mind that the next line goes \u201c\u2026for tomorrow we die!\u201d\nThe imperative now is to obligate the remaining fiscal space towards a Government Capital Outlay of 6-7% of GDP before it gets frittered away in an orgy of entitlements. Talking of arterial highways, for example, the creaky and fragmented national power transmission grid needs upgrade and completion. For the latter, Negros Island should be connected to Mindanao to finally realize the Pan-Philippine power highway. Both projects will involve sizeable investments, but all Filipinos \u2014 not just Mindanaoans \u2014 will benefit from more stable and lower cost power.\nMaoists threaten to throw a monkey wrench\nSo, the DEC program seems to promise continuity with and to build on the gains of the predecessor president. But Duterte\u2019s actions show a sneaky disconnect. His embrace of Maoist buddies threatens to throw a monkey wrench to increased investment. His is choice for Commission on Higher Education (CHED) Chair is a complete sell-out. From the internet buzz, the said choice seems more at home in a circus or a shrink sofa than in CHED. Pol Pot showed his contempt for the educated by marching them into the Killing Fields\u201d; Duterte seems to show his contempt for science and technology (Point # 9 in the DEC program) by threatening to turn CHED over to Ringling Brothers. His choice of Environment secretary-designate of the \u201cno such thing as responsible mining\u201d fame means mining continues to be open only to unregulated informal miners. Keeping fertile avenues of investment closed will hamstring an investment-led growth. Lest we forget, the shady midnight cabinet of President Estrada blindsided his decent economic team!\nIt is said that poverty is more in the mind than in the pocket. Most income-challenged nations are poor not because of scarcity of resources but because of inability to seize the opportunities in fleeting instances of plenty. Existence for most poor people and nations is, after all, never one long featureless march of abject indigence. It is a punctuated equilibrium of starts and stops. We now have a nice start in comfortable fiscal space and institutional gains by the Aquino watch. If poverty is in the mind, the gains and fiscal space will quickly close and the green shoots will wither away in the Gobi Desert. If poverty is in only in the pocket but not in the mind, the fiscal space will nurture the green shoots into a lush garden of arterial infrastructure that sustain the future. Would that the latter and not the former adorn the Duterte years!\nReferences:\nDaway, Sarah Lynne S. and Raul V. Fabella, 2015, \u201cDevelopment Progeria: The Role of Institutions and the Exchange Rate,\u201d Philippine Review of Economics, vol. 52, no. 2.\nFabella, Raul, 2015, \u201cLiuzhuan: Small Steps to Farm Efficiency,\u201d 大象传媒, Introspective column, December 15, 2014.\n—–\nRaul V. Fabella is a Professor of Economics (ret) at the UP School of Economics where he still teaches advanced microeconomics. He is an active member of the NAST. When he has something to say (not often) he writes pieces for . He gets his endorphin fix from the guitar, for which his love is unrequited, from tennis with wife Teena and from working the pedals of a bike.\n大象传媒 Senior Researchers Kia B. Obang (@kiaobang on Twitter) and Leo Jaymar G. Uy (@leouy037 on Twitter), and Researcher Christine Joyce S. Casta\u00f1eda (@cjscastaneda on Twitter) assisted in providing data. Margarita Samantha Gonzales (@famamfagonzales on Twitter) designed charts and tables.", "date_published": "2016-07-27T16:01:19+08:00", "date_modified": "2016-07-27T16:01:19+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "carlos dominguez", "finance", "Philippines", "Rodrigo Duterte", "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147133", "url": "/succession-transition/2016/07/27/147133/new-weather-insurance-aids-farmers/", "title": "New weather insurance aids farmers", "content_html": "![\"farmers\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/farmers-AFP-big-1024x681.jpg\")
By Francis Anthony T. Valentin,\u00a0Special Features Writer
\nFilipino farmers are mostly old, have little or no education, live a hand-to-mouth existence, but continue to toil, if only to help feed millions.
\nTo add to their problems, they also disproportionately bear the brunt of natural calamities.
\nClimate change, which gives rise to more frequent and punishing weather events, threatens to aggravate their already deplorable conditions.
\nTo protect their harvest, farmers can – and have – availed themselves of crop insurance offered by the Philippine Crop Insurance Corp. (PCIC), an attached agency of the Department of Agriculture (DA). Crop insurance remains the agriculture sector’s predominant safeguard against losses caused by natural disasters, pests and plant diseases.
\nBut that\u2019s not all farmers can count on.
\nA relatively new type of insurance is slowly gaining ground as a safety net for farmers increasingly becoming vulnerable to the harsh effects of climate change. It is known as weather index insurance or sometimes as weather index-based insurance. Countries like India and a number of other developing nations have already embraced it.
\nUnder a traditional crop insurance, the insurer pays an indemnity based on the losses experienced by the insured. Under a weather index insurance, the mechanics of payment are different. The insurer pays an indemnity if the realization of a weather index \u2014 a measurement of a weather variable (for example, rainfall or temperature or wind speed) that has high correlation with crop losses \u2014 surpasses or fails to meet a predetermined threshold. In other words, if there is too much rainfall or too little of it, for instance, the insured can expect to receive a payout.
\nRapid payouts for weather index insurance
\nWeather index insurance offers compelling benefits for insurers. It minimizes adverse selection, which occurs when the insured person hides information that may be critical to his risk exposure from the insurer, and moral hazard, which takes place when the insured turns negligent knowing that he has protection. Upright farmers benefit from this in that their erring fellows can less likely undermine an insurer’s ability to pay.
\nThe insurance does away with on-farm loss adjustment, which involves sending out an insurance adjuster to check and verify the damages and provide estimate of how much money is due the insured.
\nThe latter arrangement paves the way for perhaps the most crucial benefit that a farmer can derive from weather index insurance \u2014 rapid payout.
\n\u201cThe great advantage of having a faster payout is that the farmers can recover immediately,\u201d said Israel dela Cruz, national project coordinator for \u201cWeather Index-Based Insurance for Mindanao Project (WIBI Mindanao),\u201d a collaborative initiative of United Nations Development Programme (UNDP), Global Environment Facility, PCIC, and DA. Farmers covered by traditional crop insurance have to put up with an on-field loss adjustment that consumes too much time and money, and may involve inaccuracies.
\nWeather index insurance, which generally provides protection against a single weather peril, is not intended to supersede existing insurance products. It can be bundled with traditional crop insurance and/or other index insurance types, such as area-yield index and satellite index, which work in fundamentally the same manner.
\n![\"Annual](\"http://www.bworldonline.com/wp-content/uploads/2016/07/1607-Agri-insurance-1-896x1024.jpg\")
Weaknesses of weather index insurance
But weather index insurance is not flawless. Its main weakness is basis risk, \u201cthe difference between the loss experienced by the farmer and the payout triggered,\u201d International Fund for Agricultural Development (IFAD) and World Food Programme (WFP) said in their 2011 publication titled \u201cWeather Index-based Insurance in Agricultural Development: A Technical Guide.\u201d A farmer may have suffered a yield loss, but may not receive a payout, or a farmer may not have experienced any loss whatsoever and yet may still collect a payout.
\n\u201cBasis risk cannot be eliminated,\u201d said Antonis Malagardis, program director of Deutsche Gesellschaft f\u00fcr Internationale Zusammenarbeit (GIZ) in the Philippines, a German development agency. IFAD and WFP said an index insurance works best in an area where the losses are homogeneous and highly correlated with indexed peril.
\nCentral to the viability of weather index insurance is the availability of significant historical weather data. IFAD and WFP said it is recommendable to have at least 20 years of historical daily data. \u201cWe cannot create an index with reference to stations of PAGASA without significant historical data because that is very crucial in terms of computation of index,\u201d Mr. dela Cruz said, referring to Philippine Atmospheric Geophysical and Astronomical Services Administration, a government agency that monitors and collects meteorological data.
\n\u201cThe government will need to share this data with the insurers in order for them to develop appropriate products,\u201d Mr. Malagardis said.
\nAnother important concern besides the data\u2019s availability is the reliability of the equipment of PAGASA. \u201cBecause we rely on instruments, the instrumentations of PAGASA should be calibrated according to the standards of World Meteorological Organization,\u201d Mr. dela Cruz said, referring to a United Nations organization.
\nOne size doesn\u2019t fit all
\nDeveloping a weather index insurance product that largely impoverished farmers can afford can be costly, Mr. dela Cruz pointed out, given the need for weather stations and the actuarial scientists who do the indexing. It can also be difficult. For one, there is no one-size-fits-all trigger level. In a paper released in 2011 titled \u201cWeather Index Insurance for Agriculture: Guidance for Development Practitioners,\u201d World Bank defined trigger level as \u201cthe attachment level (or strike) at which the weather protection begins and financial compensation is received.\u201d
\n\u201cThere is really no fixed level or a uniform trigger which you can use for the whole country,\u201d said Roger de Pedro, country director of MicroEnsure Philippines, a pioneer in offering index insurance products in the country. \u201cProduct design for weather index insurance is usually location- and season-specific.\u201d He added that the trigger may also change per season in the same location.
\n\u201cIf the triggers are too high, they are hard to reach, then nobody will buy your product,\u201d said Jimmy Loro, senior advisor at GIZ.
\nFor her part, Charmion Grace Reyes-Feliciano, program associate at UNDP, said: \u201cBefore you can actually market an index-based insurance to as many clients as possible, you really need to have a good methodology so that you reduce the risks on the part of the insurer as well as the risks on the part of the policyholder.\u201d
\nHow weather index insurance firms cut risks
\nThere are several entities offering weather index insurance in the country today. One is the aforementioned MicroEnsure, which is headquartered in Iloilo City. Mr. de Pedro said they are capable of designing a product for a specific crop based on rainfall or wind speed or the combination of the two. The firm charges a premium of around 8% to 12% of the total sum insured, \u201cthe total cost of production per crop season,\u201d Mr. de Pedro said. Another is the Cagayan de Oro City-based Coop Life Insurance and Mutual Benefit Services or CLIMBS. It offers a national catastrophe insurance to cooperatives operating in certain municipalities.
\nThe premium is collected before the cropping season commences. To keep the premium to a minimum, Mr. de Pedro cited the need for a diversified portfolio and a large volume of the insured. Meanwhile, Mr. Malagardis said the factor of extreme weather events should be quantified and included in the premium for a weather index insurance.
\nAnd in order to reduce the risks that insurers shoulder, Mr. Malagardis recommended engaging with global reinsurers. \u201cHaving a global reinsurer is important. We know that reinsurers can easily diversify the risks in international markets.\u201d
\nInsurance literacy among farmers remains a challenge
\nThe government has an invaluable role to play for the weather index insurance or its kin, for that matter, to catch on with the private sector and farmers.
\nAnd it has reassuringly made steady strides.
\nIn October of last year, the Insurance Commission released the Agriculture Microinsurance Framework (MicroAgri Framework), which formally introduced index-based or parametric microinsurance, provided a clear-cut policy on agriculture insurance to encourage private firms to build their own products, and delineated the responsibilities of concerned government establishments, among others. Mr. Malagardis described the framework as \u201ca good step forward.\u201d
\nPCIC has conducted several pilot programs for weather index insurance.
\nThe one it is co-implementing, the WIBI Mindanao Project, which is also known as \u201cScaling-up Risk Transfer Mechanisms for Climate Vulnerable Agriculture-based Communities in Mindanao,\u201d began in 2014 and is expected to complete its run in 2017.
\nAs of 2015, a total of 837 farmers out of 2,000 target beneficiaries in Regions 10 and 11 received a weather index insurance package, and a cumulative payout of P904,000 was distributed.
\nMr. dela Cruz said what they found difficult to address at the start of the project was the lack of an ingrained insurance culture among farmers. Some factors may account for it, including how insurers regard farmers. \u201cThe problem is insurance companies don\u2019t see us as bankable,\u201d said Jonjon Sarmiento, sustainable agriculture manager at Pambansang Kilusan ng mga Samahang Magsasaka (PAKISAMA), a nonprofit organization that aims to empower farmers, fisherfolk, indigenous peoples and women.
\nMr. Sarmiento, who is a farmer himself, also brought up what he termed \u201ccultural resistance\u201d among farmers that he attributed to not having sufficient understanding of the importance of insurance and how it works.
\n\u201cIt\u2019s quite challenging to formulate how to explain insurance which is an intangible good,\u201d Mr. Loro said.
\nThere is also a language barrier to overcome. Mr. dela Cruz said there are farmers in their project who cannot comprehend English or Tagalog, prompting them to hire a translator who renders into the farmers\u2019 native tongues the mechanics of weather index insurance.
\nInsurance literacy of the farmers is thus one area that the government, private insurers and even non-government organizations can jointly work on.
\nDespite the various stumbling blocks, Mr. dela Cruz is confident about the long-term viability of weather index insurance in the Philippines.
\n\u00a0\u201cThis is a climate change adaptation tool. That\u2019s why we are doing our best so that the Department of Agriculture and PCIC will adopt it because it will help them and ultimately the farmers to cope up with climate change,\u201d Mr. dela Cruz said.
\n—–
\nFrancis Anthony T. Valentin joined 大象传媒 as a special features writer in 2014. 大象传媒 Researcher Jochebed B. Gonzales (@jochebedgon on Twitter) helped provide data to the infographic, which was designed by Margarita Samantha Gonzales (@famamfa).
\n", "content_text": "FARMERS work in a rice field near the International Rice Research Institute in Laguna. While some of them enjoy crop insurance coverage, a few others pay premiums for weather index insurance, which allows them to receive payouts, if rainfall is too much or too little. (Photo: AFP)\nBy Francis Anthony T. Valentin,\u00a0Special Features Writer\nFilipino farmers are mostly old, have little or no education, live a hand-to-mouth existence, but continue to toil, if only to help feed millions.\nTo add to their problems, they also disproportionately bear the brunt of natural calamities.\nClimate change, which gives rise to more frequent and punishing weather events, threatens to aggravate their already deplorable conditions.\nTo protect their harvest, farmers can – and have – availed themselves of crop insurance offered by the Philippine Crop Insurance Corp. (PCIC), an attached agency of the Department of Agriculture (DA). Crop insurance remains the agriculture sector’s predominant safeguard against losses caused by natural disasters, pests and plant diseases.\nBut that\u2019s not all farmers can count on.\nA relatively new type of insurance is slowly gaining ground as a safety net for farmers increasingly becoming vulnerable to the harsh effects of climate change. It is known as weather index insurance or sometimes as weather index-based insurance. Countries like India and a number of other developing nations have already embraced it.\nUnder a traditional crop insurance, the insurer pays an indemnity based on the losses experienced by the insured. Under a weather index insurance, the mechanics of payment are different. The insurer pays an indemnity if the realization of a weather index \u2014 a measurement of a weather variable (for example, rainfall or temperature or wind speed) that has high correlation with crop losses \u2014 surpasses or fails to meet a predetermined threshold. In other words, if there is too much rainfall or too little of it, for instance, the insured can expect to receive a payout.\nRapid payouts for weather index insurance\nWeather index insurance offers compelling benefits for insurers. It minimizes adverse selection, which occurs when the insured person hides information that may be critical to his risk exposure from the insurer, and moral hazard, which takes place when the insured turns negligent knowing that he has protection. Upright farmers benefit from this in that their erring fellows can less likely undermine an insurer’s ability to pay.\nThe insurance does away with on-farm loss adjustment, which involves sending out an insurance adjuster to check and verify the damages and provide estimate of how much money is due the insured.\nThe latter arrangement paves the way for perhaps the most crucial benefit that a farmer can derive from weather index insurance \u2014 rapid payout.\n\u201cThe great advantage of having a faster payout is that the farmers can recover immediately,\u201d said Israel dela Cruz, national project coordinator for \u201cWeather Index-Based Insurance for Mindanao Project (WIBI Mindanao),\u201d a collaborative initiative of United Nations Development Programme (UNDP), Global Environment Facility, PCIC, and DA. Farmers covered by traditional crop insurance have to put up with an on-field loss adjustment that consumes too much time and money, and may involve inaccuracies.\nWeather index insurance, which generally provides protection against a single weather peril, is not intended to supersede existing insurance products. It can be bundled with traditional crop insurance and/or other index insurance types, such as area-yield index and satellite index, which work in fundamentally the same manner.\nWeaknesses of weather index insurance\nBut weather index insurance is not flawless. Its main weakness is basis risk, \u201cthe difference between the loss experienced by the farmer and the payout triggered,\u201d International Fund for Agricultural Development (IFAD) and World Food Programme (WFP) said in their 2011 publication titled \u201cWeather Index-based Insurance in Agricultural Development: A Technical Guide.\u201d A farmer may have suffered a yield loss, but may not receive a payout, or a farmer may not have experienced any loss whatsoever and yet may still collect a payout.\n\u201cBasis risk cannot be eliminated,\u201d said Antonis Malagardis, program director of Deutsche Gesellschaft f\u00fcr Internationale Zusammenarbeit (GIZ) in the Philippines, a German development agency. IFAD and WFP said an index insurance works best in an area where the losses are homogeneous and highly correlated with indexed peril.\nCentral to the viability of weather index insurance is the availability of significant historical weather data. IFAD and WFP said it is recommendable to have at least 20 years of historical daily data. \u201cWe cannot create an index with reference to stations of PAGASA without significant historical data because that is very crucial in terms of computation of index,\u201d Mr. dela Cruz said, referring to Philippine Atmospheric Geophysical and Astronomical Services Administration, a government agency that monitors and collects meteorological data.\n\u201cThe government will need to share this data with the insurers in order for them to develop appropriate products,\u201d Mr. Malagardis said.\nAnother important concern besides the data\u2019s availability is the reliability of the equipment of PAGASA. \u201cBecause we rely on instruments, the instrumentations of PAGASA should be calibrated according to the standards of World Meteorological Organization,\u201d Mr. dela Cruz said, referring to a United Nations organization.\nOne size doesn\u2019t fit all\nDeveloping a weather index insurance product that largely impoverished farmers can afford can be costly, Mr. dela Cruz pointed out, given the need for weather stations and the actuarial scientists who do the indexing. It can also be difficult. For one, there is no one-size-fits-all trigger level. In a paper released in 2011 titled \u201cWeather Index Insurance for Agriculture: Guidance for Development Practitioners,\u201d World Bank defined trigger level as \u201cthe attachment level (or strike) at which the weather protection begins and financial compensation is received.\u201d\n\u201cThere is really no fixed level or a uniform trigger which you can use for the whole country,\u201d said Roger de Pedro, country director of MicroEnsure Philippines, a pioneer in offering index insurance products in the country. \u201cProduct design for weather index insurance is usually location- and season-specific.\u201d He added that the trigger may also change per season in the same location.\n\u201cIf the triggers are too high, they are hard to reach, then nobody will buy your product,\u201d said Jimmy Loro, senior advisor at GIZ.\nFor her part, Charmion Grace Reyes-Feliciano, program associate at UNDP, said: \u201cBefore you can actually market an index-based insurance to as many clients as possible, you really need to have a good methodology so that you reduce the risks on the part of the insurer as well as the risks on the part of the policyholder.\u201d\nHow weather index insurance firms cut risks\nThere are several entities offering weather index insurance in the country today. One is the aforementioned MicroEnsure, which is headquartered in Iloilo City. Mr. de Pedro said they are capable of designing a product for a specific crop based on rainfall or wind speed or the combination of the two. The firm charges a premium of around 8% to 12% of the total sum insured, \u201cthe total cost of production per crop season,\u201d Mr. de Pedro said. Another is the Cagayan de Oro City-based Coop Life Insurance and Mutual Benefit Services or CLIMBS. It offers a national catastrophe insurance to cooperatives operating in certain municipalities.\nThe premium is collected before the cropping season commences. To keep the premium to a minimum, Mr. de Pedro cited the need for a diversified portfolio and a large volume of the insured. Meanwhile, Mr. Malagardis said the factor of extreme weather events should be quantified and included in the premium for a weather index insurance.\nAnd in order to reduce the risks that insurers shoulder, Mr. Malagardis recommended engaging with global reinsurers. \u201cHaving a global reinsurer is important. We know that reinsurers can easily diversify the risks in international markets.\u201d\nInsurance literacy among farmers remains a challenge\nThe government has an invaluable role to play for the weather index insurance or its kin, for that matter, to catch on with the private sector and farmers.\nAnd it has reassuringly made steady strides.\nIn October of last year, the Insurance Commission released the Agriculture Microinsurance Framework (MicroAgri Framework), which formally introduced index-based or parametric microinsurance, provided a clear-cut policy on agriculture insurance to encourage private firms to build their own products, and delineated the responsibilities of concerned government establishments, among others. Mr. Malagardis described the framework as \u201ca good step forward.\u201d\nPCIC has conducted several pilot programs for weather index insurance.\nThe one it is co-implementing, the WIBI Mindanao Project, which is also known as \u201cScaling-up Risk Transfer Mechanisms for Climate Vulnerable Agriculture-based Communities in Mindanao,\u201d began in 2014 and is expected to complete its run in 2017.\nAs of 2015, a total of 837 farmers out of 2,000 target beneficiaries in Regions 10 and 11 received a weather index insurance package, and a cumulative payout of P904,000 was distributed.\nMr. dela Cruz said what they found difficult to address at the start of the project was the lack of an ingrained insurance culture among farmers. Some factors may account for it, including how insurers regard farmers. \u201cThe problem is insurance companies don\u2019t see us as bankable,\u201d said Jonjon Sarmiento, sustainable agriculture manager at Pambansang Kilusan ng mga Samahang Magsasaka (PAKISAMA), a nonprofit organization that aims to empower farmers, fisherfolk, indigenous peoples and women.\nMr. Sarmiento, who is a farmer himself, also brought up what he termed \u201ccultural resistance\u201d among farmers that he attributed to not having sufficient understanding of the importance of insurance and how it works.\n\u201cIt\u2019s quite challenging to formulate how to explain insurance which is an intangible good,\u201d Mr. Loro said.\nThere is also a language barrier to overcome. Mr. dela Cruz said there are farmers in their project who cannot comprehend English or Tagalog, prompting them to hire a translator who renders into the farmers\u2019 native tongues the mechanics of weather index insurance.\nInsurance literacy of the farmers is thus one area that the government, private insurers and even non-government organizations can jointly work on.\nDespite the various stumbling blocks, Mr. dela Cruz is confident about the long-term viability of weather index insurance in the Philippines.\n\u00a0\u201cThis is a climate change adaptation tool. That\u2019s why we are doing our best so that the Department of Agriculture and PCIC will adopt it because it will help them and ultimately the farmers to cope up with climate change,\u201d Mr. dela Cruz said.\n—–\nFrancis Anthony T. Valentin joined 大象传媒 as a special features writer in 2014. 大象传媒 Researcher Jochebed B. Gonzales (@jochebedgon on Twitter) helped provide data to the infographic, which was designed by Margarita Samantha Gonzales (@famamfa).", "date_published": "2016-07-27T15:55:40+08:00", "date_modified": "2016-07-27T15:55:40+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "agriculture", "farmers", "insurance", "land", "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147177", "url": "/succession-transition/2016/07/26/147177/senior-executives-reiterate-push-for-simpler-tax-systems-red-tape-reduction/", "title": "Senior executives reiterate push for simpler tax systems, red tape reduction", "content_html": "![\"PhotoSynthesis_1222-1024x683\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/PhotoSynthesis_1222-1024x683-1-1024x373.jpg\")
By Erika Denise L. Dizon, Special Features Writer
\nA shift of power was in order following the Philippines\u2019 May 2016 national elections, where former Davao Mayor Rodrigo R. Duterte and ex-solon Maria Leonor \u201cLeni\u201d G. Robredo emerged winners of the presidential and vice-presidential race, respectively.
\nThe recently concluded 大象传媒 Economic Forum last July 12, 2016 gathered leaders from various industries to address subjects concerning the economic landscape under the new administration. The whole-day event went by the theme, \u201cChartering Progress to 2020,\u201d and focused on issues like regulation, disruption, regional integration, and capacity.
\nTax reform a key priority
\nThe forum\u2019s first session came to grips with the topic of \u201cSuccession and Transition,\u201d revolving around the question: How should companies navigate the economic terrain under the new government? Moderating the discussion was 大象传媒 editor Timothy Roy C. Medina, who was also joined by five panelists standing for different sectors including government.
\nOne key priority of the Duterte government is to map out a tax reform plan that would benefit Filipinos from all classes, a subject that was tackled by Rustan\u2019s Commercial Corp. President Bienvenido \u201cDonnie\u201d V. Tantoco III and Insular Life Chief Executive Officer Nina D. Aguas .
\nRepresenting the retail market, Mr. Tantoco believes most industries would want a simple tax system that encourages more corporations to participate. \u201cWhere we are right now is the tax rates are relatively high,\u201d he said. Despite that, he thinks it has helped the previous administration create a better system of generating income.
\nMs. Aguas, on the other hand, talked about Singapore\u2019s efficient tax design, which the Philippines could garner lessons from. She praised it for its ease of compliance, reasonable tax rates, and pre-auditing measures to prevent room for corruption.
\nGetting things done faster
\nTouching more on the transition aspect, National Economic Development Authority chief and University of the Philippines School of Economics professor Ernesto M. Pernia asserted that the Duterte administration plans to \u201cget things done faster\u201d amid this period of change.
\nHe added that the current government plans to continue the \u201cgood\u201d macroeconomic policies of the previous cabinet and make a \u201cbig push\u201d towards regional and rural development. Mr. Pernia also said they want to ensure that economic growth is distributed across income classes and regions.
\nAlthough gross domestic product (GDP) growth was one of the proud achievements of the past administration, he repeatedly noted that the current government wants to attain inclusive growth and give equal chances to everyone. Mr. Pernia projects GDP to boost between a range of 7% and 8% in 2017.
\nAside from that, the government aims to reduce the country\u2019s poverty incidence from 25% to 17% by the end of its administration.
\nAlaska Milk Corp. President and CEO Wilfred Steven Uytengsu, Jr., who spoke for the food and beverage industry, talked about the administration\u2019s plan of bringing down food prices and how it would affect food companies and its stakeholders.
\nHe said that the industry looks forward to seeing red tape slashed and believes that eradicating smuggling will keep a level-playing field for the private sector.
\nInfrastructure
\nOn Manila\u2019s port congestion scenario, Mr. Uytengsu said that even though it has improved significantly, there is always more room for development. When a suggestion of creating better highways came up, he said: \u201cContinuing to invest in infrastructure is not an option; we really need it today and for the future.\u201d
\nMegaworld Corp. Commercial Division First Vice-President Kevin L. Tan then answered the question of how private real estate companies could help the Housing and Urban Development Coordinating Council, headed by Vice-President Maria Leonor \u201cLeni\u201d G. Robredo, attain its goals.
\nMr. Tan said that making government processes efficient can speed up the course of construction, which would eventually enable the private and public sector address issues on housing collectively.
\nForum delegates were given a chance to ask panelists questions soon after the session ended. Highlights of the Q&A portion comprise of queries on overpopulation and a general economic development plan for the archipelago.
\nErika Denise L. Dizon (@erikadzn on Twitter) finished BA Journalism from the University of Santo Tomas.
\n", "content_text": "By Erika Denise L. Dizon, Special Features Writer\nA shift of power was in order following the Philippines\u2019 May 2016 national elections, where former Davao Mayor Rodrigo R. Duterte and ex-solon Maria Leonor \u201cLeni\u201d G. Robredo emerged winners of the presidential and vice-presidential race, respectively.\nThe recently concluded 大象传媒 Economic Forum last July 12, 2016 gathered leaders from various industries to address subjects concerning the economic landscape under the new administration. The whole-day event went by the theme, \u201cChartering Progress to 2020,\u201d and focused on issues like regulation, disruption, regional integration, and capacity.\nTax reform a key priority\nThe forum\u2019s first session came to grips with the topic of \u201cSuccession and Transition,\u201d revolving around the question: How should companies navigate the economic terrain under the new government? Moderating the discussion was 大象传媒 editor Timothy Roy C. Medina, who was also joined by five panelists standing for different sectors including government.\nOne key priority of the Duterte government is to map out a tax reform plan that would benefit Filipinos from all classes, a subject that was tackled by Rustan\u2019s Commercial Corp. President Bienvenido \u201cDonnie\u201d V. Tantoco III and Insular Life Chief Executive Officer Nina D. Aguas .\nRepresenting the retail market, Mr. Tantoco believes most industries would want a simple tax system that encourages more corporations to participate. \u201cWhere we are right now is the tax rates are relatively high,\u201d he said. Despite that, he thinks it has helped the previous administration create a better system of generating income.\nMs. Aguas, on the other hand, talked about Singapore\u2019s efficient tax design, which the Philippines could garner lessons from. She praised it for its ease of compliance, reasonable tax rates, and pre-auditing measures to prevent room for corruption.\nGetting things done faster\nTouching more on the transition aspect, National Economic Development Authority chief and University of the Philippines School of Economics professor Ernesto M. Pernia asserted that the Duterte administration plans to \u201cget things done faster\u201d amid this period of change.\nHe added that the current government plans to continue the \u201cgood\u201d macroeconomic policies of the previous cabinet and make a \u201cbig push\u201d towards regional and rural development. Mr. Pernia also said they want to ensure that economic growth is distributed across income classes and regions.\nAlthough gross domestic product (GDP) growth was one of the proud achievements of the past administration, he repeatedly noted that the current government wants to attain inclusive growth and give equal chances to everyone. Mr. Pernia projects GDP to boost between a range of 7% and 8% in 2017.\nAside from that, the government aims to reduce the country\u2019s poverty incidence from 25% to 17% by the end of its administration.\nAlaska Milk Corp. President and CEO Wilfred Steven Uytengsu, Jr., who spoke for the food and beverage industry, talked about the administration\u2019s plan of bringing down food prices and how it would affect food companies and its stakeholders.\nHe said that the industry looks forward to seeing red tape slashed and believes that eradicating smuggling will keep a level-playing field for the private sector.\nInfrastructure\nOn Manila\u2019s port congestion scenario, Mr. Uytengsu said that even though it has improved significantly, there is always more room for development. When a suggestion of creating better highways came up, he said: \u201cContinuing to invest in infrastructure is not an option; we really need it today and for the future.\u201d\nMegaworld Corp. Commercial Division First Vice-President Kevin L. Tan then answered the question of how private real estate companies could help the Housing and Urban Development Coordinating Council, headed by Vice-President Maria Leonor \u201cLeni\u201d G. Robredo, attain its goals.\nMr. Tan said that making government processes efficient can speed up the course of construction, which would eventually enable the private and public sector address issues on housing collectively.\nForum delegates were given a chance to ask panelists questions soon after the session ended. Highlights of the Q&A portion comprise of queries on overpopulation and a general economic development plan for the archipelago.\nErika Denise L. Dizon (@erikadzn on Twitter) finished BA Journalism from the University of Santo Tomas.", "date_published": "2016-07-26T17:10:36+08:00", "date_modified": "2016-07-26T17:10:36+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147145", "url": "/succession-transition/2016/07/26/147145/tough-love-for-mining-increases-ore-costs-but-hike-seen-temporary/", "title": "Tough love for mining increases ore costs but hike seen temporary", "content_html": "\n
![\"000_Hkg139513-1-1024x837\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/000_Hkg139513-1-1024x837-1-1024x549.jpg\")
By Janina C. Lim, Reporter
\nOre prices are getting a boost from an unlikely source, but analysts see this upswing as temporary.
\nPresident Rodrigo R. Duterte has been talking tough on mining, capping that with last month\u2019s appointment as Environment and Natural Resources secretary of a known industry opponent, self-styled environmentalist Regina Paz \u201cGina\u201d L. Lopez of the Lopez Group, which has investments in one of the country\u2019s biggest media companies as well as in the largest geothermal energy producer.
\n\u201cThe much-anticipated climb in global nickel prices finally happened last week [July 4 to July 8], with help from no less than President Duterte himself,\u201d Luis A. Limlingan, managing director at the Regina Capital Development Corp. (RCDC), said in an e-mail to 大象传媒.
\n\u201cInternational sentiments converged on the idea that Duterte could impose an Indonesia-style raw ore ban, on an anti-mining platform, and disastrously disrupt Chinese supply chain,\u201d Mr. Limlingan said.
\nIn January 2014, Indonesia, which accounts for approximately 15% of global ore supply, imposed a ban on ore exports. Top nickel importer, China, has since turned to the Philippines, whose capacity to export nickel however is lower than Indonesia\u2019s.
\nBefore its ban took effect, Indonesia produced 72,000 metric tons a month of nickel ore and concentrates, nearly threefold that of the Philippines\u2019 27,700 in 2013.
\n\u201cAnother factor pushing nickel prices are expectations of lower nickel pig-iron exports from the country,\u201d Mr. Limlingan said, adding that Chinese imports of local ore fell 27% in the last five months.
\nGina Lopez appointment a trigger
\nPhilippine ore producers had warned that output would be cut down this year due to low prices.
\nKoichi Ishihara, vice-president for marketing and procurement at the country\u2019s top producer, Nickel Asia Corp. (NAC), expects global supply to turn into a deficit starting June.
\n\u201cAs forecasted, tight supply was well confirmed among nickel players in early Q2 (second quarter) but nickel price didn\u2019t react so much,\u201d Mr. Ishihara said in a mobile message.
\nThe appointment of \u201cGina Lopez just gave a trigger to the [nickel] price increase,\u201d Mr. Ishihara said.
\nTight nickel supply is expected to persist until next year, but the world\u2019s inventory \u201cis too huge so [nickel] price increase will be capped at [a] certain level,\u201d he said.
\nNAC has forecast nickel prices at approximately $11,000 per ton, or no more than $12,000 towards the end of the year.
\nSupply deficit, weak dollar
\nRalph Christian G. Bodollo, equity research analyst at RCBC Securities, Inc., cited Australia\u2019s BHP Billiton, the world\u2019s largest miner, which is projecting a rebound in nickel ore prices through the second half of this year.
\nThe rebound is seen due to an expected supply deficit. A price slump since last year compelled nickel producers to cut output, but demand is seen to persist. BHP Billiton forecasts a recovery of as much as 15% from the May level to $9,926 per ton by year-end.![\"Screen-Shot-2016-07-18-at-10\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/Screen-Shot-2016-07-18-at-10.jpg\")
\u201cIn my own view, the weak (US) dollar, which may still go down further in the year due to the gloomier probability of Fed rate increases, would also contribute to nickel ore price recovery this year or early next year,\u201d Mr. Bodollo said.
\nThe US Federal Reserve in its last policy meeting dropped hints it would go slow in raising interest rates, pressuring the greenback.
\n\u201cThis may cause an uptrend in nickel ore prices and once that uptrend appears, the whole industry will accelerate the inventory buildup, thereby stimulating demand further, again in my view,\u201d Mr. Bodollo said.
\nRCDC\u2019s Mr. Limlingan cited historical data, which shows nickel has the greatest upside potential when the overall commodities market is in bullish mode.
\n\u201cRCDC would like to point out that 2016 might not be as optimistic as think tanks wanted it to be, coming into the seventh month without as much as a fundamental lead on nickel\u2019s comeback,\u201d he said.
\n![\"000_Del6135121-(1)\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/000_Del6135121-1.jpg\")
\u201cAlthough nickel\u2019s fundamentals do not appear completely bullish, metals are getting [a] push from investors jumping into the industrial metal complex,\u201d he added.
Regulatory risk
\nAnother key risk on the domestic front is a hostile regulator.
\nLast June 21, Ms. Lopez accepted the President\u2019s offer to head the Department of Environment and Natural Resources. On that day, the mining and oil sub-index of the Philippine Stock Exchange lost 4.09%.
\nMs. Lopez\u2019s first directive left no doubt as to her position: audit all mining operations to check their compliance with environmental standards and freeze applications for new projects.
\nShe also ordered the suspension of two nickel miners in Zambales, citing the Writ of Kalikasan issued by the Supreme Court and a halt to all mining operations ordered by the newly installed provincial governor.
\nThis reduced by half the number of operating nickel miners in the country.
\n\u201c[Mining] companies are always at the mercy of commodity prices which they cannot control. Equally important or if not more important, the regulatory risk in the mining sector is high that even if you have favorable metal prices, a hateful government regime can bring mining companies to their knees,\u201d RCBC Securities\u2019 Mr. Bodollo said.
\n\u201cThe case of Gina Lopez\u2019s appointment as DENR Secretary was a case [in] point,\u201d he said.
\nJANINA C. LIM (@YnaCarlosLim on Twitter) covers the agriculture and environment beats for 大象传媒.
\n", "content_text": " \n\nBy Janina C. Lim, Reporter\nOre prices are getting a boost from an unlikely source, but analysts see this upswing as temporary.\nPresident Rodrigo R. Duterte has been talking tough on mining, capping that with last month\u2019s appointment as Environment and Natural Resources secretary of a known industry opponent, self-styled environmentalist Regina Paz \u201cGina\u201d L. Lopez of the Lopez Group, which has investments in one of the country\u2019s biggest media companies as well as in the largest geothermal energy producer.\n\u201cThe much-anticipated climb in global nickel prices finally happened last week [July 4 to July 8], with help from no less than President Duterte himself,\u201d Luis A. Limlingan, managing director at the Regina Capital Development Corp. (RCDC), said in an e-mail to 大象传媒.\n\u201cInternational sentiments converged on the idea that Duterte could impose an Indonesia-style raw ore ban, on an anti-mining platform, and disastrously disrupt Chinese supply chain,\u201d Mr. Limlingan said.\nIn January 2014, Indonesia, which accounts for approximately 15% of global ore supply, imposed a ban on ore exports. Top nickel importer, China, has since turned to the Philippines, whose capacity to export nickel however is lower than Indonesia\u2019s.\nBefore its ban took effect, Indonesia produced 72,000 metric tons a month of nickel ore and concentrates, nearly threefold that of the Philippines\u2019 27,700 in 2013.\n\u201cAnother factor pushing nickel prices are expectations of lower nickel pig-iron exports from the country,\u201d Mr. Limlingan said, adding that Chinese imports of local ore fell 27% in the last five months.\nGina Lopez appointment a trigger\nPhilippine ore producers had warned that output would be cut down this year due to low prices.\nKoichi Ishihara, vice-president for marketing and procurement at the country\u2019s top producer, Nickel Asia Corp. (NAC), expects global supply to turn into a deficit starting June.\n\u201cAs forecasted, tight supply was well confirmed among nickel players in early Q2 (second quarter) but nickel price didn\u2019t react so much,\u201d Mr. Ishihara said in a mobile message.\nThe appointment of \u201cGina Lopez just gave a trigger to the [nickel] price increase,\u201d Mr. Ishihara said.\nTight nickel supply is expected to persist until next year, but the world\u2019s inventory \u201cis too huge so [nickel] price increase will be capped at [a] certain level,\u201d he said.\nNAC has forecast nickel prices at approximately $11,000 per ton, or no more than $12,000 towards the end of the year.\nSupply deficit, weak dollar\nRalph Christian G. Bodollo, equity research analyst at RCBC Securities, Inc., cited Australia\u2019s BHP Billiton, the world\u2019s largest miner, which is projecting a rebound in nickel ore prices through the second half of this year.\nThe rebound is seen due to an expected supply deficit. A price slump since last year compelled nickel producers to cut output, but demand is seen to persist. BHP Billiton forecasts a recovery of as much as 15% from the May level to $9,926 per ton by year-end.\n\u201cIn my own view, the weak (US) dollar, which may still go down further in the year due to the gloomier probability of Fed rate increases, would also contribute to nickel ore price recovery this year or early next year,\u201d Mr. Bodollo said.\nThe US Federal Reserve in its last policy meeting dropped hints it would go slow in raising interest rates, pressuring the greenback.\n\u201cThis may cause an uptrend in nickel ore prices and once that uptrend appears, the whole industry will accelerate the inventory buildup, thereby stimulating demand further, again in my view,\u201d Mr. Bodollo said.\nRCDC\u2019s Mr. Limlingan cited historical data, which shows nickel has the greatest upside potential when the overall commodities market is in bullish mode.\n\u201cRCDC would like to point out that 2016 might not be as optimistic as think tanks wanted it to be, coming into the seventh month without as much as a fundamental lead on nickel\u2019s comeback,\u201d he said.\n\u201cAlthough nickel\u2019s fundamentals do not appear completely bullish, metals are getting [a] push from investors jumping into the industrial metal complex,\u201d he added.\nRegulatory risk\nAnother key risk on the domestic front is a hostile regulator.\nLast June 21, Ms. Lopez accepted the President\u2019s offer to head the Department of Environment and Natural Resources. On that day, the mining and oil sub-index of the Philippine Stock Exchange lost 4.09%.\nMs. Lopez\u2019s first directive left no doubt as to her position: audit all mining operations to check their compliance with environmental standards and freeze applications for new projects.\nShe also ordered the suspension of two nickel miners in Zambales, citing the Writ of Kalikasan issued by the Supreme Court and a halt to all mining operations ordered by the newly installed provincial governor.\nThis reduced by half the number of operating nickel miners in the country.\n\u201c[Mining] companies are always at the mercy of commodity prices which they cannot control. Equally important or if not more important, the regulatory risk in the mining sector is high that even if you have favorable metal prices, a hateful government regime can bring mining companies to their knees,\u201d RCBC Securities\u2019 Mr. Bodollo said.\n\u201cThe case of Gina Lopez\u2019s appointment as DENR Secretary was a case [in] point,\u201d he said.\nJANINA C. LIM (@YnaCarlosLim on Twitter) covers the agriculture and environment beats for 大象传媒.", "date_published": "2016-07-26T16:05:31+08:00", "date_modified": "2016-07-26T16:05:31+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147401", "url": "/succession-transition/2016/07/26/147401/how-to-profit-from-metro-manilas-urban-congestion/", "title": "How to profit from Metro Manila\u2019s urban congestion", "content_html": "\n
![\"000_Hkg8308896-1024x683\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Hkg8308896-1024x683-1.jpg\")
By Bienvenido S. Oplas, Jr.
\nWorsening traffic congestion in Metro Manila and other big cities in the Philippines has led people to believe that this will negatively affect people\u2019s health, temper, and eventually, the economy. Thus, the solution is to decongest heavily urbanized cities and spread out development and modernization to the peripheral cities and provinces.
\nThis subject was partly tackled during the first 大象传媒 Economic Forum last July 12, 2016 during the panel discussion about succession and transition. Among the speakers were Ernesto M. Pernia, Socioeconomic Planning secretary; Kevin L. Tan, senior vice-president & head of Megaworld Lifestyle Malls, Megaworld Corporation; Bienvenido V. Tantoco III, president of Rustans Commercial Corporation; Nina D. Aguas, CEO of Insular Life; and Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corporation.
\n![\"000_Hkg9806109\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Hkg9806109.jpg\")
\u00a0![\"000_Par8061729\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Par8061729.jpg\")
![\"DSC05382\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/DSC05382.jpg\")
Although the focus of the discussion was about how companies prepared for smooth corporate succession, the speakers also provided a wider perspective and tackled some national issues and transition. All agreed that Metro Manila is very congested and that developments should be driven to less urban and rural areas. Mr. Tan in particular highlighted that many real estate developers are going out of Metro Manila because there are more developments in several provinces and big cities, more BPOs, other businesses.
\nIf we look around the world, each country has one or more political and/or financial capital and these places experience congestion where the demand for certain services outpaces the supply. This happens because congestion is natural and part of human nature\u2019s demand for socialization and interaction. It is faster and easier if the office, the kids\u2019 school, the bank, grocery store, car repair shop, etc. are just a few kilometers away instead of dozens or hundreds of kilometers.
\nLet us check the degree of congestion of the Philippines compared to other ASEAN nations, and from two small, highly congested neighbors. A 50-year gap, 1964 to 2014, table is constructed. The per capita income in purchasing power parity (PPP) valuation over a 30-years gap is also shown.![\"2-1607-Population-density\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/2-1607-Population-density-1024x485.jpg\")
What the above table shows are the following:
\n1. Highly-congested Singapore, Macau, and Hong Kong also have very high per capita income. There are many explanations for this and the efficiency gains of having almost everything nearby is definitely one of them. Brunei is a different case, small population but relatively big land area rich with energy resources for export, like natural gas.
\n2. Less-congested Cambodia, Myanmar, and Laos also have low per capita income of only $5,100 or less. Again, there are many reasons for this and the inefficiencies and inconvenience of being far from various economic units like big banks, big grocery stores, etc. should be one of those reasons.
\n3. The Philippines is second most congested country in the ASEAN after Singapore. Its population has more than tripled over the past 50 years.
\nLet us check the numbers for Metro Manila. From 636 square kilometers originally, the megacity now has a land area of 644 square kilometers (owing to reclaimed areas at the CCP-SM MOA) and a population of 12.877 million, as of the August 2015 census. Based on these numbers, its population density is 19,995 persons/sq. kms., comparable to that of Macau.
\nBut one report says World Bank data shows that Metro Manila has a 1,300 square-kilometer land area as of 2010. Or a population density of 9,906 people per sq. km. in 2015, still higher than those in Singapore and Hong Kong.
\nSo if congestion is natural for people, how can we optimize and benefit from the presence of many people per square kilometer of land?
\n![\"ACDimatatac-30\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/ACDimatatac-30-1024x768.jpg\")
1. More land reclamation. The 800 or so hectares in the CCP-SM MOA-Entertainment City have created lots of businesses and jobs for Filipinos. The planned additional reclamation projects in Manila Bay should proceed, and at a fast rate.
Aside from creating new lands in the sea, there is also a need to remove huge volume of silt, mud, and solid wastes in river beds of the Pasig, Las Pi\u00f1as, and Marilao rivers that drain into Manila Bay. These smelly solid wastes cannot be brought to dumpsites where most LGUs declare a \u201cnot in my backyard\u201d (NIMBY) policy.
\n2. More skyways, elevated interchanges and U-turns, tunnels. Traffic congestion is an engineering problem with engineering solutions. Such solutions should veer away from hiring more traffic officers and officials, avoid having more stoplights. Instead, officials should build more hard infrastructure that can provide service to the public and motorists 24/7 for decades to come.
\n3. More trains, LRT/MRT, running along C5 and C6, above ground and underground, extending north and sound, east and west, of Metro Manila. In Tokyo, Seoul, and Singapore, it is common to see multi-level train stations and shops underground. Public Private Partnership (PPP) schemes are already existing to encourage more private funding and construction of these projects.
\n4. More low-cost medium- and high-rise residential condos. This immediately frees up space for more urban forestry and public parks, unlike in horizontal low-cost housing. Multiple regulations and taxation by both national and local governments should also decline. These are costs that are ultimately passed on to condo unit buyers and renters, that make vertical housing less affordable to the poor and lower middle class.
\nPeople and businesses respond to incentives and disincentives. If there are many disincentives and inconvenience in taking (often multi-ride) public transportation, then more people will drive their cars or motorcycles, which contribute to heavy traffic congestion. Government taxation and regulations that distort the market for urban transportation, housing, and other services should be reduced.
\nBienvenido S. Oplas, Jr. (@noysky on Twitter) is a Fellow of SEANET and President of Minimal Government Thinkers. minimalgovernment@gmail.com
\n", "content_text": " \n\nBy Bienvenido S. Oplas, Jr.\nWorsening traffic congestion in Metro Manila and other big cities in the Philippines has led people to believe that this will negatively affect people\u2019s health, temper, and eventually, the economy. Thus, the solution is to decongest heavily urbanized cities and spread out development and modernization to the peripheral cities and provinces.\nThis subject was partly tackled during the first 大象传媒 Economic Forum last July 12, 2016 during the panel discussion about succession and transition. Among the speakers were Ernesto M. Pernia, Socioeconomic Planning secretary; Kevin L. Tan, senior vice-president & head of Megaworld Lifestyle Malls, Megaworld Corporation; Bienvenido V. Tantoco III, president of Rustans Commercial Corporation; Nina D. Aguas, CEO of Insular Life; and Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corporation.\n\u00a0 \nAlthough the focus of the discussion was about how companies prepared for smooth corporate succession, the speakers also provided a wider perspective and tackled some national issues and transition. All agreed that Metro Manila is very congested and that developments should be driven to less urban and rural areas. Mr. Tan in particular highlighted that many real estate developers are going out of Metro Manila because there are more developments in several provinces and big cities, more BPOs, other businesses.\nIf we look around the world, each country has one or more political and/or financial capital and these places experience congestion where the demand for certain services outpaces the supply. This happens because congestion is natural and part of human nature\u2019s demand for socialization and interaction. It is faster and easier if the office, the kids\u2019 school, the bank, grocery store, car repair shop, etc. are just a few kilometers away instead of dozens or hundreds of kilometers.\nLet us check the degree of congestion of the Philippines compared to other ASEAN nations, and from two small, highly congested neighbors. A 50-year gap, 1964 to 2014, table is constructed. The per capita income in purchasing power parity (PPP) valuation over a 30-years gap is also shown.\nWhat the above table shows are the following:\n1. Highly-congested Singapore, Macau, and Hong Kong also have very high per capita income. There are many explanations for this and the efficiency gains of having almost everything nearby is definitely one of them. Brunei is a different case, small population but relatively big land area rich with energy resources for export, like natural gas.\n2. Less-congested Cambodia, Myanmar, and Laos also have low per capita income of only $5,100 or less. Again, there are many reasons for this and the inefficiencies and inconvenience of being far from various economic units like big banks, big grocery stores, etc. should be one of those reasons.\n3. The Philippines is second most congested country in the ASEAN after Singapore. Its population has more than tripled over the past 50 years.\nLet us check the numbers for Metro Manila. From 636 square kilometers originally, the megacity now has a land area of 644 square kilometers (owing to reclaimed areas at the CCP-SM MOA) and a population of 12.877 million, as of the August 2015 census. Based on these numbers, its population density is 19,995 persons/sq. kms., comparable to that of Macau.\nBut one report says World Bank data shows that Metro Manila has a 1,300 square-kilometer land area as of 2010. Or a population density of 9,906 people per sq. km. in 2015, still higher than those in Singapore and Hong Kong.\nSo if congestion is natural for people, how can we optimize and benefit from the presence of many people per square kilometer of land?\n1. More land reclamation. The 800 or so hectares in the CCP-SM MOA-Entertainment City have created lots of businesses and jobs for Filipinos. The planned additional reclamation projects in Manila Bay should proceed, and at a fast rate.\nAside from creating new lands in the sea, there is also a need to remove huge volume of silt, mud, and solid wastes in river beds of the Pasig, Las Pi\u00f1as, and Marilao rivers that drain into Manila Bay. These smelly solid wastes cannot be brought to dumpsites where most LGUs declare a \u201cnot in my backyard\u201d (NIMBY) policy.\n2. More skyways, elevated interchanges and U-turns, tunnels. Traffic congestion is an engineering problem with engineering solutions. Such solutions should veer away from hiring more traffic officers and officials, avoid having more stoplights. Instead, officials should build more hard infrastructure that can provide service to the public and motorists 24/7 for decades to come.\n3. More trains, LRT/MRT, running along C5 and C6, above ground and underground, extending north and sound, east and west, of Metro Manila. In Tokyo, Seoul, and Singapore, it is common to see multi-level train stations and shops underground. Public Private Partnership (PPP) schemes are already existing to encourage more private funding and construction of these projects.\n4. More low-cost medium- and high-rise residential condos. This immediately frees up space for more urban forestry and public parks, unlike in horizontal low-cost housing. Multiple regulations and taxation by both national and local governments should also decline. These are costs that are ultimately passed on to condo unit buyers and renters, that make vertical housing less affordable to the poor and lower middle class.\nPeople and businesses respond to incentives and disincentives. If there are many disincentives and inconvenience in taking (often multi-ride) public transportation, then more people will drive their cars or motorcycles, which contribute to heavy traffic congestion. Government taxation and regulations that distort the market for urban transportation, housing, and other services should be reduced.\nBienvenido S. Oplas, Jr. (@noysky on Twitter) is a Fellow of SEANET and President of Minimal Government Thinkers. minimalgovernment@gmail.com", "date_published": "2016-07-26T13:22:07+08:00", "date_modified": "2016-07-26T13:22:07+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147434", "url": "/succession-transition/2016/07/25/147434/govt-businesses-set-sights-outside-metro-manila-for-inclusive-growth/", "title": "Gov\u2019t, businesses set sights outside Metro Manila for inclusive growth", "content_html": "By Krista Angela M. Montealegre, National Correspondent
\nPresident Rodrigo R. Duterte has so far been saying the right things: accelerating infrastructure spending, cutting red tape, and reforming the tax system. The tough-talking leader has made believers out of the business elite, but more work must be done to achieve his goal of reinvigorating the countryside to spread benefits of rapid economic growth.
\n![\"FMR\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/FMR-1024x366.jpg\")
Speaking before some of the country\u2019s biggest names in business,\u00a0Finance Secretary Carlos G. Dominguez III said the government aims to accelerate infrastructure development in the rural areas, lining up \u201cquite a number\u201d of projects for implementation either through the public-private partnership (PPP) or government budget methods.
\nThis sentiment was also expressed by Socioeconomic Planning Secretary Ernesto M. Pernia during the 大象传媒 Economic Forum on July 12 at the Shangri-La at The Fort in Taguig City.
\n\u201cWe\u2019ll continue the good macroeconomic policies, but we want to make a big push toward regional and rural development, which was not given too much emphasis in the previous administration,\u201d Mr. Pernia said.
\nThe next big thing: Mindanao
\nUnder former President Benigno S.C. Aquino III\u2019s watch, the Philippine gross domestic product expanded by an average of 6.2%\u00a0\u2014 the\u00a0fastest pace since the 1970s\u00a0\u2014\u00a0but\u00a0his failure to\u00a0make the economic gains felt by majority of the Filipinos has tainted that legacy.
\nMr. Duterte \u2014 who transformed Davao once notorious for crime into a gold mine for corporates during his 22 years as mayor \u2014 plans to lure businesses to far-flung provinces in an effort to lift a fourth of the population out of poverty.
\nThe \u201cbig story\u201d within the next six years will be Mindanao, which is envisioned to become the country\u2019s \u201cmajor food basket,\u201d Mr. Dominguez said.
\nDecades of under-investment, corruption, and violence have plagued the major southernmost island in the Philippines, leaving most parts of it impoverished.
\nDeveloping the necessary power, water, communications and transport infrastructure will be crucial to realize the government\u2019s goal, with the Asian Development Bank (ADB) projecting that the Philippines must invest up to $127 billion in infrastructure from 2010 to 2020.
\nThe Duterte administration intends to continue projects under the public-private partnership program \u2014 the cornerstone strategy of his predecessor to boost spending on major infrastructure that would spur economic activity nationwide.
\nThe\u00a0PPP\u00a0Center \u2014 the central coordinating and monitoring agency for big-ticket infrastructure projects the government is undertaking with private companies \u2014 has\u00a053\u00a0infrastructure projects in its pipeline, 12 of which cumulatively worth some P217.4 billion have been awarded so\u00a0far.
\nFirst Pacific Co. Ltd. Managing Director Manuel V. Pangilinan said the gaping deficits in the economy such as infrastructure present investment opportunities for local and foreign companies.
\nMetro Pacific Investments Corp., which has interests in power generation, toll roads, water utility, and hospitals,\u00a0 is one of three Philippine subsidiaries of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. \u2014 a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. \u2014 maintains interest in 大象传媒\u00a0through the Philippine Star Group, which it controls.
\n\u201cWe all know there is poverty standing in the way so addressing it must be the business of business, not only of government\u2019s. The optimum approach to poverty is creating jobs,\u201d Mr. Pangilinan said, during the same event.
\nDecongesting Metro Manila
\nInfrastructure woes have come in the way of the Philippines reaching its economic growth potential and the improvement of quality of life, AC Energy\u00a0Holdings, Inc. President and Chief Executive Officer John Eric T.\u00a0Francia, who led the Ayala group\u2019s foray into the transport infrastructure and energy sectors.
\n\u201cWe believe this is solvable with the help of the private sector,\u201d Mr. Francia said.
\nProperty developer Megaworld Corp. Senior Vice-President Kevin L. Tan said an expansion to the countryside will provide growth opportunities for the tourism and the business process outsourcing (BPO) industries. The real estate firm plans to unveil two more townships in Mindanao.
\n\u201cWe believe in the vision of the President\u2026The key to decongest Metro Manila is to drive development to rural areas,\u201d Mr. Tan said.
\nBut bringing the private sector out of the lucrative capital may come with several challenges. Companies are chasing returns and the government must provide incentives for businesses to cater to the communities offering lower average revenue per user versus those in urban centers.
\n\u201cThe challenge is basically that there are densities for projects to be viable in these places. Clearly, there is a need for a lot of basic infrastructure such as electricity, water, fixed telephone, and mobile telephone and the only way they are going to develop is for these infrastructure to reach these areas,\u201d said Aboitiz Equity Ventures, Inc. President and Chief Executive Officer Erramon I. Aboitiz.
\nGlobe Telecom, Inc. President Ernest L. Cu said the government must help the private sector build the infrastructure in the marginalized areas to make it viable for businesses to operate there.
\nMr. Cu recommended the construction of a fiber optic network in areas such as the Autonomous Region in Muslim Mindanao (ARMM) that telecommunication companies can rent from the government.
\n\u201cIf government builds roads, they should also be building the information highway. It\u2019s as vital as farm to market roads,\u201d Mr. Cu said.
\n\u201cOur returns are predicated on a much shorter return in terms of time, but the government has a very long period of return and their basis case is not only predicated on the particular fiber optic it will rent [out] but also on the benefits of the community that will be sustained,\u201d he added.
\nEven the President\u2019s dream project \u2014 a major railway in Mindanao that will be linked to Luzon \u2014 may face some issues if he decides to undertake it through a PPP.
\n\u201cIt\u2019s going to be missionary in nature. Rail, in itself, is already non-economic on a standalone basis for a private sector investment let alone in Mindanao,\u201d Mr. Francia said.
\nRed tape, high taxes, and foreign ownership
\nThe government\u2019s focus on streamlining the bureaucracy and reducing the tax burden on companies and individuals will make the Philippines more competitive versus its neighbors in the region, said\u00a0Rustans Supercenters, Inc. President Bienvenido V. Tantoco III.
\n\u201cIf taxes are more competitive and more efficient, corporations will invest more and consumers will also spend more. There may be a period where things might get worse but on a medium term that will be beneficial for corporations and businesses,\u201d Mr. Tantoco said.
\nRed tape and high taxes \u2014 not the Constitutional limits to foreign ownership \u2014 have been the main deterrent for foreign companies to invest here, said Sun Life of Canada (Philippines), Inc. President Rizalina G. Mantaring.
\n\u201cIf you are a company and you want to build a strong industry and strong capabilities for manufacturing, why will you locate in the Philippines when you can operate much more cheaply and efficiently elsewhere?\u201d Ms. Mantaring said.
\n\u201cThose are the things we need to address because once markets open up, consumers, revenues and investments flow to where it is most efficient,\u201d she added.
\nAt a time of lingering global uncertainty, the Philippines must take advantage of its robust growth momentum to attract more job-generating foreign direct investments \u2014 one of the lowest in the region.
\n\u201cIf we\u2019re able to simplify processes, make it easier to do business in the Philippines, then we are setting ourselves up for success,\u201d said Alaska Milk Corp. President Wilfred Steven Uytengsu, Jr.
\nVice-President Maria Leonor \u201cLeni\u201d G. Robredo said companies must embrace \u201cbusiness unusual\u201d where shared value \u2014 not profit \u2014 is the driver of growth.
\n\u201cAs the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time,\u201d Ms. Robredo said.
\nCiting data from the Organization for Economic Cooperation and Development, Ms. Robredo said rising inequality took away 10 percentage points of growth rates in Mexico and New Zealand, while cumulative growth rates in Italy, the United Kingdom and the United States would have been 6-9 percentage points higher had income disparities not widened.
\n\u201cWe need growth for all, not just for a select few. Progress that benefits only the elite is no progress at all,\u201d she said.
\nKrista Angela M. Montealegre (@_kmontealegre on Twitter) has been writing about the corporate scene for nearly a decade, the last year or so for 大象传媒.
\n", "content_text": "By Krista Angela M. Montealegre, National Correspondent\nPresident Rodrigo R. Duterte has so far been saying the right things: accelerating infrastructure spending, cutting red tape, and reforming the tax system. The tough-talking leader has made believers out of the business elite, but more work must be done to achieve his goal of reinvigorating the countryside to spread benefits of rapid economic growth.\n\nSpeaking before some of the country\u2019s biggest names in business,\u00a0Finance Secretary Carlos G. Dominguez III said the government aims to accelerate infrastructure development in the rural areas, lining up \u201cquite a number\u201d of projects for implementation either through the public-private partnership (PPP) or government budget methods.\nThis sentiment was also expressed by Socioeconomic Planning Secretary Ernesto M. Pernia during the 大象传媒 Economic Forum on July 12 at the Shangri-La at The Fort in Taguig City.\n\u201cWe\u2019ll continue the good macroeconomic policies, but we want to make a big push toward regional and rural development, which was not given too much emphasis in the previous administration,\u201d Mr. Pernia said.\nThe next big thing: Mindanao\nUnder former President Benigno S.C. Aquino III\u2019s watch, the Philippine gross domestic product expanded by an average of 6.2%\u00a0\u2014 the\u00a0fastest pace since the 1970s\u00a0\u2014\u00a0but\u00a0his failure to\u00a0make the economic gains felt by majority of the Filipinos has tainted that legacy.\nMr. Duterte \u2014 who transformed Davao once notorious for crime into a gold mine for corporates during his 22 years as mayor \u2014 plans to lure businesses to far-flung provinces in an effort to lift a fourth of the population out of poverty.\nThe \u201cbig story\u201d within the next six years will be Mindanao, which is envisioned to become the country\u2019s \u201cmajor food basket,\u201d Mr. Dominguez said.\nDecades of under-investment, corruption, and violence have plagued the major southernmost island in the Philippines, leaving most parts of it impoverished.\nDeveloping the necessary power, water, communications and transport infrastructure will be crucial to realize the government\u2019s goal, with the Asian Development Bank (ADB) projecting that the Philippines must invest up to $127 billion in infrastructure from 2010 to 2020.\nThe Duterte administration intends to continue projects under the public-private partnership program \u2014 the cornerstone strategy of his predecessor to boost spending on major infrastructure that would spur economic activity nationwide.\nThe\u00a0PPP\u00a0Center \u2014 the central coordinating and monitoring agency for big-ticket infrastructure projects the government is undertaking with private companies \u2014 has\u00a053\u00a0infrastructure projects in its pipeline, 12 of which cumulatively worth some P217.4 billion have been awarded so\u00a0far.\nFirst Pacific Co. Ltd. Managing Director Manuel V. Pangilinan said the gaping deficits in the economy such as infrastructure present investment opportunities for local and foreign companies.\nMetro Pacific Investments Corp., which has interests in power generation, toll roads, water utility, and hospitals,\u00a0 is one of three Philippine subsidiaries of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. \u2014 a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. \u2014 maintains interest in 大象传媒\u00a0through the Philippine Star Group, which it controls.\n\u201cWe all know there is poverty standing in the way so addressing it must be the business of business, not only of government\u2019s. The optimum approach to poverty is creating jobs,\u201d Mr. Pangilinan said, during the same event.\nDecongesting Metro Manila \nInfrastructure woes have come in the way of the Philippines reaching its economic growth potential and the improvement of quality of life, AC Energy\u00a0Holdings, Inc. President and Chief Executive Officer John Eric T.\u00a0Francia, who led the Ayala group\u2019s foray into the transport infrastructure and energy sectors.\n\u201cWe believe this is solvable with the help of the private sector,\u201d Mr. Francia said.\nProperty developer Megaworld Corp. Senior Vice-President Kevin L. Tan said an expansion to the countryside will provide growth opportunities for the tourism and the business process outsourcing (BPO) industries. The real estate firm plans to unveil two more townships in Mindanao.\n\u201cWe believe in the vision of the President\u2026The key to decongest Metro Manila is to drive development to rural areas,\u201d Mr. Tan said.\nBut bringing the private sector out of the lucrative capital may come with several challenges. Companies are chasing returns and the government must provide incentives for businesses to cater to the communities offering lower average revenue per user versus those in urban centers.\n\u201cThe challenge is basically that there are densities for projects to be viable in these places. Clearly, there is a need for a lot of basic infrastructure such as electricity, water, fixed telephone, and mobile telephone and the only way they are going to develop is for these infrastructure to reach these areas,\u201d said Aboitiz Equity Ventures, Inc. President and Chief Executive Officer Erramon I. Aboitiz.\nGlobe Telecom, Inc. President Ernest L. Cu said the government must help the private sector build the infrastructure in the marginalized areas to make it viable for businesses to operate there.\nMr. Cu recommended the construction of a fiber optic network in areas such as the Autonomous Region in Muslim Mindanao (ARMM) that telecommunication companies can rent from the government.\n\u201cIf government builds roads, they should also be building the information highway. It\u2019s as vital as farm to market roads,\u201d Mr. Cu said.\n\u201cOur returns are predicated on a much shorter return in terms of time, but the government has a very long period of return and their basis case is not only predicated on the particular fiber optic it will rent [out] but also on the benefits of the community that will be sustained,\u201d he added.\nEven the President\u2019s dream project \u2014 a major railway in Mindanao that will be linked to Luzon \u2014 may face some issues if he decides to undertake it through a PPP.\n\u201cIt\u2019s going to be missionary in nature. Rail, in itself, is already non-economic on a standalone basis for a private sector investment let alone in Mindanao,\u201d Mr. Francia said.\nRed tape, high taxes, and foreign ownership\nThe government\u2019s focus on streamlining the bureaucracy and reducing the tax burden on companies and individuals will make the Philippines more competitive versus its neighbors in the region, said\u00a0Rustans Supercenters, Inc. President Bienvenido V. Tantoco III.\n\u201cIf taxes are more competitive and more efficient, corporations will invest more and consumers will also spend more. There may be a period where things might get worse but on a medium term that will be beneficial for corporations and businesses,\u201d Mr. Tantoco said.\nRed tape and high taxes \u2014 not the Constitutional limits to foreign ownership \u2014 have been the main deterrent for foreign companies to invest here, said Sun Life of Canada (Philippines), Inc. President Rizalina G. Mantaring.\n\u201cIf you are a company and you want to build a strong industry and strong capabilities for manufacturing, why will you locate in the Philippines when you can operate much more cheaply and efficiently elsewhere?\u201d Ms. Mantaring said.\n\u201cThose are the things we need to address because once markets open up, consumers, revenues and investments flow to where it is most efficient,\u201d she added.\nAt a time of lingering global uncertainty, the Philippines must take advantage of its robust growth momentum to attract more job-generating foreign direct investments \u2014 one of the lowest in the region.\n\u201cIf we\u2019re able to simplify processes, make it easier to do business in the Philippines, then we are setting ourselves up for success,\u201d said Alaska Milk Corp. President Wilfred Steven Uytengsu, Jr.\nVice-President Maria Leonor \u201cLeni\u201d G. Robredo said companies must embrace \u201cbusiness unusual\u201d where shared value \u2014 not profit \u2014 is the driver of growth.\n\u201cAs the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time,\u201d Ms. Robredo said.\nCiting data from the Organization for Economic Cooperation and Development, Ms. Robredo said rising inequality took away 10 percentage points of growth rates in Mexico and New Zealand, while cumulative growth rates in Italy, the United Kingdom and the United States would have been 6-9 percentage points higher had income disparities not widened.\n\u201cWe need growth for all, not just for a select few. Progress that benefits only the elite is no progress at all,\u201d she said.\nKrista Angela M. Montealegre (@_kmontealegre on Twitter) has been writing about the corporate scene for nearly a decade, the last year or so for 大象传媒.", "date_published": "2016-07-25T13:37:54+08:00", "date_modified": "2016-07-25T13:37:54+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147431", "url": "/succession-transition/2016/07/25/147431/philippine-banks-to-expand-despite-challenges-2/", "title": "Philippine banks to expand despite challenges", "content_html": "By Imee Charlee C. Delavin, Reporter
\nThe next few years will be more challenging for Philippine banks amid headwinds from overseas, but the country\u2019s sound macroeconomic fundamentals are seen fueling the local financial sector\u2019s expansion, drawing in more foreign banks that want a piece of Asia\u2019s rising star.
\n![\"000_Hkg984662\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Hkg984662-1024x688.jpg\")
Since the start of the year, local financial markets have been buffeted by the divergence in the fortunes of the world\u2019s biggest economies. In recent weeks, Britain\u2019s decision to pull out of the European Union added to this uncertainty.
\u201cWith the exit of Britain from the European Union, investors right now are on a wait-and-see mode, assessing the repercussions of Britain\u2019s decision on the health of the world economy,\u201d Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said.
\n\u201cBritain could potentially undermine global growth by dampening consumer and business sentiment. Although another worldwide recession is unlikely given the steady pace of the US economy, the separation of Britain could definitely aggravate global economic divergence, resulting in increased volatility in financial markets,\u201d he said.
\nThe divergence among the world\u2019s advanced economies has the US on the one hand raising interest rates to sustain its recovery from the Global Financial Crisis of 2008-2009. Japan and the Eurozone on the other hand are easing monetary policy to prevent their economies from sliding back.
\nAdd to the mix China, which has slowed down in recent years, pulling along with it some emerging economies in Asia that rode on the export boom of the world\u2019s second largest economy.
\n\u201cAdded stimulus would mean that interest rates may remain low, but very volatile, in the next few years,\u201d Mr. Dumalagan said.
\n\u201cAmid this global economic environment, Philippine banks might find themselves frequently adjusting their portfolios in response to mixed signals from abroad. Volatility offers profit opportunities, although market timing is critical. This could also mean that loan growth might remain strong, as relatively low interest rates could entice firms and households to borrow more,\u201d he added.
\nLocal lenders remain well-capitalized
\nDespite the external headwinds, Philippine banks remained well-capitalized, with a 14.91% capital adequacy ratio (CAR) at the end of last year, or well above 10% minimum set by the Bangko Sentral ng Pilipinas\u2019 (BSP) and the 8% floor under Basel III.
\nCapital buffers also were of high quality, mainly composed of common equity tier 1 (CET1) instruments, which represented 12.37% and 13.33% of risk-weighted assets on solo and consolidated bases, or more than double the minimum 6% share set by the BSP. The share of Tier 1 capital \u2014 composed of common equity and qualified capital instruments \u2014 also stood at 12.55% and 13.48% at end-2015, higher than the 7.5% requirement.
\nThe banking sector\u2019s total resources stood at P12.52 trillion at end-March 2016, up from the year-ago level of P11.37 trillion, as the public continued to place their savings in banks, thus supporting the industry\u2019s expansion.
\nUniversal and commercial banks\u2019 total resources stood at P11.25 trillion, up from the P10.24 trillion at end-March 2015. Thrift banks had P1.05 trillion at end-December, while rural banks held P213 billion.
\nThis was despite a drop in the number of banks operating in the country. At end-December, the number of lenders declined to 632 from 648 in 2014. However, total bank branches rose to 10,124 from just 9,713the previous year.
\nBig banks remained profitable in 2015, posting a combined net income of P120.275 billion.
\nAccording to the BSP\u2019s assessment, \u201cthe Philippine banking system remains resilient as it continued to support long-term economic growth, [adding that] banks\u2019 balance sheets were marked by sustained growth in assets and deposits.\u201d
\nInternational credit raters have said the Philippine banking system remains sound and stable, as banks remained well-capitalized against any financial shocks, having been supported by the country\u2019s strong fundamentals and rapid economic growth.
\nPositive economic outlook
\nBSP Governor Amando M. Tetangco, Jr. agrees that the country\u2019s solid macroeconomic fundamentals underpin the banking industry\u2019s strength, adding that the positive outlook for the Philippine economy lends support to lenders\u2019 resilience in the near- to medium-term.
\n\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years, which would indicate that there would be a need for funding increased economic activity during that period. That would augur well for the banking system,\u201d Mr. Tetangco said.
\nDespite the global uncertainty, the Philippines\u2019 gross domestic product (GDP) growth has averaged 6.3% annually since 2010. At 1.8 percentage points more than in the previous six years, the recent growth record is a bigger improvement than in any other country in the region, Capital Economics Ltd. earlier said.
\nLast year, GDP grew by 5.8% on the back of robust domestic demand and private investments, albeit missing a 7-8% target for 2015.
\nGDP grew by 6.9% in the first quarter of 2016, driven by an uptick in public disbursements, a surge in investments, and robust household consumption, which historically has contributed up to 70% of GDP. This year, the country is seen expanding by 6-7%, down from the initial target of 6.8-7.8%, but still above trend.
\nBoost infrastructure spending
\nSeen boosting economic growth in the medium term is increased infrastructure spending \u2014 by at least 5% of GDP, going by what President Rodrigo R. Duterte\u2019s economic managers have been saying. This in turn will be a boon to the banking industry.
\n\u201cIt helps that the new economic team has announced that they will ratchet up infrastructure spending. This would create the conditions for more future growth,\u201d EastWest Banking Corp. President and CEO Antonio C. Moncupa, Jr. said.
\n\u201cAnd if the campaign against criminality starts to bear fruits and the peace processes take off, these could unleash more upbeat mood and eventually investments and hopefully translate to more job opportunities for our workers,\u201d he said.
\nIldemarc C. Bautista, assistant vice-president and head of research at Metropolitan Bank & Trust Co., described as \u201cunprecedented\u201d the Duterte administration\u2019s plan to ramp up infrastructure spending to as much as 7% of GDP.
\n\u201c[C]onsumer and business loans should pick up on the back of these government stimulus programs and strong consumer spending,\u201d he said, adding that, coupled with low global inflation and high domestic liquidity, \u201cthis should prove positive for the demand side.\u201d
\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said the government\u2019s emphasis on infrastructure, particularly public-private partnership (PPP) projects can address banks\u2019 compressing margins.
\n\u201c[T]hey are term loans… they are considered as project financing and project financing usually gives you higher rates so more PPPs then that should also help the banks\u2019 margin in the long-term,\u201d Ms. Tan said. \u201cThere would be more room for growth for the banking sector in the next six years [as] more PPPs, more project-financing type of loans then that would probably help improve your margins.\u201d
\nBack to basics
\nPatrick D. Cheng, first vice-president at China Banking Corp., said banks \u201cshould do reasonably well\u201d during the next few years.
\nThe government\u2019s PPP projects will boost the expansion of banks as \u201cmore conglomerates team up and share the risks and rewards\u201d of such projects, giving local lenders \u201cmore capital market deals to attend to,\u201d he said.
\n\u201cIf the country continues to grow by around 6% to 7% per year for the duration of the Duterte administration, then we should expect bank earnings to gain somewhere between 1 and 1.50 times GDP growth,\u201d Mr. Cheng said.
\n\u201cWith interest rates much lower, bank\u2019s trading gains will definitely be muted compared to where they were four to five years ago. It will really be a back to basics for banking. Making good loans… keeping within their respective bank\u2019s risk appetite and generating a good balance of fee income,\u201d he said.
\nBranch expansion \u201cmay be tapering off as banks and clients adapt better to technology and digital banking \u2014 non-branch banking \u2014 channels,\u201d Mr. Cheng said, adding that this should give banks \u201csome breathing space on operating expenses.\u201d
\n\u201cThese actions if properly executed should allow banks to generate and rebuild net income levels to offset the generally lower trading gains environment,\u201d he added.
\nEntry of more foreign banks
\nAnd as success attracts rivals, the Philippine banking industry will be witness to more players from abroad, aided in no small way by the government\u2019s move to liberalize foreign ownership, and by the envisioned ASEAN Banking Integration come 2020.
\n\u201cAn expanding economy is always positive for the banking system,\u201d Mr. Tetangco said, adding that the country\u2019s \u201cstrong macroeconomic fundamentals and good economic performance\u201d is luring more foreign banks into the system.
\n\u201cGiven the positive prospects of continued growth and manageable inflation, the entry of foreign investments is expected to increase further, including investments in the banking sector which has actually been liberalized through the passage of RA [Republic Act] 10641 and also the passage of the law allowing higher foreign participation in rural banks,\u201d Mr. Tetangco said.
\nThe BSP has approved the entry of eight foreign banks since the passage of the Act Allowing the Full Entry of Foreign Banks in July 2014. The foreign lenders that got the BSP\u2019s green light to operate in the Philippines are Japan\u2019s Sumitomo Mitsui Banking Corp., South Korea\u2019s Industrial Bank of Korea and Shinhan Bank, Taiwan\u2019s Cathay United Bank and Yuanta Commercial Bank Co. Ltd and the Singapore\u2019s United Overseas Bank Ltd.
\nThis year, Korea\u2019s Woori Bank entered the local market by partnering with Gaisano-led Wealth Development Bank Corp., a thrift lender which targets to serve both Korean tourists and expats. In June, Taiwan\u2019s First Commercial Bank also got the central bank\u2019s approval to set up a branch in Manila.
\n\u201cThere are more applications that are being evaluated right now,\u201d Mr. Tetangco said.
\nEastWest\u2019s Mr. Moncupa said the outlook for the local banking industry in the next three to six years is \u201cdefinitely bright,\u201d notwithstanding greater competition.
\n\u201c[M]ore intense competition… normally happens when the mood is upbeat. Everybody will try to get a piece of the action. While that puts some pressure on bank spreads, it will be good for households and businesses in terms of access to credit, better services, and more competitive pricing,\u201d he said.
\nMr. Moncupa said the lower spreads and intense competition would put pressure on mergers and acquisitions, which would create higher efficiencies and economies of scale.
\n\u201cOverall, the industry will turn positive results although it could be tough for some banks.\u00a0 We expect to see more interest from foreign banks to get into the country. In general, in the next few years we see retail banking to continue to be the realm of local banks.\u00a0 Foreign banks will be mostly in corporate and wholesale banking. Foreign banks may try to get minority stakes in local banks,\u201d he said.
\nMetrobank\u2019s Mr. Bautista sees tighter competition playing out this way: \u201cThe big local banks will continue to leverage their national presence and create economies of scale while the smaller banks will focus on niche markets and consumer segments.\u201d
\n\u201cAlthough it looks like new entrants are more amenable to partnerships with local banks instead of going in solo… these foreign entrants will continue to seek partnerships with the mid-tier banks as they focus on niche markets and using technology solutions as a competitive tool,\u201d he said.
\nChoice of next BSP chief
\nLastly, any orderly adjustment by the banking industry to the new realities of broader competition and external volatility would require the steady hand of a central bank. Crucial to the financial sector, if not the entire economy\u2019s mid-term prospects, is the appointment of a new BSP chief by next year when Mr. Tetangco steps down.
\nNicholas Antonio T. Mapa, associate economist at Bank of the Philippine Islands (BPI) said one of Mr. Duterte\u2019s most crucial appointees will be his choice for BSP Governor in 2017.
\n\u201cPresident [Benigno S.C.] Aquino [III] did well in re-appointing the ace Governor who has earned international acclaim for his astute stewardship of the country\u2019s financial system,\u201d Mr. Mapa said.
\n\u201cNo doubt [Mr.] Tetangco helped keep the economy afloat in rough waters and ensured smooth and safe sailing in the times that the winds were full in our sails. Duterte would need to find a worthy successor to the outgoing Tetangco,\u201d Mr. Mapa said.
\nThe Philippine financial system is \u201cone of the most resilient in the region, if not the world\u201d as it \u201cadheres to stringent standards of risk management to ensure that the business of public trust remains whole and viable for all stakeholders involved,\u201d he said.
\nOne of Mr. Tetangco\u2019s legacies to the Philippine banking system is the implementation of an interest rate corridor system, \u201cwhich is precisely the framework that can stave off financial market volatility,\u201d Mr. Mapa said.
\n\u201cGiven how quickly global markets can turn from tempest to tranquil and back, the BSP\u2019s investment in such a system affords them the flexibility to deal with rapid changes in market sentiment and to calm the waters when they do get roiled,\u201d he said.
\n\u201cTheir ability to better get hold of liquidity will go a long way to deterring financial stress from the eventual [United Kingdom\u2019s] exit from the European Union, imminent, albeit delayed Fed rate hike cycle and possible renewed concerns about crude oil prices and China\u2019s economy,\u201d Mr. Mapa added.
\nImee Charlee C. Delavin (@charleedelavin on Twitter) covers private banks for 大象传媒. She loves to travel.
\n", "content_text": "By Imee Charlee C. Delavin, Reporter\nThe next few years will be more challenging for Philippine banks amid headwinds from overseas, but the country\u2019s sound macroeconomic fundamentals are seen fueling the local financial sector\u2019s expansion, drawing in more foreign banks that want a piece of Asia\u2019s rising star.\nSince the start of the year, local financial markets have been buffeted by the divergence in the fortunes of the world\u2019s biggest economies. In recent weeks, Britain\u2019s decision to pull out of the European Union added to this uncertainty.\n\u201cWith the exit of Britain from the European Union, investors right now are on a wait-and-see mode, assessing the repercussions of Britain\u2019s decision on the health of the world economy,\u201d Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said.\n\u201cBritain could potentially undermine global growth by dampening consumer and business sentiment. Although another worldwide recession is unlikely given the steady pace of the US economy, the separation of Britain could definitely aggravate global economic divergence, resulting in increased volatility in financial markets,\u201d he said.\nThe divergence among the world\u2019s advanced economies has the US on the one hand raising interest rates to sustain its recovery from the Global Financial Crisis of 2008-2009. Japan and the Eurozone on the other hand are easing monetary policy to prevent their economies from sliding back.\nAdd to the mix China, which has slowed down in recent years, pulling along with it some emerging economies in Asia that rode on the export boom of the world\u2019s second largest economy.\n\u201cAdded stimulus would mean that interest rates may remain low, but very volatile, in the next few years,\u201d Mr. Dumalagan said.\n\u201cAmid this global economic environment, Philippine banks might find themselves frequently adjusting their portfolios in response to mixed signals from abroad. Volatility offers profit opportunities, although market timing is critical. This could also mean that loan growth might remain strong, as relatively low interest rates could entice firms and households to borrow more,\u201d he added.\nLocal lenders remain well-capitalized\nDespite the external headwinds, Philippine banks remained well-capitalized, with a 14.91% capital adequacy ratio (CAR) at the end of last year, or well above 10% minimum set by the Bangko Sentral ng Pilipinas\u2019 (BSP) and the 8% floor under Basel III.\nCapital buffers also were of high quality, mainly composed of common equity tier 1 (CET1) instruments, which represented 12.37% and 13.33% of risk-weighted assets on solo and consolidated bases, or more than double the minimum 6% share set by the BSP. The share of Tier 1 capital \u2014 composed of common equity and qualified capital instruments \u2014 also stood at 12.55% and 13.48% at end-2015, higher than the 7.5% requirement.\nThe banking sector\u2019s total resources stood at P12.52 trillion at end-March 2016, up from the year-ago level of P11.37 trillion, as the public continued to place their savings in banks, thus supporting the industry\u2019s expansion.\nUniversal and commercial banks\u2019 total resources stood at P11.25 trillion, up from the P10.24 trillion at end-March 2015. Thrift banks had P1.05 trillion at end-December, while rural banks held P213 billion.\nThis was despite a drop in the number of banks operating in the country. At end-December, the number of lenders declined to 632 from 648 in 2014. However, total bank branches rose to 10,124 from just 9,713the previous year.\nBig banks remained profitable in 2015, posting a combined net income of P120.275 billion.\nAccording to the BSP\u2019s assessment, \u201cthe Philippine banking system remains resilient as it continued to support long-term economic growth, [adding that] banks\u2019 balance sheets were marked by sustained growth in assets and deposits.\u201d\nInternational credit raters have said the Philippine banking system remains sound and stable, as banks remained well-capitalized against any financial shocks, having been supported by the country\u2019s strong fundamentals and rapid economic growth.\nPositive economic outlook\nBSP Governor Amando M. Tetangco, Jr. agrees that the country\u2019s solid macroeconomic fundamentals underpin the banking industry\u2019s strength, adding that the positive outlook for the Philippine economy lends support to lenders\u2019 resilience in the near- to medium-term.\n\u201cThe projection is that the Philippine economy will continue to grow at a rate above trend over the next few years, which would indicate that there would be a need for funding increased economic activity during that period. That would augur well for the banking system,\u201d Mr. Tetangco said.\nDespite the global uncertainty, the Philippines\u2019 gross domestic product (GDP) growth has averaged 6.3% annually since 2010. At 1.8 percentage points more than in the previous six years, the recent growth record is a bigger improvement than in any other country in the region, Capital Economics Ltd. earlier said.\nLast year, GDP grew by 5.8% on the back of robust domestic demand and private investments, albeit missing a 7-8% target for 2015.\nGDP grew by 6.9% in the first quarter of 2016, driven by an uptick in public disbursements, a surge in investments, and robust household consumption, which historically has contributed up to 70% of GDP. This year, the country is seen expanding by 6-7%, down from the initial target of 6.8-7.8%, but still above trend.\nBoost infrastructure spending\nSeen boosting economic growth in the medium term is increased infrastructure spending \u2014 by at least 5% of GDP, going by what President Rodrigo R. Duterte\u2019s economic managers have been saying. This in turn will be a boon to the banking industry.\n\u201cIt helps that the new economic team has announced that they will ratchet up infrastructure spending. This would create the conditions for more future growth,\u201d EastWest Banking Corp. President and CEO Antonio C. Moncupa, Jr. said.\n\u201cAnd if the campaign against criminality starts to bear fruits and the peace processes take off, these could unleash more upbeat mood and eventually investments and hopefully translate to more job opportunities for our workers,\u201d he said.\nIldemarc C. Bautista, assistant vice-president and head of research at Metropolitan Bank & Trust Co., described as \u201cunprecedented\u201d the Duterte administration\u2019s plan to ramp up infrastructure spending to as much as 7% of GDP.\n\u201c[C]onsumer and business loans should pick up on the back of these government stimulus programs and strong consumer spending,\u201d he said, adding that, coupled with low global inflation and high domestic liquidity, \u201cthis should prove positive for the demand side.\u201d\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said the government\u2019s emphasis on infrastructure, particularly public-private partnership (PPP) projects can address banks\u2019 compressing margins.\n\u201c[T]hey are term loans… they are considered as project financing and project financing usually gives you higher rates so more PPPs then that should also help the banks\u2019 margin in the long-term,\u201d Ms. Tan said. \u201cThere would be more room for growth for the banking sector in the next six years [as] more PPPs, more project-financing type of loans then that would probably help improve your margins.\u201d\nBack to basics\nPatrick D. Cheng, first vice-president at China Banking Corp., said banks \u201cshould do reasonably well\u201d during the next few years.\nThe government\u2019s PPP projects will boost the expansion of banks as \u201cmore conglomerates team up and share the risks and rewards\u201d of such projects, giving local lenders \u201cmore capital market deals to attend to,\u201d he said.\n\u201cIf the country continues to grow by around 6% to 7% per year for the duration of the Duterte administration, then we should expect bank earnings to gain somewhere between 1 and 1.50 times GDP growth,\u201d Mr. Cheng said.\n\u201cWith interest rates much lower, bank\u2019s trading gains will definitely be muted compared to where they were four to five years ago. It will really be a back to basics for banking. Making good loans… keeping within their respective bank\u2019s risk appetite and generating a good balance of fee income,\u201d he said.\nBranch expansion \u201cmay be tapering off as banks and clients adapt better to technology and digital banking \u2014 non-branch banking \u2014 channels,\u201d Mr. Cheng said, adding that this should give banks \u201csome breathing space on operating expenses.\u201d\n\u201cThese actions if properly executed should allow banks to generate and rebuild net income levels to offset the generally lower trading gains environment,\u201d he added.\nEntry of more foreign banks\nAnd as success attracts rivals, the Philippine banking industry will be witness to more players from abroad, aided in no small way by the government\u2019s move to liberalize foreign ownership, and by the envisioned ASEAN Banking Integration come 2020.\n\u201cAn expanding economy is always positive for the banking system,\u201d Mr. Tetangco said, adding that the country\u2019s \u201cstrong macroeconomic fundamentals and good economic performance\u201d is luring more foreign banks into the system.\n\u201cGiven the positive prospects of continued growth and manageable inflation, the entry of foreign investments is expected to increase further, including investments in the banking sector which has actually been liberalized through the passage of RA [Republic Act] 10641 and also the passage of the law allowing higher foreign participation in rural banks,\u201d Mr. Tetangco said.\nThe BSP has approved the entry of eight foreign banks since the passage of the Act Allowing the Full Entry of Foreign Banks in July 2014. The foreign lenders that got the BSP\u2019s green light to operate in the Philippines are Japan\u2019s Sumitomo Mitsui Banking Corp., South Korea\u2019s Industrial Bank of Korea and Shinhan Bank, Taiwan\u2019s Cathay United Bank and Yuanta Commercial Bank Co. Ltd and the Singapore\u2019s United Overseas Bank Ltd.\nThis year, Korea\u2019s Woori Bank entered the local market by partnering with Gaisano-led Wealth Development Bank Corp., a thrift lender which targets to serve both Korean tourists and expats. In June, Taiwan\u2019s First Commercial Bank also got the central bank\u2019s approval to set up a branch in Manila.\n\u201cThere are more applications that are being evaluated right now,\u201d Mr. Tetangco said.\nEastWest\u2019s Mr. Moncupa said the outlook for the local banking industry in the next three to six years is \u201cdefinitely bright,\u201d notwithstanding greater competition.\n\u201c[M]ore intense competition… normally happens when the mood is upbeat. Everybody will try to get a piece of the action. While that puts some pressure on bank spreads, it will be good for households and businesses in terms of access to credit, better services, and more competitive pricing,\u201d he said.\nMr. Moncupa said the lower spreads and intense competition would put pressure on mergers and acquisitions, which would create higher efficiencies and economies of scale.\n\u201cOverall, the industry will turn positive results although it could be tough for some banks.\u00a0 We expect to see more interest from foreign banks to get into the country. In general, in the next few years we see retail banking to continue to be the realm of local banks.\u00a0 Foreign banks will be mostly in corporate and wholesale banking. Foreign banks may try to get minority stakes in local banks,\u201d he said.\nMetrobank\u2019s Mr. Bautista sees tighter competition playing out this way: \u201cThe big local banks will continue to leverage their national presence and create economies of scale while the smaller banks will focus on niche markets and consumer segments.\u201d\n\u201cAlthough it looks like new entrants are more amenable to partnerships with local banks instead of going in solo… these foreign entrants will continue to seek partnerships with the mid-tier banks as they focus on niche markets and using technology solutions as a competitive tool,\u201d he said.\nChoice of next BSP chief\nLastly, any orderly adjustment by the banking industry to the new realities of broader competition and external volatility would require the steady hand of a central bank. Crucial to the financial sector, if not the entire economy\u2019s mid-term prospects, is the appointment of a new BSP chief by next year when Mr. Tetangco steps down.\nNicholas Antonio T. Mapa, associate economist at Bank of the Philippine Islands (BPI) said one of Mr. Duterte\u2019s most crucial appointees will be his choice for BSP Governor in 2017.\n\u201cPresident [Benigno S.C.] Aquino [III] did well in re-appointing the ace Governor who has earned international acclaim for his astute stewardship of the country\u2019s financial system,\u201d Mr. Mapa said.\n\u201cNo doubt [Mr.] Tetangco helped keep the economy afloat in rough waters and ensured smooth and safe sailing in the times that the winds were full in our sails. Duterte would need to find a worthy successor to the outgoing Tetangco,\u201d Mr. Mapa said.\nThe Philippine financial system is \u201cone of the most resilient in the region, if not the world\u201d as it \u201cadheres to stringent standards of risk management to ensure that the business of public trust remains whole and viable for all stakeholders involved,\u201d he said.\nOne of Mr. Tetangco\u2019s legacies to the Philippine banking system is the implementation of an interest rate corridor system, \u201cwhich is precisely the framework that can stave off financial market volatility,\u201d Mr. Mapa said.\n\u201cGiven how quickly global markets can turn from tempest to tranquil and back, the BSP\u2019s investment in such a system affords them the flexibility to deal with rapid changes in market sentiment and to calm the waters when they do get roiled,\u201d he said.\n\u201cTheir ability to better get hold of liquidity will go a long way to deterring financial stress from the eventual [United Kingdom\u2019s] exit from the European Union, imminent, albeit delayed Fed rate hike cycle and possible renewed concerns about crude oil prices and China\u2019s economy,\u201d Mr. Mapa added.\nImee Charlee C. Delavin (@charleedelavin on Twitter) covers private banks for 大象传媒. She loves to travel.", "date_published": "2016-07-25T13:36:40+08:00", "date_modified": "2016-07-25T13:36:40+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147429", "url": "/succession-transition/2016/07/25/147429/govts-countryside-focus-brings-optimism-for-rural-lenders-2/", "title": "Govt\u2019s countryside focus brings optimism for rural lenders", "content_html": "The Duterte administration\u2019s push to develop agriculture and areas outside Metro Manila has cast a ray of hope on smaller lenders wanting to regain their footing, if not expand.
\nEven while campaigning for the Presidency, then Davao City Mayor Rodrigo R. Duterte has capitalized on the disparity in economic development between what he called \u201cImperial Manila\u201d and the rest of the country, especially the rural areas.
\nRural banks have mirrored the countryside\u2019s neglect, with a growing number of the industry\u2019s members driven to bankruptcy. This forced the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to launch a rescue package that includes tax and other incentives for third-party investors willing to avert closures, if not revive forlorn rural lenders.
\nDespite two extensions of the program, rural banks continue to fall by the wayside, erasing the little amount depositors had earned on their accounts, if not their trust in banks altogether.
\nRural Bankers Association of the Philippines (RBAP) President Antonio O. Pasia said rural banks are hoping to participate in the financial inclusion thrust of the new government.
\n\u201cWe’re hopeful, we definitely would like to participate in the programs of the new administration, we would be offering the rural banks to take part in the countryside development,\u201d said Mr. Pasia, who is also president of Batangas-based Malarayat Rural Bank Inc..
\n\u201cWe think the new administration is more receptive towards the needs of the farmers and fisherfolks that’s why we’re offering the services of the rural banks in those areas,” he said.
\nRural banks are front liners in countryside development and in financing the needs of farmers, fisher folks and micro, small and medium enterprises (MSMEs).
\nThese lenders serve as the platform for bigger banks to fulfill their required 25% credit quota to the farming sector, as mandated by the Agri-Agra Reform Credit Act of 2009.
\nThe small lenders could also serve as the platform for small and medium-scale enterprises to secure funding for their business expansions through microfinance.
\nWith stiffer competition in the banking space, rural banks would like to strengthen [their] position in [their] own areas and \u201chopefully compete in the delivery of credit to the countryside\u201d by merging to build stronger lenders, upgrading technology and forging partnerships, Mr. Pasia said.
\n\u201cEventually, there will be lesser number of rural banks because of consolidations and mergers but stronger players. I think for those that will stay on, there future will be better,\u201d he said.
\nEconomists have welcomed the Duterte administration\u2019s plan to hasten growth in the agriculture and fisheries sectors, which account for roughly 10% of gross domestic product (GDP) but employs almost a third of the country\u2019s workforce.
\nThe World Bank and the Asian Development Bank have said in previous reports that poverty can be addressed by improving the agriculture sector. Business leaders have also included in their recommendations to the administration the delivery of support services like financing, technology, and logistics to farmers and the adoption of value-chain development for rural-based enterprises.
\nIn line with the new government\u2019s thrust to develop the countryside, business leaders also recommended the development of regional industries.
\n\u201cThe Philippines\u2019 growing middle class and the Duterte administration\u2019s focus on promoting rural development could broaden the reach of the banking system, potentially resulting in more revenue streams,\u201d said Land Bank of the Philippines market economist Guian Angelo S. Dumalagan.
\nChamber of Thrift Banks President Rommel S. Latinazo said the sector remains \u201cvery optimistic\u201d given the new administration\u2019s thrust.
\n\u201cI think we continue to push for inclusive growth that means when there is development in the countryside, it means more opportunities for lending activities and there’s a need for financing, credit facilities as well as consumer financing \u2014 these are the two main businesses of thrift banks,\u201d Mr. Latinazo, who is also RCBC Savings Bank President and CEO, said.
\n\u201cOf course there’s also that pronouncement from the administration that they\u2019d like to push for the agricultural side and that’s where many thrift banks are positioned\u2026 [A]griculture means it\u2019s not going to happen in Metro Manila, it will happen outside Metro Manila, in the provinces and that’s where most of us are positioned like the stand-alone thrift banks, so that’s also an opportunity that makes us positive,\u201d he added.
\nMr. Latinazo said consolidations among smaller banks will become more sensible amid stiffer competition in the near term.
\n\u201cConsolidation remains to be the thrust of government. The BSP has been putting up incentives to encourage more integration, consolidation. That is happening [to] all sectors \u2014 rural banks, thrift banks and we see that continuing. Indications are there. A lot of foreign banks are looking at us, either by way of putting up their own or via investment in an existing bank,\u201d Mr. Latinazo said.
\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said mergers and acquisition \u201chas been quite attractive because there’s a lot of growth potential, as we’re very underserved and the banking space remains underpenetrated.\u201d
\n\u201cWe\u2019ve already seen a lot of big banks acquiring rural banks for the past years and there\u2019s been a lot and it’s still going to continue. We have over 600 bank in the Philippines and the consolidation would continue,\u201d she said. \u2014 Imee Charlee C. Delavin
\n", "content_text": "The Duterte administration\u2019s push to develop agriculture and areas outside Metro Manila has cast a ray of hope on smaller lenders wanting to regain their footing, if not expand.\nEven while campaigning for the Presidency, then Davao City Mayor Rodrigo R. Duterte has capitalized on the disparity in economic development between what he called \u201cImperial Manila\u201d and the rest of the country, especially the rural areas.\nRural banks have mirrored the countryside\u2019s neglect, with a growing number of the industry\u2019s members driven to bankruptcy. This forced the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to launch a rescue package that includes tax and other incentives for third-party investors willing to avert closures, if not revive forlorn rural lenders.\nDespite two extensions of the program, rural banks continue to fall by the wayside, erasing the little amount depositors had earned on their accounts, if not their trust in banks altogether.\nRural Bankers Association of the Philippines (RBAP) President Antonio O. Pasia said rural banks are hoping to participate in the financial inclusion thrust of the new government.\n\u201cWe’re hopeful, we definitely would like to participate in the programs of the new administration, we would be offering the rural banks to take part in the countryside development,\u201d said Mr. Pasia, who is also president of Batangas-based Malarayat Rural Bank Inc..\n\u201cWe think the new administration is more receptive towards the needs of the farmers and fisherfolks that’s why we’re offering the services of the rural banks in those areas,” he said.\nRural banks are front liners in countryside development and in financing the needs of farmers, fisher folks and micro, small and medium enterprises (MSMEs).\nThese lenders serve as the platform for bigger banks to fulfill their required 25% credit quota to the farming sector, as mandated by the Agri-Agra Reform Credit Act of 2009.\nThe small lenders could also serve as the platform for small and medium-scale enterprises to secure funding for their business expansions through microfinance.\nWith stiffer competition in the banking space, rural banks would like to strengthen [their] position in [their] own areas and \u201chopefully compete in the delivery of credit to the countryside\u201d by merging to build stronger lenders, upgrading technology and forging partnerships, Mr. Pasia said.\n\u201cEventually, there will be lesser number of rural banks because of consolidations and mergers but stronger players. I think for those that will stay on, there future will be better,\u201d he said.\nEconomists have welcomed the Duterte administration\u2019s plan to hasten growth in the agriculture and fisheries sectors, which account for roughly 10% of gross domestic product (GDP) but employs almost a third of the country\u2019s workforce.\nThe World Bank and the Asian Development Bank have said in previous reports that poverty can be addressed by improving the agriculture sector. Business leaders have also included in their recommendations to the administration the delivery of support services like financing, technology, and logistics to farmers and the adoption of value-chain development for rural-based enterprises.\nIn line with the new government\u2019s thrust to develop the countryside, business leaders also recommended the development of regional industries.\n\u201cThe Philippines\u2019 growing middle class and the Duterte administration\u2019s focus on promoting rural development could broaden the reach of the banking system, potentially resulting in more revenue streams,\u201d said Land Bank of the Philippines market economist Guian Angelo S. Dumalagan.\nChamber of Thrift Banks President Rommel S. Latinazo said the sector remains \u201cvery optimistic\u201d given the new administration\u2019s thrust.\n\u201cI think we continue to push for inclusive growth that means when there is development in the countryside, it means more opportunities for lending activities and there’s a need for financing, credit facilities as well as consumer financing \u2014 these are the two main businesses of thrift banks,\u201d Mr. Latinazo, who is also RCBC Savings Bank President and CEO, said.\n\u201cOf course there’s also that pronouncement from the administration that they\u2019d like to push for the agricultural side and that’s where many thrift banks are positioned\u2026 [A]griculture means it\u2019s not going to happen in Metro Manila, it will happen outside Metro Manila, in the provinces and that’s where most of us are positioned like the stand-alone thrift banks, so that’s also an opportunity that makes us positive,\u201d he added.\nMr. Latinazo said consolidations among smaller banks will become more sensible amid stiffer competition in the near term.\n\u201cConsolidation remains to be the thrust of government. The BSP has been putting up incentives to encourage more integration, consolidation. That is happening [to] all sectors \u2014 rural banks, thrift banks and we see that continuing. Indications are there. A lot of foreign banks are looking at us, either by way of putting up their own or via investment in an existing bank,\u201d Mr. Latinazo said.\nMaybank ATR Kim Eng banking sector analyst Katherine Tan said mergers and acquisition \u201chas been quite attractive because there’s a lot of growth potential, as we’re very underserved and the banking space remains underpenetrated.\u201d\n\u201cWe\u2019ve already seen a lot of big banks acquiring rural banks for the past years and there\u2019s been a lot and it’s still going to continue. We have over 600 bank in the Philippines and the consolidation would continue,\u201d she said. \u2014 Imee Charlee C. Delavin", "date_published": "2016-07-25T13:35:33+08:00", "date_modified": "2016-07-25T13:35:33+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147427", "url": "/succession-transition/2016/07/25/147427/car-program-hopes-to-spur-local-spare-parts-sector-2/", "title": "Car program hopes to spur local spare parts sector", "content_html": "By Roy Stephen C. Canivel
\nThe Philippines\u2019 car industry remains in a sweet spot.
\n![\"000_Hkg4776877-(1)\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Hkg4776877-1.jpg\")
Apart from sales rising yearly, the sector also recently received government support \u2014 a multibillion dollar financial incentive to help transform the country into a regional auto manufacturing hub.
Understandably, the challenge is daunting, ambitious even.
\nAfter all, other countries such as Thailand seem to be a better choice than the Philippines as far as car manufacturing is concerned.
\nThis much is admitted by Rommel R. Gutierrez, first vice-president for Government Affairs at Toyota Motor Philippines.
\nTake Toyota\u2019s Vios and Innova models, Mr. Gutierrez said.
\nWhile both vehicles are made locally and in Thailand, \u201cit\u2019s cheaper to import vehicles than to produce locally,\u201d he said.
\nThis is because Toyota\u2019s local unit has no choice but buy more components from abroad, unlike Toyota\u2019s Thai assembler which sources car parts locally.
\n\u201cThailand\u2019s localization is very high, more than 80% while ours are only at 40%,\u201d the Toyota executive said, adding that the industry will become more competitive if it sources its parts locally.
\nProgram seeks to make cars have more local content
\nStarting 2010, the Philippines found it more difficult to compete when import barriers were pulled down in member countries of the ASEAN Free Trade Area (AFTA).
\n![\"160609car-sales\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/160609car-sales-1024x850.jpg\")
Under the AFTA\u2019s Common Effective Preferential Tariff (CEPT), taxes on imports \u2014 including those previously imposed on vehicles and components \u2014 were virtually removed.
\nAs a result, several auto parts suppliers and some car manufacturers left the country since it was no longer competitive, Mr. Gutierrez explained.
\nAfter all, it was cheaper to import cars assembled abroad than it was to build them here.
\nBut now, the government \u2014 through its Comprehensive Automotive Resurgence Strategy (CARS) program \u2014 plans to turn the situation around by increasing localized content to 60% from 40% by 2022.
\nWith locally-built cars containing more parts sourced domestically, companies such as Toyota Philippines \u201ccan benefit,\u201d Mr. Gutierrez said.
\nThe CARS program, established by Executive Order 182 that was signed by President Benigno S. C. Aquino III on May 29 last year, provides incentives to three car makers to locally produce three car models with a production volume of at least 200,000 units respectively for up to six years, or an average of 33,333 vehicles per year.
\nThe program also provides auto manufacturers and parts makers operating in the Philippines P4.5 billion in annual support for six years, or P27 billion in total, as well as other non-fiscal measures.
\nFor its part, Toyota Motor Corp. plans to invest P3.22 billion ($70 million) in its Philippine division to increase local output and qualify for a new tax incentive. The Japanese automaker will build 230,000 Vios subcompact sedans.
\nThis would help \u201cclose the cost gap\u201d between importing and local production, he said, adding that the domestic sector needs to achieve economies of scale, bringing down cost of localization and resulting in more competitive production.
\n\u201cYou need to produce a lot because you need to spread the cost,\u201d he said. \u201cIt\u2019s not easy, but we are more than willing to take the challenge kasi (because) that\u2019s the requirement.\u201d
\nThe Toyota executive, who is also president of Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), said that it has been a year since the \u201cstart of motorization,\u201d which he said signaled a spike in total industry car sales reflecting the stronger purchasing power of the local market.
\nToyota, Mitsubishi qualify for car program
\nToyota has consistently reported the biggest sales in the Philippines, taking 45.12% of market share as of June this year alone, according to a monthly report issued by CAMPI together with the Truck Manufacturers Association.
\nBy 2020, total market sales is expected to reach 500,000 units. However, this may be reached earlier than anticipated since 320,000 units were delivered last year, meeting the 2018 target of 300,000 way ahead of schedule.
\nAs of this writing, only two companies qualified for the program: Toyota and Mitsubishi Motors Philippines. They received their certificates of recognition last June.
\nThe fate of the third player that would help reach the program\u2019s goal of producing 600,000 units is still unknown.
\n\u201cWe still don\u2019t know if we\u2019re going to open it up,\u201d Trade Undersecretary Ceferino S. Rodolfo told reporters last June while at the sidelines of Mitsubishi\u2019s groundbreaking ceremony of its Laguna stamping facility.
\nManufacturers need to meet \u201cthe production volume that is needed for the Philippines to surmount the economies of scale and be regionally competitive,\u201d he said.
\n\u201cIf they are accepted into the program, that does not mean that they will be already receiving the incentives. It depends on their performance,\u201d he told reporters. Incentives would only be enjoyed by the manufacturers after they produce their first 100,000 units.
\nMeanwhile, as the country\u2019s consistent top-selling car maker, Mr. Gutierrez says that the growing traffic does not necessarily post a harm on Toyota\u2019s performance, citing increasing industry growth on the back of solid consumer demand.
\n\u201cTraffic doesn\u2019t seem to have an effect on our sales,\u201d he said. \u201cIn fact, people would rather buy a car than suffer through our public transportation. That\u2019s the irony of it.\u201d
\nHe also pointed out that car sales in the provinces \u2014 where roads are not as congested \u2014 remain substantial.
\nA lot of dealerships are now being put in the provinces and, as a result, sales are being dispersed across the region, he said. Sixty percent of its sales are in Metro Manila while the rest are divided among the rest of the areas.
\nRoy Stephen C. Canivel (@roycanivel on Twitter) covers telecommunications and trade for 大象传媒. He likes reading a good book and occasionally checks their summaries on several Web sites.
\n", "content_text": "By Roy Stephen C. Canivel\nThe Philippines\u2019 car industry remains in a sweet spot.\nApart from sales rising yearly, the sector also recently received government support \u2014 a multibillion dollar financial incentive to help transform the country into a regional auto manufacturing hub.\nUnderstandably, the challenge is daunting, ambitious even.\nAfter all, other countries such as Thailand seem to be a better choice than the Philippines as far as car manufacturing is concerned.\nThis much is admitted by Rommel R. Gutierrez, first vice-president for Government Affairs at Toyota Motor Philippines.\nTake Toyota\u2019s Vios and Innova models, Mr. Gutierrez said.\nWhile both vehicles are made locally and in Thailand, \u201cit\u2019s cheaper to import vehicles than to produce locally,\u201d he said.\nThis is because Toyota\u2019s local unit has no choice but buy more components from abroad, unlike Toyota\u2019s Thai assembler which sources car parts locally.\n\u201cThailand\u2019s localization is very high, more than 80% while ours are only at 40%,\u201d the Toyota executive said, adding that the industry will become more competitive if it sources its parts locally.\nProgram seeks to make cars have more local content\nStarting 2010, the Philippines found it more difficult to compete when import barriers were pulled down in member countries of the ASEAN Free Trade Area (AFTA).\n\nUnder the AFTA\u2019s Common Effective Preferential Tariff (CEPT), taxes on imports \u2014 including those previously imposed on vehicles and components \u2014 were virtually removed.\nAs a result, several auto parts suppliers and some car manufacturers left the country since it was no longer competitive, Mr. Gutierrez explained.\nAfter all, it was cheaper to import cars assembled abroad than it was to build them here.\nBut now, the government \u2014 through its Comprehensive Automotive Resurgence Strategy (CARS) program \u2014 plans to turn the situation around by increasing localized content to 60% from 40% by 2022.\nWith locally-built cars containing more parts sourced domestically, companies such as Toyota Philippines \u201ccan benefit,\u201d Mr. Gutierrez said.\nThe CARS program, established by Executive Order 182 that was signed by President Benigno S. C. Aquino III on May 29 last year, provides incentives to three car makers to locally produce three car models with a production volume of at least 200,000 units respectively for up to six years, or an average of 33,333 vehicles per year.\nThe program also provides auto manufacturers and parts makers operating in the Philippines P4.5 billion in annual support for six years, or P27 billion in total, as well as other non-fiscal measures.\nFor its part, Toyota Motor Corp. plans to invest P3.22 billion ($70 million) in its Philippine division to increase local output and qualify for a new tax incentive. The Japanese automaker will build 230,000 Vios subcompact sedans.\nThis would help \u201cclose the cost gap\u201d between importing and local production, he said, adding that the domestic sector needs to achieve economies of scale, bringing down cost of localization and resulting in more competitive production.\n\u201cYou need to produce a lot because you need to spread the cost,\u201d he said. \u201cIt\u2019s not easy, but we are more than willing to take the challenge kasi (because) that\u2019s the requirement.\u201d\nThe Toyota executive, who is also president of Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), said that it has been a year since the \u201cstart of motorization,\u201d which he said signaled a spike in total industry car sales reflecting the stronger purchasing power of the local market.\nToyota, Mitsubishi qualify for car program\nToyota has consistently reported the biggest sales in the Philippines, taking 45.12% of market share as of June this year alone, according to a monthly report issued by CAMPI together with the Truck Manufacturers Association.\nBy 2020, total market sales is expected to reach 500,000 units. However, this may be reached earlier than anticipated since 320,000 units were delivered last year, meeting the 2018 target of 300,000 way ahead of schedule.\nAs of this writing, only two companies qualified for the program: Toyota and Mitsubishi Motors Philippines. They received their certificates of recognition last June.\nThe fate of the third player that would help reach the program\u2019s goal of producing 600,000 units is still unknown.\n\u201cWe still don\u2019t know if we\u2019re going to open it up,\u201d Trade Undersecretary Ceferino S. Rodolfo told reporters last June while at the sidelines of Mitsubishi\u2019s groundbreaking ceremony of its Laguna stamping facility.\nManufacturers need to meet \u201cthe production volume that is needed for the Philippines to surmount the economies of scale and be regionally competitive,\u201d he said.\n\u201cIf they are accepted into the program, that does not mean that they will be already receiving the incentives. It depends on their performance,\u201d he told reporters. Incentives would only be enjoyed by the manufacturers after they produce their first 100,000 units.\nMeanwhile, as the country\u2019s consistent top-selling car maker, Mr. Gutierrez says that the growing traffic does not necessarily post a harm on Toyota\u2019s performance, citing increasing industry growth on the back of solid consumer demand.\n\u201cTraffic doesn\u2019t seem to have an effect on our sales,\u201d he said. \u201cIn fact, people would rather buy a car than suffer through our public transportation. That\u2019s the irony of it.\u201d\nHe also pointed out that car sales in the provinces \u2014 where roads are not as congested \u2014 remain substantial.\nA lot of dealerships are now being put in the provinces and, as a result, sales are being dispersed across the region, he said. Sixty percent of its sales are in Metro Manila while the rest are divided among the rest of the areas.\nRoy Stephen C. Canivel (@roycanivel on Twitter) covers telecommunications and trade for 大象传媒. He likes reading a good book and occasionally checks their summaries on several Web sites.", "date_published": "2016-07-25T13:33:53+08:00", "date_modified": "2016-07-25T13:33:53+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147426", "url": "/succession-transition/2016/07/25/147426/indie-artists-try-to-benefit-from-spotify-while-keeping-day-jobs-2/", "title": "Indie artists try to benefit from Spotify while keeping day jobs", "content_html": "By Julianne S. Ruizol
\nIt\u2019s not easy being an independent Filipino musical artist.
\n![\"Spotify-OHFLAMINGO\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/Spotify-OHFLAMINGO-1024x575.jpg\")
Most of the time fellow musicians, fans, and listeners argue about the intricacies of Original Pilipino Music (OPM). Some say OPM is dead while others insist it\u2019s alive but only in different reincarnations. After all, the local indie music scene is a hodgepodge of genres offering different flavors for everyone\u2019s listening preference: jazz, hip hop, electronica, alternative, industrial, metal, blues \u2014 you name it, somebody else is likely to play it.
But the debate about OPM is just one part of living the independent musician\u2019s life.
\nTo survive, most local indie music artists and bands live off gigs and bookings and keep their day jobs, if only to stay true to being the \u201cindies\u201d that they are.
\nHowever, artistic integrity has its price.
\nTo be considered as a fully functional band, a lot of investments have to be made.
\nBesides setting aside cash to pay for rehearsal space \u2014 P250 an hour \u2014 independent artists also need to bankroll their own music productions with expenses shared between band manager, technical crew, and other helping hands.
\n\u201cThere is no support,\u201d Clarence Garcia, lead guitarist of tide/edit, an indie band, said in an interview. \u201cYou support yourself. Gone are the golden days of the music scene wherein you find a place you will regular play at and you will be discovered.\u201d
\nThis is exactly the reason why members of Oh, Flamingo! \u2014 a five-piece band which plays indie rock infused with tropical styles and elements \u2014 makes themselves available after gigs.
\n![\"Running_1\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/Running_1-1024x682.jpg\")
\u201cYou don\u2019t leave immediately after your set. Early on, during our first few gig, we made it a point to stick around and really talk to the people who invited us. We were still new and unknown so you have to stay and talk, to establish further rapport, so to speak,\u201d drummer Fries Bersales of Oh, Flamingo! said in a separate interview.
Another technique to sell their music involves at least one member who takes a position near the bar.
\n\u201cThat way, you can be approachable or at the entrance or outside so they know that you [already] played. You\u2019re already available. Your defenses are down. You don\u2019t have friends around you. [People] can already approach you,\u201d Howard Luistro, Oh, Flamingo!\u2019s vocalist and guitarist said.
\nLimited engagement with music labels
\nOn occasion, bands like Oh, Flamingo! sign up with labels but only for engagements involving limited production releases covered by profit sharing agreements.
\n\u201cWide Eyed Records came to us and let us release our EP (extended play) under their label, so instead of just being able to produce 100, around 750 CDs [were produced] and then we agreed on sharing the profit. Everybody\u2019s happy. Everything went back to us. It wasn\u2019t a lopsided deal,\u201d Pappu de Leon, Oh, Flamingo!\u2019s lead guitarist, said.
\nThe label also helped the band with the copyrights of their songs and with the distribution of their album to various commercial establishments including Team Manila and Satchmi. Other local bands who have enlisted the help of Wide Eyes Records are Halik ni Gringo and Ang Bandang Shirley, to name a few.
\nWhile their EP \u2014 a recording that\u2019s more than a single but isn\u2019t enough for a full album \u2014 is released under a label, the band themselves remain independent and do all the work themselves. A new contract would have to be signed if the band is seeking to release another album.
\n\u201cIt works for independent artists because we have creative freedom as compared to being signed to [major labels], you have a six-year contract,\u201d the band said.
\nMeanwhile, other groups \u2014 while striving to keep their artistic independence \u2014 also take advantage of label\u2019s e-commerce platforms to raise awareness and attract wider audiences.
\nGroups such as tide/edit and Fools and Foes are affiliated with A Spur of the Moment Project, along with other local indie bands including Run Dorothy and Tom\u2019s Story.
Fools and Foes released their debut EP \u201cUnderneath the Roots\u201d on December 4, 2015, while tide/edit has released an EP (\u201cIdeas,\u201d August 2012) and two full-length albums (\u201cForeign Languages,\u201d June 2014; \u201cLightfoot,\u201d November 2015).
\nSigning up with A Spur the Moment Project allows groups to take advantage of the label\u2019s e-commerce platform.
\n\u201cThe e-commerce platform is a big help for us, for a band that doesn\u2019t do live shows too often,\u201d Lead guitarist Clarence Garcia of tide/edit said. \u201cWe\u2019re a band that doesn\u2019t really play live so it\u2019s important for us so it works. We get to ship stuff locally, provincial orders, we get to ship even in overseas. I\u2019m not sure why not everyone is doing it. It\u2019s a basic requirement if you have something to sell. You have to make it [products] accessible for everyone.\u201d
\nUsing Spotify
\nAnd speaking of going online to popularize and sell their music, Oh, Flamingo! and Fools and Foes began using the Spotify with the help of their respective labels. Both of them also revealed that putting their music up on the site was mainly for exposure and audience reach and not for a secondary or tertiary source of income.
\n![\"Spotify-FOOLSANDFOES4\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/Spotify-FOOLSANDFOES4-1024x575.jpg\")
Being self-made musicians, Oh, Flamingo! had their doubts using the platform at first saying they \u201cthought we could do that on our own through aggregator website, but we realized maybe we won\u2019t be able to manage that given our time constraints and resources.\u201d
\u201cWe eventually saw Spotify as an opportunity to really exponentially spread our music because at least we can get people who not only buy the CD but [even] one with a smartphone can hear our music,\u201d they added.
\nFools and Foes said it \u201cdidn\u2019t really upload music in Spotify to get revenue, but to get exposure. For a new indie band like us, it\u2019s important to get our music out there.\u201d
\nWhile members of tide/edit remain unsure whether they got traction from Spotify, they nevertheless see tweets tagging them, telling them that their listeners heard them first on Spotify.
\nMoreover, both Fools and Foes and Oh, Flamingo! believe that streaming and CD albums could go hand in hand with each other.
\n\u201cIt could go two ways. Some listeners can opt to listen to an artist via Spotify instead, while others, because they discovered the artist via Spotify, they could be encouraged to buy the artist\u2019s physical CD. We definitely think online streaming is more rampant than listening to CDs. Technology as well is already phasing out the use of CDs,\u201d said Fools and Foes in an email reply.
\nIt may be too early to tell whether Spotify can help indie bands earn enough to keep them independent.
\nBut for the moment, the music service nevertheless helps them distribute their music despite risks of related investments they\u2019ve made.
\nSo for now, none of them are planning to quit the day job or leave the rat race.
\n\u201cOur goal is not how to make money,\u201d tide/edit said. \u201cOur goal is how not to lose money. It\u2019s fun to be in a band. We enjoy the process. We enjoy what we\u2019re doing and we want to do this over and over again.\u201d
\nJulianne S. Ruizol (@sopraknows on Twitter) covers the Senate and the Department of Foreign Affairs for 大象传媒. Her wide music preferences range from 90s MTV to current Korean pop hits.
\n", "content_text": "By Julianne S. Ruizol\nIt\u2019s not easy being an independent Filipino musical artist.\nMost of the time fellow musicians, fans, and listeners argue about the intricacies of Original Pilipino Music (OPM). Some say OPM is dead while others insist it\u2019s alive but only in different reincarnations. After all, the local indie music scene is a hodgepodge of genres offering different flavors for everyone\u2019s listening preference: jazz, hip hop, electronica, alternative, industrial, metal, blues \u2014 you name it, somebody else is likely to play it.\nBut the debate about OPM is just one part of living the independent musician\u2019s life.\nTo survive, most local indie music artists and bands live off gigs and bookings and keep their day jobs, if only to stay true to being the \u201cindies\u201d that they are.\nHowever, artistic integrity has its price.\nTo be considered as a fully functional band, a lot of investments have to be made.\nBesides setting aside cash to pay for rehearsal space \u2014 P250 an hour \u2014 independent artists also need to bankroll their own music productions with expenses shared between band manager, technical crew, and other helping hands.\n\u201cThere is no support,\u201d Clarence Garcia, lead guitarist of tide/edit, an indie band, said in an interview. \u201cYou support yourself. Gone are the golden days of the music scene wherein you find a place you will regular play at and you will be discovered.\u201d\nThis is exactly the reason why members of Oh, Flamingo! \u2014 a five-piece band which plays indie rock infused with tropical styles and elements \u2014 makes themselves available after gigs.\n\u201cYou don\u2019t leave immediately after your set. Early on, during our first few gig, we made it a point to stick around and really talk to the people who invited us. We were still new and unknown so you have to stay and talk, to establish further rapport, so to speak,\u201d drummer Fries Bersales of Oh, Flamingo! said in a separate interview.\nAnother technique to sell their music involves at least one member who takes a position near the bar.\n\u201cThat way, you can be approachable or at the entrance or outside so they know that you [already] played. You\u2019re already available. Your defenses are down. You don\u2019t have friends around you. [People] can already approach you,\u201d Howard Luistro, Oh, Flamingo!\u2019s vocalist and guitarist said.\nLimited engagement with music labels \nOn occasion, bands like Oh, Flamingo! sign up with labels but only for engagements involving limited production releases covered by profit sharing agreements.\n\u201cWide Eyed Records came to us and let us release our EP (extended play) under their label, so instead of just being able to produce 100, around 750 CDs [were produced] and then we agreed on sharing the profit. Everybody\u2019s happy. Everything went back to us. It wasn\u2019t a lopsided deal,\u201d Pappu de Leon, Oh, Flamingo!\u2019s lead guitarist, said.\nThe label also helped the band with the copyrights of their songs and with the distribution of their album to various commercial establishments including Team Manila and Satchmi. Other local bands who have enlisted the help of Wide Eyes Records are Halik ni Gringo and Ang Bandang Shirley, to name a few.\nWhile their EP \u2014 a recording that\u2019s more than a single but isn\u2019t enough for a full album \u2014 is released under a label, the band themselves remain independent and do all the work themselves. A new contract would have to be signed if the band is seeking to release another album.\n\u201cIt works for independent artists because we have creative freedom as compared to being signed to [major labels], you have a six-year contract,\u201d the band said.\nMeanwhile, other groups \u2014 while striving to keep their artistic independence \u2014 also take advantage of label\u2019s e-commerce platforms to raise awareness and attract wider audiences.\nGroups such as tide/edit and Fools and Foes are affiliated with A Spur of the Moment Project, along with other local indie bands including Run Dorothy and Tom\u2019s Story.\nFools and Foes released their debut EP \u201cUnderneath the Roots\u201d on December 4, 2015, while tide/edit has released an EP (\u201cIdeas,\u201d August 2012) and two full-length albums (\u201cForeign Languages,\u201d June 2014; \u201cLightfoot,\u201d November 2015).\nSigning up with A Spur the Moment Project allows groups to take advantage of the label\u2019s e-commerce platform.\n\u201cThe e-commerce platform is a big help for us, for a band that doesn\u2019t do live shows too often,\u201d Lead guitarist Clarence Garcia of tide/edit said. \u201cWe\u2019re a band that doesn\u2019t really play live so it\u2019s important for us so it works. We get to ship stuff locally, provincial orders, we get to ship even in overseas. I\u2019m not sure why not everyone is doing it. It\u2019s a basic requirement if you have something to sell. You have to make it [products] accessible for everyone.\u201d\nUsing Spotify \nAnd speaking of going online to popularize and sell their music, Oh, Flamingo! and Fools and Foes began using the Spotify with the help of their respective labels. Both of them also revealed that putting their music up on the site was mainly for exposure and audience reach and not for a secondary or tertiary source of income.\nBeing self-made musicians, Oh, Flamingo! had their doubts using the platform at first saying they \u201cthought we could do that on our own through aggregator website, but we realized maybe we won\u2019t be able to manage that given our time constraints and resources.\u201d\n\u201cWe eventually saw Spotify as an opportunity to really exponentially spread our music because at least we can get people who not only buy the CD but [even] one with a smartphone can hear our music,\u201d they added.\nFools and Foes said it \u201cdidn\u2019t really upload music in Spotify to get revenue, but to get exposure. For a new indie band like us, it\u2019s important to get our music out there.\u201d\nWhile members of tide/edit remain unsure whether they got traction from Spotify, they nevertheless see tweets tagging them, telling them that their listeners heard them first on Spotify.\nMoreover, both Fools and Foes and Oh, Flamingo! believe that streaming and CD albums could go hand in hand with each other.\n\u201cIt could go two ways. Some listeners can opt to listen to an artist via Spotify instead, while others, because they discovered the artist via Spotify, they could be encouraged to buy the artist\u2019s physical CD. We definitely think online streaming is more rampant than listening to CDs. Technology as well is already phasing out the use of CDs,\u201d said Fools and Foes in an email reply.\nIt may be too early to tell whether Spotify can help indie bands earn enough to keep them independent.\nBut for the moment, the music service nevertheless helps them distribute their music despite risks of related investments they\u2019ve made.\nSo for now, none of them are planning to quit the day job or leave the rat race.\n\u201cOur goal is not how to make money,\u201d tide/edit said. \u201cOur goal is how not to lose money. It\u2019s fun to be in a band. We enjoy the process. We enjoy what we\u2019re doing and we want to do this over and over again.\u201d\nJulianne S. Ruizol (@sopraknows on Twitter) covers the Senate and the Department of Foreign Affairs for 大象传媒. Her wide music preferences range from 90s MTV to current Korean pop hits.", "date_published": "2016-07-25T13:33:30+08:00", "date_modified": "2016-07-25T13:33:30+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147425", "url": "/succession-transition/2016/07/25/147425/bpos-seek-to-expand-create-more-jobs-in-provinces-2/", "title": "BPOs seek to expand, create more jobs in provinces", "content_html": "By. Raynan F. Javil
\nThe Duterte administration has promised to decongest \u201cImperial Manila\u201d and reduce its prominence in the country\u2019s national life. In so doing, the government \u2014 led for the first time by someone from Mindanao \u2014 vowed to bring inclusive growth to the countryside.
\n![\"DSC_8666\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/DSC_8666-1024x680.jpg\")
While businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines\u2019 sunshine industry?
That remains to be a work in progress.
\nBut it doesn\u2019t mean that the private sector and the government aren\u2019t working together to enhance the capacity of cities and towns outside Manila.
\nIf the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told 大象传媒 in an interview.
\n\u201cOther provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,\u201d said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.
\nMeasuring capacities of towns, cities
\nTo this end, IT-BPM has launched road map which serves as a \u201cprescription\u201d for cities across the country to assess their readiness for the sector\u2019s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.
\n\u201cWe have been publishing what we call \u2018The Next Wave City Report\u2019 for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,\u201d IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, \u201cAccelerate PH.\u201d
\nMr. Hernandez added that aside from \u201cThe Next Wave City Report,\u201d the IT-BPAP also named the top 20 emerging cities to watch out for.
\nIn its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:
\n\u2022 Baguio City
\n\u2022 Cagayan de Oro City
\n\u2022 Dagupan City
\n\u2022 Dasmari\u00f1as\u00a0City
\n\u2022 Dumaguete City
\n\u2022 Lipa City
\n\u2022 Malolos City
\n\u2022 Naga City
\n\u2022 Sta. Rosa City
\n\u2022 Laguna; and
\n\u2022 Taytay, Rizal
\nMoreover, the emerging cities seen to sustain the growth of the sector are:
\n\u2022 Balanga City
\n\u2022 Batangas City
\n\u2022 Iriga City
\n\u2022 Laoag City
\n\u2022 Legazpi City
\n\u2022 Puerto Princesa City
\n\u2022 Roxas\u00a0City
\n\u2022 Tarlac City
\n\u2022 Tuguegarao City
\n\u2022 Zamboanga City
\nHe said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.
\n\u201cI was involved in the last one… in Dipolog. So again looking at what\u2019s available here, how\u2019s the talent, how\u2019s the infrastructure so that\u2019s gonna keep going. So our goal is to keep promoting ten if not 20 cities,\u201d Mr. Hernandez said.
\nHe also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.
\nCreating another million jobs
\nHe also said that the Philippines\u2019 IT-BPM is now about a tenth of the industry\u2019s global size.
\n\u201cOur ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There\u2019s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,\u201d Mr. Hernandez said on the new road map.
\nHe also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.
\nPart of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.
\nAside from contact centers, other services that have grown over the past years \u2014 and still has the potential to grow even more \u2014 are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.
\nMr. Hernandez noted that 300,000 jobs \u2014 roughly 30% of the industry\u2019s total work force \u2014 were provided outside the capital and \u201cpart of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.\u201d
\nCurrent technological trends present significant opportunities for the Philippines, he said.
\nLabor pool tricky outside Manila
\nOne of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool \u201cthat could actually work in an IT-BPO sector,\u201d Premier BPO\u2019s Ms. Muro also said.
\nOnce you reach out and start expansion outside the capital, \u201cthe labor pool gets a little tricky,\u201d Ms. Muro said.
\nIn order to address this concern, Mr. Hernandez said that \u201cthe key is making sure human capital is able to get ready\u201d as the landscape in the IT-BPM sector evolves through time.
\nMoreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.
\nShe said that locating outside Manila is the trend right now for a BPO firm as it is the \u201ccheaper way of expanding.\u201d
\n大象传媒 earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.
\nIn a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.
\nNew agency to help industry achieve milestones
\nMeanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) \u201cwill help the industry achieve the new milestones as recommended\u201d in the new road map.
\nMr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.
\nMr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law \u2013 two laws seen to be critical in making the country more attractive in foreign investors.
\nMoreover the IT-BPAP said that it looks forward for a \u201cstrong partnership and collaboration\u201d with the new administration.
\nThe industry association further noted that \u201cembracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.\u201d
\n\u201cDisruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,\u201d IT-BPAP said.
\nRaynan F. Javil (@rajavil on Twitter) covers several beats \u2014 including the House of Representatives and the Office of the Vice-President \u2014 for 大象传媒.
\n", "content_text": "By. Raynan F. Javil\nThe Duterte administration has promised to decongest \u201cImperial Manila\u201d and reduce its prominence in the country\u2019s national life. In so doing, the government \u2014 led for the first time by someone from Mindanao \u2014 vowed to bring inclusive growth to the countryside.\nWhile businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines\u2019 sunshine industry?\nThat remains to be a work in progress.\nBut it doesn\u2019t mean that the private sector and the government aren\u2019t working together to enhance the capacity of cities and towns outside Manila.\nIf the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told 大象传媒 in an interview.\n\u201cOther provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,\u201d said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.\nMeasuring capacities of towns, cities\nTo this end, IT-BPM has launched road map which serves as a \u201cprescription\u201d for cities across the country to assess their readiness for the sector\u2019s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.\n\u201cWe have been publishing what we call \u2018The Next Wave City Report\u2019 for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,\u201d IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, \u201cAccelerate PH.\u201d\nMr. Hernandez added that aside from \u201cThe Next Wave City Report,\u201d the IT-BPAP also named the top 20 emerging cities to watch out for.\nIn its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:\n\u2022 Baguio City\n\u2022 Cagayan de Oro City\n\u2022 Dagupan City\n\u2022 Dasmari\u00f1as\u00a0City\n\u2022 Dumaguete City\n\u2022 Lipa City\n\u2022 Malolos City\n\u2022 Naga City\n\u2022 Sta. Rosa City\n\u2022 Laguna; and\n\u2022 Taytay, Rizal\nMoreover, the emerging cities seen to sustain the growth of the sector are:\n\u2022 Balanga City\n\u2022 Batangas City\n\u2022 Iriga City\n\u2022 Laoag City\n\u2022 Legazpi City\n\u2022 Puerto Princesa City\n\u2022 Roxas\u00a0City\n\u2022 Tarlac City\n\u2022 Tuguegarao City\n\u2022 Zamboanga City\nHe said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.\n\u201cI was involved in the last one… in Dipolog. So again looking at what\u2019s available here, how\u2019s the talent, how\u2019s the infrastructure so that\u2019s gonna keep going. So our goal is to keep promoting ten if not 20 cities,\u201d Mr. Hernandez said.\nHe also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.\nCreating another million jobs\nHe also said that the Philippines\u2019 IT-BPM is now about a tenth of the industry\u2019s global size.\n\u201cOur ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There\u2019s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,\u201d Mr. Hernandez said on the new road map.\nHe also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.\nPart of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.\nAside from contact centers, other services that have grown over the past years \u2014 and still has the potential to grow even more \u2014 are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.\nMr. Hernandez noted that 300,000 jobs \u2014 roughly 30% of the industry\u2019s total work force \u2014 were provided outside the capital and \u201cpart of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.\u201d\nCurrent technological trends present significant opportunities for the Philippines, he said.\nLabor pool tricky outside Manila\nOne of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool \u201cthat could actually work in an IT-BPO sector,\u201d Premier BPO\u2019s Ms. Muro also said.\nOnce you reach out and start expansion outside the capital, \u201cthe labor pool gets a little tricky,\u201d Ms. Muro said.\nIn order to address this concern, Mr. Hernandez said that \u201cthe key is making sure human capital is able to get ready\u201d as the landscape in the IT-BPM sector evolves through time.\nMoreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.\nShe said that locating outside Manila is the trend right now for a BPO firm as it is the \u201ccheaper way of expanding.\u201d\n大象传媒 earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.\nIn a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.\nNew agency to help industry achieve milestones\nMeanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) \u201cwill help the industry achieve the new milestones as recommended\u201d in the new road map.\nMr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.\nMr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law \u2013 two laws seen to be critical in making the country more attractive in foreign investors.\nMoreover the IT-BPAP said that it looks forward for a \u201cstrong partnership and collaboration\u201d with the new administration.\nThe industry association further noted that \u201cembracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.\u201d\n\u201cDisruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,\u201d IT-BPAP said.\nRaynan F. Javil (@rajavil on Twitter) covers several beats \u2014 including the House of Representatives and the Office of the Vice-President \u2014 for 大象传媒.", "date_published": "2016-07-25T13:33:26+08:00", "date_modified": "2016-07-25T13:33:26+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147422", "url": "/succession-transition/2016/07/25/147422/is-change-about-to-come-for-govts-ppp-program/", "title": "Is change about to come for govt\u2019s PPP program?", "content_html": "By Vince Alvic Alexis F. Nonato, Reporter
\nWithin less than a month of President Rodrigo R. Duterte\u2019s presidency, his economic managers have buckled down and began throwing around ideas to improve the flagship infrastructure program, which has been criticized for its slow pace and unenthusiastic response to unsolicited proposals.
\n![\"000_Hkg10226316\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/000_Hkg10226316-1024x681.jpg\")
Even before Mr. Duterte formally took office, Finance Secretary Carlos G. Dominguez III already issued a pronouncement that marked a reversal from the government\u2019s previous stance.
\u201cWe will welcome unsolicited proposals. Government does not have a monopoly over innovative ideas,\u201d Mr. Dominguez said in a June 29 forum organized by the Rizal Commercial Banking Corp.
\nThis was in stark contrast to the position adopted by the government of President Benigno S.C. Aquino III, which had been unexcited about unsolicited proposals.
\nIn fact, only one has so far been approved by the National Economic and Development Authority Board \u2014 the Metro Pacific Tollways Development Corp.\u2019s P23.2-billion pitch to build a 13.4-kilometer, four lane road connecting the North Luzon Expressway and South Luzon Expressway.
\nMr. Dominguez in the said forum also said the new administration will encourage local government units to \u201cinitiate their own development partnerships,\u201d citing the recent inauguration of the P38.9-billion mixed-use reclamation project in Mr. Duterte\u2019s hometown of Davao City.
\nThe following week, National Economic and Development Authority Director-General Ernesto M. Pernia issued another pronouncement addressing the languid pace of the PPP program under the Aquino administration.
\n\u201cWe plan to reduce the time… from the start to bidding,\u201d \u00a0said in a briefing after the administration\u2019s first Development Budget Coordinating Committee meeting on July 5. \u201cThe average length of time spent from the consideration of project proposal to bidding is about 29-30 months. We will try to cut that down to a third maybe, so things will move faster,\u201d he said.
\n![\"ppt-status-update\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/ppt-status-update.jpg\")
Focusing on the expenditure aspect, Budget Secretary Benjamin E. Diokno in his first briefing on July 14 said that the government aims to eventually increase the threshold of infrastructure spending to 7% of the gross domestic output. The first Duterte budget, for one, will spend 5.2% of the GDP, or a record P891 billion in 2017.
This was in contrast to the 5% infrastructure-to-GDP ratio committed by the previous administration, which Mr. Diokno claimed was more like \u201caround 2-3% only,\u201d as data was \u201cfudged\u201d by adding capital outlay on top of \u201cpure\u201d infrastructure.
\nMr. Diokno added that plans for 24/7 construction on major public works projects in urban centers would also boost expenditure.
\nChange would not likely come at the expense of stability in the infrastructure sector, with Mr. Dominguez assuring \u201cthere will be no hiatus with the PPP projects that are coming up.\u201d
\n\u201cWe\u2019ll go ahead with all of them; we\u2019ll just assume the administration did the right thing and we will push ahead,\u201d he said during the 大象传媒 Economic Forum 2016 on July 12.
\nPPP Center Executive Director Andre C. Palacios, during the same forum, said the sector was \u201cvery happy to hear the new President is saying that the PPP will be playing a key role in the infrastructure program of the Duterte administration.\u201d
\n\u201cWe should understand not only is strong political support needed \u2014 sustained political support is necessary,\u201d Mr. Palacios said. \u201cWe should understand that the average PPP contract has a life of 25 years, and will involve at least five Philippine presidents in the life of the project.\u201d
\nStain on Aquino govt\u2019s infrastructure program
\nThe PPP program basically taps into the third way of financing infrastructure projects \u2014 the private sector, as an alternative to direct government funding or foreign loans.
\nMr. Palacios in his presentation before the 大象传媒 Economic Forum noted the \u201chuge gap\u201d between the $57 billion that the government of President Benigno S.C. Aquino III was able to budget and the $127 billion needed to address infrastructure needs according to the Asian Development Bank.
\n\u201cThe gap is filled by $5 billion in foreign loans and grants, and $35 billion in private-financed infrastructure PPPs,\u201d he said. \u201cThere is still a gap of $30 billion. Now, government could either raise the money and put it in its budget or further tap the private sector.\u201d
\nThe PPP was pitched by President Benigno S.C. Aquino III during his first State of the Nation Address as \u201cour solution\u201d to the country\u2019s pressing infrastructure needs, at a time when \u201cour funds will not be enough to meet them.\u201d
\nBy the end of his term, however, his administration was criticized for various delays, culminating in the failure to reach its target of awarding at least 15 projects.
\nWhen Mr. Aquino bowed out of office, only 12 projects with a cumulative project cost of P191.2 billion were awarded.
\nAlready completed were the P2.23-billion Daang-Hari SLEX Link Road (Muntinlupa-Cavite Expressway) Project, the P1.72-billion Automatic Fare Collection System (AFCS), and the P9.89-billion PPP for School Infrastructure Project Phase I.
\nOther awarded projects are the P17.93-billion second phase of the NAIA Expressway Project, P3.86-billion PPP\u00a0for School Infrastructure Project Phase II, P5.61-billion Modernization of Philippine Orthopedic Center project, P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building, P64.9-billion LRT Line 1 Cavite Extension and Operation & Maintenance project, P2.5-billion Southwest Integrated Transport System (ITS) Project, P35.43-billion Cavite-Laguna Expressway, P5.2-billion ITS South Terminal Project, and P24.41-billion Bulacan Bulk Water Supply Project.
\nIt was the Philippine Orthopedic Center project that stained the Aquino infrastructure legacy, as winning bidder Megawide Construction Corp. rescinded the contract in November 2015 over the government\u2019s failure to turn over the possession of the project site.
\n![\"ppt-status-update3\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/ppt-status-update3.jpg\")
Former Health Secretary Janette P. Loreto-Garin told reporters in March that there were no qualified proposals from interested service providers to take over the project, effectively shelving it.
This was because of the government\u2019s commitment on allotting 70% of the specialty hospital\u2019s capacity to indigent patients or those enrolled under the state-run Philippine Health Insurance Corp. program, with the remaining 30% going to paying private patients.\u00a0 Private developers have not found the setup profitable enough to pursue.
\nOne project was supposed to have hurdled the bidding stage already, but it ultimately ended in an auction failure.
\nNone of the three qualified groups offered their bids for the P122.8-billion Laguna Lakeshore Expressway Dike Project in March. The developers have withdrawn from the project over qualms about the project\u2019s viability.
\nWhether the project will have to go back to square one will depend on the feasibility review being done by the Department of Public Works and Highways, Mr. Palacios explained. If the original parameters that turned off developers are kept, the NEDA Board approval would still apply.
\nRegistry project poised to be Duterte govt\u2019s first PPP?
\nThe awarding of the P1.59-billion Civil Registry System Information Technology Project Phase II narrowly missed being wrapped up by the Aquino administration. Instead, it is poised to be the first to be awarded by the Duterte government.
\nOnly one bidder had submitted an offer and the Investment Coordination Committee would have to approve the lone bid first for compliance. Mr. Palacios said this was targeted for the first ICC meeting on Aug. 2.
\nMeanwhile, the submission of bids for ten projects remained pending. Five of these involve the development of regional airports: New Bohol (Panglao) Airport (P4.57 billion), Laguindingan Airport (P14.62 billion), Davao Airport (P40.57 billion), Bacolod Airport (P20.26 billion), and Iloilo Airport (P30.4 billion).
\nThe other five were: the operation and maintenance of the LRT Line 2, the P18.99-billion Sasa Port modernization project in Davao City, the P298-million Road Transport IT Infrastructure Project, the P18.72-billion New Centennial Water Source-Kaliwa Dam Project, and the P50.18-billion Regional Prison Facility project.
\nStill in an equivalent stage is the aforementioned NLEx-SLEx Connector Road unsolicited proposal, which would be subject to a Swiss challenge this month.
\nThese pending projects were not free of problems either, with several being beset by delays. For one, the regional prison facility, which will accommodate convicts to be transferred from the congested New Bilibid Prisons and Correction Institute for Women, has been postponed for almost a year over delays in the handover of land at the Fort Magsaysay military reservation.
\nMeanwhile, the P65.09-billion LRT Line 6 Project and the P170.7-billion North-South Railway Project are in the process of attracting prospective investors for prequalification.
\nBefore the procurement for a PPP project takes off, a feasibility study would have to be prepared first and then evaluated by the concerned agency. Next, the ICC reviews and threshes out technical issues before it is submitted to the NEDA Board for approval.
\nWhen the Aquino administration ended, three projects P4.21-billion Integrated Transport System-North Terminal Project, the Rural Dairy Industry Development Project, and the Judiciary Infrastructure Development Project are undergoing feasibility studies. The P536.03-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project, meanwhile, is being evaluated by the DPWH.
\nThe NEDA Board is currently evaluating five projects: the NAIA Development Project (P74.56 billion), the Plaridel Bypass Toll Road (P9.33 billion), the Philippine Travel Center Complex Project (P1.75 billion), the Batangas-Manila 1 Natural Gas Pipeline Project (P14.72 billion), and the New Nayong Pilipino at Entertainment City Project (P1.58 billion).
\nDelayed projects became political ammunition
\nIn his last SONA, Mr. Aquino simply asked his constituents to \u201ccalm down\u201d as the procurement process is long.
\n![\"ppt-status-update2\"](\"http://www.bworldonline.com/wp-content/uploads/2016/07/ppt-status-update2.jpg\")
Instead, he defended the program by noting that his government has awarded more projects than the six accomplished by the preceding three administrations. Still, he did not elaborate how he planned to prevent further delays in the projects\u2019 implementation.
\u201cIt doesn\u2019t matter if I am unable to preside over the groundbreaking or ribbon-cutting. What is important is that these projects are well-planned and legal, so that when they are approved, construction can proceed quickly; the quality of the structure will withstand anyone\u2019s scrutiny,\u201d he said instead.
\nPerceived delays in the PPP program ended up providing ammunition for presidential candidates in decrying the inefficiency of the government. Opposition leader and former Vice-President Jejomar C. Binay even played with the acronym and repeatedly called the program a \u201cPowerpoint presentation\u201d that has been crippled by \u201cparalysis by analysis.\u201d
\nBy the time Mr. Duterte has emerged as Mr. Aquino\u2019s successor, his economic managers continued to echo the sentiment that the government fell short of reaching its PPP goals. Mr. Dominguez even used the \u201cPowerpoint presentation\u201d term to describe what had transpired under the previous government.
\n\u201cThis is first and foremost an opportunity to bring private sector participation in nation-building,\u201d Mr. Dominguez said in June 29. \u201cThe PPP program will, in the new dispensation, no longer be merely a PowerPoint presentation.\u201d
\nHe assured the business sector that the implementation of the PPP program will be reviewed.
\nMr. Palacios in a July 12 interview disclosed that the review is already underway, as the PPP Center started discussing with the NEDA how to streamline processes.
\nHe explained that the PPP process tends to be slowest at the level of the ICC, because of its task to thresh out the technical issues before the NEDA Board evaluates a project\u2019s policy implications.
\nSustained political support necessary for infrastructure dev\u2019t
\nOn the issue of snail-paced processes, Mr. Palacios pointed out during the 大象传媒 Economic Forum on July 12 that momentum would have to be first built by the Aquino government, to be sustained by the succeeding administrations.
\n\u201cWe should understand PPP programs require strong and sustained political support. We have been successful so far over the past six years and we look forwarded to continuing these good experience of having speedy implementation while maintaining integrity,\u201d he said.
\nSaying \u201cthe challenges to the program really started with the capacity of the agencies,\u201d Mr. Palacios noted the government would have to adjust from a traditional mindset in which it decided the design of the project and took over the operation of the asset once it is built.
\n\u201cWe needed to build the capacity of the agencies to understand they have a different role when undertaking infrastructure with a private partner in the long term. So that took a while,\u201d Mr. Palacios said.
\n\u201cBut, I think the idea of the private sector being a long-term partner for infrastructure has caught on already. So we are there. If we have sustained and strong political support, the momentum can be continued.\u201d
\nMr. Dominguez said as much during 大象传媒\u2019s July 12 forum. \u201cTo start with, they were just starting with a new system,\u201d he acknowledged.
\nAt the very least, the Duterte government will pick up on 17 projects that have not been finished when the Aquino administration bowed out.
\n\u201cWe will try to do all of those between now and the end of 2017, maybe even earlier,\u201d Mr. Pernia said on July 12. \u201cUnless there are problems with those projects, I think most of them can go.\u201d
\nFor Mr. Palacios, he looked back at the \u201csufficient experience in procurement and implementation which are then the basis for proposing policy reforms.\u201d
\n\u201cWhat we need to make sure is as we speed up the process we\u2019re also ensuring the integrity of it, because at the end of the day, the cost will be shouldered by the Filipino people,\u201d said Mr. Palacios.
\nVince ALVIC ALEXIS F. Nonato (@VinceNonato on Twitter) is the court reporter for 大象传媒. He breaks down court decisions and rants about anime on Twitter. MARGARITA GONZALES (@famamfa on Twitter) designed and updated the charts.
\n", "content_text": "By Vince Alvic Alexis F. Nonato, Reporter\nWithin less than a month of President Rodrigo R. Duterte\u2019s presidency, his economic managers have buckled down and began throwing around ideas to improve the flagship infrastructure program, which has been criticized for its slow pace and unenthusiastic response to unsolicited proposals.\nEven before Mr. Duterte formally took office, Finance Secretary Carlos G. Dominguez III already issued a pronouncement that marked a reversal from the government\u2019s previous stance.\n\u201cWe will welcome unsolicited proposals. Government does not have a monopoly over innovative ideas,\u201d Mr. Dominguez said in a June 29 forum organized by the Rizal Commercial Banking Corp.\nThis was in stark contrast to the position adopted by the government of President Benigno S.C. Aquino III, which had been unexcited about unsolicited proposals.\nIn fact, only one has so far been approved by the National Economic and Development Authority Board \u2014 the Metro Pacific Tollways Development Corp.\u2019s P23.2-billion pitch to build a 13.4-kilometer, four lane road connecting the North Luzon Expressway and South Luzon Expressway.\nMr. Dominguez in the said forum also said the new administration will encourage local government units to \u201cinitiate their own development partnerships,\u201d citing the recent inauguration of the P38.9-billion mixed-use reclamation project in Mr. Duterte\u2019s hometown of Davao City.\nThe following week, National Economic and Development Authority Director-General Ernesto M. Pernia issued another pronouncement addressing the languid pace of the PPP program under the Aquino administration.\n\u201cWe plan to reduce the time… from the start to bidding,\u201d \u00a0said in a briefing after the administration\u2019s first Development Budget Coordinating Committee meeting on July 5. \u201cThe average length of time spent from the consideration of project proposal to bidding is about 29-30 months. We will try to cut that down to a third maybe, so things will move faster,\u201d he said.\nFocusing on the expenditure aspect, Budget Secretary Benjamin E. Diokno in his first briefing on July 14 said that the government aims to eventually increase the threshold of infrastructure spending to 7% of the gross domestic output. The first Duterte budget, for one, will spend 5.2% of the GDP, or a record P891 billion in 2017.\nThis was in contrast to the 5% infrastructure-to-GDP ratio committed by the previous administration, which Mr. Diokno claimed was more like \u201caround 2-3% only,\u201d as data was \u201cfudged\u201d by adding capital outlay on top of \u201cpure\u201d infrastructure.\nMr. Diokno added that plans for 24/7 construction on major public works projects in urban centers would also boost expenditure.\nChange would not likely come at the expense of stability in the infrastructure sector, with Mr. Dominguez assuring \u201cthere will be no hiatus with the PPP projects that are coming up.\u201d\n\u201cWe\u2019ll go ahead with all of them; we\u2019ll just assume the administration did the right thing and we will push ahead,\u201d he said during the 大象传媒 Economic Forum 2016 on July 12.\nPPP Center Executive Director Andre C. Palacios, during the same forum, said the sector was \u201cvery happy to hear the new President is saying that the PPP will be playing a key role in the infrastructure program of the Duterte administration.\u201d\n\u201cWe should understand not only is strong political support needed \u2014 sustained political support is necessary,\u201d Mr. Palacios said. \u201cWe should understand that the average PPP contract has a life of 25 years, and will involve at least five Philippine presidents in the life of the project.\u201d\nStain on Aquino govt\u2019s infrastructure program \nThe PPP program basically taps into the third way of financing infrastructure projects \u2014 the private sector, as an alternative to direct government funding or foreign loans.\nMr. Palacios in his presentation before the 大象传媒 Economic Forum noted the \u201chuge gap\u201d between the $57 billion that the government of President Benigno S.C. Aquino III was able to budget and the $127 billion needed to address infrastructure needs according to the Asian Development Bank.\n\u201cThe gap is filled by $5 billion in foreign loans and grants, and $35 billion in private-financed infrastructure PPPs,\u201d he said. \u201cThere is still a gap of $30 billion. Now, government could either raise the money and put it in its budget or further tap the private sector.\u201d\nThe PPP was pitched by President Benigno S.C. Aquino III during his first State of the Nation Address as \u201cour solution\u201d to the country\u2019s pressing infrastructure needs, at a time when \u201cour funds will not be enough to meet them.\u201d\nBy the end of his term, however, his administration was criticized for various delays, culminating in the failure to reach its target of awarding at least 15 projects.\nWhen Mr. Aquino bowed out of office, only 12 projects with a cumulative project cost of P191.2 billion were awarded.\nAlready completed were the P2.23-billion Daang-Hari SLEX Link Road (Muntinlupa-Cavite Expressway) Project, the P1.72-billion Automatic Fare Collection System (AFCS), and the P9.89-billion PPP for School Infrastructure Project Phase I.\nOther awarded projects are the P17.93-billion second phase of the NAIA Expressway Project, P3.86-billion PPP\u00a0for School Infrastructure Project Phase II, P5.61-billion Modernization of Philippine Orthopedic Center project, P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building, P64.9-billion LRT Line 1 Cavite Extension and Operation & Maintenance project, P2.5-billion Southwest Integrated Transport System (ITS) Project, P35.43-billion Cavite-Laguna Expressway, P5.2-billion ITS South Terminal Project, and P24.41-billion Bulacan Bulk Water Supply Project.\nIt was the Philippine Orthopedic Center project that stained the Aquino infrastructure legacy, as winning bidder Megawide Construction Corp. rescinded the contract in November 2015 over the government\u2019s failure to turn over the possession of the project site.\nFormer Health Secretary Janette P. Loreto-Garin told reporters in March that there were no qualified proposals from interested service providers to take over the project, effectively shelving it.\nThis was because of the government\u2019s commitment on allotting 70% of the specialty hospital\u2019s capacity to indigent patients or those enrolled under the state-run Philippine Health Insurance Corp. program, with the remaining 30% going to paying private patients.\u00a0 Private developers have not found the setup profitable enough to pursue.\nOne project was supposed to have hurdled the bidding stage already, but it ultimately ended in an auction failure.\nNone of the three qualified groups offered their bids for the P122.8-billion Laguna Lakeshore Expressway Dike Project in March. The developers have withdrawn from the project over qualms about the project\u2019s viability.\nWhether the project will have to go back to square one will depend on the feasibility review being done by the Department of Public Works and Highways, Mr. Palacios explained. If the original parameters that turned off developers are kept, the NEDA Board approval would still apply.\nRegistry project poised to be Duterte govt\u2019s first PPP?\nThe awarding of the P1.59-billion Civil Registry System Information Technology Project Phase II narrowly missed being wrapped up by the Aquino administration. Instead, it is poised to be the first to be awarded by the Duterte government.\nOnly one bidder had submitted an offer and the Investment Coordination Committee would have to approve the lone bid first for compliance. Mr. Palacios said this was targeted for the first ICC meeting on Aug. 2.\nMeanwhile, the submission of bids for ten projects remained pending. Five of these involve the development of regional airports: New Bohol (Panglao) Airport (P4.57 billion), Laguindingan Airport (P14.62 billion), Davao Airport (P40.57 billion), Bacolod Airport (P20.26 billion), and Iloilo Airport (P30.4 billion).\nThe other five were: the operation and maintenance of the LRT Line 2, the P18.99-billion Sasa Port modernization project in Davao City, the P298-million Road Transport IT Infrastructure Project, the P18.72-billion New Centennial Water Source-Kaliwa Dam Project, and the P50.18-billion Regional Prison Facility project.\nStill in an equivalent stage is the aforementioned NLEx-SLEx Connector Road unsolicited proposal, which would be subject to a Swiss challenge this month.\nThese pending projects were not free of problems either, with several being beset by delays. For one, the regional prison facility, which will accommodate convicts to be transferred from the congested New Bilibid Prisons and Correction Institute for Women, has been postponed for almost a year over delays in the handover of land at the Fort Magsaysay military reservation.\nMeanwhile, the P65.09-billion LRT Line 6 Project and the P170.7-billion North-South Railway Project are in the process of attracting prospective investors for prequalification.\nBefore the procurement for a PPP project takes off, a feasibility study would have to be prepared first and then evaluated by the concerned agency. Next, the ICC reviews and threshes out technical issues before it is submitted to the NEDA Board for approval.\nWhen the Aquino administration ended, three projects P4.21-billion Integrated Transport System-North Terminal Project, the Rural Dairy Industry Development Project, and the Judiciary Infrastructure Development Project are undergoing feasibility studies. The P536.03-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project, meanwhile, is being evaluated by the DPWH.\nThe NEDA Board is currently evaluating five projects: the NAIA Development Project (P74.56 billion), the Plaridel Bypass Toll Road (P9.33 billion), the Philippine Travel Center Complex Project (P1.75 billion), the Batangas-Manila 1 Natural Gas Pipeline Project (P14.72 billion), and the New Nayong Pilipino at Entertainment City Project (P1.58 billion).\nDelayed projects became political ammunition \nIn his last SONA, Mr. Aquino simply asked his constituents to \u201ccalm down\u201d as the procurement process is long.\nInstead, he defended the program by noting that his government has awarded more projects than the six accomplished by the preceding three administrations. Still, he did not elaborate how he planned to prevent further delays in the projects\u2019 implementation.\n\u201cIt doesn\u2019t matter if I am unable to preside over the groundbreaking or ribbon-cutting. What is important is that these projects are well-planned and legal, so that when they are approved, construction can proceed quickly; the quality of the structure will withstand anyone\u2019s scrutiny,\u201d he said instead.\nPerceived delays in the PPP program ended up providing ammunition for presidential candidates in decrying the inefficiency of the government. Opposition leader and former Vice-President Jejomar C. Binay even played with the acronym and repeatedly called the program a \u201cPowerpoint presentation\u201d that has been crippled by \u201cparalysis by analysis.\u201d\nBy the time Mr. Duterte has emerged as Mr. Aquino\u2019s successor, his economic managers continued to echo the sentiment that the government fell short of reaching its PPP goals. Mr. Dominguez even used the \u201cPowerpoint presentation\u201d term to describe what had transpired under the previous government.\n\u201cThis is first and foremost an opportunity to bring private sector participation in nation-building,\u201d Mr. Dominguez said in June 29. \u201cThe PPP program will, in the new dispensation, no longer be merely a PowerPoint presentation.\u201d\nHe assured the business sector that the implementation of the PPP program will be reviewed.\nMr. Palacios in a July 12 interview disclosed that the review is already underway, as the PPP Center started discussing with the NEDA how to streamline processes.\nHe explained that the PPP process tends to be slowest at the level of the ICC, because of its task to thresh out the technical issues before the NEDA Board evaluates a project\u2019s policy implications.\nSustained political support necessary for infrastructure dev\u2019t\nOn the issue of snail-paced processes, Mr. Palacios pointed out during the 大象传媒 Economic Forum on July 12 that momentum would have to be first built by the Aquino government, to be sustained by the succeeding administrations.\n\u201cWe should understand PPP programs require strong and sustained political support. We have been successful so far over the past six years and we look forwarded to continuing these good experience of having speedy implementation while maintaining integrity,\u201d he said.\nSaying \u201cthe challenges to the program really started with the capacity of the agencies,\u201d Mr. Palacios noted the government would have to adjust from a traditional mindset in which it decided the design of the project and took over the operation of the asset once it is built.\n\u201cWe needed to build the capacity of the agencies to understand they have a different role when undertaking infrastructure with a private partner in the long term. So that took a while,\u201d Mr. Palacios said.\n\u201cBut, I think the idea of the private sector being a long-term partner for infrastructure has caught on already. So we are there. If we have sustained and strong political support, the momentum can be continued.\u201d\nMr. Dominguez said as much during 大象传媒\u2019s July 12 forum. \u201cTo start with, they were just starting with a new system,\u201d he acknowledged.\nAt the very least, the Duterte government will pick up on 17 projects that have not been finished when the Aquino administration bowed out.\n\u201cWe will try to do all of those between now and the end of 2017, maybe even earlier,\u201d Mr. Pernia said on July 12. \u201cUnless there are problems with those projects, I think most of them can go.\u201d\nFor Mr. Palacios, he looked back at the \u201csufficient experience in procurement and implementation which are then the basis for proposing policy reforms.\u201d\n\u201cWhat we need to make sure is as we speed up the process we\u2019re also ensuring the integrity of it, because at the end of the day, the cost will be shouldered by the Filipino people,\u201d said Mr. Palacios.\nVince ALVIC ALEXIS F. Nonato (@VinceNonato on Twitter) is the court reporter for 大象传媒. He breaks down court decisions and rants about anime on Twitter. MARGARITA GONZALES (@famamfa on Twitter) designed and updated the charts.", "date_published": "2016-07-25T13:30:29+08:00", "date_modified": "2016-07-25T13:30:29+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147416", "url": "/succession-transition/2016/07/25/147416/the-duterte-administrations-anti-corruption-plans/", "title": "The Duterte administration\u2019s anti-corruption plans", "content_html": "By Bienvenido S. Oplas, Jr.
\nCorruption takes place when a person has the power to dispense certain actions or render services that other parties needs. Voters who sell their ballots in exchange for money and politicians buying them are both engaged in electoral corruption. Similarly, procurement officers who favor certain suppliers even if others can offer the same products or services at lower prices are also committing corruption.
\n![\"score\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/score.jpg\")
Elevate the scene to a city or country level, and we can see or suspect large-scale corruption in various levels. Like a cabinet secretary favoring a particular supplier of construction materials and equipment, or arms and soldier uniforms, or school buildings and textbooks, or hospital equipment and medicines, even if other suppliers can deliver those goods and services at a lower price and/or better quality, corruption occurs.
To reduce or eliminate corruption, the process of procurement and signing of contracts should be made as transparent as possible. And the possibility of prosecution and imprisonment for wrongdoing should also be made as certain as possible. Because while the punishment can be as severe like the death penalty but if the chance of being caught and prosecuted is very small, then people will remain corrupt.
\nDuring the 大象传媒 Economic Forum last July 12, 2016, Department of Finace (DoF) Secretary Carlos G. Dominguez III outlined some important anti-corruption measures of the Duterte administration. Among these are the following:
\n1. Reduce income tax (personal and corporate), raise the income tax exemption, all in at P1 million a year. This will reduce corruption in the payment and collection of income taxes, broaden the tax base and hence, can actually raise revenues overall.
\n2. Rationalize import permit papers, reduce the number of signatures, conduct random audit of shipments, and undertake certain processes outside Manila ports. This will reduce corruption at the Bureau of Customs (BoC).
\n3. Accelerate the Run After the Tax Evaders (RATE), Run After the Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs of the DoF. Undersecretary Gil Beltran was appointed as the anti-red tape czar of the Department tasked to cut the transaction processes at the BIR, BoC, and other agencies under the DoF.
\n4. Maintain transparency in all dealings \u2014 the Executive Order (EO) on Freedom of Information (FoI) that will cover the Executive Department will be signed very soon. This will encourage zero tolerance for corruption.
\nThere are other proposals and programs to reduce corruption at the DoF and other agencies, but the above were highlighted in his speech that day.
\nThese are good proposals. Few permits and bureaucratic signatures can lead to a leaner and smaller government. Instead of 8 or 10 directors in one bureau that require 8 or 10 signatures, make it 4 or 5 and the transaction procedures will significantly improve. The number of officials and their offices will also decline and hence, the need for taxes and fees to keep them going will also be reduced. If people have more money in their pockets because government taxation and mandatory fees have declined, that is already one form of public service. Concrete, down to earth public service.
\nThe extent of corruption in the Philippines is captured in various international reports and studies that are reported annually. One such important report is Transparency International\u2019s (TI) Corruption Perception Index (CPI). TI interviews thousands of expats in many countries worldwide and see their perception of corruption or absence of it in the countries where they do business.
\nOther selected reports are also included in a separate table by TI. For this piece, four of such reports are included in the table below. These are the (a) World Economic Forum\u2019s (WEF) Executive Opinion Survey (EOS), (b) World Justice Project\u2019s (WJP) Rule of Law Index (RLI), (c) Economist Intelligence Unit (EIU), and (d) IHS Global Insights (GI).
\nThe Philippines has consistently scored only between 34 to 38 over the last four years of TI\u2019s CPI annual reports. So out of 167 countries covered in the 2015 Report, the Philippines ranked 95th or within the lower half of the countries covered. And the Philippines\u2019 low ranking is affirmed in its low score in the four other reports.
\nI am hoping that reforms initiated by the DoF and other departments of the Duterte administration will be implemented and sustained for the next six years. There will be significant improvement in the country\u2019s corruption perception and reduction in actual practices of corruption in many government agencies, from local to national, and from the Executive to the Legislative and Judiciary.
\nTransparent and lean government is good. It will be beneficial for businesses and taxpayers and good for the officials and ordinary personnel in government. Trust and respect for both sides will also improve.
\nBienvenido S. Oplas, Jr. (@noysky on Twitter) is the head of Minimal Government Thinkers and a SEANET Fellow. minimalgovernment@gmail.com
\n", "content_text": "By Bienvenido S. Oplas, Jr.\nCorruption takes place when a person has the power to dispense certain actions or render services that other parties needs. Voters who sell their ballots in exchange for money and politicians buying them are both engaged in electoral corruption. Similarly, procurement officers who favor certain suppliers even if others can offer the same products or services at lower prices are also committing corruption.\nElevate the scene to a city or country level, and we can see or suspect large-scale corruption in various levels. Like a cabinet secretary favoring a particular supplier of construction materials and equipment, or arms and soldier uniforms, or school buildings and textbooks, or hospital equipment and medicines, even if other suppliers can deliver those goods and services at a lower price and/or better quality, corruption occurs.\nTo reduce or eliminate corruption, the process of procurement and signing of contracts should be made as transparent as possible. And the possibility of prosecution and imprisonment for wrongdoing should also be made as certain as possible. Because while the punishment can be as severe like the death penalty but if the chance of being caught and prosecuted is very small, then people will remain corrupt.\nDuring the 大象传媒 Economic Forum last July 12, 2016, Department of Finace (DoF) Secretary Carlos G. Dominguez III outlined some important anti-corruption measures of the Duterte administration. Among these are the following:\n1. Reduce income tax (personal and corporate), raise the income tax exemption, all in at P1 million a year. This will reduce corruption in the payment and collection of income taxes, broaden the tax base and hence, can actually raise revenues overall.\n2. Rationalize import permit papers, reduce the number of signatures, conduct random audit of shipments, and undertake certain processes outside Manila ports. This will reduce corruption at the Bureau of Customs (BoC).\n3. Accelerate the Run After the Tax Evaders (RATE), Run After the Smugglers (RATS), and Revenue Integrity Protection Service (RIPS) programs of the DoF. Undersecretary Gil Beltran was appointed as the anti-red tape czar of the Department tasked to cut the transaction processes at the BIR, BoC, and other agencies under the DoF.\n4. Maintain transparency in all dealings \u2014 the Executive Order (EO) on Freedom of Information (FoI) that will cover the Executive Department will be signed very soon. This will encourage zero tolerance for corruption.\nThere are other proposals and programs to reduce corruption at the DoF and other agencies, but the above were highlighted in his speech that day.\nThese are good proposals. Few permits and bureaucratic signatures can lead to a leaner and smaller government. Instead of 8 or 10 directors in one bureau that require 8 or 10 signatures, make it 4 or 5 and the transaction procedures will significantly improve. The number of officials and their offices will also decline and hence, the need for taxes and fees to keep them going will also be reduced. If people have more money in their pockets because government taxation and mandatory fees have declined, that is already one form of public service. Concrete, down to earth public service.\nThe extent of corruption in the Philippines is captured in various international reports and studies that are reported annually. One such important report is Transparency International\u2019s (TI) Corruption Perception Index (CPI). TI interviews thousands of expats in many countries worldwide and see their perception of corruption or absence of it in the countries where they do business.\nOther selected reports are also included in a separate table by TI. For this piece, four of such reports are included in the table below. These are the (a) World Economic Forum\u2019s (WEF) Executive Opinion Survey (EOS), (b) World Justice Project\u2019s (WJP) Rule of Law Index (RLI), (c) Economist Intelligence Unit (EIU), and (d) IHS Global Insights (GI).\nThe Philippines has consistently scored only between 34 to 38 over the last four years of TI\u2019s CPI annual reports. So out of 167 countries covered in the 2015 Report, the Philippines ranked 95th or within the lower half of the countries covered. And the Philippines\u2019 low ranking is affirmed in its low score in the four other reports.\nI am hoping that reforms initiated by the DoF and other departments of the Duterte administration will be implemented and sustained for the next six years. There will be significant improvement in the country\u2019s corruption perception and reduction in actual practices of corruption in many government agencies, from local to national, and from the Executive to the Legislative and Judiciary.\nTransparent and lean government is good. It will be beneficial for businesses and taxpayers and good for the officials and ordinary personnel in government. Trust and respect for both sides will also improve.\nBienvenido S. Oplas, Jr. (@noysky on Twitter) is the head of Minimal Government Thinkers and a SEANET Fellow. minimalgovernment@gmail.com", "date_published": "2016-07-25T13:28:16+08:00", "date_modified": "2016-07-25T13:28:16+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] }, { "id": "http://www.bworldonline.com/?p=147404", "url": "/succession-transition/2016/07/25/147404/vibrant-art-scene-helps-boost-gdp/", "title": "Vibrant art scene helps boost GDP", "content_html": "\n
![\"pexels-photo-102127-large-1024x682\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/pexels-photo-102127-large-1024x682-1.jpg\")
By Camille Anne M. Arcilla
\nWho says there\u2019s no money in art?
\nNot the artists, their fans, and supporters in the Philippines\u2019 art scene.
\nAfter all, experts and observers alike say that the local art market is \u201cmore vibrant than ever,\u201d but not yet close to being saturated.
\nWith the rise of social media connectivity and with more artist-entrepreneurs jumping into the bandwagon, the art scene continues to flourish, earning profits for establishments and \u2014 most importantly \u2014 delivering the creative industry\u2019s rightful share in economic growth.
\nBut just how much exactly has the creative industry contributed to the country\u2019s gross domestic product (GDP)?
\nFormer Cultural Center of the Philippines President Nestor O. Jardin has the answer, enumerating several pieces of data during in his talk, \u201cArts Management Speak,\u201d held at the College of Saint Benilde in Malate, Manila on June 30.
\nAccording to Mr. Jardin, in 2008, the Intellectual Property Office of the Philippines, together with World Intellectual Property Office, commissioned a study to measure the contribution of the creative industry to the Philippine economy, specifically in terms of gross domestic product contribution. Overall, in 2008, the creative industry contributed 4.82% to the GDP while providing 11.1% of employment to the country\u2019s total work force.
\nThe same two organizations conducted another survey in 2014 and the economic contribution in terms of GDP has increased to over 7.34% and the employment rose to 14.4%.
\nThe cultural creative industry (CCI), according to the International Confederation of the Societies of Authors and Composers, marked $2.25 billion or 3% of the world\u2019s GDP in 2015. It produced 29.5 million jobs or 1% of the world\u2019s population.
\nThe Asia and Pacific region topped the world\u2019s CCI contributors, the report said, having $743 billion in revenues or 33% out of total, and generated 12.7 million jobs or 43% of the overall.
\n\u201cIt just shows us that the creative industry has been contributing more in the Philippine economy,\u201d he said. \u201cIn 2016, it would [possibly] shot up higher.\u201d
\nFlourishing visual arts scene
\nOf all creative fields, the Philippines\u2019 visual arts scene may emerge as one of the biggest contributors to the economy since it is experiencing an upward trend, according to Mr. Jardin.
\n![\"anniv_IMG_20160323_142139\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/anniv_IMG_20160323_142139.jpg\")
![\"anniv_ACDimatatac-20\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/anniv_ACDimatatac-20-1024x683.jpg\")
That scene is flourishing due to \u201cthe number of galleries being established, artworks being sold, and Filipino visual artists\u2019 [recognized] in international auction houses,\u201d he said in an interview. Other \u201csupport mechanisms\u201d favorable to Filipino visual artists include art fairs such as Art Fair Philippines in Ayala, Art in the Park in Salcedo, and art fairs in SM Aura, which is organized by the National Commission for Culture and the Arts (NCCA).![\"1607-S7-ART-Investment-+-enrolment-(1)\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S7-ART-Investment-enrolment-1-1024x573.jpg\")
Art Fair Philippines and Art in the Park cofounder Trickie Lopa said both events are progressing fairly well.
\n\u201cArt in the Park turned 10 this year and Art Fair Philippines will be celebrating its fifth edition in February 2017. I suppose it would it would not be irresponsible to say that both events are moving along nicely \u2014 progressing fairly well,\u201d she said in an e-mailed interview.
\nLast February, Art Fair Philippines was participated in by 40 galleries, 11 of which are foreign, and was attended by 22,000 visitors. Art in the Park, on the other hand, was joined in by 60 exhibitors in April and was attended by 16,000 people.
\n\u201cCertainly there is a marked increase from a decade ago \u2014 I\u2019m only speaking of what I\u2019ve observed for the visual arts. You have more people attending gallery shows, and there are definitely more galleries today,\u201d she said.
\nMs. Lopa added that the country now has a better defined art eco-system: galleries, museums, fairs, auction houses, and art schools. \u201cThese elements all contribute to a healthy art scene.\u201d
\nThese upbeat sentiments are also brought about by young Filipino artists who are up to date with global trends in their fields and have already made their presence felt in the international exhibition scene, ManilArt marketing and public relations director Tess Rayos del Sol said.
\n\u201cWith social media connectivity and our facility for the English language, they are able to join the discourse and exchange with artists from all parts of the globe… Much of emerging art draws from multicultural influences and contemporary issues,\u201d she said.
\nArt as \u2018blue chip\u2019 investments![\"anniv_TRASHLATION\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/anniv_TRASHLATION-1024x576.jpg\")
Auction houses have also reaped the benefits of the flourishing art scene.
\nSalcedo Auctions, which, according to its Web site, \u201csells work of leading local and international artists and artisans\u2026 with the theatricality and high drama of public bidding,\u201d said support from patrons have been \u201cphenomenal\u201d ever since it was established seven years ago.
\n\u201cWe are elated that when we started this thing, it was not crazy after all. When we said we will open an auction house, everyone thought we were looney, that it wouldn\u2019t work. Filipinos are shy, they won\u2019t bid, and they won\u2019t let go of their possessions,\u201d Salcedo Auctions advisor Richie Lerma said.
\nThe establishment\u2019s steady growth can be attributed to two things: the Philippines\u2019 overall economic expansion and the growing familiarity of the people to the auction process.
\n![\"anniv_arts-in-bgc\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/anniv_arts-in-bgc.jpg\")
\u201c[Collectors] are looking at the \u2018investment\u2019 quality of collectibles. It\u2019s very important to underscore here that Salcedo Auctions has produced fine arts and collectibles in this scale in the Philippines,\u201d he said.![\"1607-S7-Employed-art-peeps-(1)\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S7-Employed-art-peeps-1-1024x916.jpg\")
Salcedo Auctions, which is run by and registered as KRM Management and Services, Inc. in the Securities and Exchange Commission (SEC), posted a gross income of P4,943,750 in 2014 \u2014 its latest available info on the SEC Web site \u2014 against P1,909,817 in 2013.
\n\u201cRevenue has gone up year-to-year because we are now auctioning different categories such as jewelry and time pieces, furniture, books, maps, among other things,\u201d Mr. Lerma said.
\nFor his part, Jaime Ponce de Leon of Leon Gallery, another art auction house, said collectors are eyeing rare pieces in modern art and those works by artists who are considered as \u201cblue chip\u201d in the industry.
\nLeon Gallery reported P12,819,630 in revenues in 2014, the latest data available in SEC.
\nMr. De Leon said the art scene in the Philippines has a direct relationship with how the West is doing, and has a positive effect in the Southeast Asia.
\n\u201cPhilippine art is growing. With the interest that is happening now, it should continue its path to be a center for art in Southeast Asia. The Philippine art is one, or if not, the most vibrant in Southeast Asia art scene,\u201d he said.
\nIn terms of survival, ManilArt Exhibitor Relations Director Silverio Ambrosio said auction houses will continue to prosper in the future.
\n\u201cAuction houses will continue to survive, but keen selections and properly documented artworks will be the order of the day. Auction houses seem to enjoy keen competition amongst them,\u201d he said.
\n\u201cFor as long as we get very good pieces, we encourage collectors to consign with us for as long as they have confidence with Leon Gallery, we will be able to sustain the operations. It\u2019s all about confidence and relationship with collectors,\u201d Mr. Lerma said.
\nArt market far from saturated
\nContrary to what others may think, the Philippine art market is far from being saturated, ManilArt art fair Director Atty. Amy W. Loste said.
\n\u201cThe demand is growing as awareness spreads. In fact, Filipino galleries and artists should continue to actively vie for a bigger share of the international market, like Singapore and Hong Kong, as some areas are benefitting from the promotion of Filipino artists,\u201d she said.
\nMs. Loste also noted that countries that have a strong belief in their cultural dominance can actually capitalize on the arts and translate cultural development into the creative industry.
\n\u201cI think France is a prime example. There is no reason why Filipinos cannot do the same,\u201d she said. \u201cWe have a rich and distinctive cultural heritage in art, design, cuisine, music, etc. and with the Filipino diaspora all over the world, and there is no reason why Filipinos cannot claim our rightful place on the world stage.\u201d
\nBut even with a blooming art scene, Atty. Loste nevertheless emphasized the need for government support and policy.
\n\u201cWhat we need more of is government support and policy that recognizes art and culture as being in the forefront of national life and integral to the development of our identity as a people,\u201d she said.
\nMr. Jardin echoed the same sentiment.
\nGovernments in Asia have already focused on the creative industry and have seen its potential, unlike the Philippines where the creative industry is not even categorized as such in the Department of Trade and Industry.
\n![\"1607-S7-ART-Investment-+-enrolment-(2)\"](\"http://www.bworldonline.com/wp-content/uploads/2016/12/1607-S7-ART-Investment-enrolment-2-905x1024.jpg\")
\u201cIn Korea, the arts and culture is financed as an investment, rather than a grant, subsidy, or contribution, with an end view that the government will earn from this investment,\u201d he said.
While creating a Department of Arts and Culture may add another layer of bureaucracy, it would help if someone on a \u201ccabinet-level\u201d would fight for the arts and culture, Mr. Jardin said. That person \u201ccan work on a bigger budget for the cultural agencies.\u201d
\nNevertheless, with Filipinos\u2019 improved buying power and easy access to information, Mr. Ambrosio said the positive impact in the art scene will\u00a0somehow continue in the coming years.
\n\u201cMore young Filipinos with money to spare will continue to support the arts. Acquiring art is no longer confined to the elites \u2014 it is now part of a lifestyle,\u201d he said.
\nAnd with the new administration coming in, artists, art managers and enthusiasts are hopeful that this progress will be sustained and developed more in the future.
\n\u201cThe economic fundamentals are there for the general Philippine economy. The new administration promised to continue the successes of the Aquino administration and I think that would include the arts and culture sector,\u201d Mr. Jardin said.
\nCamille Anne M. Arcilla (@cam_arcilla on Twitter) covers the arts and theater beat for 大象传媒. She loves to travel when time and money permits. Margarita Samantha Gonzales (@famamfa on Twitter) designed the chart. 大象传媒 Researcher christine joyce s. casta\u00f1eda (@cjscastaneda on Twitter) helped provide data to the infographic.
\n", "content_text": " \n\nBy Camille Anne M. Arcilla\nWho says there\u2019s no money in art?\nNot the artists, their fans, and supporters in the Philippines\u2019 art scene.\nAfter all, experts and observers alike say that the local art market is \u201cmore vibrant than ever,\u201d but not yet close to being saturated.\nWith the rise of social media connectivity and with more artist-entrepreneurs jumping into the bandwagon, the art scene continues to flourish, earning profits for establishments and \u2014 most importantly \u2014 delivering the creative industry\u2019s rightful share in economic growth.\nBut just how much exactly has the creative industry contributed to the country\u2019s gross domestic product (GDP)?\nFormer Cultural Center of the Philippines President Nestor O. Jardin has the answer, enumerating several pieces of data during in his talk, \u201cArts Management Speak,\u201d held at the College of Saint Benilde in Malate, Manila on June 30.\nAccording to Mr. Jardin, in 2008, the Intellectual Property Office of the Philippines, together with World Intellectual Property Office, commissioned a study to measure the contribution of the creative industry to the Philippine economy, specifically in terms of gross domestic product contribution. Overall, in 2008, the creative industry contributed 4.82% to the GDP while providing 11.1% of employment to the country\u2019s total work force.\nThe same two organizations conducted another survey in 2014 and the economic contribution in terms of GDP has increased to over 7.34% and the employment rose to 14.4%.\nThe cultural creative industry (CCI), according to the International Confederation of the Societies of Authors and Composers, marked $2.25 billion or 3% of the world\u2019s GDP in 2015. It produced 29.5 million jobs or 1% of the world\u2019s population.\nThe Asia and Pacific region topped the world\u2019s CCI contributors, the report said, having $743 billion in revenues or 33% out of total, and generated 12.7 million jobs or 43% of the overall.\n\u201cIt just shows us that the creative industry has been contributing more in the Philippine economy,\u201d he said. \u201cIn 2016, it would [possibly] shot up higher.\u201d\nFlourishing visual arts scene\nOf all creative fields, the Philippines\u2019 visual arts scene may emerge as one of the biggest contributors to the economy since it is experiencing an upward trend, according to Mr. Jardin.\n \nThat scene is flourishing due to \u201cthe number of galleries being established, artworks being sold, and Filipino visual artists\u2019 [recognized] in international auction houses,\u201d he said in an interview. Other \u201csupport mechanisms\u201d favorable to Filipino visual artists include art fairs such as Art Fair Philippines in Ayala, Art in the Park in Salcedo, and art fairs in SM Aura, which is organized by the National Commission for Culture and the Arts (NCCA).\nArt Fair Philippines and Art in the Park cofounder Trickie Lopa said both events are progressing fairly well.\n\u201cArt in the Park turned 10 this year and Art Fair Philippines will be celebrating its fifth edition in February 2017. I suppose it would it would not be irresponsible to say that both events are moving along nicely \u2014 progressing fairly well,\u201d she said in an e-mailed interview.\nLast February, Art Fair Philippines was participated in by 40 galleries, 11 of which are foreign, and was attended by 22,000 visitors. Art in the Park, on the other hand, was joined in by 60 exhibitors in April and was attended by 16,000 people.\n\u201cCertainly there is a marked increase from a decade ago \u2014 I\u2019m only speaking of what I\u2019ve observed for the visual arts. You have more people attending gallery shows, and there are definitely more galleries today,\u201d she said.\nMs. Lopa added that the country now has a better defined art eco-system: galleries, museums, fairs, auction houses, and art schools. \u201cThese elements all contribute to a healthy art scene.\u201d\nThese upbeat sentiments are also brought about by young Filipino artists who are up to date with global trends in their fields and have already made their presence felt in the international exhibition scene, ManilArt marketing and public relations director Tess Rayos del Sol said.\n\u201cWith social media connectivity and our facility for the English language, they are able to join the discourse and exchange with artists from all parts of the globe… Much of emerging art draws from multicultural influences and contemporary issues,\u201d she said.\nArt as \u2018blue chip\u2019 investments\nAuction houses have also reaped the benefits of the flourishing art scene.\nSalcedo Auctions, which, according to its Web site, \u201csells work of leading local and international artists and artisans\u2026 with the theatricality and high drama of public bidding,\u201d said support from patrons have been \u201cphenomenal\u201d ever since it was established seven years ago.\n\u201cWe are elated that when we started this thing, it was not crazy after all. When we said we will open an auction house, everyone thought we were looney, that it wouldn\u2019t work. Filipinos are shy, they won\u2019t bid, and they won\u2019t let go of their possessions,\u201d Salcedo Auctions advisor Richie Lerma said.\nThe establishment\u2019s steady growth can be attributed to two things: the Philippines\u2019 overall economic expansion and the growing familiarity of the people to the auction process.\n\u201c[Collectors] are looking at the \u2018investment\u2019 quality of collectibles. It\u2019s very important to underscore here that Salcedo Auctions has produced fine arts and collectibles in this scale in the Philippines,\u201d he said.\nSalcedo Auctions, which is run by and registered as KRM Management and Services, Inc. in the Securities and Exchange Commission (SEC), posted a gross income of P4,943,750 in 2014 \u2014 its latest available info on the SEC Web site \u2014 against P1,909,817 in 2013.\n\u201cRevenue has gone up year-to-year because we are now auctioning different categories such as jewelry and time pieces, furniture, books, maps, among other things,\u201d Mr. Lerma said.\nFor his part, Jaime Ponce de Leon of Leon Gallery, another art auction house, said collectors are eyeing rare pieces in modern art and those works by artists who are considered as \u201cblue chip\u201d in the industry.\nLeon Gallery reported P12,819,630 in revenues in 2014, the latest data available in SEC.\nMr. De Leon said the art scene in the Philippines has a direct relationship with how the West is doing, and has a positive effect in the Southeast Asia.\n\u201cPhilippine art is growing. With the interest that is happening now, it should continue its path to be a center for art in Southeast Asia. The Philippine art is one, or if not, the most vibrant in Southeast Asia art scene,\u201d he said.\nIn terms of survival, ManilArt Exhibitor Relations Director Silverio Ambrosio said auction houses will continue to prosper in the future.\n\u201cAuction houses will continue to survive, but keen selections and properly documented artworks will be the order of the day. Auction houses seem to enjoy keen competition amongst them,\u201d he said.\n\u201cFor as long as we get very good pieces, we encourage collectors to consign with us for as long as they have confidence with Leon Gallery, we will be able to sustain the operations. It\u2019s all about confidence and relationship with collectors,\u201d Mr. Lerma said.\nArt market far from saturated\nContrary to what others may think, the Philippine art market is far from being saturated, ManilArt art fair Director Atty. Amy W. Loste said.\n\u201cThe demand is growing as awareness spreads. In fact, Filipino galleries and artists should continue to actively vie for a bigger share of the international market, like Singapore and Hong Kong, as some areas are benefitting from the promotion of Filipino artists,\u201d she said.\nMs. Loste also noted that countries that have a strong belief in their cultural dominance can actually capitalize on the arts and translate cultural development into the creative industry.\n\u201cI think France is a prime example. There is no reason why Filipinos cannot do the same,\u201d she said. \u201cWe have a rich and distinctive cultural heritage in art, design, cuisine, music, etc. and with the Filipino diaspora all over the world, and there is no reason why Filipinos cannot claim our rightful place on the world stage.\u201d\nBut even with a blooming art scene, Atty. Loste nevertheless emphasized the need for government support and policy.\n\u201cWhat we need more of is government support and policy that recognizes art and culture as being in the forefront of national life and integral to the development of our identity as a people,\u201d she said.\nMr. Jardin echoed the same sentiment.\nGovernments in Asia have already focused on the creative industry and have seen its potential, unlike the Philippines where the creative industry is not even categorized as such in the Department of Trade and Industry.\n\u201cIn Korea, the arts and culture is financed as an investment, rather than a grant, subsidy, or contribution, with an end view that the government will earn from this investment,\u201d he said.\nWhile creating a Department of Arts and Culture may add another layer of bureaucracy, it would help if someone on a \u201ccabinet-level\u201d would fight for the arts and culture, Mr. Jardin said. That person \u201ccan work on a bigger budget for the cultural agencies.\u201d\nNevertheless, with Filipinos\u2019 improved buying power and easy access to information, Mr. Ambrosio said the positive impact in the art scene will\u00a0somehow continue in the coming years.\n\u201cMore young Filipinos with money to spare will continue to support the arts. Acquiring art is no longer confined to the elites \u2014 it is now part of a lifestyle,\u201d he said.\nAnd with the new administration coming in, artists, art managers and enthusiasts are hopeful that this progress will be sustained and developed more in the future.\n\u201cThe economic fundamentals are there for the general Philippine economy. The new administration promised to continue the successes of the Aquino administration and I think that would include the arts and culture sector,\u201d Mr. Jardin said.\nCamille Anne M. Arcilla (@cam_arcilla on Twitter) covers the arts and theater beat for 大象传媒. She loves to travel when time and money permits. Margarita Samantha Gonzales (@famamfa on Twitter) designed the chart. 大象传媒 Researcher christine joyce s. casta\u00f1eda (@cjscastaneda on Twitter) helped provide data to the infographic.", "date_published": "2016-07-25T13:22:25+08:00", "date_modified": "2016-07-25T13:22:25+08:00", "authors": [ { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" } ], "author": { "name": "大象传媒", "url": "/author/blexticauldulack/", "avatar": "https://secure.gravatar.com/avatar/1311207d4ac1996cb586666fe3d56418ca9f007d735b74eb19d3fa440df5c8b4?s=512&d=mm&r=g" }, "tags": [ "Succession & Transition" ] } ] }