THE Philippines needs to embed its economy solidly in global supply chains if it is to accelerate the recovery from the pandemic, a former Socioeconomic Planning Secretary said.
Cielito F. Habito, who currently chairs Brain Trust, Inc., said: “Integration is key. Our value chains, supply chains have gaps. It will take some innovative thinking and creative minds to bridge that gap,” Mr. Habito said during the 20th Management Association of the Philippines (MAP) International CEO Conference 2022 on Tuesday in Taguig City.
“The reason we cannot build an integrated economy is because there is too much inward looking among our production sectors, including in our government itself. We carried nationalism to (such an) extreme that we all thought nationalism is keeping out everything foreign,” he added.
Meanwhile, Jesus Carlos P. Villaseñor, Procurement and Supply Institute of Asia chairman and CEO, told the gathering that the Philippines can better integrate with the global economy via expanded use of data analytics.
“We need to have a clear definition of what is the demand and supply positions by industry to manage capacity constraints and supply opportunities,” Mr. Villaseñor said.
“The supply chain is a national security issue… Now, the supply chain is characterized by many pressures such as unpredictable demand and supply, longer lead times, out of stock scenarios, high costs, cybersecurity… This is aggravated by corruption in the national level,” he added.
Mr. Habito said that companies should practice “scenario planning” in dealing with the unpredictability of global supply chains.
“Because it has become an increasing VUCA (volatility, uncertainty, complexity, and ambiguity) world, the nature of planning itself has to change. Unidirectional planning is no longer the way to go. Instead we should be doing scenario planning. That entails building several alternative scenarios on future possible directions that the organization or the economy may be taking,” Mr. Habito said.
“Having a plan and a strategy to pursue that plan is critical to success or even survival in the kind of crisis that we’ve just been through,” he added.
Stephen CuUnjieng, OpenSpace Ventures Plus advisor, said that companies should begin with the right strategy and continuously improve it in order to be successful.
“Great success doesn’t just need great strategy and execution. It needs to be planned, nurtured, adapted, and if necessary, changed and abandoned. But continuous improvement must be an assumption. You have to start with the right strategy,” Mr. CuUnjieng said.
“The companies that thrived already had strategies in place that were sound. They then adapted, modified, or accelerated them (during the pandemic) to protect and enhance their position,” he added.
Aurelio R. Montinola III, former MAP president and Far Eastern University chairman, said he expects work-from-home arrangements to continue even with the return of onsite work.
“I think in the end, people can see that there is a low chance that you will go back to pre-pandemic face-to-face (office schemes) primarily because there have been a lot of productivity improvements using online. That will continue,” Mr. Montinola said.
Bhushan Sethi, PwC United States People & Organization joint global leader, shared the same sentiment, saying that employers need to change their mindset.
“Hybrid work is here to stay, meaning that we are in the office maybe two or three days a week and then working in a remote location. Where people can work from home, they want that flexibility. Employers and managers have to change their mindset,” Mr. Sethi said.
“We need to make sure that we do not increase inequity between those who have to work in a physical environment and people that can work from anywhere,” he added.
Milbank LLP Partner James F. Grandolfo, Jr. noted that the Philippine Stock Exchange (PSE) is lags most markets in Asia.
“Despite the Philippines having one of the oldest stock exchanges in Asia, it actually has the lowest number of listed companies. At the end of 2019, the PSE had 267 listed companies. I think there are only 280 listed companies listed today. This has hardly changed from the 261 companies that were listed at the end of 2014.”
“The market also suffers from low average daily turnover due to the small number of companies and the small number of investors who are buying and selling stock,” he added.
Mr. Grandolfo said that increasing investor participation will help boost the PSE, adding that there is “still significant demand for capital.”
“Pulling in more investors will require a combination of further marketing and education efforts amongst the population both domestically and abroad. I think that the Philippines is making efforts towards this but this needs to be accelerated,” Mr. Grandolfo said.
Former consultant to the United Nations T Y Sim said that taxes will inevitably go up and warned of a scenario where tax authorities gain an information advantage on companies.
“There is a digital divide of the future could be between tax authorities and the taxpayers. It used to be the taxpayers knew a lot more than tax authorities. You would only disclose what is needed. However, with the mining of big data and the capability to invest, tax authorities will have a lot more resources than the average taxpayer. This might allow tax authorities to know more about the company because they have the data,” Mr. Sim said.
“Data is flowing freely. There is hypertransparency. Tax authorities are not slow to take advantage of that. They are mining the new oil, which is data. They are harnessing data analytics. Instead of filing a tax return and the tax authority gets the information, the authorities will now go to the source… and they analyze it… Your interaction with tax authorities in the future may radically change,” he added. — Revin Mikhael D. Ochave