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Rep. Salceda says 2019 budget extension constitutional

ALBAY REPRESENTATIVE Jose Maria Clemente S. Salceda, chair of the ways and means committee, does not expect a veto on House Bill 5437, which seeks to extend the validity of the 2019 budget.

In a Viber message to reporters, Mr. Salceda said extending the validity of this year’s budget until December 31, 2020 “is well within the powers of Congress and not unconstitutional due to an Executive Order (EO)”.

Mr. Salceda also noted that the Department of Budget and Management (DBM) “supported the measure in the House and Senate hearings and posed no objections and committed to abide by wisdom of Congress”.

“While 93% has been released by DBM to implementing agencies, level of obligation by agencies to suppliers are lower at roughly P230 billion,” he said.

Last Thursday, Presidential Spokesperson Salvador S. Panelo told reporters that the President is ready to veto the measure if it proves to be “in violation of the Constitution”.

President Rodrigo R. Duterte signed EO 91 last September, which directs the government to adopt a cash-based budgeting system (CBS) wherein all funds shall be made available for disbursement only until the end of each fiscal year.

Mr. Salceda said the extension of the validity of this year’s budget is “good for the economy since it considers the five months delay” in passing the 2019 General Appropriations Act. — Genshen L. Espedido

Infrastructure spending drops in October

INFRASTRUCTURE SPENDING continued to decline in October as the delayed passage of this year’s budget took a toll on disbursements, officials said.

Citing preliminary data, Budget Undersecretary Laura B. Pascua said on Friday that spending on infrastructure and other capital outlays stood at P82.2 billion in October.

The October figure was 12.92% lower from the P94.4 billion posted in the same month last year, and a reversal from the 53.9% year-on-year surge in September to P100.3 billion.

However, Ms. Pascua said the department is still finalizing the disbursement report for October and will be up on their website soon.

In the 10 months to October, infrastructure spending still lagged as it was lower by 5.5% year-on-year at P628.5 billion, accounting for just 73% of the full-year disbursement program of P859.5 billion, Finance Secretary Carlos G. Dominguez III told reporters on Wednesday evening.

Mr. Dominguez, who also heads the administration’s economic team, said the contraction in infrastructure spending during the period was “mainly due to the delay of the passage of the 2019 national budget and election ban.”

However, he said officials of the two primary infrastructure agencies assured the economic team that they will reach the full-year target.

Mr. Dominguez said the Department of Public Works and Highways (DPWH) vowed to reach its P725-billion disbursement target for the year.

He said the DPWH has spent P503.4 billion as of end-October, which accounted for 69% of its full-year target worth P725 billion.

“Secretary Mark Villar assured that the remaining P221.6 billion target disbursements for the last two months of this year is attainable,” he said.

For the Department of Transportation (DoTr), Mr. Dominguez said the agency used 57% of its full-year disbursement program at P46.82 billion from January to Nov. 28. DoTr posted its “highest rate ever achieved” in terms of actual disbursement.

“The other big spending departments such as the Department of Education, Department of Social Welfare and Development, among others, also committed to accelerate their disbursements in the remaining two months of the year,” he added.

GDP TARGET ‘ON TRACK’
Meanwhile, the Finance chief remained positive that the country can hit the low end of its 6-7% full year target for gross domestic product growth (GDP) as the government continues its catch-up spending plan, and on the back of robust public consumption buoyed by easing inflation.

“I’ve always maintained that we believe that most likely hit the lower end of our 6-7% target and it looks like our continuous monitoring of projects and removal of the bottlenecks is paying off and that I think, especially the two big infrastructure departments are doing their utmost and quite achieving a good percentage of their target,” he said.

With only a month left before the year ends, he said the economic team “remains optimistic that the economy will expand at a higher clip” as government agencies accelerate on the implementation of infrastructure development program as well as the continued investment for human capital development.

“Overall, we remain on track to reach our GDP growth target of 6 to 7 percent in 2019,” he said.

The economy expanded at a faster-than-expected clip in the third quarter at 6.2%, picking up from the muted 5.5% average growth in the first half and also higher from the six percent GDP growth in the third quarter last year.

The muted growth in the first half was largely attributed to the delayed passage of the 2019 budget which left projects unfunded, coupled with the 45-day ban on public works ahead of the mid-term elections last May.

For next year, Mr. Dominguez said the swift passage of the P4.1-trillion budget will provide the economy more room for faster expansion and a higher chance to hit the 6.5-7.5% GDP growth target for the year.

Last Wednesday, the Senate approved on third and final reading its version of the 2020 budget while the House of Representatives approved the budget plan last Sept. 20.

“I trust this bicam to go quite quickly. So we’re very confident that by the end of the year, we’ll have our full year budget approved for next year,” he said.

The 18th Congress’s bicameral conference committee held its first meeting on the proposed budget on Friday.

“That will help greatly but you know, it’s not only the budget that’s important, it’s what happens outside the country and so far, although there are good reports about this trade war getting resolved, that’s good news. I’m just not sure if those reports are accurate,” Mr. Dominguez added. — Beatrice M. Laforga

Gov’t debt slips as of October

THE GOVERNMENT’S outstanding debt slipped in October amid a stronger peso, the Bureau of the Treasury (BTr) reported yesterday.

Data from the BTr released on Friday showed the national government’s total debt stock stood at P7.906 trillion as of end-October, lower by 0.02% from the previous month’s P7.907 trillion

Year-on-year, the October debt level was 10.31% higher compared to the P7.167 trillion logged as of the same month last year.

Of this total, 67.08% or P5.304 trillion was sourced locally while 32.89% or P2.601 trillion were from external creditors.

The government’s local debt stood at P5.304 trillion as of end-October, 14.82% higher year-on-year and also up by 0.89% from the end-September level of P5.257 trillion.

“The increase resulted from a P47.53 billion net issuance of government securities, which was partially offset by a P0.52 billion reduction in the local currency valuation of onshore dollar bonds caused by peso appreciation,” the BTr explained.

Since the start of 2019, the domestic debt grew by 11.05% to P527.92 billion.

Meanwhile, state borrowings from external sources totalled P2.601 trillion as of October, 1.83% lower from the previous month’s P2.649 trillion but still 2.14% higher compared to P2.546 trillion in end-October 2018.

The Treasury attributed the smaller external debt stock to the P630 million worth of net repayments made and the peso’s appreciation, which “trimmed the valuation of US dollar-denominated debt by P52.49 billion”.

Meanwhile, the national government’s total guaranteed obligations declined by 1.4% to P477.65 billion in October from the previous month’s record of P484.42 billion.

“For the month, the lower level of guarantees was due to the combined effect of local and third-currency fluctuations that reduced the value of external guarantees by P4.65 billion and P0.03 billion, respectively,” the statement read.

For this year, the government has capped the budget deficit at 3.2% of gross domestic product, and has set a 73-27 ratio for its borrowing plan, in favor of local sources. — B.M. Laforga

CONFED forwards proposals to address sugar industry challenges

THE CONFEDERATION of Sugar Producers Association, Inc. (CONFED) has sent proposals to government officials to address industry challenges and prevent threats from import liberalization.

CONFED said in a statement on Friday that after consultations and workshops, the group sent proposals to the offices of Senator Juan Miguel Zubiri, agriculture secretary William D. Dar, and to the Sugar Regulatory Administration board.

They recommended programs to improve productivity, review the Sugar Industry Development Act (SIDA), and enhance the institutional and political structure of the industry.

To increase productivity in the industry, CONFED said that the block farm program — or the consolidation of smaller farms to take advantage of economies of scale — must be expanded. They added that there should be mechanization through funds from SIDA or through access to affordable loans from the government’s financial institutions.

CONFED proposed upgrading and standardizing mills and mobilizing “progressive sugarcane farmers” to become farm consolidators, service providers, or peer mentors.

The confederation is also urging government to review the implementing rules and regulations of the SIDA law. They are pushing for streamlined application processes, quicker fund utilization, fast-tracked program implementation, and an adjusted fund allocation formula based on industry priorities.

SIDA, or Republic Act 10659, is intended to update industry competitiveness, maximize resources, and boost farmer and farm worker income through improved productivity, product diversification, increased jobs, and sugar mill efficiency.

CONFED is seeking the full restoration of its P2 billion budget.

CONFED Negros-Panay chapter head Nicholas Ledesma relayed farmer complaints on the “tedious” process to access programs offered by the SIDA law.

“The need to streamline processes must be addressed urgently as this has led to underutilization of the SIDA fund which in turn, hampers our plan to modernize and improve on our productivity,” he said.

The confederation also said that the industry must manage negative perceptions.

“The industry has always been at the receiving end when retail prices of sugar go up which is why one of our urgent recommendation(s) is to undertake direct sugar marketing to address this issue,” CONFED spokesperson Raymond V. Montinola said.

He also said that there is “imperative need for additional support on research and development, not only in developing and propagating new varieties that can withstand weather and soil challenges but on technology that can make farms more efficient.” — Jenina P. Ibañez

Mobile video experience in PHL fair but improving

By Denise A. Valdez, Reporter

MOBILE video experience in the Philippines for 2019 was tagged “fair” by a global wireless coverage mapping firm, improving from its “poor” ranking in 2018.

In its “The State of Mobile Video Experience” report for this year, United Kingdom-based Opensignal ranked the Philippines 88th in a survey of 100 countries for quality of mobile video experience.

The country was at the bottom of last year’s mobile video experience list of 69 countries.

The Philippines joins 28 other countries in the fair category for 2019, along with other large markets such as Indonesia, Russia and the United States.

Opensignal uses five categories in grouping video experience: poor (those with a video experience score of 0-40), fair (40-55), good (55-65), very good (65-75) and excellent (75-100).

The video experience score measures the quality of videos when using a third generation (3G) or fourth generation (4G) mobile network, where three factors are considered: picture quality, video loading time and stall rate.

The Philippines’ video experience score this year is 42.7, an increase from last year’s 34.98. This puts mobile video experience in the Philippines at the fourth to the last place in the fair category.

Opensignal said it generally observed improvements in mobile video experience in many countries in 2019.

“Across the globe, we see ongoing network deployments using newer 4G technologies, which means users’ smartphones connect to multiple frequency bands at once, with higher-grade encoding,” it said.

“Perhaps more significantly, as carriers in major developed countries look to wider 5G roll outs, they often prepare first by upgrading 4G sites with improved backhaul links to existing cell towers, which has the effect of boosting the 4G experience for current users,” it added.

But it said in countries like the Philippines where a large chunk of the population rely on mobile devices for video streaming, telecommunications operators are challenged by the high volume of mobile network traffic.

“In large emerging economies like Indonesia and the Philippines, the challenge for carriers is every bit as acute as it is in developed markets, because consumers routinely rely on their phone as their main, sometimes their only, digital device,” the report said.

“This means mobile video viewing may not only be a personal preference because a football game happens to be on at a slightly inconvenient time when someone happens to be away from home, but in these mobile-first countries the smartphone is often simply the only screen available at home to watch the game,” it added.

Topping Opensignal’s 2019 list for mobile video experience is Norway, with a video experience score of 78.5. Joining it in the excellent category are five other nations, namely Czech Republic (77.2), Austria (76.7), Denmark (76.0), Hungary (75.9) and Netherlands (75.7).

HARI’s 10-month sales fall by 6%

HYUNDAI Asia Resources, Inc. (HARI), the official distributor of Hyundai vehicles in the Philippines, reported a six percent drop in sales in the first ten months of 2019.

In a statement, HARI said it sold 27,618 units in the January to October period compared to 29,407 sold in the same period a year ago.

In October alone, HARI saw sales rise 17% to 2,856 units from the previous month.

HARI said that it remains optimistic despite the year-to-date drop, as it expects a lift in the last two months from seasonal consumer spending, benign inflation, and lower interest rates.

“While we don’t compete in some segments of the market (e.g. pick-ups), our volumes remain strong, underpinned by the quality of our vehicles and our focus on excellent after-sales services. Our models per segment remain competitive and this bodes well for the Hyundai brand in the Philippines,” HARI President and CEO Ma. Fe Perez-Agudo said.

Year-to-date sales of light commercial vehicles (LCV) in October rose 1.5% to 12,331 units compared to the same period last year. Led by sales of the compact SUV Hyundai Kona and light truck Hyundai H-100, monthly LCV sales grew by 22.7% to 1,359 units from the previous year.

For passenger cars (PC), year-to-date sales fell to 14,560 units, which HARI attributed to consumer preferences for larger vehicles. Month-on-month, PC sales grew by 13.7% to 1,457 units due to Hyundai Reina and Hyundai Accent sales.

Sales of commercial vehicles (CV) grew 86.6% to 727 units sold in the first ten months compared to the same period last year, while month-on-month sales dropped by nearly seven percent.

While sales of commercial vehicles are mostly led by Hyundai buses such as Hyundai County, the company said that it expects higher sales after the recent rollout of its Class 2 Modern Jeepney.

“With the transport department’s support and high demand from transport cooperatives, our modern jeepneys will contribute to our growth over the medium-term. We are excited to give Filipino commuters the new King of the Road,” Ms. Agudo said.

“Combined with the acceleration of the government’s infrastructure projects, our CV business is poised to expand and provide fresh avenues of growth.” — J. P. Ibañez

Money supply growth picks up in October on RRR cuts

MONEY SUPPLY expanded at a faster pace in October as the policy easing moves by the Bangko Sentral ng Pilipinas (BSP) were finally felt in the financial market.

Domestic liquidity or M3, the broadest measure of money supply in an economy, grew 8.5% year-on-year to P12.1 trillion, a faster pace compared to the 7.7% growth logged in September, according to preliminary central bank data released on Friday.

Month-on-month, M3 inched up by 0.9%.

The central bank said credit demand mainly fueled money supply growth.

BSP data showed net claims on the central government climbed 6.5%, picking up from the six percent growth in September.

Meanwhile, domestic claims, which were mainly supported by the private sector, rose 6.7%, slower than the upward-revised 7.8% seen in September.

The BSP noted that loans for production activities remained to be buoyed by lending to key sectors such as real estate activities; financial and insurance activities; construction; electricity, gas, steam and air conditioning supply; and wholesale and retail trade, as well as repair of motor vehicles and motorcycles.

Meanwhile, net foreign assets (NFA) in peso terms picked up by 9.6% in October, a wider expansion from the 8.3% print logged in September. The BSP said the NFA position in the month was backed by foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments.

NFA held by banks likewise grew by 12.2%, rebounding from its 3.2% contraction in September. This growth was attributed to the banks seeing bigger foreign assets “as a result of higher loans and investments in marketable debt securities”, according to the central bank.

Analysts attributed the pickup in liquidity growth to the BSP’s easing actions.

“The uptick in liquidity is a long time coming. With the expansionary stance of the central bank this 2019, the rise in M3 is in line with market expectations,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an emailed response.

The faster expansion rate was on the back of the series of reserve requirement ratio reductions this year, according to Rizal Commercial Banking Corp. chief economist Michael L. Ricafort.

“The faster M3 growth as of October may largely have to do with the RRRs…to infuse a total of more than P400 billion of additional peso funds into the financial system (more than P300 billion infused as of October 2019),” he said in an email.

LENDING GROWTH SLOWS
Despite the boost in liquidity, bank lending expanded at a slower pace in October.

Outstanding loans of universal and commercial banks grew by 9.3% in October, slower compared to the 10.5% growth in September. Inclusive of reverse repurchase agreements, bank lending rose 9.1% in October, also a slower pickup compared to the 10.1% seen in the previous month.

BSP data showed production loans comprised 87.2% or the bulk of banks’ total lending, expanding at a rate of 7.5% in September which is lower than the 9% growth seen in September.

Construction loans remained to see the highest expansion at 28.9%, followed by credit for real estate activities at 18.4%; finance and insurance activities at 11.6%; electricity, gas, steam and air conditioning supply at 5.2%; and wholesale and retail trade, repair of motor vehicles and motorcycles at 3%.

Lending to other sectors also picked up in October, except credit for other community, social and personal activities which plummeted 34.4%, and the professional, scientific and technical activities, which fell 28%.

Meanwhile, loans for household consumption expanded by 26.7% in October, picking up from 26.2% growth in September, thanks to the faster growth in motor vehicle, credit card, and salary-based general purpose consumption loans.

The slower loan growth may suggest that the financial system is still feeling the rate hikes imposed last year, according to Security Bank Corp. chief economist Robert Dan J. Roces.

“We are still reeling from the hikes of 2018, and loan growth will still take some time to turnaround as the financial system absorbs the cuts on lags. This absorptive capacity is churning — it is alive and well on the back of positive loan growth data,” he said in an email.

For UnionBank’s Mr. Asuncion, the credit growth lag is “expected”.

“Financial institutions and stakeholders usually takes time to adjust rates and may need some time to unwind. Although, the likelihood of lending activities rising in the next coming months is higher now compared to the previous months when liquidity in the market was low,” he explained.

Meanwhile, RCBC’s Mr. Ricafort noted that some firms opted to raise money through the capital markets which may have dented credit growth.

“Some of the biggest companies also borrowed recently through the bond/capital markets as alternative to bank loans, as part of capital market development, thereby partly resulting to the slower growth in bank loans,” he said.

Noting that players may still be in a wait-and-see attitude amid the series of cuts in policy rates and RRR, Mr. Ricafort is positive loan growth could pick up in the coming months due to the low interest rates.

The reserve requirement ratio of universal and commercial banks now stands at 15% following the effectivity of the 100-basis-point (bp) cut in RRR announced in September. Likewise, the RRR of thrift banks is now at five percent, while that for rural banks stands at three percent.

The BSP announced last month that the reserve ratio of universal, commercial and thrift banks will be slashed by another 100 bps effective December, bringing total reductions to their reserve ratios for this year to 400 bps. This cut will also apply to the reserve ratio of nonbank financial institutions with quasi-banking functions (NBQBs).

This will bring the reserve ratio of universal and commercial lenders to 14% by December, while the RRR of thrift banks will stand at four percent. On the other hand, the reserve ratio of NBQBs will be cut to 14% next month.

Meanwhile, the BSP’s Monetary Board this month kept its benchmark interest rates for the overnight reverse repurchase, overnight deposit and lending facilities at four percent, 3.5% and 4.5%, respectively.

The BSP has cut rates by a total of 75 bps this year, partially dialling back the 175 bps in hikes it fired off last year in the face of multi-year high inflation. — Luz Wendy T. Noble

PVB books higher Q3 earnings

PHILIPPINE Veterans Bank (PVB) saw “strong” net earnings in the third quarter at P505.6 million, driven by higher loan growth.

In a statement on Thursday, the bank said its net income in the period was a reversal from the P735 million net loss it logged in the third quarter last year and also from the net loss of P574 million in 2018.

Last quarter’s record already surpassed its P500-million target for 2019, translating to a 28.44% return on equity (RoE), it said.

The bank said its current RoE is considered as “one of the highest in the banking industry.”

“The robust net income results were driven mostly by the bank’s lending business from both corporate and retail loans,” it said.

The lender reported a net loan growth of 13.54% to P21.29 billion in the third quarter from the P18.75 billion it posted a year earlier.

“Now that many of these reforms are in place, the bank has directed its efforts on business development, enhancing and developing new products and services. The third quarter results show not only a significant rise in net income but the highest levels in deposits and loans ever for the bank,” PVB Chairman Roberto F. de Ocampo said in the statement.

Meanwhile, its deposits grew 11% year-on-year to P50.78 billion from P45.4 billion.

The bank also posted a 12.3% growth in assets to P57.03 billion last quarter from P50.78 billion in the third quarter last year.

Currently, its capital adequacy ratio stands at 10.63%

“This year’s unprecedented growth levels show that all the hard work and sacrifice were worth it. Our primary mission is to give value to our shareholders — the families of Filipino WWII veterans. And the best way to give value is to deliver above market RoE,” Renato A. Claravall, the bank’s president, was quoted as saying. — B.M. Laforga

Peso weakens as China warns US of action on Hong Kong bill

THE PESO depreciated anew on Friday as China threatened to impose countermeasures after the US passed a bill in support of Hong Kong.

The local unit closed at P50.81 versus the greenback on Friday, weakening by 10.5 centavos from the P50.705-a-dollar finish on Thursday, according to data from the Bankers Association of the Philippines.

Week-on-week, the peso also dropped by a centavo from its P50.80 close on Nov. 22.

The peso opened at P50.70 against the dollar. Its weakest point for the day was at P50.89, while its intraday best was at P50.69 versus the greenback.

Dollars traded grew to $1.108 billion from the $1.045 billion seen on Thursday.

Traders attributed the local unit’s weakness to the market’s worries on developments in the US-China trade conflict as well as local economic data.

“There’s this risk-off deadline involving Huawei,” a trader said in a phone call, referring to the government’s outstanding debt.

Meanwhile, another trader said woes arose from the passage of the US law supportive of Hong Kong’s autonomy.

“The peso weakened significantly amid fears of further delay in the US-China trade discussions following US President [Donald J.] Trump’s signing of the Hong Kong Democracy Act,” the trader said in an email.

Reuters cited a Wall Street Journal report that Huawei Technologies Co., Ltd. challenged a US Federal Communications Commission (FCC) decision that did not allow US rural carrier customers from utilising an $8.5 billion government fund to buy equipment from the Chinese firm.

Citing people familiar with the matter, the Wall Street Journal reported that Huawei is expected to file a suit to challenge the said FCC decision next week.

“We don’t comment on speculation,” Huawei spokesman in Shenzhen told Reuters.

Meanwhile, China has denounced the signing of the legislation that backed protesters and threaten China with possible sanctions on human rights. China’s Foreign Ministry warned of “firm counter measures” on Thursday.

The “Hong Kong Human Rights and Democracy Act” that Trump signed requires the State Department to certify at least once a year that Hong Kong retains enough autonomy to justify the favorable US trading terms that have helped it maintain its position as a world financial center. — L.W.T. Noble with Reuters

Shares slide as US-China tensions remain

By Denise A. Valdez, Reporter

LOCAL shares were down for the second straight day as investors continue to worry on the Sino-US trade talks following US President Donald Trump’s signing of a pro-Hong Kong legislation.

The 30-member Philippine Stock Exchange index (PSEi) dropped 29.70 points or 0.38% to close at 7,738.96, as the broader all shares index fell 18.11 points or 0.39% to 4,632.84.

“It turned out to be a sour end for November as the market was still on a risk-off mode to wait on how US markets perform tonight on account of Trump’s recent support for Hong Kong (which could then lead to China’s ire once again and affect the Trade Deal),” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an email Friday.

Mr. Trump signed two bills on Thursday to legislate Hong Kong Human Rights and Democracy Act of 2019—a move that China opposed.

“The move can potentially add strain to the US’s current trade relationship with China,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

Investors chose to stay on the sidelines on Friday to wait for how the development will impact Wall Street, which was closed on Thursday due to the Thanksgiving holiday.

Asian markets declined in reaction to the cotinued tensions between China and the US. Japan’s Nikkei 225 and Topix indices shed 0.49% and 0.51%, respectively, as Hong Kong’s Hang Seng index lost 2.03%, South Korea’s KOSPI index dropped 1.45% and China’s Shanghai SE Composite index erased 0.61%.

Back home, four sectoral indices went down on Friday: mining and oil by 155.31 points or 1.89% to 8,054.07, holding firms by 31.63 points or 0.41% to 7,630.43, financials by 29.74 points or 1.59% to 1,841.80, and industrial by 4.11 points or 0.04% to 9,781.29.

Meanwhile, property gained 17.39 points or 0.43% to 4,043.60 and services added 1.24 points or 0.08% to 1,546.48.

Friday ended with 1.45 billion issues changing hands worth P6.37 billion, an improvement from Thursday’s 668.52 million issues valued at P5.44 billion.

Declining stocks outnumbered those that gained, 125 against 63, while 48 closed unchanged.

Foreign investors remained bearish, but net buying was trimmed to P425.21 million from P744.16 million on Thursday.

“All eyes (are) on how US markets perform tonight… Dow and S&P futures are currently in the red, albeit by only a minimal 0.3%. Support for the index is at its Oct. 3 low of 7,514,” Papa Securities’ Mr. Perez said.

Insurtech is key to fintech’s evolutionary timeline

Tech categories are timelines, not maps. Every visualisation that maps out a particular tech category in Asia does so in the common cluster style. That is, it’ll list the main category on top, such as fin-tech. Then it’ll list all the various sub-categories, such as digital finance, crypto, mobile money, and so on, and include the logos of the relevant companies within each grouping.

While these infographics are an interesting starting point in discussing how a tech category is growing (or not growing!), it is a bit misrepresentative. Visually, it seems to suggest that all the categories are equal, but that is not true. For many tech fields, some sub-categories will need to come before others as a kind of precursor. There is, in short, very much a tech category life cycle just as much as there is a product life cycle.

This thesis can perhaps be most clearly seen in fin-tech. Arguably the most important category is mobile money. You need to give people a means to transact with money before they can participate in other fin-tech applications. Most people erroneously assume that mobile money is the only necessary precursor, which opens all other categories – Pandora-box style – for the taking of founders and startups.

In truth, there is another major category that comes next—or at least should—on the evolutionary timeline of fin-tech: Insurtech. After giving people a means to store money digitally, they also need to be given means to protect their finances, property, and livelihood as they go about their day-to-day. Digital can similarly allow people to obtain this insurance easily, instantly, urgently.

Insurtech as an evolutionary milestone

The significance of insurtech as the second major milestone in fintech is most clearly seen when you analyze a major player in the space. In the Philippines, one need to look no further than the recently relaunched InsureShop, which is backed by leading insurance firm Pioneer, to see just how crucial insurtech is.

Led by Pioneer Chief Executive Officer Lorenzo Chan Jr., InsureShop offers three key products, including medical insurance (MediCash), travel insurance (SafeTrip), and motorcycle insurance (RideSure). Each of these products is essential to protecting value for upwardly mobile and digitally-savvy Filipino people. Let’s take the case of MediCash for example.

In the Philippine context, medical emergencies can bankrupt people, or worse, leave them stuck with years and years of debt. Because of the tropical climate, two common issues are Dengue or Leptospirosis. Dengue is a mosquito-borne affliction that can often be fatal, while Leptospirosis is a disease transmitted by rodents, often brought on by exposure to contaminated floodwaters during excessive rains or typhoons.

In the event that a person gets either of these, MediCash disburses P10,000 in cash to help with medical bills or other expenses as the person chooses. Such protection prevents the occurrence of Dengue or Leptospirosis from not only being a life-threatening affliction, but one that ruins a person financially.

Through InsureShop, Filipinos can enroll, buy, and receive instant policy delivery for MediCash as well as SafeTrip and RideSure. The advent of InsureShop is actually not surprising given the rise of ecommerce in the Philippines led by online shopping and ride-hailing — evidence of the new Filipinos predilection for turning to digital for many of their needs. If Filipinos are already buying their clothes and gadgets online, the thesis goes, why not add insurance to the mix?

Innovative insurtech products like Pioneer’s InsureShop, in short, protect the value that the new digital economy offers Filipinos and that they store in and transact with via mobile money apps. Once the double layer of bedrock is established in mobile money and insurtech, the fintech space can move onto more advanced use cases, such as everything from alternative finance and reg-tech to robo advisories and comparison sites.

As a founder, it’s tempting to ignore the idea that there may be necessary precursors to the space you want to operate in. Many founders, after all, may think that having vision is enough and everything else can follow. But the truth is that most tech categories have a natural evolution that may not necessarily be linear, but still has dependencies and co-dependencies.

Founders would be wise to break-down their respective spaces into a timeline, not a map. What types of businesses must come before theirs in order for their own startup to succeed? If there are quite a few sub-categories that you determine should precede yours—but those are still not built or have reached maturity—it may clue you in to the fact that your company is too early. It would be smart to move further back into your industry’s evolutionary timeline toward what people need now.

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Javi Medina is a chartered market technician and the current Managing Director and Chief Investment Officer at Deeptech Investment Management.

Majority of SEA Games events now open to the public

By Michael Angelo S. Murillo, Senior Reporter

Calls to make the events in the about-to-start 30th Southeast Asian Games accessible to more people did not fall on deaf ears as organizers have decided to make majority of the games available for free.

In an announcement made on Friday, a day before the formal start of the biennial regional sporting free, Philippine Southeast Asian Games Organizing Committee (PHISGOC) chairman Alan Peter Cayetano said they will give free tickets to all sporting events save for three events, namely basketball, volleyball and football.

Mr. Cayetano said free tickets could not be given to the three aforementioned events as “these were already sold out.”

The PHISGOC official went on to say that 10,000 tickets for the closing ceremony on Dec. 11 will be released for free as well.

In the lead-up to the sporting meet, which the country is hosting for the fourth time in history, Samahang Weightlifting ng Pilipinas president Monico Puentevella called on President Rodrigo Duterte and the organizers to make the games open to the public.

He said that doing so would allow more people to cheer for the Filipino athletes as they try to win for the country anew the overall championship in the SEA Games, which the Philippines last achieved in 2005, incidentally the last time the country hosted the event.

In a media briefing on Friday, PHISGOC chief operating officer Ramon Suzara said it was no less than Mr. Duterte who gave the instruction to open the games for free.

He said it will be the local government units who will be in charge of the tickets and that spectators will still go through to inspection in the venues and are expected to behave accordingly.

Mr. Suzara, however, said no refunds will be given to those who already bought tickets online but that they will try to find ways to give them “perks” for having availed of tickets.

In this year’s SEA Games, happening from Nov. 30 to Dec. 11, participants of as much as 9,000 from the 11 member nations will pit their skills in 56 sports involving 530 events.

Ten new sports are making their Games debut, namely E-sports, skateboarding, kurash, sambo, modern pentathlon, kickboxing, surfing, underwater hockey, jiu-jitsu and obstacle course.

The events will take place in four designated clusters — Clark, Subic, Metro Manila and “Other Areas,” which include Batangas, Cavite, La Union and Laguna.

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