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TAPP paper on power

“Power is a key component of any nation’s growth. Ensuring a balanced and reliable generation portfolio and a robust and responsive transmission and distribution network should be a key priority of our public and private sectors.”

— Emmanuel de Dios,
CEO of GE Philippines and
former DOE UnderSecretary

The Arangkada Philippines Project (TAPP) 2019 conference today at the Marriott Hotel Manila has a beautiful theme, “Turning on the TAP (Tourism, Agribusiness, Power).” TAPP is a major project of the Joint Foreign Chambers (JFC) in the Philippines composed of the Chamber of Commerce of the US, Canada, the EU, Australia-New Zealand, Japan, and Korea.

One of the three policy papers to be launched is “A Policy Brief on the Philippine Power Sector,” co-authored by Emmanuel “Jocot” de Dios, Lorenz de la Cruz, and yours truly. The 39 page-long paper contains a wealth of data, analysis, and recommendations addressed to both government and private stakeholders. Below is among the data presented there, I expanded the countries and years covered in the first two tables. Data sources are the BP Statistical Review of World Energy 2019, and US CIA Factbook.

The Philippines has low installed power capacity to cover increasing peak demand and unscheduled outages. Our 22 GW capacity in 2016 was just half of the capacity of Thailand, Vietnam, and Taiwan. Our electricity generation in 2018 was only half of Vietnam’s, which showed almost 10 times expansion over 1998 level (see Table 1).

Many environmental and climate activists oppose continued use of coal and even natural gas in power generation. They are misguided in imposing their desire on the rest of the Philippines population and businesses because our coal and natgas (natural gas) consumption is among the lowest in the region and if we cut those, we will be facing large-scale blackouts. Our coal use in 2018 was only half of Taiwan’s and Vietnam’s, one-fifth of South Korea’s, and one-seventh of Japan’s (see Table 2).

Low power capacity and low reserves lead to low electricity supply relative to demand and this results in higher electricity prices. When many other charges (transmission, distribution, system loss, universal, subsidies to renewables, etc.) and taxes are added to the generation cost, the result is the Philippines having the 3rd most expensive power in East Asia. Data sources are the International Energy Consultants (IEC), “Regional/Global Comparison of Retail Electricity Tariffs,” May 2016 and August 2018, and Department of Energy Director Mario Marasigan, Energy Outlook forum by Stratbase-ADRi, Sept. 27, 2018, Joy-Nostalg Hotel, Ortigas (see Table 3).

Now there are continuing moves to have more coal supply control, to oppose the construction of additional coal power plants like the proposed 1,200 MW plant in Atimonan, Quezon, and to have more power price control via lower secondary price cap in WESM.

Coal control, price control, wage control, rent control and other varieties of command and control are wrong. They distort the supply-demand dynamics towards shortages, discourage supply while encourage demand.

The Energy Regulatory Commission should fast track the approval of power supply agreements (PSAs) of more coal and conventional plants. We should have not just one but four or more 1,000+ MW new coal plants. Again, see Tables 1 and 2 on why this is necessary.

Business groups like the Federation of Philippine Industries (FPI) and Philippine Independent Power Producers Association, Inc. (PIPPA) are correct in pushing for faster PSA approval, which will encourage more gencos to build more power capacity, especially more baseload plants (running 24/7).

Less politics, less climate and energy alarmism, more energy realism and market competition. That is what we need.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Spatial delivery

“Build it and they will come,” was the old paradigm for retail. Without a physical store, a retailer could not expect to sell much. It was an imperative that to put a store with shelves fully stocked with products in high traffic areas. And thus, the management emphasis on “location, location, location.” Being at the right place was key or central to business success.

The internet, in a way, changed that. A physical store was no longer necessary to ensure retailing success. Amazon, Alibaba, Shopee, Lazada, and the like are “concrete” examples, minus the brick and mortar, of online retailing success. Use of space was practically redefined. Real estate or use of expensive square-meters shifted from stores and shelves, to warehousing and logistics hubs.

The reality, however, is that the store or retail outlet simply moved from private space to public space. The store and its front and window disappeared from privately owned real estate. It simply moved to a “public” space called the worldwide web or the internet. As such, those who used to commute to the malls to window-shop could now simply “browse” the same windows from the comfort of their homes.

For retailers, the cost of maintaining a store (real estate, utilities, staff, construction, etc.) was replaced by the cost of maintaining a website. Warehousing and logistics are still retained, but skewed towards delivering directly to customers rather than to physical stores. While for customers, the “cost” of window-shopping (fuel, vehicle maintenance and parking or public transportation fare) was replaced by the cost of browsing (electricity and cost of internet access).

Likewise of interest to me is the fact that physical stores have become “moving” stores given the significant surge in delivery services, and that from privately owned real estate, goods are now mostly moving about in the public space: publicly owned highways and city roads. The unintended consequence, of course, of this massive and constant movement of goods is traffic congestion.

In September, global logistics company United Parcel Service, Inc. (UPS) announced that it would hire 100,000 seasonal workers in the United States prior to the Christmas season, to help with delivering packages. This is to avoid a repeat of 2017, when about 8% of packages handled by both UPS and FedEx were delayed. This totalled about 98 million packages.

In 2018, UPS and FedEx and the US Postal Service handled to total of 2.15 billion packages for the Christmas holidays. So, one can only imagine the number of couriers and delivery vehicles on the road during the month-long season — from Thanksgiving in late-November all the way to New Year’s Day.

Those 2.15 billion packages, instead of being on store shelves and with customers going to stores to get them, more likely came from warehouses and then couriered from point to point. They probably went to distribution hubs, from where UPS and FedEx and USPS vehicles and drivers delivered them to people’s doorsteps.

Having changed the way goods are moved, capital spent on infrastructure have instead moved to logistics services. Moreover, as one New York Times feature report noted, with 1.5 million packages moving daily in New York City, this paradigm shift in retailing — which emphasizes “convenience” — had the unintended consequence of the internet bringing “chaos” to city streets.

In an Oct. 28 report by Matthew Haag and Winnie Hu, the New York Times noted: “But to deliver Amazon orders and countless others from businesses that sell over the internet, the very fabric of major urban areas around the world is being transformed. And New York City, where more than 1.5 million packages are delivered daily, shows the impact that this push for convenience is having on gridlock, roadway safety and pollution.”

“Delivery trucks operated by UPS and FedEx double-park on streets and block bus and bike lanes. They racked up more than 471,000 parking violations last year, a 34% increase from 2013. The main entryway for packages into New York City, leading to the George Washington Bridge from New Jersey, has become the most congested interchange in the country. Trucks heading toward the bridge travel at 23 miles per hour, down from 30 mph five years ago,” it reported.

“While the rise of ride-hailing services like Uber has unquestionably caused more traffic, the proliferation of trucks has worsened the problem. As a result, cars in the busiest parts of Manhattan now move just above a jogger’s pace, about 7 mph, roughly 23% slower than at the beginning of the decade,” it added.

The NYT report also noted that “the average number of daily deliveries to households in New York City tripled to more than 1.1 million shipments from 2009 to 2017,” and that residences or households now “receive more shipments than businesses, pushing trucks into neighborhoods where they had rarely ventured” in the past.

As for growth potential, the NYT reported that “10% of all retail transactions in the United States during the first quarter of 2019 were made online, up from 4% a decade ago,” citing data from the US Census Bureau. So, if online retail continues to grow, one cannot help but wonder what the implications will be in terms of what the NYT report referred to as “gridlock, roadway safety and pollution.”

To an extent, I believe we are now suffering from the same problem. While I don’t have the data to back this claim, I am inclined to believe that the growth in online retailing, and ride-hailing (using online technology for public transportation), is also having a big impact on Metro Manila in terms of “gridlock, roadway safety and pollution.”

That there is a need to address these unintended consequences is obvious. What is not apparent, however, is whether we even realize the emerging problems and if we are thinking of ways to resolve them. The fact of the matter is, we already do not have enough road space and parking options to accommodate all motorists, what more an increase in deliveries and “shared ride” services. Moreover, I am guessing that pollution levels in Metro Manila have gone up in recent years.

We shouldn’t clamp down. Economic activity is necessary, and consumption is a major contributor to economic growth. However, we should consider regulatory efforts aiming not to impede business but to deal with negative externalities — the unintended consequences that have negative social and economic and developmental impact — particularly in highly urbanized areas. Going electric, for instance, may not address congestion but will mitigate pollution, while stricter enforcement of traffic and parking rules can help minimize gridlocks.

We support the removal of market vendors from our streets downtown because we believe that roads and sidewalks are public spaces that are supposed to be beyond the “commerce of man.” But the simple reality is that uptown streets are now also occupied by vendors, but on “wheels.” And while their presence and footprint are not as permanent as those whom we have removed from Divisoria, they are still a constant presence in public space — contributing to congestion and pollution. They are using public roads for private business, just in a more sophisticated fashion. Thanks to technology.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

Working across Generations: A workplace dilemma

The Commission on Population (Popcom) projected that by the end of 2019, there will be about 108.88 million Filipinos. The growth also means that about 1.4 million Filipinos will be added to the country’s workforce, boosting our total workforce to about 70 million employable Filipinos. With the increasing number of employees year after year, companies must be able to provide their managers with knowledge and essential skills on how to manage different employees from various generations who are present in today’s workplace.

Many workplaces are comprised of employees from five generations that includes: Traditionalist (those born before 1946), Baby Boomers (those born between 1946 and 1964), Generation X (those born between 1965 and 1976), Generation Y or Millennials (those born between 1977 and 1997) and Generation Z (those born after 1997).

This kind of diversity has its own benefits which can include knowledge sharing, i.e., experience and technical skills, fresh and creative ideas, and different perspectives from different people coming from different backgrounds and age groups. However, because of this same diversity, conflicts and misunderstandings often arise.

In our company, I work with employees from four different generations, from Baby Boomers to Generation Z. Most of the time, it is engaging to talk with them because we can learn from one another, hear different perspectives, and explore new ideas. However, there are also times that because of the generational gap, tensions arise. These situations leads to an unpleasant working environment and can affect the employee’s productivity and motivation. Thus, companies must ensure that they have established the needed skills and knowledge for the employees to recognize and minimize any potential conflict. It is important to create a positive environment for all despite the generational gap and difference in perspective.

In an article written by Rebecca Knight in 2014 entitled “Managing People from 5 Generations,” she offered some practical advice that companies can adapt to ensure positive interaction:

• Do not dwell on differences. Each one of us tends to focus on what is different or negative from us rather than our own similarities. It is important to avoid any stereotypes about various generations and languages that alerts generalizations: “All (insert generation) are like this…” Truth is, there is no proof that there is a specific difference between 35-year-old managers from 20 years ago and the 35-year-old managers of today.

• Build collaborative relationships. It is important to develop a professional relationship with our colleagues. The more that we work closely with them, the more that we can understand and appreciate them better. Having a venue where employees of different generations can interact in both professional and personal setting can develop their trust with one another, build relationships and minimize understandings.

• Study your employees. It is important that we know who our employees and colleagues are. This will help us understand what their needs and employee communication preferences are.

• Create opportunities for cross-generational mentoring. This can be an older generation teaching a younger generation his or her knowledge or a younger generation teaching an older generation a new skill. No one is too old or too young to learn a new trick or two. Everyone must have an equal opportunity to teach and to learn.

• Consider life paths. It is important to understand where employees are at their current point in life in terms of responsibilities and interests outside of the workplace. It also gives us an idea of their priorities and where do they want to be in the next five to 10 years of their life. This can provide insights on the commonalities and differences that each generation may share.

At the end of the day, it is important to make sure that all employees feel that they respected (implying both respect for others and self-respect) and valued by the company despite the generational gap. Each employee is important for his or her knowledge and skills and contributes to the company’s success. The more we can understand each other, the better we can work together.

 

Rachel Anne Solano is an MBA student at De La Salle University’s Ramon V. del Rosario College of Business. This essay was written as part of the requirement in her Strategic Human Resource Management class.

rachel_solano@dlsu.edu.ph

Climate Change is a financial crisis, too

By Gregg Gelzinis and Graham Steele

THE PEOPLE who oversee America’s financial system seem to think that climate change isn’t their problem. As one official quipped in recent congressional testimony, he’s “not a meteorologist or a climate scientist.”

They should think again. By failing to take action, regulators are leaving the country exposed to a devastating crisis.

Financial institutions, from banks to insurers to asset managers, face climate-related risks that go far beyond the issue of social responsibility. One way or another — be it through natural disasters and forced migration, or decisive moves to transform energy use — they could end up facing trillions of dollars in cumulative losses. These could come in the form of defaulted mortgages in flooded areas, soured investments in regions that become uninhabitable, or nonperforming loans to shuttered coal-fired power plants.

Worse, the financial sector is compounding the problem by supplying capital to the industries driving climate change. Over the past three years alone, the six largest US banks provided more than $700 billion in financing to the fossil-fuel industry. As of 2016, large insurers held $528 billion in such investments, including coal, oil, gas, and related utilities. Even as some financial intermediaries have reduced their exposures to carbon-intensive sectors, the largest asset managers increased their holdings by 20% from 2016 to 2018, with the three biggest US asset managers among the leading holders of coal investments.

This willingness to finance carbon-intensive activities, without adequate regard for the longer-term consequences, jeopardizes the goal of achieving net-zero greenhouse gas emissions. The world will never close the production gap, the disparity between energy produced by fossil fuels and clean energy, without addressing the financing gap between those respective industries. By one estimate, some $200 billion in capital must be reallocated in each of the next 40 years just to limit global warming to 2° Celsius — the scenario outlined in the Paris Agreement.

Some might take comfort in the idea that losses will be spread over many decades, providing ample time to adjust. Don’t. Environmental changes and policy responses are inherently unpredictable, as is the market’s propensity to suddenly re-evaluate the prospects of entire industries. Dislocations can happen globally and at a moment’s notice — a scenario that Bank of England Governor Mark Carney has called a “climate Minsky moment.” At the moment all we have are estimates, but the damage could exceed the scale and scope of the 2008 financial crisis.

Financial institutions need to prepare and change their behavior. To that end, they must accurately price the risks that they are assuming. This is where regulators come in. For example, they could include climate change in bank stress tests, and restrict payouts to shareholders if institutions lack the capital needed to survive losses. They could also directly increase capital requirements, requiring banks to have more skin in the game when making climate-intensive investments. Also, the Financial Stability Oversight Council — charged with monitoring and addressing systemic risks wherever they might appear — should be focused on mitigating climate-related risk outside the banking system.

Unfortunately, these and other powers are useless in the hands of watchdogs who lack the will to use them. The inertia of the current crop of US financial watchdogs stands in stark contrast to the International Monetary Fund and central banks in England, France, and Australia, which are all waking up to the risks. So far, though, even the most ambitious proposals have focused primarily on approaches such as greater disclosure and monitoring of climate risks — the shortcomings of which are evidenced by the fact that the dirtiest industries are already largely in compliance.

Officials must act more aggressively, lest the carbon bubble keep expanding until it pops. Financial losses can cascade through the real economy and threaten the retirement funds of regular folks, many of whom may not even know that their pensions are filled with risky investments. Effective regulation can ease the transition to a clean energy economy, and protect manufacturing jobs and vulnerable communities. Dithering will leave the world exposed to a threat much greater than the human error that precipitated the last crisis. Science is not a counterparty that can be negotiated with, the planet is not a contract that can be restructured, and there is no bailout for a climate catastrophe.

 

BLOOMBERG OPINION

Investagrams invites trading neophytes to two-day Investa Summit Philippines

Local fintech Investagrams invites those interested in taking their first steps into trading on the stock market to join their two-day Investa Summit Philippines, from Nov. 23 to 24 at Samsung Hall, SM Aura, BGC.

Now in its third year, the summit features a deep lineup of prominent global traders, fund managers, and financial market influencers, as well as two days of workshops and socials.

Speakers include:
● Kay Sebastian, a registered nurse turned full-time trader
● Javi Medina, the Chief Investment Officer of DeepTech Investment Management
● Rayner Teo, the founder of TradingwithRayner and the most followed trader in Singapore
● Mario Singh, the CEO and founder of Fullerton Markets

Tickets are priced at P3,999, with a VIP package priced at P7,999. The VIP package includes video recordings of each session, prime seating, a three-month subscription to Investagram’s premium tools and features, and an exclusive invitation to an after-event socials and networking night.

You can purchase tickets to Investa Summit Philippines here.

VivoS1Pro empowers youth to define their unique style

Vivo, the leading technology company, has again wowed the world by merging Vivo’s signature photography technologies with its powerful software,to deliver the S1 Pro. The smartphone is more than just cutting-edge technology alone, it is a remarkable smartphone concept that raises the bar for trendsetting design which empowers youth to define their unique style.

The diamond design for the S1 Pro is inspired by images of jewelry and royal palaces which conjure a refreshing look that adds a unique and dynamic feel to this latest smartphone. For instance, the 48 MP AI Quad Camera is cleverly arranged to form a diamond shape which is a unique design that urges fans to explore their unique self.

“S1 Pro combines industry-leading features that highlights our dedication to deliver high-quality yet stunning smartphone designs for consumers, especially the youth,” said Charisma Buan, Vivo PR Team Lead. “S1 Pro is a true example of how we design industry-leading smartphone experiences to fit the needs of our young consumers in the Philippines.”

Safely unlock with the in-display fingerprint scanning

With just a single touch on the S1 Pro display, the screen can be instantly unlocked, thanks to its in-display fingerprint scanning technology. It also comes with a variety of animation effects to make phone unlocking easy and fun.

S1 Pro comes with the 6.38-inch Super AMOLED Display with a 90% screen-to-body ratio , the smartphone compliments the younger generation’s love of enjoying borderless full views that immerses them in the ultimate mobile experience.

Professional-grade photography features

Vivo understands intricately the consumers’ needs in their pursuit to capture clear and beautiful selfies. The 32MP front camera aims to showcase each individual’s beautiful and flawless self. It is also equipped with AI Face Beauty that allows users to enhance their facial features, bringing more joy and fun to photography.

With the 48MP AI Quad Camera, shooting like a pro has never been this fun and enjoyable.Its main camera is supported by wide-angle, macro and bokeh lenses. With AI algorithms embedded, it brings a new photography experience by capturing even better photo clarity.

The S1 Pro expands users’ viewing angle to 120⁰ with the 8MP Super Wide-Angle Camera which helps to broaden photography horizons. To polish the look, S1 Pro also comes with stunning features, such as Pose Master that can adjust users’ angle and guide the subject to pose for better pictures.

Such stunning camera features are aimed at ensuring users are constantly being inspired to explore and capture their best selves.

Powerful and built to last

S1 Pro comes with its signature Multi-Turbo that increases the smartphone’s performing speed level to ensure users can enjoy a more exhilarating game performance.It is also equipped with Game Center which allows users to quickly check phone performance to ensure an immersive gaming experience. The smartphone also comes with “Voice Changer” which can bring more fun into game time with a variety of voices while protecting user’s privacy.

S1 Pro’s powerful Qualcomm Snapdragon 665 octa-core processor is supported by 8GB RAM and 128GB ROM to ensure fast and smooth performance for user’s multi-tasking and gaming needs. It also houses a4500mAh battery with Dual-Engine Fast Charging Technology that brings higher durability and faster charging to further enhance mobile experience.

S1 Pro comes in Knight Black and Fancy Skytrend setting color options to match the lifestyles of today’s youth.

Availability

The S1 Pro will be available in the Philippines starting November 30 for P15,999.

About Vivo

Vivo is a leading global technology company committed to creating trendsetting smart mobile products and services. Vivo is devoted to forming a vibrant mobile internet ecosystem, and currently owns and operates an extensive network of research operations, with R&D centers in San Diego, Shenzhen, Nanjing, Beijing, Hangzhou and Taipei. These centers focus on the development of cutting-edge consumer technologies including 5G, AI, mobile photography and next-generation smartphone design. Vivo has also set up 5 production bases around the world across China, South Asia and Southeast Asia.

Vivo has over two hundred million users enjoying its mobile products and services around the world. Vivo features offline retail stores in over 1,000 cities worldwide.

Basics
 Processor Qualcomm Snapdragon 665
RAM 8GB RAM
Storage 128GB ROM
Battery 4500mAh with Dual-Engine Fast Charging
Operating System Funtouch OS 9.2 (based on Android 9.0)
Body
Dimensions 159.25 × 75.19 × 8.68 mm
Weight 186.7g
Display
Screen 6.38”FHD+ (1080×2340)
Type Super AMOLED
Touch Screen Capacitive multi-touch
Biometric recognition
In-Display Fingerprint Scanning Technology
Camera
Camera Front: 32MP (f/2.0)

Rear:48MP (f/1.8) AI Quad Camera+ 8MP (f/2.2) Super Wide-Angle Camera + 2MP (f/2.4) Super Macro Camera + 2MP (f/2.4)
Photography Modes Front: Palm Capture, Voice Control, Selfie Frontlight, HDR, Panorama, Video Face Beauty, Time watermark, Model watermark, Gender Detection, Camera filters, AI Face Beauty, Pose Master, Portrait light effects, AI Makeup, Face Beauty, Multi Frame, Portrait Framing

Rear: Palm Capture, Voice Control, PRO, SLO-MO, HDR, Bokeh, Panorama, Video Face Beauty, Time watermark, Model watermark, Gender Detection, Camera filters, AI Face Beauty, Super Wide-Angle, Super macro, Burst, Pose Master, Portrait Framing, PDAF, Portrait light effects, AI Makeup
Connectivity
USB (Type-C), Wi-Fi, Bluetooth (Bluetooth 5.0), GPS, OTG, FM
Sensors
Accelerometer, Ambient light Sensor, Proximity Sensor, E-compass, Gyroscope
Items in the box
S1 Pro, Earpieces, Documentation, USB Cable, USB Power Adapter, SIM Ejector, Protective Case, Protective Film (applied)

Vivo S1 Pro smartphone launch encourages youth to “explore your style”

Leading global technology company, Vivo, has recently unveiled the S1 Pro through an exclusive event at Conrad Manila Hotel in Pasay City. The latest smartphone in the S series offers young individuals a cool and trendy way to explore their styles.

“We are excited to launch the Vivo S1 Pro smartphone in the country because this reflects how the brand is striving to make innovations as a tool for the younger generation to showcase their personalities and power their lifestyles, especially in the realm of social media,” said Charisma Buan, Vivo Philippines PR Lead.

The event, gathering Vivo Philippines executives, product distributors and exclusive media partners, showcased the wonderful features of the S1 Pro, among them a diamond-shaped rear quad camera set-up consisting of a 48MP main, 8MP secondary, 2MP wide-angle, and 2MP macro camera that are further accentuated by the handset’s Knight Black and Fancy Sky colorways.

The Vivo S1 Pro also boasts of a 6.38-inch Full HD+ Super AMOLED display with a waterdrop-style notch for a 32MP selfie camera and an in-display fingerprint sensor. Inside, it’s Qualcomm Snapdragon 665 processor and 8GB RAM/128 ROM are powered by a dual-engine fast-charging 4500mAh battery.

Retailing for P15,999, the smartphone can be pre-ordered online and in-store from November 21 to 29. It will be available at all authorized Vivo outlets nationwide starting November 30.

For inquiries, visit vivoglobal.ph or check www.facebook.com/vivoPhilippines, www.instagram.com/vivo_philippines/, and https://twitter.com/vivo_phil.

Duterte bans vape use, imports

President Rodrigo R. Duterte yesterday ordered law enforcers to arrest anyone vaping in public as he announced a ban on its use and importation, days after health authorities confirmed a case of electronic cigarette-associated lung injury.

“You know why? Because it is toxic, and government has the power to issue measures to protect public health and public interest,” ABS-CBN News reported late Tuesday, citing a hastily called briefing by the presidential palace.

“Better stop it because I will order your arrest if you do it in a room,” Mr. Duterte was quoted as saying. “I am now ordering law enforcement agencies to arrest anybody vaping in public. That is like smoking,” he added.

The Philippines banned smoking in public in 2003 and Mr. Duterte issued an executive order reinforcing the Tobacco Regulation Law in 2017. Smoking is allowed in certain smoking rooms.

The Health department earlier sought a ban on vaping, warning the public that e-cigarettes are not a proven nicotine replacement therapy and can cause lung disease.

About 1 million Filipinos use e-cigarettes, according to the agency. — NPA

BoP in surplus for 4th month in a row

THE PHILIPPINES got more dollars than it spent to pay off foreign obligations in October, turning around from a year-ago deficit and marking the fourth straight month of balance of payments (BoP) surplus, according to data the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.

BSP data showed October with a $163-million BoP surplus that was a turnaround from a $458-million year-ago deficit. The BoP summarizes the country’s economic transactions with the rest of the world within a given period.

The central bank said in a press release that October’s dollar inflows “reflected the increase in the national government’s (NG) net foreign currency deposits and BSP’s income from its investments abroad.”

“These inflows were offset… by outflows representing payments made by the NG on its foreign exchange obligations during the month in review.”

That brought year-to-date BoP to a $5.73-billion surplus that was a turnaround from the $5.594-billion gap in the 10 months to October last year. The central bank attributed the year-to-date surplus “partly to personal remittance inflows from overseas Filipinos and net inflows of foreign direct investments.”

Latest available data from the central bank show cash sent home by overseas Filipino workers (OFWs) rose by 4.2% to P22.2 billion as of September from P21.3 billion in last year’s comparative nine months, while the eight months to August saw foreign direct investments with a net inflow of $4.535 billion that was nevertheless 39.7% smaller than the year-ago $7.526 billion.

The central bank noted that the year-to-date BoP surplus “reflects the final gross international reserves (GIR) level of $85.83 billion as of end-October.” Such GIR reflected “a more-than-ample” buffer to external financial shocks, the BSP said, equivalent to 7.5 months worth of imports of goods and payments of services and primary income, and 5.5 times the country’s short-term external debt falling due within 12 months and 4.1 times such short-term foreign debt plus principal payments on medium- and long-term loans of the public and private sectors falling due within a year.

WHAT THE NUMBERS COULD MEAN
“This bodes well for economic growth,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a mobile phone message.

“It tells one that OFW remittances and the attractiveness of the Philippines as a potential investment destination is… helping the external standing afloat,” he explained, while noting that “[t]his continues to prove that the consumption-led economy needs other pillars that will sustain growth in the medium to longer term.”

For Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, “[s]tronger BoP surplus data also reflect some investment gains from overseas by Philippine-based investors and by the government, as may also be reflected in the… increase in GIR in October, which is near the record high of $86.1 billion posted in September 2016.”

Bank of the Philippine Islands Lead Economist Emilio S. Neri said in a text message, however, that the “positive BoP position in 2019 — which has been driven by import compression, portfolio capital inflows, stronger remittance flows and POGO (Philippine offshore gaming operators)-led tourism receipts against a backdrop of declining foreign direct investments and merchandise exports is not exactly the kind of surplus that supports an inclusive and more meaningful economic growth.”

“If the resulting strengthening of the peso and subdued inflation meant the economy incurred a sizeable public spending backlog in infrastructure, then this year’s BoP surplus probably means our potential to generate more meaningful growth in incomes and jobs in the medium to long term has been somehow sacrificed.”

BoP had surpassed the central bank’s $3.7-billion surplus projection for full-year 2019 with the $3.797-billion surfeit recorded by the end of March. Monthly balances have remained above that level since then.

Last year ended with a $2.306-billion BoP deficit that was nearly three times 2017’s $863-million gap but was less than half the $5.5-billion external payments gap which the central bank had expected for 2018. — Luz Wendy T. Noble

Health care backup service industry cites prospects and challenges ahead

By Jenina P. Ibañez

THE HEALTH CARE information sector has tempered its targets with the rest of the information technology and business process management (IT-BPM) industry after the overall sector recalibrated its targets due to a growth slowdown in recent years.

Despite this, the subsector continues to have a higher growth rate compared to the rest of the industry, which it attributes to demand brought about by the growing aging population abroad.

The Healthcare Information Management Association of the Philippines (HIMAP) said in an e-mail that it expects 8.5-9% revenue compound annual growth rate from 2020 to 2022, below the 13% growth rate initially projected in 2016.

“We are confident of attaining these numbers due to the increased demand brought on by an aging world population and as health care becomes more digital, more collaborative, more patient-centric and more data-driven with information accessible,” HIMAP said.

Companies involved in this sector are those involved in clinical documentation services and information technology solutions development for healthcare information record processing.

The IT-BPM industry in the Philippines cut its revenue compound annual growth rate projection for 2020 to 2022 to between 3.5% and 7.5%, compared to nine percent set in 2016.

During the announcement of the recalibrated targets by Everest Group at the Information Technology and Business Process Association International Innovation Summit last week, the industry slowdown was attributed to the shift to automation, protectionist policies, geopolitical changes, and rapid transformation of business models.

HIMAP, which represents 10% of the industry, said that it is impacted by the same factors challenging IT-BPM.

But the group said that various factors “allows us to feel these impacts to a lesser degree.”

In the e-mail, HIMAP said that the global health care sector continues to grow due to increasing demand in services because of the growing senior population and number of patients with chronic diseases.

“And there is pressure to reduce cost. The US, our major market, is the biggest spender per capita on health care.”

According to US public policy organization Committee for a Responsible Federal Budget (CRFB), the US spends more on health care than any other country in the world.

CRFB said that the US spent $3.5 trillion — or 18% of its gross domestic product — on health care expenditures in 2017.

HIMAP said that the Philippines is the preferred location for health care services due to its specialized and skilled talent, and its access to the technological infrastructure necessary for the market.

HIMAP plans to work more closely with the Department of Trade and Industry to expand its markets, with the Department of Information and Communications Technology to improve its infrastructure, and with the Commission on Higher Education for a continuous supply of talent.

HIMAP also wants to develop its local services, as it plans to work with the Department of Health and Philippine Health Insurance Corp. to develop the domestic market and apply the best practices from the global market.

LANDBANK provides Manila P10-B credit line

THE MANILA CITY government signed a P10-billion loan agreement with the Land Bank of the Philippines for financing of upgrades of key facilities, LANDBANK said in a statement on Tuesday.

The city government will use the money to upgrade facilities related to health, education and tourism, among others, including renovation or construction of the Ospital ng Maynila Medical Center, the Pamantasan ng Lungsod ng Maynila School of Medicine Building, the new City Hall building and the Manila Sky Deck; rehabilitation of Manila Zoo and development of Pandacan Depot into a commercial district; as well as “acquisition of equipment, furniture and fixture for these projects.”

LANDBANK provides such Omnibus Term Loan Facility to provinces, cities and municipalities whose projects form part of the bank’s Approved Local Development Plan or Annual Investment Program. “This eliminates the inconvenience and associated transaction cost in having to secure loan approval for every single project to be implemented,” LANDBANK said in its statement. — LWTN

State offices improve use of their budgets

GOVERNMENT OFFICES continued to improve use of their budgets, as shown by an increase in their Notice of Cash Allocation (NCA) utilization rate as of October, the Department of Budget and Management (DBM) said on Tuesday.

The DBM said that the national government’s NCA utilization rate improved to 93% in 10 months to October, as P2.448 trillion out of the P2.638 trillion worth of NCAs released in that period were used, compared to 81% the past year.

NCAs refer to the green light given by DBM for state offices to disburse funds allocated to them.

A higher utilization rate means state offices were able to “disburse their allocated funds and implement their programs and projects” on time, the DBM said.

NCAs used increased by P110 billion from the P2.338 trillion utilized out of the P2.877 trillion released in 2018’s first 10 months.

The Budget department said that line departments alone used P1.772 trillion of the P1.956 trillion NCA released, translating to a 91% year-to-date NCA utilization rate.

Government-owned and -controlled corporations registered a 97% NCA utilization rate, while local governments’ allocations were “fully used” as of October, the DBM said.

Sought for comment, Nicholas Antonio T. Mapa, senior economist at ING Bank NV-Manila Branch, said that the higher utilization rate indicates the government’s “promised catchup spending” has been taking place. Mr. Mapa said that the increase in state spending has given “a glimpse of the ability of the government to roll out spending.”

State spending as of end-September was up 5.51% year-on-year at P2.627 trillion, with year-to-date infrastructure expenditures totaling some P546.3 billion, 4.3% smaller than the P570.8 billion spent the past year.

For Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., a higher NCA utilization rate “bodes well for economic growth” as it indicates more robust spending by the government.

“Increasing cash utilization means higher government expenditure (of course, as programmed in the national budget), and higher government spending means higher potential for economic expansion,” Mr. Asuncion said in an e-mail.

For ING’s Mr. Mapa, the latest NCA utilization rate “could mean that 4Q GDP does indeed accelerate to join robust consumption and a possible rejuvenated investment boom and help lift full year growth past that 6.0% finish line by December.”

Socioeconomic Planning Secretary Ernesto M. Pernia said he sees fourth quarter gross domestic product (GDP) to grow within the 6.5-7% range, giving the economy a chance to hit the low-end of the 6-7% GDP growth target for full-year 2019.

The economy expanded by 6.2% in the third quarter, picking up from the 5.5% average growth in the first half which was dragged largely by the delayed enactment of 2019 budget, according to economists and government officials. — Beatrice M. Laforga

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