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Facebook would be wise to just give up on politics

By Gina Chon and Jennifer Saba

SAN FRANCISCO/NEW YORK — There is an elegant solution to Facebook’s chronic problem with political ads: it could stop running them altogether.

The $525-billion firm is the favorite punching bag for pols on both sides of the aisle. The latest fracas comes from the camp of Democratic presidential hopeful Elizabeth Warren. The Massachusetts senator’s campaign ran a fake ad on the social network suggesting that Facebook founder Mark Zuckerberg is endorsing President Donald Trump in the 2020 US election. The point was to highlight Facebook’s failure to fact-check dubious claims in its quest for profit. Facebook maintains that political advertising requires a higher bar for free speech.

Social media firms are in a terrible position to police political ads, which often contain falsehoods. Such content usually enjoys additional legal protection thanks to the US Constitution’s prohibitions on restricting free speech. The Federal Election Commission oversees campaign finance laws and is a more appropriate agency to deal with such issues. Designating that power to Facebook and others gives them greater influence over public discourse.

But without clear government rules, online platforms make up their own — with messy results. Twitter recently announced it would start flagging posts by public officials that violate their rules but are permitted because they are in the public’s interest. Jack Dorsey’s company, along with Facebook and Alphabet’s Google, declined a request from the campaign of former Vice-President Joe Biden to take down a Trump ad making false accusations. CNN refused to run the ad but has aired others that contain inaccurate information.

That puts social media outlets in the awkward position of having to make judgment calls without being accused of bias. Conservatives already complain that Facebook stifles its voices; Zuckerberg has been hosting informal meetings with likes of Fox News commentator Tucker Carlson to smooth things over, according to Politico.

The outsized political spotlight is hardly worth it. For the 90-day period starting July 13 through Oct. 10, Facebook raked in roughly $136 million from political ads, according to its tally of state-by-state spending. That’s less than 1% of the $17.1 billion analysts forecast in ad sales for the third quarter, based on Refinitiv compilations. Folding up the political ad tent may be the winning move.

 

REUTERS BREAKINGVIEWS

Turkey and Russia show that land grabs can pay off

By Leonid Bershidsky

TURKISH President Recep Tayyip Erdogan’s land grab in Syria, like his Russian counterpart Vladimir Putin’s Crimea annexation, has met with a weak international response. Will that encourage more land grabs? Any nations thinking of doing so should be warned: Such conquests succeed only if they don’t set off full-scale wars.

The US has frozen the assets of the Turkish defense and energy ministries as well as those of the defense, energy and interior ministers. President Donald Trump also promised to stop negotiations with Turkey on a trade deal and to raise tariffs on Turkish steel. Turkey will barely notice these sanctions. It’s likely that the ministries and officials have no US assets, and their ability to continue using US financial assets through other branches of the Turkish government is more or less unlimited.

The European Union, for its part, agreed that its member states would commit “to strong national positions regarding their arms export policy to Turkey” — not quite an arms embargo, but a recommendation that European nations stop selling arms to Ankara. This is something Germany, Finland, France, the Netherlands, and Sweden have already promised to do. Erdogan could have lived with a full embargo, too: Russia is only too happy to sell him more weapons.

The sanctions on Turkey are even weaker than those imposed on Russia after it seized Crimea from Ukraine in March 2014. That month, the US and the EU imposed some travel bans and asset freezes on Russians believed to be involved in the operation, and the Europeans also prohibited all business with Crimea itself. Russia shrugged off these restrictions. Harsher measures, to which Russia responded with some import bans, only followed an escalation in eastern Ukraine and the downing of a Malaysian passenger airliner over territory held by pro-Russian rebels.

Like Putin before him, Erdogan can rest easy that his country won’t be hit with anything resembling the harsh UN Security Council-authorized sanctions slapped on Iraq after it invaded Kuwait in 1990. Those included an all-embracing trade and financial embargo.

The weakness of the Crimea- and northern Syria-related sanctions undermines the idea of a “territorial integrity norm” that is supposed to have crystallized in the post-World War II era. The emergence and acceptance of this norm — a general international consensus against military conquest and armed secession — is often credited for the declining number of conquest attempts in recent decades. But the conclusions of political scientist Mark Zacher, whose 2001 paper promoted the idea that this territorial integrity norm had led to a dramatic decrease in the number of border changes, has been challenged in more recent research. A causal link between the norm and the prevalence of land grabs is turning out hard to prove.

In a recent paper, Dan Altman of Georgia State University holds that conquest has never really gone obsolete. Instead, he claims, based on several updated datasets of interstate conflicts, that the nature of land grabs has changed:

As states increasingly came to shy away from intentionally waging war, war-prone forms of conquest declined earlier and more strongly. Conquest attempts more consistent with the fait accompli strategy and its aim of avoiding war proved more enduring. These tend to target smaller territories, especially those with little or no population and no military garrison that would need to be removed. It could have transpired that states would forgo conquest almost altogether as they increasingly sought to avoid starting wars. Instead, states avoided only war-prone conquest while persisting with comparatively war-averse conquest.

According to Altman, all the states responsible for the nine initial conquest attempts that led to wars — that is, conflicts with more than 1,000 battle deaths — since 1975 ended up losing the conquered territory. But out of the total of 30 land grabs involving parts of states that occurred between 1980 and 2018, conquest initiators held on to their territorial gains in half the cases. That means the successful conquerors are those who avoid a war.

HOLDING ON TO CONQUESTS
Trying to seize an entire country, as Iraq did in 1990, increases the risk of third-party military intervention, Altman wrote. What happened to Iraq after it seized Kuwait also shows that the sanctions in such a situation can be overwhelming. But “the victims of smaller conquests have been on their own,” according to Altman: “Of the 63 initial conquest attempts targeting parts of states since 1945, in only five did a third-party state — a friend or ally of the victim — fire at least one shot in defense of the victim.”

All this makes Putin’s Crimea grab a relatively typical success story for modern-day conquest. It involved little violence, and Putin correctly calculated that third-party intervention would be weak. On the other hand, Russia’s interference in eastern Ukraine is — also in keeping with Altman’s conclusions — more of a miscalculation: It set off a war, and Russia hopes to hand the territories now held by pro-Moscow separatists back to Ukraine if it can get favorable peace terms.

In Syria, Erdogan apparently also hoped for a Crimea-style fait accompli. But recent developments on the ground — such as the Syrian military’s intervention on the side of the Kurdish forces, as well as Russia’s insistence that Turkey shouldn’t hold on to any of the invaded territory — show that he may have miscalculated, just as Putin did in eastern Ukraine.

The weak Western reaction won’t force Erdogan to retreat. But the possibility of an all-out war might thwart his plan to clear a 30-kilometer “safe zone” in Syria. He may need to make a deal with Putin and Syrian dictator Bashar al-Assad. This could involve allowing him to resettle in northern Syria some of the 3.7 million Syrian refugees Turkey has been sheltering and no longer wants, perhaps making Russia and the Assad regime responsible for holding back any anti-Turkish activity along the border.

When it comes to conquests, it’s not clear whether any kind of operational “rules-based order” has ever existed. Putin and Erdogan are just taking more risk than is customary. The authoritarians play for big stakes. Erdogan’s Syria move is a gamble — but not because he can be held responsible for violating some important norm.

 

BLOOMBERG OPINION

SparkUp to Hold Second SparkUp Summit for the Local Startup Community

As our young local startup community continues to grow, bayanihan is needed more than ever to guide and sustain its rapid development. Just as our forefathers banded together for a common cause, we too must work hand-in-hand to uplift the Filipino startup ecosystem.

Fostering this unity is the goal of this year’s SparkUp Summit, aptly themed “The Bayanihan Ecosystem: Cultivating Philippine Startups” on October 19, 2019, from 8:00 am – 6:00 pm in ABS-CBN Vertis Tent, Quezon City. By gathering founders, incubators, accelerators, venture capitalists, mentors, and the government, the event aims to spark discourse on various points and help forge vital connections among the different stakeholders of the community.

Butch Meily, president of IdeaSpace Foundation and the Philippine Disaster Resilience Foundation and head of QBO Innovation Hub, will give the keynote speech. A total of 6 sessions will cover a wide array of topics, including the intricacies of launching a startup, stages of funding, the government’s role in supporting startups, and how to maximize the technologies of the future.

To register your team and know more about the program details, visit www.bworldonline.com/SparkUpSummit2019 or contact Ms. Shai Cordero at smcordero@bworldonline.com through 8-535-9901 loc. 824.

SparkUp Summit 2019 is brought to you by SparkUp powered by BusinessWorld. With sponsors: De La Salle University, EastWestBank and Philippine Business Bank.

Organization Partners: Asia Society – Philippines, Business Economics Association, IdeaSpace Foundation, Launchgarage, QBO Innovation Hub, StartUp Village and The Spark Project; Featured Brands: 1Export, Cawil.AI, Chubs Chasers, Cocotel, eCFulfill, iRENT MO and Tipsy Pig Gastropub; Media Partners: Adobo Magazine, Ambidextr, DZUP, Maroon FM, The Philippine Star and One News; Podcast Partner: HustleShare Podcast Network Asia; Venue Partner: Vertis North; and Event Partner: Fiera de Manila.

We look forward to fostering the bayanihan spirit with you!

Creative and social enterprises called to apply to YSEALI SparkAbility Level Up Program

The Young Southeast Asian Leaders Initiative (YSEALI) and crowdfunding enabler The Spark Project have joined forces to come up with YSEALI SparkAbility, a level up program to support local entrepreneurs looking to scale both their businesses and the impact they have on the communities they serve.

YSEALI SparkAbility is a three-month long program designed to help address a young scaling entrepreneur’s key needs through learning and one-on-one mentoring sessions that’ll enable them to implement an existing project or program they have in a greater scale. Selected participants will be provided funding support and the opportunity to crowdfund the additional funds they need, free of additional charges.

The program will kick off with a three day, all-expenses-paid bootcamp on Nov. 21 to 23.

According to Patch Dulay, founder and CEO of The Spark Project, “the program will utilize the expertise of some of the most successful YSEALI alumni and impart knowledge on branding and marketing; project management, impact measurement, and community building.”

Interested groups can apply to the YSEALI SparkAbility here, until October 19.

Industrial Transformation ASIA-PACIFIC 2019 set on Oct. 22 to 24 in Singapore

SingEx Exhibitions and international partner Deutsche Messe present the second edition of Industrial Transformation ASIA-PACIFIC (ITAP), a HANNOVER MESSE event, on Oct. 22 to 24 at the Singapore EXPO & MAX Atria that will gather around 20,000 attendees from 350 companies in 30 countries to help them start, scale, and sustain their adoption of Industry 4.0 (I4.0) processes and solutions.

ITAP is Asia-Pacific’s leading trade event for “Industry 4.0” which is defined by global management consulting firm McKinsey & Company as “the next phase in the digitization of the manufacturing sector.” It brings together a self-contained ecosystem for end-to-end engagements among I4.0 practitioners, technology and solution providers, industrial companies, component manufacturers, software companies, manufacturing solutions suppliers, service companies and consultancies, and start-ups.

“We have listened closely to the needs of Asia-Pacific companies who are facing I4.0 disruption and we have curated content platforms this year to ensure that they find the right guidance to determine the best solutions customized for their needs. While the state of readiness is increasing, many companies lack the in-depth knowledge to get started, and for those who have started, going beyond the pilot stage remains a problem. Industrial Transformation will address these pain points and provide the catalyst for companies to find the right solutions with the right fit that align with their business objectives,” said Aloysius Arlando, chief executive officer (CEO) of SingEx Holdings.

This year’s ITAP, which is designed as a personalized learning journey for each attendee, serves as a community enabler connecting buyers to all aspects of their needs in their I4.0 journey — from learning and networking to sourcing, retrofitting, and implementing. The event will help attendees learn from industry giants who will present innovations, valuable insights, and case studies that will inspire practical engagement.

The show floor provides an immersive experience ranging from a Learning Lab, a Collaboration Lab, a Robotics Experimental Zone, a Research & Technology Zone, Sandboxes and Conferences, and Guided and Technical Tours. These curated content platforms located onsite as well as offsite provide interactions and discoveries that allow attendees to choose their relevant industry sectors and level of readiness in I4.0 adoption for effective engagement.

ITAP brings with it the reputation of HANNOVER MESSE as the world’s leading trade show for industrial technology, and the advantage of Germany’s expertise in advanced manufacturing. In a report, McKinsey cited Germany, along with the United States, as clear front-runners in I4.0 adoption.

“Today, manufacturers face very different challenges compared to only a few years ago. Together with the research and development (R&D) sector, suppliers of production, logistics and energy technologies have to adjust to meet these new demands,” said Dr. Jochen Köckler, CEO of Deutsche Messe. “Industrial Transformation ASIA-PACIFIC brings together users and providers of all sizes to actively shape this transformation in the key sectors of automation, industrial IT and software, energy, logistics, and additive manufacturing.” 

Partnerships to drive transformation forward

As a precursor to the main ITAP event, a media and industry engagement event was held at the German Ambassador to Singapore’s residence, His Excellency Dr. Ulrich Sante, who amplified the agenda of cross-border technology transfer among Germany, Asia and Singapore. He welcomed a German delegation led by Prime Minister of Lower Saxony Stephan Weil, leaders from government agencies, and key industry organizations for a media briefing and a fireside chat to address “Priorities for the Next Stage of Manufacturing Transformation in Asia.”

“Asia holds tremendous growth potential, and Singapore is fortunate to be strategically located at the heart of the region. This allows companies based in Singapore to capture new opportunities to grow. The advent of I4.0 will enable companies to capture such growth prospects in a faster, more efficient way. Through Industrial Transformation ASIA-PACIFIC, we hope to facilitate the exchange of ideas and information between manufacturers, suppliers and solution providers, to help them form the right partnerships to drive their company transformation forward,” said Lim Kok Kiang, assistant managing director, Singapore Economic Development Board.

Strong intergovernmental engagement in I4.0 adoption bodes well for ASEAN industry players that recognize the importance of the I4.0 agenda but do not know how to start. Industrial Transformation attracts industry leaders such as Fraunhofer Singapore, Siemens and Schneider Electric, who raise the bar in research and technology and are ahead of the curve in anticipating industry trends. They are among many outstanding organizations presenting solutions that answer the urgent needs of SMEs in Asia Pacific.

To sustain Singapore’s competitiveness in high-value manufacturing, R&D and innovation remain critical, said Professor Tan Sze Wee, executive director of the Agency for Science, Technology and Research’s (A*STAR) Science and Engineering Research Council.

“A*STAR works closely with industry players through public-private partnerships to help them transform digitally by adopting I4.0 technologies. Industrial Transformation ASIA-PACIFIC is a good opportunity for such engagements. This year, A*STAR will showcase new technologies for personalized manufacturing. As demand for customized products and services continues to grow, manufacturers have to be able to respond quickly,” Mr. Wee said.

A*STAR, in partnership with the Nanyang Technological University, manages the Advanced Remanufacturing and Technology Centre (ARTC), Asia’s first center for test-bedding and developing manufacturing technologies.

Meanwhile, at this year’s Industrial Transformation ASIA PACIFIC, technology leader ABB will showcase its latest technologies and innovations for the digital transformation of cities, factories and industries.

Customized Industry 4.0 journey for attendees

Attendees begin their journey through the Gateway to I4.0, which contrasts old-technology exhibits versus the new to showcase the transformation and the outcomes of practical applications. Beginning with an understanding of I4.0 and its global implications and applications, attendees deepen their experience at displays by Nanyang Polytechnic and Advanced Remanufacturing and Technology Centre before heading to a discussion area to address their needs and priorities.

When they exit the Gateway, there are various curated learning platforms on the show floor to help sharpen their focus and to add momentum to their learning:

*Over 50 Sandbox sessions provide practical learnings based on industry specific challenges. Topics to be presented include: A Holistic Solution for SME Enterprises on a I4.0 journey; Enabling Smooth Business Transition and Transformation; Practical Examples on using Location Tracking to Improve Manufacturing & Logistics Operations Efficiency; ASi-5 + IO-Link as a Perfect Combination in Industrial Communication.

*Dynamic Learning Lab with live demonstrations to highlight the capabilities and applications of autonomous solutions in Intralogistics

* A Research and Technology Zone to activate business collaborations through open innovations with technology providers and seekers, presented by Institutes of Higher Learning such as Nanyang Polytechnic, Ngee Ann Polytechnic, Republic Polytechnic, Singapore Polytechnic, Temasek Polytechnic and TUM Asia

* Over 100 Guided Tours with 8 tracks covering 12 industries: Aerospace, Automotive, Food & Beverage, Infrastructure & Facilities/Urban Solutions, Logistics & Supply Chain, Oil & Gas/Energy, Pharmaceutical & Biotechnology, and Semiconductor/Electronics & Electrical

* Island-wide Technical Tours to leading R&D centres such as: ABB Customer Innovation Center; Advanced Remanufacturing & Technology Centre; Centre of Excellence for Testing; EOS Additive Manufacturing Centre; Flexspeed iSmart; Hexagon Manufacturing Intelligence; Ngee Ann Polytechnic Centre of Innovation (EWTCOI) Additive Manufacturing Lab; SAP Leonardo Centre; SICK Technology and Innovation Lab; Siemens Advanced Manufacturing Transformation Center; Singapore Polytechnic Advanced Manufacturing Learning Journey; SMT i4.0 Smart Manufacturing Centre; Sodick Techno Center; Tranzplus Smart Manufacturing Centre

For more information on Industrial Transformation ASIA-PACIFIC 2019, log on to https://www.industrial-transformation.com/. — JOSIELYN LUNA-MANUEL, Special Features Editor

Dynamic expansion

Metro Manila’s office property market is still booming, with property developers vigorously building new office spaces to meet growing demand.

According to a report by property consultancy firm Colliers International Philippines, office supply in the capital region rose by about 190,000 square meters (sq. m) to 11.3 million sq. m in the second quarter of this year. Thirty-three percent of the new office space came from Alabang in Muntinlupa City.

Instead of rising as a result of the increase in the stock of office space, vacancy rate actually dropped from 5.4% during the preceding quarter to 4.9%. And this is because of the “substantial absorpotion of office space in Quezon City and Ortigas CBD and its fringes,” the report said.

By 2021, Colliers predicts that Metro Manila’s leasable office stock will reach 14.2 million sq. m., compared with 10.9 million sq. m. in 2018.

“About 54% of the new supply from 2019 to 2021 is likely to be in Ortigas Center, Fort Bonifacio and the Bay Area as developers respond to rising demand from non-outsourcing and offshore gaming firms as well as companies transferring to newer buildings,” the report said.

Annual vacancy rate will reach 6.1% from 2019 to 2021, Colliers estimates. “This is equivalent to an annual supply of 1.08 million sq. m (11.6 million square feet) and yearly net absorption of about 1 million sq. m (10.8 million square feet),” the report said.

Meanwhile, from 2019 to 2021, annual average rent is projected to grow by about 6% per year. “We still see healthy rental growth in sublocations such as the Bay Area as well as Makati CBD and its fringe areas due to offshore gaming operations and limited supply. We also see Ortigas Center rates catching up due to the turnover of new and high-quality office space as well as entry of offshore gaming operators,” Colliers said in its report.

Jones Lang LaSalle (JLL) Philippines, a professional real estate services firm, noted in own report covering the second quarter of 2019 that roughly 156,100 sq. m of office space was added to Metro Manila’s total stock, bringing the aggregate supply added this year to 336,700 sq. m.

“Development completions in 2Q19 are spread in several locations across the districts of Metro Manila within the Cities of Makati, Muntinlupa, Paranaque, Pasay, Quezon and Taguig,” the firm said in a statement.

Although JLL recorded a higher vacancy rate of 6% during the second quarter, the firm called it “manageable.” The City of Taguig had the majority of untenanted office spaces since majority of the recent development completions were in Bonifacio Global City, the firm said.

“Offshoring and Outsourcing (O&O) remain as the major demand driver, taking up approximately 128,100 square meters of office space in 2Q19. For the whole of 1H19, around 181,000 square meters of office space was absorbed by O&O firms. However, there has been a slow [quarter-on-quarter] take-up of office spaces from O&O firms in Metro Manila as they have expanded more in the provinces, owing to the limited PEZA [Philippine Economic Zone Authority] approvals for IT centers especially in Metro Manila,” JLL said.

Online gaming operators were the second top office space occupier in the first half of 2019, leasing 160,000 sq. m of office space, 119,200 sq. m of which in the second quarter alone.

“Pharmaceutical companies came as a surprise as a major demand driver to leased office spaces in 1H19, taking up an estimate of 45,100 square meters mainly due to their expansions within Metro Manila. Fourth top office space occupier for 1H19 are flexible workspace operators leasing 14,400 square meters of office space in Metro Manila,” JLL said.

In light of the national government’s moratorium on the processing of PEZA applications in Metro Manila, Colliers urges developers to pay attention to the demand of non-outsourcing occupants since these entities are not entitled to the tax incentives given to economic zone locators. “Developers should specifically watch out for the requirements of insurance, financial technology (fintech), engineering, construction firms as well as flexible workspace operators,” the firm said in its report.

Meanwhile, offshore gaming firms are encouraged to consider newly opened office spaces in Ortigas Center, while cost-sensitive non-ousourcing tenants, including government agencies and start-ups, may want to explore buildings in Quezon City that offer cheaper lease rates compared with those in Makati Central Business District and Fort Bonifacio. — Francis Anthony T. Valentin

Rethinking workspaces for employees’ well-being

Workplaces have been modified through time, from the open office to cubicles to coworking spaces. Much more at this present time have workspaces been rethought and redefined to cater to the overall well-being and productivity of employees, especially those who are yet to enter the workforce.

“Designers are now creating inspirational, fun workplaces which promote health and well-being among users. This has a direct effect on job satisfaction and engenders pride in employees as well,” observed Mustafa Khamash, founder and managing director of luxury design atelier Kart Group, in an article from the Architecture Digest.

Prioritizing the well-being of employees in creating or remodeling workspaces has become a trend in itself. As Office Hub online office space marketplace observed on its web site, enhancing both physical and mental well-being of employees is at the forefront of business owners’ minds, aiming to increase their morale, reduce sick days, and inspire infectious productivity within the workspace.

Another notable trend transforming today’s offices is breakout zones. Created to drive experiences further within the usual work, these breakout zones can be in the form of meditation spaces, yoga studios, rooftop terraces, massage rooms, games areas, and lounges. According to online office space marketplace Office Hub on its web site, breakout areas “create a casual and relaxed environment that is more conducive to conversation, communication and creativity.”

“Far from fueling distraction, this office design trend tells employees that they’re welcome to bring their true selves to work — the concept that hundreds of coworking spaces harness today — and that they are trusted to be productive even without the confines of a cubicle,” Office Hub added.

Biophilic design is also another interesting trend in workspace design, which many workplaces are starting to adapt. Coming from the concept of “the human desire to connect with nature and to draw comfort from green spaces”, biophilic design brings nature indoors, as evident in the incorporation of greeneries into offices, be it live walls, landscaped gardens, or indoor plants.

Space Matrix, a design consultancy speacializing in workplace design, said on its web site that biophilic design will be less of a trend and more of a necessity in people-centric workplaces. “Futuristic offices will incorporate greenery right into the architecture of their buildings, and mimic nature as closely as possible when it comes to light, sound, smells and thermal conditions,” it added.

Not only does biophilic design integrate living forms in what used to be apparently concrete areas, but it is also poised to enrich productivity among employees. This was proven by a report by carpet tile manufacturer Interface, Inc., which indicated “an increase of eight percent in productivity and 13% in well-being from those working in offices with natural elements, proving the importance the biophilic trend will have in years to come.”

Characterized by lightweight and easily moveable furniture, wall dividers, and whiteboards on wheels among many others, dynamic space structures are also another way workspaces are being transformed. According to Office Hub, dynamic workspaces “can help minimize build costs, maximize space efficiency of small offices, and keep businesses adaptable to advances in technology.”

“By switching up the monotonous office layout, you can give staff an environment that is always fresh and interesting — which has an incredible effect on idea generation, productivity, and mindset,” it added.

Moreover, aged textures are being favored in today’s sleek workspaces. “Stark minimalism is fast being replaced by earthy touches that give a space a cheerful, lived-in look,” wrote Space Matrix. Examples of these “earthy touches” include wood beams, exposed ducts, handcrafted textiles, carefully curated interior accessories, bespoke furniture, and artisanal products.

Amid the popularity of collaborative and interactive workspaces, there are still professionals who prefer to do their work autonomously on a quiet desk. In fact, a recent report by Office Hub noted that “70% of Australian businesses moving to a shared workspace in 2018 chose a private office over a coworking desk.”

Adding personal touches of home is also another interesting way of reinventing workspaces. This is characterized by features such as wide-screen televisions, fridges, softer lighting, and comfier sofas. “Homestyle characteristics are already the DNA of the world’s most cutting-edge coworking spaces — in 2019, it will translate more to conventional office design,” noted the office space web site. — Adrian Paul B. Conoza

The Latest Trends Influencing Philippine Office Space Changes

Over the last decade, the only constant in the workspace sector has been change. In the Philippines and across the world, the way we work is revolutionizing everything about the way we do business — down to our workspaces. Static, expensive, conventional workspaces with out-of-date facilities are not going to cut it for today’s workers. The expectation is to work in offices as inspired as the ideas generated by the people within.

It’s easy to see how a captivating, well-conceived interior can inspire creative thinking and productivity. Elements as simple as plants can not only improve productivity, but one of many studies have shown that they can also improve perceptions of air quality, workplace satisfaction, and cognitive function. The addition of the latest business technology will also help employees be more productive and keep information secure.

Beyond productivity, coworking spaces offer employers savings on lease costs and the power to decide how much space they lease, and for how long — options not previously available through traditional property rental agreements. Eco-conscious companies can also reduce their negative impact on the environment, while also helping to improve work-life balance, by reducing commute times with coworking spaces. Employers also have the opportunity to attract talents and adapt to the changing market, something that is invaluable to companies looking to expand their footprint. Given the median age of the workforce is 23 years old, according to National Statistical Coordination Board (NSCB) data, companies need coworking spaces to attract a younger talent pool.

As millennials take up a greater portion of the workforce, their needs and motivations are reshaping how workplaces are structured. In an annual global survey of business professionals conducted by IWG plc, the holding group for Spaces, 82 percent of Filipino respondents considered flexible working to be the new normal and 54 percent reported working outside their company’s main locations half the week or more. These responses exceeded global averages providing clear evidence of the changes underway in the country. A promising development of the nation’s start-up ecosystem is also a key contributor to the growing popularity of coworking spaces.

The government has taken notice of this growing trend, passing a bill in May 2019 to amend the Labor Code to allow flexible working arrangements. As a result, employers in the Philippines, and across the region, are seriously considering the potential business and workplace culture benefits of offering these types of arrangements. When metropolitan areas are overflowing with start-up talent, an ambitious freelance workforce and an endless stream of commuter traffic, like we have seen here, the conditions are ripe for a boom in flexible working. Coworking Resources estimates that memberships with flexible workspace providers in the Asia-Pacific region are growing at an average of 40 percent — outpacing the global average.

This is why Spaces’ cutting-edge, vibrant office spaces are making their mark on major Asian cities. Our World Plaza facility in Manila was recently awarded the 2019 PropertyGuru Philippine Property Award for the “Best Co-Working Space” in the country for its signature Scandinavian-inspired design. These dynamic workspaces attract a like-minded community of professionals who are open-minded and share an entrepreneurial spirit. Workspaces, like the World Plaza facility, facilitate socializing with design features meant to foster new connections and encourage new ways of working and interacting with other businesses. These stylish business clubs truly involve people in the buzz and energy of Spaces, and make them feel at home with hospitality services that include a café with freshly-baked pastries and expert baristas.

Our team makes members feel right at home, not just by helping professionals make new connections, but also by paying attention to the details so that they can focus on growing their businesses. In addition to providing fresh, healthy meals, Spaces also takes care of IT, postal and printing services, dry-cleaning, and even provides a Spaces bike members can take out for a ride. Spaces locations also host a full program of professional events, such as meet-ups and networking and learning sessions organized by local groups including Connected Women, FLAIR Image Consultancy and Young Professionals Committee of the European Chamber of Commerce of the Philippines (ECCP).

These elements are all part of the free-spirited, energetic environment Spaces cultivates to serve a like-minded community of future business leaders. Regardless of the business needs, our high-quality workspaces can be configured to meet them in an inviting, inspirational atmosphere, and there is definitely something to be said about working somewhere that could be on the cover of a magazine.

As the Filipino business community adapts to the rapid changes in how and where people work, Spaces can help to cultivate the growth of the local start-up community and allow employers to offer flexible workspace options to attract the best of today’s talent. The trends influencing office changes in the Philippines will only continue its push forward and Spaces is at the forefront of bringing people and ideas together so they can be on the lookout for new opportunities to thrive.

For more information, contact +632 669 2700 or visit https://www.spacesworks.com/.

SteelAsia chairman is Entrepreneur of the Year Philippines

BENJAMIN O. YAO, chairman and chief executive officer (CEO) of SteelAsia Manufacturing Corp. (SteelAsia), the Philippines’ flagship steel firm, was named the Entrepreneur Of The Year Philippines 2019 in an awards banquet held last night at the Makati Shangri-La hotel.

Mr. Yao will represent the country in the prestigious World Entrepreneur Of The Year awards in Monte Carlo, Monaco in June 2020.

Mr. Yao was recognized for championing the steel industry in the Philippines. Mr. Yao’s inspiration, leadership and focus on transformation and disruption have made SteelAsia the Philippines’ flagship steel firm and among the largest rebar manufacturers in Asia. With presence across the archipelago, its annual production reaches over 2 million metric tons, serving over 2,000 customers, including the country’s biggest property developers.

Mr. Yao also received the Master Entrepreneur award for applying sound management practices in critical areas of the company including finance, business development, marketing, human resources and sales.

As part of Mr. Yao’s aim to elevate the Philippine steel industry and reduce dependence on imports, SteelAsia has established state-of-the-art facilities to manufacture H beams, sheet piles and other steel products that were previously all imported. He is also working on a new joint venture to bring in the first blast furnace to the Philippines.

Other award categories were Woman Entrepreneur, Emerging Master Entrepreneur and Small Business Entrepreneur.

Esther Wileen S. Go, president and CEO of MediLink Network, Inc., received the Woman Entrepreneur award for leveraging on her love for technology and her experience in healthcare operations when she took over her father’s small technology company which provided automated health coverage eligibility verification services. Through a series of strategic innovations, she transformed MediLink into an industry-leading, award-winning healthtech provider that also offers data mining and machine learning solutions.

Jose P. Magsaysay, Jr., chairman Emeritus of Cinco Corp., received the Emerging Master Entrepreneur award. Mr. Magsaysay started Potato Corner with his partners in 1992 to make money on the side. By experimenting with a franchising business model and making business owning accessible, the company’s network has grown to over 1,000 kiosks, including 200 outlets in 11 countries. Today, it is diversifying its brand line-up by launching food items that cater to various markets.

Rolandrei Viktor E. Varona, founder of Zark’s Food Ventures Corp., was named the Small Business Entrepreneur. His determination to have his own restaurant and capture the young market with savory burgers inspired him to establish Zark’s Burgers in 2009. Zark’s Burgers became the standard for affordable quality burgers and a go-to restaurant for Filipino youth. In just 10 years, Zark’s Burgers has grown from a humble 16-seater outfit to a franchise powerhouse boasting 60 branches nationwide.

The recipients of the category awards were chosen from among 15 finalists representing enterprises from diverse industries from various regions in the country.

The other finalists were: Alexander M. Cruz (XRC Mall Developer, Inc.), Beverly M. Dayanan (Contempo Property Holdings, Inc.), Miguel C. Garcia (DTSI Group, Inc.), Alvin S. Hing and Paul T. Holaysan (Excelsior Farms, Inc.), Henry Lim Bon Liong (SL Agritech Corp.), Olivia Limpe-Aw (Destileria Limtuaco & Co., Inc.), Sindulfo L. Sumagang (Oneworld Alliance Logistics Corp.), Regan C. Sy (Regan Industrial Sales, Inc.), Necisto U. Sytengco (SBS Philippines Corp.) and Aivee A. Teo (The A — Institute).

SGV Chairman and Managing Partner and SGV Foundation Chairman J. Carlitos “Itos” G. Cruz emphasized the importance of disruption and transformation, saying that, “Today’s age of transformation has given entrepreneurs vast opportunities for growth; but at the same time, it exposes businesses to various risks and uncertainties. To help us navigate through this era of disruption, we need visionaries who can leverage on new digital platforms and provide people with a clear purpose.”

All nominees went through a strict financial data ranking system used by all Entrepreneur Of The Year participating countries.

The finalists were evaluated further by an independent panel of judges composed of distinguished business personalities. The panel was co-chaired by Antonette C. Tionko, Undersecretary of Revenue Operations Group and the Corporate Affairs Group of the Department of Finance; and Ambassador Jesus P. Tambunting, OBE, chairman of Capital Shares Investment Corp. and 2009 Entrepreneur Of The Year Philippines. The other panel members were Ramon S. Monzon, president and CEO of The Philippine Stock Exchange, Inc.; Rizalina G. Mantaring, president of the Management Association of the Philippines; Reynaldo D. Laguda, executive director of Philippine Business for Social Progress; and Natividad Y. Cheng, chairperson and CEO of Multiflex RNC Philippines, Inc. (URATEX) and 2017 Entrepreneur Of The Year Philippines.

The Entrepreneur Of The Year was founded in the United States by professional services firm EY in 1986 to recognize the achievements of the most successful and innovative entrepreneurs worldwide. In 2001, EY expanded the program and launched the World Entrepreneur Of The Year awards.

In the Philippines, the SGV Foundation, Inc. established the Entrepreneur Of The Year program, in 2003.

Jollibee Foods Corp. Chairman and CEO Tony Tan Caktiong, the first ever Entrepreneur Of The Year Philippines, went on to win as World Entrepreneur Of The Year 2004 in Monte Carlo, Monaco.

Socorro Cancio-Ramos, founder of National Book Store, was named Entrepreneur Of The Year Philippines the year after and, followed by Lance Y. Gokongwei, President and CEO of Cebu Air, Inc.; Senen Bacani, chairman and president of La Frutera, Inc.; Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corp.; Jesus Tambunting, then former chairman and President of Planters Development Bank; Tennyson Chen, president of Bounty Fresh Foods, Inc.; Erramon I. Aboitiz, president and CEO of AboitizPower Corp.; Jaime I. Ayala, founder and CEO, Hybrid Social Solutions, Inc.; Ben Chan, chairman of the Board of Suyen Corp.; Nico Jose S. Nolledo, chairman and CEO of Xurpas, Inc.; and Natividad Cheng, chairperson and CEO of Multiflex RNC Philippines, Inc.

Supporting the program as co-presenters are the Department of Trade and Industry, the Philippine Business for Social Progress, and the Philippine Stock Exchange. Official airline is Philippine Airlines. Media sponsors are BusinessWorld and the ABS-CBN News Channel. Banquet Sponsors include Global Ferronickel Holdings, Inc.; International Container Terminal Services, Inc.; Jollibee Foods Corp.; Manny O Wines; Multiflex RNC Philippines, Inc.; Robert Blancaflor Group, Inc.; Udenna Corp.; Universal Harvester, Inc.; and Vista Land & Lifescapes, Inc.

Remittance data bare Q3 spending lift

By Luz Wendy T. Noble

MONEY SENT HOME by overseas Filipino workers (OFW) grew for the second straight month in August — by a slower pace than in July, although it was still a turnaround from the year-ago slump — according to data the Bangko Sentral ng Pilipinas (BSP) released on Tuesday.

Economists said July’s and August’s increases bode well for household spending, which fuels about 70% of gross domestic product (GDP). The Philippine Statistics Authority will report third-quarter GDP data on Nov. 7.

OFW cash remittances grew 4.6% to $2.589 billion in August from $2.476 billion a year ago, and by 0.31% from July’s $2.581 billion, central bank data showed.

August’s increment was smaller than July’s 7.5% but was still a turnaround from the 0.9% reduction recorded in August last year.

Personal remittances, which include inflows in kind, rose 4.2% year-on-year to $2.875 billion in August, also slower than July’s 7.2% but still turning around from the 1.4% contraction recorded a year ago.

Sought for comment, UnionBank of the Philippines Inc. Chief Economist Ruben Carlo O. Asuncion noted that “July remittances were equally robust as the August print and September may also be positive.”

“Thus, three months of robust remittances growth will consequently bode well for domestic demand and consumption,” he said in an e-mail.

For Security Bank Corp. Chief Economist Robert Dan J. Roces, however, household consumption alone will be “hard-pressed” to drive overall economic growth amid “slowing capital formation and government spending.”

“Nonetheless, we see a sustained uptick in the coming months as the holiday season approaches and, thus, we maintain our full-year cash remittance forecast at $29.5 billion” compared to 2018’s $28.943-billion cash inflows.

The country’s GDP growth clocked in at dismal 5.5% in the second quarter against the government’s 6-7% target for full-year 2019, due largely to late enactment of the P3.662-trillion national budget that left new projects unfunded.

On a year-to-date basis, cash remittances rose by 3.9% to P19.908 billion as of August from P19.057 billion in last year’s comparative eight months, while personal remittances increased by 3.6% to P21.995 billion from P21.223 billion.

The same comparative eight months saw cash remittances from land-based and sea-based workers rising by 2.8% and 8.2% to $15.5 billion and $4.3 billion, respectively.

US remained the dominant source of OFW remittances with a 37% year-to-date share. The other main sources were Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Germany and Kuwait with a combined 78.4% share.

IMF cuts Philippine growth forecasts anew

THE INTERNATIONAL MONETARY FUND (IMF) has slashed further its gross domestic product (GDP) growth projection for the Philippines, adding to other groups that now expect the economy to miss the government’s targets for this year and 2020.

According to the October issue of the IMF’s World Economic Outlook, titled “Global Manufacturing Downturn, Rising Trade Barriers,” the Philippines’ gross domestic product (GDP) is now projected to grow by 5.7% this year from the six percent it gave in July, the 6.5% forecast it penciled last April, as well as 6.6% and 6.7% given in October and September last year.

GDP clocked in at 6.2% last year, and is targeted by the government to pick up to 6-7% this year and then to 6.5-7.5% in 2020 and 7-8% in 2021-2022.

For 2020, the IMF expects Philippine GDP growth at 6.2% from the 6.3% it gave in July and from its earlier projection of 6.6%.

It also gave a 6.5% projection for 2024.

The Philippines’ projection is a tad lower than the 5.9% given for Emerging and Developing Asia for this year, but better than the region’s six percent for 2020 and 2024.

But it is better than the 4.8% and 4.9% 2019 and 2020 projections for the five biggest developing Southeast Asian countries. In this group, only Vietnam will outpace the Philippines with a 6.5% forecast for both years. Indonesia (five percent and 5.1%), Thailand (2.9% and three percent) and Malaysia (4.5% and 4.4%) have lower projections.

The report, which cited the Philippines and China as Asia’s “significant reformers”, said “[g]rowth in 2019 has been revised down across all large emerging market and developing economies, linked in part to trade and domestic policy uncertainties.”

“Downside risks to the outlook are elevated. Trade barriers and heightened geopolitical tensions, including Brexit-related risks, could further disrupt supply chains and hamper confidence, investment and growth,” it added.

“Such tensions, as well as other domestic policy uncertainties, could negatively affect the projected growth pickup in emerging market economies and the euro area.”

Other multilateral lenders have scaled down their GDP projections for the Philippines, with Asian Development Bank slashing it to six percent and 6.2% for 2019 and 2020 (from 6.2% and 6.4% previously); and the World Bank giving a 5.8% projection this year, 6.1% for 2020 and 6.2% 2021 (from 6.4% for 2019 and 6.5% for both 2020 and 2021).

Other outfits have slashed their forecasts as well, with ASEAN+3 Macroeconomic Research Office downgrading its 2019 and 2020 forecasts to six percent and 6.4%, respectively (from 6.3% and 6.5% previously); S&P Global Ratings trimming it down to six percent and 6.2% for 2019 and 2020, respectively (from 6.1% and 6.4%). MOODY’s Investors Service also slashed its projection to 5.8% for 2019 from six percent previously.

“One of the biggest factors is low investment due to slower government spending, a result of the delayed national budget. The weak external environment because of the trade conflict may also have been cited but export performance has been positive. However, the softer import performance this year has been a confirmation of lower government expenditure,” UnionBank of the Philippines Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort pointed out in an e-mail that “[t]he declining trend in both local inflation and local interest rates have kept some consumers, businesses/investors, government and other institutions on the sidelines earlier this year, while waiting for interest rates to go down further, before they become more aggressive in their borrowings/financing… as manifested by relatively slower growth in loans and domestic liquidity/M3.”

For his part, Bank of the Philippine Islands Lead Economist Emilio S. Neri cited growing risks to global economic activities. “Global headwinds have been more forceful than many economists had expected with surprises from Hong Kong, Great Britain and of course the unexpected magnitude of escalation of protectionist policies worldwide,” he said in an email to BusinessWorld. “With threats of weaker performance in agriculture and food manufacturing resulting from the collapse of rice farmgate prices and the weaker performance of the livestock sector due to the African swine fever, a catch-up in government spending and improvement in private sector confidence even becomes more crucial. The safety nets for the rice farmers need to be rolled out more quickly to cushion the impact of falling incomes.”

In the face of delayed government spending due to the three-and-a-half month delay in 2019 national government enactment last Apr. 15, ING NV-Manila Nicholas Antonio T. Mapa is of the view that household consumption may have to do the heavy lifting to cushion slow investment activity. “Thus, the economy will have to bank on household consumption to do the heavy lifting and offset still-likely subdued investment activity while government spending looks to rebound after the budget was finally passed… Fortunately, inflation has decelerated quickly to give consumption a power boost while latest government spending data have returned to growth. — Luz Wendy T. Noble

BSP slashes mandatory bond reserve

THE BANGKO SENTRAL ng Pilipinas (BSP) has moved to make local bonds issued by banks and quasi banks (QBs) more attractive to investors by reducing the reserve requirement rate (RRR) for such debt by 300 basis points from six percent currently, effective Nov. 1, according to an official statement on Tuesday.

“The Monetary Board approved the reduction in the reserve requirement rate for bonds issued by banks/QBs to three percent as part of its commitment to contribute to deepending of the local debt market,” the BSP said in its news release, noting that the new rate will be lower than reserves mandated for other debt instruments issued by banks like long-term negotiable certificates of time deposits (LTNCDs) currently at four percent.

“The lower bank reserves on bond issuances is expected to reduce bond issuers’ intermediation cost that could be passed on to holders of such securities,” the central bank explained.

The BSP said this latest move complements its streamlining of rules and requirements for banks’ and quasi banks’ issuance of debt instruments.

“These initiatives are intended to incentivize banks/QBs to tap the domestic bond market as part of liquidity management,” the central bank said.

FOR BANKS AND INVESTORS
Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the bond RRR cut “effectively reduces banks’ intermediation costs that would provide banks greater leeway to increase commensurately interest rate returns or yields paid to bondholders, effectively giving greater incentives for investors to put more money on bonds issued by banks.”

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said “[t]his will provide financial institutions more room to access credit markets.”

“This will provide more liquidity to financial firms and more funds means more opportunities for expansion and economic activities,” he explained in an e-mail.

The move is also a way for the BSP to encourage banks to opt for bonds as a funding source, according to ING NV-Manila senior economist Nicholas Antonio T. Mapa.

“BSP is looking to prod banks to source funding via bond issuances and wean them from LTNCDs, with the central bank looking to halt fresh issuances of the instrument in the near term,” Mr. Mapa said in an e-mail, noting that LTNCDs are currently tax-exempt. — Luz Wendy T. Noble

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