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PFA holds Franchise Expo in SM Bacolod

Get ready to explore boundless franchise opportunities! Organized by the Philippine Franchise Association — the country’s pioneer and the only internationally recognized franchise association, the Franchise Negosyo para sa Negros Expo is finally here, opening tomorrow, Oct. 4, at SM City Bacolod, North Wing Atrium! This highly anticipated two-day event runs from Oct. 4-5, 2024, and is set to be the ultimate destination for aspiring entrepreneurs, business owners, and franchise enthusiasts across the region.

The expo will feature over 30 exhibitors, proudly representing over 200+ brands from the food, retail, service, and allied services sectors, all in one place for you to explore. Whether you’re looking to invest in a franchise or thinking of expanding your existing business, this event is designed to provide essential insights and connections.

Participating brands are 7-Eleven, Ate Rica’s Bacsilog, Buko Twist, Canadian Tourism and Hospitality Institute, Carrier, Cocolo Express, Famous Belgian Waffle, Figaro, Francorp, Gamot Publiko, Grainsmart Cafe, Kurimi, Livingwater, LT&G Credit Line, Macao Imperial Tea, Master Siomai, M-Gas, Miguelitos Food Service, Miguelitos Ice Cream, Minute Burger, Mister Donut, Mitsubishi, MLhuiller, Momo Egg Drop, Moonleaf, Mr. Lemon, Mr. Potato, Oryspa Spa Solution, PLDT Enterprise, Potato Corner, Seaoil, Shell, Siomai House, The Hungry Pita, The Lemon Co., The Shawarma Shack, U-Franchise Sales and Management, Union Bank, and Villa Tuna.

Exciting Seminars Await!

Visitors can also participate in a series of powerful seminars that will equip them with the tools and knowledge needed to succeed in the franchise world:

How to Invest in the Right Franchise (FREE seminar)

A seminar for would-be franchisees that is aimed to educate the public on wise franchise investment. Meant for people looking to start a business or diversify their investment via franchising such as OFWs, existing and aspiring entrepreneurs, business owners, etc.

How to Franchise Your Business (Paid seminar)

A seminar for existing business owners looking to expand their brand via franchising, this seminar will discuss the steps in turning a local business into a successful franchise.

Franchise Forum: From Micro to National — Scaling Strategies for Business Success (FREE seminar)

A forum aimed to equip participant, especially the MSMEs, with the knowledge and tools needed to scale their businesses from a micro level to a national level. This seminar will feature top-notch industry leaders:

Ms. Sherill Quintana, Founding President and CEO of Oryspa

Mr. Marco Antonio Soliman, President and CEO of LT&Credit Line

Mr. Walther Buenavista, President and CEO of Shawarma Shack

Learn from the best in the industry and hear their success stories in this exclusive forum!

6 STEPS to a Better Business Seminar (FREE seminar)

With Coach Joo Caparas, you will discover the best strategies to unlock potential growth, increase profitability, build a winning team, and maximize your time with ActionCOACH’s 6 Action-Oriented Steps to a Better Business.

This is an incredible opportunity to learn, grow, and be part of the flourishing franchise ecosystem. Whether you’re taking your first steps as an entrepreneur or aiming to scale your business, the Franchise Negosyo para sa Negros Expo promises something for everyone.

The future of your business journey begins here! See you at SM City Bacolod tomorrow for an event that could change the way you do business! Registration to the expo and most of the seminars is FREE and open to the public. Attendees are encouraged to register online to reserve seats for the seminars as spots are limited.

Franchise Negosyo para sa Negros is made possible with the support of DTI Region VI, Metro Bacolod Chamber of Commerce and Industry (MBCCI), Overseas Workers Welfare Administration (OWWA), SM City Bacolod, SM Supermalls, GCash for Business, PLDT Enterprise, Park Inn by Radisson Bacolod, Carrier The Air Authority, Grainsmart Café, Living Water, Miguelitos Ice Cream, Macao Imperial Tea, Mitsubishi Motors, Francorp, U-Franchise, Shell, UnionBank, Net 25 Eagle Broadcasting Corp., BusinessWorld, Business Mirror, Mega Mobile (Inquirer Mobile), Asia Journal / Balikbayan Magazine, The Philippine Star, and Philippine Daily Inquirer.

For more information, visit our website https://www.pfa.org.ph/event-details/negros.

 

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Verde Island Passage, the ‘Amazon of the Ocean,’ eyes World Heritage Site status

The Verde Island Passage (VIP), known as the “Amazon of the Ocean” for its highest concentration of marine shorefish biodiversity, is now poised to become a UNESCO World Heritage Site.  

“We believe that this status would not just spotlight the VIP… It would also add another layer of protection to secure the VIP’s very important ecosystems,” Martha Vergara, OIC Deputy for oceans and climate at the Center for Energy, and Development (CEED) said during the media conference last Friday.  

The VIP is situated in a strait that separates the islands of Luzon and Mindoro, where over 1736 overlapping species coexist in just a 10 sq. km area.  

According to an analysis by Prof. Kent Carpenter, a marine biologist, and other scientists who studied the waters of countries within the Coral Triangle, discovered that the VIP is the epicenter with “the highest concentration in the world of marine species,” Mr. Carpenter said. 

It is also home to 50% of marine species in the Indo-Pacific region, he added 

Apart from its rich biodiversity, the VIP is also a lifeline for two million residents who rely on it for fishing and tourism. 

According to CEED, the strait generates about P12 Billion in annual income from fishing alone, which residents of the provinces of Batangas, Marinduque, Occidental and Oriental Mindoro, and Romblon rely on.   

Despite its ecological and economic significance, the VIP is facing increasing threats from various anthropogenic activities, including those caused by the shipping industry, energy expansion, fossil fuel extraction, and climate change. 

“They put pressure on the fragile ecosystems in the VIP,” Ms. Vergara said.  

The following anthropogenic activities, along with the devastating 2023 Mindoro oil spill, have resulted in damages worth P41.2 billion, according to CEED.  

Designating the VIP as a World Heritage Site will not only affirm its global significance but also rally support for its protection, CEED said.

 

No fisherfolk left behind

As the bid for the VIP to become a World Heritage Site is underway, the issue of poverty among fishermen should also be addressed, a community advocate said.  

“It’s a prerequisite to help alleviate poverty in the island and all the communities in the VIP to secure its protection,” Gela Petines, Founder of Batang VIP said during the media conference last Friday.  

Ms. Petines is a community advocate for Barangay San Andres, a community in Isla Verde, Batangas.  

Despite the community living near the center of marine shorefish biodiversity, Ms. Petines said many households still fall below the poverty line, earning less than P5000 a month.  

“It is the center of the richest marine biodiversity but why is it also home to the poorest of the poor, it does not make any sense,” she said.  

The poverty on the island has been further worsened by the drastic decline in fishermen’s catch in recent years, forcing them to sail farther and into deeper reefs. 

The decline in fish catch has been caused by the surge in the island’s population, climate change, pollution, industrial activities, and typhoons, Maximo Bayuba, fisherman and the Vice President for external affairs for Bukluran ng Mangingisda sa Batangas said.  

“Noong una nakakahuli kami in one-night mayroong 25 kilos hanggang 30 kilos. Ngayon ang nahuhuli namin at nahuhuli ng mga anak ko ay meron lang higit isang kilo, meron lang maiuulam ang isang pamilya [At first, we used to catch 25 to 30 kilos in one night. Now, what my children and I catch is just over a kilo, barely enough for one family’s meal,” Mr. Bayubay said.  

Some fishermen in VIP even practice compressor fishing, where they dive to at least 40 feet underwater, taking in air from an air compressor powered by their boat. 

This fishing practice is discouraged on VIP due to the risk of decompression sickness or illness, which could potentially lead to death. 

“It is not something that they want to do, it is just out of necessity,” Ms. Petines said.  

In a 2021 report released by the Philippine Statistics Authority (PSA), fisherfolk recorded the highest poverty incidence at 30.6%.  

This is followed by sectors such as farmers (30%), children (26.4%), and individuals residing in rural areas (25.7%). 

“These sectors had the highest proportion of individuals belonging to families with income below the official poverty thresholds compared to the other basic sectors,” PSA said in a statement.  

Ms. Petines also noticed that the dropout rate in Brgy. San Andres is notably high.  

In her conversation with the children, they usually say “Marunong na akong mangisda [I already know how to fish],” prompting them to leave school as early as Grade 3, often around the age of 10.  

If VIP becomes a World Heritage Site, Ms. Petines and Mr. Bayubay hope for support to help communities transition to sustainable livelihoods that are both financially and environmentally sustainable. 

This is in light of potential stricter fishing regulations to protect VIP’s marine biodiversity.  – Edg Adrian A. Eva

Freeport Area of Bataan gears up to lead Asia’s blockchain industry

The Freeport Area of Bataan (FAB) is poised to become one of the key blockchain hubs in Asia, with significant developments already underway. 

The FAB is a 1,700-hectare trade hub located in Mariveles, Bataan, serving as the Philippines’ center of trade and a key transit point for domestic, regional, and global shipping. 

Apart from being a trading hub, it is also a manufacturing center for various global industries, such as lenses, luxury brand accessories, sports equipment, and more, providing nearly 40,000 jobs within the region.  

Under the mandate of RA 11453, the FAB is positioned to become the country’s hub for emerging and future technologies like blockchain.  

“We also look to the future as allowed by amended charter, apart from manufacturing. We now additionally cover Bataan as a home for the global blockchain industry,” Mohammed Hussein Pangandaman, CEO of the Authority of the Freeport Area of Bataan (AFAB) said during the 2nd day of the 2024 Global Block Chain Congress held in Bataan.  

Five years after the implementation of RA 11543, Mr. Pangandaman highlighted key developments, including the release of the Offshore Digital Assets License (ODAL) Policy last year. 

The key points of the ODAL policy include the licensing of blockchain-related industries based on the nature of their activities, divided into three categories.  

Class 1 includes digital asset exchanges, trading activities utilizing blockchain technology, and similar operations. 

Class 2 covers digital asset token offerings, and crowdfunding activities such as Security Token Offerings, Initial Exchange Offerings, Utility Token Offerings, and related activities. 

Class 3 encompasses allied activities that use technology to facilitate the transfer, storage, or generation of virtual assets, as well as payment solutions and digital wallet service providers, among others. 

Meanwhile, the accreditation of local service providers is also included in the ODAL Policy such as customer support, R&D and technical support, cybersecurity services data center, and similar activities aimed at supporting blockchain-related operations.  

“Starting this year, we have already accepted applications for the Offshore Digital Assets License (ODAL) and have already approved a Class 1 license and a local service provider,” Mr. Pangandaman said.  

Mr. Pangandaman also emphasized the development of office spaces in FAB, aiming to provide essential services such as virtual office addresses, phone numbers, hot desks, and temporary workspaces for emerging industries. 

“Work is now ongoing so that we can begin to offer you, office spaces around the middle part of next year. We have allocated half of our fourth-floor building for virtual offices and co-work spaces,” he added.  

Improved internet connectivity was also boasted as the rollout of the underground fiber optic cable network was already completed.  

“And we are now working to activate it with a bandwidth that will be responsive to the requirements of your industry,” Mr. Pangandaman said. 

Mr. Pangandaman noted that with the help of citizens and dialogue among various stakeholders, the AFAB’s mission of creating an environment where blockchain industries can thrive within a regulated network can be achieved. – Edg Adrian A. Eva

PH aviation sector catches up with “under-investment” in airport development

YOUSEF ALFUHIGI-UNSPLASH

The country’s aviation industry is catching up on the “significant under-investment in airport development over the years,” Transportation Secretary Jaime J. Bautista said on Tuesday. 

Mr. Bautista said the projects from the Department of Transportation (DOTr) will secure a sustainable future, and position the Philippines as the leading regional player in the aviation sector by 2028. 

“The Philippine aviation industry is on the cusp of a significant transformation,” he said. 

The recent developments in the aviation sector will produce economic growth for the nation, he added. 

“Airport expansion and upgrading primarily hinges on a continued rise in passenger traffic as well as those that exhibit growth potential measured by increased tourism and economic activities.” 

The rehabilitation efforts at the Ninoy Aquino International Airport (NAIA) will be followed by modernization of Tuguegarao, Bacon, Loakan, Daet, Cauayan, Vigan, and Candon airports, according to DOTr. 

Catbalogan, Dumaguete, Kabankalan, Calbayog, Zamboanga, Mati, M’lang, Jolo, Siargao, and Tandag airports in Visayas and Mindanao will also undergo improvements.  

“The rehabilitation and modernization of airports will lead to increase in passenger capacity, while generating employment and tourist arrivals,” the department said. 

Mr. Bautista cited the ‘critical initiatives’ of the Civil Aviation Authority of the Philippines (CAAP) on upgrading the country’s air navigation management. 

With the help of the Japan International Cooperation Agency (JICA), improvements in communications, navigation, surveillance/air traffic management (CNS ATM) systems will commence next month. – Almira Louise S. Martinez

IMF trims Philippine growth forecasts

People shop for school supplies at a market in Quezon City, July 28, 2024. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Luisa Maria Jacinta C. Jocson, Reporter

THE International Monetary Fund (IMF) trimmed its economic growth forecasts for the Philippines as elevated inflation is likely to continue weighing on domestic demand.

The multilateral institution cut the country’s gross domestic product (GDP) outlook for this year to 5.8% from 6% previously. It also now sees GDP expanding by 6.1% in 2025, a tad lower than the previous forecast of 6.2%.

The IMF’s growth estimates fall short of the government’s 6-7% and 6.5-7.5% GDP forecasts for this year and 2025, respectively.

“The downward revision from our July forecast mainly reflects our view that private consumption is going to grow slightly with less momentum,” IMF Mission Chief Elif Arbatli Saxegaard said at a press briefing on Wednesday.

“I would like to highlight that the downgrade is very small and reflects the fact that the first-half private consumption growth was lower than what we had anticipated, and this might be in part driven by the high food prices.”

The Philippine economy grew by 6.3% in the second quarter, the fastest growth in five quarters. However, household spending continued to be “anemic” as it rose by just 4.6% in the second quarter from 5.5% a year ago.

“With the ongoing efforts, including non-monetary efforts to reduce food prices and especially rice prices, we do think that this will be supportive of consumption growth going forward,” Ms. Saxegaard said.

She said that risks to the growth outlook are tilted to the downside, with risks stemming from an anticipated slowdown in major economies, commodity price volatility, supply shocks and geopolitical tensions.

“On the upside, an easing of global financial conditions or faster-than-anticipated private investment, for example, linked to the public-private partnerships or larger foreign direct investment (FDI) inflows could stimulate higher growth,” she said.

Ms. Saxegaard also noted its growth projections for the Philippines remain one of the highest in the region.

“It’s 6.1% growth for 2025 is a very respectable growth rate… so it’s a very small adjustment reflecting the outturn in the first half.”

She also noted that the Philippine economy “holds significant potential” in its natural resources, blue economy and demographic dividend.

“In our view, what will be very critical for the medium term is the potential to unlock this medium-term growth potential through comprehensive and well-sequenced structural reforms.”

Meanwhile, the IMF sees headline inflation averaging 3.3% in 2024 and 3% in 2025.

These are slightly lower than the Bangko Sentral ng Pilipinas’ (BSP) full-year forecasts of 3.4% and 3.1% for this year and in 2025, respectively.

“That would be supported by lower food and core inflation remaining well within the target,” Ms. Saxegaard said.

Ms. Saxegaard said that risks to the inflation outlook remain tilted to the upside due to recurring commodity price shocks and any potential supply shocks.

“We believe that the decisive monetary tightening and other measures have helped mitigate inflationary pressures in the Philippines, recent tariff cuts on imported rice and other non-monetary measures helped reduce food prices and should further reduce headline inflation by the year end,” she said.

‘GRADUAL REDUCTION’
The IMF said that the Philippine central bank can begin gradually reducing interest rates.

“With inflation already coming down to within the target band, also with inflation expectations coming down, and the opening of a small negative output gap, we do think that a gradual continued reduction in the policy rate is appropriate. That’s our current advice,” she said.

At its Aug. 15 meeting, the BSP began cutting interest rates for the first time in nearly four years. It reduced the benchmark interest rate by 25 basis points to 6.25% from the over 17-year high of 6.5%.

“The data-dependent approach and careful communication around policy settings will help manage expectations and uncertainty and more frequent supply-side shocks,” Ms. Saxegaard said.

IMF Representative to the Philippines Ragnar Gudmundsson said that the BSP should also take into account that there are still both upside and downside risks to inflation.

“This is why the data-dependent approach is very important. So, yes, there is loosening, but caution is still necessary in the coming months because of an uncertain environment,” he added.

Marcos signs law imposing 12% VAT on Netflix, Amazon

Philippine President Ferdinand R. Marcos, Jr. on Wednesday signed into law a bill taxing nonresident digital service providers (DSP) including Netflix and Amazon. — REUTERS

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. on Wednesday signed into law a bill taxing nonresident digital service providers (DSP) including Netflix and Amazon, from which it expects to collect P100 billion in the next five years.

Republic Act No. 12023, which amended the National Revenue Code of 1997, imposes a 12% value-added tax (VAT) on foreign digital service providers. A 5% VAT will also be slapped on registered foreign players providing services to the government.

The law covers online search engines, online marketplaces, cloud services, online media and advertising, online platforms, and any digital content providers.

However, digital services sold on a subscription basis to educational institutions recognized by the Department of Education, the Commission on Higher Education, and state universities and colleges will be exempted from the VAT policy.

“For the next five years, we estimate to collect P105 billion from this measure,” Mr. Marcos said in a speech during the ceremonial signing event in Malacañang. “This is enough to build 42,000 classrooms, more than 6,000 rural health units, 7,000 kilometers of farm-to-market roads.”

“With this law, we say that if your presence in the Philippine market is as real as your profits, then your tax responsibilities should also be equally tangible.”

The law requires nonresident DSPs to register for VAT payments if their gross sales or receipts for the past year have exceeded P3 million.

Under the law, 5% of VAT collections will be used for the development of the local creatives industry for five years.

Concerned agencies should come up with the law’s implementing rules and regulations (IRR) within 90 days of the law’s effectivity.

The Bureau of Internal Revenue should also establish an implementation system 120 days from the effectivity of the IRR.

Under the law, foreign DSPs should designate a representative office or agent in the Philippines.

At a briefing for Malacañang reporters, Bureau of Internal Revenue Commissioner Romeo Lumagui, Jr. said the government expects to generate more than P100 billion in revenues from VAT collections under the new law, citing revenue data of Google, Netflix, Spotify, and Amazon from website Statista.

“The thing is, since Statista is also limited, the DSPs there are not complete, so the revenues could be bigger,” Department of Finance Director Euvimil Nina Asuncion said at the same briefing.

Senate President Francis Joseph G. Escudero said there are currently no pending revenue-generating bills except the measure imposing an excise tax on single-use plastics.

The government aims to generate P4.27 trillion in revenues, including P3.83 trillion from tax collections, this year.

“The 12% tax though results in significant tax revenues may not still be enough to cover the rising needs of the government given a 10.1% increase in the proposed budget next year,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said in an e-mail.

He said the BIR’s P100-billion revenue projection from the digital services VAT may not be met as consumers may adjust or lessen their spending on digital services.

Before the law’s passage, Finance Secretary Ralph G. Recto had said the government had no plans to introduce new taxes apart from the reform measures that were pending in Congress at that time.

BIR’s Mr. Lumagui said the new law should not automatically translate to price increases since the Philippines is actually a laggard when it comes to imposing VAT on digital services.

In Southeast Asia, Singapore, Malaysia and Indonesia have started imposing a VAT on nonresident DSPs since 2020. Thailand followed suit in 2021.

“Note that they already have this in other countries. They have been complying — actually, we are late in the game, in collecting from our nonresident digital service providers,” Ms. Asuncion said, noting that the law would have no significant impact on the digital economy.

The digital economy’s share to the Philippines’ gross domestic product (GDP) went down to 8.4% last year from 8.6% in 2022, according to the Philippine Statistics Authority (PSA). This was the digital economy’s lowest share to GDP since 2018.

In terms of gross value added, the digital sector grew by 7.7% to P2.05 trillion in 2023.

Mr. Lanzona said the new law would have an impact on gig workers, potentially worsening the country’s employment and unemployment figures.

It could also lead to piracy of more digital content, he added.

The new VAT law is “just the latest regressive step in the country’s tax system, which is increasingly skewed towards indirect consumption taxes and away from more progressive direct taxes on income and wealth,” said IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa.

“The impact of consumption taxes like VAT on consumers is cumulative and should not be dismissed so lightly,” he said in a Messenger chat.

He explained the share of consumption taxes like VAT and excise taxes in total BIR tax revenues has increased from 26% in 2008 to 31% in 2023, “corresponding to higher prices paid by consumers.”

“Corporate taxes, however, fell from 37% to 22% over that same period, corresponding to increased corporate profits,” Mr. Africa said.

“The added burden on poor and middle-class consumers whose incomes are stagnant and whose savings are falling amid rising prices is grossly insensitive,” he said.

Consumer group SUKI Network said that even though the 12% VAT will be imposed on digital service providers, companies usually pass the charges on to consumers.

Boards greenlight wage hikes in three regions

A worker pours a sack of rice grains into a rice mill at Pilar town, Bataan province, north of Manila May 29, 2015. — REUTERS

By Chloe Mari A. Hufana, Reporter

REGIONAL wage boards have approved a hike in the daily minimum wages of workers in Cagayan Valley, Central Luzon and Soccsksargen, the Department of Labor and Employment (DoLE) said on Wednesday.

The move is expected to directly benefit 905,000 minimum wage earners across the three regions, starting on Oct. 17, the DoLE said in a statement.

“The new rates for workers in private establishments translate to about 7%-15% increase from the prevailing daily minimum wage rates in these three regions, and result in a comparable 7%-12% increase in wage-related benefits,” the department said.

The Regional Tripartite Wages and Productivity Board (RTWPB) in Cagayan Valley (Region II) greenlit a P30 wage increase, bringing the new minimum wage rate to P480 for non-agriculture workers and P460 for agriculture workers.

Region II is comprised of the provinces Batanes, Cagayan, Isabela, Nueva Vizcaya, and Quirino.

The wage board also approved a P500 monthly increase for domestic workers in Cagayan Valley, bringing the new monthly minimum wage to P6,000. The DoLE said this would benefit over 49,000 domestic workers, about 15% of them are on live-in arrangements, while 85% are on live-out arrangements.

The wage board in Central Luzon also granted a P50 to P66 hike in daily minimum wages, which will be given in two tranches.

For Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac and Zambales, the first tranche will take effect on Oct. 17. This will bring the minimum wage to P525 for non-agriculture workers, P485 for agriculture workers, and P515 for retail/service workers.

The second tranche will be implemented starting on April 16, 2025, bringing the daily wage to P550 for non-agriculture workers, P520 for agriculture workers, and P540 for retail/service workers.

In Aurora province, which has the lowest daily minimum wage in the region, wage hikes will also be implemented in two tranches. Starting on Oct. 17, non-agriculture workers will begin earning P475, while agriculture workers will receive P460 and those in retail/service will earn P410.

Starting on April 16, 2025, workers in Aurora will see wages go up to P500 for non-agriculture sector, P485 for agriculture sector, and P435 for retail/service sector.

For Soccsksargen, the wage board agreed to increase daily wages between P27 to P48. This covers workers in  South Cotabato, Cotabato, Sultan Kudarat, Sarangani, and the lone city of General Santos.

The region’s non-agriculture workers will see wages go up by P14 on Oct. 17, and by P13 on Jan. 1, 2025, bringing the new rate to P430.

Wages for agriculture workers will go up by P14 on Oct. 17, and by P14 on Jan. 1, 2025, bringing the rate to P410.

For service workers in Soccsksargen, the wage hike will be implemented in four tranches -—by P14 on Oct. 17, by P14 on Jan. 1, 2025, by P10 on April 1, 2025, and by P10 on June 1, 2025. This will bring the new rate to P430.

The RTWPB had last issued wage orders for workers in private establishments and domestic workers in the three regions on Oct. 16, 2023.

“The new minimum wage rates are well below what is needed for formal workers and their families to subsist,” University of the Philippines Diliman School of Labor and Industrial Relations (UP SOLAIR) Assistant Professor Benjamin B. Velasco told BusinessWorld in a Facebook Messenger chat.

“The Filipino word for a job is hanapbuhay– — which perfectly expresses [the] purpose of working, that is, to earn enough for a decent life. Instead, the system of wage regionalization has created an army of working poor. People work but remain poor,” he added.

Employers Confederation of the Philippines (ECoP) Governor Arturo “Butch” C. Guerrero III said he has not received “any violent reactions so far” from their members on this round of wage hikes.

“We were really expecting P25 on the first tranche [for Central Luzon],” he told BusinessWorld in a Viber chat. “And around P30 on [the second] tranche.”

Mr. Guerrero welcomed the wage hikes for the three regions, which is less than the P35 increase in daily minimum wages for workers in the National Capital Region.

Bukluran ng Manggagawang Pilipino (BMP) Mindanao Coordinator Roldan R. Gonzales said the wage increases are still not enough.

“Each increase in workers’ wages is a significant help in facing various daily crises, even if it is not enough,” he told BusinessWorld in a Facebook Messenger chat in Filipino.

“However, we continue to call for the abolition of the RTWPB and regional/provincial rates and the reinstatement of national wage rates. We urge the passage and implementation of the P750 legislated wage increase that is currently pending in Congress,” he added.

At present, there are pending bills in both chambers of Congress seeking a legislated wage hike.

The Senate earlier this year passed a bill granting a P100 wage hike, but the House of Representatives has yet to pass a similar measure. Proposals ranging from P100 to P750 remain pending at the House.

Federation of Free Workers President Jose Sonny G. Matula echoed the call for a legislated wage increase, calling the recent round of hikes “temporary and minimal relief” for laborers.

“While these incremental wage hikes may provide a slight improvement, they are far from sufficient to address the broader issue of rising costs and economic hardship faced by Filipino workers,” he told BusinessWorld in a Viber chat.

BSP may cut by 100 bps more this year

BW FILE PHOTO

THE BANGKO SENTRAL ng Pilipinas (BSP) may cut by a total of 100 basis points (bps) in the last three months of 2024, Fitch Solutions’ unit BMI said, amid a downtrend in inflation and the start of the US Federal Reserve’s own easing cycle.

“We expect the BSP to ease more aggressively over the coming months,” BMI said in a report.

“Crucially, we now forecast the Fed to cut by a total of 125 bps in 2024. On this projection, we think that the BSP will have more policy room to maneuver with a 100-bp cut of its own.”

If the BSP cuts by a cumulative 100 bps this year, this would bring the key rate to 5.5% by yearend.

BSP Governor Eli M. Remolona, Jr. earlier this week said that the central bank has room to deliver a 50-bp rate cut in one meeting, but this would only be in a “hard-landing” scenario.

The Monetary Board in August reduced the benchmark rate by 25 bps to 6.25% from 6.5%.

BMI previously projected two 25-bp rate cuts for the year but revised this outlook after the US Federal Reserve delivered a jumbo 50-bp cut in September.

“Such a move essentially provides the BSP with leeway to ease more aggressively,” it said.

BMI now expects the Monetary Board to deliver a 50-bp cut on Oct. 16 and another 25-bp cut on Dec. 19.

“We have highlighted that the economy is in need of support following second-quarter gross domestic product (GDP) data,” BMI said.

The Philippine economy grew by 6.3% in the second quarter, driven by the 11.5% expansion in gross capital formation. On the other hand, private consumption rose by 4.6% from 5.5% a year ago.

“The boost received from a surge in investment activity will prove difficult to sustain against the backdrop of high interest rates. In the face of an economic slowdown, policy makers will likely seek to unwind restrictive policy settings to bolster growth at the earliest possible time,” it added.

The government is targeting 6-7% growth this year. To meet the lower end of the target, the economy should expand by 6% in the second half.

“The BSP’s decision to lower interest rates ahead of the Fed is a sign that policy makers are starting to grow increasingly concerned about the economy’s health,” BMI said.

Easing inflation will help support further easing by the central bank, it said.

“For starters, inflation has become less of a concern. At 3.3% in August, the headline figure is now comfortably within the central bank’s target range of 2-4%.”

September inflation likely slowed to 2.5%, according to the median estimate in a BusinessWorld poll of 15 analysts conducted last week. If realized, this would also be the slowest inflation print in nearly four years or since the 2.3% clip in October 2020.

The recent tariff cut on rice imports is likely to lower inflation by 1.2 percentage points (ppts), which may bring inflation to 2.8% by end-2024,” BMI said. 

“What is more reassuring is that we think the Fed is set for another 50-bp cut in December, providing the BSP with more policy room to maneuver without external stability constraints. If we are right, nominal interest rate differentials between the two countries will be maintained at current levels of around 125 bps,” BMI said.

For next year, BMI said that the BSP will be able to continue on its easing cycle, likely cutting rates by a total of 100 bps.

“We expect the terminal rate to settle around 4.5%. This would represent 200 bps worth of cuts from the peak to the trough, bringing interest rates back to pre-pandemic levels,” it said.

It noted that this outlook is driven by anticipations of the Fed’s easing cycle to be in “full swing” by next year and expectations of inflation settling within the BSP’s 2-4% target range, barring any external shocks.

“Moreover, our 6.2% growth projection for 2025 is still below trend. And policy makers will look to lower rates further to bolster growth in the absence of additional constraints.”

The government is targeting 6.5-7.5% growth next year.

On the other hand, BMI flagged risks to its monetary policy outlook.

“While we are confident that the BSP will continue to loosen policy, we are less sure of its magnitude. The October meeting could very well conclude with just a 25-bp cut if policy makers adopt a more cautious approach towards easing following cuts in the reserve requirement ratio.”

The recent cuts in banks’ reserve requirement ratios (RRR) would give the central bank “less flexibility” to ease policy rates, BMI said.

The BSP last month announced it would reduce the RRR of banks and nonbanks, effective on Oct. 25. It will slash the ratio for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%.

“On top of that, our BSP forecast hinges on the Fed’s interest rate trajectory. If the Fed chooses to cut by 25 bps in December instead of 50 bps, the BSP could stand pat in December,” BMI added. — Luisa Maria Jacinta C. Jocson

Sowing the seaweeds of success

The EY Entrepreneur Of The Year 2024 Philippines has concluded its search for the country’s most visionary leaders shaping opportunities and transforming industries. It is a program of the SGV Foundation, Inc., with co-presenters: the Asian Institute of Management, the Department of Trade and Industry, the Philippine Business for Social Progress, and the Philippine Stock Exchange.

Ambassador Leehiong Wee
Chairman
W Group, Inc.

AMBASSADOR LEEHIONG T. WEE’S life story exemplifies the power of perseverance, vision, and entrepreneurial spirit.

From his early days of balancing a variety of jobs to support his family, to his ascent as the leader of the W Group, a multibillion-peso conglomerate, his journey embodies the quintessential rags-to-riches narrative.

Yet, it is his strategic foresight, commitment to innovation, and dedication to societal upliftment that set him apart as a paragon of entrepreneurial excellence.

“Being poor is a blessing,” said Mr. Wee whose early life was marked by financial hardship, but his resolve led him to pursue higher education against all odds.

Driven by his modest upbringing, he began his entrepreneurial journey at the age of 14, selling sweepstakes tickets to contribute to his family’s livelihood. At 16, he left Zamboanga on a ship bound for Manila, where he secured a job as a proofreader in a Quiapo printing press.

His tenacity shone through as he balanced a variety of jobs, from tutoring to the physical task of handling textile bales in Divisoria, all while attending night classes at the Mapua Institute of Technology, where he graduated with a degree in electrical engineering.

A potential academic future at the Massachusetts Institute of Technology (MIT) beckoned, but financial constraints and a sense of duty to his family led him down a different path. This decision would eventually pave the way for his success in the seaweed trading, export, manufacturing and processing industry.

Mr. Wee carved out a specialized segment within the seaweed processing industry by focusing on the extraction of carrageenan, a move that has had a significant impact on the sector and positioned the Philippines as a key player in the global carrageenan market. His stewardship has been instrumental in the growth of the W Group, which has diversified its portfolio to include a range of businesses, from food ingredients to real estate.

The group’s subsidiaries include W Hydrocolloids, Inc., a company that has been marketing and distributing high-quality carrageenan products throughout the world under the trade name, Rico Carrageenan. Another arm, the Marine Resources Development Corp. (MRDC), not only supplies carrageenan products within the Philippines but also invests in research and development to advance the industry.

Philippine Bio-Industries (PBI) stands out as Asia’s first fully automated facility dedicated to refined carrageenan production. Additionally, Cebu Carrageenan Corp. (CCC) focuses on processing and manufacturing seaweed chips, for distribution internationally and to its subsidiaries.

The W Group has also ventured into real estate through W Landmark, Inc. and First Marcel Properties, Inc., both of which are involved in property development projects.

The company’s dominance in the global seaweed market, holding a 40% share and anticipating 20% sales growth, speaks of Mr. Wee’s visionary approach. His strategic expansions into Indonesia and the pharmaceutical sector, along with efforts to increase the company’s real estate portfolio, underscore his commitment to growth and innovation.

His impact reaches far beyond his business achievements. His introduction of seaweed farming in Mindanao have played a role in transforming areas previously affected by conflict into regions of stability and growth, where many individuals have transitioned from conflict to embracing seaweed farming as a peaceful and sustainable means of livelihood. These efforts underscore the positive social, economic, and environmental impacts of seaweed farming.

The company’s products have become synonymous with quality, adhering to the highest standards and certifications with diverse blends for products such as frozen desserts, jellies, meats, dairy beverages, sauces, cheese, confectionary, beer, pet food, air fresheners and pharmaceuticals.

His efforts have not only elevated the W Group but have also contributed to poverty alleviation, food security, job creation, and the health of marine ecosystems. Recognized for his influential role and contributions, Mr. Wee was awarded the 2020 Outstanding Mapúan in Government Service. His tenure as Ambassador to Indonesia further highlights his impact on both the business and diplomatic fronts.

From humble beginnings to leading a global enterprise, Mr. Wee’s story is not just one of personal success but a blueprint for aspiring entrepreneurs. His advice to the next generation emphasizes the importance of passion, perseverance, and grit.

“No pain, no gain,” he advised, encapsulating the ethos that has guided his remarkable career.

His life and career serve as a beacon for those aspiring to make a mark in the world of business, demonstrating that with determination and vision, even the most humble beginnings can lead to extraordinary achievements.

Media sponsors are BusinessWorld and the ABS-CBN News Channel. Gold sponsors are SteelAsia Manufacturing Corp., Uratex, and Converge ICT Solutions, Inc. Silver sponsor is International Container Terminal Services, Inc. Bronze sponsor is Lausgroup Holdings, Inc. Banquet sponsors are Robert Blancaflor & Groups, Inc., Bounty Fresh Group Holdings, Inc., and Vista Land & Lifescapes, Inc.

The winners will be announced on Oct. 23, 2024. The EY Entrepreneur Of The Year 2024 Philippines will represent the country in the World Entrepreneur Of The Year 2025 in Monte Carlo, Monaco in June 2025. The EY Entrepreneur Of The Year program is produced globally by Ernst & Young (EY).

NAIA operator hikes fees for airlines starting this month

Passengers disembark from their vehicles in front of the Ninoy Aquino International Airport (NAIA) Terminal 1 in Pasay City, Oct. 6, 2023. — REUTERS

By Ashley Erika O. Jose, Reporter

SAN MIGUEL-LED New NAIA Infrastructure Corp. (NNIC), the new operator of the country’s main gateway, will now start collecting higher landing and take-off fees from airlines, the Department of Transportation (DoTr) said.

“The increase is actually high. It is almost double, but the rates — the last increase was in the year 2000 — so for the last 24 years, there have been no increases in fees that were charged at the airport,” Transportation Secretary Jaime J. Bautista said on the sidelines of the European Chamber of Commerce of the Philippines Aviation Summit 2024 on Wednesday.

Landing and take-off fees are charges levied for the use of airport facilities and services during aircraft landings and takeoffs.

Mr. Bautista said that the imposition of higher landing and take-off fees is effective Oct. 1, or at least 15 days after the official turnover of the operations and maintenance of NAIA to its private operator.

NNIC took over the operations and maintenance of the Philippines’ main airport on Sept. 14.

“The proposed revised fees, dues, charges and assessments for the use of the properties, facilities and services of the NAIA by the Airport Operator were approved through Cabinet Resolution No. 01 Series of 2024,” the Manila International Airport Authority (MIAA) said.

The imposition of higher landing and take-off fees does not necessarily mean that airfares will increase, Mr. Bautista said, adding that airlines have the option to absorb the higher fees or pass on the charges.

“The airlines won’t certainly like it, but I don’t think it would result in higher airfares since the take-off and landing fees are comparatively smaller compared the other operations and maintenance costs of running an airline,” Nigel Paul C. Villarete, senior adviser on PPP at the technical advisory group Libra Konsult, Inc., said via Viber.

BusinessWorld reached out to Philippine carriers for comments but has not received a response as of press time.

Under MIAA’s Revised Administrative Order No. 1, series of 2024, landing and take-off fees for international air traffic movement will be increased in a gradual manner within NNIC’s concession period.

For landing and take-off fees for international operations, an aircraft will be charged a minimum rate of $794, effective after one year.

Currently, aircraft weighing up to 50,000 kilograms will pay a fee of $2.48 per 500 kilograms, while those weighing 50,001 to 100,000 kilograms will pay a minimum rate of $248.12 or $3.11 per 500 kilograms or fraction thereof beyond 50,000.

Meanwhile, for domestic operations, an aircraft weighing up to 50,000 kilograms will be charged a minimum fee of P15,417 effective one year after the operations and maintenance contract.

For now, airlines with aircraft operating domestic operations will be charged P48.18 per 500 kilograms which will be increased to P154.17 after one year.

Further, an aircraft weighing 50,001 to 100,000 kilograms will be charged a minimum rate of P4,817.80 or P60.11 per 500 kilograms.

NNIC is also set to collect higher passenger service charges starting September 2025, Mr. Bautista said.

“All fee adjustments were pre-determined and set by the government and its financial adviser for the Public-Private Partnership project, the Asian Development Bank,” NNIC said.

Passenger service charges, also known as terminal fees, are imposed on departing passengers.

Currently, domestic travelers pay a passenger service charge of P200, while foreign travelers pay P550. It is anticipated that these fees will rise to P390 and P950, respectively.

In March, the NNIC, formerly SMC SAP & Co. Consortium, signed a P170.6-billion contract to operate, maintain, and upgrade the country’s primary gateway for 25 years.

The NNIC plans to construct a new passenger terminal building with a capacity of 35 million passengers annually, as part of efforts to alleviate airport congestion.

The government anticipates earning P900 billion from the project, equating to P36 billion per year. This figure is 20 times larger than the P1.17 billion annually remitted by the MIAA over the 13 years through 2023, according to the DoTr.

Aboitiz group to take over Laguindingan airport in 2025

PHILSTAR FILE PHOTO

THE INFRASTRUCTURE arm of the Aboitiz group is set to take over the operations and maintenance of the Laguindingan International Airport in Misamis Oriental next year, the Transportation department said.

“We are planning to sign the concession agreement for the Laguindingan airport within the month. The takeover will happen within four to six months,” Transportation Secretary Jaime J. Bautista told reporters on the sidelines of an aviation forum on Wednesday.

In September, the Department of Transportation (DoTr) said the contract to operate and maintain the Laguindingan International Airport would be awarded to Aboitiz InfraCapital, Inc., the original proponent.

This came after the DoTr received no counter proposal to challenge the unsolicited proposal of Aboitiz InfraCapital, Mr. Bautista said previously.

“Aboitiz InfraCapital is eager and ready to take on the operations, management, and expansion of the Laguindingan airport… We’re waiting on the direction from the government on this for the notice of award. From there, signing should follow, then after will be a transition period to takeover,” Aboitiz InfraCapital said in a statement to BusinessWorld.

Based on the Instructions to Challengers published by the DoTr and Civil Aviation Authority of the Philippines (CAAP), the notice of award and other post-award requirements would immediately be issued upon the approval of the award by the Transportation Secretary and the governing board of CAAP.

It added that the original proponent or the winning challenger would execute the concession agreement within five days from its receipt of notification of compliance with the post-award requirements.

IMMEDIATE PLANS
The company said its immediate plans for the airport include expanding its operating capacity.

“What we can share at this time is we plan on expanding the operating capacity of the airport given the growth potential we see in Northern Mindanao,” Aboitiz InfraCapital said.

The Transportation department aims to implement the first phase of the Laguindingan International Airport PPP project from 2024 to 2026.

The airport will have a capacity of 1.6 million passengers a year, which will increase to 3.9 million by the end of the first phase and to 6.1 million by the end of the second phase.

According to the Public-Private Partnership Center, the contract for the Laguindingan airport will run for a period of 35 years.

The company has also submitted unsolicited proposals for the operations, maintenance, and development of the New Bohol-Panglao International Airport, Bicol International Airport, and Iloilo International Airport.

The group secured original proponent status for the New Bohol-Panglao International Airport, which will undergo the Swiss challenge by November, according to Mr. Bautista.

In 2022, Aboitiz InfraCapital finalized a deal with Megawide Construction Corp. and GMR Airports International B.V., allowing it to acquire shares in GMR-Megawide Cebu Airport Corp., the company behind the Mactan-Cebu International Airport. — Ashley Erika O. Jose

EDC to explore geothermal fields in Indonesia

ENERGY DEVELOPMENT Corp. (EDC), the renewable energy arm of Lopez-led First Gen Corp., has obtained rights to explore and drill for two greenfield geothermal projects in Indonesia, the company said on Wednesday.

Indonesia’s Ministry of Energy and Mineral Resources awarded to EDC the preliminary survey assignments plus exploration for the Koto Sani Tanjung Bingkung and Bora Pulu geothermal projects, the company said in a statement.

Each of the Koto Sani Tanjung Bingkung and Bora Pulu geothermal areas has an estimated potential capacity of 40 megawatts (MW) and both would require a total investment of $456 million.

“This achievement marks a significant milestone in realizing EDC’s mission to forge collaborative pathways to a decarbonized and regenerative future, not only in the Philippines but in the region as well and beyond,” said Jeff Aban Caranto, EDC’s head of business development-international.

EDC said that the development aligns with its growth strategy as part of the 13,000-MW low-carbon energy portfolio of First Gen targeted by 2030. Of the total, 9,000 MW will be from renewable energy.

Indonesia is the world’s second-largest geothermal producer with a capacity of more than two gigawatts (GW), according to the Asian Development Bank.

The Philippines, which places third, produced an installed geothermal energy capacity of nearly two GW last year, with an estimated potential geothermal capacity of 4.2 GW.

In July, EDC officially introduced its 28.9-MW Palayan Binary Geothermal Power Plant (PBGPP) in the province of Albay, as part of the expansion of its existing 140-MW Bacon-Manito (Bac-Man) facility.

PBGPP is one of the four geothermal projects in the company’s pipeline. Others are the 28-MW Mahanagdong Binary in Leyte, 20-MW Tanawon Binary in Bacman, and the 5.6-MW Bago Binary in Negros Occidental.

EDC has allocated an investment of about $400 million for these projects with a total capacity of 83 MW that are expected to come online this year.

At present, it has an installed capacity of 1,480.19 MW, accounting for about 20% of the country’s total installed renewable energy capacity. — Sheldeen Joy Talavera

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