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Millennials, a force to reckon with in the workplace

MILLENNIALS have been transforming the workplace in profound ways. Their capacity to absorb fresh ideas and ability to embrace innovations offer new opportunities for businesses to thrive in today’s era. Thus, other than securing the company’s financial stability, businesses must adjust to this generation to attract and retain talent.

According to a KPMG report titled “Meet the Millennials,” published in June of 2017, millennials are characterized as curious, tech-savvy and job-hoppers. They seek diversity in the workplace and work-life balance, and are not afraid to ask questions and challenge the system.

“As the name indicates, millennials grew up during the Millennium period, a time of rapid change. Naturally events that took place during this period have shaped them, giving them a unique set of priorities and expectations that differ from previous generations,” the report said.

At present, millennials account for over a quarter of the global population. Most of them will be out of school and will become part of the work force by 2020. Experts predict that by this year, millennials will make up the largest portion of the global work force at 50%.

Given this number, it is certain that millennials will have a critical role in the future of businesses. PwC said in a study titled “Millennials at Work: Reshaping the Workplace” that millennials will shape the world of work. Their career aspirations, attitudes about work, and knowledge of new technologies will define the culture of the 21st-century workplace.

“But although they will soon outnumber their Generation X predecessors, they remain in short supply, particularly in parts of the world where birth rates have been lower. They will also be more valuable — this generation will work to support a significantly larger older generations as life expectancy increases,” PwC said.

“It’s clear that millennials will be a powerful generation of workers and that those with the right skills will be in high demand. They may be able to command not only creative reward packages by today’s standards, but also influence the way they work and where and how they operate in the workplace. They may also represent one of the biggest challenges that many organizations will face,” the firm added.

Given that millennials are one of the most studied generations, the factors that influence their decision of whether to join a certain team or not are uncovered. Some of these, which were identified in the 2017 KPMG report, include culture, working experience, open and honest communication, and flexibility. It is crucial for the companies to recognize these things and know how to properly address them so they can attract millennials and gain a competitive edge.

As the report said, millennials prioritize the culture of a company; — how the employer portrays the overall experience of working for them is a key differentiator when they decide which positions to apply for.

“Companies need to focus on cultivating the working conditions that foster creativity and morale. Quick wins like introducing a pool table in the office, early finish Fridays or allocating time for them to pursue personal hobbies during the working day would do the trick,” the report said.

When it comes to working experience, companies need to focus their efforts on ensuring that millennials are enjoying every minute of their work.

As the KMPG report explained, millennials are the first generation to use the word “fun” to describe their dream job. They really embody the sentiment that life is too short to be stuck in a dead-end job.

Moreover, millennials are brutally honest with one other, and they expect the same from their employer. The report said that millennials want to feel that their opinion matters, and that their insights are contributing to a bigger picture that allows the company to develop.

In this case, companies need to adopt a transparent communication policy. Hosting a weekly drop-in session with the leadership team, where even the most junior staff can pose questions to the C-suite executives, can be a good idea.

Finally, this generation wants flexibility at work — they have the option to control their own working hours and location. In a survey conducted by KPMG across a broad millennial audience, work-life balance was one of the top rated factors when looking for a job.

Attracting millennials is just the first step. Corporations also need to have them engaged. As the KPMG explained in its report, satisfied employees are more invested in their company’s success and have a higher level of commitment and loyalty. They are also more productive and innovative because of their passion and interest in their jobs.

Make Parkway Corporate Center your corporate headquarters

The Metro South has fast become a major growth center and a strategic business hub, with many multinational companies choosing to settle and locate their offices in this pulsating location. For one, the Metro South offers a lot of room for growth, especially for newly-established businesses. Developments are mitigating Southward due to high demand from the top central business districts (CBDs). Moreover, it also opens new markets for clients — away from saturated areas with already maturing demographics.

With the myriad of office building projects existing and on the rise, the state-of-the-art Parkway Corporate Center — the corporate jewel in the Metro South — offers several good reasons to make it your corporate head office.

Parkway Corporate Center, another well-planned and designed Filinvest project, stands at 32 stories high. It is positioned as one of the smartest, most future-ready office towers in the Metro South. Among its modern building facilities are six high speed elevators, 24-hour security with closed circuit television (CCTV) cameras in strategic areas, 100 percent back-up power and advanced fiber optic backbone.

Exceptional amenities include an elegant main lobby, a retail plaza on the ground floor, a fully-equipped business center on the 7th level, which consists of four rooms that are ideal for meetings, seminars and other small business functions, a podium deck garden and pocket gardens at every five levels, and eight levels of secured parking. In keeping with the goal of achieving its own Leadership in Energy and Environmental Design (LEED) certification, Parkway Corporate Center puts in place a glass curtain wall, double-glazed with a low e-coating, which lessens heat and ultra-heat radiation, and thus increases energy efficiency and sustainability while reducing cost.

Parkway Corporate Center is also strategically located at the heart of Filinvest City in Alabang in the dynamic Metro South. It is truly at the gateway of a major growth corridor, the CALABARZON (Cavite, Laguna, Batangas, Rizal, Quezon) region, where top universities offer a large competent and educated human resource pool.

As a growing, progressive CBD, Filinvest City boasts of three outstanding characteristics: green, eco-friendly orientation, world-class infrastructure and amenities, and easy, convenient access.

Similarly, Filinvest City seeks to receive the LEED certification version 4 for Neighborhood Development. It has adopted urban planning practices for a more sustainable and innovative environment, particularly the introduction of lush, landscaped parks, bike lanes and other eco-centric features that make it a truly green community with a less stressful work setting.

A world-class infrastructure is progressively being rolled-out for improved information technology connectivity and communications within Filinvest City and uninterrupted water and electricity supplies. A professional sanitation and solid waste management has been set up and an efficient urban mobility and public transportation are made available. A comprehensive network of CCTV cameras in strategic areas ensure the safety and security of locators, tenants, and residents.

Filinvest City has also become more accessible via major roads going to the south and the other parts of Metro Manila such as the Skyway, South Luzon Expressway with three entry and exit points, Daang Hari Road and Muntinlupa-Cavite Expressway exit.

Proof that Filinvest City has become a truly progressive CBD in Metro South is the impressive rise in land values of up to 200 percent in the last five years.

All things considered, Parkway Corporate Center truly stands out as a highly effective business strategy and a wise investment at the corner of Corporate and Parkway Avenues. It offers investors and entrepreneurs the opportunity to acquire, rather than lease, or simply invest in an office space.

For more details on this state-of-the-art, future-ready office tower, please call (02) 809-6517 or visit www.parkwaycorporate.com.

New beacons of opportunity for PHL’s IT-BPM industry

The Philippines continues to attract the attention of investors all over the world. Particularly for the global information technology and business process management (IT-BPM) industry, the country is a beacon of opportunity and progress, owing to its largely young and educated work force and their strong English fluency, and its rapid macroeconomic growth.

With so much demand for real estate in Metro Manila, investors are starting to branch out into other areas.

The Information Technology and Business Process Association of the Philippines (IBPAP), in partnership with the government’s Department of Science and Technology-Information and Communications Technology Office and Leechiu Property Consultants, released a list of “Next Wave Cities” that may serve as new hosts for growth of the IT-BPM industry.

The cities, according to IBPAP, could be seen as new hubs of economic activity that could best enable and support the continued growth of the IT-BPM industry. These cities are, in alphabetical order: Baguio City, Cagayan De Oro City, Dagupan City, Dasmariñas City, Dumaguete City, Lipa City, Malolos City, Naga City, City of Sta. Rosa and Taytay (technically, this is a municipality).

The locations were identified for their suitability in hosting local and international IT-BPM players based on an assessment guided by the government. The Next Wave Cities scorecard includes the following criteria: talent, infrastructure, cost and business environment. All these are factored in to evaluate a city’s ability to enable and support the entry and growth of IT-BPM companies in its area.

In addition to the 10 identified areas, IBPAP also named Davao City and Iloilo City as new centers of excellence, elevating their status to that of Metro Manila, Metro Cebu, Metro Clark and Bacolod City as premier IT-BPM hosts and high-density locations.

Since its inception in 2009, the Next Wave Cities program has spurred development not only of the IT-BPM sector but also of cities outside established IT-BPM hubs, such as Metro Manila, Metro Cebu, Metro Clark and Bacolod City.

‘Next Wave Cities’

As the center of business, commerce and education in northern Luzon, Baguio City also serves as the regional center of the Cordillera Administrative Region. Due to its reputation as a university town, with eight major institutions of higher education within its premises, and its population of over 345,000 who are mostly skilled and educated, the city is a bright spot for companies looking for a competent work force.

Serving as the capital of the province of Misamis Oriental, Cagayan de Oro City is seen as the regional center and business hub of Northern Mindanao, and part of the growing Metropolitan Cagayan de Oro area. Ample supply of human capital supported by available health, research, educational and modern telecommunications facilities make it a flourishing hub for business process operators. Concentrix Corp., Rider Livett Bucknall, Teleperformance, Azpired, Envizion, Arriba Telecontact, Accolade Resources, Support Zebra and Versatel all have operating centers in the city.

In the northwestern part of Luzon, fronting onto the Lingayen Gulf, the City of Dagupan is a major commercial and financial center. Largely known for its fishing economy, the city has also been seeing an economic boom in recent years, with the Department of Trade and Industry naming it the most competitive city in the region in 2017.

Lying close to Metro Manila is Dasmariñas, a bustling city of more than 650,000 people. Due to its relative proximity to the capital, the City of Dasmariñas has seen rapid development and an influx of business, allowing it to grow beyond its agricultural-based economy, and evolve into a highly urbanized, commercialized and industrialized area. It now boasts three industrial estates: First Cavite Industrial Estate in Barangay Langkaan, Dasmariñas Technopark in Barangay Paliparan I and NHA Industrial Park in Bagong Bayan.

Nicknamed “The City of Gentle People,” Dumaguete City is the capital and most populous city of the province of Negros Oriental. Similar to Baguio, the city holds a wealth of educated workers due to the presence of four universities and a number of other colleges. This has allowed Dumaguete’s outsourcing industry to flourish, with its workers staffing call centers, publishing, medical transcription, animation, editing and architectural outsourcing across over 20 IT and BPO (business process outsourcing) locators.

In Batangas, Lipa City is fast emerging as a key city, showing its potential as a major institutional/administrative center, medical center, commercial center, financial center, agro-industrial center and residential center in the region. With Metro Manila being only an hour and a half away, Lipa has grown from its agricultural roots and seen a surge of economic activity in recent years. It is now home to many BPO firms and call centers.

The historic city of Malolos was also named a Next Wave City for IT-BPO locators. Nestléd between the capital and the booming area of Clark, Pampanga, Malolos is brimming with economic activity from a variety of industries, from BPO to health care to foodservice.

Naga, as “The Heart of Bicol,” is the site of most of the region’s commerce and industry. The city was named one of the most business-friendly cities in Asia and is considered to be one of the Philippines’ most competitive cities. The city currently has three IT parks for IT-BPO firms: the Naga City IT Park, the Camarines Sur Industrial and Technological Park and Naga City Technology Center.

In South Luzon, Santa Rosa City is shaping up to be another emerging hub for BPO companies. The city is home to a number of special economic zones and industrial parks, including the Laguna Technopark, Inc., Greenfield Automotive Park, Toyota Special Economic Zone, Lakeside Evozone Nuvali, Daystar Santa Rosa Industrial Park, Santa Rosa Commercial Complex, and the Meridian Industrial Complex. BPO firms such as Convergys, KGB, Teletech, IBM and Concentrix have centers there.

The Municipality of Taytay stands as the only municipality on the list yet is as good an environment for business as any of the others. Taytay ranked first in the 1st and 2nd Class municipalities category under the resiliency pillar and overall Competitiveness in the 2018 Regional Competitiveness Summit. Though traditionally known for its garments and woodwork, Taytay is now home to several multinational companies.

Emerging trends in the global BPO industry

Driven by innovation, new technologies and competition, the global business process outsourcing (BPO) industry has evolved rapidly from where it started more than 20 years ago. It was regarded as one of the fastest-growing industries in the world, supporting most businesses across the globe in one way or another.

A report titled “Business process outsourcing (BPO) worldwide” by a market research company Statista said that the global market size of outsourced services in 2017 was valued at $88.9 billion, $12 billion higher from the previous year. In addition, it said that the revenue of the global BPO industry in the same year was $24.6 billion.

“The largest share of global outsourcing revenue was generated in Europe, the Middle East and Africa in 2017 at $55.6 billion,” the report said. “India was among the leading countries for offshore business services in 2017 in terms of its financial attractiveness, the skills and availability of its people and the appropriateness of its business environment for business process outsourcing.”

The BPO industry is not slowing down anytime soon. In fact, according to “Business Process Outsourcing (BPO) — Global Strategic Business Report,” released last January, the global market for BPO is projected to reach $262.2 billion by 2022, driven by the cost benefits achieved by outsourcing back-office administration and the development and availability of new generation technologies, such as process automation, big data analytics, cloud services, such as BPaaS, and embedded analytics-based BPO.

“Growing competitiveness of global markets and the ensuing pressure on businesses to run efficiently and cost-effectively is providing opportunities for accelerated growth in BPO services. Banking BPO services are poised to witness the strongest gains in the coming years as a result of stringent regulatory requirements, unprecedented cost pressures and the need for banks to focus in core innovation-driven differentiation,” the report said.

Along with the promising growth of the global BPO industry is the anticipated rise of new trends, set to shape and change the industry for the better.

The most recognizable is the emergence of new technologies. According to Sandip Singh, SEO analyst at BlackMint Infocon Pvt. Ltd., growing trends in technology, such as cloud computing, Web site analytics, and social media networks, will have a big role to play in making outsourcing operations smooth and efficient.

For instance, cloud makes the process of storage increasingly organized, while allowing data retrieval and sharing to be quick and easy. In addition, by moving data to cloud, businesses can eliminate the need for unnecessary space and storage, and at the same time, reduce huge consumption of energy.

“Cloud will be the biggest facilitator to Next Gen BPO service providers in building industry-specific capabilities and solutions, doubling the outsourcing benefits,” Mr. Singh said.

Robotic process automation has emerged as a new trend in BPO, particularly in the management sector, offering high-value creation with notable cost savings and fast time-to-value.

“The outsourcing service providers can dedicate their whole time in enhancing their service quality while automated systems will take the charge of the operations,” Mr. Singh said.

Meanwhile, Outsource2india, an outsourcing company based in India, believes that data security will also be prioritized in the future of outsourcing. The recent Facebook data breach that affected 87 million users only proves that data security will continue to be a major concern.

“With Internet of Things (IoT) and telematics becoming highly prevalent, security risks are poised to increase. Therefore, threat intelligence, advanced security automation, security analytics, etc. will continue to dominate, as companies choose to stay safe and protect their businesses from external threats,” Outsource2india says on its Web site.

The firm also expects that companies in the coming years will look for service providers who add value to their business, rather than those who just provide services at lower costs. As a result, outsourcing companies will partner with service providers who offer innovative services, equipped with best infrastructure and thorough industry knowledge.

On the other hand, as the use of self-service tools and automated chat-bots become highly prevalent among many companies, the demand for call centers is expected to decrease drastically.

Outsource2india explains that as virtual agents can work on numerous clients at the same time, these automated contact centers will be able to handle higher volumes with less number of agents. Therefore, various tech-enabled contact centers replacing the traditional call centers will likely start taking place a few years down the line.

“Outsourcing trends are constantly changing and this change is expected to continue in the coming years as well. With new technological developments progressing regularly, the outsourcing industry is only going to get bigger and more efficient in the years to come. Companies will mainly focus on providing top-quality services and great customer experience, rather than merely focusing on reducing the cost of the services they offer,” Outsource2india says.

BSP beefs up cybersecurity safeguards

THE BANGKO SENTRAL ng Pilipinas (BSP) will soon require banks to promptly report cybersecurity breaches, as the regulator tightens its watch on digital platforms.
BSP Deputy Governor Chuchi G. Fonacier said the new rule, which will require financial institutions to report information technology (IT)-related attacks or glitches, will be issued “next month.” “It is undergoing legal review before MB (Monetary Board) approval,” Ms. Fonacier told reporters when asked for updates on the measure.
The BSP official previously revealed plans to prescribe a two-day window to report cyber attacks and similar incidents, at a time of growing cases of cybersecurity breaches. Such reports, she explained, should also disclose costs incurred from theft, fraud and other incidents.
Ms. Fonacier said central bank officials are yet to finalize whether the reporting window will be 24 or 48 hours upon discover of the incident.
Ahead of the approval of the new standard, the BSP official said the Bankers Association of the Philippines, composed of universal and commercial banks, has already set up its own monitoring and reporting platform. This industry portal will also be designed to enable banks to share notes and alert peers about hacking attempts or any IT-related risk which they encounter.
The central bank is encouraging increased use of electronic channels for payments and fund transfers to bring down transaction costs while promoting wider use of formal financial services.
In November last year, the BSP issued Circular 982 which requires all financial businesses to monitor and counter a wide array of digital attacks, including skimming, phishing and malware.
Existing rules also require financial firms to adopt “advanced” controls versus digital crimes and glitches, and mandates the establishment of a 24/7 security operations center to “proactively monitor emerging and highly sophisticated cyber-threats and attacks.”
While the BSP has been developing an “enabling” environment for financial technology, Ms. Fonacier has said that banks themselves should take steps to better guard against digital fraud and hacking. — Melissa Luz T. Lopez

Concerns about shift in gov’t form unresolved

THE MEETING last Wednesday of state economic managers and members of the Consultative Committee to review the 1987 Constitution failed to dispel worries about the fiscal impact of the draft federal charter, whose fate now lies with Congress.
Arthur N. Aguilar, who led the consultative body’s subcommittee on economic reforms, said in a telephone interview on Thursday that his group told state economic managers that there are “more than ample provisions in the constitutional design that ensure fiscal prudence.”
But Finance Secretary Carlos G. Dominguez III said more clarity is still needed on the fiscal impact of the proposed changes to the current Constitution.
Mr. Aguilar said much of their discussions last Wednesday revolved around the proposed revenue and expenditure sharing between the federal government and the federated regions.
“The 50-50 share is only in four taxes,” he said in a telephone interview yesterday, referring to income, excise, value-added tax and customs duty, meaning that the federal government will still get bulk of overall revenues.
Federated regions will have exclusive power to collect 12 taxes and fees while the federal government will collect all other levies.
“So the revenues, it’s about two-thirds federal and one-third federated regions,” said Mr. Aguilar.
“Expenditure finance follows functions. There are 21 exclusive powers of the federal government, 15 exclusive powers for the federated regions. Each exclusive power carries a budgetary implication.”
All other spending will be shared between the two governments.
“We’re just shifting marbles from one to another. We’re not creating a bigger pie,” Mr. Aguilar explained.
He also assured that “federated regions cannot incur indebtedness outside the guidelines of the federal government.”
Economic managers earlier warned that the proposed changes could cause the fiscal deficit to balloon beyond the prescribed three percent-to-gross domestic product (GDP) ratio.
Moody’s Investors Service last month flagged the planned shift to a federal form of government as a risk to the Philippines’ credit rating, which now stands a notch above minimum investment grade with a “stable” outlook.
The National Economic and Development Authority’s (NEDA) had cautioned that the proposed changes to the constitution could add 1.0-1.6 percentage points to the three percent-of-GDP fiscal deficit ceiling.
“In terms of the split, they said it’s a 50-50 split in terms of the revenues. But when we looked at the share in spending, it can actually go up to 80-20 if you consider debt payments,” NEDA Undersecretary for Policy and Planning Rosemarie G. Edillon told reporters late Wednesday after the meeting.
She noted that the draft federal charter was “not clear” on whether spending responsibilities will be shared in terms of subsidies, tax expenditures, financial expenses and capital outlays.
Ms. Edillon said that the government faces P156.6-243.50 billion in additional expenses — including personnel services and maintenance and operating expenses — in the first year of implementation of the new charter. She said that this does not include the cost of “around P10 billion to establish the new offices” in federated regions.
At least in the first few years of operation, therefore, the new government form “will impede the delivery of goods and services” and lead to “inevitable disruptions to the economy’s growth momentum and progress in infrastructure improvement efforts.”
The NEDA official said that there will also be “unquantifiable economic costs; repercussions and externalities [that] include impact on foreign direct investments and international trade, reaction of credit rating agencies to fiscal deficit and debt effects.”
After the meeting last Wednesday, Mr. Dominguez told reporters still that “We need more clarity, that’s all.”
“The document that was produced lacks clarity on these specific issues. We are not against federalism. It’s just that these things need to be clarified.”
The consultative committee submitted its draft to both chambers of Congress in July.
“Actually it’s already in Congress,” Mr. Dominguez said. “So it’s up to Congress already.”
Budget Secretary Benjamin E Diokno told reporters on Thursday that “the real decision makers here will be Congress,” adding that economic managers’ main concern was to “control the deficit.”
“That’s the major constraint: the size of the deficit.” — Elijah Joseph C. Tubayan

Emerging-market wobbles to test if Asia really is safer

HONG KONG/SINGAPORE — While Asia proved to be relatively stable through the Turkey-led emerging market sell-off this month, the region has its own vulnerabilities with the junk-bond market shaping up as a key area to watch.
The amount of such debt coming due in dollars from Asian issuers, excluding financial firms, will rise over the next three years to a record $24.2 billion in 2021. With global investors eyeing higher US interest rates as the Federal Reserve raises borrowing costs, Asia’s riskier firms will face pressure to offer juicier yields to lock in fresh funding.
Risks across the region vary from heavy debt piles in China, Korea, Taiwan, Hong Kong and Singapore to current account deficits in Indonesia, India and the Philippines.
Junk bonds are just one of a number of vulnerabilities investors will need to watch out for as the prospect of further interest-rate increases in the United States and the end of quantitative easing in Europe draw curtains on an era of easy money.
Here are some others:
UNDER WATER
Jitters have spread beyond junk securities to high-grade Asian corporate notes. The average price for investment-grade dollar notes in the region has stayed below 100 cents on the dollar since early April, an ICE BofAML index shows — that’s a longer period below par than stretches that preceded debt-market pain during financial crises in 1997 and 2008 and the 2013 “taper tantrum”.
CREDIT STRESS
Another worry stems from the sheer volume of debt in Asia’s developing economies.
“We believe the bigger vulnerability for Asia in coming months stems from domestic credit stress and evaporating market liquidity — not balance of payments or currency pressures — and the economies most exposed are China, Korea, Taiwan, Hong Kong, Singapore and Malaysia,” Robert Subbaraman, Singapore-based head of emerging markets economics at Nomura Holdings Inc., said in a note earlier this month.
HOUSEHOLD DEBT
Consumers are also racking up the bills, with South Korea most at risk of seeing budget-busting households fall underwater.
SOVEREIGN DEBT
Governments have run up their tabs, too.
Much of developing Asia is attempting to tackle ambitious infrastructure plans — billions of dollars’ worth of road and rail to connect rural areas with thriving urban centers.
While credit ratings firms have generally been supportive, balance sheet strains are starting to show.
In Southeast Asia, the Philippines remains in the cross hairs with President Rodrigo R. Duterte’s “Build, Build, Build” program applying pressure on the peso, which is down more than six percent this year against the dollar.
Indonesia has just pledged a record spending year for 2019 while claiming that higher revenue will shrink the swollen budget deficit.
TRADE TENSIONS
Bigger bills aren’t the only concern.
Simmering trade tensions between the US and China are also a threat for smaller export-oriented economies including South Korea, Taiwan, Thailand and Malaysia, along with financial hubs Singapore and Hong Kong.
A protracted trade war between the U.S. and China would reverberate. Fluctuations in China’s economy or financial markets now have up to three times the impact around Asia than they did before the global financial crisis, according to Goldman Sachs. Singapore and Hong Kong also play key trade hub roles that leave them exposed to the trade-war jitters.
CURRENT ACCOUNTS
Asia’s current-account positions are broadly in strong shape, but there are weak links.
India, Indonesia and the Philippines are the three deficit nations feeling the most strain from the emerging-market sell-off. While their domestic conditions vary and their deficits remain relatively narrow, they face more Fed interest-rate hikes, a brewing trade war and enduring emerging-market anxieties.
FOREIGN EXPOSURE
Indonesia has a particular need to calm investors, given that the proportion of its stocks and bonds held by foreign investors is higher than peers in the region. As a rule of thumb, the more foreign ownership, the more vulnerability to a reversal in market sentiment.
Even if Asia boasts better growth prospects and beefier buffers, its hefty weighting in many emerging-market benchmarks leaves it exposed to a broader sell-off. “Since Asia takes up 75% of the MSCI emerging market index, if people sell EM, they are going to naturally sell some Asia along with that — whether or not they actually feel negative about Asia per se,” Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs in Hong Kong, told Bloomberg Television recently. — Bloomberg

IMF weighs Argentina plea for help as peso crashes

BUENOS AIRES — The International Monetary Fund (IMF) said it was studying a request from Argentina to speed up disbursement of a $50-billion loan program after a collapse in investor confidence in President Mauricio Macri’s government sent the peso tumbling more than seven percent on Wednesday.
It was the biggest one-day decline in the peso since the currency was allowed to float in December 2015. It closed at a record low of 34.10 per US dollar and is down more than 45.3% against the greenback this year, prompting massive central bank interventions.
Nerves are frayed in Latin America’s third-biggest economy as it struggles to break free from its notorious cycle of once-a-decade financial crises. The last one, which was punctuated by a 2002 debt default, tossed millions of middle-class Argentines into poverty.
The run on the peso prompted Argentina to turn to the IMF for the $50-billion credit line earlier this year. As part of the deal, Argentina’s government pledged to speed up plans to reduce the fiscal deficit.
But given the peso’s continued depreciation, which makes the country’s dollar-denominated debts more expensive to pay, investors are increasingly concerned that the IMF help may not be enough.
“We have agreed with the International Monetary Fund to advance all the necessary funds to guarantee compliance with the financial program next year,” Mr. Macri said in a televised address on Wednesday.
“This decision aims to eliminate any uncertainty,” Mr. Macri said.
“Over the last week we have seen new expressions of lack of confidence in the markets, specifically over our financing capacity in 2019.”
IMF Managing Director Christine Lagarde responded by saying in a statement that the multi-lateral lender’s staff would “reexamine the phasing of the financial program.”
She said that the “more adverse international market conditions” had not been “fully anticipated” when the IMF and Argentina reached the agreement in June.
“Authorities will be working to revise the government’s economic plan with a focus on better insulating Argentina from the recent shifts in global financial markets, including through stronger monetary and fiscal policies,” Ms. Lagarde said.
Argentina has $24.9 billion in peso- and foreign currency-denominated debt payments due next year, according to official data.
Speaking to reporters after the IMF statement was issued, Treasury Minister Nicolas Dujovne said the government would reduce the size of its financing program, but did not provide specifics.
If Mr. Macri was trying to calm investors, it did not work.
“The market is saying: ‘Just the fact that you are engaging in this conversation makes me very, very nervous,’” Daniel Osorio, president of New York-based consultancy Andean Capital Advisors, said in a telephone interview.
The peso’s decline has contributed to a jump in inflation, which hit a 12-month rate of 31.2% in July.
In response, the central bank has hiked interest rates to 45% and sold more than $13 billion in reserves, including $300 million in an auction on Wednesday.
All that — combined with the budget cuts promised to the IMF that will slow down public works projects — is contributing to a recession that will result in an economic contraction of one percent this year, according to the government.
That could hurt Mr. Macri’s re-election prospects in next year’s presidential race.
The June signing of the IMF deal reduced the need for costly bond market funding and briefly steadied the peso.
The government has since announced more than $2 billion in budget savings, a process Mr. Macri promised to continue.
“We will accompany the IMF support with all necessary fiscal efforts,” said Mr. Macri, who was elected in 2015 on a free market platform after eight years of deep government intervention in the economy under previous President Cristina Fernandez.
Argentina’s biggest labor group, the CGT, said on Wednesday it will call a 24-hour general strike on Sept. 25 to protest Mr. Macri’s belt-tightening measures.
Two smaller union groupings said they will go on a 36-hour strike on Sept. 24 to protest the IMF, which many blame for the 2002 crisis.
“I know that these tumultuous situations generate anxiety among many of you,” Mr. Macri said.
“I understand this, and I want you to know I am making all decisions necessary to protect you.” — Reuters

Indonesia’s push to nationalize energy assets could chill foreign investment

SINGAPORE/JAKARTA — Indonesia is pushing to nationalize more of its oil and gas assets as it tries to reduce imports and boost government revenue amid emerging market turbulence that has staggered Southeast Asia’s biggest economy.
Since 2015, whenever product-sharing contracts with international companies expire, the government has increased state-owned Pertamina’s stakes the related oil and gas fields.
The goal is to accelerate a four-year-old plan that aims to send domestic crude oil to Indonesian refineries for local use.
But experts say that is risky because it discourages investors and global energy companies who have expertise crucial to maintaining Indonesia’s output.
“Getting rid of the international oil companies’ involvement means Pertamina will be losing valuable technical and operational know-how,” said Den Syahril, a senior oil analyst at consultancy FGE, adding that it could result in “lower productivity at its fields.”
Oil and natural gas are two of Indonesia’s biggest cash earners, but their contribution to government revenue has declined along with output, shrinking from more than 20% a decade ago to under five percent last year, according to government data.
President Joko Widodo, running for re-election in 2019, told supporters this month that he would “safeguard national resources” by nationalizing assets like the large Rokan and Mahakam oil blocks.
In 2021, Pertamina will take over the Rokan block, Indonesia’s second-largest crude producing field, from current operator Chevron. It already took over Mahakam from France’s Total and Japan’s Inpex this year.
Consultancy PwC says in its 2018 oil and gas investment guide “that crude oil production in Indonesia has been on a downward trend for the past decade” and that its oil industry has entered a “transitional phase, with a growing domestic need for gas for both consumers and industrial use.”
Indonesia’s crude oil output has been declining for decades, from a peak of more than 1.5 million barrels per day (bpd) in the 1970s and 1990s, to below 800,000 bpd now, according to industry data.
Government oil and gas revenues have fallen too, from around 400 trillion rupiah ($22.60 billion) in 2010 to 135 trillion in 2017, according to data from SKKMigas.
The situation does not appear likely to improve on its own.
Indonesia is on track to spend far less than planned on its 2018 oil and gas investments. In the first half of the year it spent only $3.9 billion, compared with its target of $14.2 billion, according to regulator SKKMigas.
Just five years ago, the country was investing about $20 billion a year into the industry.
“The country’s failure to attract new foreign investment in the upstream sector has seen licensing activity and development drilling fall to decade low levels,” FGE’s Mr. Syahril said.
Indonesia must act soon if it wants to turn around its declining output, which has already forced the country out of the Organization of the Petroleum Exporting Countries.
Without significant spending increases, Rachel Chua of Moody’s Investors Service said Indonesia has only 10 years of oil production left, warning that nationalizing oil and gas fields would crimp foreign investment.
Pertamina has estimated that Rokan would require about $70 billion in investment over the 20-year life of its contract.
BEST CANDIDATE?
Other regional oil companies like Malaysia’s state-owned Petronas or Thailand’s PTT have successfully sought international partners for major projects.
In Indonesia, leases on a dozen oil and gas blocks will expire between 2021 and 2026, and 15 blocks expiring between 2017 and 2021 have already been given to Pertamina.
The country’s deputy energy minister, Arcandra Tahar, told reporters in August that Rokan was awarded Pertamina was because the company made the best offer.
Tahar said Pertamina offered the biggest signing bonus, the highest government production revenue and lower discretion of his ministry on production split made it easier for the energy minister to change how revenue is divided up.
He said these factors would be considered in awarding future leases on expiring blocks.
Pertamina aims to increase production by focusing on undeveloped fields in Rokan, said Syamsu Alam, the company’s former director of upstream.
He was replaced on Wednesday by Dharmawan Samsu, previously the country head of oil major BP. Samsu declined to comment.
“If it goes well, hopefully we can control the decline rate so that production after 2021 won’t drop too much,” Mr. Alam told Reuters.
“Hopefully we can maintain it or even increase it.”
Pertamina is poised to benefit regardless.
Ms. Chua of Moody’s said the addition of the Rokan block would increase the share of Indonesian oil Pertamina uses at its refineries, which have a combined capacity of 1 million bpd, to 40% from the current 35%.
At current costs for Brent crude, that equates to savings of $30 million per day. — Reuters

Riding through history


By Michelle Anne P. Soliman, Reporter
At 10 a.m. on a Saturday, the festive sound of drums joined in with the clatter of the approaching train at the LRT-1 Central station. Eleven teams of four members — made up of an LRT-1 driver, an LRT-1 teller, a blogger, and a reporter — hurriedly lined up at the ticketing booth to load their Beep cards, catch the next train, and explore specific cultural and historical landmarks on a list. All were determined to arrive first at the finish line — and in the process, the teams explored Manila, despite the continuous rains.
EXPLORING MANILA BY TRAIN
Exploring Manila and seeing what the nearly 450-year-old city has to offer need not be a hassle as anyone may enjoy it, rain or shine.
The Light Rail Manila Corp., (LRMC) in partnership with the Department of Tourism (DoT), Tralulu, Walk This Way, Old Manila Walks, and Kapitbahayan sa Kalye Bautista, launched IkotMNL, a tourism campaign which aims to help people rediscover Manila with the LRT-1 as the main mode of transportation.
The project hopes to “maximize the tourism potential with LRT-1 and drive more riders on weekends when people have time [for] sightseeing,” LRMC president and CEO Juan F. Alfonso told the press during the launch — and race — on Aug. 11.
Mr. Alfonso noted that on weekdays, the LRT-1 has an estimated 500,000 riders while about 400,000 and 280,000 people go for a ride on Saturdays and Sundays, respectively.
“Along with LRT-1’s accelerated rehabilitation, continuous operational improvements efforts, and stations that are strategically located, LRMC is steadfast in its commitment not just to accommodate more passengers, but also to draw more foreign and local tourists to Metro Manila’s rich and diverse attractions and cultural experiences through ikotMNL,” Mr. Alfonso was quoted as saying in a press release.
“Tourism is inevitably linked to transport. As the LRT-1 operator, we are in a unique position to connect local and foreign tourists to the city’s most important and historic places in the quickest land travel possible,” he added.
TOURING THE CITY
IkotMNL offers special guided day tours and unguided tours which can tackle everything from architecture and art, to shopping and dining.
The special day tours are given to small groups which can either be moderated by a single or multiple tour operators.
The “Grand Manila: Glorious Architecture and Art” tour explores the art and architecture of Escolta, Malate, with stops at specific locations in architect Daniel Burnham’s original plan for Manila, and the Manila Cathedral Park. The “Mass Transit: Following Manila’s lost Tranvia Lines” tour explores the Quiapo to Malate route of the old street car line which serviced the city from the late 1800s to World War II.
Visitors may also check out four unguided tours: “Glorious Architecture” which explores heritage churches and monuments; “Museum and the Arts” which features several cultural stops including the Museum of Contemporary Art and Design (MCAD) of DLSU’s College of St. Benilde, The National Museum Complex, and The HUB: Make Lab in Escolta; “Bargains and Bites” which explores shopping destinations; and “Nature and Nurture” which features famous monuments and parks.
“We tried to do it with the DoT because we want to work with them on the different tourism areas,” Mr. Alfonso said, noting that the LRMC intends to complement other tours in Manila and not give tour operators any competition.
Maps of the destinations are mounted in each station to help tourists navigate the city.
During the tours, riders may opt to buy unlimited-ride cards for P99 which give them access to the trains for the entire day. The offer is valid until Sept. 28 and is only applicable for rides on LRT-1.
Meanwhile, the IkotMNL tours are planned to continue beyond that date. “We’ll just keep it as long as we feel it’s useful,” Mr. Alfonso said.
“We at the LRMC recognize our role to promote cultural, architectural, gastronomic spots in Manila to the use of the fastest land travel available,” Mr. Alfonso said in a speech during the launch.
The LRMC has had various improvement projects since assuming operations of the train line in 2015, such as adding more trains, trips, extending operating hours, and improving security and cleanliness in all stations.
Construction for the Cavite extension project is expected to begin in October and is targeted for completion in 2021.
AMAZING RACE
During the race, the 11 teams were first tasked to get down at Vito Cruz Station, head to De La Salle-College of Saint Benilde’s School of Design and Arts for the first task — deciphering three hidden messages posted on a wall.
On the way to the second station in Yamaha Monumento all the participants got soaking wet. As we got down from the station, the teams crossed to the rotunda to find the next clue.
(Last February, Yamaha got a three-year naming rights deal for the station, originally named Momumento Station after Caloocan’s Monumento Circle, which houses the Bonifacio Monument.)
Getting off at Carriedo Station next, we walked to Binondo for lunch, then the teams were tasked to head back to Central Station where the final task of the race was enumerating all the LRT-1’s 20 stations’ names on paper.
The three winning teams won cash prizes of P50,000, P30,000, and P20,000.
This writers’s team did not win.
For more information, visit www.ikotMNL.com and www.facebook.com/ikotMNL/. For guided tours, visit www.tralulu.com.

Paris aquarium offers haven for unwanted goldfish

PARIS — Paris’ biggest aquarium has created a refuge for goldfish, providing a second life for any unwanted pets who might otherwise find themselves flushed down the toilet.
The Aquarium de Paris allows the city’s residents to drop off their fish, with the numbers using the service swelling around the time of the long summer holidays.
Instead of facing death in the city’s sewerage system, the rejected goldfish find themselves given a full medical check up involving antibiotics and anti-parasite treatments.
After a month in quarantine, during which a minority succumb to the trauma caused by the change in location, they are then released into a giant tank where they go on display to the public.
“Some of them arrive very weak,” said Celine Bezault, who cares for the fish at the giant aquarium complex which is located opposite the Eiffel Tower.
Since it was created two years ago, the goldfish rescue service has been used by around 50 people a month and the tank now contains about 600 specimens, mostly the classic golden-red version, as well as striped and black ones.
Rather than spending all day banging into the glass of a small bowl, here the fish have space to swim and plenty of company, allowing them to socialize and move around in groups.
Some owners hand over their pets tearfully, motivated by concern for their fish, while others appear relieved to be rid of them and the routines of feeding and cleaning.
“It was in a small bowl and I think it’ll be better here,” a 32-year-old called Alexandre told an AFP reporter as he dropped off a friend’s goldfish called Nemo before the holidays. “It’s better than flushing it away.”
NEW LIFE
Once in the bigger tank, some of the fish undergo a remarkable transformation.
Being confined in a bowl stunts their growth, but the bigger space means some of them will expand to full adult size.
“They can reach up to 20-30 centimeters (8-12 inches),” Bezault said.
For Alexis Powilewicz, director of the Aquarium, the service is part of efforts to promote awareness about animal welfare.
Goldfish are domesticated forms of wild carp originally found in east Asia and the practice of keeping them in bowls has existed for hundreds of years. It is thought to have originated in China.
“I think there’s growing awareness that the mistreatment of animals is a real problem,” Powilewicz told AFP.
For goldfish owners, the aquarium advises that the tank should be at least 100 liters (20 gallons), should contain more than one fish, as well as a filtration system and decoration.
The animal rights group People for the Ethical Treatment of Animals (PETA) has long campaigned against keeping goldfish in bowls or giving away fish in plastic bags as prizes at funfairs.
In 2004, the Italian town of Monza made headlines when it banned putting goldfish in bowls, while Switzerland has animal rights legislation that makes flushing a fish down the toilet illegal.
For those who dispose of their pets in ponds or rivers, scientific studies have found that some goldfish thrive afterwards — but at a cost to the local ecosystem because the fish are an invasive non-native species.
In 2015, officials in the western Canadian province of Alberta launched a “Don’t Let it Loose” campaign, pleading with locals to stop releasing goldfish into the waterways.
The ethical disposal service available at the Aquarium de Paris is aimed at offering an alternative.
Owners are also able to return afterwards to try to spot their former pets: quite a challenge in a tank of 600. — AFP

State-led PNOC seeks partners for integrated LNG hub project

By Victor V. Saulon, Sub-editor
STATE-LED PHILIPPINE National Oil Co. (PNOC) is seeking partners to build an integrated liquefied natural gas (LNG) hub under new terms that defines the project under a “solicited” scheme, after the government agency failed to attract acceptable proponents.
“They (PNOC) asked the approval of the board to look for a partner through solicited terms,” Department of Energy (DoE) Undersecretary Donato D. Marcos told reporters in a chance interview after a Senate hearing on Thursday.
The DoE Secretary chairs the PNOC board by virtue of his position as head of the department. PNOC President and Chief Executive Officer Reuben S. Lista previously said he preferred an unsolicited proposal for the project, which would give the original proponent a chance to match any counter-proposal from a challenger.
The Asian Development Bank (ADB), which the PNOC tapped to advise on the project, described a solicited tender as one that would require the bank to assist the agency in structuring the project.
The assistance includes preparing the pre-feasibility or feasibility study, drafting the tender and legal documents, and assisting in the negotiation of the project with the winning bidder until the concession agreement is signed.
Mr. Marcos said they did not receive any offers that were compliant, adding that no proponents submitted a comprehensive proposal.
Under a solicited proposal, Mr. Marcos said PNOC and its chosen partner would establish their own terms of reference.
“It is a race,” he said, with the bidders presenting their technical, legal and financial qualifications. The DoE would be the final approving agency with the issuance of permits that clear the project’s compliance with existing regulations.
Late last year, PNOC first hinted at bidding out the LNG project, which is expected to cost around $2 billion, after the unsolicited proposals submitted by foreign entities failed to meet specific requirements set by the company.
Mr. Lista had said the first proposal evaluated by the technical working group came from Korea Electric Power Corp. (Kepco). The submission was assessed but returned to the proponent because of unmet requirements, he said.
The technical panel then evaluated a submission from Lloyds Energy Group LLC and its partner Itochu Corp., which was also returned.
A proposal from China National Offshore Oil Corp. (CNOOC) was also returned because it was directed to the DoE instead of the PNOC technical working group, Mr. Lista said.
Mr. Marcos said the DoE had so far completed pre-application conferences with around 15 groups keen on putting up an integrated LNG hub, including the project being envisioned by PNOC.
He said the department would be meeting again on Friday with CNOOC, which he said partnered with Phoenix Petroleum Philippines, Inc.

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