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Competition body mulls challenges to ensure fair business environment

By Janina C. Lim
Reporter
TWO YEARS and four months since its formation, the Philippine Competition Commission (PCC) endeavors to implement the law aimed at ensuring fair business competition, while facing up to the bigger challenge of impressing on the public the need for that law.
“Initially, there was a lot of distrust,” PCC Chairman Arsenio M. Balisacan said in a discussion with BusinessWorld last Friday, June 1, when asked about attitudes in business toward the anti-trust body.
Republic Act 10667, known as the Philippine Competition Act of 2015, has been touted as a game-changer as it aims to sustain a business environment of equal opportunities, encouraging as well private investments, facilitating technology development and enhancing resource productivity.
“Unencumbered market competition also serves the interest of consumers by allowing them to exercise their right of choice over goods and services offered in the market,” the competition law read.
Lawyer and PCC Commissioner Johannes Benjamin R. Bernabe said the law has a “very good solid set of provisions” in addressing anti-competitive acts, abuse of dominant positions and reviewing big transactions.
“We have cherrypicked the best provisions in different jurisdictions,” he said, noting too that competition authorities abroad even laud the country’s model. However, implementation remains one of the main challenges of PCC.
“It’s going to be a very long road to develop a culture of competition in the Philippines. Not just a culture of competition but compliance with competition laws,” Mr. Bernabe said.
Mr. Balisacan voiced the same view, as he noted the perception in the Philippines that government agencies “are a kind of hindrance to business.”
“The ease of doing business gets complicated as another agency is created. That kind of perception is, of course, [there] when the competition commission was created,” the PCC chair said.
Indeed, much remains to be done to improve the country’s standing in the global landscape. In November last year, the World Bank released its annual ease of doing business report which showed that the Philippines dropped 14 notches to 113th among 190 countries covered.
Add to this the Sweden-based International Institute of Management Development’s (IMD) recently released World Competitiveness Yearbook rankings for 2018 wherein the country also saw a decline, this time, by nine places to 50th out of 63 economies surveyed.
The slump marked as the country’s largest annual decline over the last decade and the sharpest drop in the region.
Mr. Balisacan said it’s possible other countries are progressing faster than the Philippines in terms of bringing ease of doing business. He also noted, however, indicators in the IMD report as reflecting an upward movement in developments being done here.
“The challenge is really for us to speed up the pace of reforms so that we could improve our ranking,” the PCC chief said. “The Competition Commission has been part of that reform efforts to allow us to move fast to competitiveness….”
Commissioner Stella Luz A. Quimbo said the PCC’s entry also elicited some confusion as some businesses deemed the body’s mandate as being similar to that of the regulators assigned in each sector.
“In the case of Grab and Uber, people ask us what is PCC supposed to do versus LTFRB,” the economist said.
Ms. Quimbo cited the body’s mandate of monitoring prices post-mergers and acquisitions which has often been taken as similar to price-monitoring activities by some agencies.
When prices increase following a transaction, the PCC is tasked to find out if these “are not unreasonable.”
“So it would now seem like we’re coming in as a price regulator but actually not. It’s a price remedy that we are actually allowed to implement,” Ms. Quimbo said.
For her part, lawyer and PCC Commissioner Amabelle C. Asuncion said, “Some of them are even saying that we’re substituting our own evaluation for their business decisions which they’re supposed to have the right to do. That’s their business after all. That’s their perspective.”
But for the smaller players, the PCC has become their “guardian” in leveling the playing field.
“If you talk to, say, the small and medium enterprises, most of them will tell you that it is long overdue,” Ms. Asuncion said. “It’s about time. Obviously there is some dynamics going on there. Most of them are saying they’ve been suffering from some of these practices which make it more difficult for them to flourish in that sector in that industry.”
She also noted that some businesses, even big ones, are beginning to regard the agency with more positivity.
“As we progress, as we show the outcomes of our decisions, even big business is starting to appreciate why we’re here and what we’re doing. Again, it’s a work in progress but we recognize that there is that [perception] and we consider that challenge,” Ms. Asuncion said.

Cusi assures conversion of Malaya power plant

By Victor V. Saulon
Sub-Editor
THE Department of Energy (DoE) has not abandoned its plan to convert the 650-megawatt (MW) thermal Malaya power plant in Pililla, Rizal, into a gas-fired facility after its upcoming turnover to a new operations and maintenance service contractor.
“We just want to make sure that it continues to run until such time na meron na tayong (that we have) replacement,” Energy Secretary Alfonso G. Cusi told reporters.
“We want that to be converted. Of course, we’re looking at LNG (liquefied natural gas) as the transition fuel,” he added.
The Malaya power plant is being managed by state-led Power Sector Assets and Liabilities Management Corp. (PSALM) through an operation and maintenance service contract.
The current operator of the power plant is STX Marine Service Co. Ltd. whose contract will expire on Aug. 24 this year. It was rehabilitated in 1995 by Korea Electric Power Corp. under a 15-year rehabilitate-operate-manage-maintain agreement.
The plant was designated in 2014 as a “must-run” unit by the DoE. A must-run plant is compelled to run and provide the needed power as deemed necessary to ensure reliability of supply in the Luzon grid, especially in times of power shortfall, system security and voltage support.
Last month, PSALM bid out the operation and maintenance service contract of the plant. Mindoro Grid Corp. submitted the lowest bid of P227,040,000 and beating out the P258,720,000 offer of Soosan ENS Co., Ltd.
Part of the responsibilities under the service contract include the day-to-day upkeep, management and maintenance or repair of the power plant and its equipment, PSALM said.
Mr. Cusi said for now, what the DoE wanted is for the plant’s power capacity to be readily available. He said should the oil-fired power plant be converted using another fuel source, he wanted it to be gas.
“I don’t want it anymore to be oil,” he said.
Mr. Cusi’s preference for gas comes despite his previous pronouncements that the DoE under his helm would be “technology-neutral.” He had said power security and cost matter more.
The Philippines imports most of its oil requirements. Its gas supply comes largely from the Malampaya offshore gas find, which is expected to be depleted starting in 2024.
Mr. Cusi had said his policy was “all of the above technologies” working together to deliver secure and affordable power while meeting the country’s emission reduction commitments.
The DoE expects additional required capacity by 2030 to reach 17,338 MW to meet the country’s growth needs. This requirement is expected to hit 43,765 MW by 2040.
As of end-2017, the country has an installed capacity of 22,728 MW, of which coal has remained the dominant energy source with a share of 35.4%. Oil-based energy sources made up 18.3% while natural gas had a share of 15.2%.

DTI chief holds talks on trade with Azerbaijani envoy

IN LINE with the Duterte administration’s move to extend relations with nontraditional partners, the country expressed intent to export fruits to Azerbaijan while looking at the Eurasian country as an alternative source of oil.
Trade Secretary Ramon M. Lopez met with Azerbaijan Ambassador Tamerlan Garayev on May 31 to discuss trade opportunities between Baku and Manila.
“Our meeting with Consul Garayev is part of President Rodrigo Duterte’s strategy to seek out nontraditional trading partners. We see a lot of complementation between our countries,” Mr. Lopez was quoted in a statement on Monday.
The dialogue tackled boosting trade on food and, possibly, oil, and addressing both countries’ aims to bolster the development of their education and tourism sectors.
“PH is keen on exporting tropical fruits, like bananas and mangoes, to AZ. Exporting to the Eurasian country is also a boon for PH’s Halal industry, since its population is predominantly Muslim,” a statement by the Department of Trade and Industry (DTI) read.
The agency noted that Mr. Garayev cited the Philippines’ distinction for its mangoes and even identified Philippine national hero Jose Rizal as his childhood hero.
The Philippines sees itself potentially benefitting from Azerbaijan’s oil and natural gas industry, which makes up 90% of the country’s total exports.
The Azerbaijani ambassador also noted that his country needs to buoy the work force of its tourism and agriculture industries.
“Since there are only 300 Filipinos in AZ, Sec. Lopez suggested that Filipinos fill these vacancies,” the DTI said.
“The two countries will form a Joint Economic Commission to further these talks beginning with possible government-to- government transactions,” the DTI added, noting that the two countries could establish a student-teacher exchange program and tourism promotions.
The former Soviet republic currently ranks as the country’s 172nd trading partner out of 223; 153rd export market, out of 216; and 171st import source out of 198. — Janina C. Lim

Senator eyes energy options amid TRAIN costs

SENATE Majority Leader Juan Miguel F. Zubiri on Monday said the government may look at alternatives, such as renewable energy and electric vehicles, to address the rising costs of fuel instead of suspending the excise tax on fuel.
“May I make a strong suggestion to government: let us go back to looking at renewable resources of energy and e-vehicles because transport companies, the commuters, and car owners are complaining. Maybe we can promote the importation or manufacturing of e-vehicles in the country,” he told reporters at the Senate building in Pasay City.
“This is better instead of always trying to figure out how to bring down the prices of oil,” he added.
Mr. Zubiri also urged the Department of Energy (DoE) and the Department of Finance (DoF) to provide an incentives program for e-vehicles in the country and promote it as an alternative mode of transportation.
Jeepney drivers may also shift to e-jeepneys to save costs on fuel, he also said.
Under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN), purely electric vehicles and pickups are exempted from excise tax on automobiles.
The senator pointed out that higher costs of fuel was a worldwide issue, not a problem that the Philippines was solely facing. He said the suspension of excise tax on fuel would have minimal contribution to ease oil prices.
“The suspension of excise tax on fuel is one way to help. But I am pushing for alternative methods: e-vehicles, alternative fuels… Imagine if your car is an e-vehicle, it’s just plug and use. There is no problem, 100 kilometers in one charge,” he said.
According to the Department of Trade and Industry — Board of Investments (DTI-BoI), some 28 firms are engaged in the manufacturing of electric vehicles in the country, 11 in parts and component manufacturers, and seven importers of e-vehicles. Domestic sales in the industry posted P214.2 million in 2013 based on DTI-BoI.
Through Executive Order No. 488 issued in 2006, tariff rate of e-vehicle components were reduced to zero in order to further lessen the country’s fossil fuel consumption and allow manufacturers to import components at a more affordable price. — Camille A. Aguinaldo

Doing business in the Philippines made easier

The World Bank’s Doing Business 2018 report reveals that the Philippines has slipped when it comes to the ease of doing business to 113th place from 99th place last year. 190 countries were surveyed in the report. Perhaps in response to this development, the government recently passed Republic Act (RA) No. 11032 or “The Ease of Doing Business and Efficient Government Service Delivery Act of 2018.” This new law, which aims to reduce processing time, cut bureaucratic red tape, and eliminate corrupt practices, enhances the decade-old Anti-Red Tape Act of 2007, which focused on streamlining and improving the current systems and procedures of government services.
What are the significant highlights of RA No. 11032?
1. Prescribed processing time
All government agencies (national or local), government-owned and -controlled corporations (GOCCs), and government instrumentalities located in the Philippines or abroad shall comply with the prescribed processing time:

a. Simple transactions — Three working days

b. Complex transactions — Seven working days

c. Highly technical transactions — 20 working days

2. Automatic approval
If agency fails to approve or disapprove an original application within the prescribed processing time, the application shall be deemed approved. However, if the cause of the delay is due to force majeure or natural or manmade disasters, the mandated prescribed processing time shall be suspended and appropriate adjustments shall be made.
3. Zero-contact policy
Government employees shall have no contact in any manner with any requesting party concerning an application or request, except during preliminary assessment of the request and evaluation of submitted documents or unless strictly necessary.
4. Citizen’s Charter
All government agencies shall set up a current and updated Citizen’s Charter to indicate the following details:

a. Checklist of requirements for each type of application or request;

b. Procedure to obtain a particular service;

c. Person(s) responsible for each step of the process;

d. Amount of fees, if necessary;

e. Maximum time to complete the process; and

f. Procedure for filing complaints.

5. Administrative penalty for noncompliance
Any government official or employee found in violation of RA No. 11032 will face the following penalties:

a. First offense — Administrative liability with six months’ suspension

b. Second offense — Administrative and criminal liability

While the different agencies are expected to issue the related implementing rules and regulations, the inclusion of these five significant points is a welcome development indeed. To give teeth to the law, RA No. 11032 even provides for an administrative/criminal liability to erring government official or employees in applicable situations.
With the new law, applying for permits, licenses, and certificates will be easier and faster. According to the Doing Business 2018 report, good rules create an environment where new entrants with drive and good ideas can get started in business and where good firms can invest, expand, and create jobs, encouraging more Filipinos to be entrepreneurs.
RA No. 11032 would also complement the incoming Tax Reform for Acceleration and Inclusion (TRAIN) 2 package. The easier way of doing business, together with the proposed reduction of the corporate income tax rate under TRAIN 2, will enhance the country’s competitiveness against neighboring Asian countries and, hopefully, encourage more foreign companies to come to and invest in the Philippines. RA No. 11032 may also soften the negative impact of the proposed removal or reduction of the tax incentives of some businesses, which is feared to scare away potential and existing investors.
Several studies show evidence of a significant correlation between the ease of doing business indicators and the flow of foreign direct investments. Although this does not imply causation, the findings do support the claim that a country’s ease of doing business more accurately reflects the overall investment climate than what matters only to small and medium-sized domestic firms.
It will be interesting to see the effect of RA No. 11032 in the months and years to come. Note that the Bureau of Internal Revenue (BIR), through its issuances, is striving to align with the objective of helping taxpayers streamline their registration applications, tax filing, and compliance processes.
Taxpayers hope that, in the context of the ease of doing business in the Philippines, the BIR would continue to evaluate or re-evaluate its processes in various areas, such as in computerized accounting system (CAS) applications, securing of tax rulings and of certificates authorizing registrations in sale of shares or real properties (CPM1), and tax refund processes, among others. The BIR’s efforts will require additional funds, manpower, and technology support. However, many believe that resources, if channeled into further streamlining BIR requirements, will largely contribute to the call for ease of doing businesses in the Philippines, especially since tax requirements and constraints have a permanent and continuing impact on businesses.
 
Rufino Gerard G. Moreno III is an associate of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

Political Appointments Always Lead to Disaster

The dark cloud that hovered over the tourism industry has blown away, thanks to the termination of Wanda Teo and the resignation of Cesar Montano of the Department of Tourism (DoT) and Tourism Promotions Board (TPB), respectively.
The Commission on Appointments has since confirmed the appointment of Bernadette Romulo-Puyat as the new secretary of the DoT.
Although formerly working for the Department of Agriculture, Berna (the Secretary’s nickname) is known to be a fastidious worker, a fast learner and one with a knack for marketing. Berna’s appointment comes as a welcome relief to the stakeholders of the tourism industry, myself included.
With her leading our tourism offensive, we can now start the earnest effort of tourism promotions. In fact, even Budget Secretary Ben Diokno told me that Berna is a good choice for the tourism post. She was one of his best students in advanced economics back in the day.
This piece, however, is not about Berna. It is about Teo and Montano and how they made a farce of the tourism industry. I write this to underscore how presidential appointments made by virtue of political accommodation and not by merit, will always lead to disaster. The Teo and Montano catastrophe is a painful reminder of this.
Most of my regular readers know that I am a regular collaborator of both the DoT and TPB in the promotion of Philippine gastronomy. Many of the career executives in both agencies have become personal friends. To me, they shared how Teo and Montano abused and mismanaged their respective agencies. This is what I gathered.
ABUSE AND MISMANAGEMENT
Teo and Montano took credit for the 11% increase in tourism arrivals last year. In actuality, studies reveal that the increase was achieved on the back of the residual effects of the “Its More Fun in the Philippines” campaign and the inundation of low spending mainland Chinese visitors.
Insiders allege that the duo operated with no coherent marketing plan, no communications strategy, and no scheme to build upon the advances already made by previous marketing campaigns.
Instead, they implemented projects from the hip and spent taxpayers money freely according to their caprice.
In fact, it was only last March that the directors of the Tourism Promotions Board convened to flesh-out its working program. What should have been the first order of business was done 15 months after Montano took office. Wanda Teo is to blame as she sat as Chair of the TPB. Montano apparently never realized the need for a working program.
The first scent of rats began to reek when career employees of the TPB filed a complaint before the Presidential Action Center citing 24 wrongful, graft-ridden acts committed by Montano. This included sponsoring multimillion-peso concerts that had nothing to do with TPB’s mandate; sponsoring promotions sorties and paying himself a fee for his own musical numbers; hiring relatives for jobs already being performed by current employees; unauthorized travels to local and foreign destinations without itineraries; arrogant behavior towards the TPB staff and the stakeholders of the industry, among others.
The biggest gripe among the staff, however, was the fact that Montano was hardly present at the TPB office to manage its day to day operations. It was a ship without a rudder. If he was not traveling and entertaining friends and family in an exotic destination, he was at home. It was a known fact that Montano did not like to work in the decrepit TPB office since it did not “inspire” him.
Things unraveled when the Commission on Audit reported that Teo approved a P60-million sponsorship deal for a show on PTV-4 produced by her brother, Ben Tulfo, and cohosted by another brother, Erwin Tulfo. The graft-ridden deal was too blatant to be ignored.
In a pathetic attempt to divert public attention from her own case of graft, a black-ops campaign was launched to “expose” misuse of funds by tourism executives of the previous administration.
Graft charges were filed against former tourism secretary Ramon Jimenez and several other officials for allegedly conspiring to award and renew a tourism advertising campaign costing P1.2 billion.
The case holds no water, as evidence shows.
Teo’s caper to make this a yellow versus red affair didn’t work.
She lost the confidence of the president and got the axe. Along with her demise came the tarnishing of the Tulfo brother’s integrity.
In one fell swoop, the Tulfos lost their morale high ground to act as judge and jury of political personalities.
The DoT has a budget appropriation of P3.483 billion for the year, 10% of which must be appropriated to administration expenses, 10% for emergencies and contingencies, and the remaining 80% for promotional activities.
Of the promotional funds, Teo and Montano spent tens of millions in fashion shows and junkets for which they allegedly received kickbacks. The biggest corruption scheme however, was the P320-million Buhay Carinderia project, done in conjunction with a local events company, Marylindbert International.
While the contract clearly specified that the first tranche of sponsorship worth P80 million was to be released in four tranches after certain milestones were accomplished, records showed that full payment was actually made within one short month, prior to the milestones.
Exacerbating the situation was the fact that the P320 million project was awarded through a sponsorship scheme, not through a proper bidding exercise. There was no transparency in the process.
When the scam was exposed, Montano readily blamed Teo in typical crab mentality. He said it was all Teo’s scheme despite his signature appearing on the disbursement checks to Marylindbert.
Teo and Montano maintain that they never committed acts of graft. Their luxurious lifestyle today, however, bellies that assertion. They claim their lifestyles are afforded by their work prior to joining government — Teo as an outbound travel agent and Montano as an actor. Their claims have yet to be validated by the Ombudsman.
Teo and Montano were appointed to lead the DoT and TPB, respectively, not because they were the best and brightest, but because they were endorsed by political allies. It was a move that backfired. Not only have the duo marred the integrity of the Duterte administration, it also cast doubt on Malacañang’s ability to make unbiased decisions.
The Palace should take responsibility for this.
At the very least, it should make sure that Teo and Montano are thoroughly investigated by the Ombudsman and be made accountable for any act of graft and corruption. Only then can it redeem itself from the mess it created.
Finally, for goodness sake, stop presidential appointments based on political accommodations. It only leads to disaster.
 
Andrew J. Masigan is an economist

National ICT Month to tackle software development

Every year, I look forward to June as the Philippine National ICT Month. I’m not really sure what I want to celebrate this year in terms of what have been accomplished in ICT as a country.
In 2016, it was to celebrate the signing into law of the creation of the Department of Information and Communications Technology (DICT) which took almost 15 years in the making.
June 2017 was a bit quiet for the ICT Month for me because I was too eager to apply for my senior citizen card. But this year, I’m up and about to share with you the excitement of things I am unlearning to give room to new thinking in software delivery at this age of disruption.
This year’s theme of the Management Association of the Philippines (MAP), “Competing in the Age of Disruption,” is indeed relevant in the past and coming years for businesses and industries.
We have seen how software and technologies have transformed businesses and industries like Uber, Grab, Airbnb, Amazon, Facebook, Google and many more.
Having spent the last 35 years in software delivery, I obsess with the goal of ICT to deliver software projects on time and within budget. Statistics have not been encouraging on successful software delivery.
In a McKinsey & Co research, conducted in collaboration with the University of Oxford, half of large IT projects, with initial price tags over $15 million — massively blow their budgets.
On average, large IT projects run 45% over budget and 7% over time, while delivering 56% less value than predicted. The study finds software projects run the highest risk of cost and schedule overruns. Even recently, Enterprise Project Management Hub reports the failure rates of IT projects are as high as 70%.
If we consider software as a complex product, then the use of management processes and work techniques that are radically different from software development which failed to deliver should be at the top Board agenda.
What can address the complex adaptive problems of businesses and effectively deliver products of the highest value? How can we enhance customer experience that would provide for a disruption-proof business and would leave competitors scrambling to catch up? There can be no room for complacency in an increasingly complex and competitive world; business must open to new ways of software delivery and be one step ahead of disruption.
In the AGILE software community, the manifesto is to uncover better ways of developing software by doing it and helping others do it.
Organizations expect quality software delivered on time and within budget; but requirements keep changing! So instead of getting stuck with requirements defined months before, an agile ICT embraces the change and delivers product with the greatest business value first, while costs, time, and scope are still managed.
Software delivery in this age of disruption can be managed by specifying small, usable features of the product, avoiding costly year-long project surprises, in order for a working software to be delivered in weeks rather than months or years.
Many companies are embracing new ways like SCRUM, a process framework within which management can address complex adaptive problems while delivering products, like software, of the highest possible value.
In traditional waterfall software delivery, the Project Manager is responsible for scope, cost, quality, risk, and requirements.
In the SCRUM framework, these responsibilities are shared in different roles: SCRUM Master — guides the team in handling their tasks, makes sure there are no impediments; Product Owner — responsible for maximizing the value of the product by setting priorities for features; and the Development Team — professionals who do the work of delivering a releasable increment of the product, progress reporting and quality control. Organizations need not stick to slow and tedious ways when there are possibilities for flexibility to respond quickly to changes in requirements. Users can see a working software in days not months or years.
The SCRUM Master, the Product Owner and the Development Team work together as an agile team every day. Other management processes can also be integrated with the SCRUM framework in order to generate the productivity and much awaited value from software.
It is clear then — Agile software delivery is exciting and can prepare us for the age of disruption.
I look forward to see you at the Dusit Hotel in celebration of the National ICT Month and to moderate a panel of MAP members to discuss how technologies are preparing their businesses and industries to compete in this Age of Disruption.
The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
 
Helen Perez-Macasaet is the Chair of the MAP ICT Committee and Chair of Pentathlon Systems Resources Inc.
pentathlonsystems.com
hpmacasaet@pentathlonsystems.com
map@map.org.ph
http://map.org.ph

Sex doesn’t sell for streaming apps chasing investors

By Tim Culpan
IN A CORNER of M17 Entertainment Ltd.’s corporate headquarters in Taipei’s Xinyi district hang a row of televisions.
Staffed 24-7 by content editors for M17’s live-streaming app 17, the screens display dozens of performances, mostly by women, in real time. The company’s Sky Eye team, many of whom are female, is on the lookout for innovative acts worthy of a boost in promotion — a funny outfit, a unique prop — as well as any that breach its rules on salacious content (read: too much skin).
“Artist and user misconduct” is among the risk factors listed by M17 in its prospectus ahead of a New York listing this week.
Our business and the public perception of our brands may be materially and adversely affected by misuse of our platforms.
That’s an understatement. The app was booted from Apple, Inc. and Google app stores for about two months back in 2015 amid allegations that it was peddling what amounted to soft porn. Such content wasn’t produced by M17, but the company was caught flat-footed failing to prevent some streamers from showing as much skin as possible to attract audiences and entice users, mostly men, to send virtual gifts — which could then be converted into real currency by the performer.
The skin conundrum isn’t unique to M17, whose audiences are mostly in Taiwan and Japan. Shares of Momo, Inc. have tripled since it pivoted from being a dating-app provider to a platform that connects wannabe pop stars with entertainment-hungry audiences. The Beijing-based company is now valued at $9.4 billion. A compatriot, YY Inc., added Bigo Live to its portfolio, helping it spread beyond China to Southeast Asia and India. Both moves heighten the role of content monitoring in avoiding backlash from regulators or social mores.
But wherever these platforms go, so too do whispers about soft porn and paid dating. It’s difficult to confirm or disprove that performers and users engage in such practices, as many of the allegations come by way of salacious news reports or social media gossip.
Which is why companies like M17 are going to great lengths to build out monitoring and censorship technologies to enforce standards. Getting on the wrong side of local regulators and hyper-sensitive app-store gatekeepers is one thing; pushing too far also risks off-siding users themselves.
Flirtation and light-hearted fun are great ways to keep audiences coming back to their favorite performers, and reward them with tips. But although many users and company executives may not be conscious of it, straying into NSFW territory risks ruining the magic of a harmless online encounter, after which interest and engagement could drop sharply.
There’s also no business benefit in facilitating unnecessarily risque content or off-line meetups, given the costly downside of getting booted from an app store. Which is why taking skin out of the game could end up being the smartest path for a live-streaming industry trying to persuade investors to tune in.
 
BLOOMBERG

Hong Kong banks, meet the 21st century

By Andy Mukherjee
IRONICALLY, the city that should have been first to be swept up by China’s fintech revolution is still a picture of old-world conservatism. Not for long, though. Hong Kong, whose last big innovation in retail payments is as old as the former British colony’s 1997 handover to China, is on the cusp of big change.
The Hong Kong Monetary Authority’s (HKMA) revised May 30 guidelines for online-only banks will lead to the first licenses being issued by the end of this year.
More than 50 parties, including the likes of homegrown fintech players such as WeLab Ltd., backed by billionaire Li Ka-shing, have evinced interest, even though the minimum capital requirement has been set at a not-insignificant HK$300 million ($38 million). And these will have to be real business plans, marrying traditional risk management with technology; concepts alone won’t fly, the HKMA has told applicants.
Still, the prize will be worthwhile.
HSBC Holdings Plc, Standard Chartered Plc and Bank of China (Hong Kong) Ltd., the city’s three note-issuing banks, can’t take their stranglehold on deposits for granted. Not when the new virtual lenders are being told to refrain from imposing minimum balances on customers.
The mainland’s BAT trio of Baidu, Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are waiting for any opening to penetrate the territory’s payment landscape. Their main battle currently is with Octopus, a contactless card system majority-owned by subway operator MTR Corp. The ubiquitous card became popular very quickly during the handover, when there was a shortage of coins; it works like a charm on public transport and in convenience stores. But Octopus hasn’t had the same success with newer technologies like mobile payments. It takes two weeks to link Octopus O! ePay wallet with a traditional bank account online. That’s two weeks.
Octopus, as well as WeChat Pay, Alipay and HSBC’s PayMe have stored-value-facility, or SVF, operations in the city. Octopus gave up its deposit-taking license to become an SVF. But digital wallets are struggling even to dislodge cash from Hong Kong taxis.
Rival Singapore, which has been faster in emulating China’s success with quick-response-code-based payments, will have a national QR code standard later this year. Meanwhile, Singapore’s largest lender, DBS Group Holdings Ltd., runs the world’s biggest banking application programming interface platform for third-party developers. Results are starting to show in the lender’s return on equity: Every DBS digital customer is three times as valuable to the bottom line as somebody who walks into a branch.
For Hong Kong to lift its fintech game, it needs to dismantle the silos in which deposits and payments operate. Online-only outfits could be the way to do it.
What strategy will the brick-and-mortar banks adopt?
Bank of East Asia Ltd., a 99-year-old, family-owned lender, has said it may not want a virtual bank license on its own, but is keen to work with partners.
The shakeup of the competitive environment will force the likes of HSBC, which are already making significant investment in mobile-based banking, to step on the gas. Whether they finally arrive in the 21st century as traditional banks, or under a new license, is immaterial.
 
BLOOMBERG

Peso down due to strong US data ahead of local May inflation print

BW FILE PHOTO

THE PESO slipped further against the dollar on Monday as local financial markets watch out for the May inflation print.
The local unit ended Monday’s session at P52.58 against the greenback, three centavos lower than the P52.55-per-dollar finish on Friday.
The peso slid as it opened the trading session at P52.58 versus the dollar. It declined further to hit a low of P52.60, while its intraday high stood at P52.50 against the greenback.
Dollars traded were at $493.8 million, down from the $587.5 million that switched hands last Friday.
Traders interviewed on Monday said the peso traded within a tight range as investors stayed on the sidelines ahead of May inflation data due for release by the Philippine Statistics Authority Tuesday, June 5.
“The peso traded fairly quiet today. The volume was also lower than usual,” the trader said in a phone interview on Monday.
“I think investors are waiting for the Philippine inflation data on Tuesday. That’s why we traded within the range.”
Sought for comment, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said May headline inflation “may well be near 5%.”
Analysts said in a BusinessWorld poll that inflation in May may have picked up from a year ago to a fresh five-year high. The poll among 10 economists yielded a 4.9% median rate which, if realized, falls in the midpoint of the central bank’s 4.6-5.4% forecast range given last week.
This median estimate is also well beyond the government’s 2-4% target for the year.
Mr. Asuncion, who gave an estimate matching the median rate, said faster inflation may dampen the peso further.
“It may weaken the peso further. It’s a risk I have flagged,” he said. “However, it seems the main driver [of the inflation], higher global oil prices, have recently eased.”
Meanwhile, another trader attributed the weak peso to upbeat jobs data out of the US.
“The peso weakened today following the release of higher-than-expected US non-farm payrolls data last Friday,” the trader said in an e-mail on Monday.
The US economy added 223,000 new jobs last month, better than the market expectation of 188,000. On top of this, the unemployment rate was at its 18-year low of 3.8%.
For Tuesday, Mr. Asuncion sees the peso moving between P52.40 and P52.80 against the greenback, while the first trader gave a P52.50-P52.65 forecast range.
“The peso might find some strength [on Tuesday] ahead of likely stronger local inflation data,” the second trader noted, saying the peso may trade between P52.40 and P52.70. — Karl Angelo N. Vidal

PHL stocks decline ahead of May inflation data

SHARES FELL on Monday as investors resorted to profit taking ahead of the release of inflation data on Tuesday.
The bellwether Philippine Stock Exchange index (PSEi)dropped 0.66% or 50.65 points to close at 7,579.61 Monday, June 4.
The broader all-shares index also shed 0.50% or 23.54 points to end at 4,615.18.
“Philippine investors saw this as an opportunity to take profits after Friday’s meteoric rise. This comes ahead of the inflation data which may even be the highest year-to-date, when it is released tomorrow morning,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message on Monday.
The Philippine Statistics Authority will release official inflation data Tuesday, June 5.
In a BusinessWorld poll of 10 analysts, inflation was projected to reach a median estimate of 4.9% in May, which could be the fastest in at least five years.
The median falls within the 4.6%-5.4% range given by the Bangko Sentral ng Pilipinas and also matches the estimate given by the Department of Finance for this month. However, this is well beyond the government’s 2-4% target for the year.
Analysts blamed higher oil and food prices for the likely all-time high inflation print.
“Expectations are for May’s figure to even be higher than April’s 4.5% (using 2012 prices)… This will give a signal if the Monetary Board will hike rates once again in their next meeting on June 21,” Papa Securities Corp. trader Gabriel F. Perez said in an e-mail.
The main index was unaffected by the rally seen in Wall Street last Friday, where the Dow Jones Industrial Average jumped 0.90% or 219.37 points to 24,635.21, while the S&P 500 index surged 1.08% or 29.35 points to 2,734.62. The Nasdaq Composite index also picked up 1.51% or 112.21 points to 7,554.33.
Asian indices, meanwhile, tracked the positive sentiment seen in US counterparts last week due to higher-than-expected jobs report. Investors have also started to shrug off concerns on the US-China trade war.
Back home, sectoral indices were split between gainers and losers. The industrials sub-index led decliners with a loss of 1.8% or 196.34 points to 10,657.83, followed by holding firms which gave up 1.13% or 85.73 points to 7,477.87. Financials went down 0.92% or 17.49 points to 1,872.27.
On the other hand, the mining and oil counter went up by 1% or 99.72 points to 10,041.19. Property rose 0.57% or 21.63 points to 3,799.81, while services climbed 0.50% or 7.48 points to 1,479.24.
Some 464.51 million issues switched hands, resulting in a turnover of P5.48 billion, lower than the P5.56 billion recorded last Friday.
Decliners outpaced advancers, 113 to 72, while 58 names ended flat.
Foreign selling persisted for the 14th consecutive day, with net outflows reaching P240.53 million on Monday, albeit lower than the previous session’s P303.85 million. — Arra B. Francia

Senator urges DoH Dengvaxia fund

By Camille A. Aguinaldo
SENATOR Richard J. Gordon on Monday urged the Department of Health (DoH) to allocate a special fund using its current budget to provide medical assistance to Dengvaxia-vaccinated children since the supplemental budget for the program has stalled in the Senate.
“The DoH and Philhealth should coordinate to help those who were vaccinated with Dengvaxia. The DoH has an emergency fund that can be used for the time being. I don’t think too much money would be used because not all those who were vaccinated needed to be examined immediately,” he said in a statement.
The Senate failed to pass the P1.16 billion supplemental budget for medical assistance of Dengvaxia-vaccinated children on its last day of session on May 30 despite a certification of urgency from President Rodrigo R. Duterte.
The House of Representatives has approved its counterpart version of the bill last May 28 and has transmitted its version to the Senate on May 29.
The anti-dengue vaccination program was suspended last year following the analysis of Dengvaxia-manufacturer Sanofi Pasteur that the vaccine may pose health risks for those vaccinated without having dengue.
The Senate Blue Ribbon committee chaired by Mr. Gordon recommended last April the filing of graft charges against former president Benigno Aquino III, former Health Secretary Janette P. Loreto-Garin, former Budget Secretary Florencio B. Abad over the alleged hasty procurement of the vaccines.
Meanwhile, former president Benigno S.C. Aquino III was at the Department of Justice on Monday to answer three complaints accusing him and other former Cabinet officials, as well as officials of Sanofi Pasteur, of graft, violation of RA 9184 (Government Procurement Reform Act), and other charges.
Mr. Aquino was accompanied, among others, by his former health secretary Janette L. Garin and former budget secretary Florencio B. Abad.
The former president also defended the Dengvaxia program on his watch, saying the benefits gained from the vaccination program outweighed the risks.
He also criticized President Rodrigo R. Duterte on his stance on China.

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