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BSP delivers a jumbo 250-basis point RRR cut to 7%

The Bangko Sentral ng Pilipinas (BSP) said reserve ratios for universal and commercial banks will be reduced to 7% effective October 25. — BLOOMBERG

The Bangko Sentral ng Pilipinas said on Friday that the RRR for universal and commercial banks will be cut by 250 basis points to 7% of deposits from 9.5%. The reduction in the amount that lenders must set aside in reserve, effective October 25, was intended to lower intermediation costs and promote better pricing for financial services, it said in a statement.

Banking stocks rallied after the announcement, with the financial sector index jumping by the most in a month. Metropolitan Bank & Trust Co., the nation’s No. 2 lender rose almost 3% while Bank of the Philippine Islands gained 3.4%.

The central bank is pulling another lever to boost growth after it kicked off a rate cut cycle last month to bring down borrowing costs from a 17-year high. Currency gains, thanks in large part to the Federal Reserve’s easing pivot, and slowing domestic inflation are giving emerging nations including the Philippines more scope to turn their focus toward supporting their economies.

While the Philippines is among the region’s growth stars, the key rate at the highest since 2007 has constrained domestic activity. Growth in consumption, which makes up some 70% of output, matched the first quarter pace of 4.6% — the slowest expansion post-pandemic.

“By reducing the RRR, the BSP can provide banks with more funds to lend, which can stimulate economic activity,” said Dan Roces, chief economist at Security Bank Corp. in Manila. The cut could release about 250 billion pesos into the financial system, he said.

“While the BSP may choose to be cautious in its policy easing due to the size of the RRR cut, it still has flexibility given the recent significant reduction in US interest rates,” Mr. Roces said.

FURTHER REDUCTIONS
The BSP had long stressed that the reserve requirement isn’t a monetary policy tool, and that the adjustments were meant to reduce distortions in the financial system. Meanwhile, banks have long sought lower RRR to trim their costs and free up funds for lending.

The latest decision will also reduce digital banks’ reserve ratios by 200 basis points to 4%, while a triple R reduction of 100 basis points will be implemented for smaller lenders, the central bank said.

“As inflation continues to track a target-consistent path over the next two years, the BSP will reassess the need for further reductions in the RRRs to better align them with regional norms over the medium-term,” it said.

Earlier this year, Governor Eli Remolona said that he wants to slash the reserve ratio to 5% by the end of his term in 2029. The governor also telegraphed the latest move when he said on Sept. 18, hours before the Fed, that a substantial reduction in the RRR will be underway. MR. Remolona’s predecessor also implemented a 250-basis-point cut in banks’ reserve ratios in June 2023.

Separately on Friday, MR. Remolona signaled that the central bank will continue unwinding its most aggressive monetary tightening campaign in two decades, in line with his earlier guidance.

“We had anticipated the cut,” Mr. Remolona said in a mobile-phone message on Friday, when asked whether the Fed’s half-point rate cut will convince policymakers to sustain policy easing next month. “To the extent it helps the US economy, it also helps us, including through our exports,” the governor said of the Fed move this week. — Bloomberg

Students encouraged to pursue STEM careers, help solve nation’s problems

STOCK PHOTO | Image by Christian Reil from Pixabay

by Almira Louise S. Martinez, Reporter

Students were encouraged by the Department of Science and Technology (DOST) on Wednesday to engage more in science, technology, engineering, and mathematics (STEM) related careers. 

“We ignite within you a yearning for discovery, curiosity, critical thinking, and innovation, and from that spark, and passion to serve the country and Filipinos,” DOST Undersecretary for Scientific and Technical Services Maridon O. Sahagun said at the 2024 National Youth Science, Technology, and Innovation Festival (NYSTIF).

2024 National Youth Science, Technology, and Innovation Festival (NYSTIF) | Almira Louise S. Martinez

According to Ms. Sahagun, the department hopes to inspire the youth to be more interested in work opportunities in STEM to lead and develop solutions to the nation’s problems and challenges.

“Your ideas possess the power to unlock the doors to a brighter and more sustainable tomorrow.” 

DOST Secretary Renato U. Solidum Jr. added that the younger generation must utilize science and technology as the ‘driving forces that propel our world forward.’ 

“Your country is looking at you for leadership, for innovative ideas that will improve lives and propel us in the future,” he said. 

Based on the latest Social Weather Stations (SWS) survey, President Ferdinand R. Marcos Jr.’s administration received ‘good’ ratings on developing science and technology.

“While we are elated by this validation of our hard work, we view it more as a challenge to do even better,” he said on Saturday. 

 

PISA preparations 

Last Saturday, the Department of Education (DepEd) presented its general plans in line with the 2025 Program for International Student Assessment (PISA) test preparations. 

The PISA is a large-scale study assessing the knowledge of 15-year-old students enrolled in Grade 7 or higher in mathematics, science, and reading. 

“We intend to provide them with the resources. So it’s going to be like a bar exam,” Education Secretary Juan Edgardo “Sonny” M. Angara said at the Senate Committee on Finance Deliberations on the DepEd’s FY 2025 budget proposal. 

In the 2022 PISA data released this year, the Philippines ranked 77th out of 81 countries globally. 

ADB approves $500 mln loan for Indonesia’s energy transition efforts

 – The Asian Development Bank (ADB) said on Friday it has approved a $500 million policy-based loan to Indonesia to fund a program designed to help its energy transition efforts.

Resource-rich Indonesia, which is aiming for net-zero carbon emissions by 2060, has been trying to reduce the use of coal with financial support from the G7’s Just Energy Transition Partnership (JETP).

Highlighting Indonesia’s reliance on coal, the ADB said in a statement the program “focuses on establishing a robust policy and regulatory framework for clean energy transition, strengthening sector governance and financial sustainability”.

“Indonesia is at a critical juncture in its energy transition journey,” said Jiro Tominaga, ADB’s country director for Indonesia, adding the loan supported Jakarta’s efforts “to accelerate its shift towards sustainable and clean energy”.

The ADB did not immediately respond to a request for comment when asked about specifics on how the funds would be spent.

The program includes developing a JETP-supported investment and policy plan, and improvements for scaling up renewable energy capacity, said ADBwhose co-financing partners for the program include France’s development agency, Agence Française de Développement (AFD), and German state lender KfW.

Funds worth $20 billion have been pledged under a JETP plan for Indonesia to cap emissions in the power sector at 290 metric tons of carbon in 2030, but disbursement of funds has been slow.

Asked about JETP’s slow implementation, Britain’s development minister Anneliese Dodds told Reuters this week that JETP is a long-term partnership that requires big changes around infrastructure.

“This is not going to happen overnight,” she said. “The UK is really working to renew that approach so that together we can be focused on green growth and economic development.”

Ms. Dodds added Indonesia has an opportunity to be a carbon sink for the region and that Britain intends to work with other JETP partners to accelerate efforts such as poverty alleviation and deforestation. – Reuters

Malaysia arrests CEO of Islamic firm as police widen raids in child sex abuse case

STOCK PHOTO | Image by rawpixel.com from Freepik

 – Malaysian authorities on Thursday arrested the chief executive and other senior managers of an Islamic conglomerate accused of running charity homes where children were allegedly sexually abused, amid a widening police dragnet in the case.

Nasiruddin Mohd Ali, the head of Global Ikhwan Services and Business (GISB) Holdings which police say is linked to a banned religious sect, was detained along with 18 people in an early morning raid on four residential premises in Kuala Lumpur, the Inspector-General of Police Razarudin Husain told Reuters.

Five other people linked to the company were also detained at the border with Thailand, Mr. Razarudin said.

In a statement posted on Facebook late on Thursday, GISB said its CEO and other top leaders were being detained by authorities and called for patience for the results of the investigation to be released. Nasiruddin and his lawyer were not immediately available.

Local media had earlier reported the arrests.

GISB’s Nasiruddin on Saturday had denied allegations of widespread abuse at the youth care homes and other misconduct, though he acknowledged that “one or two” cases of sodomy occurred.

Police last week rescued more than 400 children and youths from the homes they said were run by GISB, though the firm has denied managing the shelters. Many of those rescued showed signs of neglect, as well as physical and sexual abuse, officials say.

Mr. Razarudin said the people detained on Thursday included Nasiruddin’s two wives, his children, as well as several children of late Malaysian preacher Ashaari Mohamed, the founder of the Al-Arqam religious sect which was outlawed by the government in 1994 for allegedly spreading deviant Islamic teachings in the Muslim-majority country.

Three men detained as part of the police investigation into GISB were also separately charged in court on Thursday, Mr. Razarudin said.

The men, who pleaded not guilty, face several charges of allegedly sexual assaulting boys at a religious school in Negeri Sembilan state, court charge sheets seen by Reuters showed.

Each charge carries a maximum penalty of 20 years in prison, caning, or both.

Police previously charged two other people as part of its probe into GISB, which has businesses in over 20 countries ranging from mini-marts to restaurants and travel services. The firm is also under investigation for money laundering, religious offences and other crimes. – Reuters

Philippines posts $88 mln balance of payment surplus in August

BW FILE PHOTO

MANILA – The Philippines’ overall balance of payments (BOP) position was a surplus of $88 million in August, increasing from a surplus of $62 million in July, the central bank said on Thursday.

The cumulative BOP level as at end-August was a $1.6 billion surplus. The Philippine central bank has forecast a $1.6 billion BOP surplus for 2024. – Reuters

Revolutionizing hospitality: Converge Concierge brings high-tech solutions to hotels

Converge Co-Founder and Chief Executive Officer Dennis Anthony Uy addressed guests and media present during the launch of his ICT company’s latest hospitality business solution.

The Philippines’ leading fiber broadband provider is set to revolutionize the country’s hospitality sector with a ground-breaking product that promises to elevate guest experiences and streamline hotel operations.

Converge ICT Solutions Inc. recently launched the Converge Concierge with SkyTV at the iconic Manila Hotel on Sept. 12. The ICT company’s new product is an innovative all-in-one smart TV solution aimed at elevating and modernizing the guest experience with a comprehensive digital solution.

This digital concierge service, touted as a ‘first’ in the Philippines, is a hospitality tv solution. The platform features an in-room entertainment and information hub, complete with Internet-of-Things-enabled smart controls and the high-definition IPTV, SkyTV. This advanced system enhances the stay of guests while helping hotels improve service quality.

“What we want to create is a simple and time-saving experience for the guests so they may focus on what’s essential during their stay, whatever that may be: to relax or unwind, or prepare for a business conference. From their TV, they can order room service, contact the front desk, view their flight details, and of course, access in-room entertainment.This is an all-in-one hotel information and entertainment hub. All this, on top of the high-speed broadband internet we provide,” said Converge Chief Executive Officer and Co-Founder Dennis Anthony Uy.

Converge’s new product grants guests easy access to a wide range of entertainment options. This includes live channels, cable TV, streaming platforms, and even in-app games.  Mr. Uy clarified that the new service SkyTV, is available for all hotels and not exclusive to hotels utilizing Sky Cable services.

The hospitality TV solution offers ease and convenience not just for guests but for hotel management; the system can be integrated with existing hotel property management systems thus allowing a smooth transition in managing bookings, guest services, and billing processes.

“We’re ready to provide tailor-made solutions through this platform for individual properties or hotel groups alike. We can customize the features  for example, to control lighting and air conditioning in the room. On the backend, it integrates with the hotel management system so all the checking in and checking out can be aligned with the billing system,” Benjamin B. Azada, Chief Commercial Officer of Converge, said. 

Converge Executive Vice-President and Chief Commercial Officer Benjamin B. Azada and Converge Technical Manager Bryan Uy entertained questions during a Q&A session about Converge Concierge.

“The interface is customizable so we can tailor it depending on the needs of the customer and their clients. If you want to have four, five or six buttons, we can do that. Additionally, we have options for languages too. So it’s very customizable and can be tailored depending on client hotels,” added Converge Technical Manager Bryan Kendrick Uy.

To meet the varied demands of hospitality businesses based on their size, the content and bandwidth of the solution can be adjusted. Due to Converge Concierge’s scalability and adaptability, the system delivers a consistently high-quality experience, regardless of hotel size or specific demands.

“This is a scalable platform. This is not only for the big hotels but also for medium-sized and small hotels. Everyone can adopt this platform and we hope to really help with the transformation of the hospitality industry,” Mr. Azada said.

The hospitality TV solution will be bundled with the fiber internet connection. To help ease the financial burden on smaller hotels, the offering will be available via monthly subscription and other options.

The launch of Converge Concierge comes at a crucial time for the hospitality industry, as tourism peaks and hotels seek innovative ways to enhance guest experiences and improve operational efficiency. Converge’s new product equips hotels with the latest technology to navigate the future of hospitality, ensuring both guest satisfaction and operational success in an increasingly digital world.

 


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Cross the Proscenium Link and Explore a New World of Urban Living

The Proscenium Retail Row

Step across the Proscenium Link and discover Rockwell Center Makati’s newest hotspot: The Proscenium Retail Row. Just a stroll from Power Plant Mall, this vibrant open-air destination blends upscale shopping, dining, and leisure with modern design and easy access.

Breathe, Stroll, Shop

Joel’s Place

Say goodbye to crowded malls. At The Proscenium Retail Row, you’ll enjoy an outdoor shopping experience that’s both stylish and refreshing. Explore a extraordinary selection of high-end fashion, specialty stores, and lifestyle essentials, all in one scenic walk.

Pizzulu

Shop, Dine, Repeat

Where else can you dine while you shop? Joel’s Place lets you enjoy a meal while picking up your daily essentials. Looking for a cold brew? The Perfect Pint serves craft beers, including their exclusive Proscenium Pale Ale. For steak lovers, Carmelo’s Steakhouse offers premium cuts in a sophisticated setting; while hidden gem Bar Good Times—tucked inside Nori—provides speakeasy-style cocktails for the perfect nightcap. And if you crave Japanese cuisine, Mitsuyado Izakaya brings authentic flavors straight from Japan.

Carmelo’s Steakhouse

More Than Just Shopping

It’s not all about retail—The Proscenium Retail Row offers a complete lifestyle. From custom wardrobes at Bianca Cordero Studio to pet grooming at Pet Stylers MNL, you’ll find everything you need to live your best life. Beauty services at Ayumi, wellness at Kalm Spa & Aesthetics, and energizing workouts at Strong Pilates complete the experience.

Brunch Bureau

Culture Meets Creativity

What makes The Proscenium Retail Row truly special? It’s not just the shopping—it’s a cultural hub. With the School of Fashion and the Arts (SOFA) and the upcoming Rockwell Performing Arts Theater, expect a thriving scene for creatives and culture lovers alike.

Feta

Your New Go-To in Makati

Joel’s Place

Whether you’re a Rockwell resident or simply visiting, The Proscenium Retail Row delivers a unique mix of luxury, culture, and convenience in the heart of Makati. Don’t miss your chance to explore the city’s premier lifestyle destination.

 


Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.

Fed cut gives BSP more space to ease

A sign for the Federal Reserve Board of Governors is seen at the entrance to the William McChesney Martin Jr. building in Washington, D.C. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

THE US Federal Reserve’s long-awaited rate cut paves the way for the Bangko Sentral ng Pilipinas (BSP) to continue its own easing path, analysts said.

“The new monetary stance of the US, highly anticipated by now, could in fact provide the BSP more space to ease, expand domestic liquidity and stimulate growth,” Diwa C. Guinigundo, country analyst for the Philippines of GlobalSource Partners, said in a Viber message.

The US central bank on Wednesday kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction that Federal Reserve Chair Jerome H. Powell said was meant to show policy makers’ commitment to sustaining a low unemployment rate now that inflation has eased, Reuters reported.

“We made a good strong start, and I am very pleased that we did,” Mr. Powell said at a press conference after the Fed, noting its increased confidence that the country’s bout with high inflation was over, reduced its benchmark policy rate by 50 basis points (bps) to the 4.75%-5% range. “The logic of this both from an economic standpoint and from a risk management standpoint was clear.”

In addition to approving the half-percentage-point cut on Wednesday, Fed policy makers projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full-percentage point next year, and half of a percentage point in 2026.

“With the Fed cutting by 50 bps, (the BSP) has more than enough space to cut the target reverse repurchase (RRP) by 25 bps in October with September inflation possibly dipping to 2.3%,” Metropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa said on X.

Last month, the Monetary Board reduced the RRP rate by 25 bps to 6.25% from the over 17-year high of 6.5%. This was the first time that the BSP reduced rates in close to four years.

BSP Governor Eli M. Remolona, Jr. has said that the central bank can deliver another 25-bp cut in the fourth quarter. The Monetary Board’s remaining meetings this year are scheduled for Oct. 17 and Dec. 19.

Patrick M. Ella, economist at Sun Life Investment Management and Trust Corp., said the BSP would likely cut by at least 25 bps at its meeting next month.

“I expect another 25-bp cut in the next meeting (at least) because if the Fed hikes another 50 bps, the BSP has to match the magnitude of the cut in order to tame the expected strength in Asian currencies due to the Fed’s cutting cycle,” he said in an e-mail.

Mr. Ella said that if the Fed continues its pace of 50-bp sized cuts, the BSP may need to follow suit.

The Fed had kept its policy rate in the 5.25%-5.5% range since last July, when it ended an 18-month rate-hike campaign that was meant to control a surge in inflation, which soared in 2022 to a 40-year high, Reuters reported.

Rate futures traders moved to price in even more easing than projected by the Fed, with the policy rate now expected to be in the 4%-4.25% range by end of this year.

Mr. Mapa said the “door is wide open” for the BSP to deploy further policy easing in October and reserve requirement ratio (RRR) cuts in the near term.

He noted that if the BSP would keep rates steady in October, the Fed would still have two meetings in between the Monetary Board’s own December meeting. “Makes perfect sense for BSP to front load cuts,” he added.

The Federal Open Market Committee’s (FOMC) last two meetings this year are set for Nov. 6-7 and Dec. 17-18.

Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said that the BSP has room to reduce the benchmark rate two more times this year, but forecasts just one more rate cut.

“Most activity indicators remain robust even if policy rates are close to 6% and the Monetary Board needs to reduce the RRR meaningfully and build up its gross international reserve (GIR) buffer while it still has the space to do so,” he said.

“Related to GIR accumulation, the BSP can probably become as aggressive as the FOMC in the cuts if our GIR is brought up closer to the Philippine economy’s $130-billion external debt,” he added.

External debt hit a record $130.182 billion at the end of June, up by 10.4% from  a year ago.

Gross dollar reserves inched up by 0.18% to $106.92 billion as of end-August from $106.74 billion as of end-July. This was the highest level of dollar reserves in 29 months or since the $107.3 billion in March 2022.

“The BSP hasn’t been able to build up its GIR significantly since the rate hike cycle in mid-2022. The beginning of the US easing cycle opens up the window as long as we have a comfortable differential between Philippine and US policy rates,” Mr. Neri said.

He also noted that latest macroeconomic data show “robust economic activity,” citing easing inflation, strong employment figures and double-digit lending growth.

Headline inflation slowed to 3.3% in August from a nine-month high of 4.4% in July.

“The current Monetary Board doesn’t seem to be rushing to cut rates as it also needs to proactively give room for the planned ‘substantial reduction’ in our RRR and will need to rebuild a bigger GIR buffer given the rapid expansion in the country’s external debt,” Mr. Neri added.

Mr. Guinigundo also noted the risk of further rate cuts as well as RRR reductions.

“The only challenge I could foresee is the possible resurgence of price pressures from higher liquidity, especially when RRR is slashed by a few hundred basis points,” he added.

Mr. Remolona this week said that the BSP plans to “substantially” reduce the reserve requirement this year.

In June 2023, the central bank reduced the ratio for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 9.5%.

The BSP chief earlier said that the RRR should be slashed to as low as 5%. — with Reuters

PHL slumps to near bottom of global talent index

Graduates attend the commencement ceremony in this photo taken on Aug. 1, 2024. — PHILIPPINE STAR/EDD GUMBAN

By Justine Irish D. Tabile, Reporter

THE PHILIPPINES slumped to the near bottom of an annual global ranking of countries’ ability to attract and retain a skilled workforce, a report by the Institute for Management Development (IMD) World Competitiveness Center showed.

In the IMD’s World Talent Ranking (WTR) 2024, the Philippines slipped three spots to 63rd out of 67 countries, from 60th out of 64 economies last year. This is the country’s worst ranking from as early as 2005.

The Philippines’ talent competitiveness continued to fall behind Asia-Pacific neighbors. It ranked 13th out of 14 Asia-Pacific countries, better only than Mongolia.

Philippines drops further in IMD World Talent ranking

Singapore was the highest-ranking economy in the Asia-Pacific, as it finished second overall. It was followed by Hong Kong (9th), Australia (14th), Taiwan (18th), South Korea (26th), Malaysia (33rd), China (38th), New Zealand (39th), Japan (43rd), Indonesia (46th) and Thailand (47th), and India (58th).

The talent index was again dominated by European economies led by Switzerland (1st overall), Luxembourg (3rd), Sweden (4th), and Denmark (5th).

The WTR rankings are based on three factors: “appeal,” or the extent to which an economy attracts foreign talent and retains local talent; “investment and development,” which refers to the measurement of resources allotted to develop a homegrown workforce; and “readiness,” or the quality of the skills in a country’s talent pool.

José Caballero, a senior economist at IMD World Competitiveness Center, said in an e-mail interview that the drop in the Philippines’ talent ranking was due to the decline in the investment and development and readiness factors.

“At the indicator level, the main aspect affecting its performance in investment and development is the inadequate implementation of apprenticeship programs and the limited prioritization of employee training by the private sector,” he said.

The Philippines had the lowest ranking in investment and development, falling to 64th this year from 62nd last year. This was due to a significant drop in the ranking for apprenticeships and employee training.

The Philippines also ranked among the lowest in terms of public expenditure on education per student (63rd) and pupil-teacher ratio for primary (60th) and secondary (63rd) education.

On the readiness factor, the country slipped a spot to 52nd place.

“In terms of readiness, there is a general decline in all measures of the impact of the country’s talent development efforts,” Mr. Caballero said. “There is also a decline in the prioritization of talent attraction and retention among companies (57th) and workers’ motivation (47th), which feed into brain drain (54th). The latter is one of the key drivers of talent readiness.”

The low scores of 15-year Filipino students in the  Programme for International Student Assessment (PISA) are one of the Philippines’ top weaknesses. Filipino students were among the world’s weakest in math, reading and science, according to the 2022 PISA. The Philippines ranked 77th out of 81 countries and performed worse than the global average in all categories.

Mr. Caballero said that the country’s low investment in education and the quality of the system are fundamental to understanding why is it lagging behind its regional counterparts.

On appeal, the Philippines went up a notch to 54th spot, as it performed well in terms of cost-of-living (20th) and collected personal income tax (20th). However, it ranked low in terms of quality of life (57th).

“The Philippines’ appeal is also a factor. Although it has a relatively strong cost of living, its quality of life is lacking, as is its performance in measures of institutional strength, which are crucial for attracting highly qualified talent,” Mr. Caballero added.

To improve, he said that the country must revisit its overall talent development strategy, which will help streamline its investment in the education sector.

“This should be a carefully considered strategy, not a matter of just increasing expenditure, but one that aligns investment with the outcome of the system, that is, the skills and competencies that the Philippines’ economy needs to perform efficiently,” he added.

Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation, said that the country lags in talent competitiveness due to its failure to prioritize education and public health.

“Asia-Pacific countries like Japan, South Korea, Taiwan, Singapore, Malaysia, and Thailand have done better because they have focused on building comprehensive education systems, investing in public health, and different levels of national industrial policy,” Mr. Africa said via Viber. 

“In contrast, the Philippines continues to struggle with reckless liberalization, underfunded institutions, and shortsighted economic strategies,” he added.

Mr. Africa said the government can achieve immediate gains by investing more in education, health, and social protection, which will ensure a more capable and productive workforce.

“The government can build more and better public educational infrastructure, ensure universal access to quality education, and improve vocational and technical training,” he said.

Meanwhile, Benjamin B. Velasco, assistant professor at the School of Labor and Industrial Relations at the University of the Philippines Diliman, said that it is not surprising that the country ranks very low in the talent index.

“Many of the indicators for talent are dependent on education, for example, the program for PISA rankings, student-teacher ratios, and the budget for education,” Mr. Velasco said in a Viber message.

“In this objective set of indicators, we do not do well. Our education system is in crisis,” he added.

To improve its education system, Mr. Velasco said that the country will have to increase the budget for public education, improve pay to attract talent to the teaching profession, and provide books, gadgets, and classrooms.

“The private sector should pay more, not less, taxes to increase public revenues. These are hardly original ideas. Many have said this before. It is not that our public officials do not have talent. But they lack the will to just do it. They seem busy in their games of thrones,” he added.

Jamil Paolo S. Francisco, executive director of the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness, said the Philippines lags behind its peers due to its low public expenditure on education as a percentage to gross domestic product and on a per student level.

“Our relatively weaker investment in human capital development has negative implications for the future readiness of our workforce. Further complicating this challenge is the fact that we continue to lose globally competitive talent to more ‘appealing’ countries,” Mr. Francisco said in an e-mail interview.

“This is disappointing because while one of the few bright areas cited by respondents to the executive opinion survey is still the availability of skilled labor in the Philippines, insufficient investment in education and workforce development undermines the readiness of our future workforce and therefore the productivity and overall competitiveness of our economy in the future,” he added.

Moving forward, Mr. Francisco said the country must significantly improve the quality of education to see better results.

“The future workforce will need to learn how to work with advanced digital technologies to remain competitive,” he said.

Being a largely service-sector-driven an d labor-abundant economy, we need to invest in equipping our current workforce and preparing our future workforce for this type of human-machine collaboration to leverage on the much-needed potential productivity gains,” he added.

Rice prices seen to further fall

Workers unload sacks of rice in this file photo. — PHILIPPINE STAR/RYAN BALDEMOR

DOMESTIC RICE PRICES are likely to decline further with the entry of more imports under lowered tariffs, the National Economic and Development Authority (NEDA) said.

“There’s a great amount of imports coming in from the effects of the tariff reduction plus of course the development of the global market,” NEDA Secretary Arsenio M. Balisacan told reporters on the sidelines of an event late on Tuesday.

President Ferdinand R. Marcos, Jr. issued Executive Order No. 62, which slashed tariffs on rice imports to 15% from 35% previously, until 2028. The lower tariff rates on rice took effect on July 5.

Agriculture officials have previously said the lower tariffs are expected to bring down rice prices by P6-P7 per kilo.

“We should expect a greater translation of the tariff reduction into lower prices. But don’t expect too much because the world prices are still high,” Mr. Balisacan said.

The Food and Agriculture Organization’s (FAO) All Rice Price Index, which follows rice prices in key exporting countries, rose to 137.3 as of end-August from 127.9 in the same period a year ago. A higher price index means a rise in commodity prices over the period, while a lower index means otherwise. 

In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the full effect of lower tariffs on rice imports will likely be felt as early as the fourth quarter “as a function of competition from local and import rice amid lower world prices of rice.”

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said rice prices may fall by October.

“It is possible for prices to fall next month as a series of typhoons had destroyed domestic production. Importers would usually store their rice in anticipation of higher prices. Since immediate price increases are expected, then the release of imports would also be immediate,” he said in a Facebook Messenger chat.

However, Mr. Lanzona noted that rice prices may not drop “significantly” despite the lower tariffs.

“Port congestion can delay the influx of imported rice in the market. But more than this, since domestic production is weak, importers or through their collusions now have an incentive to control and limit the decrease in rice price,” he said.

To avoid this, Mr. Lanzona said the government should encourage greater domestic production.

“But government support for local production is also hampered by the decreased tariffs. In effect, we are caught in a situation where rice prices can still remain high and market supply is below the needs of the households,” he said.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. on Monday said port congestion has caused delays in the release of rice imports. He said rice prices are projected to begin dropping in October, but a more significant drop is likely by January 2025.

“But since demand for food usually spikes in December, we anticipate seeing a more substantial drop in rice prices by January,” he said in a statement.

On Wednesday, the Philippine Ports Authority noted that consignees are taking longer to withdraw rice container shipments, leading to “possible artificial increases in rice prices.”

Despite this, the PPA recorded a 70% yard utilization, indicating that the country’s ports are not congested.

Mr. Balisacan also called on the need to invest in port development to lessen shipment traffic.

The latest data from the Agriculture department showed that imported regular milled rice costs P46.73 per kilogram this week, a P3.73 increase from P43 in the same period last year.

On the other hand, the price of well milled rice is at P51.45 per kilo, P6.45 higher than the P45 recorded a year ago. — B.M.D.Cruz

The vital role of malls in the Philippines’ retail renaissance

Photo by pch.vector on Freepik

The Philippines is a consumer-driven economy, with statistics showing that 70% of the country’s gross domestic product is attributed to consumption. Even during the challenges and changes brought by the COVID-19 pandemic, this Filipino urge to consume reinforced the retail sector’s resilience, making it one of the more stable segments of the economy.

Reflecting this is a study from SM Supermalls indicating an average of over four million daily shoppers in the first quarter of this year, an increase of 21%, compared to only 3.3 million in the same period last year.

Malls in the Philippines are more than just a place to shop. They have become hubs for social interactions, entertainment districts, and sometimes even sanctuaries and evacuation centers during natural disasters. However, their most important value lies in their role as economic engines that drive local businesses and generate employment.

According to data from SM, food tenants now account for 30% of leased mall spaces, a significant increase from just 10% a decade ago. Meanwhile, non-food tenants, including entertainment providers, occupy 50% of the available space, with the remaining areas filled by various service-related tenants, creating a well-rounded mix that offers a wide range of options for shoppers.

These shifts in tenant composition and rising visitor numbers directly respond to evolving consumer preferences shaped by the COVID-19 pandemic. As the pandemic altered what Filipinos considered normal including their shopping habits, they sought more than just retail opportunities in the mall — they looked for spaces that provided safety, convenience, and a sense of normalcy.

A 2021 survey by global research firm PricewaterhouseCoopers (PwC) International Limited shows that many consumer behavior trends have changed considerably during the pandemic. The study found that although in-store shopping remains the preferred choice for daily or weekly purchases, the preference for e-commerce and digital platforms is rapidly increasing.

PwC identified four fault lines to explain a rapidly evolving consumer behaviors and the preference for online shopping: namely the “Zoom effect” or work-from-home setups, the generation gap, the “conscientious consumer,” and East-West differences.

The Zoom effect refers to a new type of worker that emerged during the pandemic who worked from home and continues to do so today. The study found that they are significantly less likely to shop in-store. PwC also mentioned that the generation gap can also be a factor as younger consumers are more likely to shop online.

COVID-19 also changed consumer habits not only in shopping preferences but also in spending habits. Some “conscientious shoppers” are planning to stay at home more and more willing to pay a premium for healthier, more local, and more environmentally friendly products.

The difference in culture also plays a hand in choosing between shopping online and in-store. PwC’s survey found that 45% of Asia-Pacific consumers reported shopping daily/weekly in-store, and 40% through online platforms compared to the Americas where only 38% of consumers shopped frequently in-store, and only 31% via mobile.

Regardless, the study found that most Filipinos preferred shopping physically in-store. Almost half of the respondents in the Philippines said that they bought clothes, books, and electronics in physical stores in the past 12 months.

Pressfoto on Freepik

Additionally, “the ability to quickly and conveniently navigate the store to find products” as well as the preference “to see and touch the products” were among the factors that drew Filipinos back to malls. Respondents also highlighted the value they place on the “enjoyment of the social aspects of going to a store.”

In light of these trends, the importance of brick-and-mortar stores becomes clearer. Leechiu Property Consultants mentioned that stores are expected to remain relevant to the consumers’ shopping experience despite the ongoing digital shift.

Leechiu Property Consultants President and Chief Executive Officer David T. Leechiu shared in a BusinessWorld report that “the total online retail is less than 20% or 30% of total shopping in the world and that’s despite all the advances that we’ve made in the online experience.”

Though the trend still is shifting towards online, Filipino consumer behavior continues to highlight the role of malls in boosting the retail industry. Malls help preserve the relevance of physical stores and create a compelling alternative to online shopping.

Indian market research firm Mordor Intelligence estimates the Philippines’ retail market size at $66.70 billion in 2024 and expects the industry to reach $96.02 billion by 2029, growing at a compound annual growth rate of 7.56% during the forecast period. This growth in the industry is closely linked and can be attributed to the growth of store-based retail sales.

Results from the online data platform Statista show that store-based retail sales in the Philippines are expected to recover and grow by 2026 after experiencing a slight decline in 2021 and 2022. Pre-pandemic numbers of retail sales in malls reached more than $52 billion in revenue in 2017 before contracting to just $46 billion in 2021. Statista forecasts that by 2026, store-based retail sales will surge to $57 billion, reflecting a strong recovery driven by increased consumer demand and renewed confidence in physical shopping.

This increased revenue in store-based retail sales and the retail sector in general is also reflected in the growth of the country’s biggest mall operators. In 2023, SM Supermalls reported P71.9 billion in revenue, a 30.0% increase from the previous year. Ayala Land’s shopping centers saw their revenue rise by 31.0% to P21.1 billion. Robinsons Mall experienced a 24.0% growth, reaching P16.2 billion. Similarly, Megaworld’s mall revenue surged by 54.0%, totaling P5.3 billion while Rockwell Land’s consolidated revenue also jumped 12%, growing to P18.5 billion in 2023.

The increase in revenue of mall operators and the retail industry, which are expected to expand further this year, amidst shifting consumer habits, underscores the resilience and adaptability of physical retail spaces. Brick-and-mortar stores in malls are far from being outdone and outdated. However, experts advise mall operators that changes have to be made to ensure continued consumer engagement.

“Retail spaces must reinvent themselves as a destination for new product launches and interactions, focusing on the enhancement of customer experience onsite and providing an online shop alternative for the perusal and easy access of familiar products for return customers,” Joenes Jemola said in an article published in Colliers Insights.

Moreover, BusinessWorld columnist and Colliers Philippines Research Head Joey Roi Bondoc expressed that mall operators and retailers should work to improve the shopping experience of their consumers both online and in-person. He explained that while Filipinos have returned to brick-and-mortar shopping, retailers should also consider the segment of Filipino shoppers who prefer to buy items online.

“In our view, redesigning of physical mall spaces should be complemented by the improvement of retailers’ online shopping platforms. We forecast a continued reconfiguration of physical mall spaces and we see this trend even after holiday-induced spending,” Mr. Bondoc said.

The resurgence of physical retail spaces in the Philippines despite the rise of online forms shows the adaptability of malls and the value of the shopping experience to Filipinos. The role of malls and shopping centers in supporting businesses, generating employment, and providing space for brick-and-mortar stores, will continue to drive the retail sector forward, proving the importance of malls in the industry and to Filipinos. — Jomarc Angelo M. Corpuz

A full-circle moment for Lea Salonga

LEA SALONGA posing with her wax figure — OFFICIAL PHOTOS FROM MADAME TUSSAUDS SINGAPORE

“YOUR HANDS! They got your hands!”

That, said singer-actress Lea Salonga, was the reaction of her brother, conductor Gerard Salonga, when he saw the initial photos of the wax figure created by Madame Tussauds’ artisans for the famed wax museum’s Singapore branch.

They would have mini freak-outs about the details that made it to the figure, she told BusinessWorld during the unveiling of the wax figure at The Theatre at Solaire last week. Ms. Salonga — who made an indelible mark internationally with her Tony and Olivier Award-winning performance as Kim in Miss Saigon, her groundbreaking role as the first Asian to play Eponine in Les Misérables, and her iconic voice work for Disney princesses Jasmine and Mulan — said she was amazed at the detail they captured. “The color of my nails, my teeth, my lashes, my makeup, down to the piercings on my left ear — which aren’t even occupied but they still put them on there!” she said.

She said that Madame Tussauds artisans did a sitting with her in London while she was there for a show. “There were so many measurements taken and so many discussions on what this pose was going to look like.”

The final figure, unveiled by Ms. Salonga in front of family, friends, and select media and fans, is dressed in a blue Rajo Laurel gown which she has worn for many concerts. The figure is posed with her hands on a microphone stand, as if ready to sing in front of a live audience, in line with the museum’s goal for fans to interact with the wax figures.

It is now on display at the Singapore branch of the world-famous wax museum.

FULL CIRCLE
Ms. Salonga’s image is also the first wax figure of a Filipino at the Singapore branch of Madame Tussauds. This, she said, was a full-circle moment, having visited the main branch in London with her mother when she was just 12 years old.

“There was a wax likeness of Liza Minnelli, who I got to meet later on in my career, posing in her tux and pixie haircut. My mother and I were both looking at it and she said, ‘Anak (my child), you never know. One day that could be you,’ so this moment is a manifestation of that all those years ago,” she said.

Her mother, Ligaya Salonga, was at the unveiling. On her daughter’s wax figure, she remarked, “It’s too much like her!”

For Madame Tussauds Singapore, having this particular likeness was a must for a city that welcomes so many Filipino travelers each year. Its head of sales and marketing, Elaine Quek, said at the launch that Ms. Salonga was “an obvious choice” for the first Filipino celebrity to grace their halls.

“We looked at her immense success, undeniable talent, iconic roles, and loyal fanbase. We have a variety of wax figures that appeal to people from different regions, and we love having guests from the Philippines because we notice that they are the life of the party. At the attractions, they are singing, dancing, laughing, having fun, and taking photos and videos,” said Ms. Quek.

Ms. Salonga is also happy that the figure will be stationed in Singapore, a city she has traveled to many times before. “I enjoy the food, the city life, and going around and crossing neighborhoods, even late at night.”

“It’s like, wow. I get to be an attraction,” the singer said.

Seeing the wax figure up close is a surreal experience. It has Ms. Salonga’s skin and hair and distinct smile. Seeing the real deal beside it during the unveiling was a bit confusing. For a moment one wondered: Which one was about to open her mouth and sing? — Brontë H. Lacsamana