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How to handle anonymous complaints

We’ve been receiving many employee complaints against the management style of some line supervisors and managers. The trouble is that these grievances are passed on anonymously using the company’s suggestion boxes, which were installed to solicit ideas and not complaints. Are we missing something here? How do we manage those issues after all? — Quantum Losses.
Somebody defined communication as follows: “It is any modus operandi by or through which evaluates the reciprocal transposition of information between or among entities or groups via commonly understood systems of symbols, signs, or behavioral patterns of activity.”
This definition, no matter how academically correct it may be, defeats the letter and spirit of “communication.” You may feel the same way about suggestion boxes that are used for complaints. But I must be blunt in saying that you’re wrong. If you install suggestion boxes, then prepare to get all kinds of letters (including poison letters) from employees — regardless of whether they’re good ideas or baseless gripes. And welcome them all.
You can’t simply brush aside complaints. My Jurassic bosses used to tell me that anonymous complaints must be ignored If I followed their advice, I would not have solved many issues head on.
Of course, that doesn’t mean that I disobeyed my bosses. Instead, I was successful in convincing them that their approach was not the right one for solving such problems, and supported a more proactive two-way communication process. Because of that, they respected me for my independent thinking.
What you’re missing is the fact that employee complaints are clear manifestations that there’s something wrong somewhere. You must not ignore them because they are not using the right channels. Whatever conduit the employees choose is not important. What’s important is they’re resorting to a bottom-up approach to send a message, no matter how trivial or unpalatable the messages may appear to management.
Suggestion boxes are passive communication tools. Management doesn’t act unless it gets employee ideas. This is patently wrong. Regardless of the nature of the workers’ ideas or complaints — good or bad, fiction or fact, accurate or inaccurate, it should be management responsibility to act positively.
Jon Gordon, author of The Power of a Positive Team (2018) says: “Where there is a void, negativity will fill it. When we fail to proactively communicate with others, they will typically assume the worst.” At times, this is often neglected by management. If you don’t tell the workers their ideas and complaints matter, they may start assuming management doesn’t care at all. “It’s very hard to over communicate but easy to fall short.”
To “over-communicate,” management should be the first to establish and maintain the right environment where it is easy for all employees to proactively communicate. Sadly, reactive suggestion boxes do not meet this basic requirement. Therefore, if you want an honest and objective approach to engage the majority of the workers, your management, with the help of the human resource department, should establish a combination of the following programs:
1. Employee morale or satisfaction survey — This should be done by any organization to help measure sentiment towards management style, the salary and benefits package, working conditions, performance system, and many more. It’s best that all workers participate, although having a response rate of 65% is acceptable. As long as the workers’ identity is protected, you can be assured of an honest-to-goodness result that your management team can use to refine its strategies. If you can afford it, you can hire a consultant to lend you the expertise.
2. Problem-solving and decision-making teams — To help maximize the bottom-up, proactive communication approach, it’s advisable to establish kaizen teams, quality circles, or similar programs that would help solicit workers’ ideas. Make the program part of everyone’s key performance areas. Require all line supervisors and managers to be a part of the screening process. This alone should help both management and their workers to use the program as a platform for two-way communications.
3. Manager-worker regular one-on-one interviews — management must not rely on exit interviews. It’s too late for management to act. Rather, it’s best to conduct at least a monthly “stay interview” to help determine the pulse of individual workers. Rather than asking “why are you leaving?” which is a staple question in exit interviews, maintain excellent rapport with employees by asking the following questions: How can I help you with your career development? How could we make your job easy for you? What kind of resources would you need?
4. Open-door policy by top management — Related to number 3 above, one way to ensure that line supervisors and managers do a good job in resolving issues with their workers is to have an “appeal system” which people can use if they’re not happy with the resolution of their grievances or issues with line executives. It should be available to any worker, if he or she feels that any concerns are not handled properly. With an open-door policy, a worker need not worry breaking the chain of command.
Undoubtedly, good communication skills are one of the basic pre-requisites for any line supervisor and manager. This however, does not mean English proficiency alone, but the ability to effectively communicate one’s position to both subordinates and management. Being convincing is a necessity, whether you’re trying to motivate the workers or pitching a proposal to the boss. The rules are basically the same.
 
Send your workplace questions or issues to elbonomics@gmail.com or via https://reyelbo.consulting. Anonymity is guaranteed, if so desired.

Smart, Globe implement 1-year expiry period for prepaid load

SMART COMMUNICATIONS, Inc. and Globe Telecom, Inc. have extended the validity of prepaid cellular credits or “load” below P300 to one year.
In separate statements issued on Thursday, Smart and Globe said they have fully complied with Memorandum Circular (MC) No. 05-12-2017, issued jointly by the National Telecommunications Commission (NTC), Department of Information and Communications Technology (DICT), and Department of Trade and Industry (DTI), providing for a one-year validity period of all types of cellular load.
“Starting today, July 5, 2018, all Smart, TNT and Sun prepaid loads now have a validity period of one year. This includes all load denominations of Smart Prepaid, Smart Bro, TNT, Sun Prepaid, Sun Broadband Wireless Prepaid, Smart Link, Smart Marino, PLDT Prepaid Landline Plus and PLDT Home,” PLDT Inc.’s wireless unit said.
In January, the telecommunications industry began implementing a one-year validity period for prepaid loads P300 and above.
“Moving forward, prepaid loads below P300 will also have a validity period of one year,” Smart added.
Globe, likewise, said all prepaid load, including those below P300, will expire after one year.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

How PSEi member stocks performed — July 5, 2018

Here’s a quick glance at how PSEi stocks fared on Thursday, July 5, 2018.

DoF sees tax amnesty raising collections, clearing backlog

THE DEPARTMENT of Finance (DoF) said its version of the planned tax amnesty offer scheduled for 2019 will increase collections and clear the case backlog for unpaid property tax.
“We hope to improve further our revenue collections with a proposed tax amnesty program. The program will help clear the dockets as well as enable the transfer of stranded real properties so that they can be made economically useful,” Finance Secretary Carlos G. Dominguez III said in a speech before the Rotary Club of Manila.
“In particular, we propose an estate tax amnesty where government collects only 6% of the net undeclared estate tax for those who died prior to January 1, 2018. For your information, the previous estate tax was 20%,” Mr. Dominguez said.
“We are likewise proposing a general tax amnesty on all unpaid internal revenue taxes excluding internal revenue taxes arising from importation and customs duties,” he added.
He said that the department will offer different rates for amnesty availers with criminal charges.
“We are proposing an amnesty on tax delinquencies offering a rate of 50% on the basic tax only, excluding surcharges and interest charges. For those already facing criminal cases in court, we are proposing a rate of 80% of the basic tax only,” he said.
Mr. Dominguez said last month that the government hopes the amnesty bill passes before the end of the year, as it plans to make the amnesty offer in April 2019 — in time for the deadline for filing income tax returns.
The House of Representatives approved an estate tax amnesty measure on final reading in February 2017 for House Bill No. 4815, the provisions of which are consistent with the DoF’s proposal.
The general amnesty bill (HB 7105) remains pending at the ways and means committee — and committee approval is expected after the regular session resumes later this month.
Meanwhile, the counterpart bills for the estate and general tax amnesty in the Senate (SB 293 and SB 942 respectively) are also awaiting committee-level approval.
The tax amnesty bills are part of the so-called Package 1B, the follow-up revenue generating measures for the Tax Reform for Acceleration and Inclusion (TRAIN) law. The package also includes an increase in motor vehicle user charge and the easing of the bank secrecy law.
Tax Management Association of the Philippines President Raymund S. Gallardo, who was among the resource persons in the House ways and means committee technical working group, said earlier that the issues with the general tax amnesty bill include the basis for the amnesty rate, and the waiver of the bank secrecy law.
Other proposed benchmarks for the general amnesty rate include total net worth, total assets, and the level of tax delinquency. The waiver of the bank secrecy law is being proposed for the amnesty period and possibly beyond.
In its current form, the general tax amnesty imposes an 8% tax on the amnesty participants’ net worth or P10,000 to P10 million, depending on the type of taxpayer, whichever is higher — in exchange for immunity from civil, criminal, and administrative penalties on payments made during taxable year 2017 and previous years. The Senate version meanwhile offers a rate of 5%.
The Department of Finance has said that the tax amnesty could generate P26 billion initially, and that overall collection growth will rise post-amnesty, due to the widening of the tax base. — Elijah Joseph C. Tubayan

DoF says SC ruling on LGU revenue share not final

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INTERNAL REVENUE ALLOTMENTS are local government units’ main source of revenue. — BW FILE PHOTO

THE Finance department will await a final decision from the Supreme Court on local government units’ (LGUs) “just share” of national government revenue before it makes a decision on filing a motion for reconsideration.
“Just heard the unverified rumor that the SC decision on the LGU’s share of taxes is still for editing and proofreading, then for signature of the justices,” Finance Secretary Carlos G. Dominguez III told reporters via mobile phone message when asked about the government’s plans after the ruling.
Although it has yet to provide a public copy of the resolution, the Supreme Court announced in a statement via its Public Information Office that the court, sitting en banc, voted 10-3 in favor of the LGU internal revenue allotment to include all national taxes, not just those collected by the Bureau of Internal Revenue.
The court ruled on a petition by former Batangas governor Hermilando I. Mandanas, who filed it six years ago, when he was a member of the House of Representatives for the province’s second district. The petition claims that the national government owes local governments about P500 billion between 1992 and 2012, based on an interpretation of the LGUs’ “just share” as stated in the Local Government Code.
Internal Revenue Allotments are LGUs’ main source of revenue. The Local Government Code requires that 40% of the national government’s internal revenue three years preceeding the current fiscal year, should automatically be earmarked to LGUs.
Each LGUs’ share is determined by its population and land area.
Apart from IRAs, LGUs have the authority to impose taxes to generate income, including real property tax, business tax, and other fees.
This year, the Department of Budget and Management has set aside P522.75 billion for IRAs, up 7.37%. — Elijah Joseph C. Tubayan

DTI zeroes in on energy drinks for sugar labeling

By Janina C. Lim, Reporter
THE DEPARTMENT of Trade and Industry (DTI) has identified energy drinks as one of the products that it wants to label “High in Sugar” under proposed new labeling rules.
Trade Secretary Ramon M. Lopez said the DTI has recommended to the Food and Drug Administration (FDA) the inclusion of information on sugar content per pack and per serving on front-of-pack labels for packaged beverages — both liquid or powdered.
“This will increase the consciousness of consumers with respect to sugar intake,” Mr. Lopez told reporters in a mobile message, adding that the move is authorized by the country’s Consumer Act of 1992. Under the law, manufacturers are directed to provide accurate details on the nature and quantity of the contents of various products.
President Rodrigo R. Duterte has expressed a need to inform consumers more accurately about the sugar content of beverages.
The DTI noted that the consumption of sugar is not inherently dangerous.
As such, it did not require beverage makers to place a “warning” label, which might have classified sweetened drinks as “sin” products like cigarettes and alcohol.
“In consultation with the FDA, FNRI (Food and Nutrition Research Institute of the Department of Science and Technology) and NNC (the Health Department’s National Nutrition Council), it was revealed that there is also no technical definition of what is a high amount of sugar in a drink. But there is a prescribed amount of sugar as a source of energy, that is equivalent to not more than 50 grams of sugar in an average 2,000 calorie diet per day. There are other foods and beverages that a person consumes in a day that are sources of calories,” he said.
The DTI is recommending that the Food and Drug Administration, in consultation with agencies such as the Food and Nutrition Research Institute and stakeholders, to adopt a benchmark that requires special labeling for amounts greater than 25 grams of sugar per 200 milliliter (ml) serving.
This standard, according to Mr. Lopez, will cover energy drinks that typically have 46 grams of sugar per 240-ml serving.
“”[T]here are beverages like energy drinks that are really high in sugar… This one drink is already close to the maximum 50-gram sugar intake per day. If that is 330 ml bottle, then it would be around 63.2 grams of sugar per bottle,” the Trade chief said.
“For this type of drink, we would strongly suggest to the FDA to add the words High in Sugar, before mentioning the sugar content in the label,” he added.
As for powdered juice drinks in packs, he said dilution could help bring the category below the 25-gram benchmark.
“This is way below for example a regular soft drink with 25 grams of sugar per 240 ml serving,” Mr. Lopez added.
The DTI reiterated that it will allow a transition period for beverage makers to use up current packaging.
The Beverage Industry Association of the Philippines has backed the government’s move to change labeling rules, saying it is “committed to transparency and providing clear, accessible nutrition information to consumers.”

Gov’t hopes to accredit up to two cell tower companies by Q1 2019

By Patrizia Paola C. Marcelo, Reporter
THE government has released an initial set of guidelines for its common tower policy, amid hopes that it can accredit as many as two such companies to build common mobile infrastructure by the first quarter of 2019.
Department of Information and Communications Technology (DICT) Acting Secretary Eliseo M. Rio, Jr. and Presidential Adviser for Economic Affairs Information and Technology Communications Ramon P. Jacinto on Thursday announced that they hope to accredit up to two independent tower companies by the first quarter of next year, followed by a six-month building period.
The incumbent telecommunications firms, PLDT, Inc. and Globe Telecom, Inc., will also be consulted regarding their target locations for placement of the towers and poles.
“There is a build-up period of six months, a consultative period, a discussion period with the telcos, also to get their inputs on what locations would be ideal. By September (2019), the rollout will start,” Mr. Jacinto said in a press conference.
Mr. Jacinto said that interested tower companies must have P10-billion net worth with no direct or indirect ownership by the incumbents. The initial guidelines additionally state that companies must also have at least five years’ experience in constructing, owning, or managing at least 10,000 towers in at least one country in Asia.
The policy contemplates a maximum rollout per company of 25,000 over seven years. For the first year, the target is 1,000; for the second year, 2,000; for the third year, 3,000; for the fourth year, 4,000; and for the last three years, 5,000 each. A tower company is expected to invest around $2 billion over the seven-year period.
The Philippines has only 16,000 cell sites, which suggests that the successful tower company must have at least some foreign involvement. Mr. Jacinto has said that improved coverage will require about 50,000 towers.
Mr. Jacinto announced in January that the policy is aimed at providing better services and a level playing field for the entry of the “third player” into the telecommunications industry.
The policy allows telcos to build their own cell sites if they do not get a response from the tower company or companies after 30 days. The previous plan of the government was to prohibit telcos from building their own cell sites once the policy is implemented, but Mr. Jacinto said consultation with the two telcos revealed opposition from PLDT and Globe, who wanted the right to build their own cell sites.
“If they want to build the tower in a certain location, let’s say Globe or (PLDT unit) Smart, and the common tower company does not respond in 30 days, they can build there own tower. So it’s not that absolutely they cannot, when the common tower cannot fulfill their needs, so it’s really fair,” Mr. Jacinto said.
In February, Globe announced that it was in talks with certain parties to form an independent tower company and divest some or all of its tower assets, to help speed up the build and deployment of cellular towers in the Philippines, and as part of its network expansion and optimization plan. It added that it was open to working with PLDT on the initiative. PLDT has said that the company does not see any need to share any of its network assets.
The government is also consider making available 2,000 towers controlled by the now-defunct Telecommunications Office (Telof).
“We are actually offering to whoever will become the tower company — government telecommunication assets. We have a defunct Telof that has 2,000 towers that can become available if the tower companies say this is useful for them so they can have those towers. Right now, these are not operational, these are just standing there… There are government procedures for selling property, we need to look into that,” Mr. Rio said.
Mr. Jacinto said there are four or five foreign companies expressing interest in putting up towers in the Philippines.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

ERC hopes to strengthen consumer protection in review of regulations

THE Energy Regulatory Commission (ERC) will review existing rules and make changes as amend those as warranted in a move that seeks to improve protection for consumers.
“We are acting on the electric power industry’s plea to strengthen the ERC. We recognized that we have entered a new regime where consumer benefit consciousness has to be given utmost consideration,” ERC Chair Agnes T. Devanadera said in a statement.
“In this connection, I have directed the review of all ERC Rules with direct impact on electricity consumers and improve thereon, if warranted,” she added.
The ERC has promised to implement a number of initiatives to step up its regulation of the electric power industry.
The move is also in line with the agency’s recently launched “ERC’s 5Es”: ERC on Wheels; ERC Academy; eWISE (ERC Web Portal for Interactive and Systematic Exchange); ERC on Emerging Technologies; and ERC Enabling Electrification.
“We will fast-track the review and, if necessary, amend the relevant ERC Rules to ensure that the consumers’ welfare is promoted and protected.
As we strengthen the ERC’s processes, we will also make sure that our policies are robust and legally defensible,” Ms. Devanadera said.
In its statement, the ERC also said energy groups, distribution utilities, electric power industry stakeholders, and other government agencies supported the regulator’s call to strengthen, rather than abolish the regulatory agency.
It listed the entities as Philippine Electric Plant Owners Association, Philippine Independent Power Producers Association, National Electrification Administration, National Power Corp., National Grid Corp. of the Philippines, Department of Budget and Management, and the Department of Energy.
It said the energy groups on June 25 also “expressed their views and concerns on streamlining vis-a-vis abolishing the ERC before a Congressional meeting.” — Victor V. Saulon

BoI sees strong investor interest in Eastern Samar

BUSINESSES are looking to invest in the Eastern Visayas in industries such as water transport, hospitals, agribusiness, mass housing, and agro-processing, according to the Department of Trade and Industry (DTI).
The DTI said prospective investors expressed “strong interest” during investment promotion activities conducted by the Board of Investments (BoI) in the region, to tout opportunities under the 2017-2019 Investment Priorities Plan (IPP).
“The Philippines has a growing economy. In fact, our country is projected to grow more than five times its current economic size and become the 24th biggest economy in the world by 2030,” Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo said in a statement.
“We see stronger demand for many projects such as these not only in the Eastern Visayas but also in the other parts of the country,” he added.
He said prospective investors can take advantage of the continued improvement of infrastructure in the Eastern Visayas.
He cited Catbalogan City’s Sky City Mega Project, which aims to address the lack of space within the city proper by building on 440-hectares in hilly territory, 120 meters above sea level.
Mr. Rodolfo added interested investors can also take advantage of the investment incentives for doing business in Eastern Visayas provinces such as Samar and Northern Samar, which are classified as Less Developed Areas (LDAs).
Projects located in LDAs are entitled to pioneer incentives.
These include Allen, Biri, Capul, Lapinig, Mapanas, Rosario, San Antonio, San Jose, San Vicente, and Victoria in Northern Samar; and Almagro, Basey, Daram, Jiabong, Marabut, Matuguinao, Pagsanghan, San Sebastian, Santa Rita, Santo Niño, Tagapul-an, Talalora, Villareal and Zumarraga in Samar.
Of the P617 billion worth of BoI-approved investments in 2017, Eastern Visayas accounted for P754 million. These investment projects covered tourism, agri-business and mass housing projects.
In the first six months of the year, BoI-approved investments in the region totaled P368 million. — Janina C. Lim

NGCP now expects unified power grid by 2020

NATIONAL GRID Corporation of the Philippines (NGCP) is targeting a unified nationwide grid by 2020 through the nearly P52-billion Mindanao-Visayas interconection project (MVIP), it said on Thursday.
“With One Grid 2020, we envision a strong, unified power transmission network that can meet the country’s future power needs,” said NGCP in a statement.
The privately owned company’s target completion year is ahead of the timeline it announced in September when it projected a 46-month period for the project. The project’s estimated cost is P51.6967 billion.
NGCP was granted provisional authority to implement the project in an order from the Energy Regulatory Commission (ERC) on July 11, 2017.
“With a unified national grid, power transmission services in the country will be more reliable as there will be less power interruptions nationwide due to the sharing of local energy resources. Reliable electricity transmission, in turn, could help boost investments, infrastructure development, and commerce in the country,” said NGCP.
NGCP said after five years of research and planning, the ERC had authorized the grid operator to start building MVIP in 2017, with the project set to be completed by December 2020.
The country harnesses most of its electricity from the interconnected Luzon and Visayas grids, which were linked in 1998 and uses a high-voltage direct current (HVDC) system with a 440-megawatt (MW) capacity.
“Once the MVIP is complete by 2020, it will be using an HVDC system with a 450-MW initial capacity,” NGCP said.
The company said MVIP will use 184 circuit-kilometers of submarine cable, plus 526 circuit-kilometers of overhead wires, to connect Dapitan, Zamboanga del Norte to Santander, Cebu using HVDC submarine cable, which will transmit energy efficiently between Visayas and Mindanao with minimal loss.
“This will support the national government’s vision to interconnect the major power grids, which would then help improve the overall power supply security of the country through the sharing of reserves,” NGCP said.
“This will also support the overall operations of the Philippine electricity market by allowing the optimization of all available energy sources, including the additional generation capacities that will be implemented in Visayas and Mindanao,” it added.
The MVIP is the first project to qualify as an energy project of national significance (EPNS) as declared by the Department of Energy on May 8, 2018 under Executive Order No. 30.
As an EPNS, the issuance of regulatory and documentary requirements by different local and national government agencies will be expedited. — Victor V. Saulon

Philippine manufacturing fuels broader economic growth

Manufacturing has maintained its standing as a key growth driver for the Philippines, with rising domestic consumption and a series of major infrastructure projects lifting expansion in both the sector and broader economy.
GDP grew by 6.8% year on year between January and March, according to the Philippines Statistics Authority (PSA), building on the 6.7% expansion recorded in 2017.
The result was largely driven by the manufacturing sector, which posted growth of 8% in the quarter, and was the largest contributor to GDP at 24.9%.
Within manufacturing, the accounting and computer equipment segment grew by 31.2% year on year, followed by increases in communications equipment and apparatus (22.4%), and non-metallic mineral products (16.5%).
Further highlighting the sector’s strong performance, both the Value of Production Index and the Volume of Production Index recorded year-on-year growth of 12.8% and 13.6%, respectively, in March, while the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI), a measure of the sector’s performance, jumped to a one-year high of 52.7 in April, the second-highest level in ASEAN, and a significant increase on the 51.5 recorded in March.
Elsewhere in the economy, services increased by 7% in the first quarter, while agriculture edged up by 1.5%.
DOMESTIC DEMAND IS PRIMARY GROWTH DRIVER
The improved manufacturing performance appears to have been largely driven by domestic demand, with exports of manufactured products falling by 6% year on year in March, according to the PSA.
While maintaining its dominance of the Philippines’s export trade, accounting for 84.6% of shipments in value terms, manufacturing exports eased to $4.66 billion in March, down from $4.96 billion a year earlier.
The result was drawn down by falls in industrial machinery and transport equipment exports (-44.6%), though these declines were offset by a stronger showing from the electronics component, which increased by 6.7% to $2.2 billion.
On the domestic front, Nikkei noted that manufacturing had been boosted by increasing demand at the beginning of the second quarter, leading to faster expansion of output, as companies took on more workers and purchased more inputs.
GOVERNMENT PUSHING FORWARD WITH INDUSTRIAL STRATEGY
The improved performance in manufacturing has come as the government undertakes some major infrastructure and industrial projects.
Chief among these is the $8.4-trillion Build, Build, Build program, which aims to boost infrastructure development spending from 5.4% of GDP in 2017 to 7.4% in 2022.
The strategy foresees the construction of some 75 flagship projects, including six airports, nine railways, four seaports, and 32 roads and bridges, which are expected to stimulate demand for locally manufactured products.
This has been complemented by the broader Manufacturing Resurgence Programme. The strategy aims to increase the sector’s contribution to GDP to 30% by 2025 and lift manufacturing’s contribution to the work force from 10% in 2016 to 15% by 2025.
A major part of this approach is the Comprehensive Automotive Resurgence Strategy (CARS). Launched in May 2016 CARS involves a series of incentives to encourage domestic vehicle production, which is expected to spur growth in the segment, along with the manufacture of chemicals, metalworking, tools, dye, plastics, electronics, rubber, glass and textiles.
In a sign of the rise in demand, automotive sales totaled 196,200 units in the first half of last year, a 17.1% increase on the same period in 2016, with the Chamber of Automotive Manufacturers of the Philippines citing well-maintained inventory levels as a key factor behind the growth.
Furthermore, in order to adapt to advancements in modern technology, in May last year the government last launched the Inclusive Innovation Industrial Strategy (i3S).
Through further market liberalization, i3S is designed to improve competition and subsequently innovation in the Philippines’ industrial sector, allowing the country to capitalize on the opportunities presented by increasing globalization, automation, robotics and artificial intelligence.
GROWING CAPACITY TO SUPPORT ECONOMIC GROWTH
Looking ahead, the increase in manufacturing is expected to be a major factor behind broader economic growth, according to the Asian Development Bank (ADB).
Rising labor productivity and investment in manufacturing and technology are set to boost the capacity of the economy, Ramesh Subramaniam, the ADB’s director-general for Southeast Asia, said at a briefing on May 5.
The bank forecast GDP growth of 6.8% this year and 6.9% in 2019, building on the 6.7% posted in 2017.
While growth is expected to remain strong, the ADB is confident that increased production capacity and investments will be able to match rising demand.
One indicator to support this position is the wholesale inflation figures for March, released by the PSA on May 18. Though the General Wholesale Price Index rose to 5.4%, up on the 4.9% in February, the main manufacturing sub-index only saw a 2.5% increase, suggesting output continues to meet industry demands without significant inflationary pressures.
However, there are concerns that manufacturing could come under increased pressure from inflation later in the year.
Recent falls in the value of the peso, rises in imported fuel prices and new excise tariffs introduced at the beginning of the year should lead to a increase in input costs, which are likely to be passed on to clients. Consumer inflation stood at 4.5% at the end of April, edging up from the 4.3% recorded in March.
This Philippines economic update was produced by Oxford Business Group.

Peso drops as inflation picks up in June

THE PESO depreciated against the dollar on Thursday as headline inflation for the month of June accelerated to a fresh five-year high.
The local currency closed on Thursday at P53.42 against the dollar versus the greenback, six centavos weaker from its P53.36-per-dollar finish the previous day.
The peso immediately weakened Thursday, July 5, opening the session at P53.41 against the dollar. It slipped to a low of P53.44, while its best showing stood at P53.36 versus the US currency.
Dollars traded slid to $520.5 million from the $587.1 million tallied the previous day.
“The peso depreciated as higher-than-expected local inflation data for June shook the markets which drove investors toward the greenback,” a trader said in an e-mail.
The government reported early Thursday that Philippine inflation accelerated to a fresh five-year high of 5.2% in June.
Last month’s inflation print surged from May’s 4.6% figure and was faster than the 4.7% median forecast among economists in a BusinessWorld poll.
The latest figure also exceeded the 4.3-5.1% estimate range by the Bangko Sentral ng Pilipinas (BSP) and the 4.9% estimate of the Department of Finance.
Price increases in June was led by alcohol and tobacco (20.8%), transport (7.1%) as well as food (6.1%).
“Given the higher-than-expected inflation print, there might be a chance for another rate hike soon and that is what we’re monitoring at this point,” another trader said in a phone interview.
BSP Governor Nestor A. Espenilla, Jr. said Thursday, July 5, that the inflation result “is a setback.”
“We will review and update our situational assessment and forecast inflation path,” Mr. Espenilla told reporters in a mobile phone message. “This will shape the strength and timing of our next monetary policy response to firmly anchor inflation expectations.”
“If inflation continues to persist, which is breaching the BSP target, then there might be a pressure for them to hike again,” the second trader said. “If they don’t, then we might see the peso weaken further.”
The second trader added the market is waiting for the minutes of the June policy meeting of the US Federal Reserve as well as the US unemployment data to be released later this week.
“The local currency is expected to weaken further [on Friday] amid expectations of hawkish cues from the minutes of the June 2018 Fed policy meeting, wherein a 25-basis point rate hike was effected by the US Federal Reserve,” the first trader said.
For Friday, the second trader expect the peso to move between P53.30 and P53.55, while the other gave a slightly slimmer P53.35-P53.55 range. — Karl Angelo N. Vidal