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Promoting youth entrepreneurship for employment and career growth

BPI Foundation Inc. (BPIFI), the Department of Education (DepEd), and YGOAL Inc. have initiated programs that are aligned with the goals of the Republic Act 10533 (K to 12), known as the enhanced basic education curriculum and Republic Act 10922 known as the Economic and Financial Literacy Act.

BPI Foundation co-created the program BPI SHAPE or Senior High Acceleration Program for Employment and Entrepreneurship — a Values-Driven and Skills Development Entrepreneurship and Financial Management Program — together with DepEd and YGOAL, a social enterprise consultancy organization.

BPI SHAPE aims to boost the competencies of Senior High School Students to be able to work, start a business, or go to college.

Karl, a seventeen-year-old student of Bagumbayan National High School, summed up what he learned from a learning program he participated in: “It’s about having the qualities of a good entrepreneur. The most important is self-esteem. You won’t be able to market or sell if you don’t have self-esteem.”

Another student, Jennifer, 18, said reviewing the success stories of Filipino entrepreneurs is what motivated her to excel in their school’s business expo.

“Entrepreneurship is a great way to develop employability and self-confidence in young people. There is reciprocity in that. A Harvard study showed that self-confidence actually drives youth entrepreneurship in the country. Sound business knowledge will actually help build the youth’s confidence to venture out as entrepreneurs,” said Maricris San Diego, executive director of BPI Foundation.

She added that “We are producing an estimate of about 2,000 students, just like Karl and Jennifer, to have the same learning experience using the modules of BPI SHAPE on Entrepreneurship and Personal Development for Senior High School students.”

The program is a two-year learning package meant to contribute in DepEd’s goal of ensuring that senior high school students are employable, entrepreneurial, and college-ready.

BPI SHAPE has four program components. First is the content developed, or the teaching modules for entrepreneurship and personal development. These modules were validated by the participating DepEd Divisions to ensure that these are aligned with DepEd’s SHS curriculum.

Second is the capacity building for teachers who are trained on how to use the modules and the digital professional sessions. Supplemental videos were developed based on Jobstreet’s research on employee competencies and the Philippines’ career landscape.

Third is the technology. An online repository of resource materials that support the modules was developed to enable teachers to use them online and offline. To support student work immersion, YGOAL has developed Internship Philippines, which serves as an online matching facility between school and companies for work immersion.

The fourth component is partnership. An ecosystem of support with DepEd Division partners will help in the success of the program. The program offers schools social mobilization sessions to build competencies in building relationships with the private sector. Furthermore, BPI SHAPE mobilizes the private sector to work with DepEd through Internship Talks and the Private Sector Summit.

The program culminates with the Business and Academic Fair where all stakeholders gather for a day of job matching, school partnership, entrepreneurial sessions, and other sessions that enhance the support system after the two-year intervention.

“Our students were matched with a software company because of BPI SHAPE, and they described their work immersion experience as very remarkable. They learned a lot of things that they will never forget,” said Heidy Pasiwagan, Work Immersion Coordinator in DepEd Taguig.

BPI-SHAPE was piloted in three schools in the Division of Taguig and two schools in the Division of Laguna. This school year (2018-2019) marks the program’s expansion to 12 DepEd Divisions nationwide, targeting about 204 schools, 800 plus teachers and 22,000 students.

“We continue to explore ways to bridge the gap between the K to 12 transition and the readiness of the private sector to hire SHS graduates. We are at a point where we, as a nation, are starting to realize the potential of the youth as enablers of economic development and entrepreneurship that will lift more people out of poverty,” said San Diego.

“BPI Foundation is supportive of government initiatives in line with this and we will continue to do our part in youth development and nation-building,” she said.

BPI-SHAPE is a recipient of a Gold Anvil Award for Best Public Relations Program on a Sustained Basis—Education.

A promising grocery retail market

High consumer confidence, combined with sustained economy, drives the country to become one of the most robust retail markets in the Southeast Asia today. Among all the subsectors of the retail segment, grocery retailers continue to have the most impact on the economy.

According to the 2017 Food Retail Sectoral Report by Global Agricultural Information Network, the largest grocery retailers in the country — SM Supermarket, Robinsons Supermarket and Puregold — still dominate the food retail business that contributed to the robust growth of the industry in the last five years.

The report showed that in 2016, supermarket sales reached $10.21 billion in retail value sales. It added that supermarkets continue to be the most frequently visited modern retailer due to its proximity to residential areas or in shopping malls where consumers regularly visit to shop and recreate.

A 2017 Oxford Business Group (OBG) report noted that grocery retailers continue to have the most impact on the economy due to its more diverse offerings of day-to-day essentials, which satisfy the bulk of consumption needs for the vast majority of Filipino consumers.

“As such, retailers remain heavily committed to providing increased access and product diversification for items such as food and beverages, beauty and personal care, home care products and so on,” the report said.

To provide local consumers more convenience and accessibility, grocery retailers are pursuing smaller store formats. Since 2016, local grocery retailer giants are aggressively extending their reach through convenience stores and minimarts that allow them to cater to consumers in residential areas and the country’s business districts.

“Convenience stores continue to expand due to the bullish Business Process Outsourcing (BPO – call centers) sector and the increasing number of outlets opening in condominiums and areas outside Manila. These stores cover the business centers and BPO hubs and operate on a 24-hour basis, making them an ideal place for midnight shifters to grab food to eat during break time,” the 2017 Food Retail Sectoral Report said.

“Aside from well-stocked shelves of packaged food, beverages, and other basic household necessities, convenience stores also offer other services such as bill payment and mobile phone reloading transactions. Convenience stores and gas marts which are mainly location-oriented are thus able to sell products at a premium in exchange for convenience,” the report added.

In 2016, convenience stores led the growth of modern grocery retailers with almost 17% growth on the number of outlets and 8% in terms of sales. The growth was driven by the existing players in the country such as 7-Eleven, Ministop, All Day and Alfamart, as well as the gaining popularity of various foreign brands such as Lawson and Family Mart.

According to a 2016 Nielsen report, the penetration rate of convenience stores and online shopping have surged significantly, recording an increase to 32% and 38%, respectively, from 2015’s 19% and 35%. This has pushed traditional supermarkets to transform and adapt to the changing needs of the consumers.

“The report found that the lure of cheaper goods online has had a significant impact on consumers’ behavior, with 61% of those surveyed said they choose to buy things online due to cheaper prices, a significant rise from 42% last year. About 56% of the respondents said they prefer online shopping platforms due to ‘easier to compare prices’, an increase of 15% from last year’s figure. Another 54% of respondents said that they shop online because of the delivery service; that number last year was 42%,” Nielsen wrote on its Web site.

To address the needs and growing demands of the customers, some big players in the country today offer additional services such as online grocery shopping and grocery delivery services.

In the coming years, grocery retailers, especially modern grocery retailers, are expected to continue to enjoy growth in both outlet numbers and value sales, Euromonitor International’s 2017 Grocery Retailers in the Philippines report said.

“As grocery retailers remain the major source of food and household consumables, players will strive to adapt to consumers’ needs by opening stores in more accessible locations and increasing their presence in underserved markets. On the other hand, as consumers enjoy increasing purchasing power, players will benefit from larger basket sizes and a higher appreciation for imported products and superior goods,” the report added.

In addition to this, the country’s grocery retail market is forecasted to grow on average 9.3% year-on-year between 2016 and 2021, according to international grocery research group IGD. This will make the country the fifth-largest grocery retail market in Asia, after China, India, Japan and Indonesia.

In a statement released by the research group last year, the grocery retail sales in the country are set to amount to P7.08 trillion by 2021 from P4.53 trillion in 2016. This will be driven by a growing population, strong domestic consumption and a buoyant economy.

“The Philippines is an exciting market to watch. Modern trade currently accounts for about 20% of total grocery retail sales and is growing rapidly. We expect to see fast growth in both the number of outlets and sales for modern grocery retailers,” Shirley Zhu, program director for IGD’s Asia-Pacific research, was quoted as saying in a statement.

“There will definitely be fewer ‘mom and pop’ stores — locally known as sari-sari stores — and there is no doubt that the convenience and online channels will be on a fast growth trajectory over the next few years. There is a wealth of opportunity for retailers and suppliers looking to grab a slice of the action in this rapidly evolving market,” Ms. Zhu added. — Mark Louis F. Ferrolino

The social value of the local supermarket

Before there were paved highways and fast cars, before people could affordably go to any place anywhere in the world, and before every major city was connected through airports, people only knew the world through their communities. It used to be that every small, rural town had only the essentials of daily living: a grocer or wet market to buy food, a community school for education, a post office, maybe a few shops to buy hardware or clothes, and maybe one or two places to socialize over a meal, a drink or common faith.

In simpler times, it was very easy for a local resident in a community to know everybody’s name. How could they not when there were so few places available for people to go and gather?

For people today, who are accustomed to fast, urban lifestyles and relative anonymity due to living in a city of millions, it would seem that that kind of life is a thing of the past. However, as supermarkets of the 21st century adopt new retail models that could respond to new shopping habits, there may be a possibility of communities returning to that tight-knit way of living.

Matthew Taylor, chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce in the UK, found that through research into the impact of supermarkets on the community, new retail models could generate a social value for strengthening communities.

“With almost 50 million retail transactions in the UK each day, few businesses have as many opportunities to interact face-to-face with the public as large shops,” Mr. Taylor wrote for The Guardian.

“Each week, a large supermarket will typically have 50,000 customers. Yet, despite the importance of the retail sector, and the impact of the growth of online shopping on our habits and high streets, it has been neglected as a subject for wider social research.”

Filling in this gap could be beneficial to society as more and more of people’s social lives are abandoning physical spaces in favor of online ones. For instance, the rise of online dating apps and Web sites are biting into the need for people to socialize in public. Users of social media Web sites are building entire communities spanning the globe based on similar interests and ideas, while remote working jobs are eliminating an entire dimension of social interaction from people’s lives entirely.

“As many physical spaces for public connection are closed down, supermarkets could provide a new setting for people to engage with each other and with key social, economic and environmental challenges,” Mr. Taylor wrote.

“As large stores are reformatted to serve mobile-connected customers, there is a chance to reimagine the form and function of ‘big box’ retail.”

The RSA, which seeks to ‘enrich society through ideas and action’, has been exploring the role of the retail sector in connecting and strengthening communities. New research by the organization highlights the opportunities for large stores to host and lead projects, programmes and activities which generate social value.

One such way that national retailers can deliver impact at scale, according to the research, is by building trust and loyalty from local customers on a store-by-store basis.

“Community ventures will be effective when they are developed through partnerships with local charities, voluntary groups and public sector agencies,” Mr. Taylor wrote.

“This could mean sharing data between businesses and public authorities; offering new services in store for citizens and entrepreneurs, bringing a range of public service interactions into the store or better utilizing physical space such as car parks for commercial and community use.”

He added that as an anchoring institution that is reliant on local people for business and work force, large retailers should take the lead in local affairs, through initiatives like serving as a hub for volunteer recruitment or services for start-ups and small businesses, or offering solutions to community problems like opening pharmacies and access to educational materials.

“There is potential, too, for retailers to coordinate with public agencies,” Mr. Taylor noted.

Supermarkets, he explained, in cooperation with the government, can make a difference in tackling issues of public concern like obesity, pollution, and even overcrowding. Retail chains also have the opportunity to convey public announcements, offering a potential platform for engaging people directly on public issues.

“For most households, retailers sit alongside utility companies as the biggest recipients of our cash. Price, quality and convenience are key customer values but the retail giants now have the opportunity for a benign competition to be the greatest provider of additional local social capacity,” he wrote.

“To put all this into practice, stores need the power and permission to experiment in engaging with the customers and wider public. Local and central government, along with charities and third sector providers, need to get involved. Through a prolonged period of austerity, the contribution of businesses locally in developing community ventures with social and environmental benefits could be vital.” — Bjorn Biel M. Beltran

Developing human capital for economic growth

To a layman, the relationship between education and economic growth is relatively straightforward. An educated population is a productive work force, and higher productivity equals higher economic gains. Therefore, a country should invest in education to develop its ‘human capital’ — the ability of a population to perform labor to produce economic value.

The esteemed American economist and winner of the 1992 Nobel Prize in Economic Science Gary S. Becker popularized the term. Mr. Becker theorized that an individual’s education can result in a payoff in terms of higher wages. Education, in a nutshell, is an investment.

“Education and training are the most important investments in human capital,” Mr. Becker wrote in his book Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education.

“Many studies have shown that high school and college education in the United States greatly raise a person’s income, even after netting out direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated and richer parents. Similar evidence is now available for many years from over a hundred countries with different cultures and economic systems.”

The earnings of more educated people, Mr. Becker added, are almost always well above average. The role of education in those countries less developed than the West is even more pronounced, as such gains are generally larger in these countries.

Private returns to schooling — what individuals receive in the labor market — have been increasing, according to an article published by the World Bank on its Web site in 2016. Returns are increasing by more than 20% in Africa and more than 14% in East Asia and the Pacific. Recently, the biggest changes have been the returns to tertiary education now being the highest.

The Asian Development Bank, which seeks to help develop nations in Asia to reduce poverty and improve quality of life, in a study published in 2010, proposed that developing Asia’s stock of human capital — in essence its well-educated work force — would be one of the critical factors in the region’s rapid economic development.

“There are several ways through which human capital — the ability and efficiency of people to transform raw materials and capital into goods and services — affects economic growth,” ADB wrote in A Survey on the Relationship between Education and Growth with Implications for Developing Asia.

“The accumulation of human capital improves labor productivity and increases the returns to capital. A well-educated workforce is also essential for the adoption and diffusion of technology to take place,” it added.

This is proven, ADB continued, by the region’s record in educational attainment over the past four decades. In 2010, its population aged 15 years and over had an average of 7.8 years of schooling, from just 4.1 years in 1970.

The relationship between technological and industrial progress, which continues to this day, and the educational requirements to adopt them play a part. Mr. Becker wrote that the continuing growth in per capita incomes of many countries all over the globe during the 19th and 20th centuries is partly due to the expansion of scientific and technical knowledge that raises the productivity of labor and other inputs in production.

“The increasing reliance of industry on sophisticated knowledge greatly enhances the value of education, technical schooling, on-the-job training, and other human capital,” he wrote.

“New technological advances clearly are of little value to countries that have very few skilled workers who know how to use them. Economic growth closely depends on the synergies between new knowledge and human capital, which is why large increases in education and training have accompanied major advances in technological knowledge in all countries that have achieved significant economic growth,” he added.

To note, economies in Asia like Japan and Taiwan have posted stellar growth records during these decades, countries that had lacked the natural resources and political power traditionally required for a competent economy. These countries have mostly built global economic powerhouses on the back of human capital alone.

“Lacking natural resources — they import almost all their energy, for example — and facing discrimination against their exports by the West, these so-called Asian tigers grew rapidly by relying on a well-trained, educated, hardworking, and conscientious labor force that makes excellent use of modern technologies,” Mr. Becker wrote.

According to the World Bank, one of the reasons for the growing returns on education is the race between technology and education, as labor markets adjust to automation.

“In this new world, the ability of workers to compete is handicapped by the poor performance of education systems in most developing countries.  Technological change and global competition demand the mastery of competencies and the acquisition of new skills for many,” the World Bank wrote.

To promote success in today’s labor market, a country needs to invest early and in the relevant skills. Most importantly, countries need to invest smartly by promoting attention to an education system’s autonomy, accountability, and assessment procedures.

“Education systems that do well prepare children early on, reform continuously, and use information for improvement and accountability,” the World Bank wrote.

“Education is truly one of the most powerful instruments for reducing poverty and inequality and it sets the foundation for sustained economic growth. Let’s start investing in it more.” — Bjorn Biel M. Beltran

Advancing education

The education system in the Philippines, according to an Oxford Business Group (OBG) report, has undergone an evolution that spans over hundreds of years as shaped by the country’s colonial and post-war history.

From being under the colonial rule when not all Filipinos have access to learning, the country, to date, focuses on expanding access to education — in recognition that education is a means of reducing poverty and improving national competitiveness.

In a further bid to better equip the country’s learners and enhance their competitiveness, the government signed the Enhanced Basic Education Act also known as the K to 12 program in 2013. The law adds two years to the basic education of students.

Meanwhile, amid the rise in globalization and digital revolution which continue to disrupt and pervade various systems, the landscape of educational systems around the world, including the Philippines, continue to undergo drastic transformation. From the traditional discipline of classroom learning where textbooks are the main source of information, various online learning tools now complement student learning.

“The widespread use of the Internet and the revolution in information and communication technology (ICT) have led to new methods of teaching and learning, such as blended learning and e-learning,” Asian Development Bank (ADB) noted in a 2017 article.

“Blended and e-learning can broaden teaching and learning by providing additional tools to explain complex issues or retain student attention. These approaches also expand access to quality education by allowing students to learn anywhere and anytime as well as learn from experts from any part of the world,” the article continued.

ADB also said that online learning could serve as an equalizer because it provides access to resources that are normally not available to remote schools.

As Internet connectivity increases in the Philippines, students — who are getting more digital-savvy — also gain easier access to endless information and educational materials online.

In recent years, the country saw reports that gamification of education can benefit students and enhance their educational experience as studies show that playing is vital for children. Gamification is defined as the usage of gaming principles and techniques in non-game contexts.

Various online platforms offering tutorial services and other learning activities use this element to make lessons more fun and engaging. Learning tools in the form of mobile applications can also be easily downloaded nowadays.

Reports have stated that gamification “increases engagement.” It is also said that when lessons are delivered using elements of a game, which are often interactive and challenging, students tend to remember it easily.

Learning is also not limited to the confines of educational institutions with the emergence of massive online open courses (MOOCs), which allow more flexibility in learning. These courses may range from humanities to science and information technology among others. MOOCs also open opportunities not just for students but also working professionals who want gain knowledge on different disciplines without having to attend a formal school or university.

According to the Philippine Institute for Development Studies, MOOCs is a good way to make education inclusive since these courses are often open, affordable, and self-paced. — Romsanne R. Ortiguero

The MOOC phenomenon

Massive open online courses (MOOCS) have exploded in popularity this decade, and it shouldn’t really come as a surprise. They’re mostly free to take by anyone with an Internet connection, a computer or any other electronic device, and, of course, an interest in learning something new.

In 2017, two of the biggest MOOC platforms in terms of users and course offerings, Coursera and eDX, released results of their respective surveys that shed some light on the MOOC phenomenon, the learners and their experiences.

Harvard University and Massachusetts Institute of Technology (MIT), the institutions behind eDX, published results of their report on learner engagement and behavior in 290 MOOCs since the platform became available in 2012. “Strong collaboration has enabled MIT and Harvard researchers to jointly examine nearly 30 million hours of online learner behavior and the growth of the MOOC space,” said Isaac Chung, co-author of the report and a professor at MIT.

Mr. Chung and his coauthor, Andrew Ho, a professor of education at Harvard University, inquired into 4.5 million participants in 290 MOOCs, as well as a quarter-million certifications and 28 million participant-hours, spanning the summer of 2012 and the fall of 2016. One of the key findings of their investigation was that cumulative MOOC participation had grown steadily over that four-year period, with 2.4 million unique users participating in one or more MITx or HarvardX open online courses, and 245,000 learner certificates issued upon successful completion of the courses.

On average, 1,554 new, unique participants enrolled per day. Participants in a MOOC classroom were heterogeneous, both in background and intention. A typical course certified 500 learners; 7,900 learners accessed some course content after registering, and around 1,500 explored half or more of a course’s content. A MOOC certificate earner typically spent 29 hours interacting with online courseware.

eDX’s learners were largely male (67% were males and 33% were females), and their median age was 29 years. A great majority of them came from other countries (71%). The remaining 29% were from the United States.

“Each year, we release a report so that everyone can see the data for themselves,” Mr. Ho said. “We hope it helps institutions, faculty, students, and the public learn more about these unprecedented global classrooms.”

Coursera first conducted the Learner Outcomes Survey in 2015, the results of which appeared in Harvard Business Review. That survey found that people around the world were getting benefits from online learning, in such areas as starting new careers and gaining credit toward a degree. Rick Levin, former CEO of Coursera, said in a post on the platform’s Web site that they made the Learner Outcomes Survey a permanent part of the platform experience, which means that every learner who completes a course now receives a survey a few months later.

The latest survey revealed that 84% of career-focused learners who completed courses reported career benefits, and 93% of education seekers reported educational benefits. Mr. Levin said these numbers were consistent with the survey results in 2015.

Those participating in Coursera’s courses also reported personal benefits. “To better understand the less-tangible but still valuable benefits of completing an online course, we’ve added new questions about personal growth to our survey. Our recent analysis found that 72% of learners who completed a course reported gaining confidence, and nearly 50% reported benefits from connecting with peers around the world,” Mr. Levin said.

Welcomingly, learners who were less advantaged — hailing from developing economies, without a bachelor’s degree, of lower socioeconomic status — were more likely to report benefits.

“These outcomes speak to the progress we’ve made as a company in the past two years, and to the amazing work that our partner institutions, instructors, and course teams have done to make their courses available on our platform,” said Mr. Levin, who is a now a senior advisor to Coursera.

BSP requires longer-term liquidity buffer

THE BANGKO SENTRAL ng Pilipinas (BSP) has approved new guidelines that will require banks to hold ample liquidity buffers covering a whole year, in keeping with global standards for a solid asset base.
BSP Governor Nestor A. Espenilla, Jr. said the Monetary Board has approved guidelines to implement the Net Stable Funding Ratio (NSFR), which is one of the key reforms under the international Basel 3 framework.
“NSFR is basically a regulatory requirement for the banks to generally maintain a liquid position long enough to sustain it for a one-year period,” Mr. Espenilla told reporters.
The NSFR will require universal and commercial banks to maintain enough “reliable” sources of funding to match their expected needs for a full year.
These will serve as more dependable buffers that will enable banks to stay afloat even in times of funding crunch.
The new standard will be on top of the Liquidity Coverage Ratio (LCR), which requires big banks to hold high-quality, easily convertible assets to cover its projected net cash outflows over a 30-day period.
UNDER OBSERVATION
Once the circular is published, banks will undergo an “observation period” wherein their liquid assets will be monitored for the rest of the year.
By Jan. 1, 2019, the new standard will be implemented fully.
The BSP wants banks to remain liquid at all times, as their inability to service withdrawals or payment transactions could result in “unacceptable costs” that will compromise the financial footing of these lenders.
Tests BSP has conducted have shown that big banks are “generally” able to comply with the new rule, Mr. Espenilla said.
He added that the NSFR is designed to make banks even more responsible.
“[I]f we don’t have good rules that compel banks to behave prudently, if you release liquidity to them, the danger is it will result in excesses in terms of credit which then creates problems down the road,” the central bank chief said.
“But in a situation wherein you have a strong regulatory framework, the BSP is confident that the channels to which the liquidity passes through — banks — are going to be responsible.”
Mr. Espenilla made these remarks in light of at least P90 billion in funds expected to be freed up by the additional one percentage point reduction in bank reserves that takes effect Friday.
OTHER SAFEGUARDS IN PLACE
Apart from the NSFR and the LCR, the central bank has also rolled out the minimum liquidity ratio which covers thrift, rural and cooperative banks.
BSP Deputy Governor Chuchi G. Fonacier said in a separate interview that a regulation requiring intraday liquidity reports is also in the works. The new rule will ensure that financial firms hold enough money to meet “expected and unexpected cash flows and collateral needs” from day to day.
The BSP has been fortifying regulatory standards under the Basel 3 regime since 2014 that include the 10% capital adequacy ratio, a framework for domestic systemically important banks and the five percent leverage ratio.
These measures have been crafted by international policy makers to improve risk management and prevent a recurrence of the 2008 Global Financial Crisis. Excessive lending that time led to massive credit defaults, in turn causing the collapse of big banks and triggering a global recession. — Melissa Luz T. Lopez

Finance dep’t disputes fall in Philippines’ competitiveness rank

THE DEPARTMENT of Finance (DoF) on Tuesday disputed the International Institute of Management Development’s (IMD) latest World Competitiveness Rankings report that saw the Philippines’ dropping nine rungs, arguing that this was not consistent with data.
In a statement, Finance Undersecretary Gil S. Beltran said the annual report’s latest findings “are not backed up by actual data.”
The research group of Switzerland-based business school IMD in its report last week ranked the Philippines 50th out of 63 economies in terms of overall competitiveness, citing weakening in tourism and employment, worsening public finances and concerns about the education system.
IMD had yet to reply as of early Tuesday evening when asked for a response to the DoF’s statement.
“First, while IMD says tourism and employment has declined, the country’s employed persons rose 6.1% in January 2018 and unemployment rate dropped to 5.3%, the lowest since the country started compiling unemployment statistics,” Mr. Beltran said.
“Also, international tourist arrivals to the Philippines rose by 16.1% to 1.4 million visitors for the period January-February 2018 compared to its level in the same period last year,” he added, noting that “[i]n 2017, Philippine tourists reached an all-time high of 6.6 million.”
Mr. Beltran added that the claim of worsening public finance was “simply laughable.”
“The statement by the IMD reflects gross research incompetence. We won’t go to lengths to dispute such statement regarding our fiscal affairs but would like to refer to other third party assessments — credit rating agencies and the IMF (International Monetary Fund),” the DoF official said.
“If the state of our public finance was really deteriorating, credit rating agencies would have taken notice and have downgraded us accordingly. But no, we’re still investment grade.”
The Philippines’ has credit ratings that are a notch above minimum investment grade from three of the major international debt watchers, S&P Global Ratings, Fitch Ratings and Moody’s Investors Service.
Mr. Beltran also disputed IMD’s concerns about the widening current account deficit and the weak local currency.
He noted IMD’s “failure to distinguish between short-term adjustments and long-term prospects and has mistaken the former for loss in competitiveness.”
“Using the current account as a measure of competitiveness is like the misguided mercantilist thinking that the greater the surplus, the better it is for the economy…,” Mr. Beltran explained.
“The depreciation in the currency was also noted and was associated with more instability. But textbook economics teaches that a country’s competitiveness improves as its currency depreciates.”
Economists and state officials have said that the current account deficit has been fueled by importation of raw materials and capital equipment needed by businesses to expand.
“In short, the ratings methodology employed by IMD mechanically ranks cold numbers without understanding the dynamics of the economy. The result is that rankings tend to be volatile. Neither does it use benchmarks with which to gauge relative performance,” said Mr. Beltran.
“Nevertheless, the dip in ranking is still a wake-up call… We do recognize the real issues such as red tape and insufficiency in infrastructure and we are working hard to address those.” — Elijah Joseph C. Tubayan

Government approves 805,200 tons of rice imports under quota scheme

THE STATE grains procurement agency on Tuesday gave the go-ahead for local traders to import up to 805,200 tons of rice under an annual quota scheme, which should boost domestic supply and keep rising prices in check.
The imports, which should be shipped in starting July, would bring total rice purchases approved this year to 1.3 million tons, including half-a-million tons that the National Food Authority (NFA) has bought to replenish its depleted buffer stock.
The Philippines, a frequent rice buyer, is seeking to stabilize retail prices of the national staple that have risen by as much as seven percent from a year ago amid the absence of the low-priced NFA supply in the local market.
Higher rice prices have added pressure to Philippine inflation, which accelerated in April to the highest in at least five years.
The NFA expects its imports to start arriving this week.
Under the import guidelines posted on the NFA’s website, traders are allowed to import 25% broken white rice or a better variety, with a 35% tariff.
Delivery should be completed by February next year, the state grains agency said.
The country-specific quota scheme allows traders to import up to 293,100 tons from Vietnam and the same volume from Thailand.
They can buy up to 50,000 tons from China, another 50,000 tons from India and the same volume from Pakistan.
Up to 15,000 tons can come from Australia, up to 4,000 tons from El Salvador and the balance of 50,000 tons from any country. — Reuters

EU lawmakers move to toughen screening of foreign investments

BRUSSELS/BERLIN — Lawmakers in the European Parliament approved on Monday a far-reaching proposal calling for greater scrutiny of foreign investments, part of a bid to respond to a flurry of Chinese acquisitions in the European Union (EU).
Parliament’s international trade committee voted overwhelmingly to extend the list of “critical sectors” that would trigger EU scrutiny, and to oblige the European Commission and EU countries to act.
Members of the committee aim to start talks with the Commission and European Council of members states, seeking to pass the legislation by the end of 2018.
The first talks are provisionally scheduled for July 10.
“Without falling into protectionism, it is time to show that Europe is no longer taking a naive stance on globalization,” said Frank Proust, who coordinated the parliament’s proposals. “We are against shady or harmful investments, in particular those that meet political ambitions to take control of industries or technologies.”
Lawmakers said they wanted the Commission to investigate foreign investments more thoroughly, drawing up a longer list of critical fields that must be scrutinized when deals are announced, including the media, election infrastructure, data analysis, biomedicine and automobiles.
At present, 12 EU countries have review mechanisms, but they differ significantly. The Commission’s proposal aimed to coordinate the EU’s response to protect Europe’s strategic interests and advantage in some fields of technology.
The lawmakers’ draft puts more emphasis on investments made with state influence or aimed at transferring key technologies to a third country — a clear reference to some Chinese state-led firms that have bought European rivals.
Some EU nations that promote greater free trade are likely to be skeptical of tougher screening, like the Netherlands, Sweden and Denmark. Others that have benefited from Chinese investment may also oppose the step, such as Portugal, Malta or Hungary.
Before parliament voted, the Federation of German Industries warned lawmakers not to take steps that would spread investment controls across Europe. “They can only be justified when they are protecting a greater good, such as security and public order, but not when they serve industrial policy goals,” said BDI Director-General Joachim Lang. “Any signal that gives impetus to the international spiral of investment protectionism is wrong.” — Reuters

Meralco sees P18-billion annual capex

By Victor V. Saulon, Sub-Editor
MANILA Electric Co. (Meralco) expects its capital expenditure for the next four-year regulatory period spanning mid-2019 to mid-2023 to track around the same amount as the previous period — at about P18 billion a year, its president said.
“We’d like to think that it will track — for now, absent any indication — we’d like to more or less probably stick with that range of about P18 billion a year,” Meralco President and Chief Executive Officer Oscar S. Reyes told reporters after the company’s annual stockholders meeting on Tuesday.
Mr. Reyes said Meralco submitted for approval by the Energy Regulatory Commission (ERC) a capex of P35 billion for the two-year period extending up to June 30, 2019, or the tailend of its fourth regulatory period.
ERC regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.
“It’s hard to extrapolate because the capex for networks [and] customer services have to be specific. There has to be specific infrastructure [projects],” Mr. Reyes said.
Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said that for the fourth regulatory period Meralco was unable to obtain a “rate-setting” from the regulator.
For the years 2015 to 2019, she noted the corresponding capex applied for by Meralco was at P17.7 billion, P15.4 billion, P18.8 billion and P21 billion for a total of P72.9 billion. She said the last one was applied by the company only in April this year.
“If you had a rate-setting, [the capex] for 2015 to 2019 should have been approved in 2015, and you just implement. And because we didn’t have a rate-setting, we apply for approval on an annual basis,” she said.
The capex for Meralco’s fourth regulatory period is a big jump from that of the third period at a little less than P40 billion, Ms. Siy-Yap said.
“The original approval was P36 [billion] and then we got an emergency approval of around P2.9 billion, so almost P40 [billion],” she said.
Meralco’s fifth regulatory period comes at a time when it is looking at developing new energy businesses.
During the stockholders’ meeting, Mr. Reyes said Meralco was looking at six new business segments, including electric vehicles, microgrids and smart cities.
Meralco is waiting to see if the government would give franchises for the routes plied by electric vehicles. Mr. Reyes also said off-grid areas are being considered by the company for electrification, not as corporate social responsibility, but as a viable business venture.
Meralco’s capex for the coming years follows the steady growth of its customer base at a compounded annual growth rate of 4.2% from 2013 to 2017. The company ended last year with 6.327 million customers, up 4.8% from 6.038 million in 2016.
On Tuesday, shares in Meralco rose by 0.60% to close at P335.80 each.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

JG Summit to ramp up capital spending this year

By Arra B. Francia, Reporter
JG SUMMIT Holdings, Inc. is hiking its capital spending for 2018 as it aims to grow its petrochemical, airline, property, food and beverage, and banking businesses amid higher oil prices in the world market and the further depreciation of the peso.
The Gokongwei-led conglomerate said on Monday that it will be spending around P80 billion in capital expenditures this year. This is around 83% higher than the P43.5 billion it spent in 2017.
Bulk of the 2018 capex will go to Robinsons Land Corp. at P30 billion. JG Summit Petrochemical Corp. will corner P20 billion, while Cebu Air, Inc. will get “a little over P20 billion,” according to JG Summit President and CEO Lance Y. Gokongwei during their annual shareholders’ meeting in Pasig City late Monday.
The food and beverage business through Universal Robina Corp. (URC) will be spending P7 billion, while the balance will go to JG Summit’s smaller units.
Mr. Gokongwei said the company has already spent P11 billion out of the capex for the first quarter of 2018.
Moving forward, the company said it remains optimistic for growth prospects, amid various factors that are expected to affect its business units. This includes the implementation of the tax reform program that will hit products by URC, fuel surcharge rates weighing on Cebu Air’s operations, and the overall weakening of the peso.
AIRFARES TO GO UP
Mr. Gokongwei said its budget carrier Cebu Pacific is seeking to impose a fuel surcharge of between P70 to P250 for domestic flights, in order to offset the higher cost of oil in the world market alongside the weaker peso. An application for the fuel surcharge has been submitted to the Civil Aeronautics Board.
“The effect of the fuel price and currency has been quite significant for us. The effect of fuel, approximately P20 million per month for every dollar increase in fuel and the effect of currency is about P65 million per month for the higher cost of, because of the weaker peso,” Mr. Gokongwei told reporters on the sidelines of the shareholders’ meeting.
“In aggregate, it is costing us P700 million more per month to fly the same net worth,” the Cebu Air president and CEO said.
During the first quarter, Cebu Air reported earnings rose 12% to P1.43 billion. However, operating expenses also jumped 12% to P15.997 billion due to higher fuel prices, weak Philippine peso and the airline’s purchase of new aircraft. It also reported net foreign exchange losses of P838.619 million for the three months, as the Philippine peso averaged P52.16 per US dollar for the three months ended March 31, from P49.93 per US dollar for the 12 months ended Dec. 31, 2017.
Cebu Pacific also expects its top-line to be affected by the six-month closure of Boracay island that started in April, as Cebu Pacific’s flights to and from Caticlan Airport account for 6-7% of its total flights.
“We anticipate maybe P500 million to P1 billion (in foregone revenues) during that because it takes time to transfer that to other destinations… But this is still a strong positive for the country after rehabilitation is complete” Mr. Gokongwei said.
HIGHER PRICES LOOM
Under URC, Mr. Gokongwei said the company has increased prices of some beverages due to the P6-per-liter increase in taxes for sugar-sweetened beverages under the Tax Reform for Acceleration and Inclusion law. URC has already increased prices of its C2 tea brand by 22-23%, which has led to a 12-15% drop in volumes during the first quarter of 2018.
“We begin to raise prices in May. We will raise most of our snack prices in May and subsequently in June, snack and noodles,” Mr. Gokongwei said. Among URC’s snack brands include Chippy, Piattos, and Nova, while its noodle brands include Payless Instant Mami and Nissin Yakisoba.
To offset the effects of higher taxes and stiffer competition, Mr. Gokongwei said they will be introducing more products into its portfolio.
“We’re doing some research now… Review all options, renovating existing brands and launching incremental new products,” he said.
Mr. Gokongwei, who is also chairman of URC, said the company hopes to see year-on-year growth in earnings by the third quarter.
BANK RECAPITALIZATION
JG Summit is likewise planning the recapitalization of Robinsons Bank, as it looks to pour in around P4.3 billion to further expand its operations to 100 branches. Mr. Gokongwei noted that the Bangko Sentral ng Pilipinas (BSP) requires banks to have a capital base of at least P15 billion to operate 100 locations.
At the end of 2017, Robinsons Bank’s capital stood at P12.11 billion, according to BSP data.
“In July, we’re going to add further P4.3 billion for the bank’s capital. RRHI (Robinsons Retail Holdings, Inc.) will fund P1.2 billion, JG Summit will fund P1.8 billion and this will further support our growth, lending growth as well as in our net worth,” Mr. Gokongwei said.
For JG Summit’s petrochemical business, Mr. Gokongwei said they are continuing the $1-billion expansion of its naphtha cracker facility that will increase production to 480,000 tons from 320,000 tons. The facility is expected to be completed by 2020.
JG Summit’s net income attributable to the parent dropped by 35% in the first quarter of 2018 to P4.82 billion, amid a 4.7% increase in revenues to P70.68 billion.
Shares in JG Summit gained 25 centavos or 0.43% to close at P59 each at the stock exchange on Tuesday.

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