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Beyond the point of sale

There is nothing like the high that comes with buying a brand-new car. Nothing compares to the purrs of a yet unused engine, nor the sheen of a fresh coat of paint, still unblemished by dust and dirt. Some wait their entire lives, saving little by little for that often dreamed about moment when their shiny new key first turns in the ignition.

There is a lot to love about getting a new car, and yet there is much to be said about maintaining one. Dealing with after-sales services is an important part of car ownership as it can make all the difference to a vehicle’s longevity. With an increasing number of people getting their own cars, the pressure is on local dealerships to provide a spectrum of services to address the needs of their growing list of clients.

Brands like Suzuki Philippines are taking initiative. With the brand’s Free Check-Up Service Campaign, which was launched in January 2014, Suzuki has provided motorists all over the Philippines with free check-up services to keep their vehicles in tip-top shape. The Japanese automotive brand has offered its free, 15-point comprehensive checkup in a number of locations nationwide and at an extended period.

“Suzuki Philippines has been going around its different dealerships one province at a time since 2014 to bring its after-sales service to its loyal patrons and new customers with a two-day free comprehensive checkup held at each participating area,” the company said on its Web site.

“The vehicles go through four different service bays where the general condition, under chassis, and under the hood of the cars are examined by highly qualified pool of technicians.”

Bermaz Auto Philippines, the distributor of Mazda vehicles and spare parts in Malaysia and the Philippines, has been investing heavily in the improvement of its aftersales program as well. The Mazda Apprenticeship Program aims to produce graduates who meet Mazda Corporation’s global certification standards.

The program, which is sanctioned by the Department of Skill Development (Malaysia’s version of TESDA), Institute of Motor Industry of the United Kingdom and Mazda Corporation Japan, also gives graduates the required training that would help with customer engagement. Apprentices are assessed according to their natural mechanical aptitude, and are made to experience a two-year work-process approach and actual work conditions to gain insights into how they would perform in the real world.

This program ensures that the Bermaz’s skilled technicians not only know the technical workings of vehicle repair and maintenance but are also knowledgeable of the best practices to apply to Mazda dealerships in the Philippines, leading to shorter repair times and an overall improvement in the customer experience. The company also revealed plans to construct a training center in Laguna to improve the after-sales services across its dealer network.

Toyota Motor Philippines, meanwhile, has introduced its Express Maintenance service to gain an edge in customer satisfaction. Express Maintenance Service is a periodic maintenance service made faster, guaranteeing just one-hour service from reception to vehicle release.

“At Toyota, we believe that you should spend more time doing things you love than waiting long hours for car service. That’s why we created the Toyota Express Maintenance Service (EM), the first and only one hour complete Periodic Maintenance Service (PM) available in all Toyota Dealerships nationwide,” Toyota said on its Web site.

Through the service, Toyota dealers will reserve a service bay and prepare parts needed for the Express Maintenance Service in advance. In addition, three Toyota-certified technicians will work simultaneously on the car using state-of-the-art tools and equipment to guarantee quality service. The Toyota Express Maintenance is priced the same as the regular Periodic Maintenance Service, at no additional cost to the car owner. The faster rate of job completion will allow Toyota to maximize its workshops and receive more vehicles.

Brands like Honda, Mitsubishi, and Hyundai are also stepping up their game. In the JD Power 2017 Philippine Customer Service Index, the three companies were among the highest-rated mass-market car brands in the country in terms of overall service satisfaction.

The global market research company JD Power conducts the annual Customer Service Index (CSI) Study to rate auto brands in the country according to customer service. The index rates the automobile brands’ after-sales services according to five factors, including service quality, vehicle pickup, service facility, and service advisor.

The best car brands realize that designing and manufacturing efficient and powerful vehicles play only one part in keeping their clients happy and loyal. With more and more Filipinos purchasing new cars, the key to keeping ahead of the game depends on the quality of service — before, during and after the purchase. To gain an edge over the increasingly competitive market, companies need to make customers feel satisfied with their chosen vehicles well beyond the point of sale. — Bjorn Biel M. Beltran

The changing nature of the automotive customer service

According to the professional services firm Deloitte, the basic expectations people are bringing to automobile are being rewritten by forces like shared mobility and autonomous driving. It is even possible, the firm says, that in the future, people could purchase mobility, to which buying a car has always been a means, without ever having to buy a car at all.

“In time, adapting and surviving in this new environment will require dealers to revisit their entire business models,” Deloitte says in a paper titled “Automotive customer service becomes a relationship-based consumer experience.” But the firm notes that the future vision for today is the direct-to-consumer sale.

“The seven key moments in a customer’s sales journey are the foundations of that new strategy. Once those moments are defined, companies need to think about the processes, environment, and people involved in each one, so each element adds value that customers appreciate instead of turning them away,” the firm explains.

Those key moments begin with the digital experience of learning about vehicles by brand, feature and price. And yet, Deloitte says, even though dealerships have websites, only a few of these sites are integrated into the entire experience.

“As a result, consumers’ research actions taken on the OEM or a third-party site are not learned, remembered, nor used to make for a seamless transition,” the firm says. What’s more, the websites need to be mobile-friendly. And Deloitte says having a dedicated app is no longer a “wishful extravagance” but a “business necessity” that must link to the overall omni-channel experience.

The next key moment is coming into the dealership, and Deloitte notes that the biggest point of differentiation that a dealership has is the space where customers touch, feel and drive the vehicles. It can be easy to mess this process up, though.

“An indifferent receptionist, a pushy salesperson, or a poorly maintained environment signals to the prospective customer that a dealership isn’t for them,” the firm says. “Customers expect a low-pressure, personalized omni-channel experience that puts them in control of the process.” A customer’s first visit to a dealership has to be good, and in ensuring that, it is useful to ask this question: “Will visiting the dealership be the most hectic part of the day, or an oasis of calm that promotes decision-making?”

Deloitte says the need for a positive environment applies to the digital realm as well. “The first impression of the dealer environment is often established online, so it is critical that the digital and physical environments are in sync and focused on delivering a great experience.”

When it comes to talking to the salespeople, making the conversation less awkward and painful should be the goal. “It can help if the first people customers interact with aren’t necessarily salespeople,” Deloitte says.

The firm continues: “Greeters who introduce the dealership and help customers find their way can be friendly, knowledgeable — and not incentivized to sell. Personality and attitude trumps automotive experience in hiring these people.”

The fourth moment in the sales journey — test drive — is a great opportunity to make a positive impression on a customer and, ultimately, make the sale. Deloitte says that even though sales channel may have been digital and the nature of ownership may evolve, the test drive is always the “hands-on tipping point.”

Nevertheless, getting something wrong in this critical moment is possible “Out of the gate, the customer experience can suffer if the salesperson tries to qualify buying ability before handing over the keys,” Deloitte says.

But the test drive process can always be improved, and Deloitte notes that several of the leading practices it has observed include taking customers through a drive-thru to purchase their drinks, playing their preferred songs and customizing the test drive route based on their daily driving patterns. The firm points out, “Customers should walk away from a test drive feeling as if the car is already theirs. That can keep them from looking elsewhere.”

In terms of negotiation and purchase, Deloitte has found that Gen Y consumers, people born between 1977 and 1994, want an efficient purchase process. It is only imperative then to keep the paperwork to a minimum. “Encouraging customers to complete paperwork online in advance is one solution, but the onus shouldn’t be on them,” Deloitte says.

The firm has observed retailers moving to a consultative selling model: from start to finish, a customer interacts with just one person, an arrangement that can add efficiency for both parties. It also notes that some are testing the one-price approach. “No negotiation, no haggling. The intent is to let customers know they are getting the best deal. It also saves a lot of time. But for customers to trust the price, they must first trust the person who is offering it,” Deloitte says.

Vehicle delivery is the second to the last moment in a customer’s sales journey. “The moment that crowns the sales process is a triumph for the retailer and a potential lifetime memory for the customer,” Deloitte says. But the handing over of a vehicle also presents a chance for a dealership to do something memorable and meaningful.

Some of the things a dealership can do: tweet its congratulations, send the buyer a token gift or take a photo of the moment. “What’s important is to step outside the business frame of mind with a little artistry that says, I know this is important for you, and it’s important for us too,” Deloitte says.

“The retailer will want to see these people again — and in a future colored by car-sharing and other changes to the ownership tradition, it will want to see them more often,” it adds.

The firm says a smile and a wave do not signal the end of a sales relationship, only the beginning of a service relationship, the seventh critical moment. “The way a retailer handles that ongoing commitment is a rehearsal for the more flexible, long-term relationships that will mark the future of the industry,” it says.

Trump meets Philippines’ controversial Duterte

Donald Trump sits down Monday, Nov. 13, with Philippine President Rodrigo Duterte, who boasts about personally killing people and is waging a drug war that rights groups say involves mass murder.

The US president is in Manila with leaders of 18 other nations for two days of summits, the final leg of a headline-grabbing Asian tour dominated by the North Korean nuclear crisis.

Allegations of Russian meddling in last year’s US presidential elections also hounded the second half of his 12-day trip, which took him from Japan to South Korea, China and Vietnam.

Rights groups have called on Trump to end his Asian journey with a strong statement against Duterte’s drugs war, which has seen police and suspected vigilantes kill thousands of people.

But brief encounters between them in the lead-up, including at another regional summit in Vietnam and a banquet dinner in Manila on Sunday night, appeared to support Duterte’s confidence that Trump was not concerned with the killings.

“I’m sure he will not take it up,” Duterte said on Sunday when asked whether he expected Trump to raise the issue of alleged extra-judicial killings in the drugs war.

Duterte won elections last year after promising to eradicate illegal drugs with an unprecedented campaign that would see up to 100,000 people killed.

Since he took office, police have reported killing 3,967 people in the crackdown.

Another 2,290 people have been murdered in drug-related crimes, while thousands of other deaths remain unsolved, according to government data.

Many Filipinos back Duterte, believing he is taking necessary measures to fight crime, but rights groups warn he may be orchestrating a crime against humanity.

Amnesty International accuses police of shooting dead defenceless people and paying assassins to murder addicts.

‘I already killed someone’

When pressured over allegations of extra-judicial killings carried out by police, Duterte insists he has never told them to break the law.

But rights groups say police are following Duterte’s incitements to kill, including comments made last year when he said he would be “happy to slaughter” three million addicts.

He has also repeatedly boasted about personally killing people, most recently on Thursday while in Vietnam for the Asia-Pacific economic summit.

“At the age of 16, I already killed someone. A real person, a rumble, a stabbing. I was just 16 years old. It was just over a look,” Duterte said.

Duterte also said in December last year that he had personally shot dead criminal suspects when he was mayor of southern Davao city to set an example for the police.

Then-US president Barack Obama was one of many prominent critics of Duterte’s handling of the drugs war. The Philippine leader responded last year by calling Obama a “son of a whore”.

Trump has so far appeared to be a fan of Duterte, telling him in a telephone call in April that he was doing a “great job”.

Duterte said on Sunday that Trump had offered him further “words of encouragement” during their brief chat in Vietnam the previous day.

And at the pre-summit banquet on Sunday, Duterte sang a Filipino love song in front of his audience, saying in a light-hearted fashion that he did so on the orders of the US president.

Duterte is hosting the world leaders because the Philippines holds the rotating chair of the 10-nation Association of Southeast Asian Nations (ASEAN) bloc.

The events on Monday and Tuesday in Manila are two separate ASEAN-hosted summits, which also include China, Japan, Russia, South Korea, India, Canada, Australia and New Zealand.

Competing territorial claims in the South China Sea and fears that the Islamic State group is gaining a foothold in Southeast Asia are expected to be on the formal agendas of the talks. — AFP

Do you know your TPPs from your RCEPs, NAFTAs and OBORs?

Danang, Vietnam — In the world of trade diplomacy, the acronym is king.

As world leaders descend on the Vietnamese city of Danang for the APEC summit, the nomenclature of free trade — NAFTA, TPP, RCEP and OBOR to name but a few — will be in full flow.

But outside the corridors of economic power, the terms are little understood. Here is a guide to what they mean and why they are important.

APEC
First up is APEC, the regional economic bloc hosting this week’s global gathering in Vietnam.

The Asia Pacific Economic Cooperation — sometimes derided as “four adjectives in search of a noun” — represents 21 Pacific Rim economies, the equivalent of 60% of global GDP and some 2.9 billion people.

Headquartered in Singapore, the group is enormously varied — from economic giants China, Japan and the United States, to comparative minnows such as Vietnam, Indonesia, Chile and Peru.

Established in 1989, it is a child of the post Soviet-era, pushing for freer trade and lower tariffs across the Asia Pacific region.

It is not to be confused with ASEAN, a much smaller 10-member bloc of Southeast Asian countries.

TPP
Until the election of President Donald Trump last year, TPP was an attempt to create the world’s largest and most comprehensive free trade deal, embracing economies representing 40 percent of the global GDP.

But it was dealt a severe blow when Trump announced he was pulling US support earlier this year.

Ironically Washington spent years pushing the pact between 12 Pacific countries that very noticeably excluded its biggest regional rival China.

The remaining 11 countries — dubbed “TPP-11” — have since struggled to reboot the deal now that it doesn’t include access to the world’s largest economy.

In Danang on Friday ministers were working on salvaging the pact, with Japan and Mexico signalling a breakthrough but Canada saying no agreement had been struck.

The pact was previously described by the US as a “gold standard” for all free trade agreements because it went beyond just cutting tariffs.

It included removing a slew of non-tariff measures and required members to comply with a high level of regulatory standards in areas like labour law, environmental protection, intellectual property and government procurement.

RCEP
The Regional Economic Comprehensive Partnership (RCEP) is often described as China’s answer to TPP because it noticeably excludes the US.

It is a proposed trade deal between the 10 members of the Southeast Asian bloc (ASEAN) plus their regional trading partners China, Japan, South Korea, Australia, New Zealand and India.

It aims to cut tariffs but has far less regulatory standards attached than TPP.

It also exempts certain goods from the tariff cuts to protect local sectors and allows less developed members more time to comply.

It’s still in the negotiation stages but interest in it has renewed since the American withdrawal from TPP — a matter of concern for those who wish to see the US taking the lead on global trade.

OBOR
The One Belt One Road initiative is not a free trade deal, but a giant infrastructure plan to web Asia and beyond into China’s trading orbit.

A flagship policy of President Xi Jinping, it aims to revive the ancient Silk Road trade routes from Asia to Europe and Africa.

OBOR spans some 65 countries representing 60 percent of the global population and around a third of global GDP.

The China Development Bank alone has earmarked US$890 billion for some 900 projects.

The road and rail route will attempt to link the northern Chinese city of Xi’an with Dushanbe in Tajikistan, Moscow, Rotterdam and Venice.

The “21st-century Maritime Silk Road” is a maritime transport route that plans to connect China’s east coast with Europe via the South China Sea and the Indian Ocean.

That means billions of loans and infrastructure for China’s neighbours at a time when the United States is increasingly retreating from global leadership.

It also means new markets for China’s surplus of commodities like steel and concrete, and its army of engineers.

NAFTA
Signed in 1994 between the United States, Canada and Mexico, the North American Free Trade Agreement was the granddaddy of free trade deals.

Most economists say that overall it has brought significant financial benefits to all three countries over the years.

But Trump says it has sent American jobs overseas, especially in car manufacturing.

Since taking office he has vowed to renegotiate or scrap the deal, to the dismay of Canada and Mexico.

Officials have extended negotiations into 2018 but so far there is little common ground between the changes Washington wants and what its two neighbours are willing to concede, placing the whole deal in doubt. — AFP

Take your education to the SEAs

Plans for a fully integrated Southeast Asian region by the Association of Southeast Asian Nations (ASEAN) has brought about many opportunities in trade, arts & culture, travel, and of course, education. The Philippines has been a popular destination for students from all across Asia due to cheaper tuition fees and our mastery of the English language. For example, plenty of Koreans come here to study English, Indians have found Davao City to be a good place to take medical studies, and the University of the Philippines Los Baños (UPLB) has become the go‑to destination for agriculture students from the ASEAN region due to being the headquarters of both the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) and the International Rice Research Institute (IRRI). Because if there’s something that binds our cultures, it’s food. (You can visit SEARCA’s website for opportunities in agriculture in other Southeast Asian nationalities.)

Here are more education opportunities in the ASEAN region:

Singapore

The Ministry of Education of Singapore offers university scholarships specifically for ASEAN students. Here are the requirements for Philippine students, although applications have just finished for next school year.

The Singaporean Government’s Singapore Cooperation Program offers programs related to nation-building such as trade, policy and administration, and law, to those who get sponsorship from their respective governments.

 

Malaysia

The Ministry of Higher Education of Malaysia offers post‑graduate and doctoral scholarships in the fields of science, agriculture, economics, information and communication technology, infrastructure, biotechnology, environmental studies and food safety.

The University Putra Malaysia has the following scholarships available in the fields of science, economics, engineering, arts, and communication.

 

Indonesia

The Kemitraan Negara Berkembang (KNB) Scholarship by the Indonesian government links developing countries, including the Philippines, to sixteen different universities across the Indonesian archipelago for graduate studies.

The Darmasiswa Scholarship is a non‑degree scholarship offered by the Indonesian Government to students from countries it has diplomatic ties to for further studies of the Bahasa Indonesia language and Indonesian culture.

 

Brunei

The Ministry of Foreign Affairs and Trade of Brunei Darussalam facilitates scholarships of forerign students to four of its universities: Universiti Brunei Darussalam (UBD), Unersiti Islam Sultan Sharif Ari (UNISSA), Universiti Teknologi Brunei (UTB) and Politeknik Brunei (PB). Here are the elegibility and requirements for the ongoing schoolyear.

 

Thailand

The Office of the Civil Service Commission of Thailand offers two scholarships: the King’s Scholarship for non‑Thai nationals and the Royal Thai Government Scholarship Program for those who passed Thailand’s civil service exam. Go here for more information on those programs in English.

There are several scholarships available for students who wish to study in the Asian Institute of Technology in Pathum Thani, Thailand.

 

Vietnam

The following are the government‑sponsored scholarship opportunities in Vietnam according to its Ministry of Education and Training.

The RMIT University of Vietnam, a part of the Australian‑based RMIT University, offers courses in business, techonology, design, fashion and communication, as well as the following scholarships for undergraduate, post‑graduate, and doctoral studies.

Ask yourself these 6 questions before getting a condo

Ask a typical millennial about his future goals and part of the list is to get a stable job, buy a car, own a condo, and eventually, build a family and a home. It seems like owning a condominium has been seen as a milestone to the typical millennial #adultinglife. But, before you could actually make that big move, check out the list and questions below, and see if condo living is for you.

Art Erka Capili Inciong

Am I financially independent?

Living the condo life is a statement that you are already capable of sustaining yourself and covering for all your expenses. Before making the move, however, make sure that your resources will allow you to do so. Whether or not you do decide to get the entire amount from your savings or from loans, be sure that it will still leave you financially stable and healthy.

What is my credit history?

Getting a loan may be an option to finance your condominium purchase. Banks assess your capability to pay back your debt through your credit history as it is a reflection of your financial capacity. Check your credit history with your corresponding bank and have it available upon request.

Can I afford it?

Having your own place and being independent do not simply mean just paying for the downpayment and all the remaining balance for the next years. Paying for the condominium is just the first step. You have to make sure that all the other expenses—utilities, monthly amortization fees, association dues, daily expenses, etc. are all accounted for. Make sure that all these are included in your budget as you transition to the independent life.

Art Erka Capili Inciong

What are the rates and fees?

Residential and commercial areas have different rates. Canvass and ask around before getting a condo deal. The rates and fees may differ depending on how valuable the location of the condominium is. Ask about the necessary rates you would need to pay and take the time to learn them all. If anything, condo life should be able to train you to becoming more diligent with your expenses.

What are the rules? How will I ensure my safety?

Each condominium will have its own set of rules and policies. Study them. All of these terms exist to ensure the safety and security of everyone in the building. Make sure that the building has a good security system and is accessible to the police station and fire department if needed.

How do I get the best possible location?

Lastly, scout for a condominium that will give you access to all the establishments you would need — markets, groceries, drugstores, church, convenience stores, hospitals, police stations and fire departments. A pad that is in the middle of all these places will surely come in handy for midnight snack emergencies or legit life‑threatening emergencies.

These are just some guidelines to help you assess and decide if condo living is for you. What’s important is that the condominium you do decide to live in will be a home fit to your personality, your budget and your lifestyle. It will, after all, be your future haven, so make that dream come true in the best possible way. Consider all factors and decide wisely. We’re pretty sure that with these in mind, you definitely condo it!

Poll bares expectation of faster growth

By Lourdes O. Pilar
Researcher

ANALYSTS expect the country’s overall economic growth to have stayed above six percent last quarter on the back of strong domestic demand and recovering merchandise exports, results of a BusinessWorld poll showed.

GDP Growth Estimates

A poll of 11 economists and analysts late last week yielded a median gross domestic product (GDP) growth estimate of 6.6% for the third quarter, edging up from the second quarter’s 6.5% and January-March’s 6.4%, but slower than the 7.1% recorded a year ago.

If realized, the figure would put the nine-month growth average at 6.5%, hitting the low-end of the government’s 6.5-7.5% target for the year. Philippine economic growth averaged 6.45% last semester.

Official third-quarter GDP data will be released on Thursday by the Philippine Statistics Authority (PSA).

Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in earlier reports as saying that full-year growth will likely settle around the midpoint of the target band, with third quarter growth hopefully outpacing that of the second quarter due to the rise in exports and government spending on infrastructure.

Moody’s Analytics, Inc., in a report last Friday, gave a 6.6% estimate for July-September GDP growth, saying in a note that “domestic demand likely remained firm, as consumers benefited from steady inflows of overseas worker remittances and a healthy job market and investment stayed firm on the back of government-led infrastructure projects.”

Analysts polled by BusinessWorld last week pointed to household spending as the driving engine for growth, coupled by spending in the public sector as well as improved outbound shipments.

For University of Asia and the Pacific economist Cid L. Terosa, GDP third-quarter growth is estimated to hover at 6.5%-6.8%, saying that “[g]rowth was supported by household final consumption spending based on vibrant remittance growth and capital formation.”

He added that trade had likewise “perked up” although its contribution was “muted.”

Ildemarc C. Bautista, vice-president and head of research at Metropolitan Bank & Trust Co., gave a 6.6% estimate for the third quarter, saying: “We see strong government spending to be supportive of strong GDP growth on top of robust household consumption spending and improvements in exports, the latter two being supported by the weaker peso translating to stronger purchasing power for OFW (overseas Filipino workers) remittances and exports being more competitive-priced.”

“We expect further growth down the line…” he said.

Mitzie Irene P. Conchada, associate dean at the School of Economics in De La Salle University, was of the same opinion, saying: “Government spending as well as investments started to pick up in the third quarter and I think these would be the major drivers for growth. The government has been aggressive in its ‘Build, Build, Build’ projects and public expenditure on construction, I think, will make a big difference starting in the latter half of this year.”

“Aside from this, exports are getting stronger and we are expecting it to build-up this quarter. Moreover, the agricultural sector is showing signs of sustained growth,” she said, giving a 6.8% third quarter estimate.

For Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, “[t]he domestic economy likely expanded at a steady pace of 6.5% year on year in the third quarter of 2017, as stronger consumer spending was likely offset by weaker annual growth in government expenditures and investments.”

He added that net exports improved, even though “the annual rate of improvement was slightly less than in the prior three months.”

On the other hand, Angelo B. Taningco, economist at Security Bank Corp., gave a 6.3% estimate, saying “[t]his forecast is based on the view that GDP growth may have moderated in Q3 2017 amid a growth deceleration in personal consumption, capital formation and government spending amid dampened consumer and business confidence levels as well as inflationary pressures.”

“Also, adverse weather conditions may have adversely affected agricultural output while manufacturing sector appear to post a sluggish performance in Q3 2017.”

Household spending, which accounts for more than three-fifths of GDP, has been supported by a steady stream of remittances from Filipinos abroad that grew 5.4% from a year ago to hit $18.595 billion as of end-August. So far in the third quarter, cash remittances were up 7.1% and 7.8% in July and August, respectively.

Meanwhile, the government spent a total of P683.7 billion last quarter, 6.97% more than expenditures in 2016’s comparable three months albeit slower compared to the 14.44% growth it registered last year. Furthermore, Department of Budget and Management data showed infrastructure and capital outlays amounting to P142.1 billion for the third quarter, 3.1% more than the P137.8-billion program and 15.4% bigger than the year-earlier P123.2 billion.

The analysts as well as economic managers expected government spending to have picked up last quarter as more infrastructure projects were rolled on the second year of the current administration. For this year, the government is looking to spend P847.22 billion on public infrastructure, equivalent to 5.32% of GDP. This forms part of a P8.44-trillion spending plan that runs up to 2022.

Farm output growth — scheduled to be reported on Nov. 15 — is estimated to have been little changed from the second quarter performance of 6.18%, Agriculture Secretary Emmanuel F. Piñol told reporters last month. The sector is coming off a low base due to a prolonged dry spell that weighed on output well into 2016. To recall, farm output growth in the third quarter of 2016 was 2.98%.

Latest trade data saw year-to-date export and import growth at 12.2% and 7.4%, respectively, way above the official 5.0% and 10% targets for 2017. This brought the country’s balance of trade as of September with a net deficit of $18.942-billion, improving from last year’s $19.520 billion.

On the other hand, manufacturing slowed last quarter, with the PSA reporting a 3.7% decline in the volume of production index in September, its worst turnout in almost six years, bringing third quarter average to a 1.9% contraction.

Eyes on Philippines as it winds down stint at region’s helm

By Maria Eloisa I. Calderon
Editor-at-Large

THE PHILIPPINES’ stint as chairman of the Association of Southeast Asian Nations (ASEAN) this year is winding down: the bloc’s plenary today and the summit with dialogue partners tomorrow being President Rodrigo R. Duterte’s last hurrah before the world decides how Manila will go down in history as host to the club’s biggest party in half a century.

It’s not the spectacle that bears watching — for true to form, Mr. Duterte did not employ pomp in his diplomacy — but eyes are on whether the Philippines used its chairmanship to the hilt to push forward its stake in core interests such as the South China Sea and regional trade pacts.

Manila will be judged too on the basis of how it stayed faithful to the ASEAN way: a non-confrontational approach in resolving disputes.

The assessment so far is mixed, going by what diplomats and academics said.

ASEAN in NUMBERS

CHINESE LOBBY
In April, Manila drew criticism after a final version of the chairman’s statement — an outcome of the 30th ASEAN Summit — dropped references to “land reclamation and militarization” in the South China Sea.

Those terms were included in an unpublished draft dated April 28, but the statement issued on April 30 omitted them. Reuters had then cited two ASEAN diplomats having said that Chinese foreign ministry and embassy officials lobbied the Philippines “to keep Beijing’s contentious activities in the strategic waterway off ASEAN’s official agenda.”

“ASEAN members are happy now that the Philippines is being non-confrontational,” even Vietnam, which together with the Philippines was most openly at odds with China, an ASEAN diplomatic source told BusinessWorld over the weekend.

Before, ASEAN members had been “uncomfortable” about the Philippines’ foreign policy during the Aquino administration which brought the maritime dispute before the Hague court, he said, without discounting that the landmark ruling lays the foundation for Vietnam, Brunei, Malaysia and Taiwan to also pursue their claims.

The Philippine won that case with the Permanent Court of Arbitration at The Hague ruling last year that China has no historic rights over the waters of the South China Sea and that it violated the Philippines’ sovereign rights by blocking out fishing and oil exploration as well as by building artificial islands there.

But the same landmark decision did not rule on sovereignty issues like who owns Scarborough Shoal, a rich fishing ground 124 nautical miles off Masinloc’s shoreline and within the country’s 200 nautical miles exclusive economic zone.

“We have to calm things down… We have to create that diplomatic space for us to move forward,” Foreign Affairs Spokesperson Robespierre L. Bolivar, who previously led Philippine delegations to and co-chaired the ASEAN regional forum meetings, said in a Nov. 11 phone interview.

“That’s what we’re able to do during our chairmanship.”

That sort of calm and the warming up of ties with China allowed ASEAN to have Beijing endorse the Framework of the Code of Conduct in the South China Sea last August in time for the club’s 50th founding anniversary, although it took them 15 years to get there. ASEAN and China first signed the Declaration on the Conduct of Parties in the South China Sea in November 2002.

One of the outcome documents expected today is China’s announcement of the start of negotiations on the Code of Conduct during the ASEAN plus China Summit, Mr. Bolivar said.

THE LESS REPORTED
“That’s a major accomplishment in itself,” he said.

But “the Philippines will be remembered not just for the Code of Conduct, but also for more on-the-ground practical cooperation” that Manila pushed, the diplomat said.

Mr. Bolivar was referring to the “operationalization” of communication hotlines between the foreign ministries of ASEAN and China so they can “quickly call each other” to address incidents within the region.

The bloc also agreed to apply the principles of the “Code for Unplanned Encounters at Sea in the South China Sea,” while the Philippines and China boosted cooperation among their coast guards.

Those are soft gains which, while under-reported, cannot be ignored.

“In that sense, they [during Philippine chairmanship] have achieved practical short-term goals,” useful for ASEAN citizens who “will look for the immediate benefits of the 2017 Summit and related meetings in their everyday lives,” Asian Institute of Management finance and economics professor Federico M. Macaranas, who was Department of Foreign Affairs undersecretary under President Fidel V. Ramos and assistant secretary during President Corazon C. Aquino’s term, told BusinessWorld in an interview on Sunday.

Singapore-based think tank ISEAS-Yusof Ishak Institute flagged that ASEAN cannot be “elitist”, drawing a comparison with the 2016 referendum in Britain that saw conservatives being outnumbered in their bid to stay in the European Union. The ordinary Filipino, for one, has yet to understand what the ASEAN Summit — beyond the currently aggravated traffic along EDSA — means to him.

“After the ‘Brexit’ that shook the European Union to its core last year, much has been said about the lesson learned for ASEAN that regional building projects must enjoy broad public support to sustain its endurance,” Hoang Thi Ha, lead researcher at the ASEAN Studies Centre, ISEAS-Yusok Ishak Institute, wrote at the think tank’s October paper.

For Mr. Macaranas, “There’s hardly yet this ASEAN-ness, only being Asians.”

TRUMP AND APEC
The ASEAN Summit comes on the heels of another key event that brought state leaders US President Donald J. Trump, Chinese President Xi Jinping and Russian President Vladimir Putin together: the Asia Pacific Economic Cooperation summit in Da Nang, Vietnam.

APEC leaders — from 11 Pacific Rim countries — reached an agreement on Saturday to keep alive the Transpacific Partnership (TPP) deal without the US as Mr. Trump dropped that trade deal earlier championed by his predecessor, Barack Obama.

Mr. Macaranas, who was chairman at the 1996 APEC Senior Officials Meeting, said: “The RCEP is more important to ASEAN than TPP which is more the concern of APEC,” referring to the Regional Comprehensive Economic Partnership that’s viewed as China’s way of matching the TPP.

“An ASEAN position on TPP at the APEC Summit in Da Nang… could have impacted but very weakly,” Mr. Macaranas said.

“ASEAN has failed to assert its central convening role in the economic realm of cross-regional cooperation.”

An RCEP Summit is set for Tuesday, Nov. 14.

Messrs. Xi and Putin won’t be attending the ASEAN Summit, which traditionally draws heads of governments, not necessarily heads of states. The prime ministers of China and Russia are attending the summit.

Mr. Trump will be in Manila, the last leg of his five-nation tour of a region he constantly referred to as “Indo-Pacific”. There’s a “big chance” that the US President will have a bilateral meeting with Mr. Duterte, the DFA said during the weekend.

“We’re pleased that US President Trump’s official engagement with ASEAN is during the Philippines’ chairmanship,” Mr. Bolivar said on a Nov. 11 phone interview.

History shows that Mr. Trump could have had the option not to swing by, said an ASEAN diplomatic source, taking the cue from other US presidents that skipped the ASEAN until Mr. Obama’s Asian pivot.

“Trump’s visit is a good sign that the US’ Asian pivot still exists,” the diplomatic source said.

A chairman’s statement is expected from the Leaders’ Summit, the ASEAN +1 and ASEAN +3, the DFA said.

The other outcome documents would be ASEAN’s consensus on the protection of rights of migrant workers and two statements from the East Asia Summit — one on chemical weapons and another on counter-terrorism.

Mr. Macaranas said the Philippines has “rightly so” covered the issues “but don’t forget the other parts.”

Addressing pandemics, reminiscent of how the bloc moved to counter Severe acute respiratory syndrome in the early 2000 decade, as well as issues on food security and maritime cooperation, should be on the agenda, he said.

“This is not an ordinary meeting. This is the 50th anniversary of ASEAN,” the diplomat-turned-academic said.

“It is pivotal.”

MSMEs in the spotlight at annual business meeting

By Krista Angela M. Montealegre
National Correspondent

SPOTLIGHT has been put on micro, small and medium enterprises (MSMEs) in this year’s meetings of the Association of Southeast Asian Nations (ASEAN), with President Rodrigo R. Duterte pledging more support for these businesses and the private sector coming together to help them scale up in an effort to achieve more inclusive growth in the region.

Mr. Duterte led the ceremonial launch of the ASEAN Mentorship for Entrepreneurs Network (AMEN) at the start of the three-day ASEAN Business and Investment Summit 2017 at the Solaire Resort & Casino in Parañaque City.

“Next year, I would like to make changes in the annual budget. I would like to pour money in these medium, small enterprises,” Mr. Duterte said in a speech, adding that he will talk to Budget Secretary Benjamin E. Diokno to increase the allocation for MSMEs.

“I hope AMEN will become a catalyst for inclusive prosperity that can be shared by all.”

A flagship program of the ASEAN Business Advisory Council, AMEN has a pool of 143 mentors consisting of entrepreneurs, business practitioners and academicians from the bloc’s 10 members.

“When trust is built, we can all work together as one big region,” ABAC Chairman Jose Ma. A. Concepcion III said.

With the Philippines serving as ASEAN chairman this year, the spotlight has been cast on MSMEs, which account more than 90% of all domestic firms and as much as 90% of the non-agricultural workforce in the region.

Myanmar State Counsellor Aung San Suu Kyi championed gender equality in her speech at the summit, noting that women empowerment is crucial to attaining sustainable economic development. Ms. Suu Kyi, who is in her second visit to the Philippines, pointed out that majority of MSMEs in her country, led mostly by women, face several challenges such as access to finance, markets and technology, and that measures should be implemented to help them overcome social injustice and unleash their potential.

“Myanmar has become fully aware of the need to develop people as human beings, not just economic powerhouses. Our women need to be empowered to become better human beings as well as better economic players,” she said.

Ms. Suu Kyi stressed that economic development in Myanmar, which has emerged from decades of isolation, is dependent on the “enhancement of integrity” and “getting rid of corruption.”

“Some of those doing business in Myanmar said it was much easier then because you only have to know who to bribe” Ms. Suu Kyi said.

“It is more difficult now because you have to know how to do business the right way.”

Meanwhile, Mr. Duterte called for cooperation on the issue of the South China Sea maritime dispute.

“South China Sea better be left untouched. Nobody can afford to go to war, even the big powers Russia, China, US and Britain,” he said in the same speech.

“I do not risk the lives of my countrymen for a useless war that cannot be won by everybody. It is clear to us that the only way to go is (through) cooperation. We should open our doors to everybody.”

Seoul sharpens SE Asia focus amid tiff with Beijing

By Cathy Rose A. Garcia
Associate Editor

SEOUL — South Korean President Moon Jae-in is visiting Manila to attend the 31st Association of Southeast Asian Nations (ASEAN) Summit, amid his efforts to elevate ties with the regional bloc to the same level as relations with United States, China and Japan.

“Just after President Moon took office in May this year, he declared that he will upgrade our relations with ASEAN,” Kwon Jae-hwan, director for the ASEAN Cooperation Division at the Ministry of Foreign Affairs, said during briefing for ASEAN journalists here on Oct. 18.

Mr. Moon will deliver a speech on Nov. 13 at the ASEAN Business and Investment Summit at the Solaire Resort & Casino in Parañaque City, Philippines where he will outline his vision for a Korean-ASEAN community.

South Korea’s pivot towards Southeast Asia came after China began an economic boycott over the deployment of the United States’ Terminal High Altitude Area Defence system earlier this year.

The Chinese began shunning Korean stores in China and avoided visiting South Korea, dealing a blow to the tourism industry that has relied on Chinese tourists for so long.

Even before Mr. Moon’s declaration though, economic ties between ASEAN and South Korea have already been strong, especially after the free trade agreement was signed in 2006.

“The FTA has been contributing a lot to the increasing trade volume and investment between ASEAN and Korea… From the year 1989 and until now, you can see trade volume has increased 15 times. Investment from Korea to ASEAN has increased 21 times,” Mr. Kwon said.

ASEAN is South Korea’s second-largest trade partner with $118.8 billion in bilateral trade in 2016, after China with $211.4 billion.

South Korean companies invested $5.1 billion in ASEAN countries last year, making the 10-member bloc that neighbor’s second-largest foreign investment destination after the United States with $12.9 billion.

However, the Philippines received only $11.36 million in foreign direct investments from South Korea in 2016, according to data from the Philippine Statistics Authority.

“ASEAN is very important investment partner for Korea. Among the 10 countries, if you refer to the ranking, Vietnam is the number one investment destination. It’s mainly due to the fact that Korean companies are focused on investing in the infrastructure sector in Vietnam, especially construction,” ASEAN-Korea Centre Trade and Investment Unit Senior Officer Jung Ji-seung told BusinessWorld on Oct. 18.

Indonesia is another priority market for Korean companies because of the big population and its market potential, Ms. Jung said.

“It really depends on the sector, which sector Korea and ASEAN have cooperation with. That influences the investment relations between the countries,” she added.

TARGETING SOUTHEAST ASIANS
ASEAN is the number one travel destination for Koreans, with 6.16 million visiting Vietnam, the Philippines, Thailand and other member-states last year.

Around 1.15 million tourists from South Korea visited the Philippines in 2016. This is expected to exceeded this year, as 1.07 million South Koreans traveled to the country in the January-August period.

Only 2.21 million tourists from ASEAN countries went to Korea in 2016. Of this figure, 556,745 Filipinos traveled to Korea last year, the biggest number among ASEAN countries.

China was Korea’s biggest source of inbound tourists last year at eight million. However, Korea’s reliance on Chinese tourists proved to be its undoing, after Beijing banned group tours to the country during its dispute over THAAD. Chinese tourists to South Korea plunged nearly 50% to 2.5 million in the first seven months of 2017, from 4.7 million during the same period in 2016.

This prompted the Korea Tourism Organization (KTO) to focus efforts on attracting more tourists from the United States, Europe and, closer to home, ASEAN members.

“One big market is Southeast Asia. To attract travelers from that region, we are working with the Ministry of Immigration to facilitate the visa issuance process. The second thing is we will try to do is expand air connectivity between the countries,” KTO Director for Planning and Coordination Department Kim Syung-hoon told BusinessWorld in his office in Wonju, Gangwon Province on Oct. 16.

Mr. Kim said the government has been working to ease the visa process for key markets like the Philippines, Vietnam and Indonesia.

“Our competitors for (those markets) are Japan, Taiwan and Hong Kong. We are now comparing the visa systems of our competitors and our target is to facilitate the visa process and make it equivalent to that of our competitors,” he said.

Taiwan started implementing visa-free entry for Filipinos visiting the country for tourism and business for 14 days. The nine-month trial period will last until July 31, 2018.

Mr. Kim said one proposal involves the issuance of electronic visas for group tours from the Philippines, Vietnam and Indonesia, while another proposal would allow visa-free stay in mainland Korea for five days if they will go to Jeju island via Incheon or Gimhae airports.

“What we are doing is the electronic visa for the group tours… We are working on that since March with the Ministries of Immigration, and Culture & Tourism. Our goal is to implement this system within this year. But there are still many details we need to review… We hope this would also work for Vietnam, Philippines and Indonesia as well,” Mr. Kim said.

At present, Filipinos need to get a visa to visit mainland Korea, but can visit Jeju island without a visa.

The South Korean government announced on Nov.7 that visitors from the Philippines, Vietnam and Indonesia will be allowed to enter South Korea without a visa if they arrive at Yangyang International Airport near PyeongChang, where the Winter Olympic and Paralympic Games will be held in February and March. In an effort to boost ticket sales for the games, tourists from these three countries will be allowed visa-free entry until April.

Philippine Ambassador to South Korea Raul S. Hernandez said the relationship between the two countries remains strong.

“We are very close friends with Korea. We help each other in different issues, not only bilateral issues but also multilateral issues. Korea is a partner of the Philippines in terms of helping both people grow and develop and progress,” he told BusinessWorld at the Philippine embassy on Oct. 16.

“Also, our defense cooperation is very robust. Korea has helped us with our modernization efforts. We buy many of our equipment from Korea, jet fighters, ammunition and boats. Korea is also donating some military equipment.”

South Korea is the seventh-largest trading partner of the Philippines with about $7.75 billion in 2016.

Exports to Korea reached $2.18 billion, with electronics products accounting for 43%, followed by other manufactured goods (14.8%), fresh bananas (5.8%), copper concentrates (5.3%) and pineapple (4.2%).

Philippine imports from Korea reached $5.56 billion, the bulk of which are electronic products (34.7%), followed by mineral fuels (16.2%), industrial machinery (9%), transport machinery (8.9%) and textile yarn (3.3%).

Mr. Hernandez said South Korea is keen on funding infrastructure projects, which is in line with the Philippine government’s massive infrastructure program that will see P8.44 trillion in public funds spent on this concern until 2022.

“Mostly, it’s the infrastructure projects they are interested in,” he said.

The Department of Finance said South Korea is offering a $1.7-billion credit facility and another $7 million through non-lending programs to the Philippines through the Export-Import Bank of Korea, which manages its official development assistance facility.

The South Korean government identified information and communication technology, transport and energy as possible areas for loan assistance to the Philippines. A signing ceremony is scheduled at the sidelines of the ASEAN Summit.

JG Summit profit drops as higher fuel prices, weak peso hit Cebu Pacific, URC

By Arra B. Francia, Reporter

HIGHER FUEL PRICES in its airline business alongside foreign exchange losses pulled down JG Summit Holdings, Inc.’s earnings attributable to the parent in the first nine months of 2017.

The holding firm of tycoon John L. Gokongwei, Jr. saw its net income attributable to the parent drop by 7.9% in the January to September period to P21.24 billion, despite a 14% rise in revenues to P202.64 billion.

The company attributed the slowdown to its airline business through Cebu Air, Inc. (Cebu Pacific), which suffered a 38.3% decline in earnings for the period. 

“(The decrease) was primarily due to the lower net income of our airline business which was affected by the rise in fuel prices, as well as some mark-to-market hedging losses for the nine months of the year as compared to hedging gains for the same period last year,” the company said.

Cebu Pacific saw its revenues rise 7.8% to P50.33 billion during the nine-month period, as passenger volume hit 14.87 million, a 2.7% year-on-year increase. The company was also able to increase the number of flights by 3.5% due to six additional aircrafts by the end of September, now at 62 carriers. 

Cargo revenues meanwhile grew by 29% to P3.29 billion with more volume of cargo being delivered by the airline for the period.

This single-digit increase in revenues however failed to offset the 15.7% rise in operating expenses, as fuel prices and the acquisition of new aircraft pushed up expenses. 

The weaker peso further affected JG Summit’s bottom line, as it recorded a foreign exchange loss of P1.08 billion from Cebu Pacific’s operations.

JG Summit’s food and beverage business under Universal Robina Corp. (URC) also reported lower earnings attributable to the parent for the period, down 21.8% to P8.21 billion. The decline was also due to foreign exchange losses and lower operating income, offsetting the 13.1% sales growth to P92.42 billion.

URC operates in three divisions, through the branded consumer foods segment, the agro-industrial segment, and the commodity foods segment.

The petrochemicals group, composed of JG Summit Petrochemicals Corp. and JG Summit Olefins Corp., improved its earnings to P4.97 billion during the period, higher by 24.3% year on year. This comes from a 45.2% climb in revenues to P30.54 billion, with volume of polymers during the period increasing to 375,497 metric tons in the nine-month period.

Robinsons Land Corp., JG Summit’s property business, delivered an attributable profit of P4.57 billion, slightly lower than the P4.5 billion in the same period in 2016. The flattish results came despite a 5% growth in its commercial business to P7.82 billion. The commercial segment accounted for 47% of RLC’s revenues, followed by residential at 31% or P5.06 billion, office buildings at 14% or P2.39 billion, and hotels at 8% or P1.37 billion. 

This brought RLC’s consolidated revenues to P16.64 billion during the nine-month period.

The banking segment of JG Summit, Robinsons Bank Corp., booked P238.65 million in earnings for the January to September period, up 9.4%, following a 28.8% rise in banking revenues to P3.24 billion.

Higher interest income, commission income and trading gains lifted the bank’s revenues for the period, according to the company.

BSP seen trimming RRR before policy rate tweaks

By Melissa Luz T. Lopez,
Senior Reporter

THE Bangko Sentral ng Pilipinas (BSP) will likely tweak reserve requirements imposed on banks before adjusting policy rates, an economist from a global bank said, with the first cut expected early next year.

Benign inflation expectations will allow the policy-setting Monetary Board to keep benchmark rates steady over the near term, an analyst from the Hongkong and Shanghai Banking Corp. (HSBC) said, noting instead that the central bank has “started laying the groundwork” to trim the reserve requirement ratio (RRR) imposed on big banks.

“[T]he BSP’s most likely next move is a cut to the RRR, not a change in its monetary policy settings. We believe that a RRR cut in the near future would be timely, given the recent increase in Treasury bonds and T-bills issuance plans,” HSBC Global Research economist Noelan Arbis said in a market report.

BSP Governor Nestor A. Espenilla, Jr. said he wants to bring down the 20% reserve standard imposed on universal and commercial banks during his six-year term, describing it as an “inefficiency” to the financial system.

The 20% RRR was last set in May 2014 and is among the highest in the world. In effect, these funds are effectively left idle and do not generate returns for the lenders.

The central bank kept key rates unchanged during their seventh review last week, noting that inflation remains within target and domestic economic activity remains firm.

Inflation averaged at 3.2% from January-October, matching the BSP’s full-year forecast and settling within the 2-4% target band. Meanwhile, economic growth has so far averaged 6.4% during the first semester.

“The stable CPI (consumer price index) outlook suggest policy continuity for the BSP and an opportunity for a RRR cut, which we expect by 1Q18,” Mr. Arbis said.

The global bank expects the central bank to cut the reserve standard by 100 basis points between January-March, which would bring the level to 19% for big banks.

Mr. Espenilla said last week that reducing the RRR is meant to be done in a “series,” with the regulator still “finding the right timing” for such adjustments.

Mr. Arbis said the central bank has “changed its tone on the RRR” during its Nov. 9 meeting, given multiple instances where Mr. Espenilla signalled his preference to cut the level of mandated reserves.

The BSP chief has said that he wants to see the reserve standard reduced to as low as single-digit, but noted that this would have to be carefully timed to consider money supply and credit conditions so as not to disrupt financial market activity.

A one percentage point reduction in the RRR could unleash between P60-70 billion to the financial system, which could flood the market that continues to be awash with cash. Economists have warned that this could be inflationary if left unchecked.

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