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AXA Philippines on track to meet growth targets

PHILIPPINE AXA Life Insurance Corp. (AXA Philippines) is on track with its growth goals as it seeks to be the number one life insurer in the country and sustain a double-digit expansion in premiums by yearend and the years to come.

AXA Philippines said it is looking at a robust growth for the firm for 2017 after it booked a 30% growth in its net premium income in the first three months of the year, which the insurer also eyes to maintain until the year 2020.

“Yes, I think if you look at the potential, we are targeting a similar growth for the next few years,” AXA Philippines President and Chief Executive Officer Rahul Hora told reporters when asked if they are eyeing to sustain the 30% increase in its net premiums for the rest of the year versus the industry’s 14% growth in the January to March period.

Preliminary data based on quarterly reports submitted by life and non-life companies to the Insurance Commission (IC) showed the sector’s total income from premiums in the first quarter jumped to P57.035 billion, a 19.51% expansion from the P47.725 billion booked in the same period a year ago.

Broken down, life insurers posted P44.08 billion premiums at end-March, a 14.19% growth from the P38.36 billion recorded in the same period in 2016.

Asked what drove the 30% growth in AXA Philippines’ total premiums in the first quarter, Mr. Hora attributed the expansion to its health product line. “One of the fastest growing lines of business for us is health… That was the fastest growing line of business in the first quarter of this year.”

Mr. Hora also noted that the growth they are looking at will be sustained until the year 2020, aligned with their “Ambition 2020.”

According to Mr. Hora, indicators supporting their growth target are the country’s economy, good demographics and the rise in disposable income among Filipinos.

“So if you look at all the indicators and if the country’s economy is doing well…I will see the penetration of our insurance market will improve… Insurance penetration to go up in the next few years to come,” he said.

Mr. Hora added that AXA wants to be the number one life insurance company in the Philippines.

“I think in a few years from now, we want to be the number one. But this year, we are on track with the plans that we have. We’re looking at robust growth for AXA Philippines and we are on track with that particular growth.”

Latest data from the IC showed AXA Philippines ranked second in premium terms in 2016 with P21.6 billion. — Janine Marie D. Soliman

Emerging markets dominated by Samsung, others to rival Nasdaq’s FAANG stocks

THE increasing gravitational pull of Asian technology giants such as Samsung Electronics Co. and Alibaba Group Holding Ltd. has investors concerned the group is developing the same outsized influence on emerging markets as the so-called FAANG group has been exerting on US equities.

Samsung, Alibaba, Tencent Holdings Ltd. and Taiwan Semiconductor Manufacturing Co. together accounted for 32% of total gains in the MSCI Emerging Markets Index this year through Thursday, data compiled by Bloomberg show. Alibaba and Tencent each contributed at least 9%. That’s eerily similar for some to the phenomenon known as FAANG — Facebook, Inc., Apple, Inc., Amazon.com, Inc., Netflix, Inc. and Google parent Alphabet, Inc. — stocks that’ve delivered 50% of the Nasdaq 100 Index’s gains this year.

“Fears of a major emerging-market information technology selloff do exist and are mainly derived from concerns over the US Nasdaq index,” Geoff Dennis, Boston-based strategist with UBS Securities, said in a July 4 report. “Our US strategist is still overweight in tech although he believes the ‘summer squall’ in the sector may have slightly further to run.”

FAANG was seemingly on every market participant’s lips in June as the Nasdaq 100 fell for the first time in eight months, including three of its biggest one-day declines this year, without much in the newsflow to warrant any such slump. The five big tech stocks were seen as a favorite among momentum trades that have been making a comeback even after the strategy suffered one of the worst years on record in 2016.

The “unusual outperformance” of growth versus value stocks for emerging markets, driven by earnings momentum in technology, will reverse in the second half of the year, Dennis said. Still, Tencent and Samsung remain in UBS’ top 40 picks for emerging equities, along with seven other tech companies, he said.

The Asian group is becoming more expensive, especially on a price-to-book-value basis, with a 77% premium to the wider index — a 15-year high, Dennis said. That’s double the long-term average premium of 38%, he said.

Pictet Asset Management Ltd.’s Luca Paolini is also worried that a correction is coming after the MSCI Emerging Markets index’s surge. The gauge beat both the Nasdaq 100 and the MSCI All-World Index in the first half.

“If global equities do indeed witness a correction in the coming weeks, there are grounds to expect that emerging-market stocks’ outperformance will come to an end,” Paolini, London-based chief strategist with Pictet, wrote in a report.

Paolini downgraded Pictet’s view on technology stocks to single positive from double, as earnings momentum appeared to peak in May. He also suggested reducing holdings of emerging-market equities given the outsize technology exposure of the region relative to developed markets.

“For here and now, profit taking in the Nasdaq and profit taking in emerging technology as well is warranted,” said George Boubouras, chief investment officer with Contango Asset Management Ltd. in Melbourne. “Quite clearly over the past 12 and 18 months, the performance of technology has been so strong and significant that to expect the same return one year forward would be an unreasonable expectation.”

BNP Paribas Asset Management’s Guillermo Felices and Lydia Rangapanaiken in a July 4 report also said the rally in emerging-market technology shares is “ overextended” at this point and the lender will wait for lower prices before adding further to their portfolios. — Bloomberg

Labor participation of women lags due to housework expectations labor management women housework

WOMEN remain bound by traditional gender roles, limiting their participation in the work force, according to a study published by state think tank Philippine Institute for Development Studies (PIDS).

The study’s authors, PIDS Senior Research Fellow Connie Bacuyan-Dacuyuy and Lawrence Dacuycuy, noted that women in the Philippines are still expected to do most of the housework, limiting their economic opportunities.

They said this state of affairs is based on deep-seated Filipino values that “women nurture and their comparative advantages are in housework,” while “men provide and their place is in the labor market.” These views result in “de facto discrimination in the formal labor market,” PIDS said in a statement.

The study also found a relationship between wages and time allocated to housework. In the Philippines, data from a survey showed that the higher the wages, the more costly housework becomes for males. The female partner, in response, decreases her time for nonmarket work as well.

However, when the female respondents’ wage increases, their partners’ time devoted to housework also increases.

The statement added that while recent evidence shows that women are robustly employed in the services sector, particularly in the banking, finance, and insurance and business services subsectors, labor market discrimination against women is still evident.

With women comprising about 50% of the population, the authors said government needs to find ways to support women’s participation in economically productive endeavors.

The authors proposed that government prioritize micro, small, and medium enterprises and widen access to credit and promote technical skills.

To increase the time spouses spend together with their families especially at home, the government should also look into improving transportation. This includes fixing roads and expanding mass transport.

“Doing housework together enhances marital relations through shared experiences. This also provides an avenue for spouses to understand each other’s attitudes, values, and preferences, which are valuable information in a repeated game such as marriage,” the authors said.

They also proposed the provision of affordable daycare and tutorial services so that children may get good supplementary care while their parents are at work.

Meanwhile, recent proposals such as the four-day work week and the proposed tax reform package are expected to benefit households, especially those where both spouses are working.

Workers in the informal sector, who are seldom covered by labor market regulations, should also be prioritized and given more protection, the authors recommended.

Peso weakens to fresh trough

THE PESO continued to slump versus the greenback on Thursday to hit another trough due to a stronger dollar overall and on the back of foreign selling in the local bourse, which strengthened appetite for the greenback.

The local currency closed at P50.67 against the greenback, sliding seven centavos from its P50.60-per-dollar finish on Wednesday.

Yesterday’s finish was the peso’s weakest level in more than a decade or since it ended at P50.735 per dollar on Sept. 1, 2006.

The peso opened the session at its best showing for the day at P50.53 versus the foreign currency, while its intraday low was seen at P50.695-to-a-dollar.

Dollars traded amounted to $429.9 million yesterday, down from $507 million seen the previous day.

Shortly after the session opened, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. told reporters in a text message that the central bank continues to monitor sharp swings from the peso’s movement versus the dollar.

“The latest peso movements broadly reflect prevailing market conditions and underlying economic fundamentals, in line with BSP exchange rate policy. BSP is nevertheless actively managing excessive volatility. This is business as usual,” he said.

As regulator to the Philippine financial system, the central bank sometimes intervenes in the daily foreign exchange market in order to temper any sharp peso swings and maintain its stability.

Mr. Espenilla also noted external factors primarily contributed to a stronger dollar, particular major central banks’ recent pronouncements. “A major driver is sentiment for a stronger USD as the Fed[eral Reserve] moves forward with steps to normalize from ultra-easy monetary policy as US economic conditions steadily improve. There is also growing policy convergence with Europe and even Japan,” he said.

Meanwhile, two traders attributed the local currency’s continued weakness against the greenback to a stronger dollar across the board.

“Despite a less bullish minutes from the Fed overnight, the dollar-peso continued to move up, so I guess that’s the direction it’s going. We’ll continue to track the movement of the US dollar in the region,” the trader said by phone on Thursday.

The trader said the peso was the weakest performer among its regional peers, opening the possibility of the exchange rate settling at the P51:$1 levels.

Asked if the P51 per dollar level could be seen within the month, the trader said it’s possible, noting: “there’s still a lot of factors to consider, depending on the BSP, because the BSP is also tempering the move of the peso.”

“It depends. If they will let go then we will easily see P51-to-a-dollar levels, but if not, then it may take a long time before that level could be reached but, yes, I think this month we can see that levels,” the trader noted.

“We also saw local equities quite on a foreign net selling so I think it played a part that’s why there’s demand for the dollar. Offshore prices also traded at a premium so there’s buying demand spilling in the offshore market,” a second trader noted.

Another trader said by e-mail on Thursday: “The peso depreciated today after minutes of the recent US monetary policy meeting suggested that the Fed might start reducing its balance sheet starting September.”

Reuters reported the Fed’s minutes during its June Federal Open Market Committee meeting failed to give a concrete view of their future plans of policy tightening, but with Fed Chair Janet L. Yellen indicating they are preparing the ground work for unwinding their balance sheets by yearend.

For today, the first trader sees the peso moving within P50.60 to P50.80 versus the dollar, while the other trader forecasts a P50.55-P50.75 range. The third trader said the exchange rate may settle within P50.45 to P50.75.

“Market may trade cautiously [today] as non-farm payrolls data will be coming out so depending on the results, that’s when we see if the peso will continue to weaken or strengthen against the dollar,” one trader noted. — Janine Marie D. Soliman

PHL score improves across the board in 2017 Social Progress Index report

THE PHILIPPINES saw its score improve on an index measuring social progress, with gains recorded across most indicators.

With 67.10 points, the Philippines placed 68th of 128 countries in the 2017 Social Progress Index (SPI) prepared by Washington-based group Social Progress Imperative. The outcome is an improvement over the 2016 index score of 65.92, which placed the country at the same rank, but among 133 nations surveyed.

The think tank defines social progress as “the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

The index — which includes data from 128 countries or 98% of the world’s population — is intended to supplement traditional measures of national performance like gross domestic product (GDP), and also allows social progress comparisons among countries ranked in the same wealth class.

“While quality of life is improving across the globe, world leaders must confront two deeply troubling trends: declining personal rights, personal safety, and tolerance and inclusion, as well as slow and uneven progress worldwide,” the SPI said in its findings.

“The 2017 SPI finds that since 2014, Personal Rights — which includes measures of political rights and freedom of expression — declined in more countries than it improved,” it added.

“The Social Progress Index is the first holistic measure of a country’s social performance that is independent of economic factors. The index is based on a range of social and environmental indicators that capture three dimensions of social progress: basic human needs, foundations of well being, and opportunity … it is designed as a complement to GDP and other economic indicators to provide a more holistic understanding of countries’ overall performance.”

The index measures a country’s social progress based on 12 indicators: nutrition and basic medical care, water and sanitation, shelter, personal safety, access to basic knowledge, access to information and communications, health and wellness, ecosystem sustainability, personal rights, personal freedom and choice, tolerance and inclusion, and access to advanced education.

This year among ASEAN countries, the Philippines was ahead of Indonesia (79), Myanmar (96), Cambodia (98), and Laos (99), and behind Malaysia (50) and Thailand (62). Denmark meanwhile is the top performing country with a 90.57 SPI score, followed by Finland (90.53), Iceland (90.27), Norway (90.27), and Switzerland (90.10).

On the bottom tier were the Central African Republic (28.38), Afghanistan (35.66), Chad (35.69), Angola (40.73) and Niger (42.97) reflecting conditions of extreme poverty and conflict.

The Philippine ranking was above the world average score of 64.85, or 2.6% higher compared to the 2014 score of 63.19.

The Philippines was classified in a tier of 31 countries labeled “upper middle” in terms of social progress — placing in the top half of countries globally — but with more areas for improvement.

“Whereas higher-tier countries have generally eliminated extreme hunger and have near universal access to water and basic education, many upper middle social progress countries still face challenges in these areas,” the 95-page report read.

The Philippines has shown a marked improvement in providing shelter — which includes measures of availability of affordable housing and access to electricity. This has shown the biggest improvement, according to the SPI report, among the 12 sub-categories reported by the index, coming in with an increase of 2.24 points from 2014 to 2017.

This is followed by improvements in the areas of access to advanced education and personal freedom and choice, showing an increase of 2.02 points and 1.67 points respectively over the four-year period.

Other indicators where the Philippines showed relative strength and improvement include access to basic knowledge (92.61) and nutrition and basic medical care (88.65). Access to advanced education (47.56) and the broader measure of opportunity (58.23).

The SPI report said these are areas where the Philippines is “over-performing” as compared with countries with the same GDP PPP per capita.

Areas where the country did not perform as well include tolerance and inclusion (55.38) — particularly discrimination and violence against minorities and religious tolerance — health and wellness (61.04), with both showing a drop of 1.36 points and 0.12 points respectively.

The personal safety index also remained a concern in the country, although the current 58.74 score was better compared to the 2016 finding of 57.10. Particularly, the areas were the country was underperforming are homicide rate (9.9 from 9.31), level of violent crime (unchanged at four), perceived criminality (steady at four) and political terror (3.5 from the 2016 score of four).

Other concerns for the country are quality of electricity (3.99), wastewater treatment (2.58), freedom of assembly (0.65), freedom of religion (four), early marriage (five), years of tertiary schooling (0.70), inequality in the attainment of education (0.12). — Imee Charlee C. Delavin

Pilots can be grounded at age 65, EU judges rule labor management pilot pilots age EU

A DEUTSCHE Lufthansa AG pilot who was grounded when he turned 65 lost his age-discrimination fight at the European Union’s top court, which said EU legislation imposing the limit is justified for safety reasons.

“It is undeniable that the physical capabilities essential to the profession of an airline pilot diminish with age,” the EU Court of Justice said in a ruling Wednesday. Insisting on the limit prevents the possibility of age-related accidents, the court said.

The ruling is another setback for pilots like Werner Fries, a captain and an instructor for Lufthansa, who contested the airline’s decision to end his contract the moment he turned 65, and not let him work until his term ended two months later.

Pilot groups argue that it makes no sense to ground cockpit crews while there is a shortage of trained aviators and while the rest of the population is expected to work longer before retirement. Lufthansa pilots have a history of picking fights over “discriminatory” age limits. More than a decade ago a group of them challenged the then age limit of 60, saying they were fit, loved their jobs and wanted to fly as long as they passed all the required medical tests.

Lufthansa spokesman Joerg Waber said the company welcomed the decision. The European Cockpit Association, a group in Brussels representing pilots at EU level, said it’s studying the ruling and had no immediate comment.

In Wednesday’s case, the German Federal Labor Court sought the EU tribunal’s guidance on the law. The EU judges in their decision acknowledged that setting the strict limit led to a difference in treatment based on age, but said this “is justified by the aim of ensuring civil aviation safety in Europe.”

The age limit, set in EU law, targets pilots of commercial flights transporting passengers, cargo or mail, a profession “characterized by a greater technical complexity of the aircraft used and a higher number of persons concerned than non-commercial air transport,” the court said. — Bloomberg

PhilPlans ‘financially viable’ despite net loss booked in the first quarter

PRE-NEED firm PhilPlans First, Inc. (PhilPlans) said it remains financially stable despite recording a loss in its total premium income in the first quarter of this year.

“PhilPlans is financially viable. Its total assets far exceed its liabilities by P4.6 Billion. It can more than adequately serve all of the benefits due all of its plan holders as their policies mature,” PhilPlans Chairman Monico V. Jacob was quoted saying in a statement.

Latest data from the Insurance Commission (IC) showed that on a per company basis, the pre-need firm booked the largest net loss with P1.12 billion at end-March.

Eight other companies that also booked net losses during the period were AMA Plans Inc. (P5.24 million), Financial Freedom Future Planners (P60,000), Ayala Plans Inc. (P13.09 million), Manulife Financial Plans Inc. (P42.11 million), Sunlife Financial Plans (P8.48 million), Cocoplans Inc. (P8.94 million), Loyola Plans Consolidated Inc. (P10.04 million), and Trusteeship Plans Inc. (P260,000).

In contrast, 10 pre-need firms recorded profits during the first three months of the year: Caritas Financial Plans (P1.22 million), Cityplans Inc. (P2.276 million,) First Union Plans, Inc. (P3.42 million,) Paz Memorial Services (P2.05 million,) St. Peter Life Plan, Inc. (P348.66 million,) Himlayang Pilipino Plans, Inc. (P8.05 million,) Mercantile Care Plans, Inc. (P330,000,) Provident Plans international Corp. (P4.64 million,) Transnational Plans, Inc. (P4.42 million) and Eternal Plans, Inc. (P1.24 million.)

Mr. Jacob said the actuarial liability of the fund of PhilPlans is at P33.5 billion. Currently, its total assets stand at P38.1 billion.

IC data also showed pre-need providers registered a net loss of P831.54 million in January to March versus last year’s profit of P314.95 million. The sector’s total premium income saw an uptick of 6.10% to reach P4.1 billion in the first quarter from P3.855 billion in the same period in 2016.

Total assets stood at P120.6 billion by end-March, a slight increase of 1.32% from P119 billion last year, while total net worth came in at a loss amounting to P16 billion, 15.62% down from its profit of P18.792 billion a year ago. — J.M.D. Soliman

Positive outlook for retail in the Philippines

Oxford Business Group

Strong consumer demand and economic expansion should drive further growth in the Philippine retail sector, assisted by increased bank lending and subdued inflation.

A World Bank report issued on June 5 said robust remittances, credit growth and low inflation were supporting private consumption. Combined with expansionist monetary and investment policies, it said, this would reinforce consumer confidence and underpin GDP growth of 6.9% this year.

While downside risks remain — such as a rise in global interest rates that could weaken the peso, curb capital flows to the Philippines and drive up inflation — the bank expects these growth levels to be sustained over the next two years, at 6.9% in 2018 and 6.8% in 2019.

Retail activity could also be supported by strong growth in bank lending. Data issued on May 31 by the Bangko Sentral ng Pilipinas (BSP) showed that while overall bank credit had expanded by 19.2% year on year in April, consumer loans increased by 24.3%.

The first figure, though below the revised 24.5% increase posted in March, suggests continued high consumer demand and banks’ corresponding willingness to lend. The BSP report said increased lending for household consumption was due to expansion in credit card loans and salary-based, general-purpose loans.

EMPLOYMENT UP
Another sign of rising momentum in retail came from employment portal Monster.com, which conducts monthly surveys of online hiring trends.

According to a report issued at the end of May, retail posted the largest increase in online recruitment of any sector in April at 33% year on year, followed by business processing outsourcing at 27%. Both figures were far above the 7% year-on-year growth registered across the economy — itself a rebound from a 3% decline in April 2016.

Higher staff numbers suggest that businesses expect retail trade to improve further in the latter part of the year.

SENTIMENT DROPS, INFLATION EASING
First-quarter data from the central bank showed consumer confidence up 8.7%, slightly below the 9.2% at end-2016 but still the second-strongest reading since the index began in 2007.

Explaining the dip, survey respondents cited reasons ranging from concerns over poor agricultural harvests to price inflation for common household expenditures.

The consumer confidence index could, however, soon rebound as inflation recedes — according to the BSP the consumer price index fell from 3.4% in April to 3.1% in May.

Along with the drop in consumer confidence, the business outlook within retail and wholesale trade worsened slightly, as per the BSP’s latest business expectations survey released on May 26, falling from 42.8% in the final quarter of last year to 36.6% in the three months of this year.

SPACE RACE
Another positive sign is sentiment in the retail property market, where demand for prime locations has stayed strong despite the expansion of available space.

According to a report for the first quarter of 2017 by real estate consultancy Pinnacle, the retail sector continues to be underserved, with consumer demand strong enough to support new projects to develop retail space.

This demand is reflected in development of new malls by large-scale retail operators as well as smaller shopping centers, according to Jojo Salas, director of research and consulting at Pinnacle.

“Top commercial-retail developers are ever increasing their retail platforms and products,” he told local media on May 28.

Even with the rapid increase in retail space in many regions, the Pinnacle report found rents had remained steady, suggesting room for further expansion.

A further increase in gross leasable area for retail is expected this year, with developers building on the existing stocks of 1.7 million square meters of leasable mall space as of the first quarter.

Trans-pacific partnership

FINEX Folio — By J. Albert Gamboa

LONG BEACH, CALIFORNIA — An economic alliance of 12 countries on both sides of the Pacific Ocean may have been scuttled by the US government’s withdrawal following the change of administration early this year. But another trans-pacific partnership is about to blossom.

The local government units (LGUs) of Bacolod City in Negros Occidental and this port city on America’s West Coast are re-launching their sister city relationship in simple ceremonies at the One World Trade Center here over the weekend.

Bacolod’s City Administrator John Orola, together with Councilors Em Legaspi-Ang and Caesar Distrito, are in town to meet with their Long Beach counterparts led by Tyler Curley, the Legislative Deputy of Mayor Robert Garcia, and Dr. Mary Barton, Chairperson of the Sister Cities of Long Beach, Inc.

Ms. Legaspi-Ang, who also chairs the Bacolod Tourism Committee, will present the city’s 10-year economic development plan, while Mr. Orola is formally inviting the officials of Long Beach to the world-famous Masskara Festival in October, on behalf of Mayor Evelio Leonardia.

Originally established in 1994, these two progressive LGUs’ bilateral ties became dormant for almost two decades. Upon the initiatives of Joe Gamboa, a US citizen based in California, and Joey Montalvo, who heads a Negros-based advocacy group, the relationship has been revived through the Long Beach-Bacolod Association, Inc. (LBBAI).

Last April, the Bacolod City Council passed a resolution approving the re-activation of sister city relations with Long Beach, whose own legislative council endorsed the long-awaited revival through a similar process shortly thereafter.

Synergies abound in this newfound friendship between the Philippines’ sugar capital and the Pacific gateway to America. There is a large Filipino-American community in Long Beach and the Greater Los Angeles area, with many coming from the four Visayan regions including a sizeable number from Bacolod and the Negros Island Region.

Long Beach hosts the biggest seaport along the US West Coast, while one of the busiest aviation hubs in central Philippines is the Bacolod-Silay International Airport located within the Metro Bacolod area.

Both cities are recognized as educational centers in their respective regions. The California State University at Long Beach is eager to have student exchange programs with the University of Negros Occidental-Recoletos and the University of St. La Salle-Bacolod.

Dr. Barton emphasized the cross-cultural benefits to be derived from having bilateral relations among LGUs from different continents. She said each city, county, or state is allowed to have a maximum of 10 foreign counterparts under the auspices of Sister Cities International (SCI) headquartered in Washington, DC.

US President Dwight Eisenhower created SCI in 1956 during the White House conference on citizen diplomacy. This non-partisan, non-profit network serves as the national membership organization for 545 American cities, counties, and states with 2,121 partnerships in 145 countries on six continents.

SCI’s 61st annual conference and leadership summit will be held on July 13-15 at the DoubleTree Hilton Hotel Virginia Beach in the state of Virginia. Its theme for 2017 is “Global Communities for World Peace” to honor Mr. Eisenhower’s original vision of fostering global peace through people-to-people relations.

A trade and investment delegation from the Fil-Am community in Southern California will attend this year’s Masskara Festival, which was founded by the late Bacolod City Mayor Jose Montalvo, Jr. in 1980.

Plans are also afoot for the LBBAI’s staging of the first-ever “Masskara sa Long Beach” event in April 2018, with visiting delegates from the private and public sectors of Bacolod in attendance.

In celebration of the 119th Philippine Independence Day last June 12 and the 241st American Independence Day on the Fourth of July, here’s to a fruitful and productive relationship between the cities of Bacolod and Long Beach!

J. Albert Gamboa is Chief Financial Officer of the Asian Center for Legal Excellence and serves as Co-Chairman of the FINEX Media Affairs Committee.

When a promotion becomes unacceptable

The manager of our sales department was forced to resign due to his poor performance and I was immediately tapped as the replacement. I was ecstatic to receive the good news, until the CEO talked to me and made clear that I cannot change everything in the current program but made me responsible for revenue. I was told not to change our partnership with an advertising company or make staff changes, among other things. Also, just like the former manager, I’m not allowed to sign any expenses on my own if the amount involved is more than P500. I’m not comfortable with such an idea because I feel like being imprisoned with the old system that made the life of my former boss difficult. Should I accept the promotion? — Troubled Mind.

Have you noticed that the only people who truly welcome change are wet babies? Even well-educated people and those apparently in the know don’t want change. Now, I remember of another cute story about a housewife who loves to bake.

She told of her two young boys who love to help in the kitchen but fight over who gets to lick the beater of the appliance after the mixing was through. At one time, the 10-year old had beaten the four-year old kid to the kitchen, but the latter was the first one to ask his mom the chance to lick the mix on the beater.

With no choice, the eldest gave way to the youngest. At that instant, he was immediately grabbed by the arm by his mom and received a heavy spanking. After the spanking, his mom looked at him squarely in the eyes and in a stern voice said: “Next time, turn the mixer off first!”

The same thing is happening every day in many organizations. Many people in high places fail to “turn the mixer off first,” resulting in a potentially dangerous situation for everyone. This can happen in many forms, including the fact that your promotion carries an apparently stern condition not to change anything, and yet you’re made responsible for the result.

You’re right. It’s like prison. For one basic thing, you’re not empowered despite your ascent to the post of department manager. You’re not given substantial authority to make decisions. In situations where true empowerment happen, you as the department manager must have enough confidence in your ability to perform your job and make things possible.

More than this, in order for an empowered department manager to thrive, you must be able to work in an environment where the following conditions are present:

One is corporate-wide employee participation. All workers with proper guidance of their managers must be actively and willingly empowered to improve work processes for cost-control purposes and to enhance efficiency and effectiveness. Problem-solving and decision making are not a monopoly of management.

Two is having a culture of innovation. Managers and their workers must be encouraged to challenge the status quo. If they are mechanically programmed to stick to the old ways of doing things, then chances are, they will also receive the same kind of mediocre result as what you can imagine with your former boss.

Three is having access to correct company information. It’s about open-book management. If you don’t have those kind of facts and figures at your fingertips, then you will not be able to do your job. And worse, you may be responding to wrong situations.

The big problem is that you are being held accountable for the results. Once you accept the promotion and the responsibility, you become obligated to perform the assigned task.

And so, would you accept the promotion? It’s up to you. If you’re not happy with the conditions, then you have the right to reject it. But how? First, resolve the issue with the CEO. Explore the possibility of removing those onerous conditions. Personally, I can live with having to work with the same advertising agency or having the same set of workers in the department, unless they prove ineffective in due time.

If you have a different view, you must be able to come out with the best argument against them. On the issue that you’re not even allowed to sign for transactions worth more than P500, then I guess the company needs to overhaul its level of authority, which I believe, applies to all department managers. The CEO must decentralize so that his office is not burdened with so many documents to sign, leaving him with no time to focus on strategic things.

However, a department manager must not confuse power with authority. These two terms are related, but they mean different things. Power is the ability to influence the workers to follow your instructions. On the other hand, authority is the manager’s right to command and at the same time spend corporate resources.

If you don’t have the authority to perform your job as you’ve described above, then you’re in for a lot of trouble that could put you in the same situation that befell the former manager of the sales department.

ELBONOMICS: An empowered work force is often the enemy of a command-and-control manager.

elbonomics@gmail.com

Studios’ foreign sales turn box-office Kryptonite into wins

THE DUDS just keep coming this summer in North America, from The Mummy to Alien: Covenant to Pirates of the Caribbean: Dead Men Tell No Tales. The season has been what critics politely call lackluster for Hollywood studios — but don’t expect them to stop churning out more bombs.

That’s because as badly as so many franchise films and reboots have done in the world’s biggest cinema market, they’ve racked up solid ticket sales elsewhere. Theater-goers in America thought Paramount Pictures’ fifth Transformers was pretty much a yawner, but in China they liked it. And No. 6 is already in the works.

“Look at the casualties just this summer,” said Paul Dergarabedian, a Los Angeles-based analyst for ComScore, Inc. “If they only had North America, it would be a monumental disaster for the studios.”

For now at least, the rest of the world — China in particular — is supporting Hollywood’s love affair with series, sequels, and rehashes like The Mummy, Universal Pictures’ new take on a story that’s been told dozens of times. The risk is that sequel fatigue will set in overseas too. Chinese moviegoers are becoming more choosy, and the fastest-growing film market is slowing down. That’s a challenge for studios such as Walt Disney Co. and Time Warner, Inc.’s Warner Bros., which plan and schedule movies years in advance.

Jonathan Papish, an analyst for China Film Insider, described as a “disaster” the $250 million that Transformers: The Last Knight is projected to record in the world’s most-populous country. The reason: the previous version from Viacom, Inc.’s film division pulled in 17% more, “a worrisome sign for both Paramount and other Hollywood studios who have become far too complacent thinking that Chinese audiences will swallow whatever garbage they shove down their throats.”

This Transformers opening in China, at least, was about 30% bigger than the opening for the previous one, according to Box Office Mojo.

Not every sequel or franchise entry has fallen flat in North America, of course. Wonder Woman, Warner Bros.’ fourth episode in the DC Extended Universe series, has taken in $346 million domestically and is one of the year’s top films. Disney’s Guardians of the Galaxy Vol. 2 topped the box office for two weeks and has taken in $383 million domestically.

And there are some big-hitters coming. Sony Corp.’s Spider-Man: Homecoming is expected to take in $301 million in North America after its release this weekend, according to BoxOfficePro.com. War for Planet of the Apes, out July 14 from 21st Century Fox, Inc., could grab $165 million.

But the second-quarter domestic box office ended down 3.6% from a year ago at $2.7 billion, Barton Crockett, an analyst at FBR & Co., said in a note. He blamed disappointing sequels; even with a better-than-expected Wonder Woman, he predicts a 15% decline for the third quarter.

Chinese box-office sales fell in June, as local movies as well as Hollywood imports failed to meet expectations. This month, PricewaterhouseCoopers LLC pushed back its forecast for China’s movie market to overtake the US to 2021 from 2017.

This weekend, Universal’s Despicable Me 3 will test the Chinese market, after opening in first place in 44 out of 46 countries, according to data from the film division of Comcast Corp. A new installment in another Universal series, The Fate of the Furious, enjoyed strong demand in China, taking in $393 million there earlier this year.

Even with big budget films flopping at home, movies can earn money for years to come from digital downloads and sales to Netflix, Inc. and other streaming sites and cable-television channels. The latest — and last — Pirates of the Caribbean may have missed expectations when it came out May 26, but it could end up generating a net profit of $219 million, according to an estimate from Wade Holden, analyst with S&P Global Market Intelligence.

That hasn’t stopped some analysts from complaining that studios have focused too much on making big-budget features.

“There is an over reliance on sequels,” said Richard Greenfield, a media and technology analyst at BTIG LLC. The major studios “are so worried about investing in an unknown property that they are all just relying on sequels and hoping that sequels will save them.”

While Disney has had tremendous success, Greenfield said it’s not bulletproof. “The danger is that investors are essentially assuming that a movie like Star Wars will be successful forever.”

As much as any studio, Disney has tied its future to sequels and remakes. The company’s 2017 schedule includes eight films, of which six fit that profile, according to Box Office Mojo.

Disney said its strategy sets it apart from the competition — in 2016 its film business had its most profitable year ever. Other studios trying to ape it have had less success. Sony, for example, tried and failed to refresh its 1984 hit Ghostbusters last year in the hope that it could spawn a new series.

In any event, many future slates are laden with new installments of existing worlds of characters. 21st Century Fox and Sony, which license Marvel characters, are planning more X-Men and Spider-Man chapters.

Disney has laid out several years worth of Marvel superhero offerings and at least a six-picture series of Star Wars movies. Meanwhile, the company is revisiting Mary Poppins and Mulan.

“Studios are rushing these sequels,” said Jeff Bock, senior analyst at Exhibitor Relations Co. “If you want to get the domestic audience back, you’ve got to do something a little outside the box.” — Bloomberg

After nearly 30 years, an OPM legend returns

CELESTE LEGASPI, the Original Pilipino Music (OPM) icon, is back for a solo concert slated on Aug. 5 at the Theatre in Solaire Resort and Casino in Parañaque City.

“I wouldn’t have agreed to do this if not for my father, (National Artist for Visual Arts) Cesar Legaspi’s centennial,” Ms. Legaspi told reporters during a press conference on July 4.

She added that it’s been a long time since she last did a solo concert — the last, one she reckoned, was before the Musical Theatre Philippines’ (Musicat) production of Katy in 1988.

“I feel very excited and challenged… it’s been so long since my last concert [but I] take comfort in the fact that my songs are excellent material,” she said.

The Filipina songstress was the voice behind hit songs of the 1970s and ’80s such as “Tuliro,” “Sabado,” “Mamang Sorbetero,” and “Saranggola ni Pepe,” among many others.

Her Aug. 5 concert, entitled simply Celeste, also serves as a tribute to the works of her father, National Artist for Visual Arts Cesar Legaspi, with Ms. Legaspi showcasing his Gadgets series, first painted in 1947.

“My father did four Gadgets and it would be beautiful for the audience to see how the work evolved,” she said, adding they’re planning to present the works of Mr. Legaspi in a “really stunning way.”

“[The concert] will be a trip down memory lane,” she said of her set list which will not include contemporary songs.

Ms. Legaspi admitted to being “apprehensive” about doing the concert because she fears the younger audience members will not be able to recognize her songs.

Despite her apprehensions, Ms. Legaspi, who prides herself on pushing for excellence in all that she does, is looking forward to the one-night show, and so is Solaire Entertainment director, Audie Gemora.

“It makes perfect sense to bring the original diva, Celeste Legapi [to Solaire],” Mr. Gemora said in a press release, noting that crooner Basil Valdez’s successful concerts in April and May showed there is an audience for the Filipino music icons.

Ms. Legaspi will be joined by composer Ryan Cayabyab as the musical director while the Company and acapella group Baihana will be performing alongside her.

Celeste will be held on Aug. 5, 8 p.m., at the Theatre in Solaire.

For tickets, visit www.ticketworld.com or call 891-9999. — Zsarlene B. Chua

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