Collabera Digital’s CONVERGENCE 2024 concludes bridging AI innovation and human creativity

July 9, 2024 | 12:10 pm

Collabera Digital concluded the second edition of its highly anticipated CIO summit, CONVERGENCE 2024, themed ‘Creative Minds. Generative Algorithms.’, at the Shangri-La The Fort Manila, BGC, on June 20, 2024. The event brought together top executives from across industries to explore the intersection of human creativity and AI-driven innovation, shaping the future of digital transformation.

The summit featured keynote addresses and panel discussions led by industry leaders, focusing on AI adoption strategies, innovative financial services, and the transformation of global captive centers into innovation hubs. Attendees engaged in interactive experience zones, offering hands-on opportunities with cutting-edge solutions. Collabera Digital’s technology partners, including Google, AWS, and Salesforce, were also present, showcasing their solutions and contributing to the rich tapestry of innovative discussions at the event.

In his keynote speech about AI and human convergence, Kaushik Sarkar, President of Collabera Digital, said, “As AI starts ticking up all that the left side of the brain does, which is operational day-to-day routine, it is important to invest in the right side of the brain for all-round individual development to create more effective, efficient and empathetic individuals. Technology and human ingenuity are what will drive enterprises to become future-ready and navigate the evolving challenges with agility and success.”

With the engaging presence of returning host Mimi Ong, participants immersed themselves in dynamic exchanges aimed at enhancing business strategies amidst technological advancements. Highlights included sessions on fostering creativity within AI frameworks, underscoring the pivotal role of human ingenuity in leveraging emerging technologies.

Manan Mehta, Senior Vice-President & Country Head of Collabera Digital Philippines, said, “CONVERGENCE 2024 for us is not just about fostering business relationships, but also creating a platform — a genuine, authentic platform for sharing knowledge, sharing thoughts, and making meaningful connections. We thank our clients and technology partners for making this event a great success!”

About Collabera Digital:

Collabera Digital is a new age digital engineering company delivering unique experiences, actionable insights, and intelligent products & platforms at the intersection of talent & technology. We are at the forefront of innovation, blending human creativity with smart technologies to drive transformative solutions. Our client-first and highly collaborative approach enables organizations to accelerate their digital journeys with efficiency and velocity at scale.

Since our inception in 2010, Collabera Digital has soared to unparalleled heights. With a global presence spanning 11 countries throughout APAC and Europe, our network of over 25 offices serves as the epicenter of digital innovation. We proudly cater to a prestigious clientele, counting Fortune 500 companies amongst our 300+ esteemed clients.

For more information, visit www.collaberadigital.com.

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Striving for change and efficiency in the police

July 9, 2024 | 10:10 am

BW-CHIEF-PNP_MG_5629-OL — PNP Chief Rommel Francisco Marbil

PNP Chief shares his vision for a revitalized police force

Solving crimes and building peace and trust within communities is what the police force is here for. “To protect and serve” is the most distinguished tagline of the police force worldwide, encapsulating their commitment in shaping modern societies the way that it is today.

As crimes today evolves and change, from robbery, kidnapping, and snatching, and cybercrime adding to the list, especially in a world of digital revolution, it has put the country more in danger. But, as crimes have evolved, so has our police force, the Philippine National Police (PNP), which is responsible for maintaining peace and order, solve crimes, and more importantly, ensure peace and safety of all Filipinos.

In an exclusive interview with BusinessWorld, PNP Chief Rommel Francisco Marbil noted that the Philippine force is skillful and talented; and for a long time, it’s been doing its best protect and serve its people, but more changes are to come.

Under the new leadership of Mr. Marbil, the PNP is striving for change first and foremost. According to him, PNP’s uniqueness lies on the services that they offer; and rather than being profit-oriented, they center their services on the Filipinos, ensuring it will make a positive difference into their lives. Besides, establishing trust and confidence among Filipinos is one of the core operations on why the police force exist.

“There is no easy answer. What we’re selling is our services; we are not profit-oriented, and we want people to feel our service,” Mr. Marbil said.

To empower the institution and become agents of transformation, the police force is improving efficiency among its services. The PNP chief shared that several changes were made, including adjusting the flag raising time to be more efficient, as well as discontinuing the police band (unless when necessary) and holding athletic activities.

PNP is also changing policies within the force. One example is the unit performance, wherein Mr. Marbil said the PNP is aiming for zero cases this term.

“Before, unit performance was highly competitive, with success being determined by the number of cases solved, such as drug cases, and illegal gambling among others. Now, we’re changing that. We are aiming for zero or no cases left.”

Also, with the ever-evolving digital world, especially with the rise of cybercrime cases, what the PNP needs is digital adoption. With modern technology, the police force is finding innovative ways to ensure efficiency and public safety.

One way to do this is by digitalizing their services, such as permitting licenses for firearms and gun holders much easier and more digital.

“The process used to be complicated: You had to go to Camp Crame; wait a day for the permit/license; then return the following week for the ID, which took up another entire day. That’s why we’re making changes. We want to computerize the process to make it easier for gun holders and security guards to get their license. We want all services to be computerized and outsourced to make things easier. This way, trust will develop; and the police force can be more efficient,” Mr. Marbil said.

Another thing about digitalization is that it improves crime prevention. One of the most popular technologies used are surveillance cameras, also known as the closed-circuit television (CCTV), which are widely used in many countries, including the Philippines.

In the Philippines, surveillance cameras are installed in every establishment, along with command centers located in various cities in the metro, and other regions as well. While they have the technology, they also lack connectivity. In response, PNP is helping in drafting further legislation to improve interconnectivity in the country.

“We are helping one of the congressmen to come up with a legislation on improving interconnection among CCTVs, especially when there’s AI technology involved. The police are already using AI, in terms of body cameras and streamlining PNP operations,” Mr. Marbil said.

Mr. Marbil also emphasized the need for medical and legal assistance through outsourcing services. For the PNP chief, health services for police personnel must be improved by giving health cards available and accessible to all police officers. As for legal services, he pointed out the need for more private lawyers and private firms.

All these changes are aimed at enhancing a police force that is more equipped and empowered protect their fellow Filipinos. At the core of these transformation initiatives, for Mr. Marbil, is restoring the image and dignity of fellow policemen.

Being a police meant a lot of things, mostly it meant honor; but recently, the PNP observes, it is raising doubts, leaving negative perception from the public view.

“In the past, the word ‘police’ was associated with honor, but now it has become questionable because of the recent negative stories and events associated with them recently,” he shared. “The police’s achievements were something good to hear but over time, we are losing trust, our image is being destroyed, which is hard to recover.”

Hence, the national police force is striving for change, both internally and externally, ensuring a better force will serve and protect the Filipino people.

“We are striving for change, we hold our police officers accountable; but we don’t brag about their wrongdoings. Because we don’t want the people’s trust in us to change. There is only one PNP and that will never change,” Mr. Marbil said.

In its commitment with the government towards a “New Philippines” with its own tagline, “In a new Philippines, the police force wants its people to be safe,” the PNP is on the right track in achieving this vision.

For Mr. Marbil, the future for PNP is bright as it continues to strive for change and transformation, shaping the Philippines into a safe, peaceful, and progressive country — one that is livable for all Filipino people.

“Being the PNP chief is destiny. I want to make innovative changes for the betterment of PNP,” Mr. Marbil said. “Let’s take things slowly, focusing on efficiency and the quality of service.”

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PHL jobless rate hits 4-month high

July 9, 2024 | 12:34 am

Job fair-applicants-wc — People attend a job fair at a school in Pasay City, May 9. The unemployment rate rose to a four-month high in May. — PHILIPPINE STAR/RYAN BALDEMOR

By Karis Kasarinlan Paolo D. Mendoza

THE PHILIPPINE jobless rate climbed to a four-month high in May while the quality of jobs improved to its best level since 2005, the Philippine Statistics Authority (PSA) reported on Monday.

Preliminary data from the PSA’s Labor Force Survey (LFS) showed the unemployment rate inched up to 4.1% from 4% in April, as the labor force expanded. However, it was lower than the 4.3% recorded in May last year.

May saw the highest unemployment rate in four months or since the 4.5% print in January.

This translated to 2.11 million unemployed Filipinos in May, up by 65,000 from 2.04 million in April.

Year on year, the number of jobless Filipinos went down by 61,000 from 2.17 million in May 2023.

In the first five months of the year, the unemployment rate averaged 4%, lower than the 4.6% average a year ago.

PSA Undersecretary and National Statistician Claire Dennis S. Mapa said the bigger labor force size was the main contributor to the rise in unemployment.

“One of the reasons why unemployment went up is the increase in participants in the labor market. Over half a million people joined the labor force but not all of them found employment,” he said in mixed English and Filipino during the press briefing on Monday.

PSA data showed that 50.97 million people became part of the labor force in May, growing by 575,000 from 50.4 million in April.

On an annual basis, the labor force increased by 544,000 from 50.43 million in May 2023.

This translated to a labor force participation rate (LFPR) of 64.8%, higher than 64.1% in the previous month, but lower than 65.3% a year ago. Year to date, the LFPR averaged 64%.

JOB QUALITY IMPROVES
Meanwhile, job quality in May improved as underemployment dropped to 9.9%, lower than 14.6% in April and the 11.7% reading in May last year.

May marked the lowest underemployment recorded since the start of the revised series almost two decades ago.

The number of underemployed Filipinos — those who want longer work hours or an additional job — stood at 4.82 million in May, falling by 2.22 million month on month and by 846,000 year on year.

As of end-May, the average underemployment rate was 12.3%.

“A substantial amount contributing to the decrease in underemployment came from those categorized visibly underemployed or those who work less than 40 hours per week. There were those among them that said they were working second jobs, so they were satisfied with working less than 40 hours at their primary jobs as a result,” Mr. Mapa said.

He also said that the decline in underemployment may be seen in certain subsectors such as wholesale and retail trade, agriculture and forestry, construction, manufacturing, other service activities, transportation and storage, and accommodation and food service activities.

“Notably, underemployment decreased dramatically in May, suggesting improved job quality and better skills matching despite the slight unemployment increase,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in an e-mail.

The employment rate, on the other hand, inched down to 95.9% from 96% in April, but still higher than 95.7% in May 2023.

This was equivalent to 48.87 million employed Filipinos, up by 510,000 from 48.36 million in April, and 605,000 from 48.26 million in May last year.

The employment rate averaged 96% in the January-May period, up from 95.4% a year ago.

In May, the biggest monthly job loss was seen in accommodation and food service activities, which cut 322,000 jobs to bring the total to 2.43 million. Job losses were also seen in fishing and aquaculture (down 241,000 to 1.2 million) and administrative and support service activities (down 135,000 to 2.42 million).

Meanwhile, month-on-month job gains were recorded in agriculture and forestry (up 610,000 to 8.96 million), construction (up 391,000 to 5.09 million), and public administration and defense (up 309,000 to 3.13 million).

Year on year, agriculture and forestry shed 1.02 million jobs to bring the total to 10.17 million. Annual job losses were also seen in fishing and aquaculture (down 543,000 to 1.2 million) and arts, entertainment, and recreation (down 178,000 to 475,000).

On the other hand, construction posted the largest annual job gains, adding 745,000 jobs to 5.09 million. Significant job gains were also seen in administrative and support service activities (up 371,000 to 2.42 million) and manufacturing (up 347,000 to 3.85 million).

“The construction, administrative services, and manufacturing sectors showed strong growth, offsetting losses in other areas. Given these mixed signals, future unemployment trends are uncertain but may stabilize or decrease if positive sector growth continues,” Mr. Roces said.

He expects underemployment to continue to fluctuate, though “not as extremely” as the April-to-May shift.

“For the coming months, La Niña could cause business disruptions that could be a drag on employment data,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mail

Sentro ng mga Nagkakaisa at Progresibong Manggagawa Secretary-General Josua T. Mata said that the government’s job generation program is lacking.

“The government clings to an outdated belief that its role is merely to enable the private sector, resisting the idea of a robust public employment program that guarantees jobs for those who want to work,” he said in a Viber message.

Delayed easing to dampen growth — BSP chief

July 9, 2024 | 12:33 am

School supplies-shoppers — People shop for school supplies and uniforms in Divisoria, Manila, July 6, 2024. — PHILIPPINE STAR/RYAN BALDEMOR

By Luisa Maria Jacinta C. Jocson, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) said that it should not “wait too long” to begin policy easing as this would dampen economic growth, its top official said.

BSP Governor Eli M. Remolona, Jr. said on Monday that the central bank is trying to “strike a balance” between supply and demand to ensure stable prices.

“At this point, in the last mile, we’re almost there, but we have to be more careful than before. Because there’s a risk we might overdo it. There’s a risk we might cause unnecessary loss of output, and we want to minimize that risk,” he said at the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum.

The BSP has kept policy rates at a 17-year high of 6.5% since October last year. It has raised rates by a cumulative 450 basis points (bps) from May 2022 to October 2023 in order to tame inflation.

The last time the BSP cut rates was in November 2020, when it delivered a 25-bp cut, bringing the key rate to 2% to support economic recovery amid the COVID-19 pandemic.

“When I said that we have to be cautious or we have to be careful, that basically means we have to not wait too long for easing because the longer we wait for easing, the more likely it is that we will cause a loss of output, which we don’t want,” Mr. Remolona said.

“That’s basically where we stand. We’re not going to raise (rates).”

Gross domestic product (GDP) grew by a weaker-than-expected 5.7% in the first quarter, slower than 6.4% a year ago.

To meet the government’s 6-8% growth target, the GDP expansion should average 6.1% in the next three quarters.

Preliminary second-quarter GDP data will be released on Aug. 8, ahead of the Monetary Board’s next policy review on Aug. 15.

The BSP chief said they are still “on track towards reducing rates” despite risks to the inflation outlook. He earlier said that the central bank can cut by 25 bps in the third quarter, and by another 25 bps in the fourth quarter.

“The 3.7% (inflation) is better than expected, so there’s a bit more scope for easing, possibly in August,” he said.

Headline inflation eased to 3.7% in June from 3.9% in May. This also marked the seventh straight month that inflation settled within the BSP’s 2-4% target range.

Mr. Remolona said recent measures such as Executive Order (EO) No. 62 would help tame prices.

“The nonmonetary measures that the government has put in place, especially EO No. 62, are so helpful, because that will help us get to where we want to go, which is stable prices.”

The executive order, signed by President Ferdinand R. Marcos, Jr. last month, slashed tariffs on rice imports to 15% from 35% previously, until 2028. It is largely expected to bring down retail rice prices and overall inflation.

Mr. Remolona also reiterated that the BSP does not need to wait for the Fed before it begins cutting rates.

“I think the Fed is not the most important data among the numbers that we look at. It affects our exchange rate, as you saw, the exchange rate affects inflation, so that’s factored in, but it’s not a decisive factor,” he said.

PESO WEAKNESS
Meanwhile, Mr. Remolona said that the BSP monitors the peso to ensure it does not “depreciate too sharply,” citing its impact on trade.

“We don’t want too much volatility in the peso. We want the peso to move based on fundamentals. When there’s too much volatility, it’s bad for trade. It’s bad for both imports and exports. So, we want to make the movement of the peso smoother,” he said.

The peso has been trading at the P58-per-dollar range since it first sank to that level in May.

Mr. Remolona again said that the peso’s performance is a case of a “strong dollar” due to safe-haven demand.

“The dollar has become the single most important safe-haven currency. Whenever you have tensions around the world, the dollar is stronger. In fact, even if the uncertainty is in the US, it makes the dollar stronger,” he said, adding that other currencies have also depreciated against the US dollar.

He said that the US Federal Reserve’s latest signals have also impacted recent currency movements.

“The Fed has been saying it’s going to be higher for longer and that has weakened all the other currencies against the US dollar,” he said.

The Fed at its most recent policy meeting in June left interest rates unchanged at 5.25%-to-5.5%, and fresh projections from policy makers showed them dialing back expectations for rate cuts this year from three to just one, Reuters reported.

Financial markets and some policy makers, however, still expect the Fed to deliver two cuts of a quarter-point each by yearend.

RRR CUT
Meanwhile, the BSP governor also reiterated that they plan to lower the reserve requirement ratio (RRR), although the timing has yet to be decided.

“We have one of the highest reserve requirements in the region. It doesn’t make sense to me that we should be more strict. In fact, the ideal number is zero. It’s a matter of timing,” he said.

The BSP has already brought down the RRR for big banks to a single-digit level last year from a high of 20% in 2018.

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

“We don’t want to bring it down while we’re still at kind of a somewhat tight monetary policy,” he added.

Mr. Remolona earlier said he is seeking to bring down the RRR to as low as 5%.

Government considering Samurai, dollar bonds this year

July 9, 2024 | 12:32 am

Japan Yen-US dollar-currencies — Banknotes of Japanese yen and US dollar are seen in this illustration picture taken on Sept. 23, 2022. — REUTERS

THE GOVERNMENT is looking to issue Japanese yen-denominated and US dollar-denominated bonds within the year, the Finance chief said.

“I expect both the dollar and possibly Samurai bonds this year. Both are being considered,” Finance Secretary Ralph G. Recto told reporters on the sidelines of the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum.

The government plans to borrow $5 billion this year, of which $2 billion was raised from the issuance of global bonds last May. This leaves $3 billion that has yet to be raised.

“On the Samurai bonds, the first mandate of the Department of Finance and the Treasury is to ensure that if we have to borrow, we borrow at the lowest rate possible,” he said during the forum.

“Yes, we are considering Samurai bonds, but we’re timing the market, taking a look at the best time to do it, if at all we have to do it.”

The Philippines last issued Samurai bonds in April 2022, raising ¥70.1 billion.

Mr. Recto said the timing of the bond issuance will also depend on the US Federal Reserve’s easing path.

“It depends on the Fed or global markets. Once they start reducing the rates, then that will be an opportunity to borrow,” he added.

The Fed has earlier signaled it may push back the start of its easing cycle to December.

The National Government’s outstanding debt rose to a fresh high of P15.35 trillion as of end-May, with external debt accounting for 32% or P4.9 trillion of the total.

REVENUE COLLECTIONS
Meanwhile, Mr. Recto said revenue collections jumped to P2.13 trillion in the first half of the year, 14.5% higher than P1.86 trillion collected in the same period last year.

“With 50% of the revenue target already achieved in the first semester, we are on track to reach the P4.27-trillion revenue program for 2024,” the DoF said in a separate statement.

Preliminary data from the department showed that tax revenues rose by 8.8% to P1.81 trillion as of end-June from P1.67 trillion a year ago.

Bureau of Internal Revenue collections rose by 10.2% to P1.34 trillion in the six-month period. This was already 44% of the BIR’s P3.05-trillion target for the year.

In a separate statement, the Bureau of Customs said collections jumped by 5.22% to P456.04 billion in the January-to-June period.

It also surpassed its P442.62-billion target for the six-month period by 3.03%, the agency said.

The DoF said nontax revenues in the first half expanded by 64.5% to P316.52 billion.

While the DoF said it is not looking to introduce new taxes this year, there are six measures pending in Congress that are expected to generate P42 billion in annual revenues.

These include the Package 4 of Comprehensive Tax Reform Program, which includes an excise tax on pickup trucks, the value-added tax on digital service providers, excise tax on single-use plastics, the mining fiscal regime, the motor vehicle road user’s change, and amendments to the Corporate Recovery and Tax Incentives for Enterprises law.

Tax collections are expected to increase by an average of 11.8% yearly due to digitalization and plugging of leakages in the tax system, Mr. Recto said.

‘DISCONTINUE POGO’
Meanwhile, Mr. Recto said he is willing to recommend the closure of all Philippine offshore gaming operations to President Ferdinand R. Marcos, Jr.

“If they were not doing anything hanky panky, and they’re paying taxes, fine with me. But I think there are many issues surrounding the POGO (Philippine Offshore Gaming Operators) industry,” Mr. Recto told reporters.

“Because of that, I am willing to recommend to the President to discontinue POGOs,” he said in mixed English and Filipino.

The government could lose P20 billion in annual revenues if it decides to ban POGOs, the Philippine Amusement and Gaming Corp. said earlier. — B.M.D.Cruz

PHL told to boost manufacturing jobs to achieve high-income growth

July 9, 2024 | 12:31 am

Skyline-slum area-wc — The Philippine economy is likely to grow by 6-7% this year. — PHILIPPINE STAR/BALDEMOR

By Kyle Aristophere T. Atienza, Reporter

ECONOMISTS flagged the declining employment share of the Philippine manufacturing sector, which they said is key to achieving a high-income status and meeting other development goals including bringing down poverty incidence to single digits at a faster rate.

A De La Salle University (DLSU) School of Economics report on Monday showed that most targets under the Philippines’ development plan for 2023 to 2028 will be met later than expected, and noted that the country would struggle to achieve high growth in the long-run in the absence of an industrial policy that has helped its Southeast Asian neighbors’ manufacturing industries climb the value chain.

Most Filipino workers are employed in sectors of “very low productivity,” the report said, adding the manufacturing sector’s employment share is only 8% and is expected to further decrease to 7% by 2030.

“Historically, countries that have achieved high-income status obtained employment shares in manufacturing from about 20-25%, sometimes even higher,” Mariel Monica Sauler, an economics professor at DLSU, said at the report’s launch in Makati City. “Our current manufacturing employment share is just 8%.”

For the Philippines to become an economic powerhouse, it needs to restructure its economy by taking workers out of the agriculture sector through mechanization and by significantly increasing the employment share of its manufacturing base, said Jesus Felipe, director of the Angelo King Institute for Economic and Business Studies at DLSU.

“We desperately need firms with high organizational capabilities and highly productive, that manufacture and export complex products, and that compete in the world economy,” he said during the event.

Mr. Felipe said the declining number of Filipinos leaving the country for job opportunities abroad — a phenomenon linked to an increase in wage rates locally — provides an opportunity for the country to expand its manufacturing base.

According to the report, the number of overseas Filipino workers (OFWs) will further decline to 1.91 million in 2025 from 1.97 million in 2023.

“We think that our wage rates are going to increase. Therefore, the incentive to leave the country declines,” Mr. Felipe said.

Even as the agriculture sector’s employment share has been on a decline, Ms. Sauler said the share of construction and transport and storage sectors, which have “low productivity” and “low wages,” have increased.

This means there are not enough manufacturing jobs locally, she added.

“Our ASEAN (Association of Southeast Asian Nations) neighbors seem to have always understood the importance of the manufacturing sector better than us.”

The economists said the government should shift its focus away from the agriculture sector, which “needs a solution but is not the solution” to the Philippines’ growth woes.

Achieving an upper middle-income status next year would not be possible if the Philippines’ economic expansion would be slower than expected, they said.

BELOW TARGETS
The DLSU report said the Philippine economy will likely hit 5.5-5.6% growth this year, lower than the government’s 6-7% target.

Under the Philippine Development Plan (PDP) 2023-2028, gross domestic product (GDP) annual growth target is set at 6.5-8% until 2028. However, the DLSU report said GDP growth is likely to be “below target until 2028.”

The Philippines is projected to hit its goal of having a gross national income (GNI) per capita of $6,044-$6,571 by 2029, instead of 2028.

According to the World Bank’s latest income classification data, the Philippines remained a lower-middle income country with a GNI per capita of $4,230 in 2023. To become an upper middle-income country, the Philippines now needs to have GNI per capita of $4,516 to $14,005.

Ms. Sauler said that while the Philippines could reach an upper middle-income status as early as this year, its real GDP will grow below the PDP 2023-2028 target rates.

“If we want to expedite development, the structure of the economy will need to change in the direction of industrialization,” she said. “Repeating the industrialization experience of our East Asian neighbors seems impossible but there is no other option.”

Mr. Felipe said the country needs an “industrial policy” centered on the creation of competitive firms that make high-quality products and jobs that require high skills.

While the number of middle-class Filipinos was increasing, Mr. Felipe said a huge chunk of them or 80% of Filipino workers were earning P15,000 per month at most.

“Only 15% of Filipino workers earned above P15,000. This is the reality of the country. This is the distribution of the structural economy from the point of view of output and from the point of view of employment,” he said.

The manufacturing sector accounted for 18% of the Philippine economy last year, while its employment share was only at 7.3%, he noted.

Mr. Felipe said Asian countries that have pursued the path of industrialization have overtaken the Philippines in terms of GNI per capita.

The GNI per capita of the Philippines is still $4,000, which means the country is “among the poorest countries in the world,” he said.

“All our neighbors have systematically, automatically caught up with us and overtaken us,” he said, citing Vietnam, whose GNI per capita was about eight times lower than that of the Philippines in the 1990s.

“Indonesia overtook the Philippines in about 2008 or 2009,” he added. “The same thing happened with China, and the same thing happened with Thailand. Malaysia has always been richer than the Philippines.”

‘UNNECESSARY’
At the same time, the DLSU report estimated the Philippines will only achieve its PDP target of a 3% deficit-to-GDP ratio by 2031, and the debt-to-GDP ratio of 48-53% by 2032.

Pedro Pascual, a member of the economic team of the Angelo King Institute at De La Salle University, said the Marcos administration’s fiscal consolidation plan is both “unnecessary” and ill-suited” in the current situation, which is marked by low GDP growth.

The government needs to run a larger budget deficit to build infrastructure needed to revamp its economy, he said.

Mr. Pascual noted that household spending remains subdued, as seen in the declining number of Filipinos traveling abroad for leisure.

Real wages had not fully recovered in 2023 to the pre-pandemic level due partly to inflation, he said. “They will in 2024 to 2025.”

But inflation should not be a major economic concern for the country since it’s mainly driven by rice prices, Mr. Pascual said, adding that it’s up to the government how it will lessen the country’s dependence on or find alternatives for the commodity.

Rice inflation eased for the straight month in June to 22.5% from 23% a month earlier.

“Overambitious disinflation can create a problem,” he added.

The DLSU report also projected that poverty incidence will likely go down to 8.8-9% only by 2035, instead of 2028.

The unemployment rate will settle within the 4-5% target range by 2028, the report showed.

SSI Group, Inc. to hold virtual annual meeting of stockholders on July 30

July 9, 2024 | 12:10 am

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PHL may exit FATF ‘gray list’ by 2025, BSP says

July 9, 2024 | 12:06 am

BSP-Building — BANGKO SENTRAL NG PILIPINAS

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINES is unlikely to exit the Financial Action Task Force’s (FATF) “gray list” by October this year, as earlier targeted, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said.

Mr. Remolona said at the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum held on Monday that the BSP is eyeing to exit the FATF’s list of jurisdictions under increased monitoring for “dirty money” risks by January 2025.

“In October, they decide whether we have fulfilled the 18 (action items). Between October and January, they check. January is the exit date,” he said.

“We’ve made very big progress… We’ve officially fulfilled 15 of the 18 (items). These have been classified as largely addressed, and we still have three more action items to work on,” Mr. Remolona added.

President Ferdinand R. Marcos, Jr. earlier this year directed all concerned agencies to work on efforts to exit the list by October.

The FATF in its June update kept the Philippines in its gray list for a third straight year or since June 2021.

It said the Philippines has made “significant” steps in improving its anti-money laundering and counter financing of terrorism (AML/CFT) regime but still needs to address remaining deficiencies.

The country has acted on 15 out of 18 items recommended by the FATF. The remaining three action items include “demonstrating that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets; applying cross-border measures to all main sea/airports including detection of false declarations of currency and confiscation action in line with risk; and demonstrating an increase in the prosecution of TF (terrorism financing) cases in line with risk,” the FATF said.

“We don’t get out of the gray list by October. Once we’ve been told we have largely addressed those three remaining items, there’s an exit process that then ensues,” Mr. Remolona said.

“If that works out, you have to come there in January to check whether what we said is true. If that works out, then we will exit in January,” he said.

Mr. Remolona added that the Philippine Amusement and Gaming Corp. is also working on tightening the monitoring of casino junkets.

Data from Moody’s showed that from 2018 to 2023, the Philippines was among the top five countries in Southeast Asia with money laundering activity events added over the five-year period.

The number of money laundering events added in the Philippines increased by 45% from 2022 to 2023, it said.

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the Anti-Money Laundering Act.

The FATF Plenary, the intergovernmental organization’s decision-making body, usually meets in February, June and October.

DD concludes P10-B bond offering ahead of schedule, plans second tranche

July 9, 2024 | 12:06 am

By Sheldeen Joy Talavera, Reporter

LISTED property developer DoubleDragon Corp. (DD) on Monday said its retail bond offering, aimed at raising up to P10 billion, achieved full subscription five days ahead of schedule.

DoubleDragon is planning to launch another tranche, which will be facilitated “very soon,” the company said in a statement to the stock exchange.

The retail bond offering concluded on July 5, ahead of its original end date of July 10, due to oversubscription.

“We seek the understanding of the investing public for cutting short the DD retail bond offer period due to oversubscription way ahead,” the company said.

The retail bond offering represents the initial segment of DoubleDragon’s shelf-registered debt securities program, totaling up to P10 billion. It includes a base amount of up to P3 billion, with an oversubscription option of up to P3 billion.

“DoubleDragon has not issued any peso retail bond for over five years, and DD is extremely grateful to the unwavering support of the investing public on its return to the retail bond market,” the company said.

DoubleDragon engaged RCBC Capital Corp., Unicapital, Inc., and the Development Bank of the Philippines (DBP) as joint lead underwriters, joint issue managers, and bookrunners for the issuance.

Juan Paolo E. Colet, managing director at Chinabank Capital Corp., said that there is a rising interest among fixed-income investors to secure high interest rates amid expectations of monetary easing.

“The strong demand also reflects investors’ confidence in DoubleDragon’s prospects and, more broadly, the property sector. It likewise helped that the DoubleDragon bonds received the highest credit rating from PhilRatings, thereby reassuring investors of the issuer’s ability to meet its payment obligations,” he said in a Viber message.

“The next issuance might mirror the terms of the current issuance to make it equally appealing, although there is a chance the coupon might be lower since the relevant benchmark rates are starting to decline,” he added.

Seedbox Securities, Inc. Equity Sales Trader Moses Frando warned investors to consider key risks such as economic fluctuations impacting financing, uncertainties in DoubleDragon’s expansion projects like CityMalls and CentralHub, and leasing risks such as tenant issues and regulatory changes.

“Evaluating these risks carefully is crucial before investing in DoubleDragon’s bonds,” Mr. Frando said in a social media message.

At the local bourse on Monday, shares in the company went up by 1.18% to close at P12.04 apiece.

Gov’t fully awards Treasury bill offer even as yields inch higher

July 9, 2024 | 12:05 am

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as all tenors’ average rates remained below secondary market levels despite rising slightly from the previous week.

The Bureau of the Treasury (BTr) raised P20 billion as planned from the T-bills it offered on Monday as total bids reached P43.185 billion, or more than twice the amount placed on the auction block.

Broken down, the BTr borrowed P6.5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P14.18 billion. The three-month paper was quoted at an average rate of 5.698%, 1.2 basis points (bps) above the 5.686% seen last week. Accepted rates ranged from 5.65% to 5.724%.

The government likewise made a full P6.5-billion award of the 182-day securities, with bids reaching P15.56 billion. The average rate for the six-month T-bill stood at 5.968%, inching up by 0.9 bp from the 5.959% fetched last week, with accepted rates at 5.92% to 5.995%.

Lastly, the Treasury raised the planned P7 billion via the 364-day debt papers as demand for the tenor totaled P13.445 billion. The average rate of the one-year debt increased by 2.3 bps to 6.073% from the 6.05% quoted last week. Accepted yields were from 6.03% to 6.095%.

At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7152%, 5.9669%, and 6.0848%, respectively, based on PHP Bloomberg Valuation (BVAL) Service Reference Rates data provided by the Treasury.

“Treasury bill average auction yields were again slightly higher week-on-week, but still slightly lower and already closer to the comparable short-term PHP BVAL yields, as consistent signals on possible local policy rate cut of 25 bps as early as August and possible 50 bps in rate cuts in 2024 led to some greater investor demand for longer-dated bonds and other fixed-income securities to lock in still relatively higher interest rates before the rate cuts happen,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Secondary market yields mostly went down last week as slower-than-expected June headline inflation strengthened the case for a Bangko Sentral ng Pilipinas (BSP) rate cut as early as August.

Philippine headline inflation rose 3.7% year on year in June, easing from 3.9% in May and 5.4% in the same month a year ago. This was below the 3.9% median estimate in a BusinessWorld poll of 14 analysts.

The June consumer price index (CPI) was within the BSP’s 3.4-4.2% forecast for the month, and also marked the seventh straight month that inflation settled within the central bank’s 2-4% annual target.

For the first six months, the CPI averaged 3.5%, slightly faster than the central bank’s 3.3% full-year forecast.

The BSP last month kept its policy rate at a 17-year high of 6.5% for a sixth straight meeting.

BSP Governor Eli M. Remolona, Jr. has said the Monetary Board may deliver its first rate cut in over three years at its Aug. 15 review — the only policy meeting scheduled in the third quarter — as they expect inflation to continue easing this semester.

The BSP may slash borrowing costs by 25 bps in the third quarter and by another 25 bps in the fourth quarter, he added.

On Friday, Mr. Remolona said the central bank may kick off its easing cycle by next month even if inflation exceeds the BSP’s 2-4% goal anew in July.

The central bank earlier said the CPI could pick up and overshoot their annual target from May to July amid a low base, but inflation remained below 4% in May and June.

“The awarded T-bill rates moved higher in anticipation ahead of US Federal Reserve Chair Jerome H. Powell’s US congressional testimony this week,” a trader added in an e-mail.

Mr. Powell is scheduled to deliver his semiannual monetary policy report to the US Congress on July 9-10.

On Tuesday, the BTr will offer P30 billion in reissued 20-year Treasury bonds (T-bonds) with a remaining life of seven years and nine days.

The Treasury is targeting to raise P215 billion from the domestic market this month, or P100 billion from T-bills and P115 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product for this year. — AMCS

Meralco sees generation charge hike for July

July 9, 2024 | 12:05 am

meralco-company.meralco.com.ph — MERALCO.COM.PH

MANILA Electric Co. (Meralco) is anticipating an increase in the generation charge this month as it begins to collect the previously deferred estimated payment of P0.77 per kilowatt-hour (kWh).

“We may expect strong pressures for the generation charge to increase this July,” Meralco Vice-President and Head of Utility Economics Lawrence S. Fernandez said in a statement on Monday.

This follows a reduction in June due to an Energy Regulatory Commission (ERC) directive, with charges from the Wholesale Electricity Spot Market (WESM) expected to normalize.

In June, Meralco reduced its rate to P9.4516 per kWh from P11.4139 per kWh in May, reversing an earlier announced hike.

The generation charge decreased by P1.8308 per kWh, contrary to the previously announced increase of P0.3466 per kWh.

Previously, the ERC mandated distribution utilities to stagger the collection of charges related to WESM purchases over a four-month period starting from June to September.

Meralco, along with Quezon Power (Philippines) Ltd., San Buenaventura Power Ltd. Co., and South Premiere Power Corp., deferred the collection of P500 million in generation costs last month to mitigate the impact of higher pass-through charges.

This deferred amount will be recovered from customers over the July-to-September billing cycle.

In addition to the normalization of WESM charges, there will be an impact from the amortization of deferred charges, estimated at 77 centavos per kWh, Mr. Fernandez said.

He noted that WESM charges were affected by red alerts on the Luzon grid early in the June supply month, but expects this impact to be mitigated by reduced demand during the rainy season.

In June, the average WESM price system-wide declined by 25.2% to P6.15 per kWh due to decreased demand, according to the Independent Electricity Market Operator of the Philippines.

Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera

BDO looks to raise at least P5B from sustainability bond issue

July 9, 2024 | 12:04 am

BDO UNIBANK, Inc. is looking to raise at least P5 billion from the sale of 1.5-year peso-denominated ASEAN Sustainability Bonds, it said on Monday.

Proceeds from the notes will be used to finance or refinance eligible assets under the bank’s Sustainable Finance Framework and diversify its funding sources, BDO said in a disclosure to the stock exchange.

This marks its third peso-denominated sustainability bond issue, it added.

The bank has the option to upsize the issuance, it said.

The 1.5-year bonds carry a coupon rate of 6.325% per annum.

BDO is offering the bonds at a minimum investment amount of P500,000 and in increments of P100,000 thereafter.

The offer period began on Monday and is set to run until July 19, unless adjusted by the lender.

The bonds will be issued, settled, and listed on July 24, BDO added.

ING Bank N.V. Manila Branch was tapped as the sole arranger for the issuance. ING Bank is also a selling agent along with BDO.

Meanwhile, BDO Capital & Investment Corp. was appointed the financial advisor for the transaction.

BDO said the Securities and Exchange Commission (SEC) has confirmed that the issuance complies with requirements under the ASEAN Sustainability Bond Standards and the SEC ASEAN Sustainability Bond Circular.

The bank in January raised P63.3 billion from its second offering of ASEAN Sustainability Bonds, above the P5-billion target, amid strong investor demand. The 1.5-year notes carry a coupon of 6.025% per annum.

It also borrowed P52.7 billion from its first ASEAN Sustainability Bond issue in January 2022.

BDO’s net income grew by 12.12% year on year to P18.5 billion in the first quarter as its core businesses remained strong.

Its shares went up by P6.20 or 4.47% to close at P145 each on Monday. — A.M.C. Sy

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