THE NATIONAL Government’s (NG) outstanding debt returned to the P15-trillion level as of end-April due to the weaker peso, the Bureau of the Treasury (BTr) said.
Data from the BTr on Thursday showed outstanding debt rose by 0.61% to P15.02 trillion as of end-April from P14.93 trillion as of end-March.
“Total debt increased by P91.5 billion or 0.61% from the end-March 2024 level due to government net financing and the impact of local currency depreciation on the valuation of foreign currency-denominated debt,” the BTr said.
Year on year, the outstanding debt stock jumped by 7.95% from P13.91 trillion in the same period a year ago.
Of the total debt, more than two-thirds or 68.64% came from domestic sources.
As of end-April, outstanding domestic debt edged higher by 0.3% to P10.31 trillion from P10.28 trillion as of end-March. It also increased by 8.99% from P9.46 trillion in the same period a year earlier.
Government securities made up almost the entire domestic debt as of end April.
“For the month, the increment resulted from the P27.23-billion net issuance of government securities and the P3.78-billion effect of peso depreciation on foreign currency-denominated domestic debt,” it said.
Data from the BTr showed the peso closed at P57.583 against the dollar at end-April, weakening by P1.323 from its P56.26 finish a month ago.
Meanwhile, external debt went up by 1.3% to P4.71 trillion as of end-April from P4.65 trillion as of end-March. Year on year, foreign debt rose by 5.74% from P4.45 trillion.
“Although there was a net repayment of P32.91 billion in foreign loans within the month, the considerable depreciation of the peso caused a P109.31-billion upward adjustment in the local valuation of US dollar-denominated debt, partly offset by the P15.91-billion downward adjustment brought about by the opposite movement of third-currency debt,” the BTr added.
External debt was composed of P2.25 trillion in loans and P2.46 trillion in global bonds.
Broken down, global bonds consisted of P2.07 trillion in US dollar bonds, P212.85 billion in euro bonds, P64.03 billion in Japanese yen bonds, P57.58 billion in Islamic certificates and P54.77 billion in peso global bonds.
Meanwhile, the NG’s guaranteed obligations stood at P356.06 billion as of April, up by 2.89% from P346.04 billion in March. However, it dropped by 6.47% from P380.69 billion in the same period in 2023.
“The increment was due to the net availment of domestic guarantees amounting to P7.54 billion and the impact of peso depreciation on foreign currency-denominated guarantees amounting to P3.8 billion,” the BTr said.
“On the other hand, third-currency adjustments against the US dollar trimmed P1.32 billion,” it added.
Analysts noted that the peso depreciation contributed to the increase in debt as of end-April.
“This 0.61% increase from March is due to a combination of government borrowing and a weaker peso. Domestic debt grew slightly, impacted by new government security issuances and peso depreciation,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Mr. Roces said the higher external debt was “primarily due to the peso’s depreciation inflating the value of dollar-denominated debt, outweighing a small decrease from other currencies.”
In mid-April, the peso sank to the P57-per-dollar level for the first time since November 2022, which was also its worst close in 17 months at the time.
“Weaker peso exchange rate over the past two years could have also increased the peso equivalent of foreign debt,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Ricafort said that outstanding debt could rise further after the government’s dollar bond issuance in May and other planned borrowings for the rest of the year.
The Philippine government raised $2 billion from its dual-tranche dollar bond issuance in May, its first global bond sale for the year.
The government’s borrowing program is set at P2.57 trillion this year, of which 75% will come from domestic sources and the rest from foreign sources.
As of the first quarter, the NG’s debt as a share of the gross domestic product (GDP) stood at 60.2%. This was below 61.1% a year ago but higher than 60.1% at the end of 2023.
The government’s debt-to-GDP ratio target this year is set at 60.3%. It seeks to bring this down further to 55.9% by 2028.
THE PESO sank to a near 19-month low on Thursday due to a strong dollar as US Treasury yields surged amid a hawkish US Federal Reserve.
The local unit closed at P58.635 per dollar on Thursday, weakening by 21.5 centavos from its P58.42 finish on Wednesday, Bankers Association of the Philippines data showed.
This was the peso’s worst finish in almost 19 months or since its P58.80-per-dollar close on Nov. 3, 2022.
The local unit is now down by P3.265 from its end-2023 close of P55.37 versus the greenback.
The peso opened Thursday’s session weaker at P58.50 against the dollar, which was already its intraday best. Its worst showing was at P58.73 versus the greenback.
Dollars exchanged inched down to $1.39 billion on Thursday from $1.4 billion on Wednesday.
The peso slumped due to a generally stronger dollar following a rise in US Treasury yields, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The dollar strengthened across the board with higher Treasury yields and recent hawkish Fed speak. The market was a bit on the edge with sticky inflation potentially indicating higher rates for longer,” Security Bank Corp. Chief Economist Robert Dan J. Roces likewise said in a Viber message.
The dollar held steady on Thursday after rising to a two-week high as a rout in US Treasuries pushed up yields, boosting the currency’s allure, Reuters reported.
The index tracking the US currency against its major peers climbed to 105.18 overnight, the highest since May 14, and was slightly lower at 105.05 in early European trading.
A two-day, 15-basis-point jump above 4.6% for long-term Treasury yields helped push the dollar higher. The rise in yields, which move inversely to prices, has been driven by a spate of stronger-than-expected data, tough words from Federal Reserve officials, and a run of poorly received bond auctions.
Expectations for Federal Reserve interest rate reductions this year have been pared back amid signs of sticky inflation, most recently with a surprise uptick in consumer sentiment in data on Tuesday.
Traders currently see 56.6% odds of a quarter-point cut by the conclusion of the September meeting, down from 57.5% odds a week ago, according to the CME Group’s FedWatch Tool.
For Friday, Mr. Roces said peso-dollar trading will be driven by the second estimate for first-quarter US gross domestic product scheduled for release overnight.
Mr. Ricafort expects the peso to range from P58.50 to P58.70 per dollar on Friday. — A.M.C. SywithReuters
Shoppers look for toys at a mall in Parañaque City in this file photo. — PHILIPPINE STAR/MIGUEL DE GUZMAN
THE BANGKO SENTRAL NG Pilipinas (BSP) may need to keep rates higher for longer or even hike rates further to cool inflation, HSBC said.
This as it sees private consumption staying strong and spending patterns shifting as the Philippines inches closer to becoming an upper middle-income economy.
In a report, HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay said that monetary policy reins may need to be “tighter than before” in order to keep inflation within the 2-4% target band.
“With Filipino consumers changing, so, too, should inflation and monetary policy. We can expect core consumer price index (CPI) to be stickier as consumers become wealthier and allocate more of their budgets to services and less to staples,” he said.
“Policy makers would then need to tighten the monetary reins even further if inflation were to surge in the future, supporting our view that, when the dust settles, monetary policy in the Philippines will likely be higher for longer,” he added.
The Monetary Board earlier this month kept its benchmark rate at a 17-year high of 6.5% for a fifth straight meeting.
BSP Governor Eli M. Remolona, Jr. earlier said that it was “highly unlikely” for the central bank to deliver further rate hikes. Instead, he signaled the possibility of a rate cut as early as August.
While high inflation and interest rates have dampened household consumption, HSBC said the Philippines still remains to be “one of the strongest in ASEAN.”
“But, despite household budgets getting tighter, consumers are, interestingly, reallocating their spending from ‘essentials’ — such as food and clothing — to restaurants and other miscellaneous goods services, even as prices have climbed. It’s a bit of a paradox,” Mr. Dacanay said.
Despite a “squeeze in purchasing power,” HSBC said Filipino consumers are spending more on nonessential products such as skincare, sports and takeout meals.
“This is a testament that tastes and preferences change, more so with the Philippines being inches away from becoming an ‘upper middle-income’ economy.”
The government is targeting to achieve upper middle-income status by 2025. An upper middle-income country has a gross national income (GNI) per capita between $4,466 and $13,845.
At present, the Philippines is classified as a lower middle-income country with a GNI per capita of $3,950.
“All things considered, the slowdown in household consumption is likely temporary as Filipino households adjust their spending given how much inflation soared last year,” HSBC said.
Household spending, which accounts for more than three-fourths of economic growth, rose by 4.6% in the first quarter, the slowest since 2010.
“When inflation stabilizes, consumption should broadly pick up. But, when it does, demand for nonessentials will likely grow faster than essentials — a trend apt for a country that is inches away from becoming an ‘upper-middle income’ economy,” it added.
Headline inflation accelerated for a third straight month to 3.8% in April, bringing the four-month inflation average to 3.4%. The BSP sees full-year inflation at 3.5%. — Luisa Maria Jacinta C. Jocson
Tensions remain high amid maritime sovereignty disputes in the South China Sea. — PHILIPPINE STAR/RYAN BALDEMOR
By Kyle Aristophere T. Atienza, Reporter
PHILIPPINE President Ferdinand R. Marcos, Jr. said countries outside the region should consider tensions in the South China Sea as a major issue for their economies, citing the waterway’s importance to international trade.
He made the remarks ahead of the premier summit of defense leaders and analysts across the world, and as China pushes policies seen restricting access to one of the world’s most important waterways.
“It’s so important to international trade that we can actually say that the stakeholders are no longer limited to ASEAN (Association of Southeast Asian Nations), Asia, Indo-Pacific. It really involves the global economy already,” Mr. Marcos told reporters, based on a transcript from his office.
He said he would highlight the government’s position amid tensions in the South China Sea and “see the ways forward for the Philippines and for the region.”
“The fact that they asked the Philippine President to come and speak on that very subject is significant in the sense that it is a recognition that there are challenges facing the Philippines, specifically,” he said.
China has been blocking Philippine government and civic missions within Manila’s exclusive economic zone (EEZ). Scarborough Shoal, a traditional fishing ground, and Second Thomas Shoal, in which a Filipino military outpost was established in 1999, have been among South China Sea features most frequented by Chinese Coast Guard vessels last year.
The Philippines has also been reporting increasing Chinese presence in features near Reed Bank, a large tablemount in the waterway that according to the US Energy Information Administration could hold up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas.
As the country deals with the potential depletion of its sole indigenous source of natural gas — the Malampaya gas field, there’s been growing focus on the waterway’s economic importance.
Two Philippine tycoons recently backed the government’s efforts to defend the country’s claims in the waterway, with San Miguel Corp. Chief Executive Officer (CEO) and President Ramon S. Ang citing its vast energy potential.
“We have a big reserve in the West Philippine Sea,” he said at a government economic briefing earlier this week, referring to parts of the South China Sea that fall within the Philippine EEZ.
Manny V. Pangilinan, chairman and CEO of Manila Electric Co. (Meralco), said Mr. Marcos “has been making the right decisions” amid tensions with China.
“We fully support what he’s been doing,” he said last month.
PXP Energy Corp., which is chaired by Mr. Pangilinan, has struggled conducting drilling and exploration activities for its Reed Bank concession or Service Contract 72.
VITAL TO TRADE Joshua Bernard B. Espena, vice-president at Manila-based International Development and Security Cooperation, said the Philippines is on the right track of “internationalizing” the dispute with China since the South China Sea is vital to international trade.
He said China keeps on insisting that disputes in the waterway should only involve claimants, but the Marcos government has “resisted” and kept doing what it needed to do — “unilateral and minilateral approaches to contain Chinese excessive moves so that the Philippines might stand to gain amid geopolitical shifts.”
“This is vital given the limitations on the Philippines’ capability to protect its fishers and deny Chinese arrests,” he said in a Facebook Messenger chat.
On the other hand, Ateneo de Manila University economics professor Leonardo A. Lanzona said the Marcos administration’s South China Sea policy may be “frightening investment out of the Philippines.”
“The exodus of firms from China because of these geopolitical issues is unlikely to benefit the country since the government has put the Philippines at the center of this tension,” he said via Messenger chat.
“Southeast Asian countries even closer to China, such as Thailand and Vietnam, are taking advantage of this situation as the firms exiting China are moving into their borders,” he said, noting that these countries are unlikely to get involved in the issue.
Mr. Lanzona said Manila should maintain stable diplomatic ties with China even as it defends its sovereignty and “most importantly focus on making our industry more attractive to investors.”
The Philippines has gained strong international support after it launched a transparency campaign last year that seeks to expose China’s aggressive acts within the Philippine EEZ such as the use of water cannons and dangerous maneuvers.
Mr. Marcos is set to deliver a keynote message for the IISS Shangri-La Dialogue in Singapore on May 31.
Beijing recently announced a four-month fishing ban in the entire waterway, just weeks after it adopted a policy authorizing its coast guard to detain foreigners it suspects of violating its exit-entry rules “in the waters under the jurisdiction of China” for up to 30 days — and in some cases for as long as 60 days — without a trial.
The Philippine military on Thursday said it had prepared contingency plans amid China’s fishing ban and new coast guard policy, which it said will be handled by law enforcement agencies such as the Philippine Coast Guard.
“We have contingency plans in place,” Armed Forces of the Philippines spokesperson Colonel Francel Margareth Padilla told ABS-CBN’s Teleradyo Serbisyo, noting that Manila regularly conducts patrols within the Philippine EEZ.
“We also have additional resources that are available and on standby.”
A group of fishermen from Zambales, Pangasinan, Bataan and Palawan provinces said their fishing rights are continuously “threatened by harassment and intimidation from China’s coast guard and maritime militia who are keeping Filipinos away from the rich waters.”
While the Philippine Coast Guard and the Bureau of Fisheries and Aquatic Resources provide them effective protection, the government needs to step up efforts to provide “economic support services” to affected fishers “who are mostly neglected and left on their own with little state benefits,” they said in a statement.
John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said the South China Sea “will be an economic issue if the situation poses economic impacts to countries involved.”
Over $3 trillion worth of trade passes annually through the South China Sea.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said Manila is well-positioned to forge more economic partnerships with friendly nations amid increasing tensions with China.
China is the Philippines’ largest source of imports and second-largest export market. On the other hand, the United States, a major defense ally that has backed Manila amid Beijing’s intrusions at sea, is the largest destination of Philippine products and the fifth-largest source of imports.
A recent report from Nomura Global Markets Research said geopolitical concerns from the South China Sea dispute “could be an impediment to Chinese companies looking to diversify supply chains into the Philippines.”
Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, said via Messenger chat the expected establishment of an economic corridor on the main island of Luzon will help Manila in its efforts to diversify the country’s trade ties away from China.
Philippine Ambassador to the US Jose Manuel Romualdez earlier said Washington and Tokyo, which has also been backing Manila in the South China Sea dispute, are expected to marshall $100 billion worth of investments for the country in the next 5 to 10 years.
Philippine flags are seen along a highway in Imus City, Cavite. — PHILIPPINE STAR/EDD GUMBAN
THE PHILIPPINES saw an improvement in its budget transparency score in the 2023 Open Budget Survey (OBS), making it the “most fiscally transparent” country in Asia.
In the survey by the International Budget Partnership (IBP), the Philippines’ transparency score went up by seven points to 75 out of 100 from 68 in 2021.
This surpassed the government’s target score of 71 under the Philippine Development Plan 2023-2028 and was well above the global average of 45.
The Philippines’ score placed it at 15th place out of 125 countries. In the 2021 OBS, the country ranked 19th out of 120 countries.
“[The] Philippines has increased the availability of budget information by publishing the midyear review online in a timely manner,” the IBP said in the report.
The Philippines’ budget transparency score of 75 was higher than its Southeast Asian peers like Indonesia (70), Thailand (60), Vietnam (51), Malaysia (48), Cambodia (43), Timor-Leste (37), and Myanmar (3).
To further improve budget transparency, the IBP said the Philippines must sustain and institutionalize the timely publishing of its midyear review timely online, including updated spending estimates.
“The DBM (Department of Budget and Management) will continue its best practices in ensuring a transparent, participatory, and accountable people’s budget,” Budget Secretary Amenah F. Pangandaman said in a statement.
However, the Philippines received a score of 33 out of 100 on public participation in the budget. This was still better than the global average of 15, and highest among Southeast Asian peers.
This pillar looks into the executive, legislature, and its main audit institution’s practices in line with the Global Initiative for Fiscal Transparency’s Principles of Public Participation in Fiscal Policies.
To enhance public participation in the budget process, the IBP said there is a need to engage vulnerable and underrepresented sectors.
“To further strengthen public participation in the budget process, [the DBM] should also prioritize expanding mechanisms during budget formulation and implementation to engage any civil society organization or member of the public who wishes to participate,” it said.
It also called on lawmakers to conduct public consultations before approving the budget, and allow the public or civil society organizations to testify during audit report hearings.
Meanwhile, the Philippines received a score of 83 out of 100 in budget oversight, noting that Congress and audit agencies provide “adequate oversight” in monitoring the country’ budget use.
“To strengthen independence and improve audit oversight by the Philippines’ Commission on Audit…. [it must] ensure that audit processes are reviewed by an independent agency,” IBP said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government must ramp up its digitization efforts to ensure budget transparency.
“Further digitization of National Government and local government processes and transactions internally and with the general public would help improve transparency and overall rankings,” he said in a Facebook Messenger chat.
Institute for Leadership, Empowerment, and Democracy, Inc. Executive Director Zy-za Nadine M. Suzara, who also worked on the data gathering of the survey, said confidential funds hamper budget transparency.
“There’s lack of transparency in the use of confidential funds and it really isn’t the best example in terms of promoting, better yet, ensuring transparency,” she said in a Viber message.
“Though there are guidelines on how to use the confidential funds, we have seen since the Duterte administration how the allocation and use of them by non-security agencies have been so prone to abuse,” she added.
There are at least P9-billion confidential and intelligence funds in the 2024 national budget. — Beatriz Marie D. Cruz
BusinessWorld Economic Forum 2024 — Photo by Jesse Bustos | The Philippine Star
BusinessWorld Economic Forum 2024 tackles the socioeconomic imperatives to drive the country forward
By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor
The quest for sustained and inclusive growth is akin to nurturing a delicate ecosystem. It requires the harmony of various factors like vision, strategy, and execution, where every component, from robust policy frameworks to innovative private sector initiatives, plays a pivotal role.
For a developing economy to thrive, it must cultivate a fertile ground where education and skills development flourish, creating a workforce capable of driving innovation and productivity. Equally vital is the establishment of resilient infrastructure that not only supports economic activities but also enhances the quality of life for its citizens. Moreover, fostering a business environment that encourages entrepreneurship and attracts investment is essential to fuel job creation and economic diversification.
But as times continue to change and foster uncertainty, so too must one’s strategy to change and adapt. This is the riddle that haunts many countries today, particularly the Philippines. Even in the most adverse conditions, the country has posted economic growth competing with many of the world’s leading economies. This has invited attention and scrutiny from many foreign investors and created certain expectations as to how the country might sustain this growth.
National Economic and Development Authority Secretary Arsenio M. Balisacan — Photo by Jesse Bustos | The Philippine Star
“Our macroeconomic fundamentals are sound and have proven time and again to be instrumental in fostering the sustained growth of the Philippine economy,” Secretary Arsenio M. Balisacan, head of the National Economic and Development Authority, said as he kick-started the recently concluded BusinessWorld Economic Forum by delivering a speech on the “Imperatives for Sustaining Philippines’ Economic Growth.”
Mr. Balisacan spoke to shed light on the crucial factors needed to maintain the country’s current economic momentum, such as controlling food inflation, managing debt, and monitoring fiscal risks. He painted an illustration of the country’s current economic situation, and highlighted the areas and issues that needed addressing, such as the growing digital divide and the inequalities of opportunities in the different regions of the country.
“As many of the world’s leading economists will tell you, a high growth trajectory can only be sustained with the whole of society and government working together. Critical development challenges and policy issues require decisive actions to maintain inclusive socioeconomic growth,” he said, adding that the government remains committed to doing all it can to sustain the country’s momentum and bring a more inclusive prosperity to the Filipino people.
“We are confident of meeting our short-term development objectives and we aim for no less socioeconomic transformation in the medium term,” Mr. Balisacan said.
BusinessWorld Economic Forum 2024, titled “PH Next: Growth Drivers,” was held last May 22 at the Grand Ballroom of Grand Hyatt Manila in Bonifacio Global City, Taguig. The whole-day forum brought together policy makers, industry leaders, and top executives to explore the Philippines’ emerging opportunities and key drivers of economic progress.
BusinessWorld Publishing Corp. President and Chief Executive Officer Miguel G. Belmonte — Photo by JLCG Creative and Digital Solutions
In his welcome remarks, BusinessWorld Publishing Corp. President and Chief Executive Officer (CEO) Miguel G. Belmonte highlighted that the Philippines has been achieving “impressively steady” growth in spite of recent headwinds, driven by favorable drivers. Nonetheless, he added, such growth should benefit every Filipino.
“[E]conomic growth alone is not the endgame. The true gauge of success will always be ensuring inclusive prosperity: How we can ensure that every Filipino benefits from a thriving economy?” Mr. Belmonte stressed.
“Through these Economic Fora, BusinessWorld has always served as a platform to explore solutions, foster dialogue, and forge partnerships that will create a bit better future for all,” he added.
JG Summit Holdings President and CEO Lance Y. Gokongwei — Photo by Jesse Bustos | The Philippine Star
Lance Y. Gokongwei, president and CEO of JG Summit Holdings, Inc., also delivered a keynote address, talking about “Boosting the Private Sector’s Share in Fueling Economic Growth” and sharing his perspective on the role of private enterprises in driving the Philippine economy forward.
“The private sector, which is a major contributor to our nation’s economy, is a catalyst for economic growth and development. With its ability to mobilize resources, enhance productivity and innovate, the private sector is a wealth creator, providing employment opportunities to deliver goods and services. But despite its impact on our country’s economy, it is imperative for the private sector to partner with the government to push forward its agenda,” he said.
Mr. Gokongwei believes that there are three key areas in which mutual cooperation between the public and private sectors can “make a tremendous impact”: education and training, revitalizing manufacturing, and enhancing tourism. Underlying these key areas, he stressed that the investment in both physical and technological infrastructures will be critical.
“The task of nation-building is a humongous challenge. It is not a straight and easy path. It requires planning, cooperation, sacrifice, grit, and unity. But it is comforting to know that it is a shared responsibility, buoyed by the concerted efforts and founded on a high level of trust among all of the key players in our economic ecosystem — government, business, and labor — all working towards the same goal: a greater Philippines for every Filipino,” he said.
From L-R: Prudential Guarantee & Assurance First Vice-Chairman Peter G. Coyiuto; GT Capital Holdings Vice-Chairman Alfred V. Ty; JG Summit Holdings President and Chief Executive Officer Lance Y. Gokongwei; National Economic and Development Authority Secretary Arsenio M. Balisacan; BusinessWorld President and CEO Miguel G. Belmonte; Ambassador of Israel to the Philippines Ilan Fluss; BusinessWorld Executive Vice-President Lucien C. Dy Tioco; and Angkas CEO George Royeca — Photo by Jesse Bustos | The Philippine Star
This year’s forum also delved into the various opportunities for the Philippine economy, particularly through the country’s seen next drivers of growth, in the succeeding sessions.
In the first panel, “Strengthening the Backbones of Nationwide Progress,” Aboitiz InfraCapital, Inc. Head of Economic Estates Rafael F. de Mesa shared his insights on infrastructure development; and George I. Royeca, CEO of ride-hailing service Angkas, shared his knowledge of the transportation industry. Meanwhile, Emmanuel “Manny” L. Estrada, vice-president for regulatory development and strategy at Globe; and Jesus C. Romero, senior executive vice-president and chief operating officer of Converge ICT Solutions, shared their insights on the state of the telecom industry.
Priming the following discussions on the digital economy, World Economic Forum Head of the Regional Agenda, Asia-Pacific Joo-Ok Lee delved into the negotiations on the Association of Southeast Asian Nations (ASEAN) Digital Economy Framework Agreement (DEFA) in a presentation titled “Maximizing the Potentials of the ASEAN Digital Economy.”
Jerro G. Ngo, CEO of EastWest; Carlos Barrera, CEO of e-commerce platform Lazada Philippines; Grace Vera Cruz, country head of ride-hailing and online payments platform Grab Philippines; and Mitch Padua, group chief product officer of digital bank Maya, shared their perspectives on “Digital Economy: A Vital Engine for Future Growth,” heralding the second half of the forum.
Following that, the panel discussion on “Safeguarding Digital Economic Growth through Security and Trust” was a fitting addition, as Ingrid Beroña, the chief risk officer of mobile payment platform GCash, shared her perspectives on financial security. Alexander K. Ramos, executive director of the Cybercrime Investigation and Coordinating Center, spoke about government activities and cybersecurity risks. Police Col. Jay D. Guillermo, chief of the Cyber Response Unit at PNP Anti-Cybercrime Group, also joined the discussion with their experiences in detecting and addressing cybercrimes; while Chito Jacinto, vice-president and chairman of membership and event at Information Security Officers Group, pointed out the importance of information security officers in safeguarding organizations’ assets in the digital world.
Furthermore, Maria Veronica F. Magsino, deputy director-general for finance and administration of the Philippine Economic Zone Authority, and Olivia Limpe-Aw, president and chief executive officer of Destileria Limtuaco & Co., Inc., joined the panel discussion titled “Maximizing the Potentials of the Philippine Manufacturing Sector,” highlighting the government’s efforts in boosting the said industry and emphasizing the sector’s long-standing significance to the economy as well as its most pressing concerns, respectively.
Lastly, Francis Giles B. Puno, president and chief operating officer of First Gen Corp.; Raymond B. Ravelo, chief sustainability officer of Manila Electric Company (Meralco); Atty. Richard J. Nethercott, president and CEO of Independent Electricity Market Operator of the Philippines; and Jaime Z. Urquijo, chief sustainability and risk officer of Ayala Corp. and board director of ACEN, comprised the panel that discussed “Sustaining Economic Development through Sustainable Power — Navigating Adversities & Opportunities in the Power Sector.”
The forum was hosted by Danie Laurel, news anchor for Cignal TV, with panel moderation by BusinessWorld Editor-in-Chief Cathy Rose A. Garcia, BusinessWorld reporters Luisa Maria Jacinta C. Jocson and Justine Irish D. Tabile, BusinessWorld Corporate Editor Arjay L. Balinbin, and TV5 News Anchor Jester Delos Santos.
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This edition of the BusinessWorld Economic Forum was presented by BusinessWorld Publishing Corp., in partnership with GCash, Ayala Corp., and ACEN; with the support of gold sponsors Globe, Metro Pacific Investments Corp., and Globaltronics.
The forum was also supported by silver sponsors BDO Unibank, Converge ICT Solutions, Inc., Federal Land, Inc., Federal Land NRE Global, Inc., First Gen Corp., GT Capital Holdings, Inc., Lazada, Megaworld Corp., National Grid Corporation of the Philippines, Philippine Amusement and Gaming Corp. (PAGCOR), San Miguel Corp., SM Supermalls, Smart Communications, and Toyota Motor Philippines.
Bronze sponsors included Aboitiz Equity Ventures, Astoria Hotels and Resorts, Citicore Energy Philippines Corp., Megawide, EastWest Banking Corp., FWD Philippines, Meralco, Robinsons Land Corp., Santé International, SGV, SM Investments Corp., and Wilcon Depot.
Partner organizations for the event included the Asian Consulting Group, American Chamber of Commerce of the Philippines, Bank Marketing Association of the Philippines, British Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Franchise Association, and Philippine Retailers Association, and JLCG Creative and Marketing Solutions; with media partners One News and The Philippine STAR.
L-R: BusinessWorld Reporter Justine Irish D. Tabile (moderator); Maria Veronica F. Magsino of Philippine Economic Zone Authority; and Olivia Limpe-Aw of Destileria Limtuaco & Co. — Photo by Walter Bollozos / The Philippine Star
By Mhicole A. Moral, Special Features and Content Writer
The manufacturing industry in the Philippines continues to be a vital pillar of the national economy, contributing approximately 19% of the gross domestic product (GDP) as of 2022. Employing about 7% of the country’s labor force, the sector is not only a significant source of employment but also a dynamic driver of economic growth.
In a forecast reported by McKinsey & Company, the manufacturing sector in the Philippines is projected to grow in tandem with the national GDP at a rate of around 6% between 2023 to 2024.
The BusinessWorld Economic Forum, with the theme “PH Next: Growth Drivers,” further discussed predictions about the future of the Philippine manufacturing landscape and the opportunities and challenges ahead last May 22 at Grand Hyatt Manila.
Maria Veronica F. Magsino, Deputy Director-General for Finance and Administration of the Philippine Economic Zone Authority (PEZA), emphasized their role in fostering a conducive environment for manufacturing growth.
“We, at PEZA, believe that we have strong pull factors in the country that enable us to attract investments, and because of our huge market potential and favorable business regulations, the Philippines remains an attractive base for offshore activities,” the PEZA executive explained.
Ms. Magsino referred to the recent surveys by the Japan External Trade Organization (JETRO) and Japan Bank for International Cooperation (JBIC), which highlight these advantages. They cited high productivity, lower labor costs, and strong regulatory support as key factors.
PEZA’s operational model further enhances this appeal by offering a ‘one-stop, non-stop’ shop for permits and services, ensuring efficiency and minimal red tape.
“We aim to create a more competitive business environment by simplifying processes, enhancing transparency, offering targeted incentives for sustainable development, and others. These include ensuring regulatory coherence, reducing regulatory burden, and addressing trade barriers through engagements and partnerships with the government, as well as the private sectors alike,” said Ms. Magsino.
Meanwhile, Olivia Limpe-Aw, President and CEO of Destileria Limtuaco & Co., Inc., provided a nuanced perspective on the manufacturing sector, acknowledging both its vast potential and the significant hurdles that the country needs to overcome.
She pointed out the discrepancy between the manufacturing and services sectors’ contributions to GDP, suggesting that the former has more room for substantial growth. For instance, the Philippines has a large domestic market that can drive manufacturing demand with a population of 119 million and the highest annual population growth rate in ASEAN.
However, Ms. Limpe-Aw said that one major issue in the sector is the underutilization of natural resources and the skills gap in the labor force. She also highlighted the regulatory complexities that manufacturing companies face, such as needing various permits and communicating with multiple regulatory bodies.
“It’s really that gamut of licenses and regulatory bodies you have to deal with. So, imagine if you are a startup company, it becomes really difficult for you to undertake any manufacturing. So, the easiest way is to just import. But if we keep importing goods, we won’t have the multiplier effect that our country needs,” she added.
Moreover, infrastructure and energy costs are additional barriers. High energy prices deter manufacturing investments, emphasizing the need for affordable and reliable energy solutions. While improvements in telecommunications are under way, further enhancements in infrastructure, such as roads and supply chains, are necessary to support the sector’s growth.
Strategic investments for holistic growth
Philippine Economic Zone Authority Deputy Director-General for Finance and Administration Maria Veronica F. Magsino — Photo by walter Bollozos / The Philippine Star
Ms. Magsino highlighted the role of Special Economic Zones (SEZs) in the Philippines, which are designed to create a conducive environment for business operations, distinct from the outside economic landscape.
PEZA facilitates the movement of goods and services within these zones by managing the necessary permits and regulatory requirements. The PEZA executive emphasized that this streamlined process helps ecozone locators — businesses operating within the zones — comply with government regulations more efficiently.
Currently, PEZA focuses on activities that add significant value: “Right now, we follow the investment priorities plan, but inside the [economic] zones, we push for high-value activities, [such as] mineral processing. We do not register extractive industries for incentives but encourage manufacturing industries to process the minerals that are mined,” Ms. Magsino explained.
She also highlighted the priority sectors like pharmaceuticals, medical and healthcare services, and renewable energy. PEZA has seen these sectors as critical to reducing operational costs and ensuring sustainable development within the economic zones.
On the other hand, Ms. Limpe-Aw advocated for leveraging local resources to produce goods domestically, thereby reducing dependency on imports. She pointed out that trade liberalization in the 1990s led many manufacturers to turn to importing due to cost advantages. However, current geopolitical challenges and rising shipping costs necessitate a shift back to local production.
“I think generally in business, it would be advisable to produce what you already have in this country,” Ms. Limpe-Aw emphasized. “If we have a lot of this type of raw material, it would be better to manufacture and process it here, and then sell it here or export the excess.”
Creating a conducive manufacturing environment
Over the past three to four years, the manufacturing sector has experienced a growth rate of 3%, according to Ms. Magsino. Even if the growth is relatively slow compared to other industries, PEZA remains committed to enhancing the sector’s performance by providing vital services to locators (businesses operating within economic zones).
“We do not only register export activities, but rather, we would also be welcoming manufacturers or activities geared towards the domestic market. So, one is information [dissemination], and two, we are trying to bring down the cost,” she added.
Ms. Magsino emphasized the importance of upskilling the workforce to meet evolving industry demands. PEZA is partnering with various institutions to bridge the gap between locators and domestic manufacturers through initiatives like reverse trade fairs. These events enable locators to source products locally, enhancing the overall manufacturing ecosystem both inside and outside the economic zones.
PEZA is also collaborating with banking institutions and multilateral agencies to ensure that locators have access to necessary knowledge and resources. “We have partnered with them to be able to bring information, to bring knowledge to our locators, as well as get our locators even compliant with the requirements on environment in the global market,” she said.
Meanwhile, Ms. Limpe-Aw expressed optimism about the potential for growth in the manufacturing sector, stressing the need to simplify processes and create a more business-friendly environment. She pointed out that the complexity and risk associated with manufacturing deter many potential entrepreneurs.
Destileria Limtuaco & Co., Inc. President & CEO Olivia Limpe-Aw — Photo by Walter Bollozos / The Philippine Star
“There’s a lot of risk to manufacturing. You may produce a good, a particular product, but you’re not sure if it’s going to take off. So, if we make it more conducive and simpler for businesses, I think there’s no reason why we can’t be bigger than what we’re doing now,” said Ms. Limpe-Aw. “We should really grow that [contribution to GDP] number. We should really be bigger than that, given our domestic market and our potential to export.”
Regarding the impact of artificial intelligence (AI) on manufacturing, Ms. Limpe-Aw acknowledged the wide range of manufacturing activities, many of which are labor-intensive and not easily automated. Hence, she believes AI will not replace jobs but rather shift the nature of work, eliminating mundane tasks and enabling workers to focus on more critical functions.
Ms. Magsino shared a similar view, suggesting that AI’s integration into manufacturing will necessitate reskilling the workforce to adapt to new technologies. She believes AI will complement human labor rather than replace it, potentially creating new economic activities and employment opportunities.
She added, “I do not think it will do the thinking portion in an economic activity; that should still be left to humans. In addition to that, if the activities would make use of AI, then it will bring forth other activities, other economic activities where human labor will also be helpful.”
Strengthening the manufacturing sector
Reflecting on PEZA’s 29 years of service, Ms. Magsino noted the agency’s role in fostering collaborations between the private sector and the government. These partnerships have been instrumental in driving economic growth and supporting the expansion of various industries within the country.
She also acknowledged that the dynamic nature of both global and domestic markets necessitates a continuous evolution of strategies: “[PEZA] will continue what we are doing. That is for the short term. But of course, as we go along, as technology moves forward, as new demands for new activities are required, we will adjust to that.”
Meanwhile, Destileria Limtuaco, a company with a rich 172-year history, has proved the relevance of manufacturing industry in the country’s development: “For as long as there are consumers, there is always room for growth for the manufacturing sector,” said Ms. Limpe-Aw.
Both leaders emphasized the importance of the manufacturing sector in the broader economic context. They called for concerted efforts to strengthen the industry, recognizing its potential to drive substantial economic benefits.
“Let’s not forget manufacturing. Let’s not forget the brick-and-mortar industry. We can’t eat digital products, but we can eat the food that we manufacture,” said Ms. Limpe-Aw. “We have a lot of young people. We have to absorb them in the labor industry. We have to absorb them in the economy and make them productive members of society. After all, manufacturing is one of the industries that can give and contribute to the biggest multiplier effect in our economy.”
L-R: BusinessWorld Corporate Editor Arjay L. Balinbin (moderator); Ingrid Beroña of GCash; PCol. Jay D. Guillermo of PNP Anti-Cybercrime Group; Chito Jacinto of Information Security Officers Group; and Alexander K. Ramos of Cybercrime Investigation and Coordinating Center — Photo by
Strategies for cyber resilience in organizations
By Jomarc Angelo M. Corpuz
Strengthening the security and resilience of the country’s cyberspace is key in making an already rising digital economy become a driving force for growth in the Philippines. With Google’s “e-conomy SEA report” indicating a growth of 13% from $22 billion in 2023 to more than $24 million in 2024, it is evident that the digital sector holds significant potential for economic advancement.
The rapid rise of the digital economy in the Philippines presents both opportunities and challenges. Capitalizing on this momentum, safeguarding digital assets and more were discussed during the fourth panel discussion at the BusinessWorld Economic Forum on May 22 at the Grand Hyatt Manila.
GCash Chief Risk Officer Ingrid Beroña — Photo by Walter Bollozos / The Philippine Star
The economic forum gathered experts from both the private and public sectors including Ingrid Beroña, chief risk officer of GCash; Police Col. Jay D. Guillermo, chief of the Cyber Response Unit at the Philippine National Police (PNP) Anti-Cybercrime Group (ACG); Alexander K. Ramos, executive director at Cybercrime Investigation and Coordinating Center (CICC); and Chito Jacinto, vice-president and chairman of membership and events at Information Security Officers Group (ISOG).
Information Security Officers Group Vice-President Chito Jacinto — Photo by Walter Bollozos / The Philippine Star
In his opening statement, Mr. Jacinto outlined three essential things that companies need to do to digitalize and protect their digital assets and information assets from potential cyber threats and data breaches.
The first of these essentials is the technology for a company’s information technology infrastructure. He noted that the “easy part” of digital protection has to be set up and done properly for the infrastructure to be effective.
However, technology alone is not enough; Mr. Jacinto mentions that robust processes must also be established to ensure the effective use of equipment and technology.
Finally, the third, and weakest link, is people. The ISOG officer acknowledges that even experienced personnel in the field of cybersecurity, like himself, can occasionally have lapses. This problem underscores the importance of continuous training and awareness programs to minimize human error and reinforce a culture of security within the organization.
“Please make sure, take note, that when you implement your ITs, IT infrastructure is dependent on three things: people, processes, and technology. If any one of these three fails, your infrastructure fails as well,” Mr. Jacinto said.
Meanwhile, Ms. Beroña, representing the private sector, strongly advocated for increased government support in safeguarding the nation’s cyberspace to create a more secure digital environment that benefits businesses and consumers alike.
“We are only as good as how much support, and how much investment our government gives into this space… We have really good programs and initiatives that we have worked on with some of our local authorities to really push through with safeguarding the cybersecurity world of the Philippines and we are continuously working with them,” she said.
Philippine National Police Anti-Cybercrime Group Cyber Response Unit Chief PCol. Jay D. Guillermo — photo by Walter Bollozos / The Philippine Star
Mr. Guillermo, serving as a government official, pushed for stringent measures such as account freezing and suspension in response to scams and fraud on online platforms. He argued that these decisive actions are essential to deter cybercriminals and protect consumers from financial losses.
“On the part of the private sector, maybe you can have your own regulations and it must also be aligned with the policies of the government, because every time the victims will be asking, ‘When can we get our money back?’ There must be a policy of freezing and recovery of this amount of money that was taken from the victims,” he said.
Additionally, the police officer highlighted some of the problems law enforcement faces when investigating cybercrimes across multiple platforms in the digital space. He noted that the more times ill-gotten money changes hands, the harder it is for authorities to recover it.
“There is an interconnectivity with all financial institutions including those like online platforms, online shopping, and these mobile transportation apps. All of these applications are interconnected wherein you can transfer money to these applications. So that is the challenge for law enforcement because money moves very fast,” Mr. Guillermo added.
Cybercrime Investigation and Coordinating Center Executive Director Alexander K. Ramos — Photo by Walter Bollozos / The Philippine Star
Furthermore, Mr. Ramos suggested a shift in the focus of improvement for online services from speed to security. Recognizing the increasing significance of cybersecurity in today’s digital landscape, he emphasized the necessity of redirecting efforts toward fortifying the security infrastructure of online platforms and transactions.
“Everybody is competing for speed. Delivery of services, speed is a factor and with the challenges we are seeing now, I believe we have to give the consumer the upper hand. We have to give them the control over their transactions. Right now, most online transactions rely on speed only, security is at the back end of it,” Mr. Ramos said.
The executive director of the CICC also campaigned for the advancement of technological infrastructures in companies, and the promotion and skill enhancements of IT practitioners in order to bolster cyber defenses.
“We must protect this industry both from a technological standpoint and the empowerment of our skilled laborers who operate this technology. Cybersecurity is not just about safeguarding the technology, but also about empowering the users. That is the direction where we are going right now, increasing digital literacy,” Mr. Ramos explained.
The insights shared by industry experts at the BusinessWorld Economic Forum underscore the importance of prioritizing cybersecurity measures for businesses in the digital age. As the Philippines’ digital economy continues to grow exponentially, both the private and public sectors must recognize that safeguarding their digital assets and infrastructure can lead to the sustainable growth of the Philippines’ next economic driver.
L-R: News5 Anchor Jester Delos Santos (moderator); Francis Giles B. Puno of First Gen Corp.; Raymond B. Ravelo of Meralco; Atty. Richard J. Nethercott of IEMOP; and Jaime Z. Urquijo of Ayala Corp. and ACEN — Photo by Walter Bollozos / Philippine Star
By Mhicole A. Moral, Special Features and Content Writer
According to consulting firm giant McKinsey & Company, the Philippines is considered as the fastest-growing economy in 2023 across Southeast Asia with 5.6% growth rate. This year, it is predicted that the country will remain resilient despite global economic pressures.
The same report mentioned that the energy and power sector will serve as one of the key drivers in the country’s progress and development, with a potential to grow by 7% in 2024.
The recent BusinessWorld Economic Forum, held last May 22 at Grand Hyatt Manila, emphasized the contribution of sustainable power and renewable energy in the country’s economic development. A panel discussion highlighted the collaborative efforts of key industry players and their shared commitment to advancing sustainable and responsible practices in the country’s power sector.
In his opening statement, Francis Giles B. Puno, president and chief operating officer (CEO) of First Gen Corp., detailed their journey in pioneering investments in gas-fired power plants and later shifting focus towards renewable energy. He also highlighted their position as the largest producer of renewable energy in the Philippines, attributing much of this success to their geothermal plants, which provide a more reliable baseload power.
“It’s exciting for us because the market continues to grow. We’re now in a position where the narrative across ourselves, including our friendly competitors, is sort of converging, where we know there’s growth and a need for investments. Everyone knows that there’s a need to decarbonize and produce more electricity coming from cleaner and renewable energy sources,” Mr. Puno added.
Meralco Chief Sustainability Officer Raymond B. Ravelo said that renewable energy will be key not only to economic growth but to lasting sustainable progress.
Mr. Ravelo also emphasized the importance of social impact alongside decarbonization, noting that Meralco aims to leverage electricity to enhance education, water access, healthcare, and livelihood productivity in communities.
Meralco Chief Sustainability Officer Raymond B. Ravelo — Photo by Walter Bollozos / The Philippine Star
“[We] are very much aware that sustainability goes well beyond going green and decarbonizing. So, we’ve identified a number of social impact areas where we can use electricity as an enabler to power better lives for communities,” said the chief sustainability officer.
Jaime Z. Urquijo, chief sustainability and risk officer of Ayala Corp. and board director of ACEN, shared the impressive growth trajectory of ACEN, transforming from zero megawatts 15 years ago to five gigawatts of renewable energy capacity today. He also highlighted the significant opportunities in the Philippine energy sector, driven by the country’s growing economy.
“As we know, the Philippines is a growing economy, and a growing economy will always need a lot of energy, a lot of power. And so, the big decision now is how a lot of that new capacity is really going to be sort of built out,” said Mr. Urquijo.
ACEN aims to expand its capacity to 20 gigawatts by 2030, with a substantial portion of this growth occurring in the Philippines.
“If you look at the installed capacity that is going to be built out between 2022 and 2030, it’s about 17 gigawatts of solar and wind capacity. For us, we see that as an incredible opportunity; and ACEN is planning, of course, to participate in that,” he added.
The president and chief executive officer of the Independent Electricity Market Operator Philippines (IEMOP), Atty. Richard J. Nethercott, introduced the role of IEMOP in managing the Wholesale Electricity Spot Market (WESM) in the country.
“For last year, the average spot transaction, ranges around to roughly 18% of the total generation sold in the industry, was transacted through the WESM. IEMOP acts as the central registration body of our retail market,” he explained.
Atty. Nethercott also mentioned that IEMOP acts as the central body under programs like Retail Competition Open Access (RCOA) and the Green Energy Option Program (GEOP) to promote the purchase of renewable energy in the country.
Transition to renewables
First Gen Corp. President and COO Francis Giles B. Puno — Photo by Walter Bollozos / The Philippine Star
Referencing the aim of the Department of Energy’s Philippine Energy Plan to increase the renewable energy’s share from 20% to 35%, and eventually to 50%, First Gen’s Mr. Puno said this transition requires support from gas-fired power plants.
“I think, in a way, the conclusion or the recommendation of the plan shows that gas has to keep up with the growth of renewable energy. So, the space that we play in is really in both areas. The question is: Can we live without gas? But, we are realizing that it’s probably almost impossible to live without the gas-fired [plants right now].”
First Gen has also been developing liquefied natural gas (LNG) facilities to replace depleting Malampaya gas reserves to ensure a reliable energy supply. Mr. Puno noted that geothermal energy’s ability to provide consistent power makes it an attractive option for consumers, especially those looking to green their supply chains.
Meanwhile, Meralco’s comprehensive sustainability strategy has emphasized its dual commitments to renewable energy.
“From a distribution standpoint, we’ve committed to securing 1,500 megawatts of renewable energy power supply contracts in the next five to seven years. On the flip side, from a generation standpoint, we’ve also committed to building 1,500 megawatts of attributable renewable energy capacity in this decade,” Mr. Ravelo announced. “I’m happy to share that we’ve actually overshot that commitment. As of today, we’ve already secured contracts in the order of about 1,800 megawatts. So that, in effect, is largely done. So, we’re trying to see if we can push that further, again, in support of the government’s renewable portfolio standards.”
Meralco is also focused on electrifying its entire franchise area, including remote and off-grid communities. Innovative solutions like sustainable microgrid systems, which combine solar power and battery storage, have been deployed in islands such as Cagbalete, Quezon and Isla Verde, Batangas.
On the other hand, Mr. Urquijo said that in addition to the actual renewable energy plants, the country’s infrastructure must support the growth of the renewable energy sector as projects usually take this into consideration.
“A lot of renewable energy plants are built in relatively inaccessible areas. And so, a lot of infrastructure has to come along to really support that growth, which we’re extremely excited about,” he added.
Currently, 80% of ACEN’s energy needs are met by renewable sources, and Mr. Urquijo expressed the company’s commitment to increasing this percentage across the portfolio of Ayala Corp.
Renewable energy industry evaluated
IEMOP President and CEO Atty. Richard J. Nethercott — Photo by Walter Bollozos / The Philippine Star
Atty. Nethercott described the current state of renewable energy in the Philippines as “very satisfactory to excellent,” while acknowledging the remaining significant challenges.
According to the IEMOP president, the government has set ambitious targets to increase the share of renewable energy to 35% by 2030 and 50% by 2040.
“The government, together with the private sector, is collectively doing what they can, not only to contribute and meet this target. It’s not only important from the point of view of sustainability, but we must also talk about security,” Atty. Nethercott explained.
However, he pointed out that the country’s energy mix is still heavily reliant on imported fuels, which account for 65%-70% of the supply.
Supporting this statement, Mr. Puno emphasized the massive scale of investment required to transition from non-renewable energy.
For instance, the intermittent nature of solar energy, which only operates at 17%-18% capacity due to factors like night-time and weather conditions, has been limiting the transition.
“You need five times the amount of solar just to have a chance of building and producing that same amount of coal,” Mr. Puno added.
Currently, 60% of the country’s energy comes from coal, so in order to achieve net-zero emissions by 2050, it will need to be replaced with renewable energy sources.
Meanwhile, Meralco’s chief sustainability officer identified three primary challenges in scaling renewable energy: economics, regulatory conditions, and technical difficulties.
“Fossil fuels still provide reliable and affordable baseload power today. For [renewable energy] to be dispatchable, for them to be able to provide 24/7 power, we would need to attach certain technologies, such as battery energy storage technologies, which are very expensive,” Mr. Ravelo noted.
Additionally, renewable energy plants require significantly more real estate compared to fossil fuel plants, adding another layer of complexity to their deployment.
“Each of these challenges must be carefully studied and addressed to enable widespread adoption of renewable energy,” said Mr. Ravelo.
He also highlighted the need for significant investments in the grid to manage the intermittent energy from renewable sources. Regulatory conditions, such as the least cost mandate for electricity suppliers, pose another challenge.
The discussion further delved into the need for a regulatory environment that empowers consumers.
Mr. Puno referenced the Electric Power Industry Reform Act (EPIRA) of 2001, emphasizing its intent to deregulate the energy market and provide consumers with more choices.
“What we’d like to see is really for the law to be implemented the way it was envisioned as it was passed 23 years ago. Meaning to say, if I was a consumer, I’d like to be given the choice to where I source my power from,” he explained. “So that if I want to buy from coal, [it’s] fine. But if I want to buy from cleaner renewable sources, then I have that choice.”
He also pointed out that while large industrial users benefit from competitive electricity prices due to market demand, residential consumers often remain a “captured market” with limited options.
Progress and opportunities
According to the panelists, the growth and progress of the renewable energy sector lies in the financial, technological, and regulatory aspects.
“During COVID, we recrafted our mission, and that mission is to forge collaborative pathways towards a decarbonized and regenerative future,” Mr. Puno said. “A regenerative future is an escalated definition of what sustainability is. And so, what we have to do as a country is really approach it, we think, from that perspective. For us, it means a lot of collaboration. It needs a lot of investment [and] a lot of effort. We can start off with existing laws.”
Mr. Urquijo highlighted the immense potential in the renewable energy sector, particularly with the Department of Energy’s plans to add 17 gigawatts of solar and wind capacity by 2030.
Ayala Corp. Chief Sustainability & Risk Officer and ACEN Board Director Jaime Z. Urquijo — Photo by Walter Bollozos / The Philippine Star
“I think, just really echoing this incredible opportunity that’s in front of us, we see that as an incredibly exciting opportunity to be involved in,” he mentioned.
In addition, Meralco’s efforts to expand renewable energy capacity, including the construction of the world’s largest solar facility, highlights the company’s thrust to economic development and sustainable power.
The Meralco chief officer also stressed the importance of partnerships in achieving sustainability goals.
“We have four Ps to our sustainability agenda: power, planet, people, and prosperity. But really, all of this will not stick if there’s no partnership,” Mr. Ravelo said.
Atty. Nethercott emphasized that the sector is not suffering from a lack of interest but rather faces several challenges.
“There’s interest investments in RE (renewable energy). However, it requires a lot of money. Renewable energy is technology-driven and technology needs capital for it to be introduced in the country,” he said.
The IEMOP president also pointed out the importance of collective responsibility to achieve the goal of affordable and clean energy.
“Of course, stakeholder commitment. You cannot talk of sustainability without mentioning the concept of stewardship. All of us are stewards of our one and only planet. And so, we all must be responsible stakeholders to reach the commitment that we have made to make available, affordable, clean energy.”
For 87 years, government-owned corporation Government Service Insur-ance System (GSIS) has played a crucial role in offering extensive insurance and social security to public servants.
GSIS started out in 1937 with life insurance program as its only business, and it later expanded its services to include old-wage, invalidity disability, and survivorship benefits as it transformed into a more comprehensive social insurance service in 1951.
To strengthen social security among government workers, various important laws were passed, one of which is Republic Act (RA) 8291, also known as the Government Insurance Act of 1997, which provides insurance coverage, oversees compensations programs for employees, and provides benefits for injuries, disabilities, and death in the public sector.
Among these programs include the Employees’ Compensation Program, which offers social security benefits for government employees with work-related incidents and General Insurance Fund that provides insurance coverage for all government properties.
GSIS is essential in providing social security, managing funds prudently, enhancing non-life insurance coverage, maintaining quality corporate governance practices, and cultivating partnerships.
As of 2024, GSIS boasts 2,610,338 members and pensioners. Among them are 2,034,319 active members and 576,019 old-age and survivorship pensioners, underscoring the significant impact of the department in the public sector. Moreover, in December 2023, GSIS recorded P1.699 trillion in assets.
By 2028, the institution envisions becoming a world-class pension and insurance institution, leveraging digital platforms to deliver excellent customer experience and supporting the country’s journey to a better tomorrow.
According to a recent report, GSIS saw an impressive performance within the first quarter of 2024. The institution witnessed a significant rise in net income (21%); revenues (17%), totaling to P85 billion in the first quarter; and global investments (45%) on a year-on-year basis.
“Our commitment to support the nation’s growth story saw increases in GSIS investments in key sectors such as real estate, infrastructure, food, energy and mining. Further, the GSIS is boosting revenue streams as it focuses on building efficiencies in its various businesses,” GSIS President and General Manager Jose Arnulfo “Wick” A. Veloso said.
“GSIS would like to be a catalyst supporting investments in various sectors to bring down the cost of power and allow vertical integration for mining companies to process raw materials into intermediate and finished products,” he added.
To further strengthen its services, GSIS revealed new developments on its services. Among these developments are affordable housing programs, low-interest loan options, and added features on the GSIS Mobile Touch app. The main goal of these initiatives is to address financial and housing needs, while simultaneously improving government services.
Further continuing excellency on its services, GSIS saw a 12% increase in insurance premiums during the first quarter, growing from P2.65 billion to P2.98 billion.
“The sustained momentum of the performance of GSIS has proven to be a catalyst of the economic development of the Philippines through supporting both the public and the private sectors.”
“GSIS is aggressively campaigning for the protection of all government insurable assets and interests. We protect the government’s budget and individual programs against unexpected insurable losses such as fire, earthquakes and typhoons. And more importantly, we are able to pool long-term funds and put them in investments to help grow the overall economy,” he added.
Digitalizing services
Another recent development is its significant progress in digitalizing their services, specifically with the GSIS Mobile Touch app. This app serves as a digital platform for members and pensioners to conveniently access information and services. It offers features like checking records, loan and insurance applications, and more.
“As a government agency that is at the forefront of innovation, we are proud to have been able to launch the Touch Mobile App that is accessible by hundreds and thousands of our members,” Juan Philip S. Evangelista, senior vice-president for Information Technology and Service Group of GSIS, said in another statement last year. “We look forward to seeing the app become the next major communication and transaction channel of GSIS, allowing more Filipinos to have seamless access to our services without traveling to the GSIS branches or agency offices in the country.”
Recently, GSIS unveiled a new feature called facial recognition, which allows elders and disabled pensioners to complete their annual proof-of-life (APIR) using smartphones. This saves them the trouble in physically visiting the GSIS branches for APIR processes.
In an article released by GSIS, in response to protect pensioners and ensure safety from the dangers of extreme heat, GSIS encourages pensioners to use and maximize its online services.
“Our pensioners are among the most vulnerable during these extreme weather conditions. By enhancing access to our online services, we ensure they can fulfill their requirements without compromising their health,” Mr. Veloso said.
More recently, GSIS has launched the Property Inventory Application (PIA). In efforts to enhance the management and insurance of state assets, particularly government infrastructure, this internally-developed app aims to fast-track the submission of annual property inventory forms and thus help solve the problem of incomplete or erroneous data arising from manual processes.
“With PIA, we are not just making it easier to manage property records, we’re also enhancing how we assist government agencies in protecting their assets through insurance. It’s a major step towards strengthening our country’s infrastructure,” Mr. Veloso was quoted as saying in a BusinessWorld report last May 20.
Stronger connections
Meanwhile, for partnerships, GSIS is working with the Philippine Government Employees Association (PGEA) for better work and social welfare for government employees across the country.
“We are committed to improve our services to government workers. This collaboration with the PGEA plays a crucial role in keeping workers aligned with the latest developments and services of GSIS throughout the bureaucracy. PGEA provides us very good feedback,” Mr. Veloso said.
Sharing the same sentiment, Esperanza Ocampo, national president of PGEA, pressed the importance of such partnership.
“The foundation of our partnership with GSIS is transparent and effective communication through continuous dialogue and participative engagement,” she said. “Thus, ensuring that members and retirees receive maximum benefits from their contributions through efficient management of the pension fund.” — Angela Kiara S. Brillantes
L-R: Rafael F. de Mesa of Aboitiz InfraCapital, Inc.; George I. Royeca of Angkas; Jesus C. Romero of Converge ICT Solutions Inc.; and Emmanuel L. Estrada of Globe — Photo by Jesse Bustos | The Philippine Star
By Angela Kiara S. Brillantes, Special Features and Content Writer
The Philippines remains as a shining example of economic progress, with industries like infrastructure, telecom, and mobility leading the way in growth. As these sectors experience continuous growth, how, then, can they keep up this momentum and further enable the country’s economic growth in the coming years?
In the first panel discussion of this year’s BusinessWorld Economic Forum last May 22, panelists representing significant players in both physical and digital infrastructures shared their insights and outlook on the challenges and opportunities for infrastructure to contribute to the nation’s economic progress.
Among the panel’s takeaways, behind successful recent development in the Philippines is connectivity, which has seen to be at the center of everything. More than improving economic prosperity, connectivity has the power to transform industries and societies; and, according to George I. Royeca, chief executive officer at Angkas, the power of connectivity has recently been found in creating jobs and improving Filipinos’ living standards.
“The means for connectivity is used for livelihood of Filipinos. There are a lot of jobs that are being facilitated through mobile platforms or mobile internet-enabled platforms. That gives you a preview of the potential for human capital and how we can use technology for the masses to uplift their lives, create value for them, and increase their value while doing so,” Mr. Royeca said.
Connectivity is evolving and transforming mobility, and creating better cities to live in. Ride-hailing apps like Angkas leveraged this opportunity to address transport needs in the Philippines as mobility has become a more essential part of daily life.
Angkas Chief Executive Officer George I. Royeca — Photo by JLCG Creative and Digital Solutions
“Mobility for us is like oxygen; you need mobility wherever you are,” he stressed. “At that level, we focus on the workforce and making sure we give them an affordable and safe way to the workplace. It is something that is always going to be needed no matter what,” he said.
Meanwhile, Rafael F. De Mesa, head of economic estates at Aboitiz InfraCapital, Inc., shared positive prospects that await the Philippines, among which is that it is one step forward into becoming an attractive investment destination.
“For us, in developing economic estates, we’re very encouraged [by] the interest we are seeing as we move around in the region. We’re on the radar already. The big part of that is the government’s push to get out there and promote the country and highlight the benefits of locating here, as well as the reforms that have been made to make it an attractive investment. We’re quite optimistic. We’re positioning ourselves to take advantage of that interest in the Philippines,” Mr. De Mesa said.
UNLOCKING OPPORTUNITIES
Further into the digital infrastructure, digital connectivity is pertinent today, especially, when it has a profound influence in daily life.
Globe Vice-President for Regulatory Development and Strategy Emmanuel L. Estrada — Photo by JLCG Creative and Digital Solutions
Emmanuel “Manny” Estrada, vice-president for regulatory development and strategy at Globe, said the Philippines is at the right track of embracing digitalization, adding that digital connectivity has enabled people to access technology and online services that fuel development moving forward.
“Everyday, we see how the internet and IT technology impact our daily lives, from social media, connecting to friends, to doing your daily jobs,” Mr. Estrada explained. “In our daily lives, we cannot do without a solid connectivity, even our ride-hailing apps and online selling all depend on that.”
Mr. Estrada also pointed out the need for further investments and innovations in connectivity as development becomes more reliant on digital connectivity.
“While connectivity is being commoditized, there is also room for growth to continue to invest in connectivity and innovate for the services, because everybody needs to go to digital,” he said.
Furthermore, Jesus C. Romero, senior executive vice-president and chief operations officer at Converge ICT Solutions, Inc., shared their company is a few steps ahead as the misconception of expensive internet is decreasing in recent years due to the rise of low-end products that are both affordable and accessible to Filipinos.
“[Before], broadband was an area that was totally underserved. The Philippines is geographically positioned to being a telecom hub. The first thing we did is to adjust rates so that it becomes more affordable, make a nationwide fiber access network. The industry needs to make sure that they can provide the service, make it available and affordable so that Filipinos can consume it,” Mr. Romero shared.
“Today, the whole fiber broadband industry is more vibrant; we’ve all moved forward to make this a better market serving more customers,” he added. “Last year, we took another step. We took fiber broadband down to an affordable level for the masses.”
SIGNIFICANCE OF TALENT
As digitalization becomes more of a necessity, the country has been reaping its benefits as efforts in this area continue to increase. How, now, can the country fully utilize it toward even more substantial growth?
Mr. Royeca of Angkas underscored the significance of tapping into the potential of the young talent and workforce in the country. One way to do this is to upskill employees.
“[W]e have very talented developers; [but] the problem is experience. [Yet,] we know what we want; we know what kind of skills that we want. This gap is an opportunity because the already talented young population that we have, we can accelerate their growth into highly skilled workers just in terms of this paradigm shift,” he said.
For their part at Angkas, Mr. Royeca noted that they seek to present the ride-hailing app more as a platform that can create financial opportunities and uplift lives, especially in informal sector.
For this to be realized, however, Mr. Royeca highlighted the need for inculcating financial literacy and a “nanopreneur” mindset among its riders.
“Financial literacy is not just knowing how to loan or getting your documents ready, but it’s a mindset. It’s about how we move them (motorcycle drivers) from a single-income household to a dual-income household,” he explained. “A lot of these people look at motorcycles as a way for their economic freedom or to get out of the poverty line. It’s not as simple as going to the motorcycle business, but how do we reinforce that nanopreneur [mindset] to be able to expand and thrive.”
Converge ICT Solutions, Inc. Senior Executive Vice-President and Chief Operations Officer Jesus C. Romero — Photo by JLCG Creative and Digital Solutions
Mr. Romero of Converge, meanwhile, mentioned of the need for interventions in upskilling new entrants to the workforce.
“There is always this issue that there’s supposed to be a lot of graduates; but when you look at [them], they’re good enough to hire but still lacking,” he shared. “One of the things we’re working on with other parties is [determining] what kind of intervention will be made available to them in the area of digital services where their skill sets can be dramatically improved. What content can be put there, monetized, subsidized, or something people can afford? Let’s multiply this concept. We’re trying to put it together and make it available.”
Mr. De Mesa of Aboitiz InfraCapital also emphasized the need for honing skills and cultivating better leaders.
“Today, our advantage is our young and growing population, but the question is how we evolve later and ensure this growth is sustainable. There’s a need to develop better leaders, people with more interpersonal skills, it’s a much wider thing but it’s an opportunity, we just need to plan for it and take advantage of it,” Mr. De Mesa said.
A NATIONWIDE APPROACH
Also emphasized during the discussion was the collaborative approach among public sector, private sector, and society as whole.
“The only way to get this done is [to make sure] it is well-socialized and communicated (and the Filipino understands) what is needed to be done, then they’ll be more willing to work together. It is a whole-of-society approach, every single element and stakeholder will be able to contribute to this and push for it and make sure nothing gets sidetracked. Otherwise, it just becomes another coffee-table book at some point.” Mr. Estrada of Globe said.
Aboitiz InfraCapital, Inc. Head of Economic Estates Rafael F. De Mesa — Photo by JLCG Creative and Digital Solutions
For Aboitiz InfraCapital’s Mr. De Mesa, collaborative efforts are key to make the Philippines become an attractive destination for investments.
“With the Philippines, it’s never been a question about its potential. It’s about being able to fulfill that potential. If we cooperate and coordinate more, we can make the Philippines a more compelling destination for investment,” he said.
“Between the government and private sector [and with] things like the Private Sector Advisory Council, I think that sends a strong message to the world about the Philippines being serious in attracting investments,” he added. “I’m hopeful that will continue beyond administration and ultimately be able to fulfill our potential in the long run.”
Adding to this, public-private partnerships are seen to stimulate innovation and bring out the potential of industries for economic development.
“There is strength in partnership with the government because they provide the parameter, landscape, and the platform for which we can do many things. This can be a learning to a lot of agencies, and you need to make these types of mechanism to experiment on innovative strategies on how to unearth the potential of various industries, service, and products,” Mr. Royeca of Angkas said.
CHEMICAL Industries of the Philippines, Inc. is changing its name to Uniholdings, Inc. and will merge with six companies as part of its shift to the real estate business.
The Securities and Exchange Commission (SEC) approved the name change on May 24, the company said in a statement to the Philippine Stock Exchange (PSE) on Wednesday.
The name change aligns with the proposed amendment of its business purpose to engage in property development, it said.
Chemical Industries, which started in 1959, manufactures, sells and distributes industrial chemicals and leases office space, according to its corporate profile on the PSE website.
The chemical segment makes and trades chemical products for water and sewage treatment and inorganic coagulants for the paper industry. It stopped operating this segment since CAWC, Inc., Chemphil Manufacturing Corp., and Kemwater Phil. Corp. ceased operations.
In a separate disclosure on Thursday, the company said its board approved on May 29 the exclusion of Unioil Group, Inc. from a planned merger, as well as the continuation of the merger with six other companies. UniHoldings will become the surviving entity.
These are Addventure Properties, Inc., Citiworld Properties and Development Corp., Exquadra, Inc., Quantumlink Realty Corp., Buklod Realty Corp., and Rivertanks, Inc., Exquadra, Citiworld, Quantumlink, and Buklod are engaged in property leasing.
“After a careful review of the business plan of the company and its affiliates, the company has adopted the above resolutions to clearly delineate and define the lines of businesses within the organization, with Uniholdings, Inc. focusing primarily on businesses related to real estate,” it said.
The company will file the final merger articles and plan and other documents with the corporate regulator, Philippine Stock Exchange and other regulatory agencies, it added.
Uniholdings also changed its office address after the corporate name change.
“Chemical Industries deemed it best to transfer its principal place of business in view of the sale of the land and building where the previous principal office of the corporation was established,” it said.
After the transfer of the principal office to Pasig City, the company would prioritize leasing activities, it added.
The company noted that in implementing the merger, all shares of capital stock of the absorbed companies issued and outstanding on the effective date of the merger would be canceled, subject to valuation confirmation and approval by the SEC.
In exchange for the net assets of the absorbed companies and the canceled shares of their stockholders, 61.98 million Uniholdings shares will be issued, it added.
In another disclosure, Chemical Industries said it expects its public float to go below the 10% minimum public ownership and 20% minimum for backdoor-listed companies.
“The company has been required to do a follow-on offering and hopes to raise the public float to a level compliant with PSE requirements, after the follow-on offer exercise,” it said.
It is still finalizing the merger plan, which it would file with the SEC by next week, it added. — Revin Mikhael D. Ochave
Year on year, the outstanding debt stock jumped by 7.95% from P13.91 trillion in the same period a year ago.
Lastly, Francis Giles B. Puno, president and chief operating officer of First Gen Corp.; Raymond B. Ravelo, chief sustainability officer of Manila Electric Company (Meralco); Atty. Richard J. Nethercott, president and CEO of Independent Electricity Market Operator of the Philippines; and Jaime Z. Urquijo, chief sustainability and risk officer of Ayala Corp. and board director of ACEN, comprised the panel that discussed “Sustaining Economic Development through Sustainable Power — Navigating Adversities & Opportunities in the Power Sector.”
The forum was hosted by Danie Laurel, news anchor for Cignal TV, with panel moderation by BusinessWorld Editor-in-Chief Cathy Rose A. Garcia, BusinessWorld reporters Luisa Maria Jacinta C. Jocson and Justine Irish D. Tabile, BusinessWorld Corporate Editor Arjay L. Balinbin, and TV5 News Anchor Jester Delos Santos.
The forum was also supported by silver sponsors BDO Unibank, Converge ICT Solutions, Inc., Federal Land, Inc., Federal Land NRE Global, Inc., First Gen Corp., GT Capital Holdings, Inc., Lazada, Megaworld Corp., National Grid Corporation of the Philippines, Philippine Amusement and Gaming Corp. (PAGCOR), San Miguel Corp., SM Supermalls, Smart Communications, and Toyota Motor Philippines.
Partner organizations for the event included the Asian Consulting Group, American Chamber of Commerce of the Philippines, Bank Marketing Association of the Philippines, British Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Franchise Association, and Philippine Retailers Association, and JLCG Creative and Marketing Solutions; with media partners One News and The Philippine STAR.
