Home Blog Page 16

Consumer lending seen to sustain momentum

PHILSTAR FILE PHOTO

CONSUMER LENDING in the Philippines is expected to sustain its growth momentum as easing inflation continues to boost economic activity, according to global information and insights company TransUnion.

“Lower inflation is creating a more supportive environment for consumer credit growth. We expect to see stronger repayment capacity among existing borrowers and higher demand among new-to-credit consumers, particularly in the small-ticket and revolving credit segments,” TransUnion Philippines President and Chief Executive Officer Peter Faulhaber said.

Philippine headline inflation cooled to an over five-year low of 1.3% in May from 1.4% in April and 3.9% in the same month a year ago, the government reported last week.

This brought the five-month average to 1.9%, a tad below the Bangko Sentral ng Pilipinas’ (BSP) 2-4% annual target band. The central bank expects inflation to average 2.3% this year.

Meanwhile, outstanding loans of universal and commercial banks grew by 11.12% year on year to P13.25 trillion at end-April, the slowest growth in five months, according to the latest BSP data.

Still, consumer loans jumped by 24% to P1.67 trillion as of April, a tad faster than the 23.9% increase recorded a month prior.

TransUnion said both lenders and borrowers, especially credit unserved and underserved consumers, will benefit from the rise in credit activity driven by robust household consumption.

It said that according to its Q1 2025 Consumer Pulse Study, 37% of the Filipinos it surveyed plan to increase their retail purchases — including clothing, electronics, and durable goods — over the next three months, while 29% expect to boost their discretionary spending, or expenses related to dining out, travel, and entertainment.

Increased retail activity will translate to more transactions using credit cards, buy now, pay later (BNPL) services, and small installment loans for these purchases, it added.

“Close to two-thirds (65%) of surveyed Filipinos in the TransUnion Q1 2025 Consumer Pulse Study said that they have used BNPL, citing it was easy to apply as the primary reason for availing the service,” TransUnion said.

Alongside boosting consumers’ purchasing power, easing inflation is also expected to boost household incomes, which could improve their ability to repay their debt, it added.

“TransUnion predicts that lenders with strong risk management strategies may see marginal improvements in early-stage delinquency ratios over the next two quarters.”

It said lenders should use data-driven strategies to help manage credit risks while growing their portfolios.

“At TransUnion, we’re deeply committed to fostering a more inclusive and resilient credit ecosystem. By equipping lenders with advanced analytics and empowering consumers — especially those that are new to credit — we help ensure that more Filipinos can access the financial tools they need to thrive and participate confidently in the economy,” Mr. Faulhaber said.

TransUnion also operates as a comprehensive private credit reference agency in the Philippines, helping clients in various sectors manage their finances. — BVR

PSE, Taipei Exchange to pursue joint initiatives in capital markets

TPEx Chairman Li-Chung Chien and PSE President and Chief Executive Officer Ramon S. Monzon at the MoU signing ceremony — Philippine Stock Exchange, Inc.

THE Philippine Stock Exchange, Inc. (PSE) has signed a partnership with Taiwan’s Taipei Exchange (TPEx) to collaborate on the development of both markets.

The partnership was formalized on Tuesday through the signing of a memorandum of understanding (MoU) and a bell-ringing ceremony hosted by the PSE.

In an e-mail statement, the market operator said the MoU covers potential areas of cooperation, including market incubation, environmental, social, and governance (ESG) practices, and the development of products such as indices, exchange-traded funds, and bond and equity derivatives.

“PSE is particularly keen on gaining insights on the bond and small and medium-enterprise markets because these are areas where TPEx is very strong at and these are the markets we also want to give more focus to,” PSE President and Chief Executive Officer Ramon S. Monzon said.

“This MoU signals the start of our collaborative endeavors including the sharing of best practices and learning opportunities. I believe that any initiative we will pursue together will ultimately benefit our respective markets and stakeholders,” he added. — Revin Mikhael D. Ochave

Living our independence with unity, vigilance, and resolve

THE Philippine Coast Guard in collaboration with the Bureau of Fisheries and Aquatic Resources launched its pilot project “Kadiwa ng Bagong Bayaning Mangingisda Program” near Bajo de Masinloc last May. — PHILIPPINE COAST GUARD

Every June 12, we celebrate the day we stood before the world and claimed our place as an independent, self-governing nation. It’s a moment in history where we declared who we are — proud, free, and determined to shape our own future. Independence is not just something we remember — it’s something we live. It’s the legacy we inherit and the responsibility we carry forward.

One hundred and twenty-seven years on, we have come a long way from the struggles of a post-colonial, Third World country. We’ve grown into a dynamic, developing economy — resilient, resourceful, and full of promise. Our people have built, rebuilt, and pushed forward through every crisis and setback. But with each step towards progress comes new challenges. Now, our independence is tested not by straightforward conquest, but by Beijing’s incursions into our territory, disinformation campaigns, and the exploitation of our natural resources. These are clear and present threats — and we must meet them with the same courage and clarity our forebears showed.

Our marine diversity situation is beset with numerous mounting threats — for instance, plastic pollution and illegal, unreported, unregulated fishing. The Philippine Statistics Authority reported, as of October 2024, that the fish catch in the West Philippine Sea dropped 6.78% during the first half of that year, falling to 101,039.54 metric tons from 108,392.48 metric tons in the same period in 2023.

According to the Bureau of Fisheries and Aquatic Resources (BFAR), the decline has been linked to the incursions of foreign vessels (notably Chinese) that intimidate Filipino fisherfolk and limit their access to their traditional fishing grounds.

Further, the BFAR has confirmed incidents of foreign fishers using damaging practices, specifically cyanide fishing, in critical ecosystems like Bajo de Masinloc (Scarborough Shoal). This practice not only poisons marine life but causes long-term damage to the coral reefs, which serve as vital spawning and nursery habitats for fish. According to the BFAR, the use of cyanide by Chinese fishers constitutes a violation of international agreements, including the United Nations Convention on the Law of the Sea (UNCLOS).

Worse, weak enforcement of environmental laws also hinders efforts toward marine protection and conservation. According to the University of the Philippines-Marine Science Institute (UP-MSI), China has destroyed at least 21,000 acres of coral reefs in the West Philippine Sea.

The Philippine Coast Guard (PCG) and UP-MSI have documented significant coral reef destruction in areas like Rozul Reef and Escoda Shoal, attributing the damage to activities by Chinese maritime militia vessels. Underwater surveys revealed lifeless marine ecosystems with crushed corals, suggesting deliberate human-induced degradation.

Remember, these are only the cases that have been documented. There are plenty more.

In a recent forum hosted by Stratbase Institute, held in partnership with the French Embassy, Environment and Natural Resources Undersecretary Carlos Primo David said it is difficult to monitor an area when there are issues of access. His remarks underscore the urgent need for unimpeded access to these marine areas to accurately assess the full scale of environmental destruction — and to hold those responsible accountable.

Indeed, the illegal entry of foreign vessels into Philippine waters has emerged as a critical threat, causing extensive habitat destruction and an alarming depletion of marine resources. The Permanent Court of Arbitration decided in favor of the Philippines in 2016, emphasizing the supremacy of the international rules-based order. The ruling invalidated China’s nine-dash line claim, holding them accountable for environmental violations under UNCLOS.

Viewed from this perspective, independence is not just a persistent struggle but a continuing duty among Filipinos. To attain independence is to ensure that our fisherfolk can freely and safely fish in the waters that have sustained generations of Filipino families. To be independent means to be able to harness and manage its own marine resources — rich in biodiversity and economic value — without interference or intimidation. It means being able to protect our environment, ensure food security, and uphold the dignity of our people.

At the end of 2024, Pulse Asia conducted a survey that asked Filipinos what measures must be prioritized to strengthen the country’s defense in the West Philippine Sea. One of the top responses was to support the modernization of the Armed Forces of the Philippines (AFP). This reflects strong public awareness that protecting our marine territory, especially within our exclusive economic zone, requires not only presence — but capability. It is encouraging that the Marcos Jr. administration has shown strong support in this direction — by increasing the defense budget, accelerating military modernization programs, and deepening security partnerships with like-minded countries.

There is no dearth of countries who share our values and commitment to peace and stability.

In this regard, the achievement of independence as well as stability in the Indo-Pacific is best achieved with strategic partners.

For example, the coast guard has strengthened its maritime and coastal security patrols. Commodore May Marfil reported that by the end of 2024, the PCG had seized or apprehended 193 vessels engaged in illegal, unreported, and unregulated fishing. Its enhanced capabilities were made possible by an increase in personnel and maritime assets — several of which were provided through cooperation with the French government.

According to French Ambassador Marie Fontanel, the upcoming UN Ocean Conference is a great opportunity to rally action for ocean sustainability. The Philippines looks forward to participating here alongside its like-minded friends. We must ensure that commitments translate into meaningful outcomes — especially in upholding maritime rights and protecting marine biodiversity.

Sustaining and strengthening our independence is the challenge of our time. As our nation progresses — breaking beyond the perimeters of a developing economy and asserting our standing in a rapidly changing world — we are called to protect the gains we’ve made and secure the future we are building. That means standing firm against threats to our sovereignty, defending our resources, empowering our people, and working alongside partners who share our values of peace, justice, and respect for international law. Independence is a living responsibility of every citizen, carried forward through unity, vigilance, and our unwavering commitment to shape our destiny on our own terms.

 

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.

‘Largest Princess Diana auction’ features frocks, hats and bags

Among the highlights is a 1988 silk floral dress by Bellville Sassoon, dubbed the “caring dress” because Diana wore it several times on hospital visits, with a price estimate of $200,000-$300,000. — JULIENSAUCTIONS.COM

NEWBRIDGE, Ireland — From colorful frocks and hats to handbags and shoes, items belonging to the late Princess Diana go under the hammer this month in what Julien’s Auctions says is the largest collection of her fashion to go to auction.

The live and online “Princess Diana’s Style & A Royal Collection” sale will take place on June 26 at The Peninsula Beverly Hills, offering an array of fashion items Diana wore.

“This is the largest Princess Diana auction because we have over 100 items from her amazing life and career… keeping in mind Diana herself… sold over 70 of her dresses… back in 1997 to raise money for her charity,” Martin Nolan, executive director and co-founder of Julien’s Auctions, told Reuters on Monday. He was speaking at the Museum of Style Icons in Newbridge in Ireland during a pre-sale exhibition.

Among the highlights is a 1988 silk floral dress by Bellville Sassoon, dubbed the “caring dress” because Diana wore it several times on hospital visits, with a price estimate of $200,000-$300,000.

A cream silk embroidered evening gown Catherine Walker designed for Diana’s 1986 Gulf tour has a similar price tag, while a Bruce Oldfield two-piece yellow floral ensemble she wore for Royal Ascot in 1987 is estimated at $100,000-$200,000.

Other sale items include a Dior handbag gifted to her by former French first lady Bernadette Chirac in 1995, a sketch of Diana’s 1981 wedding dress with tulle fabric cut-offs from when she married then Prince Charles in 1981, and a peach hat she wore for her honeymoon send-off.

The auction also includes pieces belonging to other British royals including the late Queen Elizabeth II and the queen mother.

Nolan said Julien’s Auctions had previously sold a dress belonging to Diana for $1.14 million.

“People do consider these items as an asset class now, because if people own these items today, chances are in years to come they will sell them for more than what they pay for (at) auction,” he said.

Part of the proceeds from the sale of Diana’s items will go to charity Muscular Dystrophy UK.

The pre-sale exhibition in Newbridge will run until June 17. — Reuters

Deposit insurance not enough of a safety net against bank runs, study shows

BW FILE PHOTO

CUSTOMERS tend to withdraw their funds, regardless of size, in the event of bank failures even as these are backed by deposit insurance, according to a journal article by officials from the Bangko Sentral ng Pilipinas (BSP) and the University of the Philippines School of Economics (UPSE).

“Deposit insurance is expected to provide depositors with a safety net to address information asymmetry. Yet we find that even small depositors take early private action prior to closure,” according to the article.

“While deposit insurance provides reinforcing effects, it also does not prevent runs in the presence of local adverse information of possible bank stress.”

The article authored by BSP Governor Eli M. Remolona, Jr., BSP Senior Assistant Governor Johnny Noe E. Ravalo, and UPSE Professor Emeritus Dante B. Canlas, who is also a former National Economic and Development Authority director-general, was published in Elsevier’s Journal of Financial Stability last month.

The study also found that bank closures lead to “significant withdrawals by depositors at other banks in the vicinity.”

“Their withdrawal is suggestive that their fear of a loss in liquidity, even if this is temporary in principle, outweighs the assurance of the insurance. For banks, the gain of ‘sticky deposits’ is not without cost,” it said.

“Paying the insurance premium can be seen as a means for disciplining the banks against the fear of a run. Yet again, there appears to be a market for information that allows both small and large depositors to withdraw early.”

Deposit withdrawals before a bank’s closure “raise the issue of bank liquidity,” it said. Under Basel III standards, the liquidity coverage ratio (LCR) must be at least 100% at all times, after considering run-off rates for stable and less stable deposits.

“Our findings make the case that the run-off rates would be relatively the same for the smallest-sized retail deposits and the larger-sized uninsured deposits. Thus, their LCR treatment would not be any different between these polar extreme deposit balances.”

The data also showed that small depositors behave similarly to large depositors.

“Both small and large deposits are withdrawn up to 4-5 quarters before the bank’s closure,” it said. “This has implications. For small deposits, acting on the information they have gathered is suggestive that their cost of foregone liquidity, in the event of closure, is not offset by the comforts of deposit insurance.”

“Furthermore, it appears that depositors with small balances withdraw at the same time as those with large balances. This is unexpected since we do not envision any coordination between small and large balance depositors.”

It noted that this similarity was “unusual” as the small deposits sampled for the study were covered by deposit insurance, versus the large deposits that were not insured.

“In interpreting all these results together, we suggest that while a large bank failure can lead to contagion, small and large depositors do not behave that differently. Indeed, in our informal look at the events, we find that both small and large depositors tend to anticipate that their bank is about to fail and thus start to withdraw before the bank is closed.”

This dispels the notion that small depositors are less informed than large ones, the article said.

“If in general small depositors were as well informed as large depositors, then they would likely not behave differently. We find that this is indeed the case in our analysis of head office data at the town level, in which depositors, large and small, react similarly to a bank failure nearby,” it said.

“What all this means is that financial inclusion in the form of access to bank deposits is not likely to add to instability to the banking system, but it is not likely to reduce instability either.” — Luisa Maria Jacinta C. Jocson

Vietnamese ride-hailing firm enters PHL with $1-B plan

VINGROUP.NET

VIETNAMESE ride-hailing firm Green and Smart Mobility (Green GSM) has pledged a $1-billion investment in the Philippines, which is projected to create up to 70,000 jobs nationwide.

On Tuesday, Green GSM deployed an initial fleet of 2,500 all-electric VinFast vehicles across Metro Manila.

“This marks the beginning of GSM’s first phase of operations in the Philippines with an investment of $500 million,” the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) said in a statement.

“Once fully operational, GSM is expected to create between 20,000 and 70,000 high-quality jobs for Filipinos nationwide, with investments reaching a total of $1 billion,” it added.

The initial $500-million investment will support the operations of the 2,500 vehicles, including expenditures for office buildings, salaries, charging stations, and taxi garages.

“The $1 billion is for its operations over the next three years, including additional fleet and personnel — this could grow to 70,000 employees and drivers within three years,” OSAPIEA said.

OSAPIEA said Green GSM’s entry into the Philippine market is aligned with efforts to modernize the country’s public utility vehicle sector.

Backed by automotive manufacturer VinFast, Green GSM’s operations are expected to set new benchmarks in safety, service quality, and environmental sustainability.

“This will be a game-changer for Philippine public transport. It promises not only to modernize our transport system but, more importantly, to offer commuters a safer, more convenient, and environmentally friendly transport option,” said SAPIEA Frederick D. Go.

Green GSM’s fleet will include the VinFast VF 5, a compact electric vehicle (EV) with a range of 326 kilometers.

“The company will operate a hybrid model of taxi services, combining manual hailing and app-based bookings, with drivers either employed full-time or partnering with Green GSM,” OSAPIEA said.

The Philippine government aims to increase the number of EVs on the road to 2.4 million by 2028 and to achieve a 50% EV adoption rate by 2040. — Justine Irish D. Tabile

Multi-agent AI to boost productivity — Salesforce

SALESFORCE.COM

By Beatriz Marie D. Cruz and Edg Adrian A. Eva, Reporters

PHILIPPINE COMPANIES should adopt multi-agent artificial intelligence (AI) systems to boost productivity and create new jobs as workflows become more agent-driven, according to US-based software company Salesforce.

“There’s tremendous opportunity for entrepreneurs in the Philippines and everywhere to use this technology to think about how new jobs and new activities that we’ve never thought of can be created,” Mick Costigan, vice-president of the futures team at Salesforce, said in a video interview.

Multi-agent systems are multiple AI systems working together to perform tasks on behalf of a user or system.

“Since December, we’ve seen a really fast pace of improvement in the models underlying this,” Mr. Costigan said. “I think by next year you’ll start to see this type of agent being [used more ].”

He cited Zurich-based recruitment company Adecco, which uses multi-agent systems to process resumes and match applicants with job opportunities.

“Quite a lot of the customers that we work with are actually finding these agents useful for doing a lot of that long tail of work that wasn’t done before,” he said.

About 89% of Philippine leaders said they’re confident in using agents as digital team members to expand their workforce capacity in the next 12 to 18 months, tech giant Microsoft said in its 2025 Work Trends Index report.

As AI agents become more proactive decision-makers, Mr. Costigan cited the emergence of a new leadership role — the agent-in-chief — which is an AI-powered system that serves as an executive assistant.

“Think about the agent-in-chief as a chief-of-staff that is helping organize more complex things, and part of that is interfacing with lots of other specialized agents that are taking on tasks for them,” he said.

As more companies shift to an agent-driven workflow, Mr. Costigan cited the importance of human judgment trusting agent systems.

“We’re going to learn, over the next years, where human judgments really matter in all these different processes, and how we keep human judgment in the process even as we’re shifting a lot of the workflow to agents,” he added.

‘AI THIRD WAVE’
Micro, small and medium enterprises (MSMEs) could also use the autonomous capabilities of agentic AI to enhance customer service and boost sales.

“This technology should be available even to a small bakery with just five staff members — one that might want an AI agent to handle birthday cake orders,” Galvin Barfield, Vice President and Chief Technology Officer for Solutions at Salesforce ASEAN, told reporters in Manila last week.

It could also be used by a small hardware store with only five workers to check inventory online, he added.

“Customer service is the first use case, I mean, that’s the obvious one,” Mr. Barfield said. “The second one is around sales, such as business development reps.”

He said agentic AI, like Salesforce’s AgentForce, represents the third wave of artificial intelligence.

He added that it is one step ahead of the previous wave — co-pilot — because it could autonomously perform tasks, make decisions and act without waiting for human prompts.

MSMEs in the retail sector can assign tasks to an agentic AI, such as answering customer inquiries, processing orders and refunds or using insights from Customer 360, a unified platform that provides a complete view of each customer.

Mr. Barfield said the tech augments human workers by letting them focus on complex tasks while AI handles basic and repetitive ones, resulting in shorter waiting times and increased business productivity.

“There are opportunities for customers and companies to reimagine where they use humans and where they use autonomous agents, and to move humans into higher-value tasks,” he added.

A report by global tech advisory firm Access Partnership estimates that the Philippines could gain as much as P2.8 trillion in economic benefits from AI adoption.

Key sectors expected to benefit significantly include professional services, particularly the information technology and business process management industry, as well as retail, manufacturing and financial services.

However, Filipino MSMEs face challenges in adopting AI due to limitations in infrastructure, awareness and funding, according to a 2025 report by the Philippine Institute for Development Studies (PIDS).

Mr. Barfield said both MSMEs and large companies could have equal access to Salesforce’s AI tools, such as AgentForce, which gives them the same opportunities regardless of business size or spending.

“We democratized access to software,” he said. “Salesforce was born to support small and medium enterprises, giving them access to enterprise technology without having to invest millions of dollars like large companies.”

“And we’re doing the same for AI — it’s exactly the same approach,” he added.

CEOs don’t realize their haters make them better leaders

STOCK PHOTO | Image from Freepik

By Beth Kowitt

THE TITANS of corporate America have had enough of their critics.

At Goldman Sachs Group, Inc., Chief Executive Officer David Solomon has reportedly pushed out troublemakers who criticized his leadership and leaked to the press about problems in the bank’s consumer lending business.

At Meta Platforms, Inc., the newly MAGA-ified Mark Zuckerberg grew jealous of how Elon Musk evaded criticism — leading to what insiders called “Elon envy.” Zuckerberg is now channeling that Musk energy, less willing to take advice or listen to employee concerns over policy changes around issues such as diversity, equity, and inclusion and content moderation.

JPMorgan Chase & Co. shut down comments on an internal webpage announcing the bank’s five-day-a-week return-to-office (RTO) policy after dozens balked. And CEO Jamie Dimon told workers who started a petition asking him to reconsider his RTO demands, “Don’t waste time on it. I don’t care how many people sign that f**king petition.” Employees who don’t like it can get a job elsewhere, he’s said.

Alphabet, Inc.’s Google made big changes to its internal online message board Memegen, neutering what, for more than a decade, had been a forum for employees to express displeasure with their bosses and corporate policies.

Quashing dissent appears to be the next step in the CEO playbook for re-exerting authority after a pandemic that shifted power into the hands of workers. As CEOs return to command-and-control mode, they have only become more emboldened — perhaps even inspired — by a White House with zero tolerance for anyone unwilling to toe the party line.

We can all understand the impulse to silence critics. They can slow decision making, create conflict and decimate morale. Admit it: We think they’re idiots and annoying troublemakers.

But there are good reasons that everyone — and especially CEOs — should not just tolerate dissenters but encourage them. That’s the argument Charlan Nemeth makes in her 2018 book In Defense of Troublemakers. The retired University of California, Berkeley psychology professor has made studying the value of dissent her life’s work, and she summed it up to me this way: “Fear consensus and welcome dissent.”

Consensus holds a power over us that is difficult to break. We believe so deeply that the consensus opinion must be right that one of Nemeth’s studies found that people follow the majority as much as 70% of the time — even when that majority is wrong.

But the bigger problem is what that group-think does to our own thinking, she argues. We have a harder time seeing alternative solutions and problems that could be right in front us. We adopt the strategies and mindset of the majority and look for information that supports its position. That all leads to bad decision making.

Everything changes when we are presented with a dissenting viewpoint. It breaks the majority’s hold by broadening our thinking. We consider more information, options, and problem-solving strategies. We become more original, curious, and independent.

“Dissent stimulates the kind of thinking we know is related to good decision making that, frankly, you can’t teach people,” Nemeth told me.

In just one of many examples in her book, Nemeth cites a study of the Supreme Court’s decisions that analyzed its written opinions for “integrative complexity” — the ability to see and process different perspectives and ideas. The researchers found that when the Court’s majority faced a dissenting opinion, the integrative complexity of its written opinions was high. But when the Court was unanimous, its written opinions were less complex and more one-sided.

Perhaps Nemeth’s most important conclusion is that dissent has value even when it’s wrong. In the 1950s, psychologist Solomon Asch conducted a study in which participants were shown two slides side by side. One slide pictured a single line meant to act as a standard, and the other slide had three lines. The subjects had to pick the line on the second slide that was the same length as the standard. The answer was so obvious that alone they had no problem picking the correct line. But when they were told a unanimous group had picked one of the incorrect lines, 37% of agreed with the majority’s incorrect answer.

However, a later study building upon that work found that if just one person breaks from the group and picks the other wrong line, agreement with majority’s incorrect answer dropped from 37% to 9%. “Even if a dissenter is wrong, and even if she is not an ally, she is of major value because she breaks the majority’s power,” Nemeth writes.

Dissent changes opinions, even if we don’t acknowledge or realize it. Nemeth told me people will resist publicly agreeing with dissenters, even when they’ve privately been persuaded. We may have seen a flavor of that within Goldman. Executives who criticized Solomon’s consumer lending expansion are gone, but the board launched a review and the bank is now exiting the consumer business.

In reality, leaders shouldn’t worry that much about quashing dissent; it’s already quashed. One study Nemeth points to found that around 70% of employees don’t speak up when they see problems because they think they’ll be ignored or fear the consequences of breaking with the majority.

That’s a statistic that should frighten the CEOs more than any critic.

BLOOMBERG OPINION

Peru restores Nazca Lines protection after backlash over mining risk

STOCK PHOTO | Image by Seiji Seiji from Unsplash

LIMA — Peru’s government has abandoned a plan that reduced the size of a protected area around the country’s ancient Nazca Lines, it said on Sunday, after criticism the change made them vulnerable to the impact of informal mining operations.

Peru’s Culture Ministry in a statement said it was reinstating with immediate effect the protected area covering 5,600 square kilometers, that in late May had been cut back to 3,200 square kilometers. The government said at the time the decision was based on studies that had more precisely demarcated areas with “real patrimonial value.”

The remote Nazca region located roughly 400 km south of Lima contains hundreds of pre-Hispanic artifacts and its plateau is famous for the Nazca Lines, where over 800 giant desert etchings of animals, plants, and geometric figures were created more than 1,500 years ago. UNESCO declared them a World Heritage site in 1994.

A technical panel of government representatives, archaeologists, academics, and members of international organizations, including UNESCO, will work together to build consensus on a future proposal for zoning and land use in the area, the Culture Ministry’s statement said.

According to figures from the Peruvian Ministry of Energy and Mines, 362 small-scale gold miners operate in the Nazca district under a program to regularize their status. Authorities have previously conducted operations against illegal mining in the area. — Reuters

Germany’s retiring Mittelstand owners struggle to find successors

Jacob von der Decken, who took over the family’s agricultural business in northern Germany poses for a photo in Berlin, Germany, June 6. — REUTERS/CHRISTIAN MANG

BERLIN — Rudolf Kiessling would like to retire after years spent building his heating, ventilation, and air-conditioning business. But he faces a challenge common to many German company bosses: finding someone to take over.

The 62-year-old is among thousands of owners of small and medium-sized enterprises (SME) — some 99% of German firms, known collectively as the Mittelstand — who may have to wind up their businesses if they cannot find a successor.

The issue is a growing risk to Europe’s largest economy, already suffering its longest downturn since World War Two.

“I have no one. I have a son, but he can’t do it because he has done something completely different professionally,” Mr. Kiessling told Reuters. “Some employees may have interest, but they are a bit afraid of the responsibility.”

A survey by state-run development bank KfW showed around 231,000 SME owners planning to close their companies by the end of this year — 67,500 more than a year ago.

Age is a major factor: demographic data show more than half of Mittelstand owners are over 55 years old, up from 20% 10 years ago. And they are aging faster than the population as a whole — 39% of them are 60 or older, compared with 30% of Germans overall.

“Never since we began to monitor business successions have so many small and medium-sized enterprises considered giving up their operations,” said KfW’s Mittelstand expert Michael Schwartz.

SMEs account for more than half of Germany’s economic output and almost 60% of jobs, and are an engine of private investment.

The succession problem “not only threatens jobs but also weakens Germany’s economic position overall,” Marc S. Tenbieg, head of the DMB Mittelstand association, told Reuters.

Although the new government wants to boost investment with an infrastructure fund, corporate tax cuts and advantageous depreciation options, businesses may be reluctant to commit without clarity about their future leadership.

Carsten Brzeski, global head of macro at ING, cited studies showing under-investment of 400 to 600 million euros ($457 million-$686 million) in Germany over the last decade.

“Investments are held back as business owners cannot find adequate succession planning,” Mr. Brzeski said.

TALENT POOL
Before February’s election, the Commission for Business Succession of another Mittelstand association, BVMW, made recommendations to address the problem, including tax incentives for business transfers and ways to improve financing conditions.

“The new government plans very little on this issue according to the coalition agreement, where the term ‘business succession’ does not appear at all,” said Benno Packi, chairman of the commission.

An Economy Ministry spokesperson said the government has been supporting business successions with numerous measures, such as nexxt-change.org, a free website to match owners with potential buyers, and loan offers with reduced interest rates.

A smaller pool of internal candidates can make it hard to find talent, especially if larger companies offer more competitive packages, said Oliver Stettes, head of labor economics at the IW economic institute. Germany already has an acute shortage of skilled workers.

But the succession squeeze also has an impact on bigger firms, nearly all of which have small companies as suppliers that would be hard to replace.

Candidate scarcity can make what is often an emotional transition more challenging, said Holger Wassermann, an expert in company successions.

“Psychology makes up at least two-thirds of the considerations in Mittelstand business sales,” Mr. Wassermann said. “For many entrepreneurs, their company feels like a body part — selling it can feel like losing an arm.”

The average age of those handing over increased to 63 years from 61.5 years last year, while the age of those taking charge was static at 38 years, according to a Successions Monitor in which Mr. Wassermann participates.

Marcel Krieb is an outlier.

At just 25, he became managing director of Pretium Associates, a financial consultancy for SMEs established in 2003, after working on a project with its founder.

“He asked me at the right time if I could somehow succeed him in his company,” Mr. Krieb told Reuters.

“Many young people prefer the security of a steady paycheck and predictable future, rather than the uncertainty that comes with being self-employed.”

FAMILY BUSINESS
Many Mittelstand companies are family-owned but nowadays fewer sons and daughters are prepared to take over. A survey by the Ifo Institute found 42% do not have a family member lined up to succeed.

Jacob von der Decken was 30 and his father 68 when Jacob took over the family’s agricultural business in northern Germany last year, having discussed it periodically since he was 14.

“It’s a lot of responsibility going on your shoulders,” said Mr. Von der Decken, who studied agricultural economics and had been working on renewable energy projects at a fintech company.

“In agriculture, your family lends you the farm for one generation, and then you pass it on to the next generation. You have like 30 years of bringing it forward and making sure that it also lasts the next decades.”

While his father’s generation prioritized efficiency, he is focusing on diversification and leveraging artificial intelligence for data collection through a startup, Tunen Agronomy.

Private equity takeovers, often mooted as a solution, are really only an option for larger Mittelstand firms, said Michael Wolff, an M&A expert at investment bank Stifel who specializes in transactions for companies valued at 100-500 million euros.

“For the craftsman with 10 people or 20 workers… So far there hasn’t been a solution that systematically helps these people,” Mr. Wolff said.

And the Mittelstand’s problems ripple widely.

“With each small piece that breaks away, the foundation of the German economy becomes a bit more fragile,” said Pretium’s Mr. Krieb. — Reuters

Januszczak steps down as UBX president and CEO 

JOHN JANUSZCZAK is stepping down as president and chief executive officer (CEO) of UBX Philippines Corp. effective June 16.

Union Bank of the Philippines, Inc. (UnionBank) said in a disclosure to the stock exchange on Tuesday that the UBX board has accepted Mr. Januszczak’s resignation. UBX is the financial technology (fintech) arm of UnionBank.

UBX Chief Commercial Officer Mario Domingo will serve as officer in charge “to ensure a smooth transition,” the bank said.

Mr. Januszczak has held UBX’s top post since the firm began operating in 2018.

“We appreciate and respect John’s decision to focus on personal priorities at this point in his life, and we wish him the best. We would like to thank John for his contributions and dedication to UBX during his leadership term,” UBX Board of Directors Chairman Jose Emmanuel U. Hilado said.

“Since its inception back in 2018, UBX has become a premier technology company delivering transformative digital solutions for enterprises and the government, with embedded finance as a core accelerator and differentiator,” UnionBank said. “UBX remains at the forefront of driving digital transformation given its comprehensive local financial expertise and global fintech capabilities through its affiliation with UnionBank and SBI Holdings of Japan.” — Aubrey Rose A. Inosante

Mitsubishi sees policy support driving long-term PHL investment

PHOTO FROM MITSUBISHI MOTORS PHILIPPINES CORP.

THE PHILIPPINE government’s push for renewable energy and electric vehicles (EVs) is expected to play a key role in Mitsubishi Motors Philippines Corp.’s (MMPC) long-term growth strategy, as the company prepares to expand its local operations.

“That includes continued promotion of renewable energy and electric vehicles specifically. We also discussed the Electric Vehicle Incentive Strategy, which is the Comprehensive Automotive Resurgence Strategy-like for electric vehicles,” Board of Investments (BoI) Executive Director for Industry Development Services Ma. Corazon H. Dichosa said in a Viber message following a recent meeting with MMPC.

The meeting reaffirmed MMPC’s intent to remain a major player in the local automotive sector, with the company citing government-led initiatives as critical to sustaining industry growth and the Philippines’ contribution to Mitsubishi Motors’ performance in ASEAN and globally.

MMPC said it has invested over P11.6 billion in local production and operations over the past decade.

It plans to invest an additional P7 billion over the next five years, signaling confidence in the country’s economic fundamentals and policy direction.

A portion of the new investment will support the rollout of a new model to be manufactured at MMPC’s Sta. Rosa, Laguna plant. The company said the investment will ensure the facility can accommodate the new model and meet rising domestic demand, although it did not disclose further details.

“These programs help ensure that the Philippines remains a major contributor to Mitsubishi Motors’ ASEAN performance and global presence,” MMPC said.

The BoI said its policy framework is designed to enhance the country’s investment climate through strategic alignment of incentives, streamlined regulatory processes, and broader support for innovation-driven industries.

Other initiatives discussed during the meeting included the Revitalizing the Automotive Industry for Competitiveness Enhancement Program, the Motor Vehicle Development Program, and the Public Utility Vehicle Modernization Program. — J.I.D. Tabile