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AUB’s Q1 net income up 16%

BW FILE PHOTO

ASIA UNITED Bank Corp. (AUB) saw its consolidated net income rise by 16% to P2.3 billion in the first quarter on better interest margins and as it set aside less loan loss provisions, it said on Thursday.

The bank’s net profit in the period was a record for the lender and its subsidiaries, it said in a disclosure to the stock exchange.

The performance translated to a return on equity of 20%, the highest in the bank’s history, AUB said.

“It also registered a return on assets of 2.8%, the highest since AUB’s initial public offering in 2013,” it added.

Its financial statement was unavailable as of press time.

“We aim to deliver consistent performance throughout 2024 so we can remain as a ‘challenger bank’ among the country’s top listed universal banks,” AUB President Manuel A. Gomez said.

“With interest rates expected to remain elevated throughout the year, and global shocks a continuing concern, we will remain agile to sustain our performance,” he added.

AUB’s net interest income rose by 10% year on year to P4 billion in the first quarter amid an elevated rate environment and strong revenue growth from its loan portfolio and investment activities.

As a result, its net interest margin stood at 5.2% in the period, up from 4.8% a year prior.

Meanwhile, the bank’s operating expenses increased by 12% year on year due to higher compensation, capital expenditures, and business growth-related expenses.

“Despite the increase, AUB has maintained its operational efficiency as it continued to shift to digital platforms and automation,” the lender said.

AUB’s total loan portfolio stood at P188.3 billion at end-March.

Despite the increase in loans, the bank set aside provisions of P78 million, down by 89% from P709.2 million a year ago.

Its nonperforming loan (NPL) ratio also improved to 0.47% in the first quarter from the previous year’s 1%. NPL coverage ratio was at 116.7%, rising from 113% in the comparable year-ago period.

On the funding side, deposits stood at P283.3 billion at end-March, with 73% of the total being low-cost current account, savings account or CASA deposits.

As a result, the bank’s loan-to-deposit ratio was at 66.5% in the period.

AUB’s assets grew by 6% year on year to P346.7 billion at end-March.

Total equity went up by 18% to P50.7 billion, driven by retained earnings.

The bank said its common equity Tier 1 ratio stood at 17.55% as of March, while its capital adequacy ratio stood at 18.29%, both above regulatory requirements.

“In December 2023, AUB paid 50% stock dividend and special cash dividend of P0.33 per share. Prior to the stock dividend payment, it has already paid out P2 per share in two tranches (P1 each in July and in September 2023),” it added.

The bank’s shares dropped by 50 centavos or 1.15% to close at P42.80 apiece on Thursday. — A.M.C. Sy

John Krasinski’s IF brings imaginary world alive for daughters

LONDON — John Krasinski says he made his new film IF for his children.

The live-action and animated fantasy comedy is written, directed and produced by Mr. Krasinski, who also plays the main character’s father and voices “Marshmallow” in the movie.

IF tells the story of 12-year-old Bea (Cailey Fleming) who, during a difficult time in her life, discovers that she can see children’s forgotten imaginary friends, or IFs. Together with her new neighbor, Cal (Ryan Reynolds), she sets out to reunite the discarded IFs with their now grown-up inventors or find them new homes.

“It was a thousand percent for my kids. I’ve always wanted to make a movie for my kids and I had spent so many years watching them go into this magical world that parents aren’t invited into. And I just saw the joy that they had in that world,” said Mr. Krasinski, who has two daughters with his wife, actress Emily Blunt.

“And then COVID hit and they started to have their lights go out a little bit and they were doing fewer and fewer imaginary games. And I just thought this is the time to tell them that no matter what, that imaginary world that they created, you can always go back,” he said at the film’s London premiere on Tuesday.

The IFs come in many shapes and forms and are voiced by an all-star cast including Steve Carell, Bradley Cooper, George Clooney, Phoebe Waller-Bridge, Blake Lively, Matt Damon, and Ms. Blunt.

“I just called a bunch of friends who did me a huge solid one that I can never repay them for,” said Mr. Krasinski, known for directing the A Quiet Place horror thrillers, starring in the Jack Ryan television series and playing Jim Halpert in the US version of The Office.

“But I got to say, they all said that they did it for the right reason, which is that they loved the idea of the movie and they wanted to put something good out in the world.”

IF starts its global cinematic rollout on May 8. It opens in the Philippines on May 15. — Reuters

War games risk stirring up troubled waters as Philippines — emboldened by US — squaring up to Beijing at sea

PHILIPPINE STAR/ WALTER BOLLOZOS

US MARINES joined Filipino counterparts on May 5, 2024, for a mock battle at a telling location: a small, remote territory just 100 miles off the southern tip of the contested island of Taiwan.

The combat drill was part of the weekslong Exercise Balikatan that has brought together naval, air, and ground forces of the Philippines and the United States, with Australia and France also joining some maneuvers.

With a planned “maritime strike” on May 8 in which a decommissioned ship would be sunk and exercises at repelling an advancing foreign army, the aim is to display a united front against China, which Washington and Manila perceive as a threat to the region. Balikatan is Tagalog for “shoulder to shoulder.”

Joint Philippines-US naval drills have become an annual event. But as an expert in international relations, I believe this year’s drills mark an inflection point in the regional politics of the South China Sea.

For the first time, warships taking part in the exercise ventured outside the 12-mile boundary that demarcates the territorial waters of the Philippines. This extends military operations into the gray area where the Philip-pines’ exclusive economic zone rubs up against the territory claimed by China and designated by its “nine-dash line.”

Also for the first time, the US deployed an advanced mobile launcher for medium-range ballistic and cruise missiles of a type that had been banned under the now-defunct Intermediate-Range Nuclear Forces Treaty. In addition, the Philippine navy is showing off its newest acquisition, a South Korean-built missile frigate.

The South China Sea has long been the source of maritime disputes between China, which claims the vast majority of its waters, and nations including Vietnam, the Philippines, Malaysia, and Indonesia. In addition, heightened ten-sions over the status of Taiwan — a territory that the Biden administration has pledged to defend militarily in the event of a Chinese invasion — have made the South China Sea even more strategically important.

CONTAINMENT AT SEA
The latest joint maneuvers come amid two developments that could go some way to influence the future trajectory of tensions in the South China Sea. First, the Philippines has grown increasingly assertive in countering China’s claims in the region; and second, the US is increasingly intent on building up regional alliances as part of a strategy to contain China.

The Philippines-US alignment is more robust than ever. After a brief interval during the 2016-22 presidency of Rodrigo Duterte, US warships and military aircraft once again operate out of bases in the Philippines.

Joint naval patrols resumed in early 2023. At the same time, Manila granted US troops unprecedented access to facilities on the northern Batanes islands, which have become the focus of current joint operations.

Meanwhile, Washington has become more vocal in condemning challenges to the Philippines from China.

US officials had carefully avoided promising to protect the far-flung islands, atolls, and reefs claimed by Manila for seven decades following the signing of the Mutual Defense Treaty with the Philippines in 1951.

Only in March 2019 did then-Secretary of State Mike Pompeo assert that the treaty covers all of the geographical area over which the Philippines asserts sovereignty.

In February 2023, Presidents Ferdinand Marcos, Jr. and Joe Biden doubled the number of bases in the Philippines open to the US military. That May, the two leaders affirmed that the Mutual Defense Treaty applies to armed attacks that take place “anywhere in the South China Sea.”

CAUSING WAVES, ROCKING THE BOAT
Firmer ties to the US have been accompanied by more combative behavior on the part of the Philippines. In May 2023, the Philippines coast guard introduced demarcation buoys around Whitsun Reef — the site of an intense confrontation with China’s maritime militia a year earlier.

Reports circulated three months later that Philippine marines planned to construct permanent outposts in the vicinity of the hotly contested Scarborough Shoal. And a Philippine coast guard ship, with the commander of the country’s armed forces aboard, approached Scarborough Shoal in November, before being forced to retreat by Chinese maritime militia vessels.

Then in January 2024, the Philippines broke with its adherence to a prohibition on erecting structures on disputed territory, which was part of the 2002 Declaration on the Conduct of Parties in the South China Sea, by installing electronic surveillance equipment on Thitu Island, which sits beyond Scarborough Shoal in the heart of a cluster of disputed formations. This was followed by announced plans to put water desalination plants on Thitu, Nanshan Island, and Second Thomas Shoal, making it possible to maintain permanent garrisons on these isolated outposts.

Manila has continued to assert its maritime rights by announcing that armed forces would escort exploration and mining activities in the exclusive economic zone.

Further acts that could be seen as provocative in Beijing followed, including the stationing of a Philippine navy corvette at nearby Palawan Island and a joint flyover by Philippine warplanes and a US Air Force B-52 heavy bomber.

A RAFT OF CHINESE RESPONSES
It is clear that the deepening of Philippines-US ties has given Manila the confidence to undertake a variety of combative acts toward China. The question is, to what ends?

A more assertive Philippines may end up contributing to the US strategy to deter Beijing from extending its presence in the South China Sea and launching what many in Washington fear: an invasion of Taiwan.

But it is possible that heightened truculence on the part of the Philippines will goad Beijing into being more aggressive, diminishing the prospects for regional stability.

As the Philippines-US alignment has strengthened, Beijing has boosted the number of warships it deploys in the South China Sea and escalated maritime operations around Thitu Island, Second Thomas Shoal, and Iroquois Reef — all of which the Philippines considers its sovereign territory.

In early March 2024, two Chinese research ships moved into Benham Rise, a resource-rich shelf situated on the eastern coast of the Philippines, outside the South China Sea. Weeks later, a Philippines coast guard cutter surveying a sandbar near Thitu was harassed not only by Chinese coast guard and maritime militia ships but also by a missile frigate of the People’s Liberation Army Navy, which for the first time launched a helicopter to shadow the cutter.

Washington has taken no public steps to dampen tensions between Manila and Beijing. Rather, Secretary of State Antony Blinken expressed full-throated support for “our ironclad defense commitments” during a mid-March 2024 stopover in Manila.

Reassured of US backing, Marcos has amped up the rhetoric, proclaiming that Manila would respond to any troublemaking on Beijing’s part by implementing a “countermeasure package that is proportionate, deliberate and reasonable.” “Filipinos,” he added, “do not yield.”

Such an approach, according to Marcos, was now feasible due to the US and its regional allies offering “to help us on what the Philippines requires to protect and secure our sovereignty, sovereign rights and jurisdiction.”

The danger is that as the Philippines grows more assured by US support, it may grow reckless in dealing with China.

Rather than deterring China from further expansion, the deepening Philippines-US alignment and associated Filipino assertiveness may only ramp up Beijing’s apprehensiveness over its continued access to the South China Sea — through which virtually all of its energy imports and most of its exports flow.

And there is little reason to expect that Washington will be able to prevent an emboldened Manila from continuing down the path of confronting China in the South China Sea.

To Beijing, the prospect of an emboldened Philippines forging active strategic partnerships with Australia, Japan, South Korea, Vietnam and — most troublesome of all — Taiwan makes the situation all the more perilous.

THE CONVERSATION VIA REUTERS CONNECT

 

Fred H. Lawson is a professor of Government Emeritus of Northeastern University. He received a Summer Writing Grant from the Charles Koch Foundation.

DMCI Power to start operations of Antique wind farm next year

DMCI Power Corp. will commence operations of a 12-megawatt (MW) wind farm on Semirara Island in Antique province by the first quarter of 2025, its sister company said on Monday.

“We anticipate annual savings of P200 million by sourcing energy from this facility, which would also help reduce our emissions,” Semirara Mining and Power Corp. (SMPC) President and Chief Operating Officer Maria Cristina C. Gotianun said during the company’s annual stockholders’ meeting.

The wind farm has a total project cost of P640 million.

DMCI Power has stated that the wind corridors between Luzon and Panay, including the Semirara and Cuyo Islands, have abundant wind power density and speed for a utility-scale wind project.

SMPC also expects Sem-Calaca Power Corp. unit 2 to operate at its full capacity of 300 MW in the second half of the year, assuming the “successful and timely generator swap.”

Ms. Gotianun said that the power plant was operating at an average capacity of 175 MW last year.

“We anticipate strong performance from the power segment, potentially offsetting anticipated weakness in the coal business due to unfavorable market conditions,” she said.

For the first quarter, SMPC posted an attributable net income of P6.5 billion, down 28% from the previous year due to lower selling prices for coal and electricity.

The company’s consolidated revenues decreased by 11% to P18.4 billion following the “softer market prices for both coal and power segment coupled with higher proportion of non-commercial grade coal shipments.”

SMPC mentioned that it is the only power producer in the Philippines that owns and mines its own fuel source. The company has an installed capacity of 900 MW with around 600 MW more in the pipeline.

Shares of the company on Thursday fell by P0.10 or 0.31% to close at P32 each. — Sheldeen Joy Talavera

Philippines’ quarterly GDP performance

THE PHILIPPINE ECONOMY grew by 5.7% in the first quarter, outdoing most of its peers in Southeast Asia despite slowing consumption and government spending, according to the local statistics agency. Read the full story.

 

Philippines' quarterly GDP performance

The pros and cons of regional wage setting

PHILIPPINE STAR/BOY SANTOS

REGIONAL wage boards have a better idea of local conditions in deciding what wages are suited for their areas, but run a bigger risk of being dominated by employer interests, economists said.

“I agree with (the need for a wage adjustment), but (it) should be done through the regional board,” according to Cielo D. Magno, an associate professor of economics at the University of the Philippines-Diliman and a former Finance Undersecretary.

“Adjusting through the process of the regional wage board allows for the wage adjustment to take into account the local context of both the workers and the industries in the area,” she added in a Viber message.

Monetary Board member and economist V. Bruce J. Tolentino, in a Viber message called the region-based approach the “most appropriate” way to adjust wages.

“The existing system of collaborative wage discussions and region-based wage setting is the most appropriate approach,” he said, “because economic conditions and cost of living is different by region.”

IBON Foundation Executive Director Jose Enrique A. Africa said employers have used their power over workers to dominate regional wage boards, and backed an across-the-board hike as a counter to their influence.

“Legislating a wage hike is really just the National Government stepping in to take the side of workers who have been left behind for so long,” he added via Viber.

Ms. Magno also cited the need to “strengthen workers and unions” at the regional level to ensure regional boards serve their interests.

Mr. Africa said seeking a balance should begin by acknowledging the imbalances workers are operating under.

“Profits, productivity and inflation have outpaced minimum wage increases for decades, so much more weight has to be given to truly meaningful wage hikes,” he added.

Labor Secretary Bienvenido E. Laguesma warned at a forum on Wednesday that a national wage hike could result in job losses and increase the prices of essential commodities.

The Federation of Free Workers countered Mr. Laguesma’s remarks by saying, “a reasonable and just wage increase is not only necessary but also beneficial for workers and the economy.”

“It can improve the quality of life for workers, reduce inequality, and stimulate consumer spending, which in turn can drive economic growth,” it added.

According to a study by IBON Foundation, the Bangsamoro Autonomous Region of Muslim Mindanao has the lowest daily wage for non-agricultural workers with P361 but has the highest living wage for a family of five of P2,069.

Metro Manila daily wages are set at P601 but workers there require P1,192 to earn a living wage for a family of five.

Wage hike bills are pending in both chambers of Congress legislature, with proposals to increase the daily wage by between P100 and P750. — Chloe Mari A. Hufana

Dominion Holdings books higher profit in the first quarter

DOMINION HOLDINGS, Inc. (DHI) saw its net income rise by 30% year on year in the first quarter as the company continued to shift its investment portfolio to instruments with better returns.

The company’s net income stood at P75.9 million in the first three months, up from P58.3 million in the same period last year, it said in a disclosure to the stock exchange on Thursday.

Its financial statement was unavailable as of press time.

“Gross income increased by 28% due to the shift in its investment portfolio towards higher-yielding placements and debt securities,” DHI said.

The company’s assets stood at P6.45 billion at end-March.

Stockholders’ equity was at P6.44 billion.

DHI, formerly BDO Leasing and Finance, Inc., holds or owns real estate properties, securities or shares of stocks, and other assets of other companies.

It also engages in investment and business activities involving these assets.

“As an investment holding company, Dominion Holdings has more flexibility in pursuing business opportunities that can enhance shareholder value,” DHI said.

The change in DHI’s corporate name was approved by the Securities and Exchange Commission on July 18, 2022 due to a shift in primary and secondary purposes to a holding company from a leasing and financing company.

DHI’s parent BDO Unibank, Inc. booked a net profit of P18.5 billion in the first quarter, up by 12% year on year, amid continued growth in its core revenues.

BDO’s shares declined by P4.40 or 3.01% to close at P141.80 each on Thursday. — A.M.C. Sy

Wedding-dress influencer wins back ‘Hayley Paige’ social-media accounts

WEDDING dress designer Hayley Paige (R) with Say Yes to the Dress mainstay Randy Fenoli. — YOUTUBE.COM/@SAYYESTOTHEDRESS

WEDDING-DRESS designer and influencer Hayley Paige Gutman convinced a New York federal court on Wednesday to give her total control of “Hayley Paige” social-media accounts amid her dispute with JLM Couture over their broken partnership. US District Judge Laura Swain reversed her previous decision that gave wedding-dress maker JLM sole control of the Instagram and Pinterest accounts but upheld an order banning Ms. Gutman from using the “Hayley Paige” name and promoting or selling competing dresses for five years.

JLM attorney Sarah Matz of Adelman Matz in a statement said the social-media decision was “not meaningful” and involved an “empty” Instagram account, as “all of the important aspects of the injunction and prior rulings remain in place.”

Ms. Gutman’s attorneys at Haynes and Boone said in a statement that they are “thrilled for Ms. Gutman and her million-plus followers.”

Hayley Paige Gutman, who has since changed her professional name to Cheval, was the maker of “Hayley Paige” wedding dresses until 2020. She signed on to design dresses for New York-based JLM in 2011.

JLM said in its 2020 lawsuit that Ms. Gutman locked the company out of “Hayley Paige” social media, promoted products from other companies, and violated a noncompetition agreement after contract negotiations broke down.

US District Judge Laura Swain granted JLM a preliminary injunction in 2021 that blocked Ms. Gutman from competing with the company until the end of their contract, gave JLM control of “Hayley Paige” social-media accounts, and prevented her from using the “Hayley Paige” name in advertising.

The 2nd US Circuit Court of Appeals affirmed part of Ms. Swain’s decision in January but told the judge to reconsider who should control the accounts and whether the noncompetition agreement was too restrictive. Ms. Swain gave JLM and Ms. Gutman joint access to the accounts in a March ruling.

Ms. Swain on Wednesday dissolved her order that granted JLM control of “Hayley Paige” social media, and said that the evidence indicated that Ms. Gutman originally owned the accounts and never transferred them to the company.

The judge also affirmed that Ms. Gutman could not compete with JLM until the end of the noncompetition agreement in December 2025. — Reuters

Zuckerberg’s free AI is a clever form of bait

RAWPIXEL.COM-FREEPIK

THERE’S a persistent mystery about Mark Zuckerberg, and it’s not the one about his new chain necklace. The chief executive officer of Meta Platforms, Inc. has spent billions of dollars building powerful artificial intelligence (AI) models and is giving that technology away for free. Why? Zuckerberg recently argued that “open sourcing” LLaMA, his AI model for training chatbots, prevents power from being concentrated in a single company.*

Maybe take that explanation with a pinch of salt. This, after all, comes from a man who consolidated control in social media by buying and copying his competitors, and who has near-dictatorial control over Meta with more than 50% of total voting power.

Like any good Silicon Valley tycoon, Zuckerberg has slapped a benevolent label on an effort to extract value for his company. The real reason he’s sharing his AI probably has more to do with trying to make life more difficult for his competitors, as well as improving Meta’s reputation so it can lure more experienced AI engineers. One day, it might also allow him to explore new ways to enhance his advertising business. Investors should rejoice, and AI developers with humanitarian ideals should think twice about joining him.

Getting to this point took a fortuitous bet by Zuckerberg. At the end of 2022, just before OpenAI released GPT-4, he placed a large order for graphical processing units — powerful chips used for building most AI systems — with Nvidia Corp., according to an interview he gave to the Verge. He aimed to improve the recommendation system for Reels, Meta’s short-form video clone of TikTok, but it turned out Zuckerberg was inadvertently stockpil-ing the most coveted ingredients in tech, the powerful AI chips that are now in short supply.

That’s one reason why Meta has moved so speedily on AI ever since, releasing its first version of LLaMA in February 2023, then LLaMA 2 just five months later. When it launched LLaMA 3 last month, the system immediately entered the top global ranking of AI models (it’s currently at No. 6), making it the most sophisticated system that was also free for anyone to use. Giving away LLaMA, the system that is also powering Meta’s new AI assistants, already makes life more difficult for large rivals like Microsoft Corp., Amazon.com, Inc., and Alphabet, Inc.’s Google, who all charge for their AI services as part of their cloud businesses. It should also go some way toward attracting more top talent, an issue so important to Zuckerberg that he has personally e-mailed researchers at Google’s DeepMind with job offers, according to The Information. Many AI developers want both a steady paycheck and a chance to see their work have a wide-ranging impact. LLaMA has now been downloaded more than 100 million times, and software developers like being able to ac-cess its “weights,” the internal settings that help it process data, making the model more adaptable for companies who want to summarize legal documents or rank customer feedback. That flexible approach to building tech-nology makes Meta a more appealing place to work too.

Further down the line, there could theoretically be another benefit to Zuckerberg’s grand AI giveaway: emulating Google’s success with Android. Google started giving its mobile operating system to device makers in 2008 and over time added requirements for them to include apps like Google Search, Google Maps, and Gmail.

As the number of Android handsets grew, more traffic flowed through those services, which Google was able to monetize through advertising. Google’s apps on Android essentially became portals to billions of users — and a new revenue stream.

Could Meta capitalize on LLaMA similarly? In theory, as the model becomes more popular among developers and integral to their apps, Meta could start adding a requirement for those users to share the data they are pro-cessing, data which could be used to enhance the company’s AI models and perhaps even its ads business.

Of course, doing so would mean Zuckerberg could no longer call LLaMA “open-source,” but there’s already debate among industry groups about whether the model qualifies in the first place. And as it happens, Meta has been seeking more control over how each new version of LLaMA is used. The licensing agreement for LLaMA 3 seeks more protection for its intellectual property and greater compliance with its branding and legal standards, for in-stance, than the one for LLaMA 2. Such a U-turn wouldn’t be unheard of. Just ask OpenAI, which originally used the term “open” for “recruitment purposes” and has become more secretive over the years.

Two senior open-source AI researchers tell me it would be feasible for Meta to put data-sharing provisions into future licensing agreements for LLaMA, if the company reined back some of the model’s open-source features. If Meta could then grab reams of anonymized data generated by LLaMA, that might help it refine its understanding of what content engages users and improve how its ads are personalized. That wouldn’t fly with everyone. Concerns about gathering personal data were why ChatGPT breached Italy’s privacy laws. But Zuckerberg turned Facebook into a money printer after dominating the social media market and amassing hundreds of millions of dedicated users. He favors the strategy of chase users first, monetize later. If he can do the same for LLaMA, it might mean making the AI model less open and more lucrative for his company too.

BLOOMBERG OPINION

 

*“I’m really focused on open source,” he told the Morning Brew Daily podcast in February. “My theory of this is that what you want to prevent is like one organization from getting like way more advanced and powerful than everyone else.”

How each segment contributed to Q1 2024 GDP

THE PHILIPPINE ECONOMY grew by 5.7% in the first quarter, outdoing most of its peers in Southeast Asia despite slowing consumption and government spending, according to the local statistics agency. Read the full story.

 

How each segment contributed to Q1 2024 GDP

How effective is routine job rotation?

Last week, you talked about employee transfer as an option for those who are not happy about their career development. How about job rotation as a routine practice to help develop people for future management jobs? — Lost Glory.

There’s a thin line that separates career development and management development. The former focuses on improving the growth of ordinary workers, so they become fully equipped with the right skills to perform their job. On the other hand, management development is about preparing high-potential talent with the right leadership tools they can use in the future.

This distinction has to be made as there are people not interested in doing management jobs.

When I studied in Tokyo on scholarship, I learned first-hand the intricacies of job rotation as Japanese employees become highly trained for the job. Workers are trained meticulously to do a myriad of jobs for their entire careers.

It’s easy to understand in the Japanese system, which presupposes lifetime employment. Rotations run for about three years per job. As soon as new employees are hired in April every year, they are assigned to jobs that are utterly alien to what they learned in university.

New workers with engineering degrees are posted to entry-level jobs in human resources (HR), sales, marketing, public relations, or finance. This is to ensure that people improve their skill in nemawashi (extensive consensus-building), among other traditional management practices.

If one has average communication skills in English, that person is assigned to work in other countries like a good friend of mine who was assigned here in the Philippines as a ranking executive in a major automaker, eight years prior to his compulsory retirement at 65 years. 

The Japanese rotation system creates generalists, as opposed to the specialists preferred in Western countries. That’s why many high-flyers become chief executive officers in the same company right after college graduation. If not, they become part of the senior management team several years before retirement or after spending 45 years of their life in the same organization.

ADJUSTMENTS
Do you think you can copy this Japanese approach to job rotation? Maybe, but with some major adjustments. Accept the fact that people are natural job hoppers who may shun lifetime employment. You can experiment with a modified job rotation program to support continuing personnel development, starting with the following insights in mind:

One, benchmark against the best practices in your industry. Discover whether you have a sound basis for resorting to job rotation. Assuming you have no models in your industry, there is no harm in visiting other companies to observe their practices.

Two, justify the rationale for job rotation in your company. Anticipate all possible objections that management may put up to challenge your ideas. Welcome any question. It’s better that way so that your draft program is fully tested long before implementation.

Three, make it part of professional development for all. It can be a component of the business continuity program. Even experienced people do not automatically qualify as successors, unless they have spent working in many job functions and exercised leadership with various personalities.

Four, calibrate the amount of time needed for a successful job rotation. Would a three-year program suffice? How about one year? There should be no hard and fast rule, like how long an engineer needs to become effective in an HR job. Weigh the complexities of the work assignment.

Five, incorporate performance appraisals in the process. Job rotation is not a stand-alone program. It must work side-by-side with the organization’s appraisal system. In that case, the evaluation must be done within a framework where a monthly evaluation is done, depending on the strengths and weaknesses of participants.

Six, do a pilot test covering only those with high potential. You don’t have to instantly implement the system with as many people as possible. The best approach is to choose only those with the right aptitude and talent. If someone fits the bill, management should immediately assign that person to the program.

Last, establish a management committee to oversee the program. HR can’t do it alone. The committee must be the program’s caretaker. The issues to resolve may include the refusal of some department heads to release a candidate.

CAUTION
Job rotation comes with the understanding that not all high-flyers will do an excellent job, so it’s unrealistic to expect that the program can solve their performance deficiencies. Far from it. It could be that the problem may be systemic in origin. This happens all the time when organizations tend to copy best practices without considering their relevance or direct application to their needs.

You have to be prudent in adopting this program as they may not suit all contexts. Therefore, you have to closely monitor both the positive and negative effects of rotation in company operations, and adjust accordingly.

 

Bring Rey Elbo’s popular leadership program called “Superior Subordinate Supervision” to your line executives. Contact him on Facebook, LinkedIn, X  or e-mail elbonomics@gmail.com or via https://reyelbo.com

Aggression and the President’s Commander-in-Chief powers

PHILIPPINE STAR/KRIZJOHN ROSALES

The Philippines renounces war as an instrument of national policy (Article II.2 of the Constitution). That much is clear. It doesn’t mean, however, that the Philippines can’t defend itself. When circumstances permit, the Philippines, through the president, can unleash the Armed Forces to defend the country’s sovereignty, territory, and people.

Thus, the president may call out such armed forces to prevent or suppress lawless violence, invasion, or rebellion. Furthermore, in case of invasion or rebellion, he may, for a period not exceeding 60 days, suspend the privilege of the writ of habeas corpus or place the Philippines or any part thereof under martial law.

Congress, on the other hand, shall have the sole power to declare the existence of a state of war (Constitution, Art. VI.23). In which case, the Congress may, by law, authorize the President, for a limited period and subject to such restrictions as it may prescribe, to exercise powers necessary to carry out a declared national policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease upon the next adjournment thereof.

The question that can be raised is: can the president exercise his “commander-in-chief” powers ahead of a congressional declaration of “the existence of a state of war”? From Article VII.18, it seems such is possible in cases of lawless violence, invasion, or rebellion.

Verily, when an aggression occurs, the Philippines has the inherent international law right to self-defense. If such aggression amounted to an invasion, the president could unilaterally make the call to self-defend anent Art. VII.18. But what of cases amounting to foreign “aggression” not amounting to an invasion (thus removing it from the purview of Art. VII.18)? Who makes the call then to bring the country to war?

Aggression is defined by the Rome Statute (Article 8 bis [2]) as “the use of armed force by a State against the sovereignty, territorial integrity or political independence of another State, or in any other manner inconsistent with the Charter of the United Nations.” UN General Assembly Resolution 3314 defines aggression similarly but also enumerates the acts which could “qualify as an act of aggression”:

(a) The invasion or attack by the armed forces of a State of the territory of another State, or any military occupation, however temporary, resulting from such invasion or attack, or any annexation by the use of force of the territory of another State or part thereof;

(b) Bombardment by the armed forces of a State against the territory of another State or the use of any weapons by a State against the territory of another State;

(c) The blockade of the ports or coasts of a State by the armed forces of another State;

(d) An attack by the armed forces of a State on the land, sea or air forces, or marine and air fleets of another State;

(e) The use of armed forces of one State which are within the territory of another State with the agreement of the receiving State, in contravention of the conditions provided for in the agreement or any extension of their presence in such territory beyond the termination of the agreement;

(f) The action of a State in allowing its territory, which it has placed at the disposal of another State, to be used by that other State for perpetrating an act of aggression against a third State;

(g) The sending by or on behalf of a State of armed bands, groups, irregulars or mercenaries, which carry out acts of armed force against another State of such gravity as to amount to the acts listed above, or its substantial involvement therein.

Hence, a blockade at the outskirts of Philippine territorial waters or an “attack” by a foreign ship against a Philippine ship constitutes an “act of aggression” triggering a national right to self-defense. However, should such be considered an act of “invasion” (or perhaps an act of “lawless violence”) thus triggering in turn Art. VII.18 of the Constitution?

However, it is more reasonable to presume that such acts of aggression constitute neither an invasion nor lawless violence. This effectively prevents the president from acting under Art. VII.18. Or does it? Can the president act presumptively in that the aggression entitles the Philippines to self-defense and thus justify the use of his residual powers as Commander-in-Chief? This even more if an “armed attack occurs” (UN Charter Article 51) or the Philippines is faced with a situation that is “instant, overwhelming, and leaving no choice of means, and no moment for deliberation” (as provided for in the Caroline case).

However, would it also be possible to interpret aggression as bringing the country to a “state of war,” for which the Congress is duty bound to declare its “existence” and thus the need to authorize the president to do what is necessary for national self-defense?

These are important matters that need to be deliberated upon now rather than later.

The views expressed here are his own and not necessarily those of the institutions to which he belongs.

 

Jemy Gatdula is the dean of the Institute of Law of the University of Asia and the Pacific and is a Philippine Judicial Academy lecturer for constitutional philosophy and jurisprudence. He read international law at the University of Cambridge.

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