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Meralco Power Academy executive named as Outstanding Energy Auditor

Seen in the photo (L-R) are DOE Energy Utilization Management Bureau Director Patrick Aquino CESO III, DOE Energy Utilization Management Bureau OIC-Director III Lana Rose Manaligod, DOE Assistant Secretary Mylene Capongcol, DOE Undersecretary Felix William Fuentebella, Meralco Power Academy (MPA) Program Research and Development Director Engr. Eugenio F. Araullo, MPA President Nixon Hao, MPA Program Management Director Marc Lester Malibiran, and MPA Corporate Affairs Consultant Angelina Tibayan during the awards ceremony held at Hilton Manila in Pasay City last December 19, 2023.

For his contributions in the promoting energy efficiency and conservation, Meralco Power Academy (MPA) Program Research and Development Director Engr. Eugenio F. Araullo was recognized by the Department of Energy (DOE) as the sole recipient of the Energy Efficiency Excellence (EEE) Award under the Certified Energy Auditor subcategory in this year’s EEE Awards.

The EEE Awards, held annually as part of the National Energy Consciousness Month, recognizes members of from the public and private sectors including institutions, buildings, and individuals who demonstrate outstanding energy management practices.

Engr. Araullo, an electrical engineer with over 30 years of professional experience, has constantly demonstrated quality energy audit in various sectors here and abroad. His expertise spans various fields such as process excellence, supply chain, information technology, renewable energy, power economics, energy management, and people development.

 


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Banks’ NPL ratio slips to two-month low

BW FILE PHOTO

PHILIPPINE BANKS’ asset quality improved in November as the banking industry’s gross nonperforming loan (NPL) ratio slipped to its lowest in two months.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed banks’ NPL ratio stood at 3.41% in November, easing from the five-month high of 3.44% in October but still above 3.35% a year prior.

The November bad loan ratio marked the lowest in two months or since 3.4% logged in September.

However, bad loans inched up by 1.1% to P454.281 billion in November from P449.454 billion in the prior month. Year on year, it rose by 11.3% from P408.097 billion in November 2022.

Lenders’ total loan portfolio expanded by 9.3% year on year to P13.34 trillion as of November.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets given borrowers are unlikely to settle such loans.

Despite high borrowing costs, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion noted the NPL ratio in November remained low due to strong economic growth.

“Even with the high interest rate environment, the view of BSP Governor [Eli M. Remolona, Jr.] on 6.5% still being appropriate for growth and expansion to thrive must be lent apt credence,” Mr. Asuncion said. 

At its November meeting, the Monetary Board decided to keep the key interest rate unchanged at 6.5%, its highest print in 16 years. The BSP hiked borrowing costs by 450 basis points (bps) from May 2022 to October 2023 to tame inflation. 

Mr. Remolona earlier said that at 6.5%, the benchmark rate still remains supportive of economic growth. He noted the BSP’s hawkish stance has not derailed the economy’s growth momentum.

The BSP chief had said gross domestic product (GDP) likely expanded by around 5.9% in the fourth quarter of 2023. He expects stronger GDP growth in the first six months of 2024.

Mr. Asuncion said the economy likely grew by 6.2% in the fourth quarter last year, which would bring the full-year average to 5.7%. This is below the government’s 6-7% goal and the 7.6% seen in 2022. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the seasonal uptick in economic activity ahead of the holidays led to better business and livelihood conditions, which allowed borrowers to pay their loans.

BSP data showed past due loans rose by 14.3% to P563.384 billion as of November from P492.528 billion a year ago. These accounted for 4.22% of the total loans, slightly higher than 4.04% a year ago.

In the same month, restructured loans fell by 6.7% to P305.81 billion from P327.76 billion a year ago. This brought its ratio to 2.29% of banks’ gross loan portfolio from 2.69% in November 2022.

Lenders’ loan loss reserves jumped by 6.8% year on year to P460.953 billion, equivalent to 3.46% of the total loans. The latest ratio is lower than 3.54% seen in the same month in 2022.

NPL coverage ratio — which indicates banks’ allowance for potential losses due to bad loans — was a tad lower at 101.47% from 105.73% a year ago.     

“Possible local policy rate cuts for the coming months would help boost loan demand, investments, and other economic activities, thereby would help further reduce the NPL ratio for the coming months,” Mr. Ricafort said.

The BSP may likely cut borrowing costs by as much as 100 bps this year as inflation is seen to stay mostly within the 2-4% target band, Finance Secretary and Monetary Board member Benjamin E. Diokno said on Monday.

Most analysts also expect the Philippine central bank to start its policy easing in the second half of the year. 

“A more expansive monetary policy into 2024 will definitely bode well for lower and more stable NPLs,” Mr. Asuncion likewise said.

However, Mr. Remolona has said that the Monetary Board will only consider rate cuts if inflation is seen staying firmly within the 2-4% target range.

The BSP will have its first policy review this year on Feb. 15. — Keisha B. Ta-asan

BIR waives annual registration fee for business taxpayers

PHILIPPINE STAR/EDD GUMBAN

By Luisa Maria Jacinta C. Jocson, Reporter

BUSINESS TAXPAYERS will no longer have to pay the annual registration fee with the Bureau of Internal Revenue (BIR) starting this year.

In an advisory, the BIR said it will stop collecting the annual registration fee from business taxpayers effective Jan. 22 in compliance with the Republic Act No. 11976 or the Ease of Paying Taxes Act.

President Ferdinand R. Marcos, Jr. signed the Ease of Paying Taxes Act into law on Jan. 5.

“As a result, business taxpayers are exempt from filing BIR Form No. 0605 and paying the P500 annual registration fee on or before Jan. 31 every year,” it said.

The BIR said that business taxpayers with existing certificate of registration, which includes the registration fee, will remain valid. They can have the certificate of registration updated or replaced at the Revenue District Office where they are registered on or before Dec. 31, 2024.

The Ease of Paying Taxes Act aims to modernize tax administration, update the taxation system, and protect taxpayer rights and welfare.

The law amends several sections of the National Internal Revenue Code of 1997, such as the introduction of a taxpayer classification system and a risk-based classification for VAT refund claims.

Taxpayers may also now file returns electronically or manually to any authorized agent bank, Revenue District Office, or authorized tax software provider.

The law also mandates the BIR to adopt an “integrated digitalization strategy by providing automated end-to-end solutions for the benefit of taxpayers.”

The agency is also ordered to develop an Ease of Paying Taxes and digitalization roadmap to ensure ease of tax compliance and streamlining of tax processes.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the amendments under the Ease of Paying Taxes Act will improve the ease of doing business in the country.

“This is consistent with the overall efforts to reduce business costs, make it more convenient, and encourage more people to do business and also pay taxes for their fair share of nation-building,” he said in a Viber message.

Mr. Ricafort said that simplifying tax processes for businesses will help boost revenues and promote better transparency.

Philippine Chamber of Commerce and Industry President Eunina V. Mangio said in a statement that the passage of the law is a welcome development for the business community.

“I hope this law, coupled with proper implementation and monitoring, will significantly ease the paying of taxes in the country,” she said.

Ms. Mangio also said that the law could help attract more foreign investors.

“We need to harmonize and streamline our processes for us to attract investors into the country. Otherwise, we will remain low in the ease of doing business,” she added.

BIR COLLECTION
Meanwhile, Finance Secretary Benjamin E. Diokno said the BIR should surpass its collection target for this year.

“We have much to accomplish in 2024. Thus, I urge the agency to not just meet, but exceed its collection targets this year and beyond,” Mr. Diokno said in a press release on Monday.

The BIR is expected to collect P3.05 trillion this year, based on the latest Budget of Expenditures and Sources of Financing.

Data from the Treasury showed that BIR revenues stood at P2.34 trillion in the January-to-November period, accounting for 88.77% of its P2.64-trillion full-year target.

The agency collects about 70% of government revenue.

DoF data also showed that the BIR filed a total of 221 cases against tax evaders before the Department of Justice in the 11-month period. These cases had estimated liabilities worth P13.24 billion.

“Meanwhile, 38 cases with an estimated tax liability of P5.06 billion were filed with the Court of Tax Appeals (CTA) during the said period,” the department added.

In the first 11 months, the BIR also collected P410.94 million and issued 186 closure orders against businesses in violation of value-added tax (VAT) requirements.

Manufacturing output up 1.9% in November

Workers are seen inside a manufacturing plant in Sto. Tomas, Batangas, March 1, 2023. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Lourdes O. Pilar, Researcher

FACTORY OUTPUT expanded in November, but the activities related to food items continued to drag the overall manufacturing sector.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index (VoPI), rose by 1.9% year on year in November.

The November output was faster than the revised 1.5% recorded in October.

This is the highest print in two months or since the 10.4% recorded in September.

On a monthly basis, November’s output grew by 2.7%, a reversal from the 1.2% contraction in the previous month. Stripping out seasonality factors, manufacturing that month edged up by 0.7%, a reversal from the 4.1% drop in October.

Year to date, factory output averaged 5.1%, lower than the 45% growth a year ago.

To compare, S&P Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 52.7 in November, higher than the of 52.4 in October. A PMI reading of above 50 means improvement in operating conditions compared with the previous month, while a reading below 50 shows deterioration.

PSA said the annual growth of the VoPI in November can be attributed to  the faster rise in transport equipment (17.1% from 5.8% in October), as well as the smaller declines in beverages (-11.6% in November from -34.4% in October), and chemical and chemical products (-2.4% from -10.9%).

Several industry divisions posted slower growth, such as printing and reproduction of recorded media (8.6% from 26.3%), basic pharmaceutical products and pharmaceutical preparations (15.5% from 16.5%), electrical equipment (29.9% from 30.5%), and coke and refined petroleum products (37% from 46.9%).

However, the PSA said 13 industry divisions recorded annual declines during the month, led by machinery and equipment except electrical (-27% from -23.1%); leather and related products, including footwear (-26% from -29%); fabricated metal products, except machinery and equipment (-25.4% from -16.4%); wearing apparel (-24.3% from -20%); and wood, bamboo, cane, rattan articles, and related products (-20.2% from -42%).

Average capacity utilization — the extent to which industry resources are used in the production of goods — averaged 74.8% in November, slightly higher than October’s 74.3% in the previous month.

All industry divisions have reached an average capacity utilization rate of more than 60%.

“Manufacturing activity related to food items were the drag on overall manufacturing with production of other items compensating for the decline in those items. This may reflect the struggles experienced by the agriculture sector which posted negative growth in the third quarter,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Mr. Mapa added that the manufacturing industry will likely help support growth, but gross domestic product (GDP) growth will likely remain largely driven by the services sector.

PSE names 55 Shari’ah-compliant companies, adds Fruitas, Petron, Prime Media 

REUTERS

SHARI’AH-COMPLIANT companies listed on the Philippine Stock Exchange, Inc. (PSE) have decreased to 55 from 60 after the market operator’s quarterly screening for the period ending Dec. 25.

Eight securities were removed, and three were added based on the PSE’s latest Shari’ah-compliant list, released in a memorandum dated Jan. 8.

The omitted securities comprise those of property developer Araneta Properties, Inc., construction aggregates supplier Concrete Aggregates Corp. “A” and Concrete Aggregates Corp. “B,” air conditioning and refrigeration solutions provider Concepcion Industrial Corp., cement manufacturer Holcim Philippines, Inc., flour producer Liberty Flours Mills, Inc., mining company United Paragon Mining Corp., and technology retailer Upson International Corp.

The newly added securities belong to food cart company Fruitas Holdings, Inc., oil giant Petron Corp., and holding firm Prime Media Holdings, Inc.

Shari’ah is the moral and religious code of Islam that encompasses rules, regulations, teachings, and values governing the lives of Muslims, the market operator noted.

“Shari’ah-compliant investment instruments create a mechanism for listed companies to gain access to potential funding from Islamic investors including those in countries in the Middle East and other countries with high Islam population such as Malaysia and Indonesia,” the PSE said.

The PSE issues a list of Shari’ah-compliant securities on a quarterly basis. It released the previous list on Oct. 4, covering the period ending Sept. 25.

“The adoption of Shariah in the capital market will help foster an ethical investment climate that provides opportunities for local Islamic investors to comfortably participate in the Philippine business community. Due to the ethical stance of putting premium on compliance to Islamic laws over profitability, Islamic investors can better gauge the risks involved in their investments,” the PSE said.

The market operator said it had engaged the services of IdealRatings, Inc. to screen listed companies in accordance with Shari’ah standards as specified by the Accounting and Auditing Organization for Islamic Financial Institutions.

The PSE also said that IdealRatings checks companies’ adherence to Shari’ah standards in terms of their business activities and financial ratios.

Under the business screening, the income of companies derived from activities such as adult entertainment, alcohol, cinema, defense & weapons, financial services, gambling, gold and silver hedging, interest-bearing investments, music, pork, and tobacco must be less than 5%.

In terms of financial ratio screening, a company’s cash or interest-bearing deposits or investments should not exceed 30% of its market capitalization, while its interest-bearing debt should not go beyond 30% of its market capitalization.

“Through the screening process, securities that are engaged in activities involved in Haraam (impermissible or unlawful) will be taken out from the list of Shari’ah compliant stocks,” the PSE said.  

IdealRatings, a provider of Islamic finance data, is a United States-based company that specializes in screening securities for Shari’ah compliance. — Revin Mikhael D. Ochave

Cebu Landmasters board OK’s 3-M preferred shares offering

CEBU Landmasters, Inc.’s (CLI) board has approved a public offering of up to three million series A preferred shares, the listed property developer announced on Tuesday.

The company said in a stock exchange disclosure that a special board meeting on Monday approved oversubscription for up to two million series A preferred shares at P1,000 per share.

The board also agreed to “apply for and obtain the registration of the offer shares with the Securities and Exchange Commission, and to apply for and obtain approval from the Philippine Stock Exchange, Inc. for the listing of the offer shares.”

“The offering of preferred shares will enable the company to diversify its funding sources and raise equity capital to support its rapid expansion in the Visayas-Mindanao market,” Juan Paolo E. Colet, managing director at China Bank Capital Corp., said in a Viber message.

Founded in 2003, the company’s portfolio consists of residences, offices, hotels and resorts, mixed-use developments, and townships.

CLI has over 100 real estate projects in various stages of development across 16 cities in Visayas and Mindanao.

The company announced last year that it would commence its first project in Luzon by the middle of 2024, as part of its strategy to “drive the company’s capital, expand its portfolio, and strive for sustainability.”

The preferred share offering suggests the management’s confidence in the company’s growth prospects in 2024, according to Luis A. Limlingan, head of sales at Regina Capital Development Corp.

“The company has been hitting record high reservation sales last year and this not only speaks volumes about its market appeal but also underscores the strong demand for its real estate projects, especially for its economic housing category,” he said in a Viber message. 

CLI’s sales for the first nine months of 2023 climbed by 25% to P17 billion led by its economic brand Casa Mira, which accounted for 52% of total sales.

As of end-September, the company has launched 3,664 units valued at P14.87 billion, it said. 

For the July-September period, the company recorded an attributable net income of P709.11 million, up 9.1% from P649.88 million in 2022, based on its quarterly report.

CLI’s shares at the local bourse climbed by two centavos or 0.78% to close at P2.60 apiece. — Sheldeen Joy Talavera

Gov’t fully awards P30B in fresh 5-year bonds amid high demand

BW FILE PHOTO

By Aaron Michael C. Sy, Reporter

THE BUREAU of the Treasury fully awarded fresh five-year Treasury bonds (T-bonds) that it auctioned off on Tuesday with a coupon rate higher than secondary market levels amid waning expectations of an earlier rate cut by the US Federal Reserve.

It raised P30 billion from the bonds as total bids reached P74.329 billion, more than twice as much as the program, according to auction results posted by the bureau on its website.

The bonds were awarded at a coupon rate of 6.125%. Accepted yields ranged from 5.86% to 6.125% for an average rate of 6.073%.

The coupon rate was 9.5 basis points (bps) above the 6.03% quoted for the five-year bond on the secondary market before the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“The higher rates fetched today reflected the impact of stronger US employment reports last Friday,” a trader said in an e-mail. “This economic release has dampened expectations of an earlier policy rate cut by the Federal Reserve.”

The monthly nonfarm payroll report showed the US economy added 216,000 jobs in December, while the jobless rate was steady at 3.7%, Reuters reported.

It was down from expectations from most forecasters for it to rise, prompting concerns that the US Federal Reserve’s battle to tame inflation might get prolonged.

The Fed hiked borrowing costs by 525 bps to 5.25-5.5% from March 2022 to July 2023. The Federal Open Market Committee will hold its first policy meeting this year on Jan. 30-31.

The lower T-bond yield from the last five-year bond offer came amid “unusually strong” demand, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a Viber message.

On Oct. 10, 2023, the Treasury bureau raised P30 billion from reissued 10-year bonds with a remaining life of five years and three months for an average rate of 6.512%.

The coupon rate for Tuesday’s fresh bonds at 6.125% is 38.7 bps lower than the 6.512% fetched for the reissued 10-year bonds sold in October.

The Treasury wants to raise P195 billion from the domestic market this month — P75 billion via Treasury bills and P120 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of the gross domestic product this year.

MPTC says toll plazas meet TRB standards in cashless dry run

THE Metro Pacific Tollways Corp. (MPTC) on Tuesday said it is working with the Toll Regulatory Board (TRB) to set an “aligned timeline” for the full implementation of cashless transactions on tollways, aiming to alleviate queuing and traffic congestion.

“To date, our toll plazas undergoing the cashless dry run are already making the acceptable grade set by TRB,” Roberto V. Bontia, MPTC chief transformation officer, said in a Viber message.

This follows the TRB’s announcement of plans to transition to cashless payments by June or July this year.

The TRB aims to introduce a unified radio frequency identification (RFID) wallet system or interoperability between Easytrip and Autosweep by mid-year, with the trial set on Jan. 10.

Easytrip is used on MPTC’s North Luzon Expressway, Subic–Clark–Tarlac Expressway, Manila–Cavite Expressway, and Cavite–Laguna Expressway. Meanwhile, Autosweep is used on the San Miguel group’s Skyway, South Luzon Expressway, NAIA Expressway, Southern Tagalog Arterial Road Tollway, and Tarlac-Pangasinan-La Union Expressway. Autosweep is also used on the Villar group’s Muntinlupa Cavite Expressway.

In the dry run, the TRB aims to tackle problems like encoding issues and RFID misreadings that may lead to double charging.

To recall, the TRB has instructed tollway concessionaires and operators to carry out a dry run of contactless toll collection at selected toll plazas from Sept. 1 until Dec. 31, 2023.

The dry run is intended to comply with a resolution passed by the House of Representatives for the re-implementation of contactless tolls.

The TRB said that the dry run has been extended because some toll companies are undergoing a system migration.

In 2020, the Transportation department issued an order requiring cashless transactions for all vehicles on toll expressways. However, due to numerous complaints and malfunctions in electronic toll collection systems, an addendum was issued, mandating cash lanes at all toll plazas.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — A.E.O. Jose

BDO eyes P5B from second ASEAN sustainability bonds

BW FILE PHOTO

BDO UNIBANK, Inc, (BDO) is looking at raising P5 billion from peso-denominated Association of Southeast Asian Nations (ASEAN) sustainability bonds, it said in a disclosure to the Philippine Stock Exchange on Tuesday.

Net proceeds from the bond would be used to diversify its funding sources and finance or refinance assets, the Sy-led Philippine lender said.

The one-and-a half-year notes will be priced at a coupon rate of 6.025% yearly. The minimum investment amount is P500,000 and will increase by P100,000.

BDO will offer the bonds from Jan. 9 to 22. The issue, settlement and listing date is on Jan. 29. The bank said it could amend the terms and timing of the issuance if needed.

BDO appointed Standard Chartered Bank as the sole arranger. BDO and Standard Chartered Bank are also the selling agents. BDO Capital & Investment Corp. was chosen as the financial adviser.

“This marks the bank’s second peso-denominated sustainability bond following a successful P52.7-billion issue in January 2022,” BDO said.

Proceeds from the previous issuance were used to diversify BDO’s funding sources and finance environmental and social projects.

BDO’s ASEAN sustainability bonds in January 2022 were heavily oversubscribed after a P5-billion original offer.

The two-year debt was set at a fixed rate of 2.9%, with interest payable quarterly on a 30/360 basis. It was also issued as the third tranche of BDO’s P365-billion bond program.

BDO’s net income rose by 16.5% year on year to P18.7 billion in the third quarter amid higher interest income and lower provisions.

Its shares gained 0.98% or P1.30 to close at P133.60 each. — Aaron Michael C. Sy

No reason to be complacent: Sweatshops and Pope Francis

COMMONS.WIKIMEDIA.ORG

(Part 4)

The Pope in his Message on the 2023 World Day for the Poor has raised the standards for helping the poor. Because of extreme poverty in the past, some societies have gotten used to ways of alleviating the plight of the poor that cut corners and offend the inherent dignity of those living in dehumanizing conditions. This applies especially to the world of labor in which in the name of cutting costs, multinational corporations tolerate inhuman conditions in factories which they relocate to the emerging economies. In his words: “Then too how can we fail to note the ethical confusion present in the world of labor? The inhumane treatment meted out to many male and female laborers; inadequate pay for work done; the scourge of job insecurity; the excessive number of accident-related deaths, often the result of a mentality that chooses quick profit over a secure workplace.” We are reminded of Saint John Paul II that “the primary basis of the value of work is man himself…However true it may be that man is destined for work and called to it, in the first place, work is ‘for man’ and not man ‘for work,’” (Laborem Exercens, 6).

Despite the fact that there have been commendable improvements in the way workers are treated in many industrialized countries, we still see remnants of the sweatshop environment in some developing countries to which multinational enterprises from the developed countries relocate their factory operations to benefit from lower wages. It is understandable that in the last century, after the Second World War, many countries in Asia were transformed into producers of labor-intensive consumer goods for the developed markets of the US, Japan, and Europe. All over Asia, countries experienced a baby boom after the soldiers returned to their homes with the end of the Second World War. In fact, this is the reason why those of us born during the 1940s and 1950s are referred to as the “baby boomers.” The demographic dividend was enjoyed by all the poor countries all over Asia. Their leaders had enough common sense to make use of their demographic dividend by implementing economic policies that fostered the growth of export-oriented industries such as garments, toys, footwear, furniture, and electronic products that were in great demand in the more developed nations. This was the way that countries like Singapore, Taiwan, South Korea, and, later, China were able to employ their abundant labor force and move up the income ladder. They became the famous “tiger economies” of Asia.

Tragically, the Philippines was the exception. In the name of “nationalism” and a “Filipino First” policy, the strategy followed by the economic managers after the country obtained independence in 1946 was an “inward-looking, import-substitution industrialization” that failed to make use of our own demographic dividend. Worse still, there was an utter neglect of agricultural and rural development. The rest is history. As our Asian neighbors attained higher-income status, one by one surpassing us in per capita income, we became the “sick man” of Asia during the last quarter of the 20th century. This wrong path we took in the early stages of our industrialization efforts explains why we are the least export-oriented economy in East Asia. Our export figures, especially of manufactured goods, pale into insignificance compared with our East Asian neighbors. It is only in the export of electronic products and semi-conductor devices that we have had relative success in competing with our neighbors.

Considering the recent remarks of Pope Francis about how human labor is exploited in the name of profits of multinational corporations, should we really insist in still competing with countries like Vietnam in attracting labor-intensive industries, especially those that are leaving China? I have strong reservations. First, it is too late in the day for us to compete with countries like Vietnam in attracting foreign direct investments (FDIs) in export-oriented manufacturing. We failed in the past to develop the necessary economic support for export-oriented industrialization, especially low-cost energy and low level of wages. Vietnam has much lower energy costs and wages than the Philippines, a major reason why factories from China are migrating to it rather than the Philippines. Unfortunately, however, for the Vietnamese workers, their factories are still notorious for the sweatshop environment which should no longer be tolerated in the 21st century — all over the world there has been significant progress in eliminating practices which go against the inherent dignity of human beings. True, there are those who argue that sweatshops help to lift people out of poverty by providing them with much-needed employment opportunities. They also claim that sweatshops can contribute to long-term economic progress by increasing demand for goods and services within the domestic economy.

The human costs of sweatshop industries may outweigh the economic benefits. Many of these factories, as have been revealed in garments and footwear factories in Vietnam, have poor working conditions. Workers are often exploited and subjected to health hazards, all in the name of profits for multinational companies. Workers typically work long hours with minimal breaks, sometime even forced to work overtime without extra pay. They lack safety equipment such as gloves or masks, leaving them vulnerable to injury and illnesses caused by their work environment. Many workers are paid extremely low wages, barely enough on which to survive. In socialist countries like Vietnam, workers are not allowed to unionize or speak out against unfair treatment. That is why wages can be kept at unreasonably low levels which make it difficult for them to afford basic necessities like food, clothing, and shelter. In many cases, workers may be forced to work long hours or take on additional jobs just to make ends meet.

Long-term employment in sweatshop factories can have detrimental effects on the human resources of a country. The poor conditions described above can lead to chronic pain, respiratory problems, and psychological distress such as anxiety and depression. Lack of proper safety measures and exposure to hazardous materials only exacerbate these issues. Additionally, the pressure to meet quotas and work long hours for low pay can lead to exhaustion and burn out.

The physical environment can also be negatively affected. The rampant growth of these sweatshop factories has caused severe environmental degradation and pollution. Harmful chemicals are released into the air and waterways, causing a ripple effect that extends far beyond factory walls.

Considering all these, I suggest that we do not compete with Vietnam (and other Southeast Asian countries) for the factories that are leaving China. The FDIs we should attract should be those that endow our economy with world-class airports, trains, subways, and other infrastructure, as well telecom facilities that will make it possible for us to target tens of millions of foreign tourists, following the example of Spain. It has been estimated that we employ two workers in the hospitality industry for every foreign tourist who visits the Philippines. We are not even counting the 60 to 70 million domestic tourists. Workers in the hospitality sector can live in better working conditions than in the sweatshop factories.

In general, Filipinos are better employed in service-oriented businesses because of their soft skills. We have already lost the battle in export-oriented manufacturing because of the false start we had in the last century. No use crying over spilled milk. We can still have a flourishing and strong manufacturing sector supported by our huge population (swelling to about 150 million in the next 20 years and earning a per capita income of $15,000 to $20,000 as we attain high-income status).

More importantly, we can avoid what Pope Francis called “the ethical confusion present in the world of labor: the inhumane treatment meted out to many male and female laborers, etc., etc.”

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

Zuellig Pharma named exclusive distributor for Europe’s STADA in PHL

ZUELLIGPHARMA.COM

ZUELLIG Pharma is now the sole distributor for the pharmaceutical products of German-based STADA in the Philippines, the Asian healthcare services provider announced on Tuesday. 

The move is expected to enhance access to STADA’s brands in the over-the-counter and consumer brand categories, as well as prescription medicines, particularly in ophthalmology, Zuellig Pharma said in a statement.

“The Philippines is a key strategic market within STADA’s ambitious growth plans in Southeast Asia,”  STADA Head of Emerging Markets Stéphane Jacqmin said.

“This partnership with Zuellig Pharma will substantially drive the growth of our portfolio in the Philippines and will enable greater access for our products in the market.”

STADA’s products include FERN-C vitamin C, Oilatum skincare, and Hyabak eye drops. STADA Philippines is available in over 6,000 pharmacies, supermarkets, hospitals, and clinics, according to Zuellig Pharma.

STADA Philippines General Manager, Paulo Raymundo Valenzuela, expects the partnership with Zuellig Pharma to support its growth goals in the market.

“We are confident that Zuellig Pharma’s extensive network and its proven track record in pharmaceutical distribution and healthcare services will be pivotal in helping us enhance our reach and capabilities within the Philippines,” Mr. Valenzuela said.

STADA has about 20 production sites, mostly in Europe, with a growing specialty portfolio in therapeutic areas such as dermatology, nephrology, ophthalmology, rheumatology, and Parkinson’s disease, according to Zuellig Pharma.

“As a leading healthcare solutions company, we are confident that our longstanding presence in the Philippines and our strong in-market capabilities will enable us to continue to meet the needs of the population,” Zuellig Pharma Managing Director for the Philippines Jannette A. Jakosalem said. — Revin Mikhael D. Ochave