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BSP keeps rate steady as price risks ebb

PHILIPPINE STAR/WALTER BOLLOZOS

By Keisha B. Ta-asan, Reporter

THE PHILIPPINE central bank kept its benchmark interest rate — as expected — at a near 17-year high for a third straight meeting on Thursday, as policy makers remained watchful despite easing consumer prices.

The Bangko Sentral ng Pilipinas (BSP) left the target reverse repurchase rate (RRP) at 6.5% at its first policy meeting of the year, as predicted by 15 of 17 economists in a BusinessWorld poll last week. Interest rates on the overnight deposit and lending facilities were also left unchanged at 6% and 7%.

This was the third straight meeting that the BSP stood pat since its 25-basis-point off-cycle increase on Oct. 26, 2023. It raised borrowing costs by 450 basis points (bps) from May 2022 to October 2023.

“In consideration of the prevailing risks, the Monetary Board deems it appropriate to keep the BSP’s monetary policy settings unchanged in the near term amid the improvement in inflation conditions,” central bank Governor Eli M. Remolona, Jr. said in a statement.

“The BSP remains ready to adjust its monetary policy settings as necessary in keeping with its primary mandate to safeguard price stability,” he added.

The central bank lowered its risk-adjusted inflation forecast for 2024 to 3.9% from 4.2%, but raised its view for 2025 to 3.5% from 3.4%. It also lowered its baseline inflation forecast for this year to 3.6% from 3.7%, but kept its projection for next year at 3.2%.

Risks to the inflation outlook might have subsided, but risks are still on the upside, Mr. Remolona said.

“The upside risks to the inflation forecasts are linked mainly to higher transport charges, increased electricity rates, higher oil and domestic food prices and the additional impact on food prices of a strong El Niño episode,” he added.

Inflation slowed to 2.8% in January from 3.9% in December and 8.7% a year ago, the slowest since 2.3% in October 2020. It was the second straight month that inflation was within BSP’s 2-4% target.

Mr. Remolona said the recent agreement with Vietnam to secure rice supply in the next five years is encouraging. Efforts to increase rice productivity, including the distribution of drought-resistant seeds, are a step in the right direction, he added.

In January, rice inflation quickened to 22.6% from 19.6% in December, the fastest in nearly 15 years. Rice was also the most significant contributor to December inflation, adding 1.3 percentage points. The commodity had the biggest weight in the CPI basket at 8.87%.

Under a deal signed during President Ferdinand R. Marcos, Jr.’s two-day state visit to Vietnam in January, Hanoi committed to supply 1.5 million to 2 million metric tons of white rice to the Philippines “at a competitive and affordable price” for five years.

MIDYEAR CUT
BSP Senior Assistant Governor Iluminada T. Sicat said there is “scope for a rate cut” this year as soon as they see a firmer inflation downtrend.

“While we see some improvement in headline and core, we still consider taking a more prudent monetary policy stance at this moment,” she told a news briefing.

She noted that inflation might continue to ease this quarter due to base effects, but it might pick up above the 2-4% target in the second quarter. Inflation will go back to the target in the second half, Ms. Sicat said.

She also said higher-than-expected minimum wage increases in the Philippines could reverse slowing inflation.

The Philippine Senate on Wednesday approved on second reading a bill calling for a P100 ($1.78) across-the-board minimum wage increase for workers in the private sector. The Senate president expects the bill to be approved on third and final reading next week.

“We need to maintain our hawkish position but in terms of tone, it’s not as strong as what we had last December. But we continue to be hawkish looking at developments here and abroad,” Ms. Sicat said.

There is still a more than 50% probability of above-target inflation this year, said Dennis D. Lapid, officer-in-charge of the BSP Department of Economic Research.

Ms. Sicat also said the timing of reserve requirement ratio (RRR) cuts should be considered once inflation risks ebb “The BSP continues to maintain its commitment to reduce the RRR level at the rate of its neighbors.”

The central bank said the government might miss its 6.5-7.5% economic growth target this year “as the full impact of the BSP’s prior monetary policy tightening continues to manifest [itself].”

“There could be some moderation in economic activity, but we think that we will still pose modest economic growth for 2024,” Ms. Sicat said.

Finance Secretary Ralph G. Recto earlier said macroeconomic assumptions might need to be adjusted to be “more realistic.”

The economy grew by 5.6% last year, slower than 7.6% in 2022 and falling short of the state’s 6-7% goal.

Capital Economics Senior Asia Economist Gareth Leather in a note said the central bank might start easing policy rates by the middle of the year because inflation is expected to remain within target in the coming months.

“Overall, we expect the BSP to cut rates in May and lower borrowing costs by a total of 200 bps next year, which is much more dovish than the consensus,” he said.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said BSP would likely remain hawkish and keep rates untouched until the Fed delivers its own rate cuts. “However, with the risk-adjusted inflation forecast already within target, we believe the BSP now has scope to discuss potential easing possibly as early as midyear.”

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco expects the central bank to cut rates by 100 bps this year starting May.

“Our base case is that growth will soften further this year to 4.8% from 5.6% in 2023, which would represent the weakest full-year outturn since 2011, barring the pandemic-induced recession in 2020,” he said.

Makoto Tsuchiya, an economist from Oxford Economics, said the Philippine central bank would cut rates when it starts to see a “firmer indication of disinflation.” “For the time being, risks are tilted to slower commencement of rate cuts given inflationary risks including weather disruptions, geopolitical tensions and possible minimum wage hikes.”

2023 OFW remittances hit all-time high

PHILIPPINE STAR/ MIGUEL DE GUZMAN

CASH REMITTANCES rose to another record last year as overseas Filipino workers (OFW) sent more money to their families who struggled with spiraling prices, the Philippine central bank said on Thursday.

Money sent home by OFWs through banks increased by 2.9% to $33.491 billion, falling short of the Bangko Sentral ng Pilipinas’ (BSP) 3% estimate and slower than the 3.6% expansion in 2022.

Remittance growth could have been tempered by a weaker global environment and restrictive borrowing costs, the BSP said in a statement.

Annual Cash Remittances

In December alone, cash remittances rose by 3.8% to $3.28 billion from a year earlier, the fastest in a year.

“The growth in cash remittances in December 2023 was primarily due to increased receipts from both land- and sea-based workers,” the central bank said.

Land-based OFWs sent $2.614 billion in December, 4% more than a year ago. Remittances from sea-based workers grew by 3.2% to $665.533 million.

Migrant workers usually send more money during the holiday season, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. said in a Viber message.

“The slower annual growth of 2.9%, slightly lower than the BSP target, may have been due to the weaker global economic environment amid higher interest rates and geopolitical issues,” he said in a Viber message.

After increasing key rates by 350 basis points (bps) in 2022, the Monetary Board tightened borrowing costs by another 100 bps in 2023 to tame inflation. This brought the policy rate to a near 17-year high of 6.5%.

BSP Governor Eli M. Remolona, Jr. earlier said the Monetary Board might consider cutting policy rates in the second half, but not until there is a sustained downtrend in inflation.

“Remittance flows continue to grow at a very robust and consistent roughly 3% pace, helped by the steady deployment of workers and sustained expansion of host countries,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Growth in inflows from economies such as the US, Saudi Arabia and the United Arab Emirates (UAE) contributed largely to the increase in remittances last year, BSP said.

The US was the biggest source of remittances last year, accounting for 40.9%, followed by Singapore (7.1%), Saudi Arabia (6.2%), Japan (5%), the UK (4.7%), UAE (4.3%), Canada (3.6%), Qatar (2.8%), Taiwan (2.7%) and South Korea (2.5%).

These countries accounted for more than three-fourths (79.8%) of cash remittances during the year.

“Overseas Filipinos may have simply sent home more money given still elevated inflation,” Mr. Mapa said.

Inflation averaged 6% in 2023, the second straight year that it went above BSP’s 2-4% target.

Meanwhile, personal remittances, which include inflows in kind, grew by 3.9% to $3.625 billion in December from a year earlier. This brought the full-year figure to a record $37.21 billion, 3% higher year on year.

“We can expect the same robust pace of growth in remittances again this year as it delivers a healthy dose of foreign inflows while also supporting consumption via the peso’s purchasing power,” Mr. Mapa said.

Mr. Asuncion said he expects remittances to grow by 3% this year before easing to 2.8% in 2025.

He said higher-for-longer interest rates, which may persist this year, would likely affect host countries as tight borrowing costs restrict economic activity.

BSP expects cash remittances to grow by 3% this year. — Keisha B. Ta-asan

House looking at wage hike of as much as P400

By Beatriz Marie D. Cruz and John Victor D. Ordoñez, Reporters

THE HOUSE of Representatives is seeking to pass an across-the-board wage increase for workers in the private sector that is higher than the Senate’s P100 proposal, according to a lawmaker.

Congressmen are studying a proposed P350 to P400 wage hike, House Deputy Majority Leader and Iloilo Rep. Janette L. Garin told a news briefing on Thursday, citing instructions from Speaker Ferdinand Martin G. Romualdez.

“The intention is good, but P100 may be too low,” she said, referring to the wage hike bill passed by the Senate on second reading on Wednesday.

“With the high cost of goods, it may not be enough. It’s better if it was higher, similar to what Congress is carefully studying now,” she added in Filipino.

Last year, congressmen filed separate measures seeking a P750 and P150 across-the-board wage increases for private sector workers. These have yet to be heard by the Labor Committee.

Nagkaisa, the country’s largest labor coalition, urged the House to pass its own version of the legislated wage hike.

“The Senate’s P100 wage hike proposal falls short of the P150 originally promised and a far cry from what was needed to save minimum wage earners from the poverty wages imposed upon them by all the regional wage boards,” it said in a statement. “The measure is also for minimum wage earners only.”

The Employers Confederation of the Philippines (ECoP) said raising wages would make it costlier for foreigners seeking to invest in the Philippines.

“We are now the second-most expensive in the region in terms of minimum wage,” ECoP President Sergio R. Ortiz-Luis, Jr. said by telephone. “It might be small, but it surpassed all the original wages to the point that we became one of the most expensive in the region.”

He said microenterprises that closed during the coronavirus pandemic might choose not to reopen if Congress approves the wage increase.

“Let’s rely on the wage boards,” Mr. Ortiz-Luis said. “It’s the most objective way to do it — not politicized and emotional.”

Ms. Garin said the wage increase should be balanced by the capacity of companies to pay since some might be forced to lay off workers or even shut down.

About 99.58% of Philippine businesses are micro, small and medium enterprises (MSME), according to a 2021 study by the Trade department.

Marikina City Rep. Stella Luz A. Quimbo on Monday urged her peers to focus on growth and productivity, noting that a legislative wage increase could fan inflation.

‘BALANCING ACT’
“Companies will pass on their wage increase to prices… A cost-push inflation will happen,” the lawmaker, who co-heads the Committee on Appropriations, told a news briefing. “You will temporarily satisfy our workers who are also consumers.”

Economists said Congress should weigh the effects of a legislated wage increase on small businesses and inflation.

“It really is a balancing act in terms of timing,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in a Viber message, even as he noted that it could boost worker productivity.

“It may be unwise to implement it if the inflationary environment remains precarious, but it may be viable once economic growth is firm and price growth is tamed,” he added.

Mr. Roces said small businesses with limited profit margins would find it difficult to pay higher salaries.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said lawmakers should balance the need to maintain a conducive work environment for growth and ensure a decent standard of living.

“Incentivizing workers to be more productive and increasing efficiency and competitiveness in industries depend on factors such as worker skills, management practices and technological advancements,” he said in a Viber message.

“A higher minimum wage might result in businesses passing on the increased costs to consumers through higher prices, potentially contributing to inflationary pressures,” he added.

Mr. Roces said higher wages would boost worker morale and talent retention but also cause businesses to hire fewer workers.

Inflation eased to 2.8% last month from 3.9% in December and 8.7% a year ago, the slowest in three years.

Federation of Free Workers President Jose “Sonny” G. Matula said the Senate’s P100 wage hike measure could pave the way reforms in the regional wage-setting system.

“It is time to prioritize wage hikes that truly reflect the cost of living and move closer to realizing this constitutional promise,” he said in a Viber message.

A Filipino family of five needs at least P13,797 a month or P460 a day to meet their basic needs, according to the Philippine Statistics Authority.

Metro Manila’s daily minimum wage rose by P40 to P610 in June, much lower than the P570 increase sought by some labor groups.

PHL foreign investment pledges rise to record

By Lourdes O. Pilar, Researcher

APPROVED foreign investment pledges in the Philippines almost quadrupled last year, buoyed by economic growth that was one of the best performing in Asia last year, according to data from the local statistics agency.

Pledges hit a record P889.07 billion ($15.9 billion), about 3.7 times higher than a year earlier and the highest since 1996.

Investment pledges rose 2.3 times year on year to P394.45 billion in the three months to December, the largest in three quarters.

Total approved foreign investment pledges

Germany was the top source of approved foreign investment pledges last year with P393.99 billion, 5,400 times bigger than its year-ago pledge. Investment commitments from Germany accounted for 44.3% of the total.

The Philippine Statistics Authority compiles investment pledges from the government’s seven investment promotion agencies. It is different from the actual foreign direct investments tracked by the Bangko Sentral ng Pilipinas for the balance of payments.

The Board of Investments (BoI) contributed the biggest bulk of the foreign investment pledges with P767.63 billion, or 86.3%. The Philippine Economic Zone Authority PEZA came in second with P112.13 billion, followed by the Subic Bay Metropolitan Authority with P7.17 billion, Clark Development Corp. with P1.55 billion, BoI-Bangsamoro Autonomous Region in Muslim Mindanao with P359 million and Authority of the Freeport Area of Bataan with P74.5 million.

Meanwhile, investment pledges from Filipino nationals fell annually by 38.7% to P190.7 billion in the fourth quarter, accounting for 32.6% of the combined pledges worth P585.15 billion.

If these projects take shape, foreign and local investments pledged last quarter are expected to generate 28,529 jobs.

Cid L. Terosa, a senior economist at the University of Asia and the Pacific (UA&P), said higher-than-expected economic growth in the third and fourth quarters had spurred the influx of foreign investments.

“Also, the tremendous increase in net investments in debt instruments in November 2023 that fueled the double-digit growth of foreign direct investments in the same month helped push upwards foreign direct investments in the fourth quarter of 2023,” he said.

Economic output expanded by 5.6% last quarter, slower than 6% in the third quarter and 7.1% a year earlier.

Foreign direct investment net inflows rose by 27.8% year on year to $1.048 billion in November from a year earlier, according to central bank data.

Mr. Terosa said foreign direct investments would be affected by geopolitical uncertainties in Asia and the Middle East.

“Elections in many countries around the world, tensions in Asia involving China and other Asian countries, trade route disruptions and the evolving complexities of the war between Russia and Ukraine as well as the war between Israel and anti-Israel forces have connived to make major investors around the world jittery,” he said.

“Since the growth rate during the first quarter of 2023 was high, I expect the growth rate of foreign direct investments in 2024 to be affected by base effects,” he said.

“Foreign direct investments will follow a definite upward trajectory during the second half of 2024 as the global economic recovery becomes more stable,” he added.

A steadfast push for financial resiliency among Filipinos

INSURANCE.GOV.PH

The Insurance Commission (IC), established in 1949, plays a crucial role in developing the country’s insurance sector. Throughout the years, the commission has successfully strengthened consumer protection and the stability of the insurance sector by empowering individuals with financial planning and risk management.

Over the past seven decades, the Philippines’ insurance industry has transformed into a robust and dependable sector under the vigilant oversight of the Insurance Commission, Finance Secretary Ralph G. Recto said during Insurance Commission’s 75th anniversary celebration last January.

“This transformation is evident in the industry’s sustained growth in assets, earned premiums, and investments,” he said.

Last year, the Philippine insurance industry witnessed a 2.8% increase in overall growth. It garnered P289.60 billion from life and nonlife insurance plans and an increase of investments to 15% (P1.9 trillion), and assets to 10% (P2.3 trillion), Mr. Recto highlighted.

In a report by the IC, the net income for the insurance industry increased to 9.38%, with P38.28 billion.

Moreover, the report showed life and nonlife insurance companies saw higher net income growth rates. Net income for life insurance companies jumped by 10.32% (P28.79 billion), and nonlife insurance companies increased by 15% (P5.48 billion).

Whereas total premium income by pre-need companies marked an 8.28% increase, from P15.43 billion to P16.70 billion, caused by a surge of pre-need plans sold from the previous year.

“All these numbers underscore the formidable strength of the insurance industry,” Mr. Recto said. “This outstanding performance is a testament to the efficiency of the regulatory and supervisory measures implemented by the Insurance Commission.”

“Clear standards, aligned with global practices, were established and rigorously implemented. The commitment to enforcement was steadfast. The regulatory guardian has been beyond reproach and therefore constantly credible,” he added.

On top of the insurance industry’s recent achievements, the IC was the awardee of the 2023 Freedom of Information Award under the Top Requested and Performing Agencies Category by the Presidential Communications Office (PCO).

“The Insurance Commission was awarded for its significant contribution to the development and success of the Freedom of Information Program implementation, and for demonstrating an outstanding commitment to transparency, accountability, and the pursuit of the principles of freedom of information,” the commission said in a statement.

Additionally, a customer satisfaction survey by the IC for the 3rd quarter of 2023 showed high results in responsiveness (98.16%) and reliability and integrity (97.88%), resulting in 97.24% overall public satisfaction.

More than the country’s regulator for the insurance industry, the commission has been an active advocate for financial inclusion and resiliency in the country. In particular, IC has been advocating for increasing access to financial products and services, financial literacy programs, and utilizing technological innovation within the sector.

In a Life Insurance Convention held in Cebu last year, Insurance Commissioner Reynaldo A. Regalado stressed the vital role insurance agents and underwriters play in supporting financial literacy programs.

“As among the government’s links to the insuring public, life insurance agents and underwriters can help in advocating financial literacy and prudence among our people, for the ultimate goal of financial inclusion for all,” Mr. Regalado said.

“May I thus call upon your organizations to continue supporting financial literacy programs that provide awareness of the benefits of financial products and services, particularly insurance policies that guard against risks that can result in financial ruin,” he added.

To maintain the growth of the insurance sector moving forward, the commission is called to strengthen its laws and policies, specifically, the Financial Products and Services Consumer Protection Act, which will provide better access to financial products and services.

“This will empower our consumers by providing them with confidence in accessing financial products and services within a secure environment that prioritizes their rights and interests,” Mr. Recto said during the anniversary.

Moreover, there are needed changes in building financial literacy in the country, including collaborating with schools and universities to promote financial education among students, and utilizing digital technology for better access of financial products and services.

“Digital technology will be the key that unlocks not only greater access to a wide range of financial products and services, but also a more responsive, reliable, and effective insurance industry,” Mr. Recto said.

75 years in service

The insurance sector has come a long way in the Philippines, and the commission has been a witness to its development.

Insurance was first introduced to Filipinos during the Spanish colonization. During this time, Strachman, Murray & Co., Inc., representing the Lloyd’s of London, has opened doors for insurance to enter the Philippine market.

In 1898, Sun Life Assurance of Canada entered the country, which started the establishment of the insurance sector in the country. Thereafter, the first domestic nonlife insurance company Yek Tong Lin Insurance Company, was formed in 1906, followed by Insular Life Assurance Co., Ltd., the first life insurance company in 1910.

Then, due to the rapid growth of the market, through the Republic Act 2427, or the Insurance Act, the agency that is now IC emerged, vested with the responsibility for supervising the country’s insurance business.

Since then, the IC became a pivotal institution in Philippine history, operating under various names, beginning with the Insurance Division of the Bureau of Treasury (1915), then the Bureau of Banking (1947) after the said division was merged with the aforementioned bureau, then the Office of the Insurance Commissioner (1949), then finally the Insurance Commission (1974).

In 1975, Presidential Decree No. 612 marked the birth of the Insurance Code in the Philippines, streamlining existing insurance codes into a single code.

In 2009, Republic Act No. 9829, or the Pre-Need Code was issued, allowing the IC to regulate and supervise pre-need companies in the Philippines.

In 2013, Former President Benigno S. C. Aquino III signed Republic Act No. 10607, or the Amended Insurance Code, which stated the additional requirements for life and nonlife insurance companies. According to the law, the said revision aims to strengthen the insurance industry by providing sufficient financial protection for all Filipinos. — Angela Kiara S. Brillantes

Solving Philippine insurance’s current dilemma

Photo from Freepik

As much as the whole of the insurance industry has been changed by the COVID-19 pandemic, it remains to be seen how significant its long-term impact will be.

Many reports have been made about the pandemic’s effects on the perspective of Filipino consumers in the Philippines and about the importance of insurance. Yet, insurance penetration remained at a remarkably low 1.68% at end-September 2023 according to data from the Insurance Commission (IC). This is even lower than the 1.81% recorded in the same period the previous year. Coupled with rising costs from claims and elevated inflation rates, the overall picture for the insurance industry in the Philippines remains cloudy.

“Elevated interest rates may not have that big an impact. However, heightened inflation will have a negative effect as it drives claims costs higher,” Philippine Insurers and Reinsurers Association, Inc. (PIRA) Executive Director and Fortune General Insurance Company President & Chief Operating Officer Michael F. Rellosa was quoted as saying in a recent BusinessWorld report. “High inflation affects our claims costs negatively. We have to watch our claims costs and keep them manageable.”

“A heightened sense of vulnerability would hopefully spur more people to insure themselves. However, if the economy is bad, then there would be less disposable income and insurance becomes less of a priority,” he added.

Low insurance penetration could also be a symptom of generally low financial literacy among Filipinos. “There’s a lot of financial literacy that we still need to work on,” Sun Life Philippines Chief Distribution Officer Al D. Quitangon said in another report. “We need to continue to educate more Filipinos on the importance of financial security.”

Mr. Quitangon said that a bigger focus should be put on the Filipino youth, as they account for a majority of the working population.

“Insurance must be communicated to the youth, so they have appreciation and understanding,” he said. “If we’re able to relate and communicate well what we do or what our services and products can do, then we can improve literacy.”

Technology could play a role in improving the situation. Some of these include e-wallet apps which can offer functionalities to access financial protection for different needs; artificial intelligence (AI) for automating the customization of policies; and blockchain for boosting security.

“AI enables us to tailor-make and customize the features of a policy for an individual. You can only do that cost effectively through technology. Blockchain also allows us to manage our policy and administration in a very cost-effective and safe way,” Singlife Philippines, Inc. Co-Founder and Executive Director Sherie Ng was quoted as saying.

Meanwhile, Philippine Life Insurance Association, Inc. (PLIA) President and Etiqa Philippines President and Chief Executive Officer Rico T. Bautista said raising the country’s insurance penetration rate will depend on the country’s economic growth.

“I am positive that the insurance industry as a whole, and specifically the life insurance industry penetration rate, will continue to maintain its current rate for [this] year as we are hoping to see improved GDP (gross domestic product) growth in the country,” Mr. Bautista said.

In addition, Islamic insurance products show potential in raising insurance penetration rate in the country, especially as it is a market which remains largely untapped.

“There is still a great opportunity to increase the insurance penetration in the country per se since this is still relatively lower compared to other Asian countries amid improved financial literacy and still huge potential for increased financial inclusion, especially in the countryside, including in Mindanao,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“There is potential to tap the Islamic markets with compliant products in terms of different products locally and in the international market, including Sukuk and other financial or insurance products,” Mr. Ricafort added.

Microinsurance could boost financial inclusion in the country, and the IC is considering giving incentives to new microinsurance players to help prop up the sector.

“In the Philippines, microinsurance sells itself. The only thing we have to do is to expose them to everyone. In terms of policies to boost this, we’re looking at incentives and we’re looking at the way we have been checking them. There will be less regulations for some of them if that’s possible; and just to make sure, we can help them post audited [financial statements],” Insurance Commissioner Reynaldo A. Regalado said at an industry forum.

Microinsurance MBA Association of the Philippines Chairman Emeritus Jaime Aristotle B. Alip said at the same event that lowering taxes or a tax credit scheme could encourage more insurers to go into microinsurance.

Latest data from the IC showed the microinsurance industry’s premium income rose by 19.6% to P10.16 billion as of end-September 2023, up from P8.49 billion in the same period in 2022. The number of lives insured under microinsurance policies also went up by 2.34% year on year to 56.29 million from 55 million.

While the microinsurance industry has been steadily growing in the past years, the sector still lacks major players as there are only 49 companies selling microinsurance, Mr. Regalado noted.

This could primarily be attributed to the sector being exposed to a lot of risks, which result in higher loss ratios, Mr. Rellosa of PIRA said at the same event.

According to IC data, the insurance sector saw its overall net income grow by 9.38% to P38.28 billion at end-September 2023, up from P35 billion in the same period in 2022. Life and nonlife insurance sectors saw higher premiums during this period, while mutual benefit associations (MBAs) posted increased contributions in the period.

The premium income of life insurance companies grew by 13.93% to P229.89 billion in the first nine months of 2023, with P46.57 billion coming from new business. The sector posted a net income of P28.79 billion in the period, up by 10.32% from P26.10 billion a year prior.

Meanwhile, the nonlife insurance sector’s total net premiums written rose by 15.56% to P48.21 billion at end-September. The segment’s net profit increased by 14.99% to P5.48 billion from P4.76 billion a year prior.

MBAs saw contributions rise by 7.43% to P11.494.4 billion in the first nine months of 2023. However, net earnings of MBAs declined by 3.05% to P4.01 billion from P4.14 billion a year prior due to a 32.72% rise in total underwriting expenses amounting to P9.64 billion. — Bjorn Biel M. Beltran

Commissioner Regalado: Enabling quality service to the insurance market

Insurance Commissioner Atty. Reynaldo A. Regalado — FACEBOOK.COM/DOFPH

Prior to his appointment as the new commissioner of the Insurance Commission (IC), Atty. Reynaldo A. Regalado was expected to inherit and regulate an insurance, pre-need, and health maintenance industry that has been calloused by uncertainties brought about by the pandemic and subsequent ballooning of inflation rates.

Before taking over for Former Insurance Commissioner Dennis B. Funa in April last year, Mr. Regalado accrued administrative and diplomatic experience in the country and abroad leading to his appointment. He served as the administrator of the Philippine Overseas Employment Administration from 1998 to 2001. Mr. Regalado was also a Philippine Labor Attache in Japan (1993-2004) and South Korea (2005-2006). The commissioner served as an assistant secretary of the Department of Labor and Employment as well.

Ever since Mr. Regalado was appointed as the country’s Insurance chief, the IC has not only met expectations but also provided Filipinos with quality regulatory services.

In the commissioner’s first year of service in 2023, the IC collected P518 million in registration and supervision fees, a 3.83% increase from the P499.54 million in fees generated in 2022, according to data from the agency.

Broken down, while the collection of processing (-7.19%) and certificate of authority fees (3.39%) decreased, increases were tallied in registration fees for product approval (10.04%), accreditation fees (22.53%), certification fees (2.01%), examination fees (14.12%), filing fees (0.81%), supervision fees (3.02%), other fees (8.77%), and miscellaneous income (26.59%).

Turnover from Former Insurance Commissioner Dennis B. Funa (right) to present Commissioner Reynaldo A. Regalado (left) last March 2023 — insurance.gov.ph

Another accomplishment during the commissioner’s tenure so far is the number of complaints resolved throughout 2023 based on data from the IC. 5,417 complaints from the insuring public were resolved last year compared to 5,025 the year prior.

This is pursuant to the commission’s mandate to regulate and supervise the insurance, pre-need, and HMO industries in accordance with the provisions of the existing Insurance Code as well as Pre-Need Code of the Philippines.

IC data also show that total premiums collected under microinsurance policies as of the third quarter of 2023 increased by 19.6% compared to the same period in 2022. The commission gathered P10.16 million in premiums compared to P8.49 million as of Q3 the year prior.

More recently, a memorandum of agreement between the IC and the Department of Migrant Workers that will provide overseas Filipino workers with a dedicated hotline for the resolution of their complaints against IC-regulated entities was signed this Jan. 24.

An agreement to conduct the country’s first industry-wide morbidity study based on the claims experience of health maintenance organizations (HMOs) and insurance companies was also signed between the IC and the Actuarial Society of the Philippines (ASP). The study aims to evaluate the reasonableness of premium rates, reserve valuations, and capitalization requirements of HMOs and insurance companies.

Due to these achievements, Department of Finance Secretary Ralph G. Recto heaved praise on the commission for evident sustained growth in the industry’s assets, earned premiums, and investments.

“All these numbers underscore the formidable strength of the insurance industry. In addition, this outstanding performance is a testament to the efficiency of the regulatory and supervisory measures implemented by the Insurance Commission,” Mr. Recto was quoted as saying in a message delivered by Officer-in-Charge National Treasurer Sharon P. Almanza during the IC’s 75th Milestone Anniversary Celebration last month. — Jomarc Angelo M. Corpuz

Significant strides in sustainable development

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Sustainable development is an approach that takes into account the well-being of both current and future generations, ensuring that the needs of the present are met without compromising the ability of future generations to meet their own needs. Given the challenges faced today, such as climate change, depletion of natural resources and social inequality, sustainable development has emerged as a crucial framework for building a more resilient and equitable future.

The United Nations (UN) adopted 17 Sustainable Development Goals (SDGs) in 2015, addressing critical areas of importance by 2030: people, planet, prosperity, peace, and partnership. These goals inform projects and policies across various organizations, including guidelines on housing, urban development, transportation systems, and healthcare delivery.

In the Philippines, sustainable development has been a major concern, given the country’s vulnerability to natural disasters and its rapidly growing population. Over the years, the Philippines has been grappling with issues related to poverty, environmental degradation and social inequality, among other things. Fortunately, the government and other stakeholders have been working to ensure that the development is not at the expense of the environment and that economic growth is inclusive and will benefit all Filipinos.

According to the National Economic and Development Authority (NEDA), the country is committed to achieving the SDGs by 2030 and has been working on localizing the goals, setting subnational targets, and recalibrating 2030 targets on key SDG indicators. The Philippine Statistics Authority (PSA) is also monitoring the country’s efforts to generate data for the 230 unique indicators and 169 targets of the 17 SDGs.

In 2022, Foreign Affairs Secretary Enrique A. Manalo has underscored the country’s commitment, presenting the third Voluntary National Review (VNR) of the Philippines on the implementation of the 2030 Agenda for Sustainable Development at the High Level Political Forum for Sustainable Development (HLPF).

Furthermore, the UN and the Philippine government have also recently signed a new partnership framework, the UN Sustainable Development Cooperation Framework, which spans from 2024 to 2028. This framework aims to mobilize global knowledge, capacities, and resources to support the Philippines in addressing its major national priorities, including human capital development, sustainable and inclusive economic development, and climate action for environmental sustainability and disaster resilience.

While the government plays a crucial role in implementing policies and regulations that promote sustainability, other players such as the private sector also has a significant contribution to make.

One of the ways in which the private sector is promoting sustainable development is by incorporating environmentally friendly practices in their operations. This includes reducing their carbon footprint by using renewable energy sources, implementing waste management systems, and adopting sustainable supply chain practices. By doing so, they reduce their impact on the environment, conserve natural resources, and contribute to a cleaner and healthier planet.

Moreover, the private sector can also have a significant impact on local communities by creating job opportunities, promoting economic growth, and investing in social development programs. This not only helps to improve the quality of life for people but also contributes to the overall sustainable development of society.

Environmental stewardship

As the world population continues to grow, the demand for resources increases, putting a strain on the planet’s ecosystems. In recent years, there has been a growing awareness of the importance of sustainable development and the need to protect the environment for future generations. Governments, businesses, and communities in the Philippines are taking action to reduce their environmental impact and promote sustainable practices.

Leading corporations in the Philippines are increasingly embracing corporate social responsibility (CSR) as a key component of their business strategy. Many companies are allocating resources towards sustainable development projects that contribute to environmental conservation. These initiatives include reforestation programs, waste reduction projects, and renewable energy investments.

Another significant effort towards environmental conservation is the use of renewable energy sources. Solar, wind, and hydropower are emerging as sustainable alternatives to conventional fossil fuels, presenting a compelling solution to mitigate the impacts of climate change. In fact, the Department of Energy has existing renewable energy policies to encourage private domestic and foreign investment to drive growth in the industry and reduce dependence on expensive energy imports.

For instance, the National Renewable Energy Program (NREP) outlines the policy framework enshrined in Republic Act 9513, which sets the strategic building blocks that will help the country achieve the goals set forth in the Renewable Energy Act of 2008.

Meanwhile, efficient waste management is also fundamental to environmental sustainability, as the improper disposal of waste poses severe threats to ecosystems, human health, and the overall well-being of the planet.

According to Environment and Natural Resources Secretary Maria Antonia Yulo-Loyzaga, the country generates approximately 61,000 million metric tons of waste daily, with 24% of it being plastic waste. As a result, the government has been enacting pro-environment programs and initiatives, such as the 3R (reduce, reuse, recycle) approach, renewable energy promotion, and biodiversity conservation, to address these challenges.

Waste reduction initiatives include reducing packaging waste, promoting reusable products, and encouraging composting. Sustainable waste disposal practices include landfill gas capture, waste-to-energy technologies, and hazardous waste disposal.

Social inclusivity

The country strongly supports the idea of attaining a just, equitable, and inclusive society for all, emphasizing the importance of people-centered sustainable development with the active engagement of all stakeholders.

The government has taken a comprehensive approach to implementing the SDGs, with actions grounded in laws that ensure coordination across sectors through institutional mechanisms.

Several specific initiatives have been undertaken to promote social inclusivity, such as institutionalizing the Alternative Learning System for quality education, incentivizing green jobs, and promoting inclusive business models for decent work. Additionally, the Pantawid Pamilyang Pilipino Program (4Ps) provides cash transfers to low-income families, promoting financial inclusion and poverty reduction.

Meanwhile, access to quality healthcare is a fundamental right, and the Philippines has been working towards ensuring healthcare inclusivity. A notable example is the Universal Health Care Law, which aims to provide affordable and accessible healthcare services to all Filipinos, regardless of their socioeconomic status.

The private sector has also implemented various programs to promote inclusive economic growth. For instance, microfinance initiatives, entrepreneurship programs, and livelihood projects have targeted marginalized groups, empowering them to become active contributors to the economy. — Mhicole A. Moral

Aboitiz group keen on developing more airports

STOCK PHOTO

By Ashley Erika O. Jose, Reporter

ABOITIZ InfraCapital, Inc. is eyeing to develop more airports in the country after securing the original proponent status (OPS) for the development, management, and expansion of two regional airports, the company’s president said.

“Yes, we are definitely interested in developing some of our airports, other than the ones for which we have secured OPS for,” Cosette V. Canilao, president and chief executive officer of Aboitiz InfraCapital, said in an interview last week.

The infrastructure arm of the Aboitiz group has submitted unsolicited proposals for the operations, maintenance, and development of New Bohol-Panglao International Airport, Bicol International Airport, Laguindingan International Airport, and Iloilo International Airport.

The Transportation Department has said that companies willing to match the proposal of Aboitiz InfraCapital for Laguindingan International Airport and New Bohol-Panglao International Airport will have their chance within the first quarter of the year.

The company is awaiting the terms to begin the Swiss challenge for Laguindingan International Airport as soon as possible, Ms. Canilao said.

“The government has already approved the Laguindingan Airport, so it is now just the transmittal of the terms,” she said.

Rafael M. Aboitiz, vice-president and head of Airport Business at Aboitiz InfraCapital, said the company is “very bullish” on the aviation sector.

“We feel that domestic tourism is very strong, and there’s a long runway ahead for international tourism as well. The world should get to know the Philippines a little bit better,” he said.

He said that future airport developments are still under study as the company focuses on projects in the pipeline.

“Since we have a lot of projects in the pipeline, we want to focus on securing the projects for the three airports we’re looking at. We’re also waiting to see how the government wants to pursue PPP programs, whether it’s through solicited or unsolicited programs as well,” he said.

Nigel Paul C. Villarete, senior adviser on public-private partnership (PPP) at the technical advisory group Libra Konsult, Inc., said Aboitiz InfraCapital is deemed capable of operating regional airports as it already operates the Mactan-Cebu International Airport.

“Having many different operators, for as long as they are competent, would always be preferable, but not necessary. Aboitiz InfraCapital is very much capable, if they can do Mactan, they can do all the others,” Mr. Villarete said in a Viber message to BusinessWorld on Thursday.

In 2022, Aboitiz InfraCapital finalized a deal with Megawide Construction Corp. and GMR Airports International, B.V., allowing it to acquire shares in GMR-Megawide Cebu Airport Corp., the company behind the Mactan-Cebu International Airport (MCIA).

“Unlike most other countries in the world, except for NAIA and MCIA, CAAP (Civil Aviation Authority of the Philippines) manages and regulates all other airports causing a situation where one regulates what one manages,” he said.

Mr. Villarete said Aboitiz InfraCapital’s proposals to operate and rehabilitate airports will likely address the need to separate civil regulation and airport operations.

“This upcoming proposal might somewhat cure that but it would still be really necessary to create an airport authority, separate from CAAP similar to what is existing in other countries,” he said.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said Aboitiz InfraCapital’s recent acquisition of Mactan-Cebu International Airport is a starting point of expanding its capability towards upgrading smaller airports in the country.

“While the public has yet to see whether Aboitiz InfraCapital has gained significant technical expertise in airport operations as a result of its recent acquisition of the Mactan Cebu International Airport, it should still be able to compete for the development of smaller regional airports around the country,” he said in a Viber message.

“It can be presumed that Aboitiz can raise the money to upgrade regional airports. In the long run, it is better to have other parties but the government can’t prevent Aboitiz from proposing in the hope that another would enter,” said Rene S. Santiago, former president of the Transportation Science Society of the Philippines.

Aboitiz InfraCapital is also involved in the MIAC consortium, which is among the qualified groups bidding to operate, maintain, and upgrade the Ninoy Aquino International Airport (NAIA).

The MIAC consortium submitted the lowest bid among the bidders, offering a 25.9% revenue share to the government.

The Department of Transportation is expected to announce the winning bidder for the NAIA project on Feb. 16, pending the approval of the bidding report by the Manila International Airport Authority.

Jennifer Lopez launches This Is Me… Now with muse Affleck by her side

LOS ANGELES — Jennifer Lopez explores her experiences of love and relationships in her new movie This Is Me… Now: A Love Story that premiered in Hollywood on Tuesday, where she walked the carpet with her husband, actor-director Ben Affleck.

The musical film, which coincides with the release of Ms. Lopez’s new album entitled This is Me… Now, delves into her love life and the nature of relationships, including with herself, through the characters in her self-penned drama.

“It’s become more important to me to grow as a person and as an artist to be more vulnerable and to be more honest about things,” she told Reuters in an interview.

“So this is something that felt very organic for me to do at this point in my life, with the things that I’ve gone through and the things that I’ve learned.”

The actress-singer, 54, who has been married four times, was first engaged to Mr. Affleck in 2002, sparking her hit record This is Me… Then, but the wedding was called off in 2003 and the pair split a few months later.

Fast forward to 2021 and the couple reunited, marrying in July 2022.

“I don’t know how comfortable he is being the muse for me,” said Ms. Lopez, reflecting on how her 51-year-old husband feels about her sharing details of their relationship.

“He couldn’t be more supportive and loving and kind of encouraging to me to express myself exactly the way that I want to, which I find really beautiful and generous of him.”

The 65-minute film, directed by Dave Meyers, showcases some of the 13 tracks on Ms. Lopez’s ninth studio album of the same name, including “Mad In Love” and “Dear Ben pt. II.”

Alongside Ms. Lopez, who plays the character called “artist” in the movie, other parts are taken by actors Sofia Vergara and Keke Palmer, rapper Post Malone — and Mr. Affleck.

“(Affleck) didn’t really even understand what I was doing half the time” during filming, Ms. Lopez said.

“That’s the blind kind of love and faith that a person in your life should have for you … He makes me be braver than I would normally be on my own… And I’m pretty brave.”

This Is Me… Now: A Love Story debuts on streaming platform Prime Video starting Friday. The new album comes out the same day. — Reuters

Ayala Malls allots P13B for renovation of 4 malls

AYALAMALLS.COM

MALL operator Ayala Malls is allocating P13 billion for the planned redevelopment of four of its malls: Glorietta, Greenbelt 2, TriNoma, and Ayala Center Cebu.

“We’re happy to share that for those four malls, excluding Greenbelt 1, we’re investing P13 billion,” Ayala Malls President Mariana Beatriz Zobel de Ayala said during a briefing on Thursday.

“This is the first time in our history that we will embark on renovating at least four of our major flagship malls at once,” she added.

The planned renovation for Glorietta, Greenbelt 2, TriNoma, and Ayala Center Cebu will begin in the first quarter, while the redevelopment of Greenbelt 1 will start in the second quarter.

TriNoma’s renovation is scheduled for completion by the fourth quarter of 2025, while Glorietta’s is targeted for the fourth quarter of 2026. Greenbelt 2 and Ayala Center Cebu’s renovations are expected to conclude by 2026.

Greenbelt 1 will close in April this year and reopen by 2028.

“In the past several years, much has changed for all of us — both during and before the pandemic. We’ve seen habits changes, preferences evolve, and priorities reset. With this, we feel it is an opportunity to usher in a new era for Ayala Malls — and a new experience for our customers,” Ms. Zobel said.

Ayala Malls has tapped Australia’s Buchan as the architect and designer for the Glorietta and Ayala Center Cebu projects. The company also sought Hong Kong’s CAN Design Ltd. and US-based Gensler for the redevelopment of Trinoma and Greenbelt, respectively.

Expected changes include exterior and interior design improvements, lush greeneries and open space, as well as enhanced areas for convergence and retail spaces.

“With this, Ayala Center Cebu will transform to the Queen City of the South’s premier lifestyle destination — for milestones and unparalleled retail in the region. Trinoma will become the retail powerhouse of the North,” Ms. Zobel said.

“Greenbelt will evolve from the Philippines lifestyle capital – to the next regional fashion and luxury destination, and Glorietta will take its place as the vibrant powerhouse of the metro, and the home of beloved brands,” she added.

Ayala Malls is the retail unit of listed real estate developer Ayala Land, Inc. On Thursday, Ayala Land shares fell by 0.57% or 20 centavos to P34.70 apiece. — Revin Mikhael D. Ochave

Bringing Mean Girls nostalgia to the Gen Z era

By Brontë H. Lacsamana, Reporter

Movie Review
Mean Girls
Directed by Samantha Jayne and Arturo Perez, Jr.
MTRCB Rating: PG

MANY movies these days are adaptations, sequels, homages, and everything in between, more so than the past decades. Nostalgia is in, callbacks to previous works of fiction are in, and while it is something everyone says they’re sick of, it still manages to pull at the right strings.

However, this piece is not an ode to originality, but instead a quick look at how rehashes of often very good ideas can be told in new ways.

The 2024 film Mean Girls is unfairly weighed down by the inevitably high expectations that most moviegoers have coming from the iconic 2004 original. Famous comedic writer Tina Fey sprinkles her own hyper-present sense of humor, and while it may seem basic to admit, her take on Mean Girls succeeds in bringing the franchise to a new generation.

Here is where a major clarification must come in: this new film is based on a 2018 Broadway musical adapting the original film. Which means comparisons shouldn’t be drawn to the pioneering work, but to the musical rendition that came in between.

(While this writer admits she is unfamiliar with the musical, a few deep dives online have revealed that it’s not a perfect movie adaptation either. It leaves out a few amazing songs, many fans claim.)

However, the story remains untouched and is known to most — Cady Heron (played by Angourie Rice) is a new student who finds herself eating lunch with “The Plastics,” an elite group of popular girls who are at the top of the social food chain. While Ms. Rice has a certain charm to her, she doesn’t completely pull off the character, providing serviceable sweet and alternatively mean moments but lacking the star power to hold audience’s attention.

Conniving queen bee Regina George (played by Renee Rapp) is another story. Ms. Rapp is electrifying to behold, giving the beloved mean character a sultry, evil pop star spin. She is, hands down, the best part of the entire movie.

Her minions Gretchen and Karen take on a life of their own in musical form as well, most notably Avantika as Karen Shetty. She is a revelation — though still very much Regina’s stupid underling, she exudes a sort of adorable spunk in every scene she’s in.

Cady’s best friends get a glow up too, with Auli’i Cravalho and Jaquel Spivey as Damian and Janis appropriately given much more to work with than in the original movie. Here, their role as truth-saying narrators is beefed up, equipped with their own zingers both spoken and sung.

While the 2024 Mean Girls is often funny, cute, and more attuned to the times, its biggest downfall is having all the iconic phrases and oddly familiar scenes from the original. It only highlights to everyone the fact that this is a film straddling the line between nostalgia-driven cash cow and unique, contemporary Gen Z-era musical. The truth of the matter is that those that loved the original movie will definitely choose to just watch the original movie no matter how this new one pans out.

It’s one thing, then suddenly it’s another, and perhaps the well-choreographed dance numbers and excellently shot music video-like scenes deserve more than this back-and-forth identity crisis.

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