Food and gin experts watch the mixology demonstration.
On Sept. 6, 1834, King Charles III of Spain abolished the Royal Company of the Philippines or the Real Compañia de Filipinas, which held a monopoly in Philippine trade.
This royal decree was a significant moment in the economic history of the country that opened Manila’s ports to the world that attracted American, Asian, British, and other European and Asian traders to Philippine shores. As the era of economic freedom, opportunities and discovery followed, what the Philippines had to offer was finally introduced to the rest of the world.
Inspired by this era, 1834 Premium Distilled Gin with uniquely Philippine flavors like Sampaguita and Calamansi that gives it a distinct floral aroma and a subtle citrus flavor signature, becomes the Filipino contribution to the emerging global gin scene.
Host and brand ambassador Paolo Abrera and mixologist Niño Cruz take a sip of the ‘Heneral’ drink.
At The Bevvy in Makati, a recent and exclusive 1834 Premium Distilled Gin masterclass event unfolded as a culinary delight for food enthusiasts, media professionals, and seasoned gin experts. The event was hosted by the brand ambassador and media personality Paolo Abrera. The occasion featured a curated selection of 1834 cocktails, expertly crafted by the award-winning mixologist Niño Cruz, skillfully paired with specially designed dishes to create a harmonious and unforgettable tasting experience.
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Award-winning mixologist, Niño Cruz, demonstrates how to prepare cocktail concoctions using 1834 Premium Distilled Gin as its base.
Award-winning mixologist, Niño Cruz, demonstrates how to prepare cocktail concoctions using 1834 Premium Distilled Gin as its base.
The first of these creations was Jardin Mejor, a gin cocktail with Tomato Water, Capsicum, and Tonic as ingredients. The cocktail paired best with roast chicken, bringing out the hidden umami and mirroring the mingling of traditions and flavors in Manila during 1834.
With 1834 Premium Distilled Gin as base, the unusual yet pleasant Niño Cruz creation, matched well with the flavor of Juniper and the variety of botanicals that always makes gin exude that classic yet “cool” vibe.
‘Heneral’ cocktail drink
The second drink was called Heneral — a harmonious fusion of White Negroni, White Wine, and Dry Vermouth. The Heneral drink was paired with a succulent Pan Roasted Ribeye Steak. Host and ambassador Paolo Abrera shared, “I usually pair my steak with wine, but this pair surprisingly goes so well together! And this drink will indeed make you brave like a general, ramdam mo yung tapang ng mix!”
Due to the rigors of its purification process, gin is known for being clear, a drink that excudes its essentials with nothing to hide. This quality gave the mixologist the perfect foundation for his Heneral.
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Waiter serves ‘Sol de las Islas’ drink to guests.
Gin enthusiasts cheers to Sol de las Islas.
For the last pairing, the versatile quality of gin was in full glory with theSol de las Islas. It is a mix uniting Lychee and Dark Chocolate, Grapefruit Bitter Calamansi Juice, and Sampaguita. The drink was garnished with the “Face of the Sun,” an ode to the Katipunan Flag, and was paired with the exquisite Shrimp a La Plancha, grilled to perfection on a skewer.
All through the night, Mr. Cruz surprised Chef Rolando Laudico, Lucien Dy Tioco, and other guests by using a combination of unexpected ingredients like capsicum and tomato water with traditional garnishes to complement the unique taste profile of 1834.
1834 Premium Distilled Gin is available in The Marketplace. Mitsukoshi Fresh, select SM Supermarkets, hotels such as The Marriott Manila, Sheraton Manila, Westin Manila, Edsa Shangri-La Manila, and bars in the metro: James & Daughters, Neo Café and Bar, Saikou Bar & Café, Flora Gin Bar.Also available online: LazMall, Shopee Supermarket, and Singlemalt.ph.
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L-R: Santiago J. Arnaiz of Multiverse.PH (moderator), Isabelle Therese Gotianun Yap of EastWest Bank, Carlos Ramon C. Aboitiz of AboitizPower, and Jericho P. Go of Robinsons Land Corp.
By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor
The world is nearly a quarter into the 21st century, and the modern workplace could not be more different from it was back then. The passage of time has quickly introduced technological advancements — like high-speed, long-distance, real-time communications and on-demand computing through mobile and artificial intelligence technology — to enhance the way we work and conduct our businesses.
Another key aspect of such change in the workplace is the integration of younger generations into the workforce. With their fresh perspectives, innovative ideas, and digital fluency, young professionals bring a unique set of skills and experiences that can drive growth, foster creativity, and propel businesses forward.
In the final panel discussion during the recently concluded BusinessWorld Forecast 2024 last Nov. 22, it was mentioned how business leaders today are restructuring their company in order to meet the demands of millennials and Generation Z employees (Gen Zs) and to realize their leadership potential.
To fully utilize the abilities of the two generations towards handling leadership positions, businesses are adopting flatter organizational structures to accommodate young leaders’ penchant for collaboration and openness.
“A command-and-control structure does not work anymore,” Carlos Ramon C. Aboitiz, chief corporate services officer at Aboitiz Power Corp., said. “We need to allow [Gen Zs and millennials] to articulate their own vision, and kill policies that no longer make sense.”
Jericho P. Go, SVP and Business Unit general manager of Robinsons Land Corp.
Jericho P. Go, senior vice-president and business unit general manager at Robinsons Land Corp, said, “At management, it’s important to recognize the need to have an open mind. A lot of new ideas are being generated by young people, and it’s important that we emphasize that they are given free space to be able to showcase their intelligence and the things they want to bring about.
“More importantly, as leaders it is important to have this trait of having empathy. Being able to assure and extend that warmth to colleagues so that they would all be encouraged in the activities that they undertake. Agility is also key. Being able to ask and respond accordingly so that those ideas can be able to brought to fruition,” Mr. Go added.
Mr. Aboitiz said that, as the Aboitiz Group of Companies is over a hundred years old, their heritage and family DNA underpin a mindset of stewardship and generational perspective.
“We see the world as an ever-changing one from one transition to another, and we embrace adaptability as a core value in our group,” he said. “And this ensured our survival for a long span of time. We also embrace the diversity that comes with generational change in norms, behaviors, and our environments as opportunities for advancing both our purpose and our profit.”
As the energy sector is one that is seeing the most transformation due to advancements in renewable energy technology alongside increasing pressures from climate change, Mr. Aboitiz said that it is the perfect set-up for young leaders to succeed.
“The state of transformation and transition lends itself to new perspectives and new capabilities, wherein new generations untethered to the old ways of thinking and being play an enormously important role for us. They help bring new ideas to help us figure out how to decarbonize our energy sector. They are forging the path in our pursuit of the data-driven decision-making process with their ability to learn and apply data science and add new AI tools to business processes,” he said.
This is a common point repeated throughout the panel discussion, as one of the greatest assets that younger generations bring to the table is their fresh perspectives. Growing up in a digital age, they have a unique understanding of technology, social media, and global connectivity.
This fresh outlook allows them to challenge traditional norms, question existing practices, and offer innovative solutions to complex problems. By embracing their fresh perspectives, organizations can tap into a wellspring of creativity, enabling them to adapt to changing market trends and maintain a competitive edge.
Isabelle Gotianun Yap, executive director, special projects officer, and vice-president of EastWest Banking Corp.
“It’s their ability to quickly harness technology and new ways of working. I personally saw a lot of that during the pandemic. When we had to do a lot of process adjustments that were normally manual or face-to-face, our young leaders who had a familiarity with low-code, no-code process automation were able do it quickly,” Isabelle Gotianun Yap, executive director and vice-president at East West Banking Corp., said.
“Because of that, we were able to start a committee moving forward about creating a community of young leaders who are optimizing processes using technology. Most of those people are in the millennial and even the Gen Z category.”
As the younger generations have grown up in an era of constant change, they are well-versed in adapting to new technologies and are quick to embrace emerging trends. Their ability to navigate the digital landscape effortlessly provides organizations with a valuable advantage. But that does not mean businesses should not focus on their development.
On this point, Ms. Yap noted the need to continuously improve learning programs and tools for sustainability, alongside providing more and better quality feedback.
“They need opportunities to pilot programs and proofs-of-concept, which the company can do small-scale. Give them that safe space to fail,” Mr. Go said.
“Crazy ideas may not be crazy after all. Voice it, put it in a business plan, and justify its worth in the company,” he added, noting the importance of embedding lifelong learning in company initiatives.”
Encouraging their participation and involvement in decision-making processes can allow companies tap into the young generations’ innovative thinking and drive transformative change. Their eagerness to experiment, take risks, and challenge the status quo can help organizations remain agile in a fast-paced business environment.
Carlos Ramon C. Aboitiz, chief corporate services officer of AboitizPower Corp. and president & COO of Hedcor
Embracing younger generations in the workforce is not just about gaining their skills; it is also about fostering collaboration and bridging the generation gap. There is strength to be found in age diversity, Mr. Aboitiz noted, as it is through creating a diverse and inclusive environment that organizations can facilitate knowledge sharing and mentorship opportunities between different age groups.
“We should not overplay these generational changes. There is nothing to be fearful of,” Mr. Aboitiz said. “[Current] leaders need to overcome [these fears].”
“Understand how our behaviors and expectations are different, and design an environment to allow for the coming together of these differences,” he added.
This exchange of ideas and experiences can lead to enhanced learning and growth for both younger professionals and their more experienced counterparts. It also fosters a sense of mutual respect and understanding, ultimately strengthening the overall fabric of the organization.
Multiverse.PH Publisher Santiago J. Arnaiz, moderator of the fourth panel discussion
“What’s really important with leaders is that we should be centered around a common purpose. Not just a shared purpose, but a shared culture across generations,” Ms. Yap said.
Ant Group Chairman Eric Jing (right) talks to Sopnendu Mohanty, Chief FinTech
Officer of the Monetary Authority of Singapore, at a Fireside Chat in SFF 2023.
Eric Jing, chairman and CEO of Ant Group, owner of the world’s biggest mobile payment platform, Alipay, lauds GCash as the “best start-up investment” at the Singapore FinTech Festival (SFF) 2023.
In a fireside chat of SFF 2023, Jing told Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore (MAS), that the Philippines’ leading finance super app, GCash, is the group’s best investment in the start-up space. Jing took part in an exclusive session with Mohanty as they made a deep dive into the world of payments and technology. He also shared remarkable insights into the strategies that propelled Ant Group into a global tech giant.
GCash leaders led by CEO Martha Sazon pose with Ant Group Chairman Eric Jing.
“As among the few profitable fintechs across the world, we are able to maximize value to our investors while making sure we provide the best service to our users. Through our shareholders like Ant Group, Globe Group, Ayala, and other global equity firms such as Warburg Pincus, Insight Partners, and Bow Wave Capital, GCash is poised for stronger growth in our pursuit of financial inclusion,” said Martha Sazon, president and CEO of GCash.
GCash made international headlines at the annual Fintech gathering in Singapore. Aside from setting up a booth at the expo for the first time, GCash was also featured in a panel discussion on the Insights Stage represented by Sazon as well as Ernest Cu, chairman of GCash holding company Mynt.
Through partners like Alipay+, GCash has been growing its reach beyond Philippine shores, allowing customers to use the e-wallet for cashless transactions in 17 countries such as Singapore, Japan, and the USA. It has also let users overseas sign up for GCash using international mobile numbers in six countries like Australia, Italy, and Canada.
GCash users can also make cashless transactions with over 80 million merchants across 200 countries thanks to its partnership with global payments giant, Visa.
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A bus in the Philippines carrying dozens of people lost its brakes and fell off a cliff in the central province of Antique, killing a least 16 people, local authorities said on Wednesday.
Eight people were in critical condition in hospitals while four were stable, Antique Governor Rhodora Cadiao told DZRH radio station.
The number of confirmed deaths was lower than the 28 reported earlier in local media.
The passenger bus from Iloilo province was on its way to the town of Culasi in Antique on Tuesday afternoon when its brakes malfunctioned on a winding road and it plunged down 30 metres (98.5 feet) into a ravine, Ms. Cadiao said.
“We call that area the killer curve. It was already the second bus that fell off there,” Ms. Cadiao added.
Retrieval operations have stopped after all visible bodies on site were already pulled up, the provincial government of Antique said on Facebook.
The total number of passengers, first estimated to be 53, was yet to be verified, it added.
The Philippines is notorious for its lax regulation on public transportation and poorly maintained roads.
In an e-mailed statement, Vallacar Transit, Inc. (VTI), operator of Ceres Liner buses, said that Ceres bus number 6289 was involved in the incident.
“The management has decided to voluntarily suspend all operations of the 12 remaining units under the franchise involving Case No. 11-VI-021-AK pending investigation, wherein the bus involved in the incident had been a part of,” the company said.
“VTI will be providing financial assistance to the passengers and their families, as well as shouldering the medical and burial expenses,” it added.
— Reuters
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Cayanga-Bugallon Solar Power in Pangasinan is the latest addition to AboitizPower’s portfolio in solar energy, built on sloping, non-agricultural land.
Aboitiz Power Corporation (AboitizPower) strengthens its presence in the Philippine power industry with its decarbonization strategy of expanding its clean energy portfolio to 4,600 megawatts (MW) over the next decade, with close to 1,000 MW already in the pipeline.
The Company already supports the growth and development of businesses and communities as one out of every five megawatts of installed generation capacity is attributed to AboitizPower. Currently, in partnership with various stakeholders, it presides over the largest and most diversified renewable energy (RE) platform in the Philippines in terms of installed capacity under its operational purview.
But as demand for electricity continues to increase every year, AboitizPower has commenced with the development of new energy projects with a cumulative capacity of close to 1,000 MW and encompassing various technologies like solar, hydro, geothermal, wind, and energy storage systems.
AboitizPower expects its 159-MW peak (MWp) Laoag solar plant in Pangasinan to come online in 2024. It has also embarked on the construction of its 172-MWp solar power project in Calatrava, Negros Occidental and its monumental 211-MWp solar power project in Olongapo, Zambales. The latter represents AboitizPower’s most extensive solar undertaking to date.
These endeavors augment AboitizPower’s portfolio of solar projects, bringing the total count to five. This includes the commercially operational 59-MWp San Carlos Sun Power Inc. in Negros Occidental, which is AboitizPower’s first solar energy project, as well as the 94-MWp Cayanga-Bugallon Solar Power in Pangasinan, which began delivering electricity to the grid this year.
Meanwhile, the 17-MW binary geothermal plant located in Tiwi, Albay is expected to be operational by early 2024.
On wind, AboitizPower’s 206-MWp San Isidro Wind Power Project with Vena Energy and Vivant Energy Corporation in Northern Samar, Visayas is targeted to commence with its commercial operations in the first quarter of 2025. Another wind venture with Vena Energy for a 102-MWp project in Rizal and Laguna is also expected to begin commercial operations in 2025.
These strides in renewable energy are complemented by strategic investments in battery energy storage systems (BESS), including the 49-MW Maco BESS in Davao de Oro, considered the largest in Mindanao and deemed by Enlit Asia as the “Energy Storage Project of the Year” across the ASEAN region.On the other hand, the soon-to-be-operational SN Aboitiz Power (SNAP) 24-MW Magat BESS in Isabela is set for 2024.
Notably, the Maco BESS represents the first of its kind in Southeast Asia built atop a floating platform. BESS technology plays a pivotal role in providing regulating and contingency reserve power to the nation’s power grids. With the Magat BESS, SNAP-Magat also hosts the 200 kilowatt Magat Floating Solar Pilot Project, one of the largest of its kind in the Philippines.
Overall, these efforts supplement the country’s goal to have the share of RE in its power generation mix to be 35% by 2030 and 50% by 2040.
On the distribution side, AboitizPower owns utilities that operate in high-growth areas in Luzon, Visayas, and Mindanao. This includes Visayan Electric Company, Inc. and Davao Light & Power Co., Inc., the country’s second and third-largest private utilities, respectively, which cumulatively serves almost a million customers daily.
With the start of commercial operations of Open Access, AboitizPower has also become the leading provider of retail electricity services based on market share, giving its partners and customers affordable access to dependable power via tailor-fit energy solutions, power quality and efficiency audits, and other value-added services.
In tandem with its decarbonization strategy, AboitizPower is also Transforming Energy for a Better World through its digitalization and decentralization (or growing-beyond-the-core) initiatives. This draws inspiration from the Aboitiz Group’s Great Transformation into becoming the country’s first Techglomerate.
Earlier this year, AboitizPower launched its Data Innovation Program with Aboitiz Data Innovation or ADI, the artificial intelligence and data science arm of the Aboitiz Group. With ADI, the potential of new inventions, innovations, and data will be harnessed for the benefit of AboitizPower’s generation, distribution, and commercial operations, and ultimately, the consumers.
As an energy company, AboitizPower wields significant influence in advancing the United Nations’ Sustainable Development Goal (SDG) 7, which revolves around “ensuring access to affordable, reliable, sustainable, and modern energy for all.” Being an indispensable part of modern life, electricity is integral to the fulfillment of the other SDGs; from addressing poverty, hunger, and climate change to providing clean water and sanitation, all of which are interconnected. Without reliable power, countries cannot enable and develop education, food security, technology and innovation, jobs, and the like.
In alignment with SDG 11, focusing on the development of “sustainable cities and communities,” AboitizPower is helping cities attain cleaner mobility. The Company recently launched its Electric Vehicle Fleet Transformation Program in support of the Electric Vehicle Industry Development Act or EVIDA, with the aim of transitioning 40% of its fleet of four-wheeled vehicles and motorbikes to electric alternatives by 2030, ultimately culminating in full electrification by 2040.
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A vendor selling Christmas decorations waits for customers at a street market in Quezon City, Nov. 28, 2023. — REUTERS
By Keisha B. Ta-asan, Reporter
HEADLINE INFLATION cooled to its slowest pace in 20 months in November amid easing prices of food as well as restaurant and accommodation services, the Philippine Statistics Authority (PSA) said on Tuesday.
Preliminary data from the PSA showed headline inflation climbed 4.1% in November, slower than 4.9% in October and 8% in November 2022.
This was the slowest inflation rate in 20 months or since the 4% seen in March 2022.
It was also lower than the median estimate of 4.4% in a BusinessWorld poll of 15 analysts conducted last week, and at the lower end of the 4-4.8% forecast range of the Bangko Sentral ng Pilipinas (BSP).
However, November inflation was still above the 2-4% target for the 20th straight month.
Month on month, the consumer price index was nil in November from -0.3% in the previous month.
For the January-to-November period, inflation averaged 6.2%, faster than 5.6% in the same period a year ago. This is still above the BSP’s full-year baseline forecast of 6%.
“(Inflation) is going down and without shocks that will happen in the next three weeks, we will see inflation going down,” National Statistician Claire Dennis S. Mapa said in mixed English and Filipino at a briefing on Tuesday.
Core inflation, which discounts volatile prices of food and fuel, also eased to 4.7% in November from 5.3% in October and 6.5% in November 2022.
In the eleven months to November, core inflation averaged 6.8%.
“However, there are risks such as rice and oil prices. The situation in November was good because prices of gasoline and diesel have been going down. But we will see what the prices are this December,” Mr. Mapa said.
He said the sharp slowdown in November inflation was mainly due to easing food prices, as the heavily weighted food and non-alcoholic beverages index fell to 5.7% in November from 7% in the previous month.
Food inflation decelerated to 5.8% in November from 7.1% in October and 10.3% a year prior. This was the slowest rise in food inflation since 5.2% in May 2022.
Mr. Mapa said the deceleration in food inflation was mainly due to the 2% decline in the vegetables, tubers, plantains, cooking bananas and pulses index, a reversal from the 11.9% growth a month ago.
The slower annual increases in fish and other seafood (4.9% in November from 5.6% in October) and sugar, confectionery and desserts (1.5% from 4.9%) also contributed to the downward trend in food inflation.
On the other hand, higher year-on-year growth rates were observed in the indices of rice (15.8% from 13.2%), and milk, other dairy products and eggs (7.6% from 7.5%).
The average price of regular milled rice last month went up to P46.73 per kilo from P45.42 per kilo in October. The average price of well-milled rice also rose to P51.99 per kilo in November from an average of P51 per kilo a month earlier.
The slowdown in November inflation is also attributed to the 0.8% decrease in the transport index from the 1% growth a month ago. The restaurants and accommodation services index also slowed to 5.6% in November from 6.3% in the previous month.
In November alone, oil companies cut pump prices by P1.90 a liter for gasoline, P4.45 a liter for diesel, and P3.3 a liter for kerosene, data from the Energy department showed.
Meanwhile, inflation in the National Capital Region slowed to 4.2% in November from 4.9% in October, while inflation in areas outside Metro Manila eased to 4.1% from 4.9% in the prior month.
The November inflation rate for the bottom 30% of income households slowed to 4.9% from 5.3% in October and 9.2% last year. The 10-month average stood at 6.9%.
The National Economic and Development Authority (NEDA) in a statement said the slower November inflation can be attributed to the timely implementation of measures to stabilize food supply amid domestic and external headwinds.
“With the right interventions in place, including the proper and timely deployment of trade policy, we are confident that we can effectively manage inflation and prevent unnecessary upticks in prices of goods and commodities to safeguard the purchasing power of Filipino families, especially those from the most vulnerable sectors,” NEDA Secretary Arsenio M. Balisacan said.
‘SUFFICIENTLY TIGHT’ Meanwhile, the Bangko Sentral ng Pilipinas (BSP) said it needs to “keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident.”
“The latest inflation outturn is consistent with the BSP’s projections that inflation will likely moderate over the near term due to easing supply-side price pressures and negative base effects,” it said in a statement.
The BSP said the balance of risks to the inflation outlook “still leans significantly towards the upside.”
“Key upside risks are associated with the potential impact of higher transport charges, electricity rates, and international oil prices, as well as higher-than-expected minimum wage adjustments in areas outside the National Capital Region,” it said.
A weaker-than-expected global recovery and government measures to mitigate the impact of El Niño could further reduce inflation.
The BSP sees inflation averaging at 6% in 2023 and 3.7% in 2024, before falling further to 3.2% in 2025.
“The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target, in keeping with the BSP’s price stability mandate,” it said.
Last month, the BSP kept its target reverse repurchase rate at a 16-year high of 6.5%. The BSP raised borrowing costs by a total of 450 basis points (bps) from May 2022 to October 2023 to tame inflation.
Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said it is possible for inflation to fall below 4% in December and may even reach 3% in the first quarter of 2024 in the absence of supply shocks.
However, Mr. Neri said inflation could rebound to 4% or higher in the second quarter, especially if the effect of El Niño is worse than expected, Mr. Neri said.
“Rice prices are likely to remain the primary factor contributing to inflation in the near future. Local supply continues to be at a level where rice inflation is usually double digit… The price of rice may stay high as long as supply stays at this level,” he said.
Globally, rice supply remains a concern due to a decline in production in major exporting countries like India. The Philippines imports around 15% of its rice requirement every year.
Mr. Neri said BPI sees inflation averaging at 6% this year, before easing to 3.7% in 2024.
“It might be premature to expect rate cuts in the near future despite the improving outlook for inflation. The BSP might need to keep interest rates elevated for most of next year especially given the possibility of an inflation rebound in the second quarter of 2024,” he said.
HSBC economist for ASEAN Aris Dacanay said the consistent inflation downtrend should give the BSP room to pause at the Dec. 14 Monetary Board meeting, but rate cuts are still not on the table as there are many upside risks to inflation.
“That said, we continue to expect the BSP to stay pat for longer based on inflation — more so with the need to mind the gap between the Fed and the BSP policy rates to help support the peso,” he said.
The US central bank kept borrowing costs unchanged at 5.25-5.5% for the second straight month in November. This was after it hiked policy rates by 525 bps from March 2022 to July 2023.
Following the release of the November inflation data, the peso closed at P55.32 per dollar on Tuesday, strengthening by two centavos from its P55.34 finish on Monday.
This was the peso’s strongest close since its P55.19 per dollar finish on Aug. 2.
“We only expect the BSP to begin its easing cycle right after the Fed does its first rate cut. Our baseline view is for the Fed to do its first policy rate cut in the third quarter of 2024,” Mr. Dacanay added.
THE NATIONAL Government’s (NG) outstanding debt reached a record P14.48 trillion as of end-October, the Bureau of the Treasury (BTr) said.
Data released by the BTr on Tuesday showed that outstanding debt went up by 1.49% from P14.27 trillion as of end-September.
“The NG’s debt stock increased by P212.13 billion or 1.49% month over month, reflecting the net issuance and availment of domestic and external loans, as well as the revaluation effect of peso depreciation against the US dollar,” the BTr said.
Year on year, the debt stock rose by 6.16% from P13.64 trillion. It also increased by 7.91% from P13.42 trillion at the end of December 2022.
As of end-October, the bulk or 68.38% of the NG’s debt portfolio came from domestic sources.
Domestic debt increased by 1.73% to P9.9 trillion from P9.73 trillion a month earlier due to the net issuance of government securities. Year on year, domestic borrowings also rose by 5.85% from P9.36 trillion in 2022.
Government securities made up almost the entire domestic debt in the 10-month period.
“The effect of local currency depreciation against the US dollar on the debt stock valuation was minimal at only P0.23 billion,” the BTr added.
Data from the Treasury showed that the peso finished at P56.808 as of end-October, depreciating by 0.26% from P56.66 as of end-September.
Meanwhile, external debt inched up by 0.97% to P4.58 trillion from P4.53 trillion in end-September.
Foreign borrowings rose by 6.83% from P4.29 trillion in the same period a year ago.
“For October, the increase in external debt was due to the net availment of foreign loans amounting to P33.52 billion, and the P11.84-billion upward adjustment in valuation caused by peso depreciation against the US dollar. Favorable movement of third currencies tempered the increase by P1.21 billion,” the BTr said.
Broken down, foreign debt was composed of P2.1 trillion in loans and P2.47 trillion in global bonds.
As of the end of October, the NG’s overall guaranteed obligations slipped by 0.34% to P361 billion from P362.22 billion in the previous month.
Year on year, guaranteed debt declined by 6.61% from P386.53 billion in 2022.
“The decline in the level of guaranteed debt was attributed to the net repayment of domestic guarantees amounting to P1.35 billion,” the BTr said.
“In addition, third currency-denominated guarantees declined by P0.31 billion, offsetting the P0.44-billion additional debt valuation caused by peso depreciation against the US dollar,” it added.
China Banking Corp. Chief Economist Domini S. Velasquez said that the increase in debt was “likely driven by the government’s continued spending to finance various projects and programs, as well as by the increase in domestic market interest rates during the month.”
“The new record high in the outstanding National Government debt in recent months may be attributed to continued budget deficits amid higher prices that also bloated government expenditures,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
Ms. Velasquez said the recent issuance of Sukuk bonds and tokenized Treasury bonds are expected to add to the debt stock.
“But the recent appreciation of the peso and lower market yields may help moderate the growth of outstanding debt,” she added.
Mr. Ricafort said that debt could also continue to balloon amid the government’s planned euro bond sale in the future.
The government recently raised $1 billion from its first-ever offering of Sukuk bonds, which were dollar-denominated and had a tenor of 5.5 years.
The government also raised P15 billion from the first-ever sale of tokenized Treasury bonds, which had a coupon rate of 6.5%.
This year, the government’s borrowing plan is set at P2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources. — Luisa Maria Jacinta C. Jocson
People flock to Divisoria to shop ahead of the Christmas holidays. — PHILIPPINE STAR/EDD GUMBAN
THE WORLD BANK maintained its Philippine gross domestic product (GDP) growth outlook for this year and 2024.
In its latest Philippine Economic Update, the multilateral lender said it expects GDP to expand by 5.6% this year and by 5.8% next year, unchanged from its projections last October.
The World Bank’s forecasts are below the government’s 6-7% and 6.5-8% growth targets for this year and 2024, respectively.
“We haven’t changed our projections (from) October. The reason is we haven’t seen many shocks or policy surprises, which is by itself, good news,” World Bank Philippines Senior Economist Ralph van Doorn said at a media briefing on Tuesday.
The Philippine economy grew by 5.9% in the third quarter, bringing the nine-month average GDP growth at 5.5%.
The World Bank said an improvement in domestic demand is expected to fuel a “modest increase” in GDP growth to an average of 5.8% in 2024 to 2025.
“Services are expected to drive growth due to the ongoing recovery of the tourism sector and the consistent performance of the IT-BPO industry, which is likely to spur job creation, increase household incomes, and benefit consumption and tourism-adjacent industries,” it added.
On the demand side, the World Bank said that household spending will remain the main growth driver amid a strong labor market, steady remittances, and easing inflation.
Meanwhile, investments are expected to slow this year before picking up next year until 2025 thanks to recent investment reforms and the Philippine government’s “commitment to public investment despite ongoing fiscal consolidation.”
World Bank Country Director for the Philippines Ndiame Diop said that the Philippines continues to outperform many of its peers in the region in terms of growth.
“Despite the challenging global environment that resulted in a slowdown for many countries in the region, the Philippines stands out as among the top performers. This achievement can be attributed to the country’s resilience, resilient domestic demand, which helps mitigate the impact of external headwinds,” he said.
“We anticipate that the Philippine economy will continue to exhibit strong performance in the next few years. This growth will be propelled by a healthy labor market and declining inflation, which will stimulate robust household consumption,” Mr. Diop added.
However, Mr. Van Doorn said that risks are tilted to the downside and could dampen growth, citing external factors such as geopolitical tensions, trade restrictions on agricultural products, and persistent inflation.
On the domestic front, El Niño and other climate risks could also threaten food supply, he added.
To sustain growth in the long term, the World Bank said the Philippines should focus on structural reforms to boost productivity and improve its competitiveness.
“In the medium term, it’s important to implement investment reforms, implement fiscal consolidation, invest in human capital, strengthen water security and sanitation which are key to safeguard growth, reduce poverty, and increase the country’s growth potential,” Mr. Van Doorn said.
Meanwhile, the World Bank kept inflation forecasts unchanged at 5.9% for this year and 3.6% next year.
“While headline inflation is expected to remain elevated in 2023, it is projected to decline to within the target range in 2024,” the bank said.
“Following a year and a half of tight monetary policy, the return of headline inflation to within the target range in the first quarter of 2024 is expected to keep the policy rate steady in the short term,” it added.
Headline inflation eased further to 4.1% in November, slower than 4.9% in October and 8% in the same month in 2022.
November marked the 20th straight month that inflation was above the central bank’s 2-4% target range.
“Concerns over a possible resurgence of high inflation and tight monetary policies in advanced economies will continue to weigh on the Bangko Sentral ng Pilipinas’ (BSP) decision to reduce interest rates,” the World Bank added.
The BSP kept its key policy rate at 6.5% at its latest meeting, the highest in 16 years. Since May 2022, the central bank has raised borrowing costs by a total of 450 basis points.
The BSP’s next policy meeting is on Dec. 14. — Luisa Maria Jacinta C. Jocson
Kids explore the lights installation at a shopping mall in Pasay City, Nov. 15, 2023.— PHILIPPINE STAR/EDD GUMBAN
By Luisa Maria Jacinta C. Jocson, Reporter
THE EXPECTED SURGE in household spending during the holiday season may not be enough to ensure that Philippine annual gross domestic product (GDP) growth will hit the government’s 6-7% target, analysts said.
“We don’t think the holiday spending will provide a meaningful boost to annual growth, as pandemic-related restrictions were already mostly loosened during the same period last year so this will likely not affect annual comparison much,” Makoto Tsuchiya, assistant economist at Oxford Economics, said in an e-mail.
Economic managers have kept the 6-7% full-year target range, even as GDP growth averaged 5.5% as of end-September.
The economy would need to grow by 7.2% in the fourth quarter to meet the lower end of the government’s GDP growth goal.
“I don’t see the government’s target for 2023 as being feasible, at all, despite the stronger-than-expected result for the third quarter… the holiday shouldn’t matter too much in year-on-year growth terms, which by definition strips out the impact of such seasonality,” Pantheon Chief Emerging Asia Economist Miguel Chanco said in an e-mail.
Philippine GDP expanded by 5.9% in the third quarter, ending three consecutive quarters of slowing growth.
Mr. Chanco said the third-quarter growth print was mainly driven by the spike in government spending.
“More importantly, the third-quarter headline growth bounce masked a continued slowdown in private consumption growth, which is the economy’s main engine,” he added.
Household consumption, which typically accounts for about three-fourths of the economy, grew by 5% in the third quarter. This was slower than the 8% growth a year ago and 5.5% in the previous quarter. It was also the weakest rise in household consumption in two years.
Domestic consumption is expected to surge in the fourth quarter as consumers spend more during the holidays. However, elevated inflation may put a damper on holiday spending.
“From third-quarter data, it is obvious that the private sector has been softening, and the growth was led by the public sector. However, given the accumulated debt and limited fiscal space, the government won’t be able to fully offset the weakness in the private sector,” Mr. Tsuchiya said.
Oxford Economics expects Philippine GDP growth to average 5% this year amid muted demand.
“External demand will remain subdued given the slowing global economy, while investment will be hampered by elevated interest rates and low external demand. This will translate to the labor market weakness, when households already need to tighten their purse strings given the need to rebuild savings,” he added.
Mr. Chanco also noted that the Bangko Sentral ng Pilipinas (BSP) could cut rates to support economic growth as inflation eases.
“As fiscal policy is still stretched from the COVID-era expansion of the deficit, the only real macroeconomic policy lever that’s available in the Philippines is a gradual unwinding of the BSP’s aggressive rate hikes, which should be doable in the not-too-distant future, as long as inflation continues to trend downwards in the coming months,” he added.
At last month’s policy meeting, the BSP kept borrowing costs steady at 6.5%, the highest in 16 years. From May 2022 to October, BSP raised policy rates by a total of 450 bps to curb inflation.
BMI Country Risk and Industry Research last month said it projects household spending in the Philippines to grow by 6.3% in 2024.
“Our consumer spending outlook will be more positive, relative to 2023, as economic growth persists, and consumption levels normalize. Easing inflationary pressures and healthy employment will form the base for stable consumer spending,” BMI, a unit of Fitch Solutions, said in a note in November.
However, it said that high levels of household debt remain a risk to the consumer outlook.
“It limits the future availability of debt, but also draws on current disposable income levels, especially as debt servicing costs increase on the back of interest rate increases,” BMI added.
The Philippine business community gathered at the Grand Ballroom of Grand Hyatt Manila for BusinessWorld’s Forecast 2024 last Nov. 22.
BusinessWorld forum tackles economic outlook, opportunities for 2024
By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor
The prominent theme for many global economic outlooks produced for 2023 is that while growth is still projected largely within reach into next year, there are a number of persistent risks that may compromise and slow down growth all over the world. Despite this, however, the Philippines, owing to certain factors, have largely bucked the trend.
Such was the sentiment shared by many of the esteemed guests and speakers at the recently concluded BusinessWorld Forecast 2024 forum, which took place on Nov. 22 at the Grand Hyatt Manila in Bonifacio Global City, Taguig.
ADB Country Director for the Philippines Pavit Ramachandran (center) receives token from BusinessWorld Editor-in-Chief Wilfredo G. Reyes (left) and President and CEO Miguel G. Belmonte (right).
In his keynote address on the “Philippines’ Economic Outlook for 2024,” Asian Development Bank (ADB) Country Director for the Philippines Pavit Ramachandran said the country’s economic growth is currently at the “top of the leaderboard” in Southeast Asia.
“The economy has largely remained resilient, notwithstanding global uncertainties, geopolitical tensions, economic headwinds, interest rates, inflation. We’ve seen a very strong rebound in the Philippines, and we’re actually seeing traction in the growth momentum. A lot of this is underpinned by strong macro-fiscal fundamentals; reforms that have been undertaken and have been continued from the previous administration; and the opening up of several strategic sectors like telecommunications, airlines, shipping, and renewables,” Mr. Ramachandran said.
The Philippines’ 5.9% gross domestic product (GDP) growth in the third quarter overtook the growth rates of Vietnam (5.3%), Indonesia (4.9%), and Malaysia (3.3%). The ADB did, however, lower its forecast for Philippine growth this year from 6% in April to 5.7%.
With a 6.2% growth forecast for 2024, the ADB predicts that the Philippines’ economy would develop the fastest in Southeast Asia.
“There’s a real buzz now about the Philippine prospects. Having said all that, I think we do need competitiveness-enhancing and productivity-enhancing investments particularly to nurture the potential demographic dividends here. That’s going to be crucial, and we need to intensify climate action,” Mr. Ramachandran said.
“You can’t really think of medium- to long-term sustainable, inclusive development without addressing some human deficit challenges. There are still lagging regions in the Philippines. 20 of the poorest provinces are still concentrated in Visayas and Mindanao. 60% of GDP growth still comes from Metro Manila, the Southern Tagalog region, and Central Luzon,” he said.
Mr. Ramachandran pointed out that a lot of the country’s growth is still dependent on domestic demand, household consumption and fixed investment both public and private investment in construction, and in the future, the Philippines would need to improve infrastructure competitiveness and enhance productivity and investments to sustain momentum.
Sharing growth
World Bank Country Director for Brunei, Malaysia, Philippines and Thailand Ndiamé Diop (center) receives token from Wilfredo G. Reyes (left) and Miguel G. Belmonte (right) of BusinessWorld.
From the perspective of the World Bank, Country Director for Brunei, Malaysia, Philippines and Thailand Ndiamé Diop said he is optimistic about the country’s growth prospects despite global headwinds. The Philippines, from the international lender’s own data, still remains as one of the fastest-growing economies in the region.
“The good news is that the Philippines really has climbed out of pandemic-induced recession in 2020, and we are quite optimistic about its growth prospects. One of the key reasons is that the structural drivers that are quite favorable despite the headwinds coming from the global economy, and that’s why the economy is quite resilient.”
The headwinds still take their toll, however. The World Bank had reduced its growth forecast for the Philippines to 5.6% in October from the 6% projection it gave in June. It also trimmed its growth forecast for the Philippines to 5.8% for 2024 from 5.9% previously. These are below the government’s 6-7% target for this year and 6.5-8% in 2024.
“Before the pandemic, the world and the Philippines grappled with three long-term challenges: one, building human capital; second, dealing with climate change and natural disasters; and then ensuring inclusive digital transformation,” Mr. Diop said during his address on the theme, “Development Imperatives in a Post-Pandemic World.”
“In this brave new world, what should government do? Essentially, they should have a two-speed strategy. They should deal with immediate shocks, and they should address longer term development challenges that haven’t disappeared,” he added, identifying the need to support and provide safety nets for households struggling with rising costs, manage inflation, and ensuring food supply and security.
“What we think is a key area to focus on and work more towards is to ensure that that growth and the prosperity generated is shared more widely in the Philippines. That every Filipino, wherever you are in the country, [is] connected to that growth prospect and benefit from it. And this what I see as the key challenge for the Philippines going forward. The best way to do it, to make sure that there is equality of opportunity is to build the foundation right now.”
“It will be really important to further enable private investment and innovation to keep growth,” Mr. Diop recommended. “Second is to double down on investment in human capital. Third is to bridge the digital divide and invest in adapting and integrating climate change.”
Sustaining efforts
IMF Resident Representative to the Philippines Ragnar Gudmundsson (center) receives token from BusinessWorld’s Wilfredo G. Reyes (left) and Miguel G. Belmonte (right).
Meanwhile, International Monetary Fund (IMF) Representative to the Philippines Ragnar Gudmundsson echoed the sentiment.
“When considering the global environment, we are seeing currently a global economy that is limping along rather than sprinting. It is in fact slowing down from 3.5% in 2022 to 3% in 2023, and this compared to a growth rate for the world economy that averaged 3.8% during the last two decades, we are clearly seeing a slowdown in the global economy,” he said, addressing the financial stability risks for the Philippines in 2024.
For the Philippines, he pointed out that the government’s infrastructure program, opening up sectors to foreign investments, and private sector participation should help realize a growth potential of about 6.5% over the medium term.
“Boosting the country’s growth potential requires sustained efforts to raise productivity by reducing infrastructure and education gaps while promoting foreign investment,” Mr. Gudmundsson said.
“Sustaining significant growth gains over the past few decades and reaping the benefits of the demographic dividend will depend on further investments to diversify exports, promote the acquisition of new skills, and enhance connectivity across the archipelago,” he said.
According to the IMF, the country should redouble efforts to exit the Financial Action Task Force’s (FATF) “grey list” to further reassure foreign investors and reduce financial transaction risks.
Since June 2021, the Philippines has been included in the global “dirty money” watchdog’s gray list of countries subjected to increased monitoring to prove its progress against money laundering and terrorist financing.
BusinessWorld President and CEO Miguel G. Belmonte
Ultimately, the Philippines must steel itself against disruption to adapt and innovate when the situation calls for it, Miguel G. Belmonte, BusinessWorld president and CEO, said during his opening remarks.
“As we discuss future risks and help one another devise effective strategies for the incoming year, we need strong relationships with all our stakeholders, including customers, suppliers, employees, and regulatory bodies. Nurturing long-term relationships will ensure that our businesses—and our country—remain resilient even in the face of adversity,” he said.
“While the odds may be stacked against us, keeping the economic momentum of the Philippines going requires more than deft hands; it requires us to remain committed to a future of sustainable and inclusive growth that can be enjoyed by all.”
BusinessWorld Editor-in-Chief Wilfredo G. Reyes
Recalling main takeaways from Forecast 2024 in his closing remarks, BusinessWorld Editor-in-Chief Wilfredo G. Reyes highlighted, among others, the importance of keeping an eye on both short-term and long-terms priorities and of factoring in all possible impacts of solutions to issues.
“Addressing urgent concerns should not make us lose sight of what is important to our companies in the next three to five years,” Mr. Reyes stressed.
“Solutions to problems need to be designed and carried out in a wholistic manner, keeping in mind everything else that can be affected in order to minimize unintended consequences,” he added.
Future trends
In addition to the keynotes on the country’s economic outlook, there were also two panel discussions that looked into the prospects of leading industries, namely real estate and energy. In addition, the first fireside chat walked through the opportunities unfolding in the Philippine stock market.
Two other panel discussions, meanwhile, delved into emerging trends in consumer behavior, as well as the seen shift of corporate leadership and workforces towards younger generations, particularly the millennials and Generation Z. Another trend explored in the forum was generative artificial intelligence, which was tackled in the second fireside chat of the forum.
Top 1000 Premium
The forum also served as the venue for introducing BusinessWorld’s latest offering, the Top 1000 Premium. It is a digital platform (accessed via https://top1000.bworldonline.com) that carries up to ten years of data from the country’s leading corporations, conglomerates, and sectors that were previously published on the annual Top 1000 Corporations in the Philippines magazine.
BusinessWorld Executive Vice-President Lucien C. Dy Tioco
“With Top 1000 Premium, users are not just confined to the print editions of Top 1000 in looking for figures and comparing them. Users can now view such data with less hassle, in an interactive and visually appealing manner,” Lucien C. Dy Tioco, executive vice-president of BusinessWorld, shared during the second half of the forum.
“The platform does not just show a rundown of top corporations, top conglomerates, and top sectors in a given year. Top 1000 Premium makes it easier to view how a corporation, a conglomerate, or sector has performed in, say, the previous year, alongside how it performed in previous years. It also allows a corporation’s performance to be viewed in comparison with its competitors in its particular industry,” Mr. Dy Tioco explained.
A one-month free trial of Top 1000 Premium is currently offered to those who will reserve a copy of the upcoming 2023 edition of the Top 1000 Corporations in the Philippines magazine.
BusinessWorld Forecast 2024 was presented by AboitizPower Corp. and Megaworld, with gold sponsors ACEN, Ayala Corp., First Gen Corp., GCash, Globe, National Grid Corporation of the Philippines, Prime Infra, and SM Investments Corp. Silver sponsors BDO, Federal Land NRE Global, Inc., Global Dominion Financing Incorporated, and SM Supermalls; as well as bronze sponsors AppleOne Properties, Inc., EastWest Bank, Meralco, PAGCOR, Pag-IBIG Fund, Robinsons Land Corp., SGV, Toyota Motor Philippines, and Villar City, have also made contributions to the event.
Additionally, the event is supported by the following partner organizations: the Asia Society of the Philippines; the Bank Marketing Association of the Philippines; the British Chamber of Commerce of the Philippines; the French Chamber of Commerce and Industry of the Philippines; Fiera de Manila, Inc.; J. Legaspi Computer Graphics; the Management Association of the Philippines; the Nordic Chamber of Commerce of the Philippines; the Philippine Chamber of Commerce and Industry; the Philippine Franchise Association; and the Philippine Retailers Association. Media partners, including The Philippine Star and One News, also covered the event.
L-R: BusinessWorld Managing Editor Cathy Rose A. Garcia (moderator), William Thomas F. Mirasol of Federal Land, Inc.; Noli D. Hernandez of Megaworld Corp.; and Jon Canto of McKinsey & Company
By Angela Kiara S. Brillantes, Special Features and Content Writer
2023 has been a progressive year for the Philippine real estate sector, as it started the year on a positive note and has worked its way in sustaining its performance.
As Colliers Philippines Research Director Joey Roi Bondoc previously wrote in a BusinessWorld column, in spite of the challenges in reaching the growth target of more than 6% this year, Philippine real estate is expected to have a “solid finish” towards the end-2023 as opportunities still remain for selected property segment. These include, among others, the expansion of resort or leisure-themed projects in the residential segment; holiday-induced spending in retail; and the potential of the Philippines as a meetings, incentives, conferences & exhibitions (MICE) hub for hotels.
Despite economic headwinds, key drivers such as the return to the office, increased tourism, investment pledges, and steady demand from office and retail spaces, are seen to help in mitigating imminent risks, thus bringing hope for the country’s real estate sector moving forward.
The panel of Forecast 2024’s first panel discussion received tokens from BusinessWorld’s Miguel G. Belmonte (leftmost)
These were discussed in the first panel discussion of BusinessWorld’s Forecast 2024 last Nov. 22 in Grand Hyatt Manila in Bonifacio Global City, Taguig. McKinsey & Company Philippines Managing Partner Jon Canto, Federal Land Inc. President William Thomas F. Mirasol, and Megaworld Corp. Executive Vice-President for Sales and Marketing Noli D. Hernandez shared their outlook for the Philippine real estate market in the upcoming year, including the opportunities and challenges they expect the sector to face.
“The Philippines is optimistic about real estate. It is one of the sectors that will rebound fully next year. It has been resilient in the wake of COVID-19, inflation, and rising construction costs, but sustained demand and investment will take it through next year,” Mr. Canto of McKinsey & Company said during this presentation.
For Mr. Hernandez of Megaworld Corp., while there are risks in inflation, the Philippine real estate sector has been performing exceptionally well. Offices, businesses, and hotels have been increasing significantly, resulting in steady and increasing rental income, occupancy, and room rates.
“For our hotels, office, and businesses, we have also seen a surge of investor confidence and in fact, as far as retention levels of our tenants are concerned, it’s been very steady and increasing. This has contributed substantially to making sure we have a very stable rental income,” Mr. Hernandez said.
“Similarly, for our hotels and resorts business, we are seeing a very huge demand coming from the MICE industry, as well as from foreign tourist arrivals, both foreign and domestic. As a result, we have been seeing not just an increase in occupancy rates but also increase in room rates, especially compared to the previous year,” he added.
Likewise, Mr. Mirasol emphasized how the sector has continuously been creating developments for every Filipino to benefit from. In particular, he spotted residential homes in middle and high-end markets as main drivers of growth for Federal Land.
“We’re doing great. 2019 was our best year ever, and as of end-October, we’ve already exceeded 2019 numbers. We’re very optimistic about the year-end numbers,” Mr. Mirasol said.
“We’re optimistic that this positive side of momentum can carry on to the next year. We see signs of increased consumer confidence and have observed favorable opportunities from the high income and luxury market segments where most of our projects are,” he added.
Returning to office
Among the rising trends highlighted during the discussion was the rise of office spaces. While hybrid work arrangements have changed how people work and live, physical office spaces are found to be more needed among workforces.
Jon Canto, managing partner of McKinsey & Company’s Philippines office
According to Mr. Canto of McKinsey, citing their firm’s recent report, people are spending more time in the office, and this is seen to impact real estate in general.
“Globally, we see that people are in the office three and a half days a week. That affects real estate, how we think about offices, and going back to work,” Mr. Canto said.
“Traditional views of the office are now different. Going back to the office, people now want a different kind of space, a place to collaborate, a place where they feel at home,” he added.
Mr. Canto’s presentation cited Cisco’s Global Hybrid Work Study, which showed a significant proportion of respondents globally preferring the hybrid work model. In the Philippines, it was found the study found that 70% of employees surveyed prefer hybrid work, while 20% prefer working fully online and 11% prefer a fully remote mode.
The McKinsey partner also highlighted that, compared to previous years, office spaces are much more considered now as spaces for collaborations, interactions, increased productivity, and fostering social cohesion.
“For Asia, there’s a stronger preference to return to [working on site]; but it will be different. It’s more purposeful collaboration, where you come to work to do certain things that are much effective in person, to drive social cohesion. Think about ideation sessions [and] working with teams — a different type of engagement than it was in the past,” Mr. Canto said.
“Filipinos are much more social. We want to see each other and to interact face-to-face. We also don’t have, let’s say, the technology services sector like in other places in the US and Europe where collaboration online is much more effective. We will need to come back more than them,” he added.
Given these expectations, Mr. Canto notes the importance of enabling younger generations to adjust to the new and evolving office environment in spite of their apparent hesitancy to fully return to office.
“The reality is that in the Philippines over half of companies have returned. Over time, as we get to a steadier state, we would see that there is a key role of physical office space. It’s good to have a different type of office space than you’re used to in the past. People want different things now when they come to the office. They want to ‘want’ to be there in essence. With that, you’ll get millennials and the younger generations to adapt accordingly,” Mr. Canto said.
“In the data that Jon has mentioned, the 20% of people who wants to go back to the office, these are the owners and executives, and the managers who want their staff to be in office all the time. There’s going to be a push and pull, but undoubtedly things are going to leaning more towards going back to the office,” Federal Land’s Mr. Mirasol added.
Moreover, the data also showed that the number of occupancy rates are going down, but it’s still exceeded to go up in the following year.
Noli D. Hernandez, executive vice-president for sales and marketing of Megaworld Corp.
“Despite the COVID-19 [having] induced the work-from-home arrangements a couple of years back, people would always want to see each other,” Megaworld’s Mr. Hernandez shared.
There’s nothing that can replace the human interaction that makes people a lot more productive and we have been seeing a steady increase of occupancy rates. Our tenant retention levels are at an all-time high and this allowed the necessary rent escalation. So, I’m optimistic that moving forward this is a pattern that we can sustain.”
Risks in inflation, rising costs
Alongside such opportunities, the panel also cited risks that can hinder the sector’s growth. The risks are led by global inflation, driving the rising costs of materials and mortgage rates, which altogether are seen to make access to emerging markets more challenging.
For Mr. Canto, to address such issues, the country still has room for growth, starting with the lack of retail lending, where banks can play an important role.
Regarding mortgage rates, Mr. Mirasol observed that when interest rates are low, investors do not make as much money in investing; which means there is less demand for currency and the exchange rate also decreases.
“Not every consumer has the ability to pay cash. So, the more the flexible the banks are, the easier the mortgage rates will be, the better the industry will go,” he said.
“Higher interest rates tend to naturally bring down the man. But, on the upside, the economy is growing, and the consumer [can have] confidence in the future,” he added.
BusinessWorld Managing Editor Cathy Rose A. Garcia, moderator of the first panel discussion
In spite of the seen risks, the impact of inflation is also seen as an opportunity that will help the sector to survive and thrive.
“While inflation poses a threat, it can also serve as a boon to the industry because we know that real estate investment still remains to be a very good hedge against inflation,” Mr. Hernandez explained. “On one hand, there is the threat posed by inflation as a deterrent to the impulse to invest. On the other hand, it can be an impulse that will generate more interest in the industry.”
Adding to inflation is the rising cost of materials, which has a direct impact on construction and development. Rising costs of materials, from low-income housing to luxury market segments, eventually lead to extra costs and higher prices for consumers who are buying or investing in real estate properties.
“Fortunately, as a big developer in scale, we can offer very inventive and creative payment schemes,” Mr. Hernandez responded. “And as you spread amortization over a period of time, it becomes more attractive and helpful for consumers who would like to aspire to be a part of the improving environment for community building. That is some way we can mitigate interest rate regime.”
Embracing sustainability
Also emphasized during the discussion was the shift to sustainability among property developers. For instance, since the pandemic, there has been an increase in replacing older buildings with sustainable and energy-efficient ones, as well as mixed-use developments that are transit-oriented and environment-friendly.
Yet, support from the public sector is necessary to supplement efforts in decarbonizing buildings and integrating sustainable practices in property development.
William Thomas F. Mirasol, president and chief operations officer of Federal Land, Inc.
“[On sustainability,] the major issue is the cost. When a consumer finds out the costs, sometimes [they] get a little pushed back. Now, what can be done is [giving] incentives to the industry for doing more green development,” Mr. Mirasol said. “Leaning towards green is inevitable; we just have to find a way to make it more less expensive.”
Besides incentives, Mr. Canto added, the government can give their support in terms of policies covering the landscape of building infrastructure, communities, and affordable housing.
“These things will make the overall landscape in sustainability more acceptable to a large part of the population,” Mr. Canto said.
