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Listed companies consider ESG

FREEPIK

COMPANIES are expected to pursue more environmental, social, and governance (ESG) initiatives amid rising climate risks and as the Philippines continues to recover from the coronavirus pandemic.

More firms are integrating ESG principles into their operations, said Roderick de Castro, executive director for the Business for Sustainable Development.

“What prompted this is the global call for a worldwide approach to climate change, the pandemic, and regulators adopting an ESG framework for due diligence and audit,” Mr. De Castro said in an e-mail.

The coronavirus pandemic showed companies how they can improve the social aspect of their operations, he added.

“The pandemic also revealed issues related to gender equality and livelihood programs which companies could further improve on,” he said.

For its part, Aboitiz Equity Ventures, Inc. (AEV) said in its 2022 annual report that it would be focusing on improving its sustainability initiatives through risk assessment and strategy development.

The company has businesses in power generation, distribution and retail electricity supply, financial services, food manufacturing, real estate, and infrastructure.

“As the COVID-19 pandemic risks began to be managed, other risks emerged that shaped the global landscape, including geopolitical tensions that led to soaring inflation and supply chain disruptions. These underscored the importance of a commitment to sustainable business practices,” Ana Margarita N. Hontiveros-Malvar, AEV first vice-president and chief reputation and sustainability officer, said in an e-mail.

“Aboitiz has made strides in making a robust process of group-wide business environmental scanning and scenario planning for risks and opportunities,” she added.

The company is also using data science and artificial intelligence to improve its operational efficiency and reduce carbon emissions by approximately 35,000 tons of carbon dioxide equivalent, she said.

One of AEV’s environmental initiatives is the implementation conservation efforts by preserving water in its communities through watersheds and rehabilitated rivers and estuaries, she said.

The company also spent P521 million to plant 12.44 million trees in 2022, she added.

“The workflows adopted have been designed to keep people at the center of our initiatives, with environmental initiatives balanced to meet long-term social equitability,” Ms. Hontiveros-Malvar said.

AEV also came up with supply chain management strategies for its core businesses.

“ESG risks critical to the supply chain are being reviewed based on supplier compliance requirements that may vary depending on the industry sector where our strategic business units belong,” the company said in the report.

Meanwhile, Filinvest Development Corp., which has businesses in banking, utilities, real estate, and infrastructure, has invested in digitalization, as well as sustainable designs and building practices by creating “people-centric and nature-sensitive” spaces with water security solutions, Filinvest Chief Sustainability Officer Mark Tom Q. Mulingbayan said in an e-mail.

“We strive to operate our business with careful thought about our impact on the Filipino customer and community. Our focus is to strike a balance between serving our customers’ needs and aspirations and supporting local economic development, while being mindful of the environment,” he added.

According to the company’s 2022 sustainability report, it has identified “green, inclusive, and resilient” action areas.

One of Filinvest’s green initiatives is to include energy, water, and resource efficiency in the designs of its buildings and townships.

The company has also committed to allocating at least 60% of its projects for open spaces, with parks and natural waterways integrated into the designs.

“The Filinvest group pushes the envelope to being resilient as part of its strategy to ensure long-term ability to generate value, which defines sustainability,” the company said. 

“We believe in continuous improvement and adaptation to remain competitive in the corporate ESG space. A significant step towards maintaining this mindset is enhancing our sustainability disclosures. Sharing our environmental, social, and governance practices and achievements allow us to build trust among our stakeholders,” Mr. Mulingbayan added.

However, Sustainable Fitch, a specialist ESG unit of the Fitch Solutions group, said in a report that companies tend to highlight only positive things in their sustainability reports without acknowledging the challenges that could affect their plans.

It said the Philippines remains unable to come out with clear details about its ESG and decarbonization strategies.

“A large swathe of people in the Philippines live in poverty and depend on brown-industry jobs to survive, with effective strategies being critical to helping these groups keep up with transition efforts,” the report said.

Business for Sustainable Development’s Mr. De Castro said conglomerates “have enough resources for ESG-related activities as they have economies of scale.”

“Other than that, transformation and change will be difficult because of diversity of interests. Add on to that the existing mental models of leaders and the organization that has to transform as well,” he added. 

Regulators like the Securities and Exchange Commission (SEC) have been introducing policies and guidelines that promote responsible business practices and ESG reporting among companies.

The SEC earlier said it is looking to update its sustainability reporting guidelines to make sustainability reports mandatory for listed companies. — AHH

Lessons not from the classroom 

JOSH CALABRESE-UNSPLASH

By Sherisa P. Nuesa

STRATEGIC maneuvers during crisis times have been truly instructive, especially to boards and leadership teams. In the heat of the recent pandemic, landmark moves included ACEN Corp.’s bold expansion in the renewable energy space (locally and abroad, supported partly and aptly by green financing), Manila Water Co., Inc.’s $500-million sustainability bonds and a strategic alliance with Trident Water Co., as well as Ayala Land, Inc.’s launch of AREIT, Inc., the country’s first real estate investment trust.

While much has been said about large publicly listed corporations, it is equally worthwhile to delve into the story of a moderately sized listed company, Far Eastern University or FEU. This 95-year-old institution demonstrated resiliency and imagination, even as the whole education space, specifically private schools, faced sweeping challenges then that struck at the very core of their business model. Moreover, these began long before the era of COVID-19.

The legislated transition to K-12 starting in 2016 triggered industry-wide, prolonged (five-year) dips in student enrollments. As bottom lines of affected private schools headed south, the law on free tuition for state colleges and universities quickly followed in 2017. These statutory stresses were compounded by the tidal wave impact of technologies and their concomitant methodologies and processes that schools in the country then were just starting to imbibe.

Thus, when the pandemic and lockdowns hit, many private colleges and universities were simply caught off guard. In September 2020, the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA) reported that of 756 schools surveyed nationwide, an overwhelming majority registered 20% to 60% declines in enrollment. A few closures happened. How FEU silently navigated through this backdrop has been an interesting learning journey, which can be dubbed as “lessons not from the classroom.”    

The following ideas are not necessarily novel, but in examining prescriptions for a recovery roadmap, a few applied learnings from the past could contribute to a simple refresher course.

1. Reinvent a relevant, compelling value proposition as a constant process 

A value proposition, defined by “Blueprint to a Billion” as the fundamental benefit delivered to customers, should outlast any financial crisis. Thus, companies should not freeze in a squeeze, and think as much of a rebound even as firefighting is going on. If an organization is starting to think only now about reigniting growth in this economic upswing, it is probably late. Companies should constantly think of staying ahead of the pack, especially as competitors within and outside most industry playgrounds have multiplied exponentially. Technology innovations, pandemic shocks and supply chain gaps have unleashed thousands of fresh or rehashed players, new entrepreneurs and product and service innovators, online or not. “Work-from-home” or “work-anywhere” setups have expanded geographical markets. Industries are being reshaped everywhere and more transformations are likely forthcoming.

Companies could reformulate, repackage, redistribute or even totally revamp their products and services, and those who understand their customers intimately will know the value, functional or emotional, as ascribed by the market. They should also be reading signals and readying for the next wave, the next frontier. More than ever, businesses should protect and enhance the current and potential value benefit — whether in the content or quality, the mode of delivery, the image proposition or the response time. Rethinking one’s fundamental advantage does not stop.

Embracing technology and addressing environmental threats, FEU launched at least three years before the pandemic a leading online learning management system, Canvas, and later added others, both in the academic and administrative spheres. It likewise trained its faculty and students on digital literacy, not without difficulty at first, and set up the support infrastructure as well for both online and blended learning systems.

With keen awareness that students would eventually clamor for the campus experience, the university did not halt school renovations and campus additions either. A senior high school was added in four locations, while construction at FEU Filinvest-Alabang progressed. The Roosevelt schools, acquired in 2016, were also renovated and expanded, and this 90-year-old brand added three campuses to the FEU Group of Schools (now nine school campuses nationwide, plus three joint ventures). And right during the pandemic, key investments were made in the Good Samaritan Colleges in Cabanatuan City and in a nursing school in Brunei, the first foray outside the country.

2. Reprioritize strategic risks as paramount 

“A car has brakes so it can run faster.” Make risk analysis a strategic tool. There will always be opportunities even in downturns. Resist the urge to slash costs or alter the growth path simply to conserve cash, without balancing financials against the more impactful threat of eclipsing a hard-earned business advantage. A blemished brand value or one that is no longer as heavily differentiated will take time to recreate. A financial approach is a crucial leg of any strategy, but it is the business strategy, the overall business model, that drives or dictates the financial strategy, not the other way around. Even in the middle of uncertainties, a company can step on the business accelerator, provided the risk threshold boundaries are drawn. Knowing the danger zones (what is the worst that could happen?) and managing them can unlock game-changing, audacious ideas.

At the height of the health crisis, the COCOPEA survey showed that as of September 2020, about 3 million students in the country had not returned to school. The industry saw layoffs and cutbacks in investments and other expenditures. FEU similarly tightened its cost watch, but understood risks beyond operational or financial, and set its course for a strategy-based expansionary response. 

3. Repower leadership through teams and teamwork

“None of us is as smart as all of us,” goes a saying by global author Ken Blanchard. The big ideas and, more importantly, their coordinated and smooth execution can best happen through effective and motivated teams. The level of confidence also rises dramatically when the key functional units are fully in sync. The one at the helm should possess an ability and feel to choose the right leaders around him or her, to form a cohesive team that can execute well. Execution is key, because a vision stays on paper unless it is carried out in the market.

FEU attributes its mix of new learning modalities (asynchronous remote lessons, fully online or hybrid applications) to each school group designing and implementing its own system approach. From this empowering policy came experimentations, an Innovation Center and a mastery-based individualized learning enhancement system (called MILES) that was developed in-house. FEU continues to reap benefits from an aligned Board and management stewardship and a reinforced faculty and workforce. 

4. Revisit the organization’s understanding of governance themes

Certain governance themes are pervasive and inescapable — artificial intelligence (AI) or machine learning, DEI (diversity, equity and inclusion), climate change and social missions. Make sure that the organization-wide know-how and articulated policies for these fields go beyond what are prescribed in governance manuals.

AI, especially generative AI, and data science, can and should work for us, far more than we can imagine right now. These should be part of boardroom discussions. Gender diversity has demonstrated in certain studies that it can enhance performance in measurable ways, and many have seen it work (including highly respected male champions). Climate impacts have been staring at all of us, with the recent months seeing the hottest temperatures globally, and sea divers witnessing the sad bleaching of valuable corals, even locally. Finally, citizenship duties and social governance must find their way in the business case — improvement only for the balance sheet is not sustainable for the long haul.

Among the happy accolades for FEU, whose board has three female directors, are World Universities of Real Impact rankings (among the top 100 global innovative universities, for three years in a row); the first academic EDGE Green Building certification in the Philippines; and continuing Golden Arrow Corporate Governance awards. Its FEU Public Policy Center remains a haven for socially relevant topics. The university remained profitable all through the extended crisis years. As early as 2022 and continuing through June 2023, its system-wide enrollment, revenues and net income have already exceeded pre-pandemic levels, an unmistakable rebound. 

In a wave of recurring volatility and dynamic movements, businesses should also be constantly reimagining and relearning — unlocking valuable insights, developing fresh knowledge and capabilities, and delivering lasting outcomes.

 

Sherisa P. Nuesa is a board director of Far Eastern University, Manila Water Co., Integrated Micro-Electronics, Inc. and AREIT. She is also a board adviser of Metro Retail Stores Group and Vicsal Development Corp. and a trustee of the Nextgen Organization of Women Corporate Directors.   

Her past directorships include Ayala Land, Inc., ACEN Corp. and ALFM Mutual Funds Group. She also served as chairman and co-founder of the Justice Reform Initiative, and as director of the Institute of Corporate Directors and the Financial Executives Institute of the Philippines (Finex). She was awarded the ING-FINEX CFO of the Year for 2008.

Small businesses embrace technology to stay competitive in face of risks

TIM MOSSHOLDER-UNSPLASH

By Miguel Hanz L. Antivola

THE micro, small, and medium enterprise (MSME) and startup ecosystem is becoming more attuned to the need for adaptability and sustainability by assigning more weight to lean, efficient operations, industry experts said, noting that the realignment of priorities is becoming more pronounced as tough times loom.

“With so much global uncertainty, everybody is back to their conservative stance,” Dan I. Siazon, co-founder and senior vice-president of venture capital firm Kickstart Ventures, Inc., told BusinessWorld. “The challenge is to go beyond that and seek opportunity.”

The Asian Development Bank (ADB)  reported that 73.1% of Philippine MSMEs faced a sharp drop in domestic demand and operational standstills due to the quarantine imposed at the onset of COVID-19. While businesses continue to deal with the tail end of the crisis, new challenges have emerged in the form of supply chain disruptions caused by the Russia-Ukraine war, as well as surging oil and food prices.

“Many businesses are under pressure to address cost management, pricing dynamics, supply chain diversification, and alternative ways to be creative and productive,” according to Rosemarie B. Ong, chairman of the Philippine Retailers Association (PRA), who also cited the impact of the adverse inflationary environment.

“They don’t want to pass on the costs to the price-sensitive consumer, while maintaining profitability,” she added.

These enterprises have recalibrated to recognize the need for transformation appropriate for the times, reimagining workflows and offerings to become more sustainably competitive. From leveraging e-commerce platforms to implementing automation, MSMEs have embraced technology as a key enabler of an efficient resurgence.

“There is an awakening,” according to Jason Christian Gaguan, co-founder of market insights startup Agile Data Solutions, Inc. and assistant vice-president for commercial at SM Supermalls, referring to MSMEs and startups. “I’m excited about it because everyone now is starting to innovate, which is good for the ecosystem.”

“What we’ve seen now is as we go back to normal and embrace new technology, it’s really more of adapting,” Ms. Ong said on the MSME recovery. “So they can leverage new avenues for their marketing and sales (to become more efficient).”

MSMEs are the backbone of the economy — accounting for 99.58% of all business establishments, 63% of the workforce, and 40% of gross domestic product, according to the Philippine Statistics Authority (PSA) and the Department of Trade and Industry (DTI). Small businesses created 5,461,731 jobs and generated P2.09 billion in sales in 2021.
According to the 2023 World Competitiveness Yearbook of the International Institute for Management Development (IMD), the Philippines was 52nd out of 64 economies, down from 48th in 2022. This year marked the sixth straight time the Philippines was in 13th place out of 14 economies in the Asia-Pacific. The yearbook’s ranking of business efficiency put the Philippines at 40th, from 39th last year.

The Philippines dropped two places to 59th out of 100 the countries in the 2023 edition of the Global Startup Ecosystem Index compiled by research house StartupBlink. With a score of 2.469, the Philippines remained the seventh-worst scoring country in the Asia-Pacific.

How do MSMEs and startups innovate and compete while in survival mode? Where should their focus be directed while dealing with the dynamic environment?

BACK TO BASICS
Ms. Ong said MSMEs are starting to explore more local sourcing instead of relying on imports as a means of lowering costs.

“Many domestic suppliers are being supported to create a resilient supply chain,” Ms. Ong said. “(MSMEs) are performing this balancing act of managing their expenses while continuing to grow revenue.”

In these conditions, scaling down has become a plausible option for some. The former growth mindset has had to be dialed down in favor of sustainability, according to social entertainment and livestreaming platform kumu.

“We had to adjust our growth expectations and ambitions to a timeline of three to five years instead of 12 to 18 months,” according to Rexy Josh L. Dorado, co-founder and president of kumu. “This required focusing on cost optimization, scaling back infrastructure, and finding a pathway to profitability.”

A reassessment of strategy becomes necessary to keep up with the market, as investment wanes in Southeast Asia after an uptick in 2021, according to Deal Street Asia and Kickstart Ventures. The first quarter of 2022 racked up about $5 billion in deals, down from a peak of $8 billion in the fourth quarter of 2021.

“We had record fundraisings in 2021, and things were looking good in the Philippines, ” Mr. Siazon said. “The next year, we were on our way down. And not just in the Philippines.”

“As the threat of the recession looms, people put their money in safer investment vehicles,” he added, as businesses rethink their core needs.
“Profitability — that needs to be the goal right now, the true north,” according to Brian P. Cu, chief executive officer and co-founder of hyperlocal e-grocery platform SariSuki. “The degree of freedom given to a startup today is much smaller than what was given last decade where money was cheap and interest rates were low.”

Mr. Gaguan noted that incentive- and discount-driven business models have begun exiting the scene, due to the unsustainability of a pure focus on growth. Resiliency and self-sufficiency have become the hallmarks of successful businesses.

“For all the previous excitement generated by ‘sexy metrics’… startups now are becoming more proposition-oriented, which I think is a good direction,” Mr. Gaguan said. “And smaller startups have a chance at getting funded.”

“It’s no longer just a story of selling fantastic growth at the expense of basic financials,” Mr. Siazon said. “Generally, growth used to be sustained by throwing money at things — the topline grows, but your margins don’t make sense.”

“That expectation has changed. The unit economics must make sense now,” he said, adding that businesses need to go back to the basics like product-market fit and a realistic profitability and self-sufficiency time frame.

“Competitiveness is achieved by just getting the basics right. If you get the basics right, you’re already far ahead of your peers,” he said.

DIGITAL TRANSFORMATION
Digital transformation continues to open up new ways for MSMEs and startups to be viable, but they also raise some concerns.

With full implementation by 2030, digital technology could create up to P5 trillion in economic value, equivalent to about 27% of GDP in 2020, according to a study conducted by global tech advisory firm Access Partnership and commissioned by Google. This requires the Philippines to embrace digital skills training and education, accelerate digital adoption and innovation, and tap opportunities for digital trade.

The pandemic “forced everybody to learn how to use their mobile apps. Nothing like a life-death crisis to really burn things into your system,” Mr. Siazon said, noting the increased adoption of e-commerce and e-wallets.

President Ferdinand R. Marcos, Jr. said in his second State of the Nation Address that digital payments accounted for 42% of retail payments made in 2022, putting the central bank in position to achieve its target of a 50% digital share of payments by this year.

“As digital wallet usage became much more prevalent, a strong base has been put forward,” Mr. Siazon said. “It also helped B2C (business to consumer) businesses. Online businesses thrived.”

According to the GoDaddy 2023 Data Observatory, 62% of Philippine small business respondents make up to half of their annual revenue from online sales channels.

“In just the past months of 2023, there has been a 117% year-on-year surge in the number of sellers joining our platform,” TikTok Philippines said of the growth of its Shop feature. “Notably, within the same timeframe, there was a 53% year-on-year increase in sellers achieving breakeven status, who are poised for more long-term success.”

Building community viewership through more creative campaigns is being touted as a new sales model for businesses, especially those engaged in shoppertainment. The segment is projected to be worth over $1 trillion globally by 2025, according to the Boston Consulting Group.

Social media algorithms and more democratized data analytics have also paved the way for making it easier to operate a small-scale businesses, which can move faster than larger competitors. “Data analytics empowers MSMEs to make well-informed decisions due to real-time insights and fast reactions,” Ms. Ong said.

“The difference between a big company and a startup lies in execution. Even though they have the budget, big companies move a little slower,” Mr. Gaguan said. “As a small team, we can immediately listen to our customers and change.”

While e-commerce is all the rage, technology is often taken for granted or overestimated, according to SariSuki. “A lot of the communities that we work with — simply pinning their address on a map, they don’t know how,” Mr. Cu said. “So we had to make it as simple as possible.”

Understanding the user demographic and having a good product manager become key to leveraging technology while also making it easy to adopt by stakeholders. Digital literacy initiatives must be pursued to grow the channel.

“It’s a hard thing to do — to have tech adoption be done by a startup,” according to Manuel Florencio A. Mejia IV, chief commercial officer and co-founder of SariSuki. “There’s desire. You just need to tap that desire.”

The ultimate technological hurdle might be artificial intelligence (AI), which presents both a threat and an opportunity.

The global AI market is expected to top $407.0 billion by 2027, with a compound annual growth rate of 36.2% during the forecast period of 2022-2027, according to analytics firm MarketsandMarkets. “This large TAM (total addressable market) leads us to believe that there is significant opportunity for growth and profitability in AI technology,” Brian Dy, head of research at Kickstart, said.

Anna Irmina B. Navarrete, co-founder and president of Kickstart, noted the importance of skepticism when assessing TAM, as there are many data providers available online for such information. “It is very easy to look and be impressed,” she said.

“We must also look at the direction of growth and the trends surrounding the market,” she added, noting that the technology tends to go through a “hype cycle” during which the belief spreads in its potential to revolutionize the world.

Mr. Siazon noted that AI should encourage more efficient business workflow and further exploration of its applicability beyond the initial “hyped” fields to arrive at a more sustainable level of doing business.

“Over the long run, there’s also an opportunity to liberate people who may otherwise be stuck in that kind of role to explore other potential areas where human creativity cannot be matched by AI,” he said.

“We hope that in a country full of creative talent like the Philippines, they can employ that to expanding their creative abilities. Maybe introduce new areas for people like us to invest in, as well as new industries where the country can excel.”

Jack be nimble: Hoteliers keep best practices as COVID wanes

PROXYCLICK VISITOR MANAGEMENT SYSTEM-UNSPLASH

By Joseph Emmanuel L. Garcia, Senior Reporter

AFTER stagnation throughout the years of the coronavirus disease 2019 (COVID-19) pandemic, hotels around the country are showing optimism for the hospitality industry, with some developers about to open, or have just opened, new properties. Meanwhile, established hotels are retaining pandemic-borne safety practices, as well as utilizing online and remote capabilities that became a necessity during the worst days of the pandemic.

When the first lockdowns were announced in March 2020, several hotels evacuated guests to conform to government lockdown policies. After the initial evacuation, some hotels were used as quarantine facilities for health workers and repatriated overseas Filipino workers (OFWs). The Chroma Hospitality group, under the Filinvest Hospitality Corp., offered its facilities for this purpose. The Chroma Hospitality group includes the Crimson Hotels in Mactan, Boracay, and Alabang, as well as the Quest Hotels in Clark, Tagaytay, and Cebu. They are slated to open a new property in Baguio either late in 2024 or early in 2025.

“The pandemic has taught us to be resilient,” said Carmela Bocanegra, vice-president for Sales and Marketing for Chroma Hospitality in an interview with BusinessWorld. “Even during the pandemic, all our hotels were open, actually, because we were serving the OWWA (Overseas Workers Welfare Administration),” she said. “We had to be flexible with our rates, help each other, help the government. Iyon ang bumuhay sa amin eh (that’s what enabled us to live).”

To this day, they still apply the sanitation practices made a necessity by the pandemic, such as the frequent handwashing (they have dispensed with masks). She said that they had internally published a cleaning manual that was different from their normal cleaning operations from before the pandemic. New rules include holding rooms for a few hours after their cleaning before handing the keys to the next guest, as a health and safety precaution.

George Reynoso, director of Rooms for Diamond Hotel Philippines (a hotel which was also used as a quarantine facility, according to the website of the Bureau of Quarantine) sees a vestige of the pandemic in the continued requests for quarantine accommodations. “At the start of this year, we no longer accommodated quarantine guests even if we still had a number of requests,” he said in an e-mail to BusinessWorld.

THINGS ARE LOOKING UP
Both the Diamond Hotel and Chroma Hospitality use 2019, the last year before the lockdowns, to gauge their performance. Mr. Reynoso said, “Occupancy, rates, and profits have not reached what we achieved in 2019 because international tourism is not the same as pre-pandemic times, but the hotel’s performance is still better than what we expected.” Ms. Bocanegra gave a similar answer, saying, “The international market is not yet 100% there, but slowly, it’s coming in… We compare it to the last normal year before the pandemic, 2019. We’re almost there. That’s our gauge… of course, we’re targeting bigger than that.”

She added that the properties in resort locations (as opposed to the city-based hotels) are doing better at reaching their 2019 targets. “The domestic market is really full throttle. It’s there; they’re traveling, and they’re going places.”

This can be seen in the Discovery Hospitality group’s newly opened property in Samal Island in Mindanao, Discovery Samal. Situated on six hectares of land, the resort offers luxury accommodation as well as a convention center that can seat 1,200 people. “From the point of view of sales, foreign travelers are now coming back, and also the revenge of the domestic travelers,” said Dianne Santos, director of Sales for Discovery Samal.

Ms. Santos noted that since the pandemic, they have used more video conferencing tools for practical reasons, such as touring the property virtually. “Not a lot of people can go to Samal and the property… now we can do virtual tours,” she said. “Before, it wasn’t a thing.”

Melco Resorts and Entertainment’s property in Manila, City of Dreams, consists of three hotels: the Hyatt Regency Manila, Nobu Hotel, and Nüwa Manila. Of these, Nüwa is also on the Bureau of Quarantine’s list of accredited quarantine facilities. Geoff Andres, property president of City of Dreams Manila told BusinessWorld in an e-mail, “With our operations in full swing, the occupancy of all City of Dreams Manila’s three hotels are in the high 90s, back to pre-pandemic levels. Our F&B outlets, ballroom, and entertainment venues such as DreamPlay are also performing remarkably.”

GOING ONLINE, UPGRADING
Mr. Andres detailed the recognitions they received for the safety and health measures they had undertaken during the pandemic: “We instituted stringent sanitary measures during the pandemic. These efforts enabled us to be Safety Seal-certified by the Department of Tourism, which also presented us with the Safe Travels stamp of the World Travel and Tourism Council. Our three hotels were also recognized by international hygiene experts for the initiatives we undertook.”

City of Dreams Manila also concentrated on placing many of their services and operations online. “We also focused on digitizing and streamlining processes in operations, harnessing technology in our supply chain procurement systems, and using technology to make our products, services, and reservations more accessible to our guests, such as the use of the dynamic Melco app,” said Mr. Andres.

Other improvements to their operations include sourcing sustainable ingredients for their restaurants, a reduction in the use of single-use plastics (through the installation of a glass bottling and water filtration system and replacing food and beverage containers and utensils with sustainable alternatives). “As we sustain the initiative, we are currently reaching about 30-40% waste reduction and waste diversion,” he said.

Meanwhile, The Diamond Hotel has implemented some structural changes: they have improved their heating, ventilation, and air-conditioning (HVAC) system (“already installed so we have better ventilation and air exchange rates,” said Mr. Reynoso). He added, “We installed vents in all bathroom doors so that the increased ventilation will cover the entire room.”

The Diamond Hotel has also retained the use of online facilities, which became necessities during the pandemic when person-to-person contact had to be reduced. These include contactless web check-in and check-out, and more options for online payments. “The hotel also continues to capitalize on its existing e-commerce website — Diamond Online Shopping Site, with offers to further expand the food take-out operations and by developing creative online marketing strategies to engage existing and potential customers,” said Mr. Reynoso. He also pointed out that the website has been operating since 2015, “which made it easier to transition to online selling of Diamond Hotel’s culinary specialties since the restaurants (were) not allowed to operate on full capacity (during the lockdowns).”

These same practices extend internally, with Mr. Reynoso saying, “Options for meeting on-line/off-site instead of face to face are still valuable even if there is renewed interest in holding meetings face-to-face.”

KEEPING EMPLOYEES
On the subject of workers, Ms. Santos said that in her previous job (prior to joining the Discovery group), she performed the task of three people due to layoffs, resignations, and the like. “Now, what I see, it’s really hard to look for people now, because they have the option to work from home. People now are looking for that kind of arrangement. People are moving to a hybrid work arrangement, which is hard for hoteliers like us (who cannot) work from home. We really have to be onsite to be with our clients and guests.”

As for City of Dreams Manila, the property won the Work Here, Work Happy award from the Forbes Travel Guide in 2022.  Initiatives to help workers during the pandemic included giving financial assistance through paid leaves from April 2020 to December 2021 to those unable to work; giving bonuses and providing in-house accommodations, full meals, and vitamins to workers who were required to work during community quarantines; and providing assistance for colleagues’ vaccination needs, including offering two-way limo services for pregnant employees.

Mr. Andres added, “We took the pandemic as an opportunity to further train colleagues through our own learning academy called Melco Absorb, where various courses and programs are continuing and available non-stop. Qualified managers were also enrolled in ECornell courses for free. We promoted colleagues and prioritized internal over external hiring.”

“I think it’s an industry problem, until now,” said Chroma Hospitality’s Ms. Bocanegra, reporting resignations and reshuffling at work. “We’ve had some problems there, but I wouldn’t say it’s really that much.

“The way to do it is just really be more competitive. Instead of thinking of the negativities, we just have to move forward and look for more people. Encourage more fresh graduates, and training — in our properties, training and mentoring are very important. I think that’s where we should move forward.”

How technology helped retailers beyond the pandemic

MELANIE LIM-UNSPLASH

By Revin Mikhael D. Ochave, Reporter

TECHNOLOGY has allowed retailers to survive the pandemic while boosting their operations to meet changing consumer behavior. From supermarkets to restaurants, the retail industry has embraced advances in e-commerce, positioning businesses for further growth.

“The sector heavily leveraged various technologies. Retailers integrated user-friendly websites, mobile applications, and secure payment gateways to enhance the customer experience and facilitate seamless transactions,” Rosemarie B. Ong, Philippine Retailers Association (PRA) chairperson, said.

“These adaptations have not only helped retailers survive during the pandemic but have also positioned them for long-term growth and success in the post-pandemic era,” she added.

The shift to e-commerce channels ensured faster transactions and better customer experience.    

“Retailers recognized the importance of reaching customers virtually and established robust online platforms to cater to the growing demand for digital shopping experiences,” Ms. Ong said.   

Beyond the pandemic, retailers have moved forward by using technologies such as artificial intelligence (AI), virtual reality (VR), and the Internet of Things (IoT) to ensure profitability in the coming years.

“Local retailers are actively embracing cutting-edge technologies to enhance their business operations and improve efficiency. AI is used to analyze customer data and behavior, enabling personalized offerings and targeted marketing. VR, like virtual dressing rooms, is transforming the retail experience,” Ms. Ong said.

“Additionally, IoT devices are modernizing supply chains and logistics, ensuring efficient product delivery. By staying at the forefront of technological advancements, retailers aim to remain competitive and drive innovation in the industry,” she added.    

Eric Teng, president of the Restaurant Owners of the Philippines or RestoPH, said the local restaurant industry turned to technology as a result of the pandemic.   

“We have new applications that restaurants use all the time like customer service apps and menu apps. There is also AI,” he said. “It is a new way of doing business, a new way of getting information.”

“Technology will affect many of the reasons why we travel since travel is one of the things that tell us where we eat because when you’re out of [your] home, you eat in the restaurant. That is travel mobility. That is very important with regard to the food industry,” he added.   

Data from the Philippine Statistics Authority (PSA) showed that the gross value added in retail trade reached P713.40 billion in the first quarter, up 16% from P615.66 billion a year ago.   

CHANGING CONSUMER BEHAVIOR
Dennis G. De Jesus, country head for the Philippines of global e-commerce solutions provider Anchanto, said the e-commerce sector has the potential to grow even after the pandemic following the change in consumer behavior.

“The potential for e-commerce growth is still there because in terms of our experience and consultation with the retail players, what they are saying is that there has been a change in the behavior for a lot of the consumers because they were exposed to the convenience of online shopping during the pandemic,” Mr. De Jesus said.   

“That particular experience stuck with them and the behavior has suddenly shifted into an omnichannel type of buying behavior wherein they now have the decision and access to buy the things that they need at an online or a physical store. Customers have redefined their buying behavior and pattern before making a purchase decision,” he added.   

Mr. De Jesus added that the easiest entry for small businesses to e-commerce is via the leading online marketplaces.   

“Anyone can sell in Lazada, Shopee, and Zalora. There is no hurdle at this point in time. Right now, there is no barrier to entry. I don’t think it is a challenge for small businesses to embark on e-commerce initiatives,” Mr. De Jesus said.   

The Department of Trade and Industry, citing data from British consulting firm GlobalData, is expecting the e-commerce sector to sustain its growth with a projected annual increase of 15.8% in transaction value from 2022 to 2025.   

It estimated e-commerce transactions to reach P495.2 billion or $9.7 billion by 2025, higher than nearly P270 billion recorded in 2021.   

Laurice Padlan-Obana, Kantar Philippines Worldpanel Division Consumer and Shopper Insight director, said in a media briefing that Filipinos still prioritize value and convenience when it comes to shopping, as shown in the company’s Shopperscope 2023 report.

She said it is important for shops to make their customers feel that they are spending their money wisely.

“Promotions should be offered. The specific kind of promotion that tops their preference would be the price off/discounts,” Ms. Padlan-Obana said.

“Now that people are out and about, when they speak about convenience, they also talk about access,” she said.

She said people also talk about longer store hours and nearness to other facilities, which are not necessarily their home. The location should be accessible to public transport and near other stores they visit, she added.   

Filipino consumers are now prioritizing ease of shopping when buying in local shops, Ms. Padlan-Obana said, citing organized shelves and visible promotions.

“Shopping is already more purposive and [customers] don’t want to waste a lot of time going around the store, at least for a majority of the Filipinos,” she added.   

RECOVERY PROSPECTS
Meanwhile, PRA’s Ms. Ong said local retailers are cautiously optimistic about the future of the retail sector.   

“Despite facing challenges such as rising inflation and shifts in consumer spending patterns, the local retail industry remains focused on growth and aims to regain the momentum seen before the pandemic,” Ms. Ong said.   

“Retailers are open to adopting multiple strategies and leveraging different channels to navigate potential headwinds and seize emerging opportunities,” she added.    

RestoPH’s Mr. Teng added that the local restaurant industry is already back to normal following the effects of the pandemic.   

“For the restaurant [industry], it’s actually back to normal. There is not much memory of the pandemic, although all the protocols became habits. People sanitize and wash their hands. As far as the comfort of people to go out, they are already back. We want normalcy back and we got normal back,” Mr. Teng said.    

He added that the government should push for stability in the food supply to avoid disruptions.   

“Generally, we need more stability in everything. If things keep changing left and right, that’s very hard for businesses to grow. We hope that there is more stability with regard to the food supply,” Mr. Teng said.   

This year, there have been shortages of either vegetables or major commodities, which have caused disruption, but restaurants have remained focused on recovery, he said.    

“We just have to deal with it. The only important thing that we learned was that even through the worst crisis, the world survived, the food industry survived,” Mr. Teng said.   

“We went through it and right now, just like any other crisis, after that, it is recovery,” he said. “When it happens, we hope we’re prepared for it but we will focus on the normal.”

Steven T. Cua, Philippine Amalgamated Supermarkets Association president, said supermarkets made adjustments after the effects of the pandemic.   

“As the pandemic slowly released its hold on the economy, supermarkets began sprucing up their merchandise, rationalized merchandise selection, worked on offline sales as online sales receded, and relied on innovative marketing to take the lead in enticing the market back into its doors,” Mr. Cua said.   

However, supermarkets have been slow in employing the number of personnel they used to have before the pandemic.

“Just visit your favorite supermarket and count the percentage of checkout counters existing compared to pre-COVID days, as well as the percentage of those retained open to service customers. To this day, I see retailers opening only 25% to 66% of retained counters even during rush hour,” Mr. Cua said.   

Mr. Cua urged the government to address the rising inflation as prices of grocery items have surged.   

“Inflation is one issue the government has to address before it leads to a state of stagflation, which is a deeper hole to get out of. Retail should find relief if prices become more stable and people have jobs and salaries to avail of commodities,” Mr. Cua said.   

“Additional taxes, increase in salaries, higher power costs, low demand all add up to inflation. Opportunities will be plentiful once the economy relatively stabilizes,” he added.   

Beyond the pandemic, local supermarkets should prepare for the “The Big One” or a magnitude 7.2 earthquake on the West Valley Fault, he said.   

“What we have to prepare for is ‘The Big One’ just in case it arrives even if it doesn’t during our lifetime. Retain the lessons learned from COVID-19 and always be vigilant of future shocks like this tsunami of a pandemic,” Mr. Cua said.   

Mr. Cua added that the government should focus on assisting various industries to support the growth of the retail sector.    

“The government should provide incentives for the manufacturing industries to invest, reinvest, expand and flourish. This provides employment and fuels a consumer-driven economy. Look after the needs of industry for power and water, physical infrastructure. Get the farmers who supply fresh produce more informed, inclusive and empowered to enjoy the fruits of a growing economy,” he added.

Post-COVID opportunities in healthcare

CDC-UNSPLASH

By Patricia Mirasol, Reporter

THE post-COVID opportunities in healthcare are becoming apparent in fields like digital transformation and wellness, industry officials said, while at the same time highlighting the challenges posed by labor shortages and cybersecurity threats.

TECHNOLOGICAL CHANGE
The Medical City (TMC) finds itself at various levels of digital transformation, according to Dr. Eugenio F. Ramos, president and chief executive officer (CEO) of TMC, which operates a flagship complex, four provincial hospitals, and over 50 clinics. 

“We are getting into AI (artificial intelligence) in ECGs (electrocardiograms) and in echocardiograms. We are doing AI in our mammograms,” he said in Zoom call in July. 

These facilitate the efficiency of the process, he said: “The machine and the radiologists concur… AI is based on numbers. If it has gone through millions, then you can see it becomes really accurate.”

Ambulance company Lifeline 16-911, for its part, is likewise investing in AI-assisted dispatching systems.

This “will allow for a zero-response time to emergency cases, by allowing us to guide the callers in providing effective first aid to patients while the ambulances are en route,” Michael H. Deakin, president and CEO, said.

“Post-pandemic, we have to prepare ourselves in terms of how to get the right data, and how to make use of that data in making decisions,” Mr. Ramos of TMC said. “Sometimes, the decisions may not be the best decisions, but those that are quick and helpful to the most number of people.” 

PANDEMIC FINDINGS
Disaster preparedness and recovery planning served the company well during the pandemic, according to Lifeline 16-911’s Mr. Deakin.

“(We) regularly worked on various scenarios and an updating of skills — even before the pandemic,” he said in an e-mail. “When the pandemic hit, we were fully prepared to activate our protocols… without any downtime.”

Emergency medical service companies can expand by offering home services, thereby reducing the need to go to hospitals, he pointed out.

“Looking ahead, we are hoping to establish a national system that facilitates seamless interactions between the government and private sector for better crisis response in the future,” Mr. Deakin added.

American Bio-Clinical Laboratories, International (ABC Labs, Int’l.), on the other hand, has found that not committing too heavily to a future of extensive coronavirus disease 2019 (COVID-19) testing turned out to be the right decision.

Malacañang lifted the COVID-19 test requirement for incoming visitors on Oct. 25, 2022. Earlier that year, local government units started lifting their test requirement for fully vaccinated travelers.

Riding on the trend would have been good for business, said Geoffrey L. Beldua, ABC Labs, Int’l’s general manager.

“In retrospect, ABC Labs Manila made the right call not to push Covid testing as we were still in the preparation stages during the peak of the pandemic,” he told BusinessWorld.

“Post-COVID recovery negatively affected diagnostic centers focused on COVID testing alone,” he said in a July 27 e-mail. “An exit strategy should be in place as the trend is expected to die down eventually.”

PREVENTIVE HEALTH
One opportunity that has emerged from the wake of COVID-19 is the greater focus on preventive health and wellness, according to Cholo A. Tagaysay, CEO of KonsultaMD, a 24/7 health hotline service.

“Twenty percent of Filipino consumers who care about wellness expressed intent to spend,” he said in an e-mail, noting interest in supplements, health insurance, and preventive healthcare.

“Despite price increases, the majority are still willing to pay a premium,” he said.

Mr. Tagaysay also noted that the proliferation of wearable devices will enable remote consultation and the monitoring of vital signs such as blood pressure and heart rate.

“The focus on wellness, lifestyle, and wellbeing is the bigger market, actually,” Mr. Ramos said. “People have become more health literate, have started to assume more responsibility over their own health.”

This requires the healthcare industry to take advantage of the shift from disease management to disease prevention, Mr. Ramos said.

The Universal Health Care Act (Republic Act No. 11223), “if successful, [would help] Filipinos be more productive,” Mr. Beldua said.

“However, this should also be supplemented by other programs, such as employment opportunities, so that the cycle of capability and contribution to society can be completed,” he said. 

The law, passed in February 2019, grants full health coverage and prescribes complementary reforms to the health system to minimize the financial hardship arising from health emergencies.

A December 2022 study by the Philippine Institute for Development Studies found that members of the national health insurance program still pay out-of-pocket for medical services despite the law on universal healthcare.

CYBERSECURITY CONCERNS
An attendant challenge to any technology-driven enterprise is cybersecurity.

“A lot of opportunities are present in connected healthcare through telehealth,” Mr. Tagaysay said. “Opportunities for data and remote monitoring by syncing outpatient and inpatient records are possible.”

“But we also see challenges in cybersecurity, data ownership, and legislation,” he added.

Nearly half (47%) of Southeast Asian organizations succumbed to ransomware which held hostage crucial data, according to a report by IBM Corp.

The average cost to recover sensitive information illegally obtained by hackers rose 6% to a record $3.05 million in 2023 in Southeast Asia, the report found.

Healthcare continues to experience the highest data breach costs of all industries, IBM said in its Cost of a Data Breach Report 2023. Such costs rose to $10.93 million in 2023, up 8.2% from a year earlier.

On Aug. 1, President Ferdinand R. Marcos, Jr. said he was looking into improving the Philippines’ cybersecurity defenses and digital connectivity.

“We have to keep up. We are always looking for additional capability when it comes to all these communications, especially with the problems of cybersecurity,” the President said in a meeting with a satellite company.

LABOR SHORTAGES
Labor poses a major challenge in healthcare, health service providers said.

“The biggest risks for the emergency medical services these days is the shortage of nurses and EMTs (emergency medical technicians) who are leaving the country,” Mr. Deakin said.

“If not addressed carefully, this trend could result in drastic increases in healthcare service prices locally and exacerbate the brain drain as talented nurses leave the country,” he added.

Between 2020 and 2022, 29% of Lifeline’s staff were recruited overseas each year. Most have been moved to the Middle East, Europe, the UK, and Canada.

Lifeline stems the flow by paying for the training and university courses of future employees at the high school level.

“We have to give them more reason to stay, other than giving them a decent salary,” Mr. Ramos said. “Empower them with better chances of mobility as far as careers are concerned.”

“A lot want to stay,” he added, even “the younger ones. They are excited to travel, but… they want to eventually come back.”

Philippine schools level up with new tech

PHILIPPINE STAR/EDD GUMBAN

By John Victor D. Ordoñez, Reporter

UPSKILLING teachers and taking advantage of new technologies remain top priorities for the Philippine education sector as the country transitions out of the global coronavirus pandemic, according to education experts.

The pandemic forced many schools to invest in up-to-date equipment to allow teachers and students to work more efficiently, said Maria Ella Calaor-Oplas, an economics professor who specializes in human capital development research at De La Salle University.

“Investment in online collaboration platforms is also important to facilitate online classes and efficient learning experiences for teachers, administrators and students,” she said in a Viber message, citing the need for teachers to be trained on how to conduct classes online.

Universities have adopted online platforms as one of the primary modes of learning even as schools returned to in-person classes.

Ms. Oplas said the private sector and government need to upgrade the country’s network infrastructure to ensure reliable and fast internet.

The Philippines ranked 83rd out of 140 countries in June for mobile internet performance, with a download speed of 26.98 megabits per second (Mbps), according to global network testing firm Ookla. The speed was below the global average of 42.92 Mbps.

As schools continue to introduce new online tools such as artificial intelligence (AI), it may also pose risks to the integrity of the learning process, Ms. Oplas said.

“AI may be dangerous especially when students at the primary and secondary levels start using it,” she said. “It does not allow students to develop critical thinking,” she added, citing new web-based applications teachers use to detect AI-generated inputs in schoolwork.

“Education institutions have learned a significant insight into the role of artificial intelligence as a catalyst for enhancing the efficiency and efficacy of the learning process,” Ms. Oplas said.

Crafting AI policies in education should help countries “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all,” according to the United Nations Educational, Scientific and Cultural Organization.

Turnitin Philippines, an online plagiarism detection and educational feedback company, has partnered with local universities to upskill teachers in using AI to help them grade papers online.

In a July report, the Asian Development Bank (ADB) said the Philippines should use education technology to bridge the skill gap or risk job losses due to rapid technological advancements.

It said 20% of the Philippine workers face a “high risk of losing their jobs” due to automation.

Raymond Basilio, secretary-general of the Alliance of Concerned Teachers (ACT), said the education sector needs to do something about the outdated skill training programs for public school teachers.

“Nothing much has been done to equip teachers to remedy the learning loss caused by the pandemic,” he said in an e-mail. “To address the learning loss, the government must consider overhauling the curriculum because it is the major culprit of learning loss.”

Students in the Philippines and Indonesia are more than a year behind in their learning because of the pandemic, McKinsey & Co. said in a report published in April last year.

A quarter-million Filipino students moved from private to public schools in 2020 and 2021, as many parents lost their jobs, according to the Education department.

Data from the ADB showed that 21% of children from middle-income countries who are of school age by 2030 will not learn basic primary-level skills.

It cited the need for the Philippines to develop the technical and vocational education training sector to increase workers’ competitiveness.

‘NO MAGIC WAND’
The Philippines had a learning poverty rate of 91% and a learning deprivation rate of 90.4%, among the highest in Southeast Asia, according to a 2022 report by the World Bank.

“We learned during the pandemic that our schools and systems must be ready with mitigating measures or alternative programs that can be used during times of calamities or emergencies,” Mr. Basilio said.

The Department of Education needs more than a trillion pesos ($17.6 billion) next year to pay for teachers’ salaries, benefits and school supplies, ACT Teachers’ Party-List Rep. France L. Castro said in June.

The higher budget would allow the country to comply with a United Nations standard for education to account for at least 6% of economic output, she said.

Under the proposed 2024 national budget, the education sector will get P924.7 billion, 3.3% higher than this year.

“More seminars, training programs for teachers and other forms of capacity building should be conducted and learning modules must be updated to make them more effective educational tools,” Renato B. Magtubo, chairman of the Partido Manggagawa labor group, said in a Viber message. Schools should also invest in faster WiFi connectivity and tablets for students.

International Labour Organization (ILO) Director-General Gilbert F. Houngbo has urged the government and local employers to boost investments in education and equip teachers with modern skills to address youth unemployment.

The World Bank said in February that millions of children around the world could lose up to 10% of their future average yearly earnings due to learning setbacks caused by the coronavirus pandemic.

George T. Barcelon, president of the Philippine Chamber of Commerce and Industry, said improving Science, Technology, Engineering, and Mathematics (STEM) programs could help bridge the skill gap in the workforce.

“We encourage the use of new technologies to help our young develop new skills and for our students to go up the global value chain,” he said by telephone. “Platforms such as YouTube could provide broad learning access to our young.”

Mr. Barcelon said improving proficiency in the English language should be prioritized to produce more employable students. “The command of English is important for our students since a lot of reading material is in that language.”

Last year, the Philippines placed 22nd out of 111 countries in the 2022 English Proficiency Index by Education First.

The country got a score of 578, which is considered high, second in the Asia-Pacific region after Singapore.

Mr. Barcelon said the Philippines lacks good teachers who are proficient in STEM fields, adding that performance-based salary increases could attract more capable people to the profession.

“The country needs to have a program that provides proper training for teachers and wherein we rate them on standards based on meritocracy,” he said. “There is no magic wand that we can wave to solve the losses we incurred in the education sector. The best we can do is address the gaps.”

Striking a balance between mining development and environmental protection

DION BEETSON-UNSPLASH

By Sheldeen Joy Talavera, Reporter

AMID the country’s move towards the greater use of renewable energy is a need to strike a balance between maximizing the mining industry’s contribution to the economy and minimizing the impact on the environment.

The Department of Environment and Natural Resources (DENR), the agency responsible for the conservation and proper use of the country’s environment and natural resources, said it wants mining companies to go beyond compliance.

“We have complete regulation but beyond regulations, what we are trying to do with this current administration is to go beyond compliance,” DENR Undersecretary Carlos Primo C. David told BusinessWorld.

“What if you can do better than what is prescribed by law? The improvement should be continuous, and this is what we want to commend some of the companies — if they are able to do that,” he said.

Mr. David said that among the programs being implemented by the department is the monitoring of mining activities using its geospatial database office.

The geospatial database allows the agency to map and monitor the country’s natural resources, including ongoing mining activities and reforestation initiatives by using satellite imagery.

“The government has the responsibility for that,” he said. “DENR handles or manages both sides — environment and natural resources development. It seems that it’s always in conflict with each other but it doesn’t have to be.” 

The world’s surging demand for renewable energy has enabled the mining industry to thrive even during the pandemic.

Critical minerals such as nickel, cobalt, and copper are seen as vital for creating electric vehicles (EVs), their large-scale batteries, as well as wind and solar farms.

According to the Mines and Geosciences Bureau (MGB), up to 470 applications are awaiting approval for the exploration of minerals such as copper, chromite, nickel, and cobalt, as of April 2023.

“The covid pandemic showed that the mining industry is one of the more resilient sectors and was in fact a key source of US dollar inflows for the country,” said Martin Antonio G. Zamora, president and chief executive officer of Nickel Asia Corp.

Nickel Asia is the Philippines’ largest producer of lateric nickel ore and the only nickel company with processing plants.

The mining industry’s gains come as the Philippines aims to strengthen green initiatives to accelerate decarbonization.

The country has committed to reduce greenhouse gas emissions by 75% by 2030 and has pledged to help limit global warming to less than two degrees Celsius under the Paris Agreement of the United Nations Framework Convention on Climate Change.

At the same time, consumers’ shifting attitudes towards mobility have propelled the growth in the demand for nickel, a key ingredient in lithium-ion batteries used in EVs.

Global EV sales increased by 43% to 3.24 million units in 2020, data published by Sweden-based consultancy EV-volumes.com showed.

For 2023, it projected global EV sales to reach 14.3 million, up 36% from 10.52 million in 2022.

“By the end of 2023, we expect 40 million EVs in operation, counting light vehicles, 73% are BEVs (battery electric vehicles) and 27% PHEVs (plug-in hybrid electric vehicles),” it said.

Global Ferronickel Holdings, Inc. President Dante R. Bravo said the outlook for nickel remains bright primarily because of the accelerating growth of the EV sector.

“Although an oversupply in the nickel market will likely persist until 2026, deficits are expected from 2027 onwards,” he said.

Intergovernmental organization International Nickel Study Group estimated the global demand for nickel to increase by 11% to 3.22 million tons in 2023.

The Philippines saw a slight increase of 1.13% to P132.21 billion in metallic mineral production value in 2020, driven by improved nickel volumes, data from the MGB showed.

In 2022, the value surged by 31.73% to P238.05 billion on the back of higher nickel prices and robust metal production.

The nickel group accounted for 49.39% of the total output value at P117.58 billion. This came as the price of nickel went up to $11.86 per pound from $8.35 per pound.

“This strong performance can be attributed largely to the contribution of TVI Resources Development, Inc. (TVIRD) located in Zamboanga del Sur and OGPI in Nueva Ecija,” the MGB said.

Kaycee Crisostomo, communications and marketing director of TVIRD, said new technologies emerged as mining companies now use dry stacking technology to store filtered tailings — the silty and sand material left once the metals are extracted. This is an alternative to building tailings storage facilities.

“The country’s vast natural resources provide opportunities for TVIRD to explore and harness renewable energy sources to support its decarbonization targets and pursue a climate-resilient future for its communities,” he said.

The company plans to build solar power plants to augment the power requirements of its mine sites in Surigao del Norte and Zamboanga del Sur.

Global Ferronickel’s Mr. Bravo said nickel presents a compelling outlook due to the “global shift to smart and sustainable cities, which require technology and materials made from minerals such as nickel.”

In the three months to March, EV sales in the country totaled 2,535, according to the Electric Vehicle Association of the Philippines (EVAP).

EVAP President Edmund A. Araga said the launch of new EVs by Audi, Porsche, Jaguar, and BYD in 2021 paved the way to get the interest of the high-end market.

“We believe that another roadmap for the mining industry is needed,” he said, citing the “tons of opportunity” that can be gained.

He said it is essential to work with the government to make sure that the plans will roll out along with standardized policies to protect the country.

The opportunity ahead includes an estimated $1 trillion in untapped reserves of copper, gold, nickel, zinc, and silver.

The Philippines has 30% of land area identified for potential mining resources, only 1.4% of which are active mining sites, the MGB said.

In a bid to boost the industry, the DENR in 2021 lifted the four-year-old ban on open-pit mining for copper, gold, silver, and complex ores.

Meanwhile, Philippine mining companies have explored processing to transform mineral products into higher-grade materials.

“TVIRD has learned from experience that precious metals like gold and base metals like copper can and should be processed in order for the industry to benefit from the added value of semi-finished products,” Ms. Crisostomo said. Philippine mining companies have also explored processing to transform mineral products into higher-grade materials.

“TVIRD has learned from experience that precious metals like gold and base metals like copper can and should be processed in order for the industry to benefit from the added value of semi-finished products,” Ms. Crisostomo said.

For Mr. Bravo, the industry needs support from the government to attract investments by simplifying the processing of permits and tax structure, and bringing down power costs, among others.

“Mining should be given the necessary support from the government to grow responsibly and sustainably,” he said.

Why renewable energy has gained more support from power generators

CASEY HORNER-UNSPLASH

By Ashley Erika O. Jose, Reporter

TWO recent events — the pandemic and the Russia-Ukraine war — have forced the energy sector to look at renewables not just as a clean power source but as an indigenous resource less susceptible to logistical disruptions.

For decades, conventional energy sources such as coal and natural gas have dominated the country’s energy mix. But after the two disruptive events, the government had to reshape its strategy for the country’s energy security.

The Philippines’ energy sector is now looking at renewable energy (RE) and new green technologies not just for power supply sufficiency but also to accelerate the country’s target of a just energy transformation.

“While the pandemic brought about a drop in demand for power, the Russia-Ukraine conflict, on the other hand, reminded us of the volatility of the commodities market that underpins our current energy system,” said Joseph Lacson, chief investment officer of Aboitiz Power Corp. (AboitizPower).

“The spike in global prices on coal, as one example, compelled AboitizPower to seek means to run our plants at even greater efficiency so that we could continue delivering on our mandate of a secure, affordable energy supply,” he added.

The listed energy company of the Aboitiz group has set a goal of 50:50 renewable energy and thermal capacities by 2030. It has set a target of building an additional 3,700 megawatts (MW) of renewable energy that will grow its capacities to 4,600 MW by 2030.

“AboitizPower is the largest, diversified RE platform in the Philippines and we have ambitious plans to invest even more in RE in the coming years. New technologies such as offshore wind, floating storage, battery systems, provide new means in which to achieve those activities but they come with corresponding risks and unknowns,” Mr. Lacson said. 

To date, AboitizPower has around 3,962.25 MW of attributable net sellable capacity. The company placed its renewable attributable net sellable capacity at 928.42 MW.

INDIGENOUS RESOURCES
The country’s energy sector is seen to have abundant potential in the renewable energy field considering the vast untapped indigenous resources.

As of end-2022, renewable energy accounted for 22.13% of the country’s power mix, with coal still dominating the power generation with a 59.57% share.

Since the pandemic, the government has set a target to increase the share of renewables to 35% by 2030 and 50% by 2040, which forces companies to rethink their strategies.   

The strategy includes looking for energy sources and technologies to complement the fuel powering their plants. Those with ambitious RE targets are seeing the need to include battery energy storage systems.

“We have to ensure that renewable energy is complemented by energy storage systems as well as other sources of power and technology,” Energy Secretary Raphael P.M. Lotilla said during the BusinessWorld Insights forum on July 26 at the Shangri-La hotel in Bonifacio Global City.

Mr. Lotilla said the government is placing renewable energy as the key to attaining security, sustainability, and affordability of electricity prices.

For clean energy provider First Gen Corp., other technologies are needed to support the intermittency of renewable energy.

“Their variable and intermittent nature though necessitates that we match them with more grid capacity and storage to account for the fact that they’re not there when night falls or on cloudy and windless days,” Federico R. Lopez, chief executive officer of First Gen, said.

First Gen is aiming for 13,000 MW by 2030, of which about 9,000 MW will be the share of renewables.

He said renewable energy will not only help deliver the country’s energy requirements but will also accelerate the country’s sustainability goals by helping reduce greenhouse gas emissions.

First Gen, through its subsidiary FGEN LNG Corp. is one of the seven proponents of liquefied natural gas (LNG) terminals in the Philippines.

LNG, despite the volatility of prices in the market, is being put forward as a key to addressing the country’s energy needs due to the expected depletion of the Malampaya gas field.

“Our efforts remain focused largely on helping to reduce the carbon intensity of the electricity grid and then ultimately to decarbonize it.  We’re making it our mission to shepherd the energy transition to Net Zero,”  Mr. Lopez said.

The Malampaya gas field is the Philippines’ only indigenous source of natural gas. Its supply is expected to decrease next year. Currently, Malampaya gas is fully contracted to First Gen’s natural gas power plants with a combined capacity of 2,011 MW or 20% of Luzon’s energy requirements. 

Aside from LNG and renewable energy, First Gen is also looking at other emerging technologies that can also offer baseload energy supply.

“Of course, over time, we must look toward repowering our natural gas facilities with green fuels like hydrogen as these become more feasible, or they can be decommissioned outright before 2050,” Mr. Lopez said.

“As such, there is a need for a low carbon emission fuel like natural gas to act as the bridge fuel that’s technically more suited for complementing the variable nature of renewable energy,” he said, adding that the company will also focus on setting a net-zero emissions target.

AboitizPower’s Mr. Lacson said the company acknowledges that RE needed to be complemented by other technologies and traditional sources of power.

“AboitizPower’s overall targets remain the same. To deliver energy security, affordability and reliability in a sustainable manner, we aim to expand and have a 50-50 mix in our generation portfolio between thermal and renewable energy in the next 10 years,” he added. 

Meanwhile, Manila Electric Co. (Meralco) said that it is looking at “long-term” solutions in reshaping the company’s strategy from the impacts of the pandemic.

Manuel V. Pangilinan, the company’s chief executive officer and chairman, said the power distributor is eyeing nuclear power and gas to meet the country’s energy demands.

He said that while the company is also rolling out its plan to venture into other emerging green technologies, Meralco is setting its plan on nuclear power and conventional sources like gas because it can provide the country’s needed supply.

Call center industry sets sights on countryside expansion

FREEPIK

By Beatriz Marie D. Cruz, Reporter

THE Philippine call center industry is aiming to grow in rural areas to support inclusive growth, according to industry leaders.

“With 70% of the workforce in Manila and 30% in the countryside, the vision for 2028 entails a minimum of 40% in rural areas and a maximum of 60% in Metro Manila,” Rosario C. Bradbury, managing director of the Contact Center Association of the Philippines, said in an interview with BusinessWorld.

The IT and Business Process Association of the Philippines (IBPAP), along with the Department of Information and Communications Technology and Leechiu Property Consultants, introduced the Digital Cities 2025 initiative in 2020.

The program aims to transform rural areas into thriving business hubs and prime choices for international investments, according to IBPAP.

The 25 digital cities are scattered across Luzon, Visayas, and Mindanao.

“As an association, our goal is to help enable them to grow,” Ms. Bradbury said. “Our vision is to become the world’s number one for digital enabled customer services.”

This is in line with the 2028 roadmap for the information technology (IT) and business process management industry, which seeks to grow at 2.5 million full-time workers and at P59 billion in revenue by 2028.

In 2022, the industry generated P32.5 billion in revenue, up from P29.5 billion in 2021, and saw an increase in full-time workers from 1.44 million to 1.57 million.

There have been significant countryside expansions in Cebu, Davao, Bacolod, Pampanga, and Laguna, according to IBPAP President and Chief Executive Officer Jack Madrid.

Over 70,000 new jobs were created outside of the capital region, marking a 17% increase from 2021. “By the end of 2022, 31% of the sector’s total headcount, or 486,000 full-time workers, were in the countryside,” Mr. Madrid said in an email interview.

Four “levers” would expedite the achievement of the industry’s 2028 targets — policy support and ease of doing business, talent development, infrastructure, and marketing, Ms. Bradbury said.

Emerging from the coronavirus pandemic, the industry has embraced diverse workflows to enhance service quality, with a specific focus on remote work and new technologies, according to Mr. Madrid.

“Remote work presented numerous advantages, but companies realized that, to make it successful for them, they had to invest in culture, training, and technology,” he said.

About 30% to 40% of employees work remotely while 60% to 70% are onsite, he noted.

Amid changes brought about by the pandemic, it was necessary to maintain the quality of the workers’ outputs, Concentrix Senior Vice-President and Country Leader Amit Jagga said.

“After the pandemic, we realized all the more that staff experience and engagement make the difference in terms of organizational success, as the pool of available talent is also changing and expanding, and new types of work are created with phenomena like gig economy and freelancing adding to the competitive landscape in the war for talent,” Mr. Jagga said in a Viber message.

Some companies have implemented innovative solutions that minimized internet usage.

“We also needed to reassess our collection of software and technology tools. If they operate online, they were designed not to consume excessive bandwidth,” said Jenny R. Constantino, Country Manager of RealPage based in Texas.

She also highlighted the importance of nurturing a positive work culture to elevate work quality.

“The work environment affects the way people work, and you really need to adapt to how they manage their personal lives and work within their homes. So, that, to me, is an adjustment we have learned in the process,” she said.

GENERATIVE AI
Contrary to popular belief, the industry considers the emergence of generative artificial intelligence (AI) a blessing rather than a curse, according to Ms. Constantino.

“A tool can tell me if a call has a client that’s frustrated,” she said, noting how AI has even enhanced the services of her company.

“AI is useful for us as we operate in areas of hire, how we manage our operations, productivity and performance…[as well as] thinking of the right tools in order to support the clients that we have,” she added.

She said that AI assists call center workers in addressing numerous customer queries in a short span of time.

In the past, a supervisor would listen to calls for quality assurance and feedback, but now AI can handle that task, Ms. Bradbury noted.

“This technology has been present in this industry for a long time… It’s a matter of reallocating your personnel to roles where they can contribute greater value to the industry now,” stated Ms. Constantino said.

Research and advisory company Gartner said that by 2026, the call center industry will possibly cut costs by up to $80 billion by replacing humans with AI chatbots.

By 2026, the call center industry will possibly cut costs by up to $80 billion by replacing humans with AI chatbots, according to research firm Gartner .

AI “isn’t about reducing headcount but upskilling and re-skilling teams to operate smarter and to deliver higher value work,” Concentrix’s Mr. Jagga said.

Moreover, employees working within the industry still grapple with wage and tenure-related problems, according to a labor group.

“It’s actually the workers who are experiencing [the effects of] inflation more because of the higher prices,” Emman D. David, co-convenor of Alliance of Call Center Workers, said via phone call. “Our wages are indeed higher than minimum but it’s really not enough.”

Workers are placed in floating status when companies need to downsize. “Or worse, our performances are used against us,” Mr. David said.

Call center workers need to be pushed to speak up against issues plaguing their sector, he added.

“Problems are only addressed collectively if there’s an issue that is urgent or pressing.”

A proposed law that institutionalizes the Magna Carta for call center workers has been pending at the House Committee on Labor and Employment.

“I think the challenge for us is to be able to renew our organization [to unionize] in order to convince to challenge our fellow workers that this is something that we should fight for,” Mr. David said.

Advancing diversity, equity and inclusion in the workplace

FREEPIK

By Sharon G. Dayoan

IN TODAY’s dynamic and interconnected business landscape, the importance of diversity, equity and inclusion (DEI) cannot be overstated. Companies that prioritize DEI initiatives reap numerous benefits, from outperforming their competitors and attracting top talent to fostering a culture of creativity and collaboration. Beyond financial gains, DEI also plays a significant role in shaping a company’s reputation, as consumers and investors increasingly seek ethical and socially responsible businesses to support.

But how does DEI really look like in the workplace? In recent years, we have witnessed a remarkable shift in the work environment, particularly in regard to gender representation. As DEI initiatives have gained momentum, more women are breaking through the glass ceiling and taking up positions at the board level. The underrepresentation of women in leadership roles has long been a challenge, but now, progressive companies are actively working toward gender parity and promoting women’s voices in the decision-making process. This shift not only leads to better corporate governance but also sets an inspiring example for future generations, demonstrating that diversity is key to success at all levels of an organization.

Organizations like the NextGen Organization of Women Corporate Directors (NOWCD) in the Philippines, a nonprofit organization that advocates gender diversity on corporate boards and executive positions, play a crucial role in advancing the DEI conversation. As a trustee at NOWCD, we build a community that provides a platform for women leaders in the corporate world to share insights, experiences and best practices with fellow Filipina leaders. More specifically, NOWCD is committed to engage with various stakeholders to advocate board diversity and inclusion, increase membership to build a pipeline of board-ready women directors and develop programs to support the transition of C-level women executives to the B-suite.

Championing DEI in the workplace has been increasingly becoming a focus for large corporations in the Philippines and across the globe. Board leaders should ensure their commitment to DEI, actively communicate their advocacy to their employees and hold themselves accountable in achieving them.

Now more than ever, businesses should integrate DEI practices into their organizational models and policies. Embedding DEI into policy by securing the senior leadership’s commitment and creating a committee dedicated to DEI will drive not only conversations but concrete actions in achieving equity and women empowerment.

By integrating diverse hiring practices, businesses can minimize unconscious bias and ensure fair evaluation among candidates joining the organization. Setting measurable goals in achieving DEI and properly monitoring and reporting its progress can help identify areas for improvement to adjust strategies accordingly.

Offering training as well as mentorship and sponsorship programs anchored on DEI can help raise awareness and break the bias surrounding gender equality. Board leaders should also promote equal policies and benefits to all employees, fostering a culture of inclusion and openness in the workplace.

Another initiative is through Women’s Empowerment Principles, of which KPMG in the Philippines is a signatory. As its chairman and CEO, our firm adopts this set of principles established by UN Women and UN Global Impact in advancing gender equality and women empowerment in the workplace, marketplace and community.

Efforts in pushing forward DEI comes in many forms, and companies are embracing various practices to foster an inclusive environment that celebrates diversity. From actively working to eliminate biases from the hiring process, ensuring that all candidates have an equal opportunity to showcase their skills and potential, to investing in employee training and education, business leaders, together with the government and regulatory bodies, have recognized the value of establishing a culture of care — driving systemic changes and ensuring that fair and inclusive practices are adhered to. Collaboration between the public and private sectors is crucial to accelerate DEI initiatives, leveraging collective efforts for greater impact.

The importance of diversity, equity and inclusion in the workplace transcends mere corporate buzzwords; it is the key to unlocking the full potential of businesses and individuals alike. The journey will be challenging and will take time, but together, we can effect positive change and pave the way for a stronger and more equitable society.

 

Sharon G. Dayoan is the chairman and CEO of KPMG in the Philippines.

Philippine telcos strategize to leverage AI, Internet of Things

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Justine Irish D. Tabile, Reporter

TELECOMMUNICATIONS companies in the Philippines are getting ready to take advantage of the increasing adoption of advanced technologies, according to industry executives.

Artificial intelligence (AI) and the internet of things (IoT) continue to gain traction in the country, and telecom companies are capitalizing on their strength to cater to the rising demand for better connectivity, Converge ICT Solutions, Inc. Co-Founder and Chief Executive Officer Dennis Anthony H. Uy said.

“AI will be a game changer in the industry for sure,” he said in an e-mail interview.

“We’re also seeing a more ‘hyper-connected’ or IoT approach in the country; this is not new of course, but being a broadband provider, this is where we want to leverage our strength.”

Telcos may use AI to be more predictive and, eventually, prescriptive in how they operate, according to Roderick S. Santiago, network head at PLDT, Inc. and Smart Communications, Inc.

“We can double the capacity and speed of thinking of this AI by using a five-nanometer and later on three-nanometer (chips),” he said in an interview.

“Those are key innovations that we could see in the next few years to be able to help us to better serve our customers.”

The Philippines’ Trade department has introduced an AI roadmap to steer technology use for local industries’ regional and global competitiveness.

AI adoption could potentially elevate the Philippines’ gross domestic product by 12% by 2030, amounting to around $92 billion, the department said in a statement.

Meanwhile, DITO Telecommunity Corp. is looking at the potential use cases of the fifth-generation (5G) technology in the Philippines, according to Adel A. Tamano, the company’s chief administrative officer.

“We are looking at what is happening in our partners in China because they were the first ones who adopted 5G technology and are extensively using it in manufacturing, seaport and airport operations, and in fact even in agriculture. We wanted to see how it can be adopted in the Philippines,” he said in an interview.

In a report by S&P Global Ratings, 5G population coverage in the Philippines is still between 60% to 80%, on par with Malaysia and falling behind Australia, China, New Zealand, South Korea, Hong Kong, Japan, Singapore, Taiwan, and Thailand.

The ICT industry landscape has been disrupted by the pandemic, policy changes, and the adoption of new technology, prompting companies to realign priorities.

The public health crisis shut down businesses and transportation, impacting traditional brick-and-mortar establishments and goods transportation. However, telcos experienced increased demand, particularly for connectivity and data due to remote work and study.

As for Globe Telecom, Inc., the pandemic caused a 2% decline in service revenues in 2020 compared to the previous year.

“This was due to the impact of quarantine restrictions on the overall economy,” said Maria Yolanda C. Crisanto, chief sustainability and corporate communications officer at Globe, in an email interview.

More Filipinos integrated their work, school, shopping, and other activities from home, leading to increased data consumption. This shift contributed to the rise in data revenue’s share of Globe’s total revenues, increasing from 71% in 2019 to 76% in 2020.

“The greater need for connectivity and digital solutions during the pandemic served as an impetus for the Globe group to more aggressively pursue innovations that will solve Filipinos’ daily pain points,” said Ms. Crisanto.

Converge’s Mr. Uy said that instead of downsizing during the pandemic, the company opted to hire more individuals and expand its workforce to support the ambitious growth of its fiber broadband network.

“What I can see in the industry is that it is in a very disruptive situation. Our first disruption was the pandemic … and then the next disruption was the SIM (subscriber identity module) registration law,” he said.

The SIM registration law pushes people to be now more attached to their numbers and phones and discourages single-use SIM cards, DITO’s Mr. Tamano said.

“I think what’s good for us, and for the industry as a whole, is that we now know who our revenue-generating base is, and then we will just need to build on that,” he said.

OUTLOOK
While there was moderated growth in home broadband, the expansion of fixed-line subscribers outpaced the contraction of fixed wireless subscribers, Unicapital Securities, Inc.’s Senior Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message, referring to the telcos’ first-quarter performance.

“This trend is likely to continue as mobility improves, offset by an increase in spending power due to easing inflation.”

There is sustained demand for data, playing a pivotal role in driving the mobile segment, despite a reduction in subscriber count due to inflation and SIM registration, Mr. Temporal also noted.

“Elevated inflation in the initial months affected prepaid subscriber count. With inflation easing, the mobile segment is expected to benefit.”

“Nevertheless, we remain concerned about the potential impact of terminated SIM cards, accounting for 35% of total subscribers, following the expiry of the SIM registration period.”

Apart from the surging demand for data and the adoption of mobile internet, the government’s initiatives to drive digital transformation will also contribute to industry growth, Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message.

“The Philippine government and businesses are increasingly embracing digital transformation to enhance efficiency and improve customer experiences,” he said. “ICT companies can play a significant role in providing the necessary technology solutions and services.”

Mr. Temporal also highlighted potential opportunities for the sector, including the emergence of new use cases for 5G, hyperscale data centers, and the sustained value creation of fintech companies, particularly Globe and Smart.

Exploring partnerships and collaborations will uncover new growth avenues, expand service offerings, and broaden market reach, according to Mr. Arce.

The industry also faces significant risks, such as intense competition, regulatory changes, and cyber threats, he added.

“Overall, while the Philippine telco and ICT industry offer considerable opportunities for growth, companies must navigate the challenges posed by competition, regulation, and technology disruptions to stay ahead in the market.”

“As technology evolves rapidly, staying updated on emerging trends and consumer demands will be vital for sustained success,” he also said.

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