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Realizing Philippines’ full potential as a tech powerhouse in Southeast Asia

Sabin M. Aboitiz

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor

It has long been known that the Philippines as a market is among the most welcoming in the world when it comes to technology. It is a country of digital natives, who thrive on social media, internet trends, and tech adoption.

In 2021, the government made a statement reinforcing this inherent strength of the Philippine market in the wake of the pandemic by claiming that the country can become “a future technological leader in Southeast Asia.”

That potential has yet to be realized. Digitalization brought about by the rise of e-wallets and digital marketplaces has certainly helped. According to data and analytics firm GlobalData, e-commerce sales in the Philippines are expected to continue to grow and hit P969 billion by 2026 amid increasing consumer preference for online channels.

This year alone, the firm expects to see 22.9% sales growth to P615.7 billion — a slower, but still significant increase after an estimated 31.3% jump to P500.9 billion in 2022.

Yet, there is no indication that the Philippines is close to reaching its full potential as a technological leader. According to the Association of Southeast Asian Nations (ASEAN) Investment Report 2022, venture capital (VC) investments in Southeast Asia continued to grow from the mid-2010s, to reach more than $66 billion in mid-2022. This puts VC investment in the region rose by a factor of 2.6 between 2015 and 2020, outperforming both China and India.

“This phenomenon shows the great innovation potential of ASEAN. The significant growth of VC investments has helped the region to give origin to more than 40 ‘unicorns’ — startups valued at over $1 billion. The now famous post-initial public offering (IPO) of digital giants, the large majority of which operate in the digital economy sector, can also be credited to this growth,” the Asian Development Bank (ADB) wrote in an analysis.

However, such VC investments in ASEAN remain primarily concentrated in Singapore, ASEAN’s leading innovation hub, and Indonesia, ASEAN’s biggest market. It is only recently that the proportion of investments going to countries like Vietnam, Thailand, Malaysia, or the Philippines has grown.

The investments themselves are slowing down, owing to a difficult global environment for investors, but the amounts raised by ASEAN startups were down by around 40% during the second quarter of 2022 compared with the previous year.

“The digital economy so far appears to have remained resilient. Startups and deals related to tech and internet sectors were affected by smaller declines, if any. But investors are now more cautious, especially vis-a-vis late-stage investments, as IPO gains are becoming less likely in the current macroeconomic scenario.”

According to the ADB, Southeast Asia is characterized by strong macroeconomic performance that is expected to grow above 5% in 2022 and 2023, outperforming China for the first time in recent history — a fact that will certainly pique the interest of international and regional investors.

“ASEAN is still perceived by international investors as a high-growth potential and less known Asian market when compared not only to developed Asian economies, like Japan or the Republic of Korea, but also to large emerging ones, like [China] and India,” the ADB said.

“There is also room to expand the role of regional investors. ASEAN-based private equity and VC firms are a growing source of funding for startups and for cross-border activities, but in 2021 they accounted for less than a quarter of investment into ASEAN-focused venture capital funds.”

Creating the first Philippine ‘techglomerate’

Aboitiz Group President and CEO Sabin M. Aboitiz recognizes this opportunity and has since made headlines by proclaiming the “Great Transformation” of the Aboitiz Group into the country’s first ‘techglomerate.’

“There is no better time for conglomerates to start building their techglomerate capabilities in the Philippines than now, because we have a President and administration that cares deeply about building the infrastructure needed for techglomerates to exist and support economic transformation,” Mr. Aboitiz said in an interview.

“This kind of outcome-producing collaborations between the government and the private sector to improve digital infrastructure, for example, has never been seen — at least not at this level. Can you imagine all the techglomerates in our country working together with the full support and collaboration of the government? All that innovation and out-of-the-box thinking — we can really turn the economy around. Which is, of course, what we are trying to do with the Private Sector Advisory Council (PSAC).”

Mr. Aboitiz is one of the business leaders and experts comprising the PSAC who are tasked with supporting the government in meeting its economic objectives across six main sectoral groups. He leads the infrastructure sector.

Other designated sector leads include Aileen Uygongco-Ongkauko, director of La Filipina Uy Gongco Group of Companies, for agriculture; Jose Ma. “Joey” Concepcion III, the president of RFM Corp. and founder of Go Negosyo, an advocacy group for small businesses, who is the sectoral lead for jobs; Henry Rhoel R. Aguda, president and CEO of UnionDigital Bank, for digital infrastructure; Paolo Borromeo, Ayala Healthcare Holdings, Inc. president and CEO, who leads for healthcare; and Lance Y. Gokongwei, JG Summit president and chief executive officer, for tourism.

According to Mr. Aboitiz, their goals of creating the country’s first ‘techglomerate’ aligns with the government’s vision for the country — a future driven by both innovation and by people.

“One of the more defining characteristics of a techglomerate is its ability and responsibility to use innovation, speed, synergy, creative thinking, and all the other techglomerate traits, to benefit the greater good,” Mr. Aboitiz said.

“Whether you’re ‘advancing business and communities’ like we are, or you’re trying to save the planet or improve the lives of people, techglomerates have the ability to do these things faster, better, and stronger. The impact of this then quadruples when you have the government and other techglomerates as partners. So, there’s really no other way. It has to be done together and with everyone at the same caliber and level of commitment.”

It is by no means an easy goal to strive for. Much of the opportunities highlighted by organizations like the ADB hinges on improvements that will enable rapid growth, such as more coherent and cohesive regulations, especially in the digital space, and enhanced improvements in physical and digital infrastructure and cross-country connectivity.

“There are two sides,” Mr. Aboitiz noted. “First, you have the technology aspect of it, which is of course reliant on proper digital infrastructure and access to the latest tech. This issue can only be addressed, as I said, if the Philippine government and the Philippine techglomerates of the 21st century continue to work well together, sharing their resources, support, and expertise.”

“The more difficult obstacle is opening our minds to new and better ideas and ways of doing things — the techglomerate mindset,” he continued. “This can be challenging because it dares us to move out of our comfort zones and try things that might seem intimidating but are actually just unfamiliar to us. It’s just a matter of diving into the pool and realizing swimming isn’t that difficult. Or learning to drive a car or use your new smart phone — seems like a lot of work at first, but becomes second nature in no time.”

Should the Philippines succeed in implementing such a change, Mr. Aboitiz said, it could change everything.

“In terms of the future of work, we have already accepted radical changes, thanks to the pandemic. So, hybrid working is an obvious techglomerate model. Conglomerates never heard of it, while techglomerates embrace it without flinching.”

“But the picture is so much bigger than that,” he added. “If, for example, we know that artificial intelligence will change the world, and if, by definition, a techglomerate optimizes the use of AI, then it would make sense to say that techglomerates, in partnership with the government, will shape or reshape the future of business in the Philippines. Can you imagine how MSMEs (micro, small, and medium enterprises) will change with AI?”

Cybersecurity is an oxymoron for the Digital Age

FLY D-UNSPLASH

THE digital era has enriched the list of outstanding oxymorons that already includes “military intelligence” and “competent authorities” with a new contradiction in terms: “cybersecurity.”

Last week, in response to a freedom of information request, an official from the Police Service of Northern Ireland (PSNI) mistakenly posted the personal details of 10,000 officers on the internet. For three hours, a digital free-for-all ensued; anyone could access the surname and first initial of officers, their rank and grade, where they are based and with whom they work — including with the domestic intelligence service, MI5.

The chief constable of the PSNI, Simon Byrne, has confirmed that republican terrorists downloaded the information. It is certainly one of the most serious breaches of secret data experienced by any police force in the United Kingdom. But will it be the last?

Sensitive data breaches are becoming commonplace. Cyberattacks by hostile state actors like Russia and China are a clear and present danger. Just this week, it was revealed that records held by the British Electoral Commission from August 2021 have been filched by hackers, but, as in Northern Ireland, technical incompetence and human error are serious threats too. An infinite amount of data is supervised by finite talents and the police who, to put it mildly, are stretched to recruit the best and the brightest — especially in areas where there is acute competition for technological talent.

The risks are plain. Up to 2,000 PSNI officers are now considering taking legal action following the breach, according to their union, the Police Federation. As well they might, since 319 police officers were murdered and almost 9,000 injured, mostly by the Irish Republican Army (IRA), during the 30 years of violence known as the Troubles. By some measures, it was the most dangerous force in the world in which to serve in the 1980s. Even today, there are police officers who don’t let their friends know their occupation for fear of retribution. No wonder staff panicked and desperately tried to wipe their data from the web once the alarm spread. This is hardly an atmosphere that promotes what HR would call talent retention.

Dissident republican paramilitaries who broke away from the IRA to reject the 1998 Good Friday Agreement still target PSNI officers. Although the worst of the violence has ended, two police officers and two prison officers have been killed since then. In February, terrorists shot Detective Chief Inspector John Caldwell several times in front of his young son and other children, causing “life-changing” injuries. The official threat level has gone back up from “substantial” to “severe” as a result of the leak, meaning another attack is judged imminent.

It was also revealed on Wednesday that in July a police superintendent’s car had been broken into by thieves who removed a laptop and sensitive documents. Why did it take so long to admit the theft to the 200 officers and staff affected? The temporary news blackout added to paranoia in the ranks.

Members of the armed services and their families risk their lives for the British Crown on the understanding that they will be supported by the state in the event of their injury or death — the military contract. Given the historic casualties they have suffered and the continuing terrorist threat, Northern Ireland’s police officers deserve equal regard. Without their bravery, the edifice of the state would collapse. Gangsterism and the sectarian conflict of Protestant against Catholic that has historically bedeviled the province would be endemic.

Roman Catholic officers, some 30% of the total, are particularly fearful for their personal safety and the pressure that could be placed on their families living in nationalist communities. Republican extremists regard them as traitors; the terrorists would prefer that police ranks contained only the Protestant “enemy” that favors Northern Ireland’s continued membership of the UK. In fact, the Royal Ulster Constabulary was reconstituted as the PSNI in 2001 to counteract its perceived sectarian bias. Republican parties like the IRA’s political wing, Sinn Fein, that have renounced the armed struggle now accept the PSNI’s bona fides. Yet some Catholics in the PSNI have told the BBC that this breach of their security will force them to quit.

The authorities are investigating what training was given to staff who handle freedom of information requests. As with other security breaches around the world — from those of Edward Snowden to Bradley (now Chelsea) Manning — it will be asked who was entitled to such high-level security clearance and why. At the very least, the supervisory Police Board needs a good answer to the question of who signs off on this stuff before it goes out. And how many police officers will now have to relocate their homes and alter their work patterns? The fate of the chief constable hangs in the balance, although he has already declared he isn’t the resigning type.

The UK, like most advanced societies, is increasingly reliant on detailed databases to operate its public services and infrastructure. But without a better-trained workforce, these will be highly vulnerable to hacking and sloppy leaks. In Estonia, I have seen schoolchildren trained from an early age to game cyberattacks from their malevolent Russian neighbor and learn advanced digital skills in the process. Elsewhere in the West, we show no such urgency or foresight. Yet the US, India, and France, like Britain, have all suffered from catastrophic data breaches, intended or not.

Last month, a cyberattack on the Swedish medical company Ortivus AB led to two British health service ambulance trusts reverting to old-fashioned paper records to do their routine work. Old fixes for new problems — but back to the future can’t be the solution to our digital deficits.

BLOOMBERG OPINION

Supreme Court affirms seafarer disability ruling

WIKIMEDIA/PATRICKROQUE01

THE Supreme Court has affirmed a Court of Appeals ruling that found a seafarer to be entitled to permanent disability benefits after he suffered a hand and shoulder injury while on duty.

In a resolution dated Jan. 23 and made public on Aug. 10, the tribunal concurred with the appellate court’s decision to uphold the findings of company-designated physicians, who had concluded that Dennis R. Villamor’s carpal-tunnel syndrome and rotator cuff tendinopathy entitled him disability benefits.

It said the doctors’ findings were deemed final after the seafarer had been unable to work following the 120-day period required under law.

Under the Labor Code, a disability is total and permanent if the employee is unable to perform any “gainful” occupation for a continuous period exceeding 120 days.

Only doctors chosen by employers may determine if a worker has sustained a permanent disability while on duty.

The seafarer’s employers, Transocean Shipmanagement (Philippines), Inc. and Companhia Portuguesa de Navagacao International SA., had offered to pay $9,000 for the shoulder injury, arguing that his hand injury was not work related, citing the opinion of third-party doctor.

Mr. Villamor’s hand injury had been diagnosed as a Grade 10 disability, which under Philippine Overseas Employment Administration’s rules entitles the worker to $10,075 in compensation.

The shoulder on the other hand was classified as a Grade 11 injury, making the seafarer eligible for $7,465 in compensation, subject to the legal interest rate of 6%.

“The opinions of the company-designated and the independent physicians are rendered irrelevant because the seafarer is already conclusively presumed to be suffering from a permanent and total disability” the tribunal said.

“It must be consistently reiterated that the law governing the entitlement of a seafarer to disability benefits consists of an interplay between the Labor Code (and) the Amended Rules on Employee Compensation,” the court said. — John Victor D. Ordoñez

Century Properties says results hit or beat pre-pandemic levels

CENTURY PROPERTIES Group, Inc. said on Thursday that financial results have returned to pre-pandemic levels, allowing the real estate developer to pursue growth opportunities.

“Our financial and operating results for the first half of the year are comparable if not better than the pre-pandemic levels which puts us in a very good position to pursue opportunities in this growing and robust segment of the industry through organic growth, acquisitions or consolidation,” said Century Properties Treasurer and Chief Finance Officer Ponciano S. Carreon in a media release.

In a regulatory filing, the company said second-quarter attributable net income reached P219.23 million, up 25.5% from P174.75 million a year earlier.

Gross revenues for the three months ending in June, hit P3.77 billion, higher by 39.6% than P2.7 billion previously.

In the first half of the year, it reported P656 million in net income, 20% higher than the P548 million in the same period last year, driven by higher revenues.

It reported a 27% increase in its top line to P6.7 billion from P5.3 billion due to higher sales from its first-home residential brand PHirst.

The company’s PHirst brand contributed 52% to first semester revenues or P3.5 billion, 48% higher than the P2.6 billion reported the previous year.

“The demand for quality and strategically located first homes have proven to be resilient and even stronger and [Century Properties] was well-prepared to serve this market with its First-Home Brand,” said Century Properties President and Chief Executive Officer Marco R. Antonio.

The company added that the rest of the revenues, at P2.4 billion, came from its in-city vertical developments commercial leasing, and property management segments at P670 million and P217 million, respectively.

“We are aiming to maintain this growth trajectory as we launch new projects,” Mr. Antonio added.

For the second half of the year, the company said it is planning to launch two more projects, which include the brand’s foray into the Visayas region.

During the first half, it launched its development project PHirst Park Homes Gapan in Nueva Ecija and opened PHirst Impressions Batulao in Nasugbu, Batangas.

“We are taking a very calculated stance in managing our leasing portfolio and high-rise vertical residential developments aligned with our view of a moderate and gradual growth for this segment of the industry,” the company said.

The properties would bring Century Properties’ active projects to 20, “on its way to achieving the programmed nationwide presence,” it said.

On Thursday, Century Properties closed unchanged at P0.34 per share. — Adrian H. Halili

DC superhero Blue Beetle brings Latino family team to big screen

ELPIDIA CARRILLO, Damián Alcázar, George Lopez, Xolo Maridueña, and Belissa Escobedo in a scene from Blue Beetle. -IMDB.COM

LOS ANGELES — Xolo Mariduena quickly learned that he and his character in the latest DC Studios film Blue Beetle have one big thing in common — they cannot hide anything from their families.

The Cobra Kai actor plays college graduate-turned-superhero Jaime Reyes, the first Latino superhero in a DC movie, who finds it impossible to keep his alter-ego a secret.

“There’s no hiding from mom and dad that I’m Blue Beetle. As a Latino, I know that there’s no secrets in my family, so I felt it resonated with me and the fact that the superhero in this movie is really the family,” Mr. Mariduena told Reuters last month before film promotion was halted by the Screen Actors Guild strike.

In the film, Jaime returns to his hometown of Palmera City after graduating from college and has his life turned upside down when he is chosen by a blue scarab from an alien planet to become the Blue Beetle.

Jaime bonds with the scarab, which transforms into protective armor for him. He must ensure the scarab does not fall into the wrong hands while also trying to protect his family.

Blue Beetle arrives in theaters on Friday and also features comedian George Lopez as Uncle Rudy and Susan Sarandon as the main villain.

Focusing on the importance of a Latino family was always a top priority for the Puerto Rican director of the Warner Bros. film, Angel Manuel Soto.

“The resilience of our people is represented in each of those characters, from the dad to the mom to the sister and when it comes to the uncle, for example, Uncle Rudy is inspired 100% on the uncle of the writer (Gareth Dunnet-Alcocer) who passed away last year,” Soto told Reuters. “He wanted to immortalize him in this film and bring this dark brown energy to the family.”

For Soto, making the film would not have been possible without emerging equity in entertainment. As the most underrepresented group in the industry, Latino talent is keen to change their narrative.

Last week, Variety reported that 27 Latino Hollywood organizations signed an open letter calling on the community to amplify Latino work, especially Blue Beetle.

Mr. Mariduena believes that Blue Beetle is “just the first step” to hopefully open the door for other Latino superheroes to reach the big screen. — Reuters

CTA denies Manulife Data Services’ claim of P99-M excess VAT

CTA.JUDICIARY.GOV.PH

THE COURT of Tax Appeals (CTA) has denied Manulife Data Services, Inc.’s refund claim worth P98.84 million representing its excess value-added tax (VAT) payments for the fiscal year of 2017.

In a 13-page decision dated Aug. 10, the tribunal said it did not have jurisdiction over the case since the firm failed to appeal the commissioner of internal revenue’s (CIR) denial of its claim on time.

“Upon its receipt, petitioner (Manulife Data Services) could have simply and immediately furnished the BIR’s letter to its counsel informing it that its refund/tax credit claim has been denied,” Associate Justice Lanee S. Cui-David said in the ruling.

Under the Tax Code, taxpayers have 30 days to dispute the CIR’s denial of a refund claim before the CTA, upon receipt of the decision.

Manulife Data Services argued that the internal revenue commissioner’s denial letter was invalid since it was addressed directly to the firm instead of an authorized representative. 

The tax tribunal disagreed, saying the firm failed to show any provision or law that supported its claim that denial letters can only be presented to a company’s appointed tax representative.

“When the provisions of the law are clear, plain, and free from ambiguity, they must be given their literal meaning and applied without any interpretation,” the tax court said.

“Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by silence, acquiescence, or even by express consent of the parties.” — John Victor D. Ordoñez

Philippine Airlines soars into the world of blockchain art collectibles

I am thrilled to witness Philippine Airlines (PAL) taking a bold step into the world of blockchain with its limited-edition digital art collectible collection. This collaboration with Philippine Blockchain Week marks a significant milestone, not just for PAL but for the entire blockchain ecosystem in the Philippines.

The introduction of this collection comes at a pivotal moment when Web3 technology is reshaping various industries and revolutionizing the way we interact with digital assets.

The collection, featuring eight unique digital art pieces designed by the talented artist Patricia (Trace) Orozco, showcases the iconic elements of PAL’s aviation legacy, adding a touch of artistic charm to the world of digital collectibles. Each art piece will be minted on the Ethereum blockchain platform, providing a secure and transparent means of ownership and verification for art enthusiasts and collectors alike.

What makes the PAL collectibles even more appealing is the value they hold. Each collectible includes $1,500 worth of Mabuhay Miles for redemption, providing buyers the opportunity to enjoy PAL’s services at their convenience. Additionally, buyers receive a ticket to the prestigious Michael Cinco Metaverse Fashion Gala 2023, an exclusive event featuring the designer’s first-ever non-fungible tokens collection.

Moreover, PAL’s strategic partnership with Philippine Blockchain Week adds further value to these digital art collectibles. Buyers will be treated to a VIP ticket to the blockchain event annually for the next three years, enabling them to delve deeper into the world of blockchain technology and its vast potential.

As we look ahead to the upcoming Blockchain Week conference at the Marriott Grand Ballroom from Sept. 19 to 21, we anticipate an exciting convergence of blockchain enthusiasts, industry leaders, and visionaries. This year’s event will serve as a platform to showcase real-world applications of blockchain technology, bridging the gap between traditional industries and the world of Web3.

PAL’s entry into the world of blockchain art collectibles signifies a progressive mindset, embracing innovation, and exploring the potential of blockchain technology in new and exciting ways. This initiative not only enriches the PAL brand but also serves as an inspiring example for other organizations in the Philippines to leverage blockchain technology and explore the infinite possibilities of Web3.

Lufthansa, a global leader in the airline industry, is also making strides in the NFT space. The airline’s Uptrip app transforms flights into rewarding experiences, offering travelers digital trading cards that unlock privileges such as in-flight Wi-Fi, lounge access, and upgrades. These trading cards are stored as unique NFTs on the Polygon blockchain, showcasing Lufthansa’s commitment to embracing blockchain’s potential to redefine customer rewards. The 1st Edition of these NFT trading cards, launched last March, offers users the chance to receive rewards worth €3,000. This innovative move highlights Lufthansa’s dedication to delivering exceptional travel experiences while harnessing the transformative power of blockchain technology.

Etihad Airways, a renowned airline from the United Arab Emirates, is also making waves in the NFT space. The airline just recently announced an expansion of its loyalty and rewards programs. Holders of these NFTs can expect a range of appealing privileges, including a 12-month Etihad Guest Silver Tier Status, priority check-in, a 25% increase in earning Etihad Guest Miles, exclusive lounge access at the Abu Dhabi International Airport, and membership to the Etihad: Virtual Club. With plans to introduce a staking-for-miles feature through their upcoming Web3 loyalty program, Horizon Club, set to launch in September, Etihad is taking innovative steps to reward its community, showcasing their commitment to embracing cutting-edge technologies.

These initiatives reflect a dynamic shift in the airline industry, showcasing a commitment to embracing cutting-edge technologies and redefining customer engagement. The Blockchain Council of the Philippines is committed to supporting and collaborating with visionary companies to unlock the immense potential of blockchain in reshaping our digital landscape, contributing to a more inclusive and prosperous future for the Philippines.

As we look ahead to the rapidly evolving landscape of Southeast Asia’s digital economy, these developments provide an inspiring glimpse into the future possibilities of blockchain technology and its transformative power.

 

Dr. Donald Lim is the founding president of the Blockchain Council of the Philippines and the lead convenor of the Philippine Blockchain Week. He is also the Asian anchor of FintechTV.

China suspends youth jobless data after record high readings

REUTERS

CHINA has suspended publication of its youth jobless data, saying it needed to review the methodology behind the closely watched benchmark, which has hit record highs in one of many warning signs for the world’s second-largest economy.

The decision announced shortly after the release of weaker-than-expected factory and retail sales data sparked rare backlash on social media amid growing frustration about employment prospects in the country.

It also marks the latest move by Chinese authorities to restrict access to key data and information, a trend that is unnerving overseas investors.

Fu Linghui, a spokesman for the National Bureau of Statistics (NBS), said the release of data would be suspended while authorities look to “optimize” collection methods.

“In recent years, the number of university students has continued to expand,” Mr. Fu said. “The main responsibility of current students is studying. Society has different views on whether students looking for jobs before graduation should be included in labor force surveys and statistics.”

This issue, as well as the definition of the age range currently set at 16-24, “needs further research,” Mr. Fu said.

In recent months, China has restricted foreign users’ access to some corporate registries and academic journals, and cracked down on due diligence firms operating in the country, a vital source of information on China for overseas businesses.

“The declining availability of macro data may further weaken global investors’ confidence in China,” said Ting Lu, chief China economist at Nomura, adding that youth unemployment was expected to have risen in July.

At the height of its COVID-19 outbreak late last year, China abruptly changed the way it classified deaths from the disease, a move that fueled criticism abroad and at home.

This week’s move has also been met with skepticism at home as young Chinese face their toughest summer job-hunting season.

The most recent NBS data on youth unemployment, published last month, showed the jobless rate jumping to a record 21.3% in June.

Some 47% of graduates returned home within six months of graduation in 2022, up from 43% in 2018, state-run China News Service reported last week, citing a private-sector survey.

“If you close your eyes then it doesn’t exist,” one user wrote on microblogging site Weibo, where a hashtag related to the NBS decision received over 10 million views.

“There is a saying called ‘burying your head in the sand’,” wrote another user. — Reuters

Tala looks to improve products to help drive usage

TALA Philippines is looking to improve its financial products and add new features and benefits to the Tala Wallet as it looks to attract more users to tap its app.

“The way we used to do things, whether it’s talking to our customers, being where our customers are, or the typical loan products, that definitely needs to change, even the way we build and use the wallets,” Tala Philippines Global Customer Experience Operations Iona Iñigo-Mayo said in a media roundtable on Thursday.

“And I think you might see that already in other companies and Tala is just about to innovate there. But definitely, where we will innovate is particular to our target market. We will definitely focus on our core, which is really the underbanked,” she added.

The Tala Wallet was launched in April this year through a partnership with Union Bank of the Philippines, Inc.’s online lending arm, UnionDigital.

Tala Product Senior Vice-President Nick Norcross earlier said they are targeting to reach one million users by the end of the year.

Ms. Iñigo-Mayo said they are looking to introduce retention and rewards programs for their borrowers in Tala Wallet.

Lowering fees in the app would also help drive usage of the digital wallet, she added.

“Ideal scenario would be we would want our fees to be very competitive, and of course, maybe some retention and rewards programs for our borrowers. That’s something that we are always looking into,” Ms. Iñigo-Mayo said.

She added that the Tala Wallet could also offer installment options soon, as well as longer tenors for its loans.

“We get regular customer insights so we can best determine what the best product feature should be in the order of priorities. So, we regularly do customer insights to be able to serve what they need,” she said.

Tala Philippines will be announcing improvements to its digital wallet within the next two weeks, Ms. Iñigo-Mayo said. — A.M.C. Sy

Russia’s Vimpelcom fined for broadcasting ‘LGBT movie’ without 18+ rating — agencies

RUSSIAN mobile and streaming service operator Vimpelcom was fined on Wednesday for failing to put an 18+ age rating on a movie referencing LGBT relationships, Russian news agencies reported from a Moscow courtroom. Russia toughened its anti-LGBT laws last year, allowing authorities to fine any individual or organization found to have promoted homosexuality in public, online, or in films, books or advertising.

Vimpelcom was fined 1 million roubles ($10,401) for distributing the film Little Italy, which contains LGBT scenes, without an 18+ label, the RIA news agency reported.

Kinopoisk, owned by tech giant Yandex and streaming site Ivi, have been fined for the same offence in recent weeks.

Vimpelcom, which provides mobile services under the Beeline brand and operates streaming site Beeline TV in Russia, did not respond to a Reuters request for comment.

The company did not acknowledge guilt, RIA reported, citing its representative in court. Vimpelcom’s lawyer said that Beeline TV was available through a subscription. “Each subscriber knows what they are choosing and watching, there is no widespread access,” the lawyer was quoted as saying.

Russian lawmakers argue that Russia’s laws are necessary to protect society from what they see as decadent “Western values.”

Rights groups say the laws are designed to outlaw representations of lesbians, gay men, bisexuals and transgender people (LGBT) in public life. — Reuters

The technology-driven future of conglomerates

FREEPIK

In the digital age, constantly adapting to transformation is becoming the norm among organizations, and especially among conglomerates. As technology has progressed in the past years, it is also redefining the form and function of conglomerates, which global giants like Amazon, Facebook, Google, and even a Philippine “techglomerate” like the Aboitiz Group are exemplifying.

In recent years, the world is witnessing the fall of traditional conglomerates and many are describing them as “unfashionable” within the sector. According to the Institute for Management Development, centuries-old conglomerates are starting to realize that the reason why some of them are deteriorating is because they are sticking to their older business models and investors are expecting them to function as independent entities instead.

However, giant conglomerates are not out of style as some perceive them to be because they are already adapting to a modern world where they use technology and the startup culture to develop innovative ideas and transform enterprises.

Despite the challenges faced by many conglomerates, the startup landscape today is providing an opportunity for them to restore their reputation by exploring sustainable mechanisms, igniting competitive advantages, and driving captivity over their customers. 

Due to these changes, a new model for conglomerate is seen to have emerged, which venture capital investment firm Equal Ventures calls “the platform conglomerate.” The firm cites Apple as an example for this model, noting that it serves not as a consumer products company but as a “platform” business  that has been able to “to extend a nearly limitless array of products and services with extremely limited expenses beyond maintaining the core platform.”

“These [‘platform conglomerates’] develop a core capability for fueling new product development that can be deployed not just for a single product, but that is infinitely scalable to other future products. These companies leverage learnings around each successive product launch to hone their engine, creating a flywheel that generates increasing returns to scale,” Equal Ventures wrote in an article published on its website.

With this new model, the firm added, conglomerates should be able to internalize their capabilities in supporting the development of new products that can be used not just for one product but also for other products in the future. Such approach will help increase efficiency in business operations and help them benefit from investments in their future products.

Another form in which conglomerates are seen to have evolved is the “internet-enabled conglomerate,” which offer a wide variety of internet-supported products and services (e.g., retail, entertainment services, cloud computing services, gaming) and so has brought forth a fresh paradigm for business diversification.

In a study titled “The Rise of the New Conglomerates,” Columbia Business School Professor Kathryn Harrigan explains that new conglomerates are maximizing the use of the Internet and advanced technology to manage business operations and to harness data and concepts that will cater to the needs and demands of their customers.

Moreover, the study also points out that these internet-enabled conglomerates have also been taking advantage of synergies to improve their customer-centric approach to products and services and are more focused on adapting to flexible organizational structures and building solid foundations for their businesses.

These observations show that for conglomerates to rise in a changing environment, strategic approaches that optimize technological advancements is rightfully needed.

According to a report by a global strategy consulting arm EY-Parthenon (EYP), future years of prosperity for conglomerates in Southeast Asia can be fueled by four key pillars, namely: developing a strategy, building a digital ecosystem, creating a sustainable mindset, and shifting to asset-light business models.

A digital ecosystem, in particular, is formed by a combination of platforms that provides value to customers through personalized products and services, as well as strategic partnerships.

Conglomerates, EYP added, can use the digital ecosystem to further expand opportunities within enterprises they cover. For instance, building a digital ecosystem creates opportunities to develop networks where they can share and secure data, develop applications, and further improve the digital infrastructure within enterprises.

“Conglomerates can aim to create these network effects within existing businesses and are well positioned to ultimately become the digital ecosystem orchestrators. This would, in turn, allow them to get better control over the ecosystem dynamics and often outperform other entities in revenues and profits,” the report said. — Angela Kiara S. Brillantes

In defense of the Philippines

PHILIPPINE STAR/EDD GUMBAN

Executive Order No. 37 (S. 2023) gave effectivity to the National Security Policy (NSP) 2023-2028. It’s an interesting document, providing a picture of our strategic posture not only from the text but from the table of contents itself.

For sure, the document is anchored on “the enduring values that have enabled Filipinos through the centuries to cope and thrive,” and correctly contextualized the national security goals “based on an assessment of the emerging strategic landscape and placed within the context of the country’s socio-political values, fundamental laws, and core national interests.”

Nevertheless, unlike the 2017-2022 NSP (which logged “Territorial Integrity” merely fourth amongst National Security Interests), the present NSP puts “National Sovereignty and Territorial Integrity” at the top of the list. As it should be.

Amidst reports that 21 Chinese ships were spotted heading toward Pag-asa Island, while almost the same number gathered around Ayungin Shoal, a recent national survey (OCTA, published August 2023) showed that an overwhelming majority (70%) of Filipinos are demanding that the government defend our territory. This majority cuts across all social classes. Even more tellingly, 65% of Filipinos declared their willingness to fight militarily to defend our territories, with 61% wanting to modernize and strengthen our armed forces. This within the context of another national survey (SWS, 2019) that declared 70% of Filipinos are “worried” about the increasing number of Chinese workers in the country.

Hence, the National Security Policy was right to declare that: “The Philippines shall stand by its cherished values as a sovereign nation that subscribes to multilateralism and rules-based international order. The Philippines shall remain steadfast in its commitment to UNCLOS and in upholding the final and binding South China Sea Arbitration Award of 12 July 2016. The Philippines shall sustain efforts in safeguarding the Philippine maritime zones, especially in the West Philippine Sea and Philippine Rise, and shall strengthen the National Task Force for the West Philippine Sea (NTF-WPS) to come up with better measures to cope with the changing security environment in the maritime region.”

Equally correct is: “The Philippines shall strengthen the Mutual Defense Treaty between the Republic of the Philippines and the United States of America that was signed on 30 August 1951, along with other existing cooperation mechanisms with regional partners, to achieve a credible defense capability.”

It is good that our NSP makes mention of our democratic values and adherence to the rule of law and human rights. While it is oft-repeated that foreign policy is merely contingent on passing national interests, nevertheless, it is very much to the country’s interest that the Philippines unabashedly and honorably stand for our societal and constitutional values, principles, and interests.

This entails that our foreign alliances be based not merely on economic or other short-term materialist considerations but also whether such country partners are aligned with our own democratic values, including that of the rule of law and human rights. It is upon this sharing of values that our alliances should be founded upon to ensure protection of our maritime commerce, for which security arrangements, as well as greater engagement in international trade, is critical.

Additionally, the following policy and legislative considerations could also positively contribute to Philippine defense:

• The revival of the ROTC (Reserve Officers Training Corps) for college-level youth and supplemented by a mandatory military service requirement (one or two years) for the 20-35 age group, plus another program for those older and up to 50 years of age. As of 2023, there are around 29,334,342 Filipinos in the 20-35 age range. Even if only 10% of them can be utilized militarily, that would still constitute a quite serviceable fighting force.

• Refashion a defense posture taking advantage of our separate and disparate islands and utilizing the fact that those islands are divided internally by rivers, lakes, hills, caves, and other land features. The point is to organize our defense forces to work with a national command, if available, but be capable of quickly and readily adapting to independent guerilla efforts on a per region or district basis.

• To facilitate this, our Self-Reliant Defense Posture (SRDP) program should be calibrated around this policy, with armament and transportation manufacturing and purchases reflecting the type of defense planning advocated here: producible en masse, mobile, easily hidden, and interchangeable.

• For such SRDP, the Departments of National Defense (DND), and Trade and Industry can work on developing local industries for that purpose. One huge consideration is the sourcing and storing of fuel and minerals used as raw materials for whatever equipment is necessary for a credible defense effort.

• The DND could work with the Department of Information and Communications Technology to develop a group that will focus on defensive and offensive computer expertise and technology.

• The Philippine Competition Commission could increase emphasis on monitoring and regulating foreign ownership in industries vital to national security.

• The National Food Authority should emphasize stockpiling of food and other related resources, viewed to include readiness in food supplies in case there is indeed a need to shift to a highly prolonged defense effort (or even natural calamities).

I say quite emphatically: Urgent efforts must be made to address our depreciating age demographics. Last year, 57% or 870,820 of newborn Filipinos were born illegitimate. The Philippine Statistics Authority also reported that the Total Fertility Rate of Filipino women aged 15 to 49 years declined from 2.7 children per woman in 2017 to 1.9 children per woman in 2022, effectively placing the Philippines below the replacement fertility level of 2.1. The security, economic, and social problems that an aging population can bring, if unaddressed, could be catastrophic.

Finally, President Ferdinand Marcos, Jr.’s call on Aug. 14 (building on his April 27 speech before the Kapisanan ng mga Brodkaster ng Pilipinas) against “fake news” is a huge step forward in strengthening our defense capabilities. Speaking out against “active disinformation and misinformation” (and this could be said particularly so regarding propaganda done by or at the behest of a foreign government), Mr. Marcos asked that “truth and credibility, the rule of law [be upheld], especially in the practice of broadcasting, news reporting and information-dissemination.”

For his part, Presidential Communications Office Secretary Cheloy Garafil, outlined the collaboration our government is making to combat such “fake news,” calling on “partners: META, Google, TikTok, and X [formerly Twitter],” alongside the Departments of Education, Interior and Local Government, and Social Welfare and Development, as well as the Commission on Higher Education.

It is time indeed for our government to emphasize and for the public to be very aware of our national security challenges and strategy. More than at any other time since a half century ago, when a communist takeover had been an utter possibility, or 30 years before that, when the country had been overrun by an invading foreign force, our very existence as a democratic republic, as a nation, is at stake.

 

Jemy Gatdula is a senior fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence

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