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Viruses in Cambodian bird flu cases identified as endemic clade

The viruses that infected two people in Cambodia with H5N1 avian influenza have been identified as an endemic clade of bird flu circulating in the country, the U.S. Centers for Disease Control and Prevention (CDC) said.

The cases reported last week had raised concerns they were caused by a new strain of H5N1, clade 2.3.4.4b, which emerged in 2020 and has caused record numbers of deaths among wild birds and domestic poultry in recent months.

But work so far suggests this is not the case.

Preliminary genetic sequencing carried out in Cambodia led its health ministry to identify the viruses as H5 clade 2.3.2.1c, which has circulated in Cambodia among birds and poultry for many years and has sporadically caused infections in people, the CDC said in a statement on Saturday.

“Yes, this is an older clade of avian influenza that had been circulating around the region for a number of years and while it has caused human infections in the past, it has not been seen to cause human-to-human transmission. However, that doesn’t mean that the threat is any less,” said Erik Karlsson, director of the National Influenza Center of Cambodia and acting head of virology at the Institut Pasteur du Cambodge, which sequenced the virus.

He added that the response needed to be coordinated and swift to prevent any further spread and to limit exposure to any common source.

An investigation into the source and to detect any additional cases is ongoing, the CDC said, adding that so far there had been no indication of person-to-person spread.

Cambodia tested at least 12 people for the H5N1 strain last week, after an 11-year-old girl died from the virus in the first known transmission to humans in the country in nearly a decade.

The victim’s father, who was part of a group the girl had been in contact with in a province east of the capital Phnom Penh, tested positive for the virus but did not exhibit any symptoms, Cambodia’s Health Minister Mam Bunheng had said in a statement on Friday.

Only the girl’s case has been sequenced and the father’s case is still being worked on, Karlsson said.

The World Health Organization said it is working with Cambodian authorities following the cases, describing the situation as worrying due to the recent rise in cases in birds and mammals. – Reuters

Providing Filipinos with premium, affordable homes

Single-attached unit in Santeví, San Pablo, average Lot Area 85sqm, Floor Area 74sqm

Every Filipino deserves a premium home that provides for their needs and wants. Having a premium home does not always mean paying more for it, given such homes can be attained at an accessible price point. Oftentimes, owning a home is a crucial stage for Filipinos. This is because owning one is an investment for the long-term well-being of their family and even their financial futures.

A real estate developer that strives to help Filipinos achieve their dreams is Ovialand. Established in 2014, the company is a pioneer in the premium, affordable segment of the market with its 1,000 housing units built across South Luzon.

Single-attached unit in Santeví, San Pablo, average Lot Area 85sqm, Floor Area 74sqm

A key to Ovialand’s success has been its “HousEasy” scheme for clients. Under this program, clients are assisted in every stage of the homebuying process—from the application of a housing loan, payment process, payment of real estate taxes, and even up to the maintenance of their new homes.

“With our HousEasy! Promise, our clients can move into their brand-new homes within three to six months,” Pammy Olivares-Vital, president and CEO of Ovialand, told BusinessWorld in an email interview. “This makes homeownership easier and more convenient, allowing the new generation of Filipino homebuyers to make their dreams of real-estate investments come true.”

Ms. Vital added that Ovialand keeps evolving to meet the needs of its clients, including those they consider as discerning, hard-working, and aspirational.

The company does this by providing consistent and quality customer service and making transactions simple — which are the core traits of a successful business that retains its clients.

The milestones they have achieved over the years motivates Ovialand to reach greater heights. For example, in line with its goal to expand nationwide, the company has broken ground on its developments in Baliuag, Bulacan. This would mark the company’s first foray outside its core South Luzon market.

According to the Department of Trade and Industry, the real estate sector is striving to maintain its robust growth and development while continuing to offer products that are cost-effective to Filipinos. The sector also continues to see high demand from the public.

In line with this outlook, Ovialand has maintained strong ties with its business partners—such as suppliers—throughout the years. According to Ms. Vital, this has allowed the company to successfully provide premium and affordable homes to Filipinos despite persisting economic headwinds such as supply-chain constraints.

 

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Real estate’s prospects and opportunities in 2023

By Chelsey Keith P. Ignacio, Special Features and Content Senior Writer

Rising up from the impacts of the COVID-19 crisis, the property market in the country is generally projected to have bright prospects to rebound further this 2023.

The Philippine economy registered a 7.6% growth last year. This expansion, the country’s fastest in over 40 years, could be a “positive signal” for the property market, according to Colliers. This is because the market reflected the boom-bust cycle of the country’s economic output in the previous decades. Such economic growth is expected to support the office and residential markets.

After recording a net takeup of 110,500 square meters (sq.m.), a February report by Colliers expected the office market to reach a net absorption of 228,000 sq.m. in 2023. The demand is seen to be driven by healthcare, logistics, telecommunications, finance, government, and shared service segments.

Meanwhile, Colliers noted 750,300 sq.m. of new office spaces in 2022. This year, it expected the new supply to reach 641,000 sq.m., with the Ortigas Central Business District and Quezon City projected to cover nearly half of this. Following these new spaces, the firm foresees vacancy to expand to 20.2%.

“The country’s office market is seeing uneven but steady recovery, supported by sustained transaction activity in Metro Manila and provincial locations becoming a mainstay in locators’ portfolios,” Kevin Jara, associate director for office services-tenant representation at Colliers Philippines, said in the firm’s report published on Feb. 2.

In the residential segment, Colliers expected the project completions to slow down this 2023 from the year prior. It saw 9,000 units completed in 2022, then a new supply of 3,540 units is expected in 2023. Almost half of the new supply this year is likely to be in the Bay Area and Fort Bonifacio.

Colliers expected 3,840 units on the residential demand side in 2023. Meanwhile, the recovery of office leasing and tempered completion of condominiums this year are seen to support the drop in vacancy to 17% from last year’s 17.6%.

“We see continued queries from expatriates while demand from local employees has been raising rents in major business districts such as Makati, Fort Bonifacio, and Ortigas,” Colliers Philippines Director for Research Joey Roi Bondoc shared in a report.

Meanwhile, as tourism also recovers, occupancy in the hotel segment is projected to pick up in 2023. On average, hotel occupancies reached 55% in Metro Manila in the second half of 2022, expanding from the 47% recorded in the first half, according to Colliers. This 2023, anticipating more foreign visitor arrivals and the local staycation market’s continued growth, Colliers projected average hotel occupancy in Metro Manila to breach 60%.

Colliers also expected a record-high of new 4,140 hotel rooms in 2023. And between this year to 2025, the firm projected that 42% of new hotel supply in Metro Manila would be made up of foreign brands.

Consumer traffic and purchasing power are also seen to rise, hence more foreign and local retailers are expected to take advantage by covering physical mall spaces this 2023, according to a Colliers report in December. Meanwhile, the firm projected a new 448,900-sq.m. retail space this year, thus vacancy is forecasted to marginally increase to 17%.

Colliers considered that brick-and-mortar shopping would likely be complemented by online shopping, which would continue to be popular among Filipino consumers.

In the industrial segment, Colliers expected fast-moving consumer goods (FMCG), third-party logistics, e-commerce, and agro-industrial locators to lead the takeup in 2023, having done so in the previous year.

A new industrial supply of 132 hectares (ha.) is expected in CALABA (The Cavite, Laguna, Batangas corridor) in 2023-2024, as three industrial parks in Batangas and Laguna are anticipated to be completed; while 243 ha. of industrial supply would rise in North-Central Luzon in the said period.

“Over the near to medium term, the sector’s growth is likely to be supported by investments from new trade deals and the emergence of new industries including the electric vehicle (EV) industry,” Colliers’ Mr. Bondoc noted in the February report.

Opportunities

Buoyed by the economy reopening further, there are several opportunities seen for real estate segments to leverage.

Opportunities in the office segment might reside in flexible workspaces within and beyond Metro Manila, as such spaces would likely play an important part in post-pandemic operations of tenants, according to Colliers. The firm reported that flexible workspace vacancy in the capital region decreased from 41% in 2020 to 11.9% in end-2022.

Furthermore, the firm recommended developers to tap opportunities beyond Metro Manila, having noticed growing inquiries from outsourcing firms in Iloilo, Bacolod, Bulacan, and Laguna. Developers should also look into prospective demand in the areas touted to comprise high potential to become digital cities, such as Iligan, Dagupan, Urdaneta, Malolos, General Santos, Tarlac, Cabanatuan, and Puerto Princesa.

For the opportunities in the residential segment, developers should look at how the pandemic altered the homebuyers’ preferences.

“In the residential real-estate aspect, we now see that the shift to horizontal living spaces is no longer a pandemic fluke but has become the choice for many Filipinos. Since we all know that there’s barely any more space in Metro Manila, this will now translate to strengthening real estate and property in more places,” Pammy Olivares-Vital, president and chief executive officer of Ovialand, Inc., told BusinessWorld in an email.

“Matched by the aggressive infrastructure plans of the government to make more regions accessible, I believe developers and individuals alike will be grabbing the opportunity to purchase strategic real estate, causing real estate prices to appreciate faster,” she added.

Ms. Olivares-Vital also noted that Filipinos have begun to reconsider their residence by valuing time and quality of life more, instead of being in the vicinity of urban spaces.

“I would say it is a shift in direction, that the opportunity to develop in suburban Metro Manila will provide a great opportunity not just for developers but for the end-users as well,” she said.

Likewise, Colliers encouraged developers to emphasize features that serve the post-pandemic preferences. These include, according to its Q3 2022 Residential Survey, condominiums with good ventilation, and green and open spaces, as well as developments with green and sustainable features. The firm also recommended amenities that enable residents to work from home or multi-task.

Meanwhile, to support the recovery of the hotel segment, Colliers highlighted the importance of developing and modernizing more airports, which could also improve the attractiveness of hotel REITs (real estate investment trusts). The firm also encouraged the development of new hotels in key locations beyond Metro Manila.

And to draw more foot traffic to the malls, Colliers suggested that operators should reactivate their event spaces or activity centers and organize events. They should also maintain putting regular sanitation and other health and safety protocols in place, especially in crowded retail spaces.

The firm recommended developers to consider diversification in building industrial parks and facilities to accommodate a range of locators from different industries such as FMCG, logistics, automobile parts, and electronics, especially as they have recently taken big-ticket investments from locators that occupied industrial spaces in Central and Southern Luzon.

The challenge

The effects of the potential recession in the United States and the Russia-Ukraine conflict could be a risk. But for Ms. Olivares-Vital of Ovialand, the economic state in the US could be a crisis or opportunity, as it could push more equity or capital to be directed to Asia and translate to fresh funds or investments in the Philippine economy.

She added that it has yet to be seen whether China’s new attitude towards COVID-19 would be relentlessly pursued.

The Philippines also still needs better food security and strategic alliances to make certain that the cost of living would not exceed the income of Filipinos.

“All these factors can contribute to a weakening spending power of Filipinos, which will impact not just the property market but across all industries,” Ms. Olivares-Vital said.

Nonetheless, after the pandemic’s impact on real estate in the past years, Ms. Olivares-Vital held that the industry would keep its resilience.

“After the period of 2020-2022, I believe that real estate and property will continue to remain resilient — especially if the property involved has value — in terms of location, usability, and relevance to the market,” she said.

“The world will never be free from calamities, economic disruptions, wars, etc., but humanity continues to live. So, the considerations [for property investors] continue to be the same: evaluate your finances and prioritize investing wisely early; find real estate that will still have value appreciation that you can benefit from; and lastly, as an investor, make sure to invest in developers that have experience and the ability to deliver,” she added.

Fighting against headwinds in Philippine real estate

The outlook for Philippine real estate is looking rosy. In 2022, office space transactions in Metro Manila grew 43% annually to 603,800 square meters, according to professional services firm Colliers Philippines.

Office space transactions within regions — a key barometer of investor sentiment in the country — rose by as much as 50%, with many outsourcing firms expanding operations within Metro Manila and in emerging markets outside of it.

According to the data, office space was quickly snapped up in Cebu, Davao, and Pampanga, which will account for 90% of transactions in 2022.

Coupled with the country’s 7.6% year-on-year economic expansion in 2022, despite record inflation and interest rates, Colliers predicts that demand for Philippine properties will continue for the rest of the year.

“An aggressive stance taken by the national government in attracting manufacturing investments should result in greater absorption of industrial space across the country,” Joey Roi Bondoc, research head of Colliers Philippines, said.

The data supports Colliers’ previous optimism for the Philippine real estate industry’s performance in 2022, when Mr. Bondoc stated that the “sector is expected to finish 2022 strong,” with “an optimism that is expected to persist through 2023 as recovery prospects are boosted by strong macroeconomic fundamentals.”

Real estate services firm Santos Knight Frank (SKF) echoed the positive sentiments, as their own data foresees a marked increase in activity in the hospitality and retail sectors.

Retailers and hotels are the property sectors that are rebounding the fastest as a result of the easing of coronavirus disease 2019 (COVID-19) restrictions and the resulting greater mobility among the populace, SKF Chairman and Chief Executive Officer Rick Santos told reporters.

“Brick-and-mortar retail and hotels were some of the most severely affected real estate sectors during the pandemic. Now that travel and mobility restrictions have been lifted, we are seeing the resurgence and ‘unfreezing’ not just of market activity but also development and expansion of players in these sectors,” he said.

Further boosting the growth of the hospitality property sector are the return of international flights, more face-to-face events, and China’s relaxing of its COVID-19 policy, as these factors will result in “revenge travel” from tourists.

Almost 2.65 million tourists visited the Philippines last year, a significant decrease from the nearly 8.26 million tourists that visited before COVID-19.

Mr. Santos said that they forecast that 2,692 more hotel rooms will be opened in Metro Manila alone between 2023 and 2024 to accommodate this year’s anticipated foreign guests.

In other sectors within the industry, Morgan McGilvray, senior director for occupier services at SKF, noted that the occupancy rate of retail spaces in Metro Manila by the end of 2022 was 93%, which is very close to the pre-pandemic level of 96%.

With the office sector, the sentiment is the same. The demand for office space is being driven by the information technology and business process management (IT-BPM) industry, and it continues to show promise.

Mr. McGilvray said that the rising inflation in the US and other countries is a positive for the Filipino IT-BPM industry since it means American businesses are considering cost-cutting measures that may involve setting up back offices offshore.

In this, the Philippines continues to be a hot spot for IT-BPM investments.

“We expect more leasing activity this year as a result of greater outsourcing requirements from developed economies, the availability of quality office space and companies adjusting their work setups. While we will continue to see some downsizing of footprints for Philippine headquarter companies, we still expect to see an overall net positive take up in 2023 driven mainly by the BPO sector,” he added.

Real estate services firm JLL Philippines reached the same conclusion, saying that the IT-BPM sector is expected to lead the market amid a grim economic environment.

JLL pointed out that monetary policy rate hikes issued by the Bangko Sentral ng Pilipinas (BSP) to control skyrocketing inflation will dampen the growth of the real estate sector significantly.

As the government weighs the proposed ban on POGOs (Philippine Offshore Gaming Operators), which may adversely affect approximately P65 billion ($1.2 billion) of economic contribution, the IT-BPM sector is expected to carry the recovery of the property industry.

JLL pointed out that the BSP anticipates 9% and 5% year-over-year increase in IT-BPM earnings in 2022 and 2023, respectively. The Information Technology and Business Process Association of the Philippines (IBPAP) also forecast that the sector will generate $59 billion in revenue and add 1.1 million new jobs by 2028, demonstrating continuous development despite a number of challenges.

As they expand their activities all over the country, the IT-BPM industry is expected to continue scaling up operations, which could lessen the market impact of the likely POGO withdrawal. — Bjorn Biel M. Beltran

Emerging trends in the property sector this year

Photo from freepik

2022 was quite a challenging year for the real estate sector, especially with the economic crisis and climate change. But, the industry was set to recover and continue growing as one of the major players in economic recovery and development. Setting foot into 2023, real estate leaders are optimistic about real estate, following the easing of travel restrictions and the low COVID-19 infection rate, which have increased the economic performance and growth of the sector.

With such optimism at the backdrop, the real estate industry is encountering emerging trends that will help in shaping its future in the months and years ahead.

Workforce transformation

As pandemic restrictions ease, workforce transformation will come in handy, primarily when the work-from-home or hybrid setup is being implemented in most sectors. Unlike pre-pandemic, most of the employees have yet to return to working face-to-face, and as professional services firm PricewaterhouseCoopers (PwC) observed, only a handful of employees work in a physical office within a day, thus leading to increasing demand for a return to office in most leading companies.

However, the complete shift of face-to-face work is still under discussion, as most employees have their own work preferences and are still not ready to go back amidst the ongoing health pandemic until today. However, the real estate sector is impacted by the work-from-home setup since the office real estate stock can be eliminated or repurposed.

On the other hand, many companies will continuously cling to working in a hybrid setup, as a precaution in keeping their workspaces and respecting the work preferences of their employees. The hybrid setup sets an advantage for employers’ and employees’ work preferences and brings real estate into the digital world, creating an opportunity for sustainable growth in the sector.

Sustainability and climate change

Like other sectors, the impact of climate change is a strong incentive for the real estate industry to take action. For instance, the industry has been incorporating environmental, social, and governance (ESG) initiatives in its business operations.

Some sustainable initiatives that the sector is currently focused on include: developing green buildings and using water, eco-friendly, and energy-efficient materials in business operations that will help achieve a net-zero future.

As the Urban Land Institute (ULI) noted on its latest Emerging Trends in Real Estate report for the Asia-Pacific, many countries have already started this green movement. For instance, new net-zero buildings were being constructed to raise sustainability awareness and acquire carbon efficiency in leading countries like Australia and Japan. But in other Asian regions, adopting net zero standards can be extremely challenging, considering the region’s overall energy and density intensity. However, countries can bridge this gap by taking little steps in adopting net-zero initiatives such as acquiring renewable energy from electricity and purchasing carbon offsets.

In addition, water usage effectiveness and renewable energy have also been impacting the sector. As of now, data centers are searching for ways to reduce energy usage and cut carbon by using rechargeable batteries and rooftop solar panels, according to the said report.

Affordable housing

As a solution for production backlog, micro-apartments are also a rising trend, as Gino Olivares, the national president of the Organization of the Socialized and Economic Housing Developers of the Philippines, Inc., was quoted as saying in a previous report by online property marketplace Lamudi for the third quarter of 2022.

Micro-apartments are smaller studio apartments that have all the amenities and functions similar to a standard apartment in a space that is less than 350 square feet. Known as a place with minimal space, it features essential amenities, including a bathroom, kitchen area, and living and sleeping space. Recently, micro-apartments are attracting young professionals or those people who tend to live alone, according to real estate and landlord expert Erin Eberlin in www.liveabout.com.

Another trend mentioned by Mr. Alvares is co-buying or co-ownership, defined as the decision made by two or more persons in dividing ownership of a residence after it has been purchased.

The property owner in a co-buying arrangement could be the following: family, friends, couples, or business entrepreneurs. Unlike being the owner and co-owner of a business, co-buying is based on the individual interest of the owners.

Co-buying is still an emerging real estate trend that may be the key to ending the ongoing housing crisis because it is said to provide cheaper mortgage payments, more equity growth, and utility cost savings.

Moreover, the rights and ownership of co-buyers in property interests are also crucial. Although co-buying may be relatively new to the Philippine market and may pose some complications if not done right, it can still be a good strategy for owners who are eyeing investing in real estate.

Metaverse

Metaverse is also taking a spotlight on the real estate industry, according to PwC, as leaders are optimistic and eyeing the impact of the digital platform and how it can shape business enterprises and consumers to engage with products, services, and with each other.

The digital platform can improve the workplace experience, such as enhancing collaborative spaces, complementing the physical office, and upskilling employees and business operations.

With metaverse, properties can be bought, sold, purchased, and leased. Given that buying virtual homes is significantly less expensive compared to physical houses, this might make real estate create an opportunity to invest more accessible to a broader range of investors.

Similar to other new technologies, the metaverse still has many risks and is far from perfect, yet it’s been already attracting the interest of the sector.

“Interest in the metaverse is hot, even though many of its concepts are years away from being solidified. Your company doesn’t need to be a metaverse leader today, but you should explore the potential implications to your organization,” PwC advised.

Despite the obstacles brought on by the pandemic, the outlook for the real estate sector largely shows optimism as it adopts long-term goals and perspectives for the industry and as real estate professionals are working on strategies that allow the industry to thrive and see steady growth in return.

“Although real estate capital markets are constricting, they are still open for business, investors are still buying high-quality properties, leaders will continue to lend, and companies should move forward with cautious optimism through this current cycle and prepare to adapt to quick market changes,” Byron Carlock, Jr., US real estate leader for PwC, said in a statement. — Angela Kiara S. Brillantes

Sustaining PHL’s growth as IT-BPM hot spot

Photo by tirachardz on Freepik

The Philippines remains to be a prime hot spot for offshore information technology and business processes management (IT-BPM) services that the country serves as a model for other countries.

The country is one of the world’s leading outsourcing destinations for business process and IT-enabled services. The cost-competitiveness, excellent talent base, proven track record in dealing with global customers, strong English language ability, proximity to key markets and improving infrastructure have all contributed to its continued success.

Looking onward, however, as the shape of the industry evolves and matures, moving toward higher value-added deliverables such as big data analytics, digital media and creative services, which will be increasingly delivered remotely over the Internet, will the Philippines be able to keep up?

Jack Madrid, president and CEO of the IT Business Processing Association of the Philippines (IBPAP), seems to think so.

In talks with BusinessWorld columnist Flor G. Tarriela, Mr. Madrid said that in 2022, the IT-BPM industry employed 1.55 million Filipinos, contributed over $31 billion to the economy and was the second largest source of foreign exchange earnings.

In the next six years, the industry has the potential to add one million more new jobs and generate over $59-billion revenue, representing 8% of the Philippines’ gross domestic product.

“Without a doubt, the industry is, and will continue to be an indispensable pillar of our economy,” he was quoted as saying.

Mr. Madrid stated during a previous press briefing that the sector hopes to make Philippines the world’s top experience hub for digitally enabled and customer-centric services while promoting inclusive and sustainable growth throughout the nation.

He said that the IBPAP’s growth target of 54% will be driven by IT-BPM firms setting up and expanding rural operations.

Upskilling the local work force will be one of the goals of the IT-BPM sector in order to support the industry’s growth target. This is shown in IBPAP’s plans to increase the number of high-skill positions over the next six years, with a 13% increase in revenue per FTE by 2028.

Mr. Madrid told Ms. Tarriela that the Filipino talent will be the basis of the industry’s future growth, adding that aside from excellent communication skills and English fluency, Filipinos are world-renowned for their adaptability, creativity, empathy, and resilience.

Due to their special skill sets, Filipino providers may now provide services to clients worldwide in a variety of sectors, including financial services, healthcare, hospitality, animation, and IT technical assistance.

He added that the BPO sector, which demonstrated the adaptability and resiliency of the Filipino population and led to the creation of 255,000 new employment from 2020 to 2022, was one of the pandemic’s silver linings.

Mr. Madrid went on to further claim that despite increasing inflationary pressures and constricting regulatory frameworks, the positive economic trajectory nevertheless stayed its course.

Carrying office space, business demand

The industry contributes by preserving jobs, creating new opportunities, encouraging rural development, promoting investments, and increasing demand for real estate.

Real estate services firm JLL Philippines affirmed this with a statement they released in January about the real estate industry’s resilience against global economic headwinds like skyrocketing inflation and interest rates alongside the depreciating peso.

“The IT-BPM industry is likely to carry the market in trying times. In 3Q22, IT-BPM firms made up 85.3% of Metro Manila office transactions, higher than the 6% share taken by POGOs (Philippine Offshore Gaming Operators),” JLL Philippines said.

“Continued activities from the IT-BPM sector are anticipated as they further scale up operations which may offset the impact of the probable POGO exit in the market. The Bangko Sentral ng Pilipinas expects IT-BPM earnings to see 9% and 5% y-o-y growth in 2022 and 2023, respectively.”

Mr. Madrid was quoted as saying that “the future is bright as a growing number of global business services are incorporating offshoring and outsourcing into their strategic initiatives to improve efficiencies and optimize costs in multiple geographies.”

“The sustained growth will be spurred by next-generation business models and assets, the talent and skills supply-demand gap, and ongoing cost optimization. Expansion across select industry horizontals and verticals, and increased digital adoption by traditional players will also be key drivers of growth in the coming years,” he said.

Measures moving forward

This pursuit of growth may face challenges in the coming years, and in order to maximize the country’s growth potential and reinforce its global competitiveness the country must take measures. Mr. Madrid outlined several of them.

Supply chain talent resilience, he said, will be essential in the midst of a talent battle that is heating up due to greater attrition rates and rising demand for specialized and emerging capabilities like automation, cloud computing, data analytics, and cybersecurity.

Hybrid work models must be included into company initiatives. Around the world, 70% of IT-BPM businesses claim to have used hybrid work arrangements. 80% of local IT-BPM workers in the Philippines said they preferred a hybrid work approach.

On this point, Mr. Madrid had previously told the media that they have called for partners in the telecommunication industry to build infrastructure to support the IT-BPM industry outside Metro Manila, where many companies are now keen on expanding.

“As a whole the Philippines is more than holding its own and in retaining its position. What’s more important in the coming six years is how much more market share we can capture. It’s there and it’s ours for the taking,” he had said.

“Our industry has been the focal point of what I believe to be a global desire for more flexible work, location-independent setups. The future of work is already happening… It’s loud and clear that an overwhelming majority in the Philippines, but even across other parts of the world have shown that the future is going to be about finding that optimal balance.”

The strategic imperatives that IBPAP will work on with industry and government partners are described in the IT-BPM Industry Roadmap 2028. They include enhancing business accessibility, tackling the talent shortage, and bolstering our digital infrastructure.

The nation’s ability to capitalize on new trends and avoid looming threats from around the world will be crucial to the industry’s survival. The Philippines has to keep focusing on building a strong talent pool, a stable regulatory framework, and an infrastructure that is more conducive to investment. — Bjorn Biel M. Beltran

PHL eyes retail dollar bonds in Q2

JCOMP-FREEPIK

THE PHILIPPINES is looking to offer dollar-denominated retail Treasury bonds (RTBs) in the second quarter, Finance Secretary Benjamin E. Diokno said.

“There’s a lot of interest from London and Frankfurt. Even in Japan. What’s good about dollar-denominated is that even if the peso depreciates, you still win because of high interest and it’s tax free too,” he told reporters on Friday on the sidelines of the 2023 Annual Reception for the Banking Community in Manila.

Mr. Diokno said there is no set volume for the proposed retail dollar bond offering.

In December, the Finance chief said the government was targeting to offer retail dollar bonds within the first quarter. At that time, the bonds were expected to have a tenor of at least five years and raise around $3 billion, depending on demand.

Mr. Diokno said the offering was pushed back after the government held an RTB sale this month. The government raised P162.180 billion or almost $3 billion from the second RTB issue under the Marcos administration.

The Philippines’ last retail dollar bond sale was in 2021, where it raised $1.6 billion.

The government plans to borrow P2.207 trillion this year, where 75% is expected to be sourced domestically.

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Meanwhile, Mr. Diokno said the government will also extend its Targeted Cash Transfer (TCT) program, which will provide P1,000 each for around 9.3 million beneficiaries.

“There are some 9.3 million beneficiaries which will have P1,000 each, (that) translates to P9.3 billion (for) the poorest of the poor beneficiaries. This is different from the Pantawid Pamilyang Pilipino Program (4Ps). Some beneficiaries under 4Ps are under this program,” he added.

Mr. Diokno said they are considering a two-month subsidy for these beneficiaries. Malacañang will make the announcement, he added.

Mr. Diokno said there is a possibility the cash transfer program may be extended again when needed.

“Others may still be in need of the cash transfers. I cannot say if this is the last,” he said.

The government released a total of P18.3 billion in subsidies to about 9.2 million household beneficiaries under the TCT program, according to the Department of Finance (DoF).

The program was launched in June last year and granted cash payments for poor households amounting to P500 per month for six months.

The TCT program was aimed at mitigating the impact of rising commodity prices on the most vulnerable households. The program expired on Dec. 31, 2022. — Luisa Maria Jacinta C. Jocson

25-bp hike ‘most likely’ in March — BSP chief

PHILIPPINE STAR/MIGUEL DE GUZMAN
There are signs that inflation in February is slowing, according to the Philippine central bank. A store employee arranges packs of sugar in a supermarket in Quezon City in this undated file photo. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE BANGKO SENTRAL ng Pilipinas (BSP) will likely hike the benchmark rate again next month, with its governor eyeing a smaller 25-basis-point (bp) move amid signs of slower inflation in February. 

“We’re actually looking at the month-on-month (inflation), but the most likely scenario is maybe one more hike,” BSP Governor Felipe M. Medalla told reporters on the sidelines of the annual reception of the banking community on Friday.   

He said that a 25-bp hike is the “most likely” option at the March 23 meeting, due to a “great possibility” that inflation has already peaked in January as non-monetary measures are starting to dampen price increases.

“There are signs that (February inflation) will be (lower), there are lots of sugar imports and we’ll probably be seeing that with other products as well,” Mr. Medalla said in a mix of English and Filipino. 

He also said that the economic team was able to convince Philippine President Ferdinand R. Marcos, Jr. to import more food items such as sugar.

At the same event on Friday, Finance Secretary Benjamin E. Diokno said February inflation is “definitely lower” than January.   

“The price of oil has stabilized, peso has stabilized, all that’s left is food. We really have to focus on food items. It’s not just importation, but the food has to reach the market,” Mr. Diokno told reporters in a mix of Filipino and English. 

“Right now, prices of sugar are still high,” he added.

The Sugar Regulatory Administration has issued Sugar Order No. 6 earlier this month, authorizing imports of 440,000 metric tons of the commodity, part of which would form a buffer stock in order to stabilize prices.

However, a higher month-on-month increase in February inflation may prompt a bigger move at the Monetary Board’s meeting on March 23, Mr. Medalla said.

“We’re still hawkish. If the results are bad, we will act… If the month on month is 1%, which implies a year on year of 12%, we have to act,” he added.   

Inflation accelerated to a 14-year high of 8.7% in January from 8.1% in December. Stripping out seasonality factors, month-on-month inflation rose by 1% in January.

“The main impetus behind inflation is not demand. What’s happening is what we call second-order effects. Prices are rising because the previous increases influenced future increases,” Mr. Medalla said.   

He reiterated that he expects inflation to return to within the 2-4% target range by November or December this year.   

The BSP projects inflation to average 6.1% this year, higher than the actual 5.8% recorded last year, before easing to 3.1% in 2024.   

Asked if another rate hike is possible at the Monetary Board’s next meeting after March, the BSP governor said it is “hard to forecast because the data is so fluid.”

After March 23, the BSP will discuss policy on May 18.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa expects the BSP to hike borrowing costs by 25 bps next month as well, adding that a whole-of-government approach is needed to address high inflation.   

“BSP rate hikes can only do so much to quell demand hikes with supply-side remedies needing to kick in to make a dent in the inflation fight,” Mr. Mapa said.

“BSP will still need to hike to maintain the hawkish stance, but it’s clear that a 50 bps will not be able to effectively deal with searing price pressures, especially as the main driver for this episode is food inflation best addressed by the Department of Agriculture and Bureau of Customs,” he added.   

Security Bank Corp. Chief Economist Robert Dan J. Roces said a month-on-month increase of about 0.3% may result to a year-on-year headline inflation of 8.9% this month.   

“So, the risk is on the upside as disinflation lies in food prices which is a significant portion of the CPI (consumer price index). Solve the supply side there, then disinflation is guaranteed,” Mr. Roces said.   

While many central banks worldwide, such as the US Federal Reserve, have slowed monetary tightening to 25-bp rate hikes this year, the BSP has so far stuck to large rate increases with the 400 bps in cumulative hikes since May 2022.

RRR CUT?
Meanwhile, the BSP may reduce banks’ reserve requirement as part of efforts to encourage financial institutions to cut or eliminate fees for small-value digital transactions.

“We are ready to collaborate with banks and payment system operators to explore a cost-sharing system that excludes small transactions from these types of fees,” Mr. Medalla said.   

“We may even consider cutting the reserve requirement to enable banks to make these concessions. All these, in pursuit of a financial system that leaves no one behind,” he said.

The BSP earlier reduced the banks’ reserve requirement ratio (RRR) to 12% from 18%. It aims to reduce the country’s RRR, the highest in the region, to single digit this year.

Mr. Medalla said one way to make digitalization more inclusive is to make small transactions free of charge.

“If the fee is P15 for a P200 transaction, then the fee is quite large relative to the amount being sent,” he said.   

The value of electronic fund transfers coursed through the PESONet and InstaPay rose by 36% to P955.9 billion in January from P702.6 billion in the same month last year, latest data from the BSP showed. The combined volume also grew by 25.8% to 58.922 million from 46.83 million in 2022.

Last year, the combined value of PESONet and InstaPay transactions went up by 36% to P9.94 trillion from P7.24 trillion in 2021, with the volume rising by 21% to 633.46 million from 523.59 million. — Keisha B. Ta-asan

Big Philippine banks’ assets up nearly 10% in Q4

PHILIPPINE STAR/MIGUEL DE GUZMAN

By Lourdes O. Pilar, Researcher

THE ASSETS of the Philippines’ largest banks grew by nearly 10% in the fourth quarter of 2022, as economic activity continued to pick up.

BusinessWorld’s latest quarterly banking report showed the combined assets of 45 universal and commercial banks (U/KBs) jumped by 9.4% to P22.51 trillion in the October-to-December period, from P20.56 trillion in the same three months last year.

Asset growth quickened from the 8.38% year-on-year expansion in the third quarter of 2022 and the 8.59% in the same period in 2021.

PHL big banks’ total assets recover in Q4 2022

Aggregate loans of big banks expanded by 9.73% year on year to P11.14 trillion in the October-December period, faster than the 5.93% growth in the same period in 2021. However, it was nearly unchanged from the 9.74% growth in the third quarter.

The fourth quarter also saw nonperforming loans (NPLs) drop by 9.45% year on year to P336.54 billion from P371.65 billion in the fourth quarter of 2021.

This brought the NPL ratio, or the bad loans as a portion of the total loan portfolio, to 3.17% in the fourth quarter, higher than the NPL ratio of 2.91% in the third quarter of 2022. Year on year, the NPL ratio was an improvement from the 3.95% in the same quarter of 2021, reflecting Filipinos’ increased capacity to repay their loans.

Loans are classified as nonperforming if the principal and/or interest are unpaid for more than 90 days from contractual due date. These may pose risk to the lenders’ asset quality as borrowers are likely to default on these debts.

The big banks’ nonperforming asset (NPA) ratio — the share of NPLs and foreclosed properties to total assets — stood at 0.99% as of the quarter ending December. This was the lowest NPA ratio since 0.91% in the first quarter of 2020, when the coronavirus pandemic began.

Foreclosed real and other properties as a share of the big banks’ total assets steadied to 0.28% quarter on quarter, but higher than 0.25% in the final three months of 2021.

Meanwhile, total loan loss reserves inched up 0.34% quarter on quarter to P382.54 billion in the fourth quarter. On an annual basis, this was 12.10% higher than P341.23 billion in the fourth quarter of 2021.

Big banks’ median capital adequacy ratio — the ability to absorb losses from risk-weighted assets — stood at 17.97%, lower than the 19.60% in the third quarter and 21.30% year on year. This was still above the minimum of 10% set by the Bangko Sentral ng Pilipinas as well as the international minimum standard of 8% under the Basel III framework.

Profitability as the median return on equity (RoE) slightly eased to 6.36% from the preceding quarter’s 6.42%, but still higher than the RoE of 3.11% in the fourth quarter of 2021.

The RoE ratio measures the amount that shareholders make on every peso they invest in a firm, and is calculated by dividing the net profit to average capital. It also measures how well a firm makes use of the money from shareholders to generate income.

BDO Unibank, Inc. (BDO) remained the largest bank in terms of assets with P4.01 trillion as of the fourth quarter. State-owned Land Bank of the Philippines (LANDBANK) came in at second with P3.16 trillion, while Metropolitan Bank & Trust Co. (Metrobank) ranked third with P2.92 trillion.

The Sy-led bank was also the top bank in terms of loans issued with P2.53 trillion, followed by Bank of the Philippine Islands (BPI)’s P1.69 trillion and Metrobank’s P1.39 trillion.

Among banks with assets of at least P100 billion, Union Bank of the Philippines (UnionBank) posted the fastest year-on-year asset growth of 31.13%, followed by China Banking Corp. (27.94%), and Security Bank Corp. (25.46%).

Hongkong and Shanghai Banking Corp. Ltd. saw the quickest loan growth, with a year-on-year expansion of 70.78%, followed by Bank of Commerce (42.64%) and UnionBank (42.52%).

BDO had the most deposits with P3.22 trillion, followed by LANDBANK with P2.78 trillion and Metrobank with P2.22 trillion.

BusinessWorld Research has been tracking the financial performance of the country’ big banks on a quarterly basis since the late 1980s using banks’ published statements.

The full version of BusinessWorld’s quarterly banking report will soon be available for download on https://bworld-x.com/product-category/bw-in-depth-banking-report/.

Indian companies keen on further expanding PHL operations

Filipinos shop for clothes and toys in Divisoria, Manila in this undated file photo. — PHILIPPINE STAR/WALTER BOLLOZOS

By Alyssa Nicole O. Tan, Reporter

INDIAN COMPANIES are looking to further expand in the Philippines this year.

Biocare Lifesciences, Inc. Managing Director Dileep Tiwari, who also heads the Indian Business Forum, said the company already distributes affordable generic medicine to over 200 hospitals and drug stores in the country. The pharmaceutical distributor is planning to introduce 15 new products this year.

“In the next five years, Biocare is eyeing to set up a manufacturing facility in the Philippines to support the government’s plan… to boost manufacturing, generate employment and bring cutting-edge technology to the Philippines, which in large will lessen the import of crucial medicine,” Mr. Tiwari told BusinessWorld in a WhatsApp message.

Biocare currently has several partnerships with Philippine pharmaceutical companies, including Unilab, Inc. It also participates in government bidding to make critical care products available to indigent patients.

Datamatics Global Services Limited Country Head Praveer Chadha said the Philippines is one of the best markets to grow the customer management business.  

He cited the country’s high level of education, proficiency in English, admirable work ethic, and ability to adapt to digital technologies.

“We have been working with various colleges to start employment-ready programs which will assist talents to be future ready,” Mr. Chadha told BusinessWorld in a WhatsApp message.

Datamatics, an information technology (IT) consulting company, recently inaugurated its third customer support center in Pasig City, which allows it to employ up to 3,000.

“We are actively scouting for acquisition or partnering opportunities which will enable us to bring more of our technology and service offerings to the Philippines,” Mr. Chadha said.

He identified five sectors as priorities: travel, transportation, hospitality, and logistics; retail, with focus on e-commerce; education; life sciences and healthcare; and financial technology.

“We intend to grow our base and set up more tech-enabled centers across the country by reaching out to second-tier (larger) cities and provinces,” he said. “Some of these show high, untapped potential when it comes to opportunities for CX (customer experience) transformation.”

For multinational IT services and consulting company HCL Technologies Limited Country Manager Sourabh Jha, the Philippines is a “strategic location” for its services.

“We wish to provide services to all modern emerging technology clusters like workplace engineering; unified communication and collaboration; and unified messaging and collaboration,” he said, citing as examples Microsoft Teams, Amazon Connect, Google Workplace, among others.

Mr. Jha said HCLTech is looking to further expand in the country.

“An already identified location is Bacolod and (it) will have a center in next quarter. We have recently invested in a new site in Manila,” he said.

HCLTech is also in talks with universities to provide training support in order to bridge the gap between education and the industry’s requirements.

“We plan to create 2,000 IT jobs this year in digital workplace space alone,” Mr. Jha said. “Our aim is to move the Philippines job landscape beyond call centers and make this country skilled with more IT related jobs.”

Meanwhile, Advanta Seeds Philippines and North East Asia Business Lead Siraj Ahemad said the global seed company is looking to expand operational areas in the Philippines and increase manpower.

“This year we are planning to expand our operational areas, especially on the southern part of Luzon, Visayas and the Mindanao area in which we have minimal operation and manpower,” Mr. Ahemad told BusinessWorld in a WhatsApp message.

At present, Advanta Seeds has 53 active direct distributors and 35 employees.

“We are planning to appoint more distributors to serve more dealers or financiers and more farmers to experience growing our products,” he added, noting the need to standardize operations.

Mr. Ahemad said the company’s main interest is “to serve smallholder farmers by providing them quality seeds and services that will help improve their lives.”

PHL still on FATF’s ‘gray list’

THE LOGO of the Financial Action Task Force (FATF) is seen at the OECD headquarters in Paris, France, Oct. 18, 2019. — REUTERS

THE Financial Action Task Force (FATF) kept the Philippines on its “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks, urging the country to address deficiencies “as soon as possible.”

In a statement dated Feb. 24, the FATF said the Philippines should continue addressing its strategic deficiencies in combatting money laundering.

The Philippines had made a high-level political commitment to strengthen its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) initiatives in June 2021.

“The FATF notes the Philippines’ continued progress across its action plan, however all deadlines have now expired and work remains. The FATF encourages the Philippines to continue to implement its action plan to address the strategic deficiencies as soon as possible,” it added.   

According to the FATF, the country should demonstrate effective risk-based supervision of designated nonfinancial businesses and professions such as jewelry dealers, real estate brokers and developers, and service providers for financial businesses.

The Philippines should ensure that supervisors are using AML/CFT controls to mitigate risks related with casino junkets, the FATF said.   

The dirty money watchdog said the country should also enhance and streamline the access of law enforcement agencies to accurate and up-to-date information regarding beneficial ownership.

The Philippine government is currently reviewing proposed changes to the country’s Bank Secrecy Law, which is seen to help address money laundering and cybercrime incidents.   

The Paris-based FATF also said it will check if there is an increase in investigations and prosecutions related to money laundering cases, and the effectivity of the targeted financial sanctions framework for both terrorism financing and proliferation financing.

The Philippines will submit its next progress report to the FATF in May.

BSP Governor Felipe M. Medalla earlier said officials are now hoping that the Philippines will be removed from the FATF’s gray list by January 2024, after missing an earlier deadline.

The Philippines and 22 other countries remained in the FATF’s gray list, while Cambodia and Morocco were removed.

Meanwhile, North Korea, Iran, and Myanmar were countries in the FATF’s black list. — KBT

Mitsubishi Motors targets to expand market share

By Revin Mikhael D. Ochave, Reporter

MITSUBISHI Motors Philippines Corp. (MMPC) is eyeing a higher market share this year as the car manufacturer is banking on increased demand for its vehicles.

Jack S. Ramirez, Jr., MMPC first vice-president for sales and marketing, said the company is aiming for a 16% market share by the end of its fiscal year in March, and an 18% share by 2025.

“Our fiscal year is from April to March [of the following year]. We’re pushing hard in the remaining month to attain this. By 2025, we are eyeing 18% market share for MMPC,” he said in a chance interview on the sidelines of the company’s 60th anniversary at its Sta. Rosa, Laguna plant on Friday last week.

According to Mr. Ramirez, MMPC is aiming to sell 59,800 units in 2023, relying on its Xpander multipurpose vehicle and Mirage G4 subcompact sedan to boost sales and reach its target market share.

The Xpander accounts for 36% of overall sales while the G4 contributes 31%, he said.

“We’re looking at a total of 58,700 units sold but we are pushing it to 59,800 units sold because we see an increase in the demand. The market conditions are good. In terms of growth, I think it is 22% growth,” Mr. Ramirez said.

He said that there is still pent-up demand from consumers who opted not to purchase vehicles at the height of the coronavirus disease 2019 (COVID-19) pandemic.

“There are also other business sectors. We have seen a lot of increase in demand for business use. So, we’re also pushing the pickups and L300. These can be for cargo or passenger use,” Mr. Ramirez said.

Based on data from the Chamber of Automotive Manufacturers of the Philippines, Inc., MMPC had the second-highest sales among car manufacturers last year with a 15.09% market share equivalent to 53,211 units sold.

Meanwhile, Mr. Ramirez said that MMPC is urging the government to delay the proposed lifting of the excise tax exemption on pickup trucks if it pushes through.

He disclosed that MMPC’s Strada pickup model contributes roughly 15% to the company’s total sales.

“If the government can consider postponing the implementation of the excise tax on pickups until next year, that would be best for the automotive industry. We want to continue the good sales of the pickups in our market,” Mr. Ramirez said.

“The delay is to give time for the public to prepare,” he added.

Mr. Ramirez said that there would be a price increase of over P200,000 for pickup trucks if the government opts to impose excise taxes.

“Definitely, it would affect our pickup segment. The segment might suffer since it will be applied to all brands,” Mr. Ramirez said.

In November last year, the House of Representatives approved on third and final reading House Bill 4339 or the fourth package of the Comprehensive Tax Reform Package program, which calls for the removal of the excise tax exemption enjoyed by double cab pickup trucks.

Currently, double cab pickup trucks are exempted from excise tax under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law in a bid to help small business owners and professionals.

The Finance department previously said that P52.6 billion in revenues will be generated until 2026 if pickup trucks are charged with an excise tax.

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