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Inside the hangar at the center of the $1-billion Airbus-Qatar jet dispute

UNSPLASH

DOHA — Two high-tech Airbus A350 jets sit idle with their windows taped and engines covered in a floodlit hangar in the Gulf, hobbled by an international legal dispute between European industrial giant Airbus AIR.PA and Qatar’s national carrier.

From a distance, the planes might seem like any other long-haul jetliners crowding the busy Doha hub. But a rare on-site visit by Reuters journalists showed what appeared to be evidence of damage to the surface of wingtips, tail and hull.

The two planes, worth around $300 million combined according to analysts, are among 23 grounded A350s at the center of a $1-billion London court battle over whether the damage represents a potential safety risk, something Airbus strongly denies.

The planes were grounded by Qatar’s regulator after premature paint erosion exposed damage to a metallic sub-layer that provides protection to the fuselage from lightning strikes.

Other airlines continue to fly the A350 after European regulators declared the aircraft safe.

Reuters journalists were granted rare first-hand access after requesting the visit on the sidelines of an airline industry meeting in the Qatari capital, Doha, this week.

Sporadic surface flaws on the A350s viewed by Reuters included an elongated stretch of blistered and cracked or missing paint along the roof or crown of the jets.

In some areas, the protective lightning mesh that sits between the hull and the paint appeared exposed and corroded.

In other parts it appeared to be missing, leaving areas of the composite hull of the aircraft exposed to the environments.

The paint on the tail of one of the A350s emblazoned with Qatar Airways’ maroon Arabian Oryx emblem was pockmarked by cracked and missing paint that exposed the layer beneath.

Airbus and Qatar Airways had no immediate comment on Reuters’ findings.

EROSION
Airbus acknowledges quality flaws to the A350s, but denies they pose any safety risk because of the amount of backup systems and tolerance built into design.

Qatar Airways has argued this can’t be known until further analysis, and is refusing to take more of the planes.

Airbus has argued that some paint erosion is a feature of the carbon-composite technology used to build all modern long-haul jets — a necessary trade-off for weight savings.

It says the cracks are caused by the way paint, anti-lightning material called ECF and the composite structure interact. The tail does not all contain the ECF foil, prompting a technical debate over whether the damage there is caused by the same problem.

Amid hundreds of pages of conflicting technical court filings presented by both sides, Reuters has not been able to verify independently the cause of the damage.

Qatar Airways’ Chief Executive Akbar Al Baker and Airbus Chief Executive Guillaume Faury had the opportunity to mingle during the three-day industry gathering in Qatar this week.

Asked whether the relationship had improved after the event, which included the two men seated next to each other over dinner, Al Baker suggested the two sides remain far apart.

“On a personal level I am friends with everyone but when it comes to an issue with my company, then it’s a different story. If things were settled, we would not be still waiting for a trial to happen next year,” he told a news conference.

Faury said this week he was in discussion with the airline and reported “progress in the sense that we are communicating”.

One of the airline industry’s most senior officials voiced concerns after the Doha meeting that the dispute could have a toxic effect on contractual ties across the industry.

“It would be much better if we were dealing with friends that than dealing in the courts,” Willie Walsh, director general of the International Air Transport Association, told reporters. — Reuters

Biden expected to call on Wednesday for suspending the federal gas tax, source says

REUTERS

 – US President Joe Biden is expected on Wednesday to call for temporarily suspending the 18.4-cents a gallon federal tax on gasoline, a source briefed on the plan told Reuters on Tuesday.

Mr. Biden said Monday he was considering whether to call for a pause in the tax, as the United States struggles to tackle soaring gasoline prices and inflation. A gas tax holiday faces significant opposition in Congress, including among many Democrats. The plan was reported earlier by Punchbowl News.

The White House, which said Mr. Biden will deliver remarks on gas prices at 2 p.m. EDT Wednesday, declined to comment.

High gasoline prices pose a significant political problem for Biden and congressional Democrats as they struggle to maintain their slim control of Congress in November’s midterm elections.

Michigan Governor Gretchen Whitmer, a Democrat, on Tuesday called on Biden to support suspending the gas tax saying “getting this done will offer real, immediate relief without compromising the federal government’s ability to make infrastructure investments.”

House Transportation and Infrastructure Committee chair Peter DeFazio, a Democrat, said “suspending the federal gas tax will not provide meaningful relief at the pump for American families, but it will blow a multi-billion-dollar hole in the highway trust fund.”

Republicans are widely opposed to the gas tax suspension. In February, Senate Republican Leader Mitch McConnell ridiculed a suspension backed by some Democrats, saying “they’ve spent an entire year waging a holy war on affordable American energy.”

Mr. Biden has pulled on numerous levers to try to lower prices, including a record release of barrels from U.S. strategic reserves, waivers on rules for producing summer gasoline, and leaning on major OPEC countries to boost output.

Fuel prices have been surging around the world due to a combination of rebounding demand, sanctions on oil producer Russia after its invasion of Ukraine and a squeeze on refining capacity. Russia calls its actions in Ukraine a “special operation”.

On June 11, the price of U.S. gasoline averaged more than $5 a gallon for the first time, data from AAA showed. It was $4.97 on Tuesday.

Adjusting for inflation, the U.S. gasoline average was still below June 2008 highs of around $5.41 a gallon, according to U.S. Energy Department figures. – Reuters

BusinessWorld Insights: Fintech Space as the Thriving Ground for Upgrading Financial Services

Amid the pandemic-driven acceleration of digital transactions, several players have entered the Philippine fintech space to offer various financial services. Among these companies, those in the lending, payment, and e-wallet sectors currently take the top shares in the fintech space, as noted in the latest Philippines Fintech Report of Fintech News Philippines and FinTech Alliance.PH. These sectors, along with other areas like cryptocurrency, are set to shape not only the country’s fintech industry but also the overall delivery of financial services to Filipinos.

This June 22 (Wednesday) at 11 a.m., join the first session of the two-part BusinessWorld Insights series themed “Fintech PH: Making Financial Services More Accessible and Inclusive” LIVE and FREE together with high-caliber speakers and experts in an intelligent online discussion about today’s most relevant issues to help the country accelerate the push for a more financially inclusive and resilient economy through our thriving fintech industry.

This session of #BUSINESSWORLDINSIGHTS is sponsored by Maya and supported by the British Chamber of Commerce Philippines, European Chamber of Commerce of the Philippines, Makati Business Club, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, and The Philippine STAR.

Taiwan scrambles jets to warn away Chinese planes in its air defense zone

XANDREASWORK-UNSPLASH

TAIPEI — Taiwan scrambled jets on Tuesday to warn away 29 Chinese aircraft in its air defense zone, including bombers that flew south of the island and into the Pacific, in the latest uptick in tensions and largest incursion since late May.

Taiwan, which China claims as its own territory, has complained in recent years of repeated missions by the Chinese air force near the democratically governed island, often in the southwestern part of its air defense identification zone, or ADIZ, close to the Taiwan-controlled Pratas Islands.

Taiwan calls China’s repeated nearby military activities “grey zone” warfare, designed to both wear out Taiwanese forces by making them repeatedly scramble, and also to test Taiwanese responses.

The latest Chinese mission included 17 fighters and six H-6 bombers, as well as electronic warfare, early warning, antisubmarine and aerial refuelling aircraft, Taiwan’s defense ministry said.

Some of the aircraft flew northeast of the Pratas, according to a map the ministry provided.

However, the bombers, accompanied by an electronic warfare and an intelligence gathering aircraft, flew into the Bashi Channel, which separates Taiwan from the Philippines and into the Pacific, before turning back to China on the same route.

Taiwan sent combat aircraft to warn away the Chinese aircraft, while missile systems monitored them, the ministry said, using standard wording for its response.

It was the largest incursion since Taiwan reported 30 Chinese aircraft in its ADIZ on May 30. The largest to date this year occurred on Jan. 23, involving 39 aircraft.

There was no immediate comment from China, which has in the past said that such moves were drills aimed at protecting the country’s sovereignty.

Taiwan Foreign Minister Joseph Wu said on Wednesday the large-scale exercise by the Chinese military showed China’s military threat is “more serious than ever”.

“But there’s no way #Taiwan will cave in & surrender its sovereignty & democracy to the big bully. Not a chance!,” Wu said on Twitter.

A U.S. State Department spokesperson told Reuters in an email that Beijing should “cease its military, diplomatic, and economic pressure and intimidation against Taiwan”.

China launched its third aircraft carrier on Friday, the Fujian, named after the province opposite Taiwan.

China’s military said last month it had conducted an exercise around Taiwan as a “solemn warning” against its “collusion” with the United States.

That came after U.S. President Joe Biden angered China by appearing to signal a change in a U.S. policy of “strategic ambiguity” on Taiwan by saying the United States would get involved militarily if China were to attack the island.

China has stepped up pressure on Taiwan to accept its sovereignty claims. The Taipei government says it wants peace but will defend itself if attacked.

No shots have been fired and the Chinese aircraft have not been flying in Taiwan’s air space, but in its ADIZ, a broader area Taiwan monitors and patrols that acts to give it more time to respond to any threats. — Reuters

When queens come together, awra wins

Awra Queens at Cosmetique Asia Plant: The Binibining Pilipinas Candidates with key people behind Silka, (From left to right) Senior Brand Specialist Jioie Anne Ragel, VP Finance & Purchasing Jane Co, Chief Finance Officer Juanito Co, Senior Brand Manager Eunice Apple De Belen, and Senior Brand Associate Alexis Marizz Gloria.

That one beautiful Awra Day: Binibining Pilipinas at the Silka Cosmetique Asia Corp. plant

It happened because of their kindred purpose.

For decades, Binibining Pilipinas Charities, Inc. has been at the forefront of discovering and nurturing accomplished, beautiful Filipinas for the national and world stage of beauty pageants. Cosmetique Asia Corp., makers of SILKA, the country’s no. 1 beauty soap has been empowering countless women and their families for more than twenty years, instilling in them their naturally fair and beautiful skin, giving them the confidence to step out into the world, with their very own AWRA enabling them to shine through.

Welcoming of the Queens: Engr. Sherwin Vaflor, the plant’s Manufacturing Director, welcomes the Awra Queens to the Cosmetique Asia Plant.

A partnership between the two is now in its second year and it can only be described as a perfect match. In fact, another milestone was reached in their shared history, as on May 24, 2022, on a bright Tuesday morning, Cosmetique Asia Corp. and SILKA hosted the Binibining Pilipinas candidates in a tour of its world-class manufacturing plant. Dubbed as the “AWRA DAY WITH THE QUEENS,” 39 beautiful candidates discovered how the no. 1 beauty soap in the country, SILKA, is produced, packed and eventually finds its way to homes all over the country, even as they indulged in some fun activities that brought out their competitive streaks.

The 39 Queens arrived at the Plaridel, Bulacan plant of Cosmetique Asia Corp. early in the morning. They were promptly awed by the plant fully equipped with state-of-the-art equipment and peopled by executives and personnel. They basked in the warm welcome of employees in the soap and lotion production lines who were only too happy to share their day with the Queens.

Inspirational talk from Silka: Senior Brand Manager, Eunice Apple De Belen, talks about the value of the Binibining Pilipinas and Silka partnership.

Speeches from key people behind SILKA were ahead on the agenda. First, Senior Brand Manager Eunice Apple De Belen articulated that the partnership of the brand with Binibining Pilipinas is all about providing young women the reinforcement to inspire, and to impact society. A great follow-up was Engr. Sherwin Vaflor, the plant’s Manufacturing Director, who reiterated that it is but proper that the 39 beauties from around the Philippines, get up close and personal with the plant where the #1 beauty soap of the county is being manufactured. The pillars of Cosmetique Asia Corp. themselves graced the event, Ms. Juanita Co, Chief Finance Officer; and Ms. Jane Co, VP for Finance and Purchasing, who even gamely joined all the queens for a photo op.

With a fully packed schedule, the plant visit had the 39 Queens dressed out of their high heels and into lab coats, hair nets, and shoe covers to prepare them to experience the SILKA manufacturing process. Volunteer Queens were able to pack, cap, and box SILKA lotions and soaps. Helpful plant employees mentored them, showing them the science and the art of how the packaging is completed, while they shared production know-how on the different machines in the packaging line.

Touring the Awra Queens Around a World-Class Facility: The Awra Queens experience the Silka manufacturing process with the guidance of CAC’s plant personnel.

All the Awra Queens were immersed with the manufacturing process, but they had time to soak up some fun, too! As they changed back into their Awra clothes, they took on the first game — “Ready, Set, Awra” — and the one who imitated the Awra poses best, won. With everyone prepped up for the second game, “SILKA Stack-O,” towers of SILKA soap boxes, lotions, and PR kits rose before the eyes of the audience, clinching for their builders the winning titles.

All the Queens who participated received 1 bayong filled with SILKA products along with bragging rights of having won over their fellow candidates.

Everybody went home a winner that day: to nicely cap a day of beauty and Awra, each queen was gifted a loot bag of SILKA products, packed in 1 PR Kit and 1 Eco Bag filled to the brim. Top of the list of goodies is of course, the no. 1 beauty soap in the Philippines, Silka Soap with whitening efficacy and VitaRich actives, together with the ever-essential Silka Body Lotion with papaya enzyme, Nutriblend complex, Vita-Absorb technology and SPF6. To complete their Awra beauty regimens, the Queens’ loot bags also came with the more high-end, first-class Silka Premium Whitening Lotion with SPF30 plus UVB & UVA that whitens as early as 7 days! The queens gushed over the new Silka Foaming Wash that will leave their skin smooth, bright and clean, as it removes bacteria, oil, makeup, and pollutants. More so, they excitedly discovered more of the best of SILKA with the super-specialized Silka Facial Cleanser — with variants Papaya for classic whitening, Green Papaya for intense whitening, Avocado for moisturizing, Calamansi for energizing, and Clear for pore minimizing.

The AWRA queens are now closer to their dreams. As every day is a new day, they were sent off with all the beauty and confidence that can be theirs with SILKA.

As the official skincare partner of Binibining Pilipinas, come coronation night, one deserving candidate will be awarded the title Binibining Silka 2022 and will become the next face of the Silka brand! One who embodies and exudes the Silka brand of beauty, a true queen inside and out, the one who inspires and radiates “Bagong Araw, Bagong Awra” will be crowned Binibining Silka 2022. She will receive not only the title and recognition, but also P75,000 in cash and P25,000 worth of Silka products!

Coronation night is fast approaching and that will be the day: Bagong Araw, Bagong Awra for the Queens of Binibining Pilipinas and SILKA!

#BagongArawBagongAwra #SilkaxBbPilipinas2022 #AwraQueen

You can find out more about Silka using the following links:

Facebook: https://www.facebook.com/SilkaSkincare
Instagram: https://www.instagram.com/silkaskincare/
Tiktok: silkaskincare https://www.tiktok.com/@silkaskincare
Shopee: https://shopee.ph/cosmetiqueasiacorp
Lazada: https://www.lazada.com.ph/shop/silka-skincare-store
Zalora: https://www.zalora.com.ph/catalog/?q=silka

 


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Sun Life upskills advisors to serve business owner clients

Sun Life Chief Client Experience & Marketing Officer Carla Gonzalez-Chong

Sun Life of Canada (Philippines), Inc. is empowering its advisors to serve the unique needs of Filipino business owners by beefing up its Family Business and Wealth Advisory Program (FBWA).

A pioneering initiative in the life insurance industry, the program was launched in 2019 and had Wong + Bernstein Family Advisory Group Family Business Coach and Strategic Adviser Prof. Enrique Soriano as trainer.

The program shifted to virtual classes as the lockdowns began and recently held the graduation for its third batch of advisors.

“Sun Life is committed to serving the unique needs of Filipinos entrepreneurs, especially at this crucial time as they strive to rise above the pandemic and secure their businesses for the future,” Sun Life Chief Client Experience and Marketing Officer Carla Gonzalez-Chong said. “FBWA stands for our determination to be their partner for life through every stage of their business.”

Sun Life is set to roll out FBWA to more of its advisors to enable the company to reach as many business owners as possible.

Complementing FBWA is Sun Future Proof, a program designed with a business owner’s journey in mind, bringing together financial education and financial solutions to help them achieve both business and personal goals.

Meanwhile, Sun Life also offers the Business Owner Insurance Packages, which are product bundles designed to address the financial needs of entrepreneurs both for their business and personal goals. The options include BIP Emergency Fund + Lifetime Protection, BIP Health Protection, BIP Education Fund, BIP Key Employee Protection, BIP Partner/Shareholder Protection, BIP Retirement Fund, and BIP Estate Protection.

“Filipino entrepreneurs are the lifeblood of our economy. With the right financial products and sound financial advice, they can achieve more and help our country recover from the pandemic,” Gonzalez-Chong said. “Sun Life is here to help them make it happen.”

Those interested to know more about the Sun Future Proof program are encouraged to talk to their Sun Life advisor or connect with one via http://www.sunlife.co/TalkToAnAdvisor.

 


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Isla Lipana & Co./PwC Philippines celebrates 100 years of trusted service

The partners and staff during an annual New Year Cocktails event at the Makati main office.

Isla Lipana & Co., the Philippine member firm of the PwC network, celebrates its 100th year today, marking a century of delivering quality in assurance, advisory and tax services in the Philippines.

On 22 June 1922, Scottish accountants Charles P. White and Percival S. Page established White, Page & Co., one of the earliest accounting firms in the country. The firm had undergone several name changes since Flipinos took the helm at the end of the second World War. From 1964, Joaquin Cunanan & Co. became a brand associated with quality and integrity for over 40 years. The legacy remains with Isla Lipana & Co., the name we adopted in 2005.

Former Chairman and Senior Partner Joaquin Cunanan (foreground) with partners when the firm’s name was Joaquin Cunanan & Co.

The firm became the first local accounting firm to have international affiliation when it was designated as the official Price Waterhouse correspondent in the Philippines in 1958. On 1 July 1998, the merger of two venerable firms — Price Waterhouse and Coopers & Lybrand — created PwC.

Chairman and Senior Partner Roderick Danao reflects on the firm’s longevity in the business. “Even through periods of economic disruptions and political upheavals, the firm has grown steadily at its own pace. We chose to hold onto timeless values from our predecessors, and translated into the current core values of PwC: acting with integrity, making a difference, care, working together and reimagining the possible. These carried us through difficult decisions and exciting wins, as we strive to fulfill our purpose in PwC: to build trust in society and solve important problems.”

Chairman and Senior Partner Roderick Danao (left) and Chairman Emeritus & ESG Leader Alexander Cabrera.

Eyeing the firm’s next 100 years, Chairman Emeritus and ESG Leader Alexander Cabrera shares: “I can’t help but be proud of how we as a firm have evolved. For us, integrity always comes first, with innovation a close second — it’s where our now 45 partners and 2,000 professional staff invest much of their time in. Along with our assurance, tax and business advisory services, we now bring new services for present-day urgencies: digital technology and IT infrastructure, data and analytics, forensics, IPO readiness, M&A advisory, value creation, and ESG strategy and reporting.”

Special logo to commemorate the firm’s centennial.

Isla Lipana & Co. serves its clients and stakeholders through its main office in Makati City, and offices in Cebu, Iloilo and Davao, and affiliate member firms at Pasig City and Brunei Darussalam.

 


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Golden MV Holdings, Inc. to hold annual meeting of stockholders on July 15

 


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May BoP deficit widens to $1.6 billion

BW FILE PHOTO

By Keisha B. Ta-asan

THE PHILIPPINES posted its largest monthly balance of payments (BoP) deficit in 15 months in May, mainly due to the National Government’s foreign debt payments, the central bank said on Tuesday.

Data from the Bangko Sentral ng Pilipinas (BSP) showed May’s BoP deficit stood at $1.61 billion, widening from the $1.4-billion gap a year ago and the $415-million gap in April.

This was the widest deficit since the $2.019 billion in February 2021.

Philippines: Balance of payments position“The BoP deficit in May 2022 reflected outflows mainly from the National Government’s (NG) foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures,” the central bank said in a statement.

The BoP gives a glimpse of the country’s transactions with the rest of the world at a given time. A deficit shows more funds exited the country than what went in, while a surplus means more money entered the economy.

In the five months ending in May, the BoP gap narrowed to $1.53 billion, from $1.63-billion deficit in the same period in 2021.

“Based on preliminary data, this cumulative BoP deficit reflected the trade in goods deficit, which was partly offset by inflows such as from personal remittances, net foreign borrowings by the NG, foreign direct and portfolio investments,” the central bank said.

Latest data from the Philippine Statistics Authority showed trade-in-goods deficit stood at $4.773 billion in April, wider than the $3.098-billion shortfall a year ago.

The BoP deficit reflected the large trade gap as net imports have been bloated by elevated prices of imported oil and other commodities, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At its end-May position, the BoP reflected a final gross international reserve (GIR) level of $105.65 billion, 1.6% lower than the $105.4 billion as of end-April.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 8.7 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

The GIR can also cover up to 7.4 times the country’s short-term external debt based on original maturity and 4.7 times based on residual maturity.

The BSP said last week it expects the country to post a wider BoP deficit this year due to a weaker global growth outlook that could affect trade and capital flows.

The country’s BoP is now expected to yield a deficit of $6.3 billion this year or equivalent to -1.5% of gross domestic product (GDP), higher than the previous projection of a $4.3-billion gap (-1% of GDP) announced in March.

The BSP said it sees a bigger BoP gap this year amid a projected widening of the current account deficit to $19.1 billion (-4.6% of GDP) from the earlier forecast of $16.3 billion (-3.8% of GDP).

The BSP projected the country’s GIR to hit $105 billion by end-2022 and $106 billion by end-2023, lower than the March projections of $108 billion and $109 billion, respectively.

BSP unlikely to OK more digital banks in near term

BW FILE PHOTO

IT MAY TAKE two to three years for the Bangko Sentral ng Pilipinas (BSP) to accept new applications for digital banks as it still needs to boost its capacity to regulate these kinds of lenders, according to its incoming chief.

“We should have at least enough examiners, enough experts to regulate and protect the public. That’s the reason… We have to be very, very careful,” current Monetary Board member and incoming BSP Governor Felipe M. Medalla told BusinessWorld in a roundtable discussion with editors on June 14.

The central bank capped the number of digital banking licenses to six last year, after the remaining applicants failed to meet the requirements.

Mr. Medalla said the BSP should further develop its capacity to regulate digital banks before allowing rapid expansion.

“Our ability to regulate must also grow,” he said. “We don’t hate competition but we better have the capacity to regulate, and not be outstripped by growth of what we regulate.”

Asked how long it would take to achieve this expanded capacity, Mr. Medalla said: “Maybe two or three years. Then our capacity will be equal to the tasks that we can clearly say ‘anyone who wants to come in and meets the capital requirements and the technical requirements’ (can come in).”

The Philippines’ current cap on licenses is comparable to those of its neighboring countries such as Singapore, which has granted four licenses and Malaysia, which approved five.

In December 2020, the BSP released the guidelines for establishing digital banks in the country, distinguishing them from traditional banks.

Under BSP Circular No. 1105, a digital bank is defined as an institution that offers financial products and services through digital and electronic channels without physical branches.

A minimum capital of P1 billion is required to establish a digital bank in the Philippines.

Just as with traditional banks, digital banks are also allowed to grant loans, accept savings, time deposits and foreign currency deposits, invest in securities, issue e-money products and credit cards, sell micro-insurance products, and buy and sell foreign exchange currencies, among others.

The six digital banks that secured licenses to operate in the country are Tonik Digital Bank, Inc.; GOtyme of the Gokongwei Group and Singapore-based Tyme; Maya Bank of Voyager Innovations, Inc.; Overseas Filipino Bank (OFBank),  subsidiary of Land Bank of the Philippines; UNObank of DigibankASIA Pte. Ltd.; and UnionDigital of UnionBank of the Philippines.

These all-online banks are expected to help the BSP reach its goal to bring 70% of Filipino adults into the banked population and 50% of payments done online by 2023. — Keisha B. Ta-asan

Philippine tourism industry seen to reach pre-pandemic levels by 2024 

Tourists flock to surfing spots in Baler, Aurora during summer. — PHILIPPINE STAR/ MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

THE DOMESTIC tourism sector is expected to reach pre-pandemic levels by 2024, although near-term challenges such as high inflation may affect demand, according to industry stakeholders. 

“We consulted our members, we also talked to some experts, reports coming from United Nations World Tourism Organization (UNWTO) and many of them are really looking at 2024 as the year that we can go back to pre-pandemic levels. So, the next year and a half will be crucial,” Philippine Hotel Owners Association (PHOA) Executive Director Benito C. Bengzon, Jr. said in an interview with BusinessWorld Live on One News television channel on Monday.

The coronavirus disease 2019 (COVID-19) pandemic brought travel and tourism to a standstill around the world. The industry is slowly recovering as travel restrictions ease and COVID-19 cases drop.

Mr. Bengzon said he is optimistic that the tourism and hotel industry is heading towards recovery, after travel demand improves during the summer months.

“For the hotel industry, we have been registering very good occupancy rate in the last couple of months. This has been driven by the strong demand among Filipinos who are out on summer vacation,” Mr. Bengzon said.   

Preliminary data from the Philippine Statistics Authority (PSA) recently showed that the share of the local tourism industry to the country’s gross domestic product (GDP) inched up to 5.2% in 2021 from 5.1% in 2020. However, this is still significantly lower than the 12.7% seen in 2019.

Tourism Congress of the Philippines (TCP) President Jose C. Clemente III said that most countries and industry experts are aiming to see travel and tourism to reach pre-pandemic levels by 2024.

“Of course, that will depend on some factors such as the war in the Ukraine and COVID-19 or new viruses that may come to light. If there is a resolution to Ukraine sooner than later and no new viruses, then travel and tourism should be okay,” Mr. Clemente said in a Viber message. 

John Paolo R. Rivera, associate director at the Asian Institute of Management (AIM) – Dr. Andrew L. Tan Center for Tourism, said in a Viber message that the projection of attaining pre-pandemic levels by 2024 is “reasonable” but may have already factored in disruptions from the pandemic, global economy and other external factors.

“However, it is also possible to reach pre-pandemic levels as early as 2023 if no disruption will happen such as a surge, lockdown, war, political instability, and security threat. While it is not likely, we are living in a volatile, uncertain, complex and ambiguous world. Anything can happen,” Mr. Rivera said.

However, the spike in fuel and food prices may pose a challenge to the industry’s recovery.

“Any increase in oil will invariably affect prices of commodities and services across different sectors… This (oil hike) is a challenge but we don’t really see it as a dampener,” Mr. Bengzon said.

Mr. Clemente said that the industry has little control when it comes to inflation, which is expected to continue accelerating in the next few months.

“Coping with challenges such as inflation and oil price hikes, unfortunately, are external factors that the travel and tourism industry has little control over. The most we can do is to do our best to keep prices down as best we can but still continue to make acceptable margins,” Mr. Clemente said.   

“We have to remember that tourism is also coming out from a two-year hibernation and we are just starting to get back on our feet. We also need to make back what we lost during the peak of the pandemic,” he added.   

Mr. Bengzon said the local tourism industry needs to achieve an “optimum balance” to achieve recovery.

“We know that there’s still some restrictions on international travel. For domestic (travel), for us to really sustain this growth momentum, it’s really important that we’re able to contain COVID-19, to make sure that Filipinos who travel around the country observe health protocols,” the PHOA executive director said, noting that tourists from major markets such as South Korea, Japan and China are crucial to recovery.

According to AIM’s Mr. Rivera, the tourism industry’s recovery can be supported by encouraging more Filipinos to get their COVID-19 vaccines and booster shots.   

“Everyone should get vaccinated and boosted, continue complying with minimum health standards so we can make sure that we are towards no alert level and avoid an increase in alert level so mobility continues to progress,” Mr. Rivera said.

Duterte designates Makati building as special ecozone

AYALALANDOFFICES.COM.PH

PRESIDENT Rodrigo R. Duterte has designated Ayala Land, Inc.’s (ALI) office tower in Makati City as a special economic zone.

Mr. Duterte signed Proclamation No. 1392 on June 13, which declared Circuit Corporate Center 2 as a special economic zone-information technology center. A copy of the proclamation was made public on Tuesday.

The office building is located along 3 Theater Drive in Circuit, a 21-hectare mixed-use township being developed by ALI in Barangay Carmona.

According to the proclamation, Circuit Corporate Center 2 will have a gross floor area of 46,817 square meters (sq.m.), more or less.

On the AyalaLand Offices website, Circuit Corporate Center 2 is described as a 17-storey office tower.

However, it was unclear whether the proclamation meant the existing ban on new ecozones in the National Capital Region (NCR) has been lifted.

Sought for comment, Presidential Communications Operations Office (PCOO) Secretary Martin M. Andanar said he had no information on the matter.

In June 2019, Mr. Duterte signed Administrative Order No. 18 that imposed a moratorium on new ecozones in Metro Manila as part of efforts to boost development and investments in the countryside. Buildings designated as ecozones typically receive tax breaks and incentives.

The Philippine Economic Zone Authority (PEZA) has sought the lifting of the moratorium, but was rejected by the Fiscal Incentives Review Board (FIRB).

PEZA Director-General Charito B. Plaza said the application for the building’s designation as a special economic zone may have been submitted before the moratorium was implemented in 2019.

“Maybe this application was before the moratorium in the National Capital Region,” Ms. Plaza said in a Viber message.

David T. Leechiu, Leechiu Property Consultants, Inc. chief executive officer, said in a Viber message that it is vital for the ecozone ban in Metro Manila to be lifted since it means less risk for property developers. 

“(There is) higher chance of (the buildings) getting leased out, therefore higher chance of them reinvesting capital and generating economic activity. Plus, by building more, the real estate tax base and business tax base becomes larger,” Mr. Leechiu said.

He noted many business process outsourcing (BPO) firms still want to expand in the Philippines, and Metro Manila has the best infrastructure and largest skilled labor market.

“Companies grow in Manila first as the risk-free option and only afterwards will they be able to get board approval to expand outside of Manila. They will choose larger labor markets first such as Cebu for Visayas and Clark for Central Luzon, then grow from there. This is the better approach,” Mr. Leechiu added.

Separately, Mr. Duterte also signed Proclamation No. 1394 which designated several parcels of land in Barangay Santiago, Sto. Tomas City, Batangas to be included in the existing Light Industry & Science Park III-special ecozone. — Revin Mikhael D. Ochave