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Brian Poe-Llamanzares named Rising Tigers Magazine co-owner

(From left to right) Andrew Troy Nicolas CEO of Rising Tigers Magazine, Brian Poe Llamanzares CEO of Oracle Media Group, and Andria Terese Nicolas, Vice President of Tag Media Group

Brian Poe-Llamanzares is now the co-owner of one of the country’s leading business magazines, Rising Tigers Magazine.

The most-distributed local magazine right now in National Bookstore caught the attention of this serial entrepreneur.

Mr. Llamanzares’ Oracles Media Group will now be adding Rising Tiger Magazine to its portfolio, which already includes other media entities like The Manila Journal, Negosyante News, Rapid News PH, and Alike Magazine.

According to Mr. Llamanzares, “the team is very confident that it will top the market with its innovations and quality of content. The magazine has already perfected its marketing strategy even-though it’s still new and will celebrate its first anniversary this March 2023. A lot of big names in the business industry have already confirmed and committed their support. While I’m looking forward to helping the company grow.”

Focused on inspiring readers with the profiles of the emerging leaders and captains from different industries, the magazine, which was launched during pandemic, opened up to investors to provide more reach and growth for the company.

“We’re really grateful to have Brian as part of our team. I admire his grit and determination, and with him, I am very sure we will be able to reach our goals this year. We are looking forward to all of our future projects together. Rising Tigers Magazine will definitely reach new heights,” said Andria Terese Nicolas, vice-president of Tag Media Group.

The magazine is all about motivating the readers. It also aims to help them grow their businesses. Majority of content is all about leadership, while 20% is lifestyle written by socialite Becky Garcia. Entrepreneur Andrew Troy Nicolas publishes the magazine quarterly under Tag Media Group, with planned nine events under his company for this year, which include expos and forums.

“Brian is a valuable asset in the company, and with him we’re very confident that the objective will be accomplished fast. He is very aggressive and determined to help out,” Robert Laurel Yupangco, Rising Tigers Magazine adviser, added.

 


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Philippine companies seen raising up to $8.25B via bonds in 2023

BW FILE PHOTO

MANILA — Philippine companies are expected to generate up to P450 billion ($8.25 billion) through bond issuance this year to fund expansion and repay debt, the country’s bond market operator said on Monday.

“Domestic investment liquidity is alive and well,” Antonino Nakpil, president and chief executive officer of the Philippine Dealing & Exchange Corp (PDEX), told reporters.

PDEX sees companies raising P300 to P450 billion via bonds this year, he said, adding that big corporations and banks would be active in the fixed income market.

Companies tapped the bond market to raise a record P508 billion ($9.3 billion) last year, more than double the P213 billion in 2021, PDEX data showed.

Despite an expected slowdown in the economy this year because of inflation and higher interest rates, Philippine companies are selectively pursuing expansion in sectors that will benefit from the country’s economic reopening.

As of the end of 2022, PDEX had P1.38 trillion in tradable corporate debt instruments issued by 53 companies comprised of 196 types of securities. — Reuters

Israel drops plastic tax despite environmental gains

WIKIMEDIA COMMONS

JERUSALEM — Israel’s new hard-right government said on Sunday it had dropped a year-old tax that had significantly reduced the consumption of single-use plastic plates and utensils.

The decision, in apparent defiance of global efforts to reduce the amount of plastic waste that is polluting oceans, came after opposition to the levy from religious parties that said it unfairly targeted their communities.

Finance Minister Bezalel Smotrich said the tax was canceled and urged customers to check that stores were lowering prices of plastic wares. His spokesman said the tax was repealed for the coming year to help lower consumer prices amid high inflation.

Israel’s environmental protection minister said she had opposed ending the tax and hoped an alternative solution could be found. The ministry reported that sales of the disposable plastic items were roughly 40% lower now than when the tax came into effect in November 2021.

There was opposition to the plastic tax among ultra-Orthodox Jewish parties that are strongly represented along with the far right in the new governing coalition led by Benjamin Netanyahu.

A parliamentary report from November 2021 found that ultra-Orthodox families used plasticware three times more often than the rest of the population because they often have large families and low incomes, with many not owning dishwashers. — Reuters

Boeing’s 747, the original jumbo jet, prepares for final send-off

WIKIMEDIA COMMONS

SEATTLE/PARIS — Boeing’s 747, the original and arguably most aesthetic “Jumbo Jet,” revolutionized air travel only to see its more than five-decade reign as “Queen of the Skies” ended by more efficient twinjet planes.

The last commercial Boeing jumbo will be delivered to Atlas Air in the surviving freighter version on Tuesday, 53 years after the 747’s instantly recognizable humped silhouette grabbed global attention as a Pan Am passenger jet.

“On the ground it’s stately, it’s imposing,” said Bruce Dickinson, the lead singer of Iron Maiden who piloted a specially liveried 747 nicknamed “Ed Force One” during the British heavy metal band’s tour in 2016.

“And in the air it’s surprisingly agile. For this massive airplane, you can really chuck it around if you have to.”

Designed in the late 1960s to meet demand for mass travel, the world’s first twin-aisle wide body jetliner’s nose and upper deck became the world’s most luxurious club above the clouds.

But it was in the seemingly endless rows at the back of the new jumbo that the 747 transformed travel.

“This was THE airplane that introduced flying for the middle class in the US,” said Air France-KLM CEO Ben Smith.

“Prior to the 747 your average family couldn’t fly from the US to Europe affordably,” Mr. Smith told Reuters.

The jumbo also made its mark on global affairs, symbolizing war and peace, from America’s “Doomsday Plane” nuclear command post to papal visits on chartered 747s nicknamed Shepherd One.

Now, two previously delivered 747s are being fitted to replace US presidential jets known globally as Air Force One.

As a Pan Am flight attendant, Linda Freier served passengers ranging from Michael Jackson to Mother Teresa.

“It was an incredible diversity of passengers. People who were well dressed and people who had very little and spent everything they had on that ticket,” Ms. Freier said.

TRANSFORMATIONAL

When the first 747 took off from New York on Jan 22, 1970, after a delay due to an engine glitch, it more than doubled plane capacity to 350-400 seats, in turn reshaping airport design.

“It was the aircraft for the people, the one that really delivered the capability to be a mass market,” aviation historian Max Kingsley-Jones said.

“It was transformational across all aspects of the industry,” the senior consultant at Ascend by Cirium added.

Its birth become the stuff of aviation myth.

Pan Am founder Juan Trippe sought to cut costs by increasing the number of seats. On a fishing trip, he challenged Boeing President William Allen to make something dwarfing the 707.

Allen put legendary engineer Joe Sutter in charge. It took only 28 months for Sutter’s team known as “the Incredibles” to develop the 747 before the first flight on Feb. 9, 1969.

Although it eventually became a cash cow, the 747’s initial years were riddled with problems and the $1-billion development costs almost bankrupted Boeing, which believed the future of air travel lay in supersonic jets.

After a slump during the 1970s oil crisis, the plane’s heyday arrived in 1989 when Boeing introduced the 747-400 with new engines and lighter materials, making it a perfect fit to meet growing demand for trans-Pacific flights.

“The 747 is the most beautiful and easy plane to land … It’s just like landing an armchair,” said Mr. Dickinson, who also chairs aviation maintenance firm Caerdav.

AGE OF ECONOMICS

The same swell of innovation that got the 747 off the ground has spelled its end, as advances made it possible for dual-engine jets to replicate its range and capacity at lower cost.

Yet the 777X, set to take the 747’s place at the top of the jet market, will not be ready until at least 2025 after delays.

“In terms of impressive technology, great capacity, great economics … (the 777X) does sadly make the 747 look obsolete,” AeroDynamic Advisory managing director Richard Aboulafia said.

Nevertheless, the latest 747-8 version is set to grace the skies for years, chiefly as a freighter, having outlasted European Airbus’ double-decker A380 passenger jet in production.

This week’s final 747 delivery leaves questions over the future of the mammoth but now under-used Everett widebody production plant outside Seattle, while Boeing is also struggling after the coronavirus disease 2019 (COVID-19) pandemic and a 737 MAX safety crisis.

Chief Executive Dave Calhoun has said Boeing may not design a new airliner for at least a decade.

“It was one of the wonders of the modern industrial age,” said Mr. Aboulafia, “But this isn’t an age of wonders, it’s an age of economics.” — Reuters

[B-SIDE Podcast] Protecting artists and valuing creativity

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Jennifer Lee-Bonto, executive director of Artists’ Welfare Project Inc. (AWPI), speaks to BusinessWorld reporter Beatriz Marie D. Cruz about pursuing your passion while paying attention to the practicalities of life.

AWPI was founded in 2007 as a help desk for artists who, prior to the founding of AWPI, had to pass the hat every time the aches and pains of performing would catch up with them.

TAKEAWAYS

The ‘starving artist’ cliché is dangerous and should be thrown out.

Ms. Bonto called for end of the stereotypical view of freelancer artists suffering for their art.

“We just need to stop the notion that we are ‘Bohemian’, [that] we are ‘starving artists.’ … We have to stop ‘starving’ —  it’s not fashionable,” she said

Insist on a contract.

Contracts protect both sides by defining the scope of work and deliverables as well as terms of compensation.

“If you hire them [artists], don’t think that it’s a hobby for them. You have to value them as professionals,” Ms. Bonto said. “Give them a proper contract and pay them on time.”

Digitization is both blessing and bane.

Technology paved the way for more job opportunities outside the 9–5 office setup but, at the same time, created issues surrounding copyright, intellectual property rights, and more.

“The digital world is part good, but we still need to address some respect and protection issues,” said Ms. Bonto.

Recorded remotely in January 2023. Produced by Joseph Emmanuel L. Garcia and Sam L. Marcelo.

Follow us on Spotify BusinessWorld B-Side

PHL’s economic outlook in review

Economic growth seen to slow in 2023 amid headwinds

The Philippines’ economic growth is expected to continue this 2023, albeit at a slower pace than last year’s performance, given several external headwinds.

The Philippines’ gross domestic product (GDP) expanded by 7.6% in 2022, according to the Philippine Statistics Authority (PSA). While the growth in the fourth quarter slowed to 7.2% from the third quarter’s 7.6%, the full-year GDP growth in 2022 surpassed the 6.5%-7.5% target range of the Development Budget Coordination Committee (DBCC). The full-year growth also surpassed the 7.5% estimate by economists in a BusinessWorld poll, and it is seen as well as the country’s fastest economic growth since 1976.

For 2023, the DBCC projected the GDP growth momentum to slow from last year’s growth rate in the first three quarters, which also exceeded the target range.

“This momentum is expected to slightly decelerate in 2023 and range from 6.0% to 7.0% considering external headwinds such as the slowdown in major advanced economies,” the DBCC said in a statement last December.

The country’s economic team initially forecasted the GDP to grow 6.5%-8% this year.

“Nevertheless, growth is expected to pick up in 2024 to 2028 at 6.5% to 8.0%, as we push for government strategies and interventions of the Philippine Development Plan 2023-2028,” said the DBCC.

Among those strategies and interventions are the modernization of agriculture and agribusiness; revitalization of the industry sector; and reinvigoration of the services sector.

The DBCC consists of the National Economic and Development Authority (NEDA) and Department of Finance (DoF) secretaries as well as the Bangko Sentral ng Pilipinas (BSP) governor, with the Office of the President. The committee is chaired by the Department of Budget and Management (DBM) secretary.

For Finance Secretary Benjamin E. Diokno, “the best is yet to come” for the country.

“After the highly unprecedented pandemic, followed by Russia’s invasion of Ukraine and a weakening China growth, the global economy is likely to face a mild recession next year. But for the Philippines, the worst is over, and better years are expected,” Mr. Diokno said last month.

He noted that many organizations and experts projected a global recession this year, hence lowering their growth outlook on the country’s GDP below 6%.

DBCC’s outlook for the year, as mentioned, is at 6%-7%.

“But an average GDP growth of 6.5% is nothing to be sneezed at: it is still one of the highest, if not the highest, growth rates among ASEAN+6 economies,” he said.

ASEAN+6 comprise of the 10 member states of the Association of Southeast Asian Nations plus trading partners such as Australia, China, India, Japan, New Zealand, and South Korea.

Such an optimistic view has a lot of reasons, said Mr. Diokno. Among these is the early approval of the 2023 national budget and adoption of the Medium-Term Fiscal Framework FY 2023-2028 as well as the prompt approval of the Philippine Development Plan 2023-2028.

Meanwhile, the World Bank projected the growth of the Philippine economy to slow to 5.4% in 2023.

“After the strong rebound in 2022, growth in Malaysia, the Philippines, and Vietnam is expected to moderate as the growth of exports to major markets slows,” the World Bank said in its Global Economic Prospects report from this month.

The Asian Development Bank (ADB) also lowered its growth projection on the country’s GDP to 6% from 6.3%.

“There are downside risks to growth in 2023, including inflation stickiness, further increases in interest rates, and a sharper-than-expected slowdown in GDP growth in advanced countries,” ADB Philippines Country Director Kelly Bird said last month.

The ADB expected sustained upward pressures on commodity prices in 2023 as well. And this includes oil, which could lie heavy on the Philippines, being mainly oil-importing. It also noted continued uncertainty stemming from the conflict in Ukraine.

For Southeast Asia, ADB projected GDP growth to slow to 4.7% this year.

Also trimming its growth outlook, the ASEAN+3 Macroeconomic Research Office (AMRO) expected the country’s economy to grow by 6.2% this 2023, down from its earlier projection of 6.3%.

“The Philippines had a very strong year last year. It was very resilient and that’s why we revised up to 7.3% (from 6.9% previously). This year, we expect growth to revert back to 6.2%, so this is still a very strong growth rate, the economy has done well overall,” AMRO Chief Economist Hoe Ee Khor was quoted as saying.

AMRO also lowered its growth projection for the ASEAN+3 region (which includes ASEAN member-states plus China, Japan and South Korea) from 4.6% to 4.3%. It also trimmed its forecasted growth for the ASEAN region from 4.9% to 4.8%.

As BusinessWorld reported last October, Fitch Ratings slashed its 2023 GDP forecast from 7% to 5.5%, citing risks stemming from a foreseen global slowdown, as well as “potential economic scarring from the pandemic, in particular, due to learning losses.”

The following November, Fitch Solutions Country Risk & Industry Research also forecast a slowdown in the country’s economic growth at 5.9% as momentum is seen to slow over the quarters to come. “High inflation, continued policy rate hikes, and weakening external demand are likely to cause growth to slow over the coming quarters, with the impact only being softened by extended fiscal support,” read the report.

A study published by state think tank Philippine Institute for Development Studies (PIDS) last November also expected GDP growth to weaken this year, with a forecast below the government’s outlook.

Authored by Margarita Debuque-Gonzales, John Paul Corpus and Ramona Maria Miral, the study projected GDP growth to slow to 4.5%-5.5% in 2023, citing the International Monetary Fund’s (IMF) “gloomy and uncertain” outlook for the global economy. The PIDS study projection is lower even with DBCC’s cut in growth forecast from 6.5%-8% to 6%-7%.

“Projections incorporating the Philippine FCI (financial conditions index), which is tightly linked to GDP growth, particularly at important turning points and which has turned negative as of the last update (June 2022), indicate a slower GDP expansion of about 4.7% in the coming year,” the PIDS authors wrote in the discussion paper. “However, catchup spending in services, especially in tourism, and stronger deployment of overseas Filipino workers may bolster growth.”

On the other hand, the Federation of Filipino Chinese Chambers of Commerce & Industry, Inc. last December expressed its optimism about the country’s economic growth this year, which it pegs between 6.5%-7.5% and expects to be driven by the country’s “positive economic and demographic fundamentals.”

S&P Global Ratings, meanwhile, shared a slower growth outlook for 2023 last two months ago, trimming it from 5.7% to 5.2%. Yet, the credit watcher sees domestic demand recovery to boost growth in the country this year, while strong consumption in the country, alongside those of other economies, is forecast to lift the average Asia-Pacific regional growth.

Moreover, earlier in January, S&P Global Market Intelligence pointed sustained reopening of domestic and international tourism travel as a potential boost to the economy this year.

“Due to the importance of domestic tourism in the overall contribution of tourism to GDP, the recovery of domestic tourism could be a significant growth driver in 2023,” Rajiv Biswas, Asia-Pacific Chief Economist at S&P Global Market Intelligence, wrote in a report published in the intelligence firm’s website.

“Continued rapid GDP growth of around 5.6% [year on year] is expected in 2023, helped by continued strong private consumption spending, an upturn in government infrastructure spending and improving remittance inflows,” the report added.

The report goes as far as projecting a rapid economic growth for the country over the decade ahead.

“By 2034 the Philippines is set to join the ranks of a small group of countries in the Asia-Pacific region that have a GDP exceeding one trillion dollars. This will result in a significant transformation of the structure of the Philippines economy, with substantial expansion in the size of the domestic consumer market,” Mr. Biswas added. — Chelsey Keith P. Ignacio with A.P.B. Conoza

Understanding present economic challenges and opportunities facing the global market this year

Photo from freepik

With the confluence of factors like the ongoing Russia-Ukraine war, skyrocketing inflation rates and worldwide economic slowdown, the future of the global economy is turning out as the International Monetary Fund (IMF) described it — “gloomy and more unclear.”

Krishna Srinivasan, director for IMF’s Asia-Pacific department, who shared his insights on the organization’s economic outlook for 2023 during BusinessWorld’s most recent Economic Forum, said that, “We are dealing with a world of compound crises, and they are creating a challenging environment globally and for Asia.”

The IMF’s World Economic Outlook Report released last October forecast global growth to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023 — the weakest growth profile since 2001 except for the global financial crisis and the height of the coronavirus disease 2019 (COVID-19) pandemic.

The report further projected global inflation to rise from 4.7% in 2021 to 8.8% in 2022, but to decline to 6.5% in 2023 and to 4.1% by 2024.

“The headwinds are cultivating a marked slowdown in global economic activity, including in Asia and the Pacific. But the region continues to perform better than the rest of the world. Our latest forecasts have downgraded growth in Asia and the Pacific by 0.9 percentage points in 2022, reflecting the slowdown in the second half, and by 0.8 percentage points in 2023,” Mr. Srinivasan said.

“Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation,” the report said.

The grim outlook is shared by the World Bank (WB), which recently published its latest Global Economic Prospects report.

The WB predicts that due to increased inflation, higher interest rates, decreased investment and disruptions brought on by Russia’s invasion of Ukraine, global gross domestic product (GDP) will continue to see sharp declines in growth for the foreseeable future.

According to the report, global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024. The steep slowdown in growth is anticipated to be universal, and forecasts for 2023 have been lowered for 95% of advanced economies and almost 70% of emerging markets and developing nations.

In emerging market and developing economies, per-capita income growth is expected to average 2.8% during the next two years, which is a full percentage point less than the average for the period 2010-2019. The growth in per-capita income for 2023-2024 is predicted to average about 1.2% in Sub-Saharan Africa, which is home to nearly 60% of the world’s extreme poor. At this rate, poverty rates may increase rather than decline.

Real risks

The WB added that there are very real risks of the world plunging into another recession given the fragile economic environment at the start of 2023. Any adverse development — such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions — could tip the balance.

This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.

“The crisis facing development is intensifying as the global growth outlook deteriorates,” said WB Group President David Malpass.

“Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty and infrastructure, and the increasing demands from climate change.”

It is predicted that growth in advanced economies will decrease from 2.5% in 2022 to 0.5% in 2023. Slowdowns of this size have predicted a worldwide recession over the past 20 years. Growth in the United States is anticipated to slow to 0.5% in 2023, which is 1.9 percentage points below earlier projections and the lowest performance since 1970 that is not part of an official recession.

The forecast for euro-area growth in 2023 has been revised downward by 1.9 percentage points to zero percent. Growth in China is predicted to be 4.3% in 2023, which is a 0.9 percentage point decline from earlier projections.

With China excluded, it is anticipated that growth in emerging market and developing economies will slow from 3.8% in 2022 to 2.7% in 2023, reflecting significantly lower external demand that will be exacerbated by high inflation, currency depreciation, tighter financing conditions and other domestic headwinds.

The GDP levels in emerging and developing economies will be about 6% below what was anticipated before the epidemic by the end of 2024. Although it is predicted that worldwide inflation would moderate, it will still be higher than before the pandemic, according to the report.

The WB’s Global Economic Prospects report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging market and developing economies.

Collaboration, investments in fighting issues

Ayhan Kose, the director of the multilateral lender’s Prospects Group, said that worldwide economic slowdown will likely have an impact on the global fight against poverty and inequality.

“That is actually the crux of the argument, when we think about poverty, when we think about inequality, when we think about inclusive growth, when we think about the types of development goals global economy set for itself by 2030. These goals are possible. For us to make meaningful progress in these goals, we need to have sustained, robust growth,” she said in an interview for World Bank’s Expert Answers series.

However, there’s good news. Ms. Kose pointed out that there is a greater recognition of the inflation problem across the globe, and major central banks have been acting decisively to address it in both advanced and developing economies in the past year. Given this worldwide effort, inflation is expected to moderate. She also mentions as positive opportunities the resilience of the global financial sector at weathering the headwinds, as well as the growing strength of international measures addressing climate change.

“In this context, investment is critical. We raise the issue of investment weakness. Of course, without significant infrastructure investment, we cannot overcome the climate challenge. So, it is a demo outlook, but I think there are good reasons to be optimistic and we should look to the future, stay on course, and on the part of policy makers deliver what is necessary in a credible fashion,” she said.

“At the global level, there is no question what we need to do. We need to collaborate to address these global problems. Of course, that starts with the peace in Europe. We need to basically find ways to work even more aggressively to address the climate change challenge. We need to find ways to address the food insecurity in many countries, and we need to have robust frameworks to have quick and durable solutions in the context of debt-related challenges we have.” — Bjorn Biel M. Beltran

Government’s aspirations in the midst of adversities

Photo from freepik

Compared to the rest of the world, the Philippines is in a great spot economically entering into 2023, even as challenges like sky-high inflation weigh its growth down.

According to the recently released data by the Philippine Statistics Authority, the country closed 2022 with the fastest growth rate recorded in over four decades, driven by strong domestic demand, lowered unemployment and “revenge” spending following the lifting of pandemic restrictions.

The Philippines, in fact, is among the fastest-growing economies in Asia with a recorded gross domestic product (GDP) growth rate of 7.2% during the final quarter of 2022, bringing the full-year expansion to 7.6%.

This is the fastest growth the country has seen since 1976 and breaks past the government’s target growth range of 6.5% to 7.5%.

Yet, the challenges still remain. The Bangko Sentral ng Pilipinas (BSP) expects baseline inflation to remain at 5.8% for 2022 and 4.3% for 2023, only easing in 2024 when the inflation is forecasted to be at 3.1%.

As the central bank explained in its Monetary Policy Report last November, the projections are mainly driven by the higher-than-expected inflation outturns in the third quarter of 2022, higher nowcast for the fourth quarter of 2022 due to the nationwide transport fare hikes and weather-related disturbances during the quarter, higher GDP growth projections, and peso depreciation.

The BSP made the decision to increase its key policy rate by 75 basis points (bps), to 5%, in November last year. By choosing to increase the policy rate once more, the BSP hopes to lessen the likelihood that inflation expectations would diverge even more from the target, broaden price pressures and stay high indefinitely.

The BSP’s policy rate increase also aims to mitigate the effects of significant, sustained changes in the peso-dollar exchange rate on inflation expectations.

Inflation is intended to return to within the target range of 2%-4% in the medium term as a result of the sequence of policy rate increases.

Until prices return to normal, the increase in the BSP’s policy rate will promote less expenditure, especially on non-basic commodities. The use of credit and consumer spending may see declines. However, the central bank noted that the Philippine banking sector continue to be solid, and in 2022, it is anticipated that domestic growth would be within target.

House Speaker Ferdinand Martin G. Romualdez spoke about the other side of the equation about the government’s fiscal policy during the BusinessWorld Economic Forum last November, outlining the current administration’s plans.

“Our President Ferdinand Marcos, Jr. has an agenda for prosperity. This agenda has as its core mission the country’s economic transformation towards inclusivity and sustainability. We in Congress are one with the President in this mission, which is why for the first time in history, the House of Representatives adopted the administration’s Medium-Term Fiscal Framework and eight-point socioeconomic agenda which comprise the road map for the agenda for prosperity,” he said during his keynote address.

“For the first time, the country has a clear six-year agenda with clearly-defined growth. These are to achieve a 6.5%-7.5% GDP growth in 2022, which we are poised to achieve, and a 6.5%-8% annual GDP growth from 2023 to 2028. Second, to achieve single-digit or 9% poverty rate by 2028. Third, to bring the government deficit down to 3% by 2028. Fourth, to achieve less than 60% debt-to-GDP ratio by 2025. And finally, to achieve upper-middle income country status for the Philippines.”

Regarding the government’s eight-point socioeconomic strategy, Mr. Romualdez said that it was developed to make sure that the advancement made via such efforts is inclusive and long-lasting. He listed the goals as achieving food security, resolving issues related to public health, bolstering social protective programs, and lowering the price of transportation and energy.

“It is with this economic plan that the Philippines is not only surviving, but thriving in spite of the external or global economic challenges,” he said.

The eight-point agenda consists of the following objectives: protect purchasing power and mitigate socioeconomic scarring; reduce vulnerability and mitigate scarring from the COVID-19 pandemic; ensure sound macroeconomic fundamentals; create more jobs; create quality jobs; create green jobs by pursuing green economy; uphold public order and safety, peace and security; and ensure a level playing field.

In the same forum, Finance Secretary Benjamin E. Diokno went further into detail on the country’s economic agenda. For the short term, he said that the government plans to reduce the impact of inflation on vulnerable sectors, mitigate economic scarring from the COVID-19 pandemic, and reinforce the country’s strong macroeconomic fundamentals.

For the medium term, as outlined in the Medium-Term Fiscal Framework, the priorities are high-quality green job creation via higher investments in physical infrastructure, human capital development and the digitalization of the economy. The Medium-Term Fiscal Framework aims to enhance the fairness and efficiency of the tax system, while promoting sustainable long-term growth and solid fiscal management.

The road towards the Philippines’ desired prosperity will be long and full of obstacles. The BSP noted that there are multiple risks and threats on the horizon that can adversely affect the government’s plans.

Increased global food prices as a result of rising fertilizer costs, unfavorable weather patterns from climate change and tightening trade restrictions are just some of the variables that could cause inflation to increase, for instance.

This would then result in a restricted supply of some imported items. Domestically, increases in transportation costs, the cost of sugar, fruits and vegetables, as well as the failure to extend Executive Order No. 171, s. 2022, would result in increased tariffs on coal, corn, rice, and pork.

A further slowdown in global economic activity, which lowers demand worldwide, could moderate pricing pressures.

Many economic analysts are also skeptical of the government’s targets, expecting inflation to instead breach the upper end of the BSP’s target range in 2022 as the sources of price pressures become broader.

In a BSP survey conducted in November 2022, economists from the private sector also expect inflation to remain beyond the target range in 2023. Meanwhile, they expect inflation to decelerate toward the upper end of the band in 2024.

They also anticipate that the BSP would increase the policy rate by an additional 25 to 75 bps in 2023 before cutting it by 25 to 150 bps in 2024. — Bjorn Biel M. Beltran

A few trends to watch in 2023

Across economies and sectors, 2023 can be a more challenging year as crises occur in the global economy. In fact, in its list of economic trends to watch this year, Euromonitor International speaks of a “new economic reality” that is shaped by geopolitical tensions, high inflation and rising interest rates.

“Sharply reduced purchasing power and a rapidly changing interest rate environment will further dampen business and consumer confidence. Rising geopolitical tensions could result in immediate economic shocks, while also raising the potential of broader shifts in global trade,” Maxim Hofer, senior economies consultant at the said market research firm wrote on its website.

But several opportunities still arise. Independent risk and financial advisory solutions provider Kroll Institute listed the following trends it finds worth watching as the state of the worldwide economy aims to thrive.

Strengthening emerging markets

As Kroll Institute shared on its website, developed markets are expected to go into recession while emerging markets will continue to prosper, supporting the two percent global growth rate in 2023. This year, continuous certain limitations are anticipated, which might disrupt global supply chains similarly in the early stages of the pandemic, as officials work to increase vaccination rates and new cases spread. While restrictions are finally at ease, consumer and business confidence is expected to increase, unless an increase in mortalities comes to light.

Echoes of this observation is likewise seen by Euromonitor as it noted that advanced economies are forecast to grow by 0.7% in real terms in 2023, driven by high recession risks in the US and Europe; while emerging and developing economies are expected to grow by 3.7% in the same year, with some outperformers in Asia-Pacific and the Middle East.

Yet, Kroll Institute also see that emerging market (EM) sovereign debt crises are predicted to occur in 2023. Before the pandemic, some EM economies were overleveraged and were forced to borrow money to pay for their pandemic responses, according to the Kroll Institute. As a result, borrowing costs, the cost of food and energy, and the value of currency have increased globally, causing a decrease in demand for International Monetary Fund and World Bank support in the year.

Emerging infectious diseases

Almost three years into the pandemic, the government and businesses are told to still be armed for the new normal in 2023, as multiple factors, including deforestation, intensive animal agriculture, urbanization, migration and travel can cause the increasing frequency of the widespread of emerging new diseases. With the climate change issue in hand, it becomes a new concern, putting non-tropical areas on alert as they can also be a target of these tropical diseases.

Alongside war and civil disruptions, and anti-vaccine advocacies, businesses and organizations will need to plan strategic approaches and prepare in case public health can affect their business operations. The business sector must take health into account when it comes to the staff, customers, facilities and supply chains of the organizations.

The Kroll Institute highly encouraged the business sector to consider doing health initiatives such as vaccination drives, wellness initiatives and optimization of sanitation of their work environment to lessen the exposure of employees to such infectious diseases. Moreover, focusing on improving the employees’ health and their families and communities, and maintaining situational awareness is important to reduce the health impacts affecting the business sector.

ESG

In business, environmental, social and governance (ESG) is a tool used for attaining ethical and sustainable outcomes. It is commonly used by financial markets when it comes to assessing businesses and forecasting financial success.

According to David Larsen, managing director and institute fellow of Kroll Institute, incorporating ESG in the business sector is not expected to decline in 2023. Environmental concerns will continue to be prioritized, especially those relating to the climate, sustainability and impact on biodiversity. As investors increasingly demand greater transparency on ESG frameworks, it is essential for businesses to invest in ESG frameworks and policies, and ensure that they are effectively implemented across the entire organization to protect the organization’s value and reputation, as well as produce significant, long-term benefits for both the organization and society.

Reinforcing regulatory environment

In troubled or turbulent markets, fraud and other misbehaviors are more common, and these violations should be stopped at any cost, especially when investors and the financial markets are at risk.

“We advise that companies and firms continue to enhance their governance, supervisory, compliance policies, and procedures and training with a risk-based approach to address regulatory exposures,” Kroll Institute reported.

Additionally, the business sector needs to develop a crisis response strategy that includes credible assessment and correction of possibly illegal conduct that can be found, as well as the ability to pivot in reaction to changes in regulatory requirements.

Cybersecurity

Cyber threats will keep developing and pose a persistent threat to every organization in the sector. Alan Brill, Kroll Institute’s senior managing director and institute fellow, believed that cyberattacks will continue to increase this year.

For instance, ransomware assaults are occurring more often and some attackers are also erasing data to restrict data restoration or decryption, making it possible for the attackers to demand ransom payments. As a result, many companies are taking action on investing in safe cybersecurity practices.

Mr. Brill also stated that cybercrimes do not only target business leaders, but celebrities and social media influencers, as well through hate speech, offensive content and physical threats that are increasingly occurring on popular social media platforms as well. For the safety and security of businesses and their people, early detection of such cybercrime from online sources, analysis, integration and data sharing can be crucial.

“Sharing risk intelligence at pace with the speed and velocity of social media will help corporations mitigate risks and navigate social media uncertainty, which is likely to continue into and throughout 2023,” Mr. Brill added.

Stepping into the next stage of the now normal and witnessing the post-pandemic transformations and innovation throughout the years is one step to moving forward. As we look at 2023 and its forecasts, it is important to be fully armed and prepared by planning and putting those plans into action with the goal of economic growth in mind. — Angela Kiara S. Brillantes

Legato to further drive healthcare transformation as it transitions to Carelon

Healthcare management services and solutions company Legato Health Technologies announced today its rebrand to Carelon Global Solutions, a new health services brand focused on solving healthcare’s most complex problems.

In this transition, Carelon Global Solutions promises bigger and better things to come for its stakeholders and employees.

The rebranding is aligned with the company’s objectives and strategic intent to become a lifetime trusted health partner, with Carelon managing and optimizing operational processes for health plans and providers alike. The company champions the ecosystem as it develops and adapts solutions to meet the needs of health plans. Through collaborative partnerships, digital solutions, and connected experiences, Carelon Global Solutions simplifies complex operational processes to improve the health of the healthcare system.

Carelon Global Solutions, whose name means “providing full and complete care,” commits to live up to its name through reassuring its associates, partners, and customers that despite the brand refresh, the quality of service remains the same and even greater as the change allows them to bring their visions to life. The company will continue bringing like-minded individuals who will develop solutions and provide services that will shape the future of healthcare.

People-first company dedicated to nation-building

The company promises to put the welfare of its employees first and open more opportunities for them. Carelon Global Solutions has always been keen on hiring Filipinos because of their expertise in the healthcare field and unique brand of service which combines knowledge and care in serving people. It believes that Filipino talent would definitely help in advancing healthcare globally, and it is committed to investing in the country’s talent.

Carelon Global Solutions maintains that change is healthy. While concerns and questions may arise, the company remains committed to improving lives and shaping the future of healthcare with their collaborative efforts. As they work towards their goal and expand in the country, new opportunities are also presented to Filipinos who hope to join the company’s growing talent pool in the near future.

About Carelon Global Solutions Philippines, Inc.

Established in the Philippines in 2018, the company now known as Carelon Global Solutions specializes in digital tools to streamline business operations for healthcare organizations. The company currently has four offices in the Philippines, two in Manila and two in Iloilo, and boasts a talent pool of nearly 7,000 diverse and highly skilled individuals with deep expertise in healthcare operations.

For more information, please visit www.carelonglobal.com.

 


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Planning livable and sustainable cities

In photo during the BusinessWorld Insights (clockwise, from top left) are moderator Arjay L. Balinbin of BusinessWorld, and panelists Steven Tan, president of SM Supermalls; Felino A. Palafox, Jr., Principal Architect-Urban Planner of Palafox Architecture Group, Inc.; and Erika Fille T. Legara, Aboitiz chair in Data Science and associate professor at the Asian Institute of Management.

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

Many people go to the cities to discover the opportunities they widely present. Currently, over half of the global population lives in cities, according to the United Nations. This is expected to expand to two-thirds of the population by 2050.

How can the cities in the Philippines accommodate such growth? Rapid urbanization, when unplanned, could create issues affecting the people and the surroundings. Realizing the issues in existing cities and the work to do to develop better cities for people to live in were explored during the BusinessWorld Insights forum about “Smart Cities and Mobility: Building More Sustainable Cities and Transportation” on Jan. 25.

Projecting that the Filipino population would reach 150 million by 2050, Felino A. Palafox, Jr., Principal Architect — Urban Planner of Palafox Architecture Group, Inc., has been promoting for the planning and development of a hundred new cities by then. Or else, he saw that the existing cities would be as bad, if not worse, than the present Metro Manila.

In the Philippines, Metro Manila is known for encompassing opportunities in its various cities. But the capital region is also infamous for the wrongs in its urban planning.

“In the 70s, Metro Manila was a model, a reference, for good metropolitan planning. Today, many scholars from Harvard, Yale, and European universities, they come to our office and interview me, ‘Metro Manila, what went wrong?'” Mr. Palafox shared.

Mr. Palafox pointed out the imbalance in the country. For example, Makati City’s central business district (CBD) is surrounded by gated communities, but “there is no housing for the human capital,” he said.

“The employees of Makati, on the average, spent about five to six hours commuting because [they] are priced out of the housing stock.”

He also mentioned that the Makati CBD’s daytime population is 11 times more than its nighttime population due to the human capital lacking of socialized housing.

“There’s so much imbalance in our country, urban, regional, and national development, and the primacy of Metro Manila,” he further emphasized.

He also said later on that “we cannot address the problems of Metro Manila unless we distribute more cities outside Metro Manila.”

Mr. Palafox noted issues such as the lack of public parks or democratic spaces for all income classes as well, hence a lot of people go to malls. He later mentioned also that Metro Manila lacks open spaces.

“Open spaces are the lungs of the city. That’s why Metro Manila, [when] compared to the human being, needs lung transfer because of the lack of open spaces, a heart bypass because roads are congested, and a heart transplant because major activity centers like CBDs are all constrained, and so on,” he said.

Another issue pinpointed by Mr. Palafox was the lack of being visionary.

Sharing his experience from working in Dubai in United Arab Emirates, he said that the rulers of modern Dubai possess “visionary leadership, strong political will, a good appreciation of good urban planning and good design, architecture, engineering, and very competent. They always keep on improving.”

“In our country, it’s mostly short-term and opportunistic. There seems to be lacking long-term and visionary,” he said.

He also noted that a lot of the urban planning decisions made by local governments are political decisions.

Educating policy makers

Policy makers must be educated about the cities, stressed Erika Fille T. Legara, Aboitiz chair in Data Science and associate professor at the Asian Institute of Management.

Properly understanding cities, according to Ms. Legara, stipulates a complex systems perspective, given cities are complex systems. For instance, Metro Manila cannot be fully understood and managed by isolating individual cities that comprise the region.

“We have to look at it as a whole. Everything is linked, everything is interconnected and interdependent,” she said. “So, to develop sound policies, for example, for improving well-being and the quality of life of commuters and citizens, we must start thinking in systems and consider this interconnectedness, the different components, and factors.”

Ms. Legara also considered the “natural tendencies” of the people and the cities.

“Sure, we can be engineered. But the engineering and management must be well-thought-out considering these tendencies [or] human behavior. Why, for example, do people want to move to cities? Because people want to be where the action is, where the economic activities are, where the opportunities are, and where there is a dynamic and active lifestyle,” she said.

These dynamics, active lifestyle, and opportunities should also be there when considering decentralization, not just building housing, she later added.

Making cities smarter should also not just be the goal, said Ms. Legara, but to make them more livable. That is, by making the amenities, centered on well-being and quality of life, more accessible to the people. Yet, getting there might need cities to be smarter, but that should not be the end.

“These plans and implementation must be all-inclusive. [In] Metro Manila, inequality is really terrible. And this is something that we also need to address, and the government must start to think this way, too,” Ms. Legara said.

She also mentioned the need for political will to put plans in place. “Because even if you have the right data, the science and technology, all of these approaches, the plans, if there’s no political will to implement these plans, that would be a big problem,” she said.

For the ordinary citizens’ part, meanwhile, Ms. Legara believed that it is important that they should let the government know that they demand things.

“We have to call their attention because usually our policymakers — not all, but many of them — don’t really use public transport so they don’t know what people go through on a daily basis. It would be good if we can tell them, let them know that ‘Hey, we need this,'” she said.

“[That is] critical, for us to know that we can actually come to them, approach them, let them know of what we’re going through and hopefully they listen,” she added.

Private sector’s role

The private sector also has a role in helping address cities’ problems and work together with the government in this endeavor. This was highlighted by Steven T. Tan, president of SM Supermalls.

“Big corporations [or] institutions like us, I think we have that responsibility to act on these pressing issues. And we work very closely with whether it’s the local government or the national government,” he said.

He added that the private sector could not disregard and say that this is only the government’s problem. “It’s everyone’s problem. It’s everyone’s concern. We have to really work hand in hand.”

“It is [in cities] that we are doing business, and it’s just right for big businesses like ours to also help [with] other concerns of the cities,” Mr. Tan said. For SM Supermalls’ part, for instance, they also consider other things to uplift people’s lives when they build a mall.

“When we put up a mall, we also put up residentials, we create jobs,” he shared, adding that 70% of their tenants are micro, small, and medium-sized enterprises, which help the provinces where their malls are located.

“At SM Supermalls, we believe that sustainable property development is the key. We make every effort to future-proof our country through the practice of disaster resilience that addresses the increasing demand for urban areas and the threat of climate change,” said Mr. Tan.

He shared that SM Supermalls has launched several free E-Vehicle Charging Stations. The SM electric bus services also began rolling out, which allowed commuters to go from SM Fairview in Quezon City to SM Megamall in Mandaluyong City and vice versa. More destinations would be rolled out in the coming months, according to Mr. Tan.

“Our commitment to building smarter, sustainable cities and transportation has become stronger than ever. I believe that by initiating sustainability programs that will improve the way we live, we can add value to the lives of every single Filipino mall-goers and increase our chances of achieving a sustainable nation. However, this is not just SM Supermalls’ battle alone. It is ours,” he said.

Fitch sees better profits for PHL banks this year

STOCK PHOTO | Image Dmitry Berdnyk from Unsplash

By Keisha B. Ta-asan, Reporter

PHILIPPINE BANKS will continue to see improved profits this year, supported by better margins following the central bank’s rate hikes, according to Fitch Ratings.

“In the absence of a new shock in the economy, we expect banking sector profitability to continue to improve in 2023, helped by rising interest rate margins as banks continue to reprice their loans while funding costs are likely to remain controlled thanks to banks’ favorable funding structure,” Tamma Febrian, a director at Fitch Ratings’ Asia-Pacific Banking team, said in an e-mail interview with BusinessWorld.   

Mr. Febrian said this would offset any rise in credit costs stemming from the vulnerable sectors.

“Capitalization levels are likely to remain steady, supported by sustained earnings growth that is broadly in line with credit growth,” he added.    

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed outstanding loans extended by universal and commercial banks climbed by 13.7% year on year to P10.64 trillion in November 2022.

As lending growth continued to pick up, M3 — the broadest measure of liquidity in an economy — expanded by 5.4% to P15.6 trillion in November.

However, rising inflation and higher interest rates, which may affect consumers’ purchasing power, could result in weaker asset quality for lenders, Mr. Febrian said.   

Inflation averaged 5.8% in 2022, well-above the BSP’s 2-4% target range. The BSP expects inflation to average 4.5% this year, although BSP Governor Felipe M. Medalla has said this is expected to be below 4% by the third quarter and below 2% by early 2024.

The Monetary Board increased the overnight reverse repurchase rate by 350 basis points (bps) to 5.5% in 2022, although it is expected to continue tightening this year to curb inflation.

“Higher interest rates, coupled with rising cost of living and input costs, would generally weaken borrowers’ debt repayment capacity. Nevertheless, most large corporates in the country have significant financial buffers to withstand the rise in interest expense,” Mr. Febrian said.   

He noted small- and medium-sized enterprises (SME) and consumers may feel the impact of higher rates more, given their thinner buffers, but any weakening in loan quality in these sectors will likely be contained as economic growth is expected to remain strong this year.

Fitch Ratings expects the Philippines to grow by 5.5% this year, slower than the 7.6% gross domestic product (GDP) growth in 2022. This forecast is also below the government’s 7-6% target.

“Loan demand is sensitive to interest rate movements. Pent-up consumer demand and capex (capital expenditure) have kept loan growth robust in the second half of 2022 despite the aggressive monetary policy tightening since May 2022,” he said.   

“We expect demand to moderate in 2023 as effects of the rate hikes filter through to the economy. Our base case is for loan growth to settle at 6-7% in 2023, with some upside if the economic momentum turns out stronger than expected,” he added.   

Despite rising borrowing costs, economic output grew by 7.2% in the fourth quarter of 2022.

Fitch Ratings also expects “fairly steady asset-quality performance” for the banking sector this year.

“We believe any deterioration in the vulnerable sectors (i.e. SME, consumer) are likely to be offset by continued recovery in the large corporates’ loan quality and the tourism sector. The latter has been a major drag on banks’ asset quality over the past two years, but tourism activity is expected to continue to rebound as China reopens its economy, which should cause credit pressures on these borrowers to ease,” Mr. Febrian said.   

Based on data from the central bank, bad loans slipped by 0.9% to P408.097 billion in November from P411.632 billion in October. This brought the November nonperforming loan (NPL) ratio to 3.35%, which fell from 3.41% in October.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets as borrowers are unlikely to settle these loans.

“We see some upside to our outlook if the economy grows faster than expected or if banks aggressively write off NPLs, given the high loan-loss coverage of a number of the large banks in the country,” Mr. Febrian said, adding that asset quality may worsen if there is another economic shock or if rates rise significantly higher than the base case.

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