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Third MVP

Through some fortunate twist of fate, the Celtics and Nuggets, holders of the best records in the East and West, respectively, found themselves doing battle on New Year’s Day. Considering their provisional standings, their best players, not surprisingly, likewise headed pundits’ lists for Most Valuable Player. Which, in a nutshell, was why all and sundry took notice of proceedings; a humdinger looked to be in the offing.

As things turned out, the Nuggets had little trouble asserting themselves at the Ball Arena. Never mind that the visiting Celtics carried a four-match win streak, including convincing turns against the highly regarded Bucks and Clippers. The opening minutes were tight, but they managed to create separation midway through the first quarter, and from then on coasted to their eighth triumph in the last 10 contests.

Needless to say, much of the conversation after the match focused on yet another outstanding effort from reigning MVP awardee Nokila Jokic. The Nuggets’ principal playmaker put up 30 (on 13 attempts from the field), 12, and 12 in 32 minutes of action, during which time they were 14 points better than the Celtics. Clearly, he didn’t just post his second straight triple-double and ninth of the season. He stamped his class en route to victory, just like in every other time he hit the milestone.

For longtime habitues of the sport, Jokic represents the rare breed of scorer who likes to pass first. If there is anything to criticize about his game, it’s that he takes fewer shots than he should in the face of his status as a unique offensive threat. That said, there can be no doubting his place among the league elite. In fact, he’s pacing the likes of the Celtics’ Jayson Tatum, the Mavericks’ Luka Doncic, the Nets’ Kevin Durant, and the Bucks’ Giannis Antetokounmpo.

Nuggets head coach Michael Malone may be biased, but he’s right all the same. “If people’s reason for not giving Nikola a third MVP is because he’s already won two in a row, that’s lazy,” he was quoted by the Denver Post’s Mike Singer as saying in the aftermath of the positive start to 2023. The flipside is that voter fatigue is real; it’s why, in the National Basketball Association’s 76 years of existence, only Bill Russell, Wilt Chamberlain, Larry Bird have claimed the accolade three seasons in a row.

Will Jokic do what such notables as Kareem Abdul-Jabbar, Michael Jordan, and LeBron James could not? The answer depends on how the panel of broadcasters and sportswriters slated to vote will go. He will have to buck the odds, though; after all, not a single one of the league’s general managers polled in the offseason answered yes. Not that he cares. Bottom line, he has succeeded precisely because he operates at a speed no one else can approximate.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and human resources management, corporate communications, and business development.

Dreaming about the World Cup: Starting them young

ANDRE NOBOA-UNSPLASH

(Part 2)

A young and growing population is the greatest asset of the Philippines in the field of economic development. Thanks to a population today of some 112 million people with a median age of 24, the Philippine economy is able to grow, despite the damage done by the pandemic and the ongoing global recession, at an average of 6% to 7% in GDP and could even grow faster at 8% to 10% if the administration of President Ferdinand Marcos, Jr. delivers on three fronts: increase agricultural production at an average of 2% to 3% annually in the next five to six years; increase the investment to GDP ratio to over 30% from a historical average of 22%; and significantly improve good governance and reduce corruption, both public and private.

The leading sources of growth on the income side are the remittances from the more than 10 million overseas Filipino workers abroad; the foreign exchange earnings of the business process outsourcing-information technology (BPO-IT) sector that employs 1.4 million today and is expected to add 1 million more workers in the next five to six years; and the booming tourism sector, jump started by domestic travel and to be boosted by foreign tourism two or three years from now. Because of our large domestic market, the Philippine economy is significantly insulated from the ups and downs of the export sector as the world goes from one recession to another.

It is also this demographic dividend that should make us confident, that with greater efforts on the part of the stakeholders of football as a national sport, we can emulate what two small countries like Croatia and Morocco have done in not only qualifying for the World Cup but in reaching the semi-finals in Qatar in 2022.

In fact, Croatia has qualified for every major tournament with the exception of Euro 2000 and 2010 World Cup, reaching the quarter finals of the UEFA European Championship twice (1996, 2008) and the semi-finals of UEFA Nations League in 2023. At the FIFA World Cup, Croatia has finished second once (2018) and third on two occasions (1998 and 2022). It may be noted that futsal is widely played and often taught in schools and played by football professionals as a pastime in Croatia, which has a population of 4.13 million (2019) with a median age of 43.3 years compared to our population of 112 million (2021) with a median age of 24. It has a fertility rate of 1.41 and is one of the oldest populations in the world. Its per capita income is $17,398 compared to our $3,548. Its land area is 56,594 square kilometers compared to our 300,000 square kilometers.

Morocco, on the other hand, has about one-third our population at 38 million with a median age of 29.5 years and a per capita income slightly lower than ours at $3,496. Morocco’s national football team won the 1976 African Cup of Nations, two African Nations Championships and the FIFA Arab Cup once. It has participated in the FIFA World Cup six times, with the best result this year by being the first African and Arab national team to reach the semi-finals.

These two countries should give us sufficient confidence to be among the World Cup qualifiers in the next eight years or so, having a much larger pool of young potential players than Croatia and not being handicapped vis-à-vis Morocco as regards financial resources. We just have to discover the appropriate strategies to follow in the next few years to build on our strengths and make our weaknesses irrelevant to our desire to excel in the World Cup.

As an educator, I would like to highlight the role that schools play in the development of any sport in the Philippines. As mentioned above, in Croatia the teaching of football is part of the curriculum at the basic education level. Here I would like to summarize the recommendations of a former head of Sports Education in the University of Asia and the Pacific.

In an article entitled “Getting to the World Cup” in the book I co-authored (already mentioned in my previous column), Stella Marie Urbiztondo emphasized that schools are the natural environments for training those who want to excel in the playing of football (although there are other venues as the likes of Pele experienced learning to play the beautiful game in the streets). The values that are vital in achieving the level of excellence necessary to succeed in any sport can first be inculcated and developed in the academe, just like other values that are important for anyone to succeed in life. According to her, school sports has two faces: one in the physical education program that all students undergo, and the other in the interscholastic or varsity program. Two kinds of potentials are developed through these complementary programs: first, the potential that might carry a student to a career as an athlete and, after retirement from professional sports, to pursue a sports-related career (e.g., coaching, officiating, etc.). Second, there is the potential for a lifetime of recreational enjoyment in a specific sport that can both ensure fitness and health to a late age and significantly connects the sports enthusiast to the community. Sports is one of the most effective channels for one of the greatest human pleasures: that of having life-time friends.

We would like to call the attention of Vice-President and Secretary of Education Sara Duterte that even more effective in developing the appropriate values and virtues among the youth than the ROTC (Reserve Officers Training Corps) program in the school curriculum of public schools is a well-planned and implemented physical education program.

It is in physical education that our children from the earliest age learn the ABCs of sports, starting with the fundamental movements and motor skills. Children initially learn to manage their own bodies, such as when they bend, stretch, turn, and reach while remaining in one spot, before they can even explore the space which they share with others around them. They are able to progress from simple to complex movements — learning to balance on tiptoes before they jump, bouncing a ball once before they can dribble, and even learning to separately kick and run well, before they can run and kick a football simultaneously.

It is in physical education, an indispensable part of the K to 12 curriculums, where a child learns the fundamental movements and motor skills before they can acquire specific sports skills.

(To be continued.)

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

Driving recovery with PPPs and a robust manufacturing sector

CARLOS ARANDA-UNSPLASH

A new year is always cause for celebration. It makes us look forward to many things, but it also reminds us to make good use of the lessons we learned in the past.

The year 2022 saw the reopening of our economy after the pandemic-induced lockdowns, which were harrowing for our people on many levels. But in the year just past, for the first time in nearly three years, we were able to live with a semblance of normalcy — even holding official events, holiday gatherings, and family reunions face-to-face again. To be sure, COVID-19 is still very much around and remains a risk to our people and economy. Still, owing to a good percentage of vaccination among our people, the cases have been milder, and we realize the virus is something we all must live with.

We remember it was the private sector that played a pivotal role in bringing vaccines to the people, especially in the beginning. This is just an example of the sector’s capacity — and willingness — to help in the things that matter to our people. And to think that these business enterprises did more than their share despite being unfairly demonized by the then-administration instead of focusing on the dynamics of problems, harnessing expert guidance, and pursuing strategic solutions and reforms.

Under the new administration of President Ferdinand Marcos, Jr., however, there appears to be a renewed and sustained interest by the government in partnering with the private sector. This is crucial since while we are seeing the first few signs of recovery from the ravages of the pandemic, the situation remains volatile. Business sentiment slipped to 23.9% in October 2022 from 26.1% the previous quarter, according to the Bangko Sentral ng Pilipinas. Consumer confidence also took a hit, sliding even further to -14.6% from -12.9% the previous quarter.

Filipinos are acutely aware of the crucial role of the private sector in accelerating growth. In a September 2022 survey by Pulse Asia, 86% of respondents agreed that the private sector does have this crucial role. Likewise, 89% of respondents nationwide agree that the government and the private sector should engage in partnerships to sustain economic recovery.

The same survey revealed that Filipinos have a good idea of the areas private investors can address to boost the economy. In a question where respondents could pick up to three answers, 69% cited creating jobs, 65% said helping uplift the lives of Filipinos out of poverty, and 49% pointed to expanding livelihood opportunities.

Meanwhile, a survey undertaken by PwC and the Management Association of the Philippines in September sought to find out what CEOs believe to be factors that would delay the Philippine economy. The top answer of 67% of the chief executives surveyed was corruption.

These surveys, both among ordinary Filipinos across the country and among CEOs of top business organizations, all point to the need for a robust and proactive policy to attract capital not only from foreigners but also from domestic investors. The pandemic revealed our economy’s vulnerable areas, and continuing issues such as Russia’s invasion of Ukraine and high prices of agricultural produce tell us in no uncertain terms that more needs to be done to make the Philippine economy resilient to whatever blows and external disruptions that may occur.

Good governance is always key to fostering an investment friendly environment. Aside from this, we at Stratbase have been advocating the reinvigoration of our manufacturing sector that specifically caters to the domestic market. This would be good for the economy on several levels. Foremost, it will significantly narrow our trade deficit, because we would lessen the need to import goods for consumption here in the country. Second, it would create jobs and other opportunities for the population, providing them income security, alleviating poverty, and revitalizing consumer spending.

For this to materialize, there need to be serious policy and governance reforms. The government needs to provide greater support to domestic investors via incentives, and to address issues such as the unstable supply and high cost of electricity, and ease of doing business. The latter continues to be difficult and uneven as bureaucratic and regulatory concerns at both the local and national levels could often seem like roadblocks.

Other areas for reform include providing local businesses access to raw materials such as wheat, sugar, salt, corn, and coffee. The Agriculture and Trade and Industry departments remain focused on safeguards based on outdated data instead of current supply and demand information and trends. Trade facilitation at the level of the Bureau of Customs and the Philippine Ports Authority must also be addressed.

Micro, small, and medium enterprises should be given greater access to capital so that they could fill the gap in producing raw materials and other components in certain sectors. Finally, the government must also help develop and upgrade the skills of workers.

We believe that what the NEDA (National Economic and Development Authority) outlined as the six cross-cutting strategies of digitalization, connectivity, leveraging the role of the private sector, “servicification,” technology, innovation, and the inclusion of local governments as an equal in the country’s development agenda would do much to advance the entire economy.

It was only year 2022 that ended — not our problems and challenges. We look to our government leaders to set the tone and pace for engaging different stakeholders so that we can effectively address the lingering issues brought about not only by the pandemic but by a myriad of threats from all around us.

We will be closely watching the big and small decisions that our leaders make — these would indicate their seriousness and sincerity in making the lives of our people better. At the same time, we will always be ready to do our part wherever we can be most helpful, just like the private sector has always done.

We look forward to the rest of this new year, driven by hope and guided by the hard lessons of multiple crises of these times.

Happy New Year to everybody.

 

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.

Why Sri Lanka’s suffering may not end soon

EDDY BILLARD-UNSPLASH

IN MAY, Sri Lanka defaulted on its overseas debt. Amid political upheaval and human suffering, the Indian Ocean island is still awaiting a $2.9 billion rescue by the International Monetary Fund (IMF). Lacking resources to buy even essentials like fuel, the economy is falling into an ever-deepening abyss. The poverty rate has doubled in one year; output has cratered and inflation soared. A decade of welfare gains has been eroded. All of this raises a question: When did sovereign debt restructuring become so hard?

In a less complex world, poor economies defaulted to rich nations. The Paris Club, comprising the US, Japan, UK, and other advanced nations, coordinated rescheduling efforts among its members and with the IMF. Nobody gained much by prolonging the misery of a sovereign debtor that couldn’t be liquidated anyway.

But Sri Lanka’s is a 21st century insolvency with several competing interests. Big-bulge institutions like BlackRock, Inc. and Morgan Stanley Investment Management have formed their own group to pursue $12.6 billion in claims, or half of the government’s foreign-currency debt. In addition, Sri Lanka’s bilateral creditors include China and India. Neither Beijing nor New Delhi wants the other to extract more financial or geopolitical mileage out of the crisis.

To speed things along, the besieged debtor has broached the idea of a Most Favored Creditor: Once India has that status, it will get any sweetheart deal offered to China, which holds 52% of the bilateral debt. Such assurances haven’t managed to break the logjam. If anything, there’s reason to fear that Colombo’s ordeal will continue even after the IMF deal. In a move reminiscent of the hedge-fund boss Paul Singer’s campaign against Argentina, Hamilton Reserve Bank Ltd. has sued Sri Lanka in New York.

The delay in resolution of sovereign crises is increasingly a norm. For 15 years after its 2001 default, Argentina had to worry about its presidential plane or naval fleet being seized by Singer’s lawyers. It was only in 2016 that the billionaire’s Elliott Management got what it wanted and went away. That was hardly a one-time affair. Until the early 1990s, less than 10% of crisis-hit countries ended up in litigation; now half do. The 3% of restructured debt governments typically get sued for is unusual even for corporate borrowings, according to the European Central Bank’s Julian Schumacher and other researchers. “We are not aware of many fields of law in which such a high share of disputed claims end up in court,” they say.

The chance that some minority investors would try to arm-twist Sri Lanka for better terms is high. The bigger the loss that’s imposed on bondholders, the more likely that some of them will hold out. On the other hand, if it kept the punishment low for all, then Sri Lanka would find it hard to convince the IMF that it won’t be back for a second rescue. After a 50% haircut on international bonds, and a 25% write-down in the money owed to bilateral and multilateral creditors, the government’s debt load in 10 years will still exceed 130% of gross domestic product at current bond yields, higher than 121% of GDP at present, according to Verité Research. The think tank’s Sri Lanka policy group estimates that a 10-year extension of maturities on current domestic debt could bring the burden down to 101% of GDP.

Touching local-currency debt would be tricky. A Sri Lankan bank that lent money to the government in 2021 has lost most of it to 60%-plus inflation. Its investors — and depositors — could balk at holding on to those low-yielding notes for another 10 years. However, it’s also possible that the domestic bond market will see the pain as an unavoidable side-effect of lifesaving surgery. With a little luck, the near-12% contraction in output may reverse, boosted by tea, textiles, and tourism services. As the pressure from a strong dollar and the war in Ukraine begin to fade, an end to shortages could slay inflation; the 28% yield on three-year, local-currency bonds may start sliding toward last year’s 9% level.

That return of confidence will need a spark, though. The new President Ranil Wickremesinghe isn’t wrong when he says there’s no point in reform when his country doesn’t have an economy. But it does have a financial system, which could be put on a surer footing by changing the mandate of the central bank to a Hong Kong-style currency board operating a fixed exchange rate.

The new central bank law, which the IMF insisted on, repeats the usual homilies: freedom from political interference, and a commitment to independent monetary policy. The messy politics of this formerly civil war-torn country is unlikely to respect those lofty ideals once the current storm has passed. Besides, there’s no reason why a small, open economy should want its own monetary policy. For all the warnings routinely repeated about the impending demise of Hong Kong’s dollar peg, the link survives as an important anchor. The Indian counterparts of the wealthy Chinese could do with a similar hard-currency enclave at their doorstep.

It might still be something to consider once the IMF rescue is under way. The disastrous policies of former President Gotabaya Rajapaksa and his powerful family ruined this tropical idyll. Untangling the knots of creditors’ claims has delayed Sri Lanka’s rescue and stalled its recovery. Hopefully, 2023 will bring the island of 22 million people better luck, more money — and fresher ideas. 

BLOOMBERG OPINION

Agribusiness, not just agriculture

ERIK AQUINO-UNSPLASH

In a statement attributed to Einstein, doing the same thing over and over again and expecting a different result is insanity. This seems to be the case with agriculture in our country. The people who produce our food are still among the poorest. We still have to import much of our basic food needs. Today, the President has decided to run the Department of Agriculture himself. Unless he reinvents the job, he cannot expect to make a difference in our poverty situation, nor in our ability to produce enough of our own food.

First of all, the mission has to be defined clearly. Former Secretary of Agriculture Sonny Dominguez defined it as “to make the farmer prosperous.” For many reasons, it looks like he was not able to deliver. Perhaps it was because the strategy, if any, was not clear. Alas, perhaps, they still did the same thing over and over again. Set production targets and try to meet them.

Today, the average age of our farmers is over 60 years old, or beyond the official retirement age for pensions which most of our farmers do not receive because they are unable to pay for premiums. Their children do not want to farm; they prefer to get jobs in the city or overseas. Production of our food is really in crisis. Radical changes are definitely called for in the way we administer the job.

Perhaps it is time we redefined the industry. It is not merely agriculture or food production. We have to go beyond production to making the farmers prosperous. We must think of the job as agribusiness. In fact, we must rename the government’s support system as the Department of Agribusiness.

This will have to include fisheries, that subset in Agriculture which, ironically for an archipelago like ours, has been contributing so little to our GDP. It seems the only time it increased its contribution was when “Salas Boy” Malcolm Sarmiento headed the Bureau of Fisheries. He worked very hard to push for aquaculture fisheries, fish sanctuaries, and value-adding such as sardines production in Zamboanga, his home province. With China taking over much of our rich fishing grounds, and many politicians allowing illegal fishing practices in municipal waters, it is ironic that we are unable to produce enough marine food products and have to import them. Our fisherfolk are also among the poorest in our country.

A great deal of innovation is called for. Our rice farmers own an average of less than two hectares each. One consideration is the need for economies of scale. Our senior-age farmers cannot continue to provide manual labor as their contribution to food production for our country. In the United States, some of the success stories in farming are cooperatives. Sunkist Oranges, the US Wheat Associates, Ocean Spray brand, etc. — these organized groups work for profit, and are not just food producers. They even have their own marketing managers and market research units. And they hire their own agriculture technicians independent of government.

In Vietnam, which has a communist government, businessman Huyn Van Thon has mobilized groups of farmers who own their own land to produce rice and other food products for sale to his company at market prices. His An Giang Plant Protection Joint Stock Company (AGPPS) supplies inputs such as seedlings, fertilizers and chemicals, rents out combine harvesters, mills rice, and provides warehouse space, all on credit at low interest rates, which the farmer pays for when he sells his processed outputs. The farmer is free to sell to other buyers; but the company buys at market rates to encourage loyalty. This Vietnamese firm is so successful that the international banking group Standard Chartered Bank has bought a 30% share for over $90 million. And the farmers who still own their land are considered business partners. This firm exports rice to the Philippines (which seems to be Vietnam’s biggest rice buyer) and to as far as Africa. Of course, it helps that they have natural irrigation systems from the Mekong River.

The Vietnamese government did help by providing 40 hectares for research to the business firm, which is located near an agricultural school which became the source of technicians hired by the business firm as “farmers friends” to work with the farmers. These “farmers friends” are more than technicians. They are trained to also motivate the farmers to work smoothly together for their common prosperity.

The head of this paper’s “mother company” has stated his intention to go into “agribusiness.” Perhaps the government can work with Manny V. Pangilinan to demonstrate boldness in redirecting our agriculture into agribusiness by providing tax relief and other incentives. Since no less than the President himself has chosen to head the government’s support system, boldness in policy and strategic direction is possible.

The government’s agriculture technicians have actually been devolved into the local government units under the Local Government Code of 1991. However, as one mayor said to me once, “I am told they are in the field; but I don’t know which field.” Rural banks often require the endorsement of borrowers by these technicians, which is a situation ripe for corruption. It can result in low quality diluted fertilizers and other inputs by suppliers favored by these endorsers.

I once witnessed a government lending agency offering coffee farmers loans at 16% interest when at the time deposits were paying only 6% interest. The lending agency required approved input suppliers to keep 3% out of the 16% for their “service.” The big coffee buyer firm in the area had obviously organized the meeting with the farmers. Our poor farmers had no better alternatives.

Who should run the Department of Agribusiness? It should be someone who has a bold strategic business sense, not just an agriculture specialist who will think production and do the same things over and over again. The situation is critical. We could end up with serious food shortages sooner than later. And our food producers — the farmers and fishers — will continue to be among the poorest in our country.

 

Teresa S. Abesamis is a former professor at the Asian Institute of Management and fellow of the Development Academy of the Philippines.

tsabesamis0114@yahoo.com

What leaders can do when a key team member leaves for good 

PIXABAY

Succession planning, as well as appreciating what team members have brought to the table, will ensure that their departure does not leave a negative impact on the rest of the team, human resources (HR) practitioners say.  

Resignation is a natural part of the employee journey, according to Rhona M. Florentino, president and CEO of UpRush Social Geekers Inc., an HR and management consultancy. 

To allow for a shorter learning curve, “leaders should have a succession planning in place to ensure that, when a key position becomes vacant, somebody has been groomed to take over the position,” she said in a Jan. 2 message on Facebook.  

Succession planning helps identify high potential employees, pointed out Darwin B. Rivers, vice-president of HR of Inspiro Relia Global Shared Services, a business process outsourcing company, and founder and president of the Philippines HR Group, an online HR community.  

“It’s good to look for talents from within and promote employees by creating a developmental plan that would enable them to… be successful in the role,” he said in a Jan. 3 e-mail.  

Leadership can also ensure that team members focus more on what the departing employee has brought to the table — rather than the act of leaving itself, added Ms. Florentino. 

“This allows team members to see that the company is appreciative, leading to a lesser risk of the current employees leaving and following suit,” she said. 

MITIGATING ATTRITION
Mr. Rivers wrote of the importance of affording due process to exiting employees.  

“Previous employees are your ‘unofficial ambassadors’ to the outside world on [the] kind of leadership and culture you have,” he told BusinessWorld. “Their experience will affect your future hiring needs and your organization’s brand.”  

Understanding the motivations behind the exit, added Mr. Rivers, likewise gives opportunities for correction and improvement.  

Don’t rush into hiring, advised Forbes magazine in a September 2022 article.  

“As your company has grown, the job responsibilities of each position have likely evolved,” said Nick Leighton, an executive coach and Forbes Councils member. Taking the time to redefine the position’s requirements creates a job description that “clearly communicates your expectations and helps attract the best possible candidates to your company.”  

As with any change, top of mind among the remaining team members would be the question, “Why?”  

Transparency and honesty are the best policy for this, according to Michele Bailey, a business speaker and founder and CEO of culture agency The Blazing Group.  

Take the time to answer questions, she said in a July 2021 blog by Trello, a work management software by the Sydney-headquartered company Atlassian.  

“While considering privacy, sharing as much as you are able about the departure is important,” Ms. Bailey said. Honesty is important too, as “uncertainty over the reason for the departure could lead to rumors and fears that could impact morale, engagement, and productivity.”  

BUILDING CULTURE
How these new team members fit into the company’s culture is as important as what they do, and Ms. Florentino told BusinessWorld that building a good team culture depends on “what you allow and what you don’t allow within the team.”  

“[That] is what sets good culture,” she said. “It is not something that happens overnight, though, and open communication is oftentimes the key.”  

For Mr. Rivers, fostering a healthy culture includes crafting a common goal and clarifying each role.  

“There should be a mechanism that handles the concerns of each team member,” he added. — Patricia Mirasol

Singapore’s economy expanded 3.8% in 2022 but faces new risks

REUTERS

SINGAPORE — Singapore’s economy grew faster that official forecasts in 2022 but slower activity in the fourth quarter points to significant risks ahead for the city-state in the new year as global demand weakens and inflationary pressures weigh.

Singapore’s economy grew 3.8% in 2022, preliminary data from the Ministry of Trade and Industry showed on Tuesday, beating government forecast for growth of 3.5% and down from 7.6% in 2021.

Gross domestic product (GDP) expanded 2.2% in October-December on a year-on-year basis, the government data showed, almost half the 4.2% growth seen in the third quarter. Eight economists polled by Reuters had expected growth of 2.1%.

“It is concerning that there is a slight quarter-on-quarter fall in services… this showed the impact of the global slowdown on external oriented services sectors, and that further growth from current levels will be harder to achieve in 2023,” said MUFG analyst Jeff Ng.

GDP grew 0.2% on a quarter-on-quarter seasonally adjusted basis in October-December.

Singapore Prime Minister Lee Hsien Loong said in his New Year message on Saturday that the international outlook remains troubled, which will affect the city-state’s economy. The government expects growth of between 0.5% to 2.5% this year.

INFLATION
Singapore has seen some signs of price pressures easing in recent months but inflation still remained elevated at about 5%.

Meanwhile, the country’s sales tax has been raised to 8% from 7% since Jan. 1 this year as the government needs more revenue to fund increasing healthcare expenditure of its aging population. The sales tax will be further raised to 9% from 2024.

Singapore’s government has pledged to give almost 3 million Singaporeans at least S$700 in cash payouts over five years as part of an S$8-billion “assurance package” to help them cope with rising prices.

Capital Economics said the economy is likely to struggle, which means the Monetary Authority of Singapore is unlikely to tighten monetary policy in 2023. The central bank tightened its foreign exchange-based monetary policy four times last year to fight rampant inflationary pressures.

“Looking ahead, we think growth is likely to weaken further. Exports are likely to fall further if, as we expect, the global economy enters a recession in 2023,” Capital Economics said. “Elevated interest rates, declining household savings and high inflation are likely to drag on domestic demand.” — Reuters

Families offered 1M yen to move out of Tokyo

JEZAEL MELGOZA-UNSPLASH

JAPAN plans to boost financial support to households to move away from the capital to combat depopulation in other areas of the country, according to multiple local media reports.

Eligible families in the Tokyo metropolitan area will be able to receive 1 million yen ($7,700) per child starting in the fiscal year 2023 if they move to a disadvantaged local area — more than triple the 300,000 yen incentive already in place, the reports said.

The financial incentives highlight the challenges that Japan is facing with its low birth rate and long life expectancy. Rural areas have seen rapid depopulation as the young move away for opportunities in cities, leaving the localities dotted with empty homes and contending with dwindling tax revenue.

The increased support for children comes on top of a flat 1 million yen that families can get for moving. Under the new proposal, a household with two children could receive 3 million yen in support if they left the Tokyo area. Japan’s national government began the initiative to attract people to regional areas in 2019, allowing households who have lived in the central Tokyo metropolitan area for five years to apply for support funds if they move.

Families can continue to work remotely at their current job, work at a local small or medium sized business, or start a business in the local area — which would allow them to apply for even more financial support.

The scheme saw 1,184 household participants in 2021, compared to 71 the first year it launched, according to the Nikkei. — Bloomberg

Russian anger grows over strike that killed dozens of troops in Ukraine

A RUSSIAN FLAG flies with the Spasskaya Tower of the Kremlin in the background in Moscow, Russia, Feb. 27, 2019. — REUTERS

KYIV — Russian nationalists and some lawmakers have demanded punishment for commanders they accused of ignoring dangers as anger grew over the killing of dozens of Russian soldiers in one of the Ukraine war’s deadliest strikes.

In a rare disclosure, Russia’s defense ministry said 63 soldiers were killed on New Year’s Eve in a fiery blast that destroyed a temporary barracks in a vocational college in Makiivka, twin city of the Russian-occupied regional capital of Donetsk in eastern Ukraine.

Russian critics said the soldiers were being housed alongside an ammunition dump at the site, which the Russian defense ministry said was hit by four rockets fired from US-made HIMARS launchers.

The New Year’s Eve strike on Makiivka came as Russia was launching what have become nightly waves of drone attacks on Kyiv and other Ukrainian cities.

Ukrainian officials said Russia had on Monday struck Ukraine-controlled parts of the Donetsk region, hitting the village of Yakovlivka, the city of Kramatorsk and destroying an ice rink in the town of Druzhkivka.

Ukraine said the Russian death toll in Makiivka was in the hundreds, though pro-Russian officials called that an exaggeration.

Russian military bloggers said the extent of the destruction was a result of storing ammunition in the same building as a barracks, despite commanders knowing it was within range of Ukrainian rockets.

Igor Girkin, a former commander of pro-Russian troops in eastern Ukraine who is now one of the highest profile Russian nationalist military bloggers, said hundreds had been killed or wounded. Ammunition had been stored at the site and military equipment there was uncamouflaged, he said.

“What happened in Makiivka is horrible,” wrote Archangel Spetznaz Z, a Russian military blogger with more than 700,000 followers on the Telegram messaging app.

“Who came up with the idea to place personnel in large numbers in one building, where even a fool understands that even if they hit with artillery, there will be many wounded or dead?” he wrote. Commanders “couldn’t care less,” he said.

Ukraine almost never publicly claims responsibility for attacks on Russian-controlled territory in Ukraine and President Volodymyr Zelensky did not address the Makiivka strike in his nightly speech on Monday.

But the General Staff of Ukraine’s Armed Forces reported the Makiivka attack as “a strike on Russian manpower and military equipment”. It did not mention casualties, but said 10 pieces of military equipment were destroyed.

‘STUPID LOSSES’
The fury in Russia extended to lawmakers.

Grigory Karasin, a member of the Russian Senate and former deputy foreign minister, not only demanded vengeance against Ukraine and its NATO supporters but also “an exacting internal analysis”.

Sergei Mironov, a legislator and former chairman of the Senate, Russia’s upper house, demanded criminal liability for the officials who had “allowed the concentration of military personnel in an unprotected building” and “all the higher authorities who did not provide the proper level of security”.

Unverified footage posted online of the aftermath of the blast at the Russian barracks in Makiivka showed a huge building reduced to smoking rubble.

Some of the dead came from the southwestern Russian region of Samara, the region’s governor told Russian media, urging concerned relatives to contact recruitment centers for information.

Andrey Medvedev, deputy speaker of the Moscow City Duma and a pro-Kremlin journalist, said authorities, whether civilian or military, must value Russian lives.

“Either a person is of the highest value — and then punish for stupid losses of personnel, as for treason to the fatherland — or the country is over,” Mr. Medvedev wrote on the Telegram messaging app.

A Russian-backed military information center in the Donetsk region said there had been 69 Ukrainian attacks on the region, including Makiivka, on Monday.

‘BANKING ON EXHAUSTION’
Having suffered defeats on the battlefield in the second half of 2022, Russia resorted to mass air strikes against Ukrainian cities.

Ukraine said on Monday it had shot down all 39 drones Russia had launched in a third night of air strikes on civilian targets in Kyiv and other cities.

Ukrainian officials said their success proved that Russia’s tactic in recent months of raining down missiles and drones to knock out Ukraine’s energy infrastructure was increasingly failing as Kyiv beefs up its air defenses.

Russia denies targeting civilians in what it calls a special military operation against its southern neighbor launched on Feb. 24.

After firing dozens of missiles on Dec. 31, Russia launched more than 80 Iranian-made Shahed drones on Jan. 1 and Jan. 2, all of which had been shot down, Mr. Zelensky said, adding that Russia was planning a protracted campaign of such attacks to “exhaust” Ukraine.

“It is probably banking on exhaustion. Exhausting our people, our anti-aircraft defenses, our energy,” Mr. Zelensky said in his nightly video address.

Ukraine, he said, had to “act and do everything so that the terrorists’ fail in their aim, as all their others have failed”. — Reuters

Mastermind of Banksy mural removal may face up to 12 years in jail

KYIV — The suspected mastermind behind the removal of a Banksy mural in a Ukrainian town could face up to 12 years in prison if found guilty, Ukraine’s interior ministry said on Monday.

The artwork, depicting a woman in a gas mask and a dressing gown holding a fire extinguisher, was taken off a wall in the town of Hostomel on Dec. 2, according to officials.

The ministry announced on its website that the man it believes orchestrated the operation had been handed a “suspicion notice”.

The artwork by the renowned British artist had been valued at over 9 million hryvnia ($243,900), the ministry statement said.

“The criminals tried to transport this graffiti with the help of wooden boards and polyethylene,” it said.

“Thanks to the concern of citizens, the police and other security forces managed to arrest the criminals.”

The mural was retrieved.

Banksy confirmed he had painted the mural and six others in places that were hit by heavy fighting after Russia invaded Ukraine in late February. — Reuters

Startup CEOs reflect on their greatest challenges of 2022, and how they were able to overcome them

STOCK IMAGE | Image by vectorjuice on Freepik

The year 2022 was tough, said four startup CEOs interviewed by BusinessWorld. Navigating their way to calmer waters, they said in separate Dec. 27 e-mails, entailed maintaining a bootstrapped mentality, seeking guidance from mentors, and stepping out of one’s comfort zone. 

A BOOTSTRAPPED MENTALITY 

Investors had a wait-and-see approach to their investment decisions as a result of the global recession, said Dennis J. Velasco, founder and CEO of Prosperna, an online store builder for Philippine micro, small, and medium enterprises (MSMEs). Everyone in the ecosystem was likewise figuring out how to navigate “these economic times.” 
 
“Our funding strategy has always been to maintain a bootstrapped mentality which centers around three pillars: manage growth investments with a clear line of sight to profitability; measure and inspect everything; and deliver measurable value,” he said. 

The first pillar, Mr. Velasco explained, meant having every investment – whether it be for product or marketing – be cash-flow positive within 90 days. This also meant having brief weekly meetings to discuss key performance indicators, to be able to measure value and “align everyone’s objectives to the acquisition, activation, and retention of customers.” 

A second challenge is finding the right talent, which the company manages by identifying people who “have the potential to be great” at the recruitment stage, and including training and development as part of its strategy. 

 
“There’s not an abundance of people who have ‘been there and done that.’ In Silicon Valley, you could just go down to the corner bar for happy hour and build a team with lots of experience by the end of the night,” Mr. Velasco said. 

Prosperna, he added, has grown to over 6,000 customers (including Cookiedudeph.com, TheBootArtillery.com, and Parasolymar.com) in 2022 versus about 1,700 customers the previous year. 

GROWTH-RELATED DECISIONS 

Offering a platform for cross-border trade and fulfillment services, 1Export had to make a lot of growth-related decisions in 2022, according to its founder and CEO Anna Melissa G. Nava.

These decisions, she shared, were on country expansion, operating cost reduction, and revenue growth — “to a point where it’s sustainable with our operating expenses.” 

She said, “2022 was a year where we had to make choices about our growth. Growth in terms of scaling up or managing cash flows; growth in terms of doubling down on the Philippines, or opening in a new country; growth in terms of getting out of your comfort zone or doing things you have never done before.”  

Ms. Nava said that, had the team decided not to grow, they would still be in the same comfortable spot.  

“We look back at where we were a year before and realize how far we’ve come — not just in terms of the business and operations, but also how much our people grew in terms of overcoming challenges,” she added. “And for this, we are extremely thankful.” 

The company is now in 60 markets, up from 24 markets in 2021. It has also expanded to Indonesia in 2022 with an eight-person headcount, and has revenue growth of over 100%. 

ADVICE OF MENTORS AND CO-FOUNDERS  

For Don Pansacola, it was the increasing complexity of business operations as NextPay scaled up that yielded the year’s most significant hurdle. 

“It can be really tough coordinating among people who have their own strengths, weaknesses, communication styles, and specializations,” said the co-founder and CEO of the digital banking suite for small Filipino businesses.  

Every added stage of complexity, he said, “brings about an exponential increase for high-level coordination and communication (a.k.a. ‘coordination tax’), which I’ve had to learn how to work with.” 

As NextPay grew, Mr. Pansacola’s role evolved from coding, to managing the company app, to managing the servers and operations, to managing the people who manage the servers and operations, and then finally to managing the systems that manage people.  

Seeking guidance from mentors and other co-founders helps one overcome challenges, he said. One such mentor’s advice Mr. Pansacola has imbibed is the clear definition of roles and responsibilities within a team. 

“This will help ensure that everyone knows what is expected of them and can work effectively without duplicating effort or stepping on each other’s toes,” he said, noting that while “this sounds generic and sometimes obvious, sometimes it takes someone you trust and admire to actually say it for it to really sink in.” 

“By learning from their experiences and seeking out their advice, we’ve been able to overcome these challenges and keep growing,” he added. 

NextPay has had an over 200% increase in transactions in 2022 vis-a-vis 2021. It has had over P2.5 billion worth of transactions processed since its launch in 2020. 

KEEPING THE FAITH TO SNAG POTENTIAL DEALS 

Nanotronics, Inc.’s most daunting obstacle is funding, its co-founder and CEO Jerome O. Palaganas explained, because developing its minimum viable product necessitates having its own laboratory and equipment. 

The deep tech startup was funded by the Department of Science and Technology Philippine Council for Industry, Energy and Emerging Technology Research and Development (DOST PCIEERD) in 2017 for pioneering the production of nanocellulose crystal, which is derived from indigenous crops, and which can be used in various industries. 

“It is CAPEX [capital expenditure]-intensive right at the very beginning,” Mr. Palaganas said.  

The company has identified local packaging as a market where it can make an impact on customers and the environment. Nanotronics, Inc., however, needs to “conduct R&D [research and development] if we wish to come up with a response to the plastic waste problem.” 

At present, it has three material solutions which it is testing with partners in the packaging industry.  

“These latest products… have sparked interests in clients,” said Mr. Palaganas. “We look forward to closing the deal with and increase our revenue stream, for us to further grow Nanotronics and achieve business sustainability.” — Patricia Mirasol

Tips for startups on their way to scaling up their business 

As told to BusinessWorld by Carlo C. Calimon, startup mentor and president and co-founder of StartUp Village, a startup incubator and accelerator:  

1. Continue to listen to your customer.  

The challenge companies face as they scale up is that they become detached from their customers. There is a tendency to forget that their business’ success is dependent on the value proposition that their customers appreciate and are willing to pay for. 

2. Continue to innovate.  

Your past success does not mean continued success; it will not necessarily be the basis of your future success. Companies that remain relevant continue to push the boundaries of innovation while constantly thinking of ways to a.) remain relevant to their customers, and, b.) develop new customer bases.  

3. Keep your eye on the prize, not on the money.  

It’s not about the money… it is definitely about investor money. It’s about growing the business to help create value for other people. Helping create value for customers will naturally lead to the cash. Do not lose track of your core and your vision.   

4. Give back.  

Once you achieve a degree of success, pay it forward. The Philippine startup ecosystem needs all the help it can get. Whether it’s by investing or mentoring, share your success. 

China state media plays down severity of COVID wave before WHO meeting

STOCK PHOTO | Image by Gerd Altmann from Pixabay

BEIJING  – China’s state media played down the severity on Tuesday of the COVID-19 wave surging over the country, with its scientists expected to give a briefing to the World Health Organization on the evolution of the virus later in the day.

China’s abrupt U-turn on COVID controls on Dec. 7, as well as the accuracy of its case and mortality data, have come under increasing scrutiny at home and overseas and prompted some countries to impose travel curbs.

The policy shift followed protests over the “zero COVID” approach championed by President Xi Jinping, marking the strongest show of public defiance in his decade-old presidency and coinciding with the slowest growth in China in nearly half a century.

As the virus spreads unchecked, funeral parlours report a spike in demand for their services and international health experts predict at least one million deaths in the world’s most populous country this year.

China reported three new COVID deaths for Monday, up from one for Sunday. Its official death toll since the pandemic began now stands at 5,253.

In an article on Tuesday, People’s Daily, the official newspaper of the Communist Party, cited several Chinese experts as saying the illness caused by the virus was relatively mild for most people.

“Severe and critical illnesses account for 3% to 4% of infected patients currently admitted to designated hospitals in Beijing,” Tong Zhaohui, Vice President of Beijing Chaoyang Hospital, told the newspaper.

Kang Yan, head of West China Tianfu Hospital of Sichuan University, said that in the past three weeks, a total of 46 critically ill patients have been admitted to intensive care units, accounting for about 1% of symptomatic infections.

More than 80% of those living in the southwestern Sichuan province have been infected, local health authorities said.

The World Health Organization on Friday urged China’s health officials to regularly share specific and real-time information on the COVID situation.

The agency has invited Chinese scientists to present detailed data on viral sequencing at a meeting of a technical advisory group scheduled for Tuesday. It has also asked China to share data on hospitalizations, deaths and vaccinations.

The European Union has offered free COVID vaccines to China to help contain the outbreak, the Financial Times reported on Tuesday.

EU government health officials will hold talks on Wednesday on a coordinated response to China’s outbreak, the Swedish EU presidency said on Monday.

The United States, France, Australia, India and others will require mandatory COVID tests on travellers from China, while Belgium said it will test wastewater from planes from China for new COVID variants.

China has rejected criticism of its COVID data and said any new mutations may be more infectious but less harmful.

“According to the political logic of some people in Europe and the United States, whether China opens or does not open is equally the wrong thing to do,” state-run CCTV said in a commentary late on Monday.

ECONOMIC CONCERNS

As Chinese workers and shoppers are falling ill, concerns mount about growth prospects in the world’s second-largest economy, weighing on Asian stocks.

Data on Tuesday showed China’s factory activity shrank at a sharper pace in December as the COVID wave disrupted production and hurt demand.

December shipments from Foxconn’s Zhengzhou iPhone plant, disrupted late last year by a COVID outbreak that prompted worker departures and unrest, were 90% of the firm’s initial plans, a source with direct knowledge of the matter said.

A “bushfire” of infections in China in coming months is likely to hurt its economy this year and drag on global growth, said the head of the International Monetary Fund, Kristalina Georgieva.

“China is entering the most dangerous weeks of the pandemic,” warned analysts at Capital Economics.

“The authorities are making almost no efforts now to slow the spread of infections and, with the migration ahead of Lunar New Year getting started, any parts of the country not currently in a major COVID wave will be soon.”

Mobility data suggested that economic activity was depressed nationwide and would likely remain so until the infection wave began to subside, they added.

China’s Ministry of Culture and Tourism said the domestic tourism market saw 52.71 million trips during the New Year holiday, flat year-on-year and only 43% of the 2019 levels, before the pandemic.

The revenue generated was over 26.52 billion yuan ($3.84 billion), up 4% year-on-year but only about 35% of the revenue created in 2019, the ministry said.

Expectations are higher for China’s biggest holiday, the Lunar New Year, later this month, when some experts expect daily COVID cases to have already peaked in many parts of the country. Some hotels in the southern tourist resort of Sanya are fully booked for the period, Chinese media reported. – Reuters

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