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The world’s cotton supply keeps shrinking, hit by drought, heat

SZE YIN CHAN-UNSPLASH

By Tarso Veloso, Tatiana Freitas and Marvin G. Perez

EXTREME weather is wreaking havoc upon virtually all of the world’s largest cotton suppliers.

In India, the top-producing country, heavy rains and pests have cut into cotton crops so much that the nation is importing supplies. A heat wave in China is raising concerns about the upcoming harvest there. In the US, the largest exporter of the commodity, a worsening drought is ravaging farms and is set to drag production to the lowest level in more than a decade. And now Brazil, the second-largest exporter, is battling extreme heat and drought that have already cut yields by nearly 30%.

This confluence of extreme weather events brought on by climate change has sent cotton prices soaring by as much as 30%. Earlier this year, they touched the highest level since 2011, squeezing the margins of clothing suppliers around the world and threatening to raise the costs of everything from T-shirts, to diapers, to paper and cardboard. In a call with investors last week, Children’s Place CEO Jane Elfers described the surge in cotton prices as “a huge, huge problem for us” and said the company was hoping to see some relief in the second half of the year.

The outlook for Brazil is anything but helpful. The drought there has already dried up an estimated 200,000 metric tons of supply, according to Abrapa, a group representing growers. With the nation’s 2021-2022 harvest close to complete, production is now seen at 2.6 million tons — or less.

Bom Futuro group, one of Brazil’s largest cotton producers accounting for about 10% of the nation’s planted area, has seen yields fall 27% compared with the previous season. Julio Cezar Busato, a grower in Sao Desiderio, Bahia state, has suffered from a similar decline. Dryness is reducing the number of cotton bolls, making them lighter across all of the country’s main growing regions, he said. 

Meanwhile, US output is set to plunge 28% in the season that began this month. The US expects production to hit the lowest level since the 2009-2010 season, sending stockpiles to near-historic lows, because of a drought that has become so extreme that the US government is rationing water from the Colorado River. Together, the US and Brazil account for half of the world’s cotton exports.

The decline in global supplies has become so steep that it’s overshadowing demand headwinds. The US government and analysts have been projecting a drop in demand due to a slide in clothing purchases and slowing economies, especially in Europe and Asia. And yet all signs point to “much higher” cotton prices in the coming months with crops shrinking, said Andy Ryan, senior relationship manager for Hedgepoint Global Markets in Nashville.

‘A MOUNTAIN OF MONEY’
Mr. Busato, who also serves as the head of Abrapa, sold 75% of what he expected to harvest in advance and ended up largely missing out on the big surge in prices. Because of the weather, he only produced enough to meet his already-existing contractual obligations. “I could have made a mountain of money,” he said.

The weather has created a secondary headache for the cotton buyers of the world. Untimely rains in regions including Australia, Pakistan, and even Brazil have also diminished the quality of the stock, said Peter Egli, director for Plexus Cotton Ltd.

So as not to be blindsided for another season, Brazilian farmers are set to increase their cotton-growing areas by 100,000 hectares to 1.7 million hectares for the 2022-2023 season, with plantings beginning in January. Now that most of the current crop there has been sold, farmers are looking to start hedging the 2023 harvest more aggressively. “We don’t want to lose Asian markets that we gained recently,” Mr. Busato said. –— Bloomberg

Pioneering Japanese ‘butterflies’ designer Hanae Mori, 96

HANAE MORI and one of her creations, the ‘Red Butterfly Dress’ — PHOTOGRAPHED BY HIROSHI YODA/HANAE-MORI.COM

TOKYO —  Hanae Mori, a pioneering designer who brought Japanese motifs to the global haute couture stage and created the wedding dress worn by Empress Masako, had died aged 96.

Famed for her butterfly designs, Ms. Mori was born in the rural prefecture of Shimane, recalling in later life how the stylish clothes ordered for her as a girl by her doctor father from Mitsukoshi, a noted Tokyo department store, left her feeling “embarrassed.”

Still, she later made her way to the city, where she attended university and then design school, opening her own studio there in its still partly war-ravaged center in 1951.

Working as a designer for movie directors helped hone her style, but a turning point came in 1961, when she went to Paris to do research on designer Coco Chanel and then visited New York.

“I felt strongly aware of my roots as a ‘Japanese person’,” Mr. Mori —  who her office said had died on Aug. 11 —  told the Rakuten FashionWeek Tokyo website in an interview.

“Cheap Japanese products sold in the basements of department stores… The depiction of Madame Butterfly in the opera Madame Butterfly, which I saw in New York,” she said.

“‘This is not Japan!’ I decided to try my luck with creations that were made in Japan.”

In 1965, she presented her first collection in New York, which garnered attention for its mixture of Eastern and Western themes.

Over the next decade, shows in Europe followed and she opened a fashion house in Paris, becoming the first Asian woman to be admitted to a French haute couture association.

“I chose the butterfly, symbolizing the Japanese woman spreading her wings around the world, as my theme,” she added.

Notable commissions that followed before her retirement in 2004 included the dress worn by Empress Masako at her wedding to then-Crown Prince Naruhito in 1993.

She also designed uniforms for Japan Airlines flight attendants and for Japan’s Olympic teams in the 1992 Barcelona Summer Games and the 1994 Lillehammer Winter Games. — Reuters

How PSEi member stocks performed — August 19, 2022

Here’s a quick glance at how PSEi stocks fared on Friday, August 19, 2022.

Stocks seen to pull back after robust Q2 results

PHILIPPINE SHARES may move sideways this week on profit taking after its last week’s rally as investors wait for more economic catalysts that would point to sustainability.

The Philippine Stock Exchange index (PSEi) posted gains on Friday, inching up by 39.23 points or 0.57% to close at 6,863.86, while the broader all shares index went up by 15.80 points or 0.43% to 3,635.57.

Week on week, the PSEi surged by 164.2 points or 2.45% from its close of 6,699.66 on Aug. 12.

“The local market has been riding on bullish momentum fueled by confidence towards the strength of the corporate sector evidenced by the robust results seen in our second-quarter and first-half company reports,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail the market maintained its strength during Friday’s session “as buying appetite continued to be robust” despite the central bank’s rate hike and continuing hawkish stance.

The Monetary Board raised its benchmark interest rate by 50 basis points (bps) at its Thursday meeting.

Meanwhile, interest rates on overnight deposit facilities were raised to 3.25% and lending facilities to 4.25%.

The Bangko Sentral ng Pilipinas (BSP) forecast for this year’s baseline shifted higher as it expected inflation to breach the 2-4% target at 5.4%, while forecasts for 2023 and 2024 declined to 4% and 3.2%, respectively.

For this week, Mr. Mercado said that he expects the market to move sideways as investors are expected to pocket profits from last week’s rally.

“We don’t think that the market will continue to run away given that macro uncertainties (though easing) continue to remain high. As such, we think that the market is highly susceptible to a pullback in the coming weeks given the extent of the rally thus far in August. We expect investors [to] lock in some of those gains,” Mr. Mercado added.

Mr. Tantiangco said: “Next week, investors are expected to watch out for catalysts that would point to the sustainability of the strong results we’ve seen in the [first] half. Lack of such is seen to lead to profit taking.”

He added that: “macroeconomic concerns are expected to challenge the extension of the local market’s rally.”

These concerns include the hawkish outlook of the US Federal Reserve, the possibility of more rate hikes by the BSP, further widening of our balance of payments deficit (BoP), and lingering supply problems in agricultural commodities.

In the data released by the BSP on Friday, the country’s BoP deficit widened to $1.819 billion in July, a reversal from a year ago’s $642-million surplus.

This is the widest deficit posted in 17 months or since $2.019 billion in February 2021 and it is also higher than the $1.574 billion gap in June.

Meanwhile, Federal Reserve Chairman Jerome H. Powell will give a speech on US economic outlook at the annual global central bankers’ conference in Jackson Hole, Wyoming on Friday from which investors may get more cues on the Fed’s actions in the coming months.

China Bank Securities’ Mr. Mercado placed the PSEi’s support at 6,720 and resistance at 6,900-7,000 levels, while Philstocks Financial’s Mr. Tantiangco put support at 6,741.47, the local market’s 200-day exponential moving average, and resistance at the 7,000-7,100 range. — Justine Irish D. Tabile with Reuters

Gov’t told to talk to local gov’ts on cash aid after weekend chaos

PEOPLE flocked to the Department of Social Welfare and Development’s Dagupan City office on Saturday for cash aid. — DAGUPAN CIO

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINE government should coordinate with local authorities after chaos marred its aid payout to poor students, experts said at the weekend, amid spiraling oil and food prices.

The government has not learned from its experiences during the coronavirus pandemic, Maria Ela L. Atienza, a political science professor at the University of the Philippines, said in a Viber message. “No clear lessons have been learned from it and previous crisis situations.”

Tens of thousands of students and parents trooped to offices of the Department of Social Welfare and Development (DSWD) nationwide at the weekend to claim their cash aid. Many of them went home with nothing, while at least one stampede was reported in Zamboanga in the country’s south.

The agency on Thursday said it would give P500 million in student cash aid — P1,000 each to elementary students from poor families, P2,000 to high school students, P3,000 to senior high school students and P4,000 to college students.

The aid is limited to three students per family, which can get the financial assistance on Saturdays from Aug. 20 to Sept. 24.

The Social Welfare department admitted failing to coordinate with local governments for the cash aid distribution. Social Welfare Secretary Erwin T. Tulfo apologized for the mess at the weekend. He told a news briefing he wanted his agency to directly give the money and avoid selective aid.

Ms. Atienza said the Local Government Code of 1991 and other laws mandate coordination between the central and local governments, as well as other agencies.

“That is the essence of decentralization and multilevel governance,” she said. “If the problem is patronage at the local level, there are accountability mechanisms to avoid these and proper guidelines should be formulated.”

Ms. Atienza said since the funds involve education aid, the Social Welfare department should have coordinated first with the Department of Education and Commission on Higher Education.

In Zamboanga City, about 5,000 people showed up in front of a school where the aid was distributed, causing a stampede that hurt 29 people.

The victims, aged 16 to 58 years, had been waiting in line for a chance to receive the aid since Friday evening, the Zamboanga City Medical Center’s Public Affairs Unit posted on Facebook.

Zamboanga City Mayor John M. Dalipe in a statement said they were “ready and willing to support and provide necessary resources to ensure the well-being of the beneficiaries.”

In Manila and nearby areas, authorities had to use riot police to prevent people from storming offices of the Social Welfare department.

“Public services require the coordination and cooperation of the National Government and local government units,” policy analyst Michael Henry Ll. Yusingco said in a Facebook Messenger chat.

“The president himself alluded to this in his first state of the nation address. And it’s surprising that his administration seems to be struggling with this.”

“If they don’t recalibrate their governance paradigm, then fiascos like this one will be repeated.”

Mayors in several cities have suggested alternative procedures in the release of the cash aid.

Iloilo City Mayor Jerry P. Treñas said DSWD should consider a school-based distribution system.

“If the reason of DSWD is to avoid going through the LGUs, the financial assistance can be coursed through the schools. It will be easier and more convenient,” he posted on Facebook on Saturday.

Earlier in the day, the mayor scolded the DSWD regional head over what he called a “terribly planned event” at the Iloilo Sports Complex.

“If there will be students who will be harmed I will be filing criminal and administrative cases against all responsible for this poor planning and execution,” he added. 

In Dagupan City, Mayor Belen T. Fernandez offered to provide the local government’s list of poor households. She also offered the city’s plaza for the distribution.

Ms. Atienza said the poor claimants should not be blamed for the chaos. “Government officials and personnel are there to be in the service of the people. They operate and use funds from people’s taxes. Even poor people pay taxes, mostly indirectly because of value-added tax and other additional taxes imposed on goods they buy,” she said.

“People, whether rich or poor, should be treated equally, she said. “Everybody should be treated with dignity. If there are limited funds, priority should be given to those genuinely in need.” 

Ms. Atienza also urged people to know “their rights and responsibilities” and learn to demand accountability and improved services. 

“During failures of leadership, government leaders should be reminded that the buck always stops with them,” Terry L. Ridon, former head of the Presidential Commission for the Urban Poor, said in an emailed statement.

Most schools are set to open classes on Monday. The Philippines is one of the last countries in the world to resume face-to-face classes, which experts said has affected student and labor quality.

More physical classes are expected by November, and experts have said the public transport sector is not prepared to face an expected increase in demand.

Analysts: Red-tagging continues with Marcos

PHILIPPINE STAR/ RUSSEL PALMA

By John Victor D. Ordoñez, Reporter

THE GOVERNMENT of Ferdinand R. Marcos, Jr. appears to be continuing his predecessor’s practice of tagging people as communists without basis, political analysts said at the weekend, after the indictment of members of a religious group for terrorist financing.

“This is a continuation of the previous administration’s policy of red-tagging, disinformation and weaponizing of the Anti-Terror Act against all critics of the government and those who work directly with the people,” Maria Ela L. Atienza, a political science professor at the University of the Philippines, said in a Viber message.

“These actions are a big challenge to the rule of law, independence of the Judiciary, accountability mechanisms and people’s rights,” she added.

Executive Secretary Victor D. Rodriguez did not immediately reply to a Viber message seeking comment.

Last week, the Department of Justice (DoJ) charged 16 members of the Rural Missionaries of the Philippines (RMP) of financing the activities of the Communist Party of the Philippines (CPP) and its armed wing, the New People’s Army (NPA).

The church members failed to answer the charges during a preliminary investigation, government prosecutors said in a statement last week.

The church group said one of the ex-rebels had falsely testified against its members in exchange for the release of her mother.

It also said the indictment showed the state’s tendency to “demonize legal democratic organizations” critical of the government.

“Instead of really addressing the root cause of insurgency in the country, instead of using an approach that forces state critics and detractors to be within the bounds of law and democratic practices, the government uses irresponsible, unlawful and cowardly means to engage those forces that they think will undermine their rule,” Arjan P. Aguirre, who teaches political science at the Ateneo De Manila University, said in a Facebook Messenger chat.

“Red-tagging is and will always be an approach of the feeble-minded and excessively insecure political bully.”

In May, Justice Secretary Jesus Crispin C. Remulla said he would be “more reserved” about accusing activists of being members of the Maoist movement.

Human rights groups earlier said his appointment was worrisome given his history of accusing certain people as communists. 

In June, Solicitor General and former Justice Secretary Menardo I. Guevarra said the country’s anti-communist task force should file complaints rather than label people as communists.

RMP is a church-based group made up of Catholic priests and lay people. The group supports farmers, fisherfolk and indigenous groups and educates them about their rights, according to its website.

The religious group’s website, along with 25 other alleged communist supporters, was ordered blocked in June by the National Telecommunications Commission upon the request of former National Security Adviser Hermogenes C. Esperon, Jr.

The country’s Anti-Terrorism Council has labeled the communist party as a terrorist group.

In April, the Supreme Court rejected an appeal seeking to reverse its decision upholding the validity of the Anti-Terrorism law, which was signed in 2020.

The Anti-Money Laundering Council has said the law would help it counter the so-called dirty money.

“All these attacks on legitimate organizations and personalities to stifle dissent must be challenged by various organizations in all arenas,” Ms. Atienza said.

House kicks off budget season with arrival of spending plan from gov’t

PHILSTAR FILE PHOTO

THE House of Representatives will receive the P5.26 trillion proposed 2023 national budget today, Aug. 22, giving it just under six weeks to pass an appropriations bill before recess, a senior legislator said.

“The budget process starts here and we want to give all House members time to scrutinize the proposed budget. I can confidently say that we can make the Sept. 30 deadline,” House Majority Leader Manuel Jose M. Dalipe said at a briefing last week.

The proposed budget for next year is nearly 5% larger than the P5.02 trillion 2022 edition.

The Constitution requires President Ferdinand R. Marcos, Jr. to “submit to the Congress within 30 days from the opening of every regular session, as the basis of the general appropriations bill (GAB), a budget of expenditures and sources of financing, including receipts from existing and proposed revenue measures.”

Marikina Rep. Stella Luz A. Quimbo said in a House statement that the Committee on Appropriations, chaired by Ako-Bicol Party-list Rep. Elizaldy S. Co, is committed to the swift approval of the propose economic recovery budget.

“Congress shall work tirelessly to approve a budget that is responsive to the needs of the people and is able to bring inclusive and sustainable growth,” Ms. Quimbo, also senior vice-chairman of the House Committee on Appropriations, said.

Deputy Minority Leader Bernadette Herrera said that the proposed national budget will be subjected to thorough review by the minority.

“We at the minority, assure our countrymen that the budget will pass through the eye of a needle,” Ms. Herrera, of the Bagong Henerasyon party-list, said in a statement.

She also said that Minority Leader and Pantawid Pamilyang Pilipino Projects Rep. Marcelino C. Libanan will assign each minority member a role during the budget hearings.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that timely passage of the budget depends on the presence of “controversial budget items that would require more time (for adjustments) to be made by various government agencies.”

“It would also be a function of any widespread support of lawmakers at both the House and the Senate as to how it would be expedited based on urgency to approve in a more timely manner especially if certified by the President, at least to avoid delays and prevent a re-enactment of the previous year’s budget,” Mr. Ricafort said.

“The economy’s faster growth will depend on the timely approval of the national budget. (As we have seen) in recent years (delays) in the approval of the national budget… led to slower GDP growth by about minus 1 percentage point,” he said, adding that the previous administration eventually learned the downside of a delayed budget and was able to avert repeat episodes.

Mr. Ricafort said financial resources are limited due to the large debt incurred during the pandemic. — Matthew Carl L. Montecillo 

Safety regulations seen as ‘first step’ in nuclear power shift

WIKIMEDIA COMMONS

By Alyssa Nicole O. Tan, Reporter

THE Philippines is running late with its regulatory preparations for a safe nuclear power transition, the head of the Senate energy committee said.

Senator Rafael T. Tulfo said a law is needed to lay down standards for the incorporation of nuclear power companies, the construction of power plants, and the their operation.

“We have not even made a first step and we’re overdue,” he told BusinessWorld in a Viber message.

Safety standards are needed because the Philippines sits astride an area of high tectonic activity, he said, adding that disaster response capacity must be developed should anything go wrong with such plants.

According to the World Bank, the Philippines is vulnerable to earthquakes, volcanic eruptions, tropical cyclones, and floods, making it one of the most disaster-prone countries in the world.

“In regulating the nuclear energy sector, there must be stringent standards as to the minimum standards for facilities, minimum qualifications for the persons or entities operating it, considerations as to where and how to acquire nuclear material, contingencies in case of emergency scenarios, proper standards on nuclear fuel disposal, limitations on foreign influence in the nuclear industry, and how the LGU where the plant is situated should gain a just and equitable share of the plant’s profits,” he said.

Center for Energy, Ecology, and Development Executive Director Gerry Arances told BusinessWorld in an e-mail that it would take years to create a policy framework thorough enough to take into account all safety, environmental, and electricity price risks, and years more to build nuclear facilities.

“Even small modular reactors would take about three to five years to construct. That means nuclear energy cannot provide immediate solutions to today’s energy crisis. In that span of time, renewable energy facilities could already have been deployed,” he said. 

Nuclear power, Mr. Arances said, is not a solution to the climate and energy crises, adding that it does not guarantee lower electricity prices.

“The price of fuel for nuclear energy like plutonium and uranium, neither of which can be sourced domestically, will put Filipino consumers at the mercy of global market prices and vulnerable to shocks,” he said. “We are already seeing this today with fossil fuel volatilities triggered by the Ukraine-Russia war.”

“In developing nuclear power, the Philippines will devote time and energy to figuring out where we can source nuclear fuel, how we will manage nuclear waste, and how we can prevent the possibility of our country turning into the next Fukushima or Chernobyl,” he added.

Even then, he said there is no assurance of eliminating the risk of nuclear accidents, given the country’s geographic location and the intensifying climate crisis.

“Just last month, we saw the impacts of a 7.1 magnitude earthquake (which) should serve as a warning. Exposure to unpredictable seismic events should make us think twice about having a nuclear power plant,” he said.

There were 10 deaths from the magnitude 7 earthquake that struck the northern Philippines, with more 300,000 people from about 82,000 families affected, according to the National Disaster Risk Reduction and Management Council.

The earthquake also damaged more than 21,000 houses, 302 of which were destroyed, the agency said. Damage to infrastructure was about P414 million in the Ilocos region, Cagayan Valley and Cordillera Administrative Region.

Mr. Arances said time and effort should instead be channeled to effecting a 100% transition to genuinely sustainable and safe renewable energy.

“We have an abundant supply of renewable energy just waiting to be developed at an increasingly affordable cost — case in point are the winning bidders of the GEA Reserve prices, of whom the lowest bid is P3.4 per kilowatt hour from solar,” he said.

Concentrix views gov’t as ‘receptive’ to expanding work from home

By Revin Mikhael D. Ochave, Reporter

CONCENTRIX, an information technology and business process outsourcing (IT-BPO) company, said the government appears to be “receptive” to the industry’s proposals to expand work-from-home (WFH) arrangements.

Chris Caldwell, Concentrix president and chief executive officer, said on the sidelines of a company launch of three new sites last week that he is optimistic that the government will ultimately resolve the WFH standoff with BPOs.  

The industry is currently required by law to conduct most of its operations onsite within economic zones in order to continue enjoying fiscal incentives.

“Our wish is that the Philippine government supports WFH more aggressively and they are thinking about how to be competitive on a global scale. The feeling we get is that the government is very receptive to that right now. We’ve got very positive feedback that the Cabinet secretaries are working together to solve this problem before Sept. 12,” Mr. Caldwell said.

“This government has been incredibly supportive of us trying to figure out a solution, and I’m more optimistic that I’ve ever been that they’ll come up with a workable solution. My wish is that the WFH issue is resolved quickly and clearly,” he added.

Sept. 12 marks the expiry of temporary authorization for the industry to do most of its work from home, a policy initially adopted for safety reasons during the pandemic.

On June 21, the inter-agency Fiscal Incentives Review Board (FIRB) issued Resolution No. 017-22, which temporarily allows registered information technology and business process management (IT-BPM) firms to maintain a 70% onsite and 30% WFH arrangement (70:30) until Sept. 12 while continuing to enjoy fiscal incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

The FIRB oversees the grant of tax incentives to registered business enterprises.

Mr. Caldwell said that the industry has ample growth opportunities, which will be affected if the WFH issue is not addressed.

“The Philippines will still grow, the industry will still grow in the Philippines, it just won’t grow (to potential) if the WFH issue is not addressed. We’ll wait and see what the government will come up with,” Mr. Caldwell said.

“I don’t think this government is ready to do (100% WFH) now, but I think getting it to 70% WFH and 30% work in office would be fantastic. We would certainly push for something like that,” he added.

FIRB released Resolution No. 19-21 issued in August last year permitted registered IT-BPM firms to carry out work on a 90% WFH and 10% onsite (90:10) basis while still enjoying tax incentives. This resolution expired on April 1.

Mr. Caldwell said Concentrix is hoping to operate more than 50 sites in the Philippines by the end of the year.

He said Concentrix is looking at areas outside of Metro Manila, but gave no details.

“We are moving some small sites to bigger sites. We’re expanding some sites and shutting down some older sites because we want our buildings to be very new and vibrant,” Mr. Caldwell said.

“There’s a number of places outside of Metro Manila that we are looking at that we believe there is a good talent pool. We’ve always looked at different areas to grow,” he added.

On Aug. 18, Concentrix simultaneously launched its three newest sites, Giga Tower in Bridgetowne, Quezon City, One Montage in Cebu Business Park, and Davao Finance Center in Davao Park District.

“The expansions reinforce Concentrix’s position as the nation’s undisputed largest private employer with approximately 100,000 staff, and brings the company’s total sites in the Philippines to 50, located in 20 cities for its brick-and-mortar operations,” the IT-BPO said.

“All three sites operate 24/7, and have close to 30,000 square meters of space in total. Staff support clients in industries such as Communications, Financial Services, Retail, Technology, Travel, Healthcare, and Content Moderation. Giga and Montage both have Recruitment Hubs for the high volume of jobseekers in Quezon City and Cebu City,” it added.

PHL, Thailand agree to update tourism promotion deal 

REUTERS

THE Philippines and Thailand have agreed to update their tourism promotion agreement in aid of both countries’ economic recoveries.

In a statement over the weekend, the Department of Tourism (DoT) said Secretary Maria Esperanza Christina G. Frasco and her Thai Ministry of Tourism and Sports counterpart Phiphat Ratchakitprakarn agreed to the update on the sidelines of the 11th Asia-Pacific Economic Cooperation (APEC) Tourism Ministerial Meeting in Bangkok on Aug. 18.

The cooperation agreement provides for collaboration between the Philippines and Thailand in travel facilitation, research and development, education and training, tourism initiatives, human capital development and employment generation.

The Philippines and Thailand signed the cooperation agreement covering the 2017-2022 period on March 21, 2017.

According to Ms. Frasco, the Philippines hopes to attract more Thai tourists.

“As of Aug. 14, we have had a little over 1.2 million visitors to the Philippines. Of that number, there have been 6,401 Thai nationals,” Ms. Frasco said.

Mr. Phiphat said the Thai government wants to address the imbalance in visitor numbers.

“I understand that… we have more tourists from the Philippines than Thais going to the Philippines and I want to change this… our departments (must) engage in public relations with the Philippines so we can increase the number of Thai tourists going to the Philippines,” he sid.

Ms. Frasco floated possible collaboration with Thailand in Meetings, Incentives, Conventions, and Exhibitions (MICE) tourism, education tourism particularly English as a second language, and food and gastronomy tourism.

Mr. Phiphat proposed a tourism circuit involving the Philippines and Thailand to be marketed as a package for visitors from outside Asia.

The two officials also agreed to create a technical working group to review and discuss the extension of the agreement.

Ms. Frasco also met with Thai tourism industry representatives during her Bangkok trip, including the Thai Travel Agents Association, Esque Lifestyle & Travel; Jubilee Travel Co., Ltd.; Dive Potato; SC World Express; Big World Holiday; Worldwide Agency Co., Ltd.; Abroad Land; Pleione Travel Co., Ltd.; and Supertrips Co., Ltd.

Ms. Frasco said during her presentation at the APEC meeting that the Philippines is planning to collaborate with airlines and airports to resume flights and the development of new routes to reduce travel rates.

“We shall facilitate partnerships with airlines and airports with the reinstatement of flights and the development of new routes with the end in view improving connectivity across economies within the APEC and across the globe and restoring affordable and competitive rates for international and domestic travel,” Ms. Frasco said. — Revin Mikhael D. Ochave

Embracing the power of technology beyond the COVID-19 crisis

As the pandemic slows down in many parts of the world, many companies will find that digital technology will be one of the most powerful options for recovery during this next phase of the COVID-19 crisis.

Businesses will also undertake this challenge despite severe obstacles which include inconsistent revenue, disorganized workforces, broken supply chains, and a persistent lack of investment capital.

In the Philippines, companies have been forced to adopt new business models, including managing a hybrid work environment, expanding on digital business channels, and providing customers with a more pleasant and holistic digital experience that increases engagement.

Many organizations still struggle to embrace these new technologies. Their legacy technologies have been deemed a liability as they hamper their ability to quickly adopt new and improved way of operations. As the cyberattack threat increases, they are also now more susceptible to cyber incidents as cybercriminals exploit opportunities in these newly digitized operations.

Because of the nature of this unprecedented environment, digital technologies are one of the most effective solutions for recovery. More specifically, a proactive technology strategy built around adapting operations and building resilience can equip businesses with a stronger competitive edge as they recover from the pandemic.

ADAPTING BUSINESS OPERATIONS IN EVER-CHANGING CONDITIONS
Facing uncertainty during this pandemic is one of the greatest challenges businesses must address. The impact of COVID-19 on the economy as well as in our daily lives continues to evolve. This presents an unknown operating environment for enterprises.

The capacity to adapt to these challenges will be crucial in this new way of doing business during these ever-changing conditions. Although it will be difficult to predict how conditions may change, companies can utilize these key actions as discussed in a recent EY article on how embracing technology can bring success:

• Reevaluate infrastructure to support a hybrid workforce. This includes a flexible communications plan that supports the return-to-office situation. New infrastructure will benefit the company more in the long run by helping facilitate collaboration, remote working and higher levels of automation in operations. Teams will be able to better manage resources, track production, and protect the enterprise through a collaborative software platform.

• To ensure business continuity, cloud adoption will help business operations transition more smoothly to support an ecosystem-based approach. This will allow more collaboration and connection among various teams that will improve decision making. Using the cloud will also allow companies to ramp up and down its supporting infrastructure as economic conditions change, linking suppliers, customers, shippers and employees to gain a flexible advantage.

• Automation remains a key pillar of any digital transformation for a business. This offers tremendous potential for leaders looking to drive transformation in their organization: from cost savings and increased delivery speed to new operating models, to higher-value efforts for their people.

BUILDING RESILIENCY AND FLEXIBILITY INTO THE ENTERPRISE
New business models are being introduced because of the pandemic, such as hybrid work situations where employees work from home and in-office, a digital experience that boosts customer engagement, and the acceleration of digital businesses at the expense of traditional physical channels.

However, many organizations have struggled to catch up and be more digitally prepared. Traditional technologies — always high-cost and slow-moving — have become a much greater liability. Moreover, as hackers take advantage of newly digitalized activities, more companies are now frequently being targeted by cyberattacks due to their lack of adequate cyber protection.

Focusing on the following three key areas can help companies build a more resilient and flexible enterprise where digital technologies will be critical:

1. Restructure IT operations

Upgrading digital infrastructure can enhance digital sales channels, the virtual customer experience and direct-to-customer delivery methods. This is evident even in the case of public services where government agencies now allow a more seamless engagement with the citizenry. For example, the Bureau of Internal Revenue (BIR) now accepts not only tax returns but also payments via electronic channels. Soon, its e-invoicing facility will expand and further facilitate online interaction between the Bureau and the taxpayers, be it large or micro, small and medium enterprises (MSMEs).

2. Reevaluate digital strategy

Now is the time to assess which new technologies the company will need to improve on, such as expanding cloud infrastructure and contactless payments and adopting 3D printing and augmented and virtual reality. In addition, companies will need to make difficult decisions around replacing legacy technologies sooner than later.

3. Double down on cybersecurity

Companies should ensure that the virtual infrastructure is secure and that their data is safe and backed up. Leaders should also review their cybersecurity infrastructure and improve where necessary. Moreover, they must consider how to better support the security of third parties such as suppliers, customers and contractors. Companies should also keep in mind that strengthened security measures across its ecosystem should complement and provide a more effective defense against the current generation of security threats without slowing the business down.

ACCELERATING DIGITAL TRANSFORMATION
According to a 2010 Harvard Business Review study that looked into how business fared during the 2008 recession, less than 10% of companies emerged stronger than before the crisis. They did this despite the global crisis by balancing strategic investments that focused on new technologies while cost-cutting through divestments.

With COVID-19 creating fundamental changes to how we live and work on a larger scale than in the 2008 recession, the gap will only widen between leading and underperforming companies. The successful businesses of tomorrow will be those that embrace and accelerate their digital transformation to fast-track recovery and create a competitive advantage in a post-pandemic world.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Warren R. Bituin is the technology consulting leader of SGV & Co.

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