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Taiwan seeks international support after Chinese incursions

By Ben Blanchard

TAIPEI – Taiwan will ensure regional peace and stability and seeks to work with other like-minded democracies, President Tsai Ing-wen told senior French and Australian dignitaries on Thursday, days after a dramatic spike in tensions with China.

The trips by four French senators and former Australian prime minister Tony Abbott come after four straight days, beginning last Friday, of massed Chinese air force incursions https://www.reuters.com/world/asia-pacific/taiwan-reports-surge-chinese-aircraft-defence-zone-2021-10-04 into Taiwan‘s air defence zone, moves met with concern by Washington and its allies.

Democratically ruled Taiwan has sought support from other democracies, especially the United States and it allies, amid the growing military and political pressure from China, which claims Taiwan as its own territory.

Speaking at the presidential office to the French senators, lead by former defence minister Alain Richard, Tsai thanked France for its concern about the situation in the Taiwan Strait and support for its international participation.

“We will continue to fulfil our responsibilities as members of the international community to ensure peace and stability in the Indo-Pacific region. We also hope to make more contributions to the world along with France,” she added.

Richard discussed the “essential contribution of Taiwan in the important field of human progress” but did not mention the rising military tensions with China in remarks carried live on the presidential office’s Facebook page.

Tsai gave a similar message in later remarks to Abbott, who told her he was in Taiwan to help end its international isolation, praising its democracy and handling of the COVID-19 pandemic.

“Of course not everyone and not everywhere is pleased at Taiwan‘s progress, and I do note that Taiwan is challenged on an almost daily basis by its giant neighbour,” Abbott said.

The French senators arrived in Taiwan on Wednesday, despite the strong objections of China which is always angered by visits of foreign officials.

Richard, head of the French Senate’s Taiwan Friendship Group, was the country’s defence minister from 1997 to 2002 under President Jacques Chirac.

Tsai said Taiwan was “very moved” Richard decided to come, despite what she described as “pressure” – a reference to China.

In March, the Chinese embassy in Paris warned against lawmakers meeting Taiwanese officials, prompting a rebuff from the French foreign ministry, which said French senators are free to meet whomever they wish when they travel.

Tsai did not directly mention the recent Chinese air force activities in public comments at her meetings with the senators or Abbott.

Neither France nor Australia have formal diplomatic ties with Taiwan, like most countries.

Separately, Taiwan‘s foreign ministry said it would pay close attention to a planned summit between U.S. President Joe Biden and Chinese President Xi Jinping, the United States being Taiwan‘s most important backer.

“We will continue to coordinate closely with the United States in Taipei and Washington to ensure that U.S. policy toward Taiwan remains unchanged,” said ministry spokeswoman Joanne Ou.

Taiwan‘s government has denounced China’s moves against it, and says it will defend the island’s freedom and democracy, and that only Taiwan‘s people can decide their future. – Reuters

Amid Facebook fracas, Australia moves to update defamation laws

By Byron Kaye

SYDNEY, Oct 7 (Reuters) – Australia is moving with new urgency to redraft its defamation laws after a court ruling that publishers can be liable for public comments on online forums like Facebook sent shockwaves through the media industry and beyond.

Since the ruling, CNN, which is owned by AT&T Inc, has blocked Australians from its Facebook pages https://www.reuters.com/technology/cnn-quits-facebook-australia-citing-defamation-risk-2021-09-29, while the Australian arm of British newspaper the Guardian says it has disabled comments below most articles posted to the platform.

The leaders of the state of Tasmania and the Australian Capital Territory, home to Canberra, have also turned off comment sections on their Facebook pages, citing the judgement by the country’s highest court.

Federal Attorney-General Michaelia Cash on Wednesday wrote to her eight state and territory counterparts, stressing the importance of an ongoing review of defamation laws.

“I have received considerable feedback from stakeholders regarding the potential implications of the High Court’s decision,” the letter, which was seen by Reuters, said.

“While I refrain from commenting on the merits of the Court’s decision, it is clear from stakeholder reactions … that our work to ensure that defamation law is fit-for-purpose in the digital age remains critical.”

The review, which has been running through 2021, has published 36 submissions on its website, including one from Facebook which says it should not be held liable for defamatory comments since it has relatively little ability to monitor and remove content posted under publishers’ pages.

The ruling has come under fire with defamation lawyers accusing Australia of not keeping up with technological change and noting the contrast with the United States and Britain where laws largely protect publishers from any fallout from comments posted online.

The state and federal attorneys general will meet to discuss possible changes in the next month, although no timeline has been published about when changes to the law could go to parliament.

While media organisations were among the first to criticise the High Court ruling, lawyers have warned all Australian sectors which rely on social media to interact with the public are potentially liable.

“The decision has significant implications for those who operate online forums … which allow third-parties to make comments,” a Law Council of Australia spokesperson said. “It is not limited to news organisations.”

Australian Capital Territory Chief Minister Andrew Barr was among those who have disabled comments from Facebook pages.

The move was made “out of an abundance of caution, as his page is not a Government account, it’s a personal page”, a spokeswoman told Reuters in an email.

Brendan Nyst, director of law firm Nyst Legal, which posts regularly on Facebook, said most businesses would continue allowing comments since “engagement is the primary strength of social media”, but the High Court ruling “establishes the need for appropriate monitoring”. – Reuters

The Keepers Holdings’ net income up by 56.8% during 1H2021

The Keepers Holdings, Inc., the publicly listed wine and spirits distribution company of retailer Lucio Co, reported that its net income climbed 56.8% to P650.7 million in the first half of 2021 compared to the P415.0 million it recorded in the same period last year.

The company saw a 38% year-on-year improvement in consolidated net sales as it posted P4.30 billion in the first six months of the year, or an increase of P1.11 billion.

The Keepers Holdings’ brandy segment, led by flagship brand Alfonso, registered a 58.6% sales growth in the first half of 2021, compared to the same period the previous year. The brandy segment now accounts for 78.1% of the group’s total sales by volume.

IWSR Drinks Market Analysis Limited, the global benchmark for beverage alcohol data and intelligence, had identified leading imported Spanish brandies, such as Alfonso, as among the growth drivers of the imported spirits segment.

Based on its early performance this year, The Keepers Holdings is hopeful that Alfonso will be able to sustain its rapid growth – even surpassing the performance of direct competitors in the wider spirits market in the Philippines – through execution of tailored strategies and by leveraging on the Lucio Co Group’s deep understanding of the domestic consumer market.

The Keepers owns three major players in the Philippine imported liquor, wine and specialty beverage distribution segments, namely, Montosco, Inc., Meritus Prime Distributions, Inc. and Premier Wine and Spirits, Inc.

According to IWSR, The Keepers Holdings controls 74.0% of imported spirits by volume and 66.9% by retail sales value, resulting from pure third-party distribution arrangements and associated businesses with some of the world’s leading and popular spirits brands, such as Alfonso, Johnnie Walker, Chivas, Jim Beam, Jameson, Jinro, Absolut Vodka, Tanqueray, Jose Cuervo, and Baileys.

In July 2021, The Keepers Holdings filed an application for a follow-on offering or a ‘re-IPO’ with the Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE). Based on a prospectus dated July 13, 2021, The Keepers Holdings plans to offer up to 3 billion common shares at an offer price of P2.00 to P2.50 per share. The Keepers Holdings has engaged China Bank Capital Corp., PNB Capital and Investment Corp. and SB Capital Investment Corp. as joint issue managers, joint lead underwriters and joint bookrunners.

 


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InLife partners with Lazada to offer protection and accident products

Life insurance has a reputation for being expensive, too technical and hard to understand.

In order to address these concerns, Insular Life (InLife) partnered with the Lazada Marketplace to offer low-priced and easy-to-understand protection and accident products that one can obtain in as fast as a few clicks.

“This pandemic has made many realize that sickness and death may befall anyone anytime. But we also understand the reservation that comes with acquiring life insurance. It’s full of technical jargon and may take several days before it gets approved. At InLife, we want to let people know that LIFE really means Life Insurance is Fast and Easy. And this is what our Lazada products are here for,” said InLife Digital Distribution Head Geraldine G. Pascual.

She added that in order to help Lazada users purchase what could be their first insurance, InLife produced three videos that would explain to them how the products work,”

The videos may be accessed via InLife’s YouTube account. They are about: InLife Lazada Protect Plans, which are term life insurance plans with accidental death and disability benefits, as well as accidental hospital income benefits; the InLife Premium Protect Plans, which are term life insurance plans with hospital income benefits, and the InLife Shield Plans, which are comprehensive group accident plans with medical and surgical expense reimbursement benefits.

“We hope that after watching these videos, our kababayans would gain a better understanding of what life insurance means and why it is essential to own one,” Pascual added.

InLife’s Lazada products may be bought from the Insular Life LazMall Flagship Store.

 


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Factory output expands for fifth month in a row 

INDUSTRIAL production rose for a fifth straight month in August, the Philippine Statistics Authority (PSA) said earlier this morning.

Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries showed the volume of production index jumping 534.6% year on year in August. This was slightly lower than the revised annual rate of 539.7% in July, but still a significant turnaround from the 82.2% contraction in August last year.

The August reading marked the fifth straight month of growth in manufacturing output.

For the year, factory output expansion averaged 61.6%.

The PSA noted growth in 15 out of 22 industry divisions in August led by coke and refined petroleum products (3,800.9%); fabricated metal products, except machinery and equipment (194.2%); wood, bamboo, cane, rattan articles, and related products (94%).

The capacity utilization of these factories averaged 66.1% in August, slightly down from 66.8% the previous month. Of the 22 sectors, 19 averaged a capacity utilization rate of at least 50%.

Leading the sectors with the highest utilization rates were furniture (83.1%), tobacco products (81.6%), and other non-metallic mineral products (79.3%). – Bernadette Therese M. Gadon

Seize the moment, it’s the best time to be with Globe

Globe has been a trusted brand for Filipinos for many years now, with many using its telco products and services to make their everyday lives better and easier. As the company continues to innovate with new offers, perks, and access to everyday essentials, Globe says there is no better time than now to be part of their network.

With the Mobile Number Portability Act or Republic Act No. 11202 now enforced, anyone who wants to enjoy Globe’s exclusive benefits and rewards can easily switch from their current network without giving up their cherished mobile number. The MNP Act gives mobile phone users the liberty to cross from one network to another or to switch from prepaid to postpaid (or vice versa) while keeping their current number, free of charge.

Enjoy the deals you want, with the number you love

Aside from large data allocations and faster connectivity, Globe’s suite of subscription plans is bundled with relevant add-ons that will help subscribers reinvent their lifestyle and keep up with the times.

Among the exclusive device deals customers have access to are the best price for their dream phones, including Apple’s new iPhone 13 and 13 Pro lineup that is soon coming to all Globe stores through its flexible subscription offerings.

Enjoy the essentials you need, with the number you love

With Globe, users can keep tabs on their health and make sure they have the care they need, with 24/7 access to a licensed doctor through KonsultaMD, and GInsure medical coverage for three months for dengue and COVID-19 in collaboration with mobile-first life insurer Singlife. They can also get GCash credits that can be used for many of today’s most popular activities, like shopping online for some good retail therapy or buying premium content subscriptions on streaming platforms for the family to relish together.

Enjoy the rewards you crave, with the number you love

Globe Rewards has one of the most expansive catalogs of great perks and offers that only Globe customers can use. Loyal Globe users can indulge in exciting rewards through the 917 GDay reward program, which provides loyal customers with giveaways, virtual surprises and events. For entrepreneurs or business owners on Globe Business, the Upstart loyalty program empowers small and medium-sized businesses with knowledge and skills that will maximize their company’s digital capabilities, exclusive partnerships, and business enablement.

Enjoy the care you deserve, with the number you love

 Genuine customer care is guaranteed end to end, including incentives when you renew your Globe plan or subscribe to a promo. With the new GlobeOne app, customers now have an easy way to load up promos, manage their accounts, allocate their points and redeem rewards on things they love and need, from entertainment to e-commerce; plus they can get their questions answered and concerns addressed with just a tap of their finger.

“We serve our customers with products and services that are solving problems for them in their everyday lives, and this means introducing them to our relevant ecosystem of services enabled by their chosen Globe plan, promo, or rewards. We are excited to bring these offers and perks to all, welcoming everyone to our Globe family where every day, we strive to deliver superior products and service while empowering them to thrive,” said Globe Telecom Chief Commercial Officer Issa Guevarra-Cabreira.

To learn more about switching to Globe without changing your current mobile number, visit https://www.globe.com.ph/mobile-number-portability.html.

To switch, visit these pages:

Globe Prepaid: https://www.globe.com.ph/prepaid/mobile-number-portability.html

Globe Postpaid: https://shop.globe.com.ph/mnp-postpaid

Globe Business: https://www.globe.com.ph/business/enterprise/mobile-number-portability.html

TM: https://www.tmtambayan.ph/mobile-number-portability.html

 


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Retail’s transformed future with e-commerce

In photo during the BUSINESSWORLD Insights (clockwise, from top left) are panelists Joey Roi Bondoc, Colliers Philippines associate director; and Dennis Velasco, Prosperna chief executive officer; with moderator Arjay L. Balinbin of BusinessWorld.

By Chelsey Keith P. IgnacioSpecial Features Writer

E-commerce prospers at the height of lockdowns across the country, especially in Metro Manila. Such migration of merchants to online platforms are expected to continue transforming the future of the retail market.

Last September 29, a BusinessWorld Insights session on “The future of retail & logistics after e-commerce boom” went through the changes in the sales and delivery of products via digital channels, as well as the advantage of e-commerce to Philippine businesses and economy.

The lockdown, as mentioned, moved several retailers to the online space. At the same time, it has forced them to close their physical shops. According to Joey Roi Bondoc, an associate director at Colliers Philippines, this rise in vacancy across Metro Manila has reached 14% as of the third quarter of 2021.

But even with this decline of the physical presence of retail establishments, Mr. Bondoc believed that brick-and-mortar stores would not disappear. Rather, he presumed a balance between the physical and digital stores.

“Beyond COVID-19 pandemic, Filipinos are expected to be on a revenge shopping and dining. So, we do not see physical stores being phased out. But we see stronger coordination between these brick-and-mortar shops and their e-commerce sites,” he said.

But until the lockdown eases and the achievement of herd immunity, customers would greatly depend more on delivery platforms of retailers and mall operators to purchase goods.

Demand for fast deliveries

Right now, Mr. Bondoc observed, a trend in this service is to deliver within the same day or the following day. To commit to this demand, retailers and developers started looking into having warehouses.

“The problem initially for a lot of retailers is how [to] reach a last-mile delivery point, [such as] delivery to fringe locations and areas far from the central business hubs. So, they explored the viability of having micro-warehouses within Metro Manila,” he shared.

“We now have a lot of developers that are already exploring the feasibility of converting these vacant mall spaces into micro-warehouses to enable retailers to achieve their commitment of delivering within 24 hours.”

Such a delivery trend also boosted the demand for warehouses near Metro Manila, in suburban areas, industrial locations, Southern Luzon, and Central Luzon. In fact, Mr. Bondoc also shared that they received many queries from companies that plan to occupy or lease warehouses in the northern Metro Manila area, which covers Caloocan, Malabon, Navotas, and Valenzuela. Outside these cities, there are also demands for lease facilities in Bulacan and Pampanga.

He mentioned that many developers are modernizing their warehouses as well, which is an “interesting” trend they see in the property space.

Such commitment to 24-hour delivery service, for Mr. Bondoc, will likely be part of the newer and better normal past 2021 and the COVID-19 pandemic.

“It is probably difficult to imagine returning to pre-pandemic retail preferences or trends. We will [likely] see newer and better trends reshaping the Philippine retail market,” he said.

“Overall, what we see in the retail landscape is this continued support of the online and e-commerce presence to the brick-and-mortar shops that we have in malls across the country.”

Advantage for businesses, economy

Dennis Velasco, chief executive officer of Prosperna, explained the power of e-commerce while encouraging the adoption of such technology for a successful business and economy in the future.

“Technologies like e-commerce and logistics help customers and companies increase their communications, make business easier for them, and enable access to new markets, products, and services,” Mr. Velasco said. “So, I believe what we are going through today [will] change the face of Philippine economy and society forever.”

An advantage that businesses can harness from technologies is having data. With the right information, according to Mr. Velasco, merchants can enhance their e-commerce platforms through the personalization of experience and provide suggestions.

“[This] is more efficient, scalable, and helping promote a more successful business, which leads to a more successful economy here in the Philippines,” he said.

He also considered that combining e-commerce platform software with the improvements made by logistics companies on their back-end operations can create more options for the consumer. 

Along with this undertaking, data security is extremely crucial to have. “[It] should be given,” he said. “What we want to do is give consumers and merchants control of their data. They want to know and be in control of when, what, and why they share.”

Another advantage of e-commerce, for Mr. Velasco, is its ability to make convenience easier for the business and consumers to work together, especially as more of them deemed convenience as the most important thing today.

“Marketing studies show that consumers will back out and not complete a transaction if, for some reason, they feel that the experience does not create convenience. So, if merchants do not have the ability or the technology to display their inventory in real-time, they will lose out in transactions and prevent them from succeeding,” he said.

Thus, Mr. Velasco advised, e-commerce is a great way to take businesses — especially those running in the long term — to the next level.

“We can all win by adapting and embracing technology,” he said. “And if Philippine companies and MSMEs can gain that courage and find the right friend in the e-commerce and the logistics business, this can be an amazing time in the next 10 years for our economy, where we [can] create more next-generation business leaders and success stories than ever before.”

This session of #BUSINESSWORLDINSIGHTS is presented by Globe. 

Widespread opportunities from e-commerce in meeting consumer needs

In photo during the BusinessWorld Insights (clockwise, from top left) are moderator Keren Concepcion G. Valmonte of BusinessWorld; and panelists Atty. Ruth B. Castelo, Department of Trade and Industry undersecretary for consumer protection group; Anna Melissa Nava, 1EXPORT co-founder and CEO; and Bennett Aquino, Bain & Company associate partner.

By Bjorn Biel M. BeltranSpecial Features Writer 

E-commerce has reached a tipping point at the height of the pandemic, with many consumers turning to digital avenues to purchase products they cannot due to physical restrictions imposed in quarantine. But, such a rapid shift in consumer behavior has left many businesses struggling to adapt. How can businesses use the tools at their disposal to effectively reach consumers in the growing e-commerce market? 

BusinessWorld Insights, the online video conference series by the country’s most respected business daily, has gathered experts in the e-commerce field to attempt to answer this question in a discussion themed “Meeting the evolving needs of consumers in a hyperconnected world” held last Sept. 15. 

To kickstart the discussion, Atty. Ruth B. Castelo, undersecretary for consumer protection group at the Department of Trade and Industry said that the Philippines currently has over a hundred thousand businesses registered for online or internet retail. Illustrating the rapid adoption of e-commerce among Filipinos, registered businesses in the said category surged from 1,663 in 2019 to 88,575 in 2020. 19,673 more were registered, as of August 2021. 

“Especially now during the pandemic, we have limited operating hours of stores. So, consumer need is not being met 100% by physical stores, and so they resort to online transactions. There are also limited public utility vehicles available for transportation right now and the limited available stocks of products. These are some of the reasons why people resort to online retail shopping,” she said. 

Bennett Aquino, associate partner at global consulting firm Bain & Company, noted that the Philippines is not alone in this regard. 

“In 2020, Southeast Asia’s migration from the offline to the online economy broke all estimates. Changes that were expected to take place over half a decade took place in only one year, in large part because of the consumption habits brought about by the pandemic,” he said. 

“So, the question for 2021 was which of these changes are transient and which ones will last, and how will consumer patterns change over time?” 

According to Bain & Company research, by the end of 2021 there will be projected 350 million digital customers in Southeast Asia. For the Philippines, this equals to 61 million customers, representing 78% of the population older than 15, the second highest percentage in the region behind Indonesia. Average spending for digital consumers expected to grow by 60% this year, and by 2026 this number will nearly double. 

This suggests that e-commerce will become a certainty in the retail landscape for the years to come. Mr. Aquino pointed out that the future challenge for businesses will move from ‘How do I acquire new digital customers?’ to ‘How do I gain a share of their wallets as their spending online increases?’ 

“While it’s obvious that demand has been a clear driver for the growth of this online economy, the fact that it’s growing at hyper-speed has been in large part to the less friction in supply,” he said, noting that 1.7 times more online shoppers pay via the prevalence of e-wallets, the $2.5 billion in investments in logistics startups, as well as the quality assurance that has emerged in the market. 

Anna Melissa Nava, co-founder and CEO of end-to-end exporting platform 1EXPORT, pointed out that the paradigm shift has also caused newfound issues in exporting, as micro, small and medium enterprises (MSMEs) face challenges in global trade such as heightened competition, inaccessibility to sales channels, high prices, and logistics issues. This has resulted in emerging trends such as dropshipping and community-based markets. 

“Dropshipping is a fulfillment method where a store doesn’t keep the products it sells in stock, but it’s the manufacturers that delivers the products to wherever the buyer is. This has grown significantly over time, to a hundred billion-dollar market,” she said. 

An interesting trend that has emerged in the Philippines in particular was the use of balikbayan boxes among MSMEs. Balikbayan boxes, Ms. Castelo noted, has seen an increase in usage during the pandemic as people ask relatives and associates to put products in the boxes as personal effects to get them cleared through customs. 

“This is a trend that is significantly increasing and it is disrupting the exporting industry because they don’t go through traditional means,” she added. 

Strategies 

Recognizing the issues concerning e-commerce, Ms. Castelo suggested that businesses adopt new strategies to take advantage of the opportunities e-commerce offers. 

“Get social. Take advantage of all the social media pages that are available for free. It is a very good way of doing word-of-mouth marketing and customers that are satisfied with your service will be able to share their experience and promote you without knowing it. And then, please make sure that your audience is very specific — from interests to purchasing behavior,” she suggested. 

“Most importantly, please comply with the law. It’s very important that you build consumer confidence, [because] that will not be there if they know that the business is not registered or does not comply with the law.” 

“Businesses must rewrite a multi-year digital-first strategy. There are many things needed for the immediate term, but digital is also for the long game,” Mr. Aquino of Bain & Company added. “Brands need to develop a holistic digital strategy and invest ahead of the curve when it comes to enablers such as data analytics, digital marketing, account management, and supply chain. There needs to be a reimagining of consumer engagement, because consumer behavior and the purchase journey is constantly evolving,” 

“Disruptions to business models are happening across all industries, and this will not change. Instead of waiting for a moment or a pause to make plans, businesses must learn how they can adapt now and have a plan for future disruptions via partnerships, agility, and other solutions.” 

This session of #BUSINESSWORLDINSIGHTS is presented by Globe. 

New TransUnion research reveals consumers’ increased appetite for alternative lending

TransUnion’s Q3 2021 Philippine Consumer Pulse study* has uncovered that consumer awareness and appetite for alternative lending methods is broadening. Specifically, Buy Now Pay Later (BNPL) facilities have high awareness among consumers, with 74% of Millennials (born 1980–1994) and 78% of Gen Xers (born 1965–1979) saying they’ve heard of BNPL services. Nearly half (45%) of all respondents also reported they have used BNPL services in the past 12 months.

Filipinos’ perceived access to credit—or lack thereof—may also have something to do with the high awareness and use of BNPL services. Over half (55%) of respondents in TransUnion’s latest Consumer Pulse study believed access to credit is important to achieve their financial goals, but only just over a third (36% – an increase of three percentage points from Q2 2021) said they have sufficient access to credit and lending products. Despite this, nearly half (46%) of respondents said they plan to apply for new or refinance existing credit in the next year.

Financial institutions extending BNPL as an alternative form of lending should pay particular attention to Millennials and Gen Z (born 1995–2003). The survey revealed that among those who have used BNPL services in the past 12 months, they are the generations most curious with 40% and 38%, respectively, saying they used BNPL because they “just wanted to try it”. Meanwhile, Gen X was the generation most likely to make larger purchases with the service at 34%. Baby Boomers (born 1944–1964) was the generation who most said they used BNPL in order to spread payments over time (60%). More than 30% of each generation surveyed said they used Buy Now Pay Later services because it was easy to apply for it.

“The growing popularity of Buy Now Pay Later coincides with the convenience, availability, and smooth transactions that consumers have come to expect from digital services. Lenders looking to implement campaigns in this evolving and growing area must be able to establish an underwriting system that can identify good customers in order to sustain that reasonable balance between risk and opportunity, and great customer experiences,” said Pia Arellano, TransUnion Philippines president and CEO.

Bills and loans consumers are unable to pay

In the latest round of the TransUnion Consumer Pulse study, the percentage of Filipino consumers reporting their household income was currently decreased reached 64% in Q3 2021. While many hoped a faster COVID-19 vaccine rollout would drive economic recovery, the majority (54%) of consumers believed their household income will be negatively impacted by the pandemic in the future.

About half of all surveyed consumers (48%) were concerned about paying their bills or loans in full. The top bills and loans consumers said they won’t be able to pay among those with these bills/loans were auto lease (36%), personal loan (35%), and auto loan (35%). Meanwhile, 21% of consumers said they received a financial accommodation, such as a deferral, forbearance, payment holiday or eviction prevention in the past year. Mortgage (20%), private student loan (19%), auto loan (16%), and personal loan (16%) were the top bills and loans enrolled in financial accommodation in the past year among consumers with that bill/loan.

In order to pay current bills or loans, 47% said they’ll use money from savings and 40% will borrow money from friends/family, while 41% said they’ll pay a partial amount. Over one in 20 consumers (6%) reported they don’t know how they’re going to pay.

“With BNPL gaining traction, we are seeing a growing opportunity for financial services providers and even marketers to support consumers during this difficult time. In more mature global credit markets, retailers have even been extending BNPL to products or services beyond the usual consumer goods, such as vet care. There is a huge growth potential for BNPL, and TransUnion is focused on helping lenders accommodate evolving consumer needs by helping inform risk decisions so that the economic viability of BNPL lending can be sustained. Lenders that use advanced information and insights and digital onboarding technology can grow market share, while also safeguarding themselves and consumers from fraud. Done right, consumer lending has the ability to stimulate economic activity and benefit the nation as a whole,” said Arellano.

Fighting fraud schemes targeting consumers

TransUnion has constantly warned about the prevalence of fraud in the digital space. Fraudsters didn’t fail to notice the exponential increase in online transactions in the past year and have been trying to capitalize on trends as they emerge.

In the latest Consumer Pulse study, almost half (48%) of Philippine respondents said they have been targeted by a digital fraud attempt in the last three months. Among those targeted, phishing (44%) and third-party seller scams on legitimate online retail websites (43%) were the two most common tactics employed by fraudsters online.

“Technology has afforded us with solutions that cater to the ever-evolving market needs and consumer demands. Many BNPL companies now utilize real-time decisioning, but all financial institutions must keep in mind that their risk management strategies should always include multi-layered defenses against fraud while maintaining friction-right customer experiences. At TransUnion, we’ve found that harnessing device intelligence, in addition to our own bureau data and alternative data from our partners, expose fraud and fraud linkages that can’t be detected by simple face or ID scans alone. We are committed to continuously innovating to provide our members with the tools they need to grow their business and protect them and the consumers they serve from fraud,” said Arellano.

*TransUnion’s global Consumer Pulse study quantifies the ongoing financial impact of COVID-19. This online survey of 1,100 adults in the Philippines was conducted Aug. 11–17, 2021 by TransUnion in partnership with third-party research provider, Qualtrics® Research-Services. For previous Consumer Pulse Studies, visit our Consumer Pulse study page.

 


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BSP proposes 3% RRR on digital banks

BW FILE PHOTO

THE BANGKO Sentral ng Pilipinas (BSP) is proposing to initially align the reserve requirements of digital banks with thrift lenders as both are targeting the same market and offer similar financial products.

Under a draft circular released by the BSP, digital banks will generally be subjected to the same standards and prudential requirements imposed on traditional lenders.

One of the key provisions is that digital banks will have to keep a reserve requirement ratio (RRR) of 3%, which is similar to the current level for thrift lenders. In comparison, the RRR of big banks and rural lenders is pegged at 12% and 2%, respectively.

“The policy proposal is to initially align the RRR of digital banks with those of thrift banks, considering the current similarity in their target markets and the type of financial services they offer,” BSP Assistant Governor Lyn I. Javier said in a Viber message.

Ms. Javier said the central bank may adjust the RRR for digital banks “as needed consistent with its price and financial stability objectives.”

Under the draft circular, digital banks will be required to comply with all prudential requirements set by the BSP for the conduct of business. These include requirements for corporate governance, risk management (particularly on information technology and cybersecurity), outsourcing, consumer protection, and anti-money laundering, among others.

“They will be subject to the same standards and prudential requirements because they are exposed to the same types of risks as any other bank,” Ms. Javier said.

The central bank released the digital banking framework last year which differentiated these lenders from universal, commercial, thrift, rural, cooperative, and Islamic banks.

These digital banks are required to maintain a minimum capital requirement of P1 billion, which is also stressed in the draft circular.

Unlike other banks that need to have brick-and-mortar branches, digital banks do not need to establish branches but only have to have a main headquarters.

Based on the proposed regulation, digital banks will be required to have at least one member of its board of directors and a senior management officer to have a minimum of three-year experience and technical knowledge in operating a business in the field of technology or e-commerce.

Earlier this week, BSP Governor Benjamin E. Diokno said the central bank will cap the current digital bank licenses at six.

Mr. Diokno has said the central bank is likely to keep the application for new digital banks closed for the next three years to assess the development of the new lenders and the competitive landscape.

The six digital bank licenses were given to state-owned Overseas Filipino Bank, Tonik Digital Bank, Inc. (Philippines), UNObank, Aboitiz-led Union Digital Bank, GOTyme led by the Gokongwei Group and Tyme, and Maya Bank of Voyager Innovations, Inc.

The proposed BSP circular likewise stressed that other banks operating with a different license type are not allowed to represent themselves as digital banks, even if they also offer online services. They are prohibited to describe themselves as digital banks through media, websites, or mobile applications, among others.

“Only a bank granted with digital banking license may represent itself to the public as such. The policy draft proposes that banks belonging to other bank categories may represent themselves as a bank offering ‘digital banking products or services’ or other equivalent terms/phrases,” Ms. Javier said, noting these specific provisions are already in line with Circular 1105 that laid down the guidelines for the establishment of digital banks.

Prior to the release of the digital banking framework in 2019, some banks with a different license type already allowed its clients to access financial services including bank account opening, deposits, and loans all through an online platform. These include CIMB Bank Philippines, Inc., ING Bank N.V. Manila, as well as the Komo app of East West Banking Corp. Last year, Rizal Commercial Banking Corp. also launched Diskartech app. — Luz Wendy T. Noble

PHL needs to expand COVID-19 testing outside Luzon, says ADB

PHILIPPINE STAR/ MICHAEL VARCAS
Medical staff conduct coronavirus disease 2019 (COVID-19) tests on residents in a barangay in Quezon City, May 31. — PHILIPPINE STAR/ MICHAEL VARCAS

THE PHILIPPINES needs to focus more resources into expanding coronavirus disease 2019 (COVID-19) testing and tracing automation outside Luzon, according the Asian Development Bank (ADB).

The ADB report on the progress of the government’s coronavirus response program for the first half of 2021 found that testing laboratories are concentrated in Luzon, with levels below World Health Organization (WHO) recommendations.

“With rising infections and emerging COVID-19 variants, it is vital that the government expands testing capacities, especially in the regions,” the ADB said.

“Further collaboration between the public and private sectors should be pursued. Ensuring reliable supply of materials for testing laboratories is also important.”

The ADB last year approved a $1.5-billion loan aimed at partly funding the government’s COVID-19 response program that would assist affected businesses through wage subsidies, loan and credit guarantees, and direct cash aid.

The ADB said that contact tracing done manually by local government units is still inadequate, noting that a national automated system will help reach more communities.

“It is important to increase the contact tracing ratio while cutting down the time to identify close contacts of cases from days to hours to quickly interrupt chains of transmission,” ADB said.

The Philippines continues to see a rise in COVID-19 cases as the government loosened lockdown restrictions to help revive the pandemic-battered economy.

The Health department on Wednesday reported 9,868 new COVID-19 infections from 43,759 tests conducted. The active number of COVID-19 cases stood at 112,807.

At the same time, the ADB said the Philippine government should support worker upskilling to help transition to technology-based sectors from sectors that depend on personal contact such as tourism and retail trade.

“Unemployment benefits need to be enhanced so the system of social protection has a more solid foundation,” the multilateral bank said.

The unemployment rate in August was at 8.1%, the highest since April’s 8.7%, preliminary data from the Philippine Statistics Authority showed.

The ADB recommended more livelihood assistance and expanded small business support, which means integrating lending programs with other forms of assistance.

Also, the report noted some areas indicating progress, including emergency subsidies under the social amelioration program, small business credit guarantee and lending, digitalization, infrastructure, and reforms to support economic recovery.

The government, ADB said, was on track to reach its pandemic response outputs.

“While progress has been achieved, the unprecedented scale and prolonged duration of the pandemic have placed greater demands on the government’s programs,” it said.

“The pandemic continues to evolve rapidly and the recent surge in COVID-19 cases is straining health system capacity, increasing the need for testing, tracing, quarantine, and treatment while simultaneously accelerating vaccination.”

Finance Secretary Carlos G. Dominguez III in August said the government has raised $19.6 billion (P979.6 billion) so far from loans and grants from external lenders to fund its pandemic response.

The Department of Finance is currently in talks with the World Bank, ADB, and Asian Infrastructure Investment Bank for up to $900 million in financing for additional vaccine supply for next year. — Jenina P. Ibañez

IMF trims global economic forecast, citing ‘Great Vaccination Divide’

REUTERS
The skyline with its financial district is photographed in Frankfurt, Germany, Nov. 1, 2020. — REUTERS/KAI PFAFFENBACH

WASHINGTON — The International Monetary Fund (IMF) expects global economic growth in 2021 to fall slightly below its July forecast of 6%, IMF chief Kristalina Georgieva said on Tuesday, citing risks associated with debt, inflation and divergent economic trends in the wake of the coronavirus disease 2019 (COVID-19) pandemic.

Ms. Georgieva said the global economy was bouncing back but the pandemic continued to limit the recovery, with the main obstacle posed by the “Great Vaccination Divide” that has left too many countries with too little access to COVID-19 vaccines.

In a virtual speech at Bocconi University in Italy, Ms. Georgieva said next week’s updated World Economic Outlook would forecast that advanced economies will return to pre-pandemic levels of economic output by 2022 but most emerging and developing countries will need “many more years” to recover.

“We face a global recovery that remains ‘hobbled’ by the pandemic and its impact. We are unable to walk forward properly — it is like walking with stones in our shoes,” she said.

The United States and China remained vital engines of growth, and Italy and Europe were showing increased momentum, but growth was worsening elsewhere, Ms. Georgieva said.

Inflation pressures, a key risk factor, were expected to subside in most countries in 2022 but would continue to affect some emerging and developing economies, she said, warning that a sustained increase in inflation expectations could cause a rapid rise in interest rates and tighter financial conditions.

“High debts, soaring food prices and lack of vaccines are the greatest threats facing developing countries,” said Eric LeCompte, executive director of the religious development group Jubilee USA Network. “We are counting economic losses in the trillions if developing countries can’t access vaccines.”

Ms. Georgieva said central banks could generally avoid tightening for now, but they should be prepared to act quickly if the recovery strengthened faster than expected or risks of rising inflation materialized.

She said it was also important to monitor financial risks, including stretched asset valuations.

RISING DEBT BURDENS
Global debt levels, now at about 100% of world gross domestic product, meant many developing countries had very limited ability to issue new debt at favorable conditions, Ms. Georgieva said.

Ms. Georgieva said it was important that debt restructuring efforts already initiated by Zambia, Chad and Ethiopia be concluded successfully to encourage others to seek help.

Better transparency about debts, sound debt management practices and expanded regulatory frameworks would help ensure increased private sector participation, she said in response to a question from a participant.

Asked about rising debt levels in Europe, Ms. Georgieva said growing economic momentum had put Europe on a sound footing to avoid another sovereign debt crisis like the one faced by Greece in the aftermath of the global financial crisis of 2007–2008.

But she said countries would have to plan carefully how to shift course to medium-term fiscal consolidation to erase the increased pandemic-related debt burden.

“The bills are going to come due,” she said, adding that good planning was needed to ease debt burdens over time while avoiding “brutal” cuts in education or healthcare funding.

ACCELERATE VACCINE DELIVERIES
Ms. Georgieva urged richer nations to increase delivery of COVID-19 vaccines to developing countries, remove trade restrictions and close a $20-billion gap in grant funding needed for COVID-19 testing, tracing and therapeutics.

While nearly 46% of people around the world have received at least one dose of a COVID-19 vaccine, the rate is just 2.3% for people in low-income countries, according to Our World in Data at the University of Oxford.

Failure to close the massive gap in vaccination rates between advanced economies and poorer nations could hold back a global recovery, driving cumulative global GDP losses to $5.3 trillion over the next five years, she said.

Ms. Georgieva said countries should also accelerate efforts to address climate change, ensure technological change and bolster inclusion — all of which could also boost economic growth.

A shift to renewable energy, new electricity networks, energy efficiency and low carbon mobility could raise global GDP by about 2% this decade, creating 30 million new jobs, she said. — Reuters