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Regional NGOs say new ADB energy policy falls short on ditching fossil fuels

REUTERS

By Bianca Angelica D. Añago, Reporter

NON-GOVERNMENT organizations (NGOs) within the Asian Development Bank’s (ADB) coverage area have expressed concerns about the bank’s new Energy Policy, saying that it does not do enough to deny funding to fossil fuel projects.

Announced just weeks before the 26th Conference of the Parties to the United Nations (UN) Framework Convention on Climate Change (COP26) on Oct. 31 to Nov. 12, the ADB has demonstrated an unwillingness “to close off options for financing for oil, gas, or coal and gas co-fired projects,” according to Tanya Lee Roberts-Davis, Energy Policy and Campaigns strategist of the NGO Forum on ADB.

Ms. Roberts-Davis said the policy leaves the door open for supporting coal expansion via financial intermediaries and associated infrastructure, cross-border oil and gas pipelines, diesel-powered plants in island and conflict-affected areas, liquified natural gas terminals, fossil fuel-reliant blue hydrogen, large-scale dams, waste to energy incinerators, and geothermal ventures.

“The conditionalities placed on gas financing are vague and the wording on coal remains ambiguous,” she added.

She said that though the policy allows the ADB to finance the early retirement of coal-fired power plants, it still has active direct investments in coal, for instance in the Jamshoro Project in Pakistan.

The ADB’s policy announcement coincided with the launch of the UN’s Production Gap Report, which confirmed the critical need to halt fossil fuel-dependent operations worldwide.

Grant Hauber, Energy Finance advisor of the Institute for Energy Economics and Financial Analysis, said the policy “falls materially short of being the manifesto for supporting a sustainable, low-carbon future.”

Mr. Hauber said that while the ADB focuses on eliminating coal support, “it leaves a significantly wide door open to other fossil fuels.”

Competitively procured renewable energy (RE) is the low-cost solution for Southeast Asia, he added.

“The private sector is excited to invest in it and can significantly expand its role in the energy market,” Mr. Hauber said.

He also noted that the ADB could do the greatest good by supporting the RE rollout by helping members modernize and strengthen their transmission grids, facilitate the adoption of storage technology, and work with governments on developing economically and sustainability-driven sector policies and regulations.

DTI urges companies to step up AI adoption

REUTERS

COMPANIES need to put artificial intelligence (AI) at the center of their modernization efforts in order to remain competitive after the pandemic, the trade department said.

Trade Undersecretary Rafaelita M. Aldaba said: “Initiatives such as AI must be harnessed and be placed at the core of all our endeavors to ensure that we will not only overcome overwhelming obstacles but also guarantee that our industries will remain adaptable (and ensure that) they thrive moving forward,” Ms. Aldaba said in a statement Sunday.  

The Department of Trade and Industry (DTI) also announced an Oct. 27 event on AI to boost competitiveness.

It added that the event will guide industries in preparing AI-adapted business strategies.

“This occasion will also showcase some the country’s experts in the field of AI who will deepen and broaden our understanding and appreciation of this new technology,” the DTI said.

“Through this event, a productive and constructive engagement is envisaged to revolve around aspects of paramount importance such as the potential of the envisioned National Center for AI research; experiences and insights on the adoption of AI by businesses, especially during the pandemic; and, critical issues surrounding AI particularly those that are related to ethics, governance and regulation,” it added. — Revin Mikhael D. Ochave 

Why data governance matters

With the rise in regulatory requirements and global industry standards to address the increased business consumption and volume of consumer data caused by the COVID-19 pandemic, companies have placed greater significance on the protection and handling of data. Now perceived as part of the wider challenge of maintaining operational resilience, issues in data quality, security, privacy and the threat of cyber-attacks rank higher on the data agenda of many organizations.

However, compliance with data handling policies can no longer be entrusted to Data Protection Officers (DPOs) alone — there needs to be an entire data lifecycle management process that is sustained by more individuals who will be held specifically accountable for both the responsible use and protection of data. This presents organizations with the opportunity to maximize data value through improved data governance, taking advantage of increased data volume to automate and scale data governance processes while ensuring its ethical use.

THE NEED FOR DATA GOVERNANCE
While data governance refers to the exercise of authority, control and shared decision-making over the management of data assets, it should be distinct from the concept of data management. Data management is the practice of ensuring that an organization’s data is accurate, relevant and effective in fulfilling its business objectives. This includes activities to maintain data such as data classification, labeling, and proper handling. Data governance, on the other hand, sets the policies on how an organization manages data, and implements and monitors compliance.

Data governance is mandatory for success if an organization wants to maintain a “single source of truth” to its data, enabling it to reduce redundant data, enhance data quality and maximize the value of information. According to the EY article “Three priorities for financial institutions to drive a next-generation governance framework,” organizations must focus on three key areas in governing the use of data.

DATA PRIVACY
Regulations around data privacy have become increasingly difficult to comply with, given the current data storage and access technologies. In the past, ensuring data privacy only entailed focusing on role-based access controls (RBAC) that restricted sensitive data access. Now, the widespread adoption of the cloud and the introduction of open application programming interfaces introduced new challenges not addressed by traditional controls. This makes it highly difficult for organizations to monitor the legitimate use of personal data, ensure transparency or obtain consent from individuals, and exercise data deletion for a specific individual.

Companies must take a structured approach along the entire data lifecycle to achieve compliance. Meeting customer needs and achieving compliance with privacy regulations requires organizations to be transparent in how they store, process, control, and distribute private data. While modern data privacy controls are growing as a trend, these controls are predicated on the exponential growth and diversity in data usage and sourcing. Traditional risk-based approaches that apply retrospective controls will not be sufficient to manage the complexity of data privacy as technologies and use cases become more sophisticated. For companies to ensure proper processing of personal data, they must take a structured approach along the entire data lifecycle similar to the traditional “process and controls” approach, with more forward-looking considerations.

CLOUD PLATFORMS AND DATA FABRICS
New technologies using public cloud will offer a competitive advantage if they can automate controls and reduce costs while being able to properly use data. The use of the cloud in particular can be seen as a new challenge for data governance or a simple extension of an existing technology practice. However, organizations must take the opportunity to use modern technologies to actually solve challenges in data governance.

A well-formed data governance framework for the cloud will need to consider regulation, visibility, data classification, risk management and change management. Organizations will need to determine the controls required to be compliant across regions, keep abreast of changing global regulations, and provide evidence that the necessary controls are in place. They must also determine how data should be classified, how different classifications should be handled, and how operational risk should be measured and reported. Organizations will need to exercise key controls in moving data while avoiding control gaps and ensuring consistency. These controls must be maintained over time, while the information in the cloud should be automatically tagged to make it useful for enterprise reporting.

ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING
Innovation through artificial intelligence (AI) and machine learning (ML) is not just driving business transformation — it also highlights unique risks and challenges regarding the governance of data. Both AI and ML applications are becoming more accessible and powerful as firms increase their access to open-source algorithms, use of big data, and low-cost computing.

Organizations need to establish an AI/ML governance framework that addresses the data-related risks of AI/ML ecosystems in aggregate. The framework should use cases where new technologies are applied and include early risk assessments based on an understanding of AI and ML. It should ultimately be automated to balance risk against data value, mapped against clear benefits and business outcomes. As these technologies become more accessible and advanced, in turn becoming integral components of business functions, achieving this level of automation and integration will be imperative for organizations.

CLEAR DATA GOVERNANCE POLICIES AS A NEW BUSINESS IMPERATIVE
As companies grow increasingly cognizant of the disruption and risks posed by weak data protection, they need to develop robust data governance frameworks and prioritize improving controls over the ethical use of data. Organizations cannot wait for a cyber-attack or data breach — they must shift to a proactive strategy with enhanced capabilities in areas such as privacy frameworks, data and analytics growth, data traceability and detection, and data security and controls.

By strengthening capabilities that approach data in a protective and operationally efficient manner, organizations can enable a data governance framework that supports key business outcomes focused on long-term growth.

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.

 

Nixon C. Garais is a manager of SGV & Co.

Why 25 previous conferences have failed to stop climate change

CHUTTERSNAP AND UNSPLASH

But this one could succeed

THERE HAVE BEEN 25 conferences under the United Nations Framework Convention on Climate Change since the body first met in 1995. Over that period, some 894 billion metric tons of carbon dioxide, about 37% of all greenhouse pollution in human history, has been emitted. What makes anyone think that the 26th meeting starting Oct. 31 — COP26 — will be any more effective?

The answer lies in the age-old challenges of forging major international agreements — and it may be more hopeful than you think.

One adage of multilateralism is that effective global accords can be deep and narrow, or broad and shallow, but won’t work if they try to be both deep and broad. The 1987 Montreal Protocol, which controlled chemicals that damage the ozone layer, is a classic example of the former. The treaty’s effects are deep — it’s legally binding on every UN member state and on its own will reduce global warming by as much as one degree Celsius — but its scope is narrow, in regulating a single niche set of compounds.

The UN’s human rights treaties, on the other hand, set sweepingly broad global standards for relations between the individual and the state. Their enforcement, however, is shallow, with even signatories often appearing to treat them as worthless paper promises. Nine of the 10 countries rated lowest for gender equality under the Women Peace and Security Index have ratified the UN’s Convention on the Elimination of all Forms of Discrimination Against Women.

This dichotomy puts climate talks at a disadvantage from the start. Their intent is stunningly broad: remaking the energy systems that have powered the entire planet since the Industrial Revolution, as well as land-use practices we’ve employed since the Stone Age. At the same time, enforcement must be deep, because the world can’t afford a repeat of the emissions trajectory we’ve been on since that first meeting.

To compound the problem, individual nations are deeply divided on how to proceed. This is best exemplified by the split between the Group of Seven major advanced economies — which together have accounted for about 53% of historical carbon emissions1 — and the Group of 77 developing nations. Controlling emissions in post-industrial economies whose populations have peaked is a far easier business than it is in nations just embarking on the rapid increase in population, income, and industrial activity that we call development.

The G-77, whose largest representatives include China, India, Brazil, and Indonesia, is often portrayed as the wrecker of negotiations: refusing to accept constraints on the ability to pollute and arguing that richer nations must cut their emissions faster before poorer ones agree to any absolute limits. G-7 countries are accused of making no allowances for the leg-up their own economies received from decades of emissions, and haranguing developing nations that have few alternative options.

This division has frequently shaped the talks. The core of the Kyoto Protocol, the first major climate agreement adopted at COP3 in 1997, was in essence a treaty between the G-7 plus the former Soviet Union, Australia, and New Zealand. If action on climate change is going to be hostage to the resolution of centuries-old disputes between colonial nations and their former empires, though, the prospects for the planet are grim, indeed.

Believe it or not, there’s still reason for optimism. One surprising fact about Kyoto is that an agreement widely considered a failure was in many ways a success. The countries that remained in the deal didn’t just meet the target of a 5% reduction in emissions over the two decades following 19902 — they went well beyond it, with reductions of 11% that deepened to 17% by 2019. That fits well with evidence that ambitious goals are more likely to be achieved than timid ones.

The problem with Kyoto wasn’t that countries didn’t reach the targets they’d committed to — it’s that too few committed to targets at all. Once you include the US and Canada, which pulled out of the protocol, that 11% drop in emissions narrows to a 2.2% fall. Throw in the developing economies that were excluded at the outset, and the picture is even worse. While fossil-fuel emissions from the Organization for Economic Cooperation and Development rich-countries’ club fell about 4.4% between 1998 (the year after Kyoto was signed) and 2019, those from the rest of the world more than doubled.

That points to the last reason for cautious optimism. For most of the time these meetings have been taking place, delegates’ pre-eminent national interest in low-cost energy has been most easily served by remaining wedded to fossil fuels, while the physical risks of climate change have seemed remote and theoretical. Both sides of that equation are now changing with blistering speed.

Renewables are the cheapest source of new power generation for two-thirds of the world’s population, and even undercut existing fossil-fired power in China, India, and much of Europe, according to BloombergNEF. Electric vehicles made up 17% of car sales in the European Union in the June quarter, and 13% in China. While the current energy crisis will cause a short-term rise in fossil emissions to plug short supplies of power, China is redoubling its efforts to rein in polluting industries and India has warned that high oil prices will speed the transition to zero-carbon technologies.

On the other side of the ledger, recent floods in China, Germany, and India, and wildfires in Canada, plus the most active Atlantic hurricane season on record last year are evidence of the way the effects of climate change are growing ever closer. In just the US, there have been 18 separate billion-dollar weather and climate disasters in 2021 alone.

Countries at international conferences aren’t in it for show or charity. They’ll only sign up to agreements that they perceive to be in their best interests. For most of the past three decades, the raw economics of energy and climate have stood in the way of making a worthwhile deal. Finally, now, there’s an ill wind at negotiators’ backs.

BLOOMBERG OPINION

 

1Including the European Union as a whole, which is represented at the G-7 without being technically a member. The G-7 are the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada.

2Technically, the end-date was an average of emissions during the period 2008 to 2012.

Security sector reform for the new administration

PHILIPPINE STAR/ MICHAEL VARCAS

The Philippines once again finds itself at a crossroads in a defining election season. Merely choosing between contending ideologies or programs of government has always been a luxury for Filipinos. Elections for this Southeast Asian nation are rather a time to determine which primary issue is on the ballot — good governance, the rule of law, or democracy itself. This coming election year, it is all of the above.

More than at any other time since the fall of the Marcos dictatorship, the fate of the nation is not just about a choice for a strong economy but, more importantly, about whether the economy — and our very sovereignty — will be saved by our ability to keep our democracy.

The delineation of who are the opposition and the administration candidates is a way for the public to distinguish between those who will seek to govern with fidelity to democratic principles versus those who have become enamored with a system of government that favors weak institutions; between those who believe that democracy still delivers development outcomes best and those who are willing to explore illiberal government — essentially, authoritarianism. For the latter, the transition from the current dispensation would be very nearly seamless. The country is teetering on the edge of the precipice.

The true opposition will need to claw the country back from the brink. This needs to begin with the determined and systematic undoing of the current administration’s authoritarian policies, programs and activities. For most people yearning for a return to decency, responsiveness, and competence in government, this undoing will center around what social scientist Nicole Curato has referred to as “the securitization of social issues.”

From the pandemic to the war on drugs to the manner in which the government has dealt with the threat of terrorism (external or internal), the security sector, especially the police, has played an outsized and wholly inappropriate role for the Duterte administration.

While it is said that truth is the first casualty of war, due process, the respect for human rights, and the diminution of individual liberties have been selectively sacrificed by this government in the name of greater efficiency and effectiveness to deliver social and economic goods. This is a textbook case. In what is referred to as an illiberal government’s toolkit to leverage populist governance, a Brookings report argues that, “(l)iberal principles — political ideas that espouse the importance of individual liberties, minority rights, and the separation of power across levers of government — and democratic institutions — processes that translate popular will into public policy through legitimate elections — are being pulled apart” (“The Anatomy of Illiberal States”).

There is a method to the madness. Communities truly feel (and do not imagine) the immediate increased peace and safety. But this has been a quick fix and at the end of the day, this method has neither stemmed the high COVID-19 transmission rate nor the availability of illicit drugs in our streets.

This has all been a play of light and shadows. This is essentially about instilling fear, and this method, we attest, can be efficacious.

It then falls upon the opposition candidates to present a path forward for the country. It is not easy, for we have strayed far off from the straight path. The policy declaration alone will be fraught with risks.

The opposition cannot ignore the 800-pound gorilla in the room. And to mix metaphors, the big gorilla is the security sector that occupies the room and that constricts the breathing space of a democracy already on oxygen support. It is the instrumentalities of State security that have been used, very possibly criminally, against the State’s own citizenry.

So, what direction should be taken? A new administration must send up and down the chain of command an unimpeded directive that breaks away from policies and practices that violate human rights and constitutional processes like due process.

It must communicate a clear message to the public that accountability will be taken seriously, including conducting the necessary investigations and holding erring personnel immediately to account — in a manner that is serious and robust in substance and process so as not to be mistaken as merely performative. It must manifest a desire and commitment to correct the institutions by undertaking reforms in staffing, structure, systems and strategies, policies, programs and behavior.

Further, it must acknowledge that the digression from professional and legal standards and procedures emanated from the high-ranking officers of the Philippine National Police (PNP) and from the corrupting elements at the highest levels in the executive branch.

And how will the above look like in concrete terms?

1.) Rescind all government memoranda that codify Oplan Tokhang.

2.) Fully cooperate with the Supreme Court on its decision ordering the Philippine National Police (PNP) to submit the data on the Duterte administration’s war on drugs.

3.) Investigate, in support of the efforts of the Department of Justice, all cases of killings of alleged drug suspects reported by human rights and civil society groups and the media, beyond the cases acknowledged by the PNP.

4.) Suspend or replace any police chief and station or precinct commanders who have been (or will be) named or charged in court cases related to the war on drugs.

5.) Critically review the Anti-Terrorism Act and the Human Security Act.

6.) Disavow “lawfare” in all its forms, and commit to repair the institutional damage wrought by it.

7.) Disband the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC).

8.) Suspend or replace any military officer and personnel who have been (or will be) named or charged in court cases related to human rights violations, including red-tagging and extra-judicial killings.

9.) Review and enhance the mandate and capacity of the Commission on Human Rights.

10.) Resume in earnest the peace talks.

11.) Reaffirm the Rome Statute of the International Criminal Court (ICC).

The list of reforms is long and hard. There is so much at stake in the forthcoming elections. Security sector reforms are the clear expression of the electoral issues on good governance, rule of law, and democracy itself.

 

Jose Maria M. Mendoza works in development policy and management, with a focus on justice, human rights, and democracy.

Why the Philippines is the most economically affected by COVID-19

TITUS_JR0 - PIXABAY

No country was exempt from the economic impact of COVID-19. All nations had to swallow their fair share of economic reversals, albeit to varying degrees. Unfortunately, the Philippines is by far the most economically devastated in Asia.

We already know that the economy contracted by 9.6% last year, followed by another contraction of 4.2% in the first quarter of this year. Notwithstanding the second quarter growth 11.8%, full recovery from five quarters of contraction will only be realized by end-2023, assuming there are no more lockdowns.

The culprit behind our massive economic reversal was the six-month lockdown last year and the sporadic lockdowns this year. Our lockdowns are so oppressive that they paralyze both retail and manufacturing supply chains. The former is significant since we are a consumer driven economy. Factory output plunged by 7.1% last year.

The National Economic Development Authority (NEDA) reported that the economy lost the equivalent of $86 billion in economic output last year. And since quarantines, lockdowns, and social distancing will continue to dampen consumer spending and investments, NEDA forecasts that the pandemic will cost us another $740 billion in economic activity in the next 20 years.

What stings acerbically is that our neighbors are slowly adapting to life with COVID-19. They are opening their economies, including tourism, opening their schools, and starting to live life with relative normalcy. Their economic recoveries are in full swing and happening much faster than ours.

What made our neighbors more resilient to the pandemic? Let me site the best practices of three Asian countries.

VIETNAM
Like us, Vietnam is bereft of vast resources to fight the virus spread. Yet, the Doi Moi republic has succeeded in keeping the virus at bay. They succeeded despite being highly vulnerable due to a shared land border with China and robust trade between them.

What made all the difference for Vietnam was its decision to close their borders to the Chinese as soon as the Wuhan virus broke out back in Jan. 3, 2020. The move retarded the initial spread of the virus.

Within the first week of the pandemic, the Vietnamese government embarked on a massive information campaign that leveraged the country’s top 13 online news outlets. The people were educated on the nuances of the virus, its threats and how to avoid infections. No room was allowed for disinformation.

Vietnam’s greatest defense, however, is its nationwide contact tracing system through a government-owned app called NCOVI. It has become the most downloaded app in Vietnam since its launch in March 10, 2020. Trust in the app is so established that citizens voluntarily share their personal health information and travel movements on this app. The app has enabled the Vietnamese government to identify case clusters hotspots in real time. This enabled authorities to implement cluster isolations instead of debilitating city-wide lockdowns.

THAILAND
The military government of Thailand refused to disrupt their economy. They never imposed a hard lockdown. In fact, even street food vendors were allowed to operate at the height of the virus spread so as not to compromise their livelihoods. Despite being under military rule, the Thai government has been praised for their compassion towards daily wage earners.

In the early days of the pandemic, the Thai government embarked on a television information campaign organized by the Center for COVID-19 Situation Administration (CCSA). The program was hosted not by a politician or a general but by a professional medical doctor. It became the most watched TV show in the country. Enjoying high credibility, the doctor educated the public on the characteristics of the virus, provided outbreak updates and tips for infection mitigation. The Thai government focused on immune system strengthening and hygiene. It rallied the public to eat well, take supplements, and live a balanced life.

The Thais also had a testing and contact tracing mechanism in place. Those who tested positive and those with flu symptoms were immediately subjected to isolation.

There were two game changing factors that enabled the Thais to effectively combat the virus. The first is the high credibility of its public health system. Public health is one of the few non-politicized facets of Thai life. Public health authorities have enjoyed a high trust rating for over 50 years. They succeeded in implementing a family planning program in the 1970s, HIV-AIDS prevention in the 1980s and ’90s, and the public sanitation campaign called “Tawiset” in the 2000s, all without corruption scandals. Thailand’s successful COVID-19 response was built on the close cooperation between the public health system and civil society.

The second is Thailand’s universal healthcare system established in the early 2000s. The system provides high quality and affordable healthcare for 98% of citizens. It is funded by general income tax which is why healthcare facilities across the country are capacitated with equipment and drugs. Public healthcare facilities, even if free, are superior to private hospitals.

SOUTH KOREA
Following the mass infection in Daegu, the Korean government launched an information campaign to ensure that there would be no confusion about what needs to be done to prevent similar incidents. The Korean Center for Disease Control maintained full transparency in sharing COVID-related information to the public.

The Korean pandemic response is based on containment and mitigation. Containment measures started immediately after the first case was identified in China on Dec. 30, 2019. The Korean government focused on identifying infected patients and immediately isolating them to interrupt transmission. Massive testing was undertaken across the country using diagnostic kits accessible through drive-through and walk-through service. The Korean government commissioned more than 100 labs working round the clock with daily testing capacity of 20,000 and this has been crucial in keeping COVID-19 at bay. Infection mitigation followed that involved country-wide tracking and tracing.

The third line of attack was to building strong treatment capacities. Five isolation hospitals were built specifically to care for those designated as critical or severe. Mild cases were handled by a network of public community hospitals. Bed spaces were also created through revamped hotels, gyms, and residential centers. And since South Korea has a well-developed pharmaceutical industry, the Koreans were able to stockpile on vital medicines to help those infected.

THE PHILIPPINES
The Philippines had none of the defenses of its neighbors.

Even after 18 months, government is still bereft of a nationwide COVID-19 testing network. Neither has it made testing accessible and affordable for the majority. It still does not have a functioning tracking and tracing mechanism (government’s StaySafe.ph is riddled with bugs and is not widely used). Even at this late stage, the National Government still relies on fragmented data from LGUs for tracking and tracing.

Government has not used the lockdown to significantly augment medical capacities, especially ICU beds. Budget allocations provided by Bayanihan I and II were not used to purchases sufficient supplies of ventilators and COVID-19 meds such as Tocilizumab, Remdesivir and Avigan. In terms of vaccination, the Philippines is only ahead of Myanmar in the region in terms of percentage of population vaccinated.

The inability to set-up proper defenses against the virus that causes COVID-19 has left government with only one weapon — lockdowns.

In short, we are suffering the brunt of the pandemic because government has not established a credible information network, a nationwide testing effort, a tracking and tracing mechanism, and ample medical capacities.

Government’s pandemic response was heavy handed but inefficient, aggressive but incomplete, haughty but ineffective, arrogant but corrupt. This is why the Philippines is the most economically devastated.

 

Andrew J. Masigan is an economist

andrew_rs6@yahoo.com

Facebook@AndrewJ. Masigan

Twitter @aj_masigan

Business strategies in the New Normal

CHARLES FORERUNNER-UNSPLASH

Peter Drucker (1954: The Practice of Management, plus 37 more management books), espoused decentralization in management. He first thought of “Outsourcing” as a business practice towards the faster growth of the business. He proposed “Management by Objectives” (MBO) whereby the company focused on its core business, and back-room activities (non-core) should be handed over to other companies, for whom these tasks are the front room (core) activities. Outsourcing would cut costs for the firm, Drucker pointed out. It was possible and logical, as the global economy was just then opening, and there were cheaper supply sources abroad.

But the 1979 energy crisis, caused mainly by the Iranian War disrupting the world oil supply, caused high prices and world inflation and dragged many countries into debt crises. In 1982, the World Bank declared a “global recession” that lasted until at least 1985. Globalization was stalled.

That was where Tom Peters and Robert H. Waterman (1982: In Search of Excellence) were coming from — there needed to be a change of strategy in the microeconomics of the business firm, forced by the chimera of the New Normal in the world recession.

Analyzing “what works” for 43 “excellent” publicly traded companies at that time, Peters and Waterman identified common characteristics which they argued were responsible for the success of the chosen corporations. Basically, the excellent companies were people-oriented (focused on employees and customers) and kept their ears to the ground — “Management by Walking Around” debunked Drucker’s textbook slogan of “Management by Objectives.”

Against the backdrop of the world recession, the basic “what works” for a business was never more crucial:

• “Stick to the knitting” — remaining with the business the company knows best.

• Simple form, lean staff — few administrative layers, few people at the upper levels.

• Simultaneous loose-tight properties — being adaptable, but always in line with core values of the company.

In other words, a business must “KISS” goodbye vanities for going big and let “Big” happen because of good core values and ethical and fair management practices. “Keep It Simple, Stupid!” is what KISS stands for, one of the cutesy acronyms of the MBA classes and smooth-talking business executives of the 1990s.

And the advocations of the sage Peter Drucker (then 73+ years old) were upstaged by the practical solutions of the younger generation (40+ at that time) business thinkers Peters and Waterman, who sold 3 million copies of In Search of Excellence in the first four years, the most widely held monograph in the United States from 1989 to 2006. Debunked was Drucker’s prescription for outsourcing as a main business strategy: “Do your best and outsource the rest,” which Drucker wrote in his Wall Street Journal (WSJ) article entitled “Sell the Mailroom.”

Peters and Waterman proposed “Insourcing” or keeping operations and processes within the organization for direct availability, surer control, and tighter security and confidentiality. It is congruent with the business strategy of vertical integration in which a company acquires or has control over the operations of its suppliers, distributors, or retail stores in order to control its supply chain, reduce costs, and improve efficiency. “Stick to the knitting,” Peters and Waterman exhorted, know your business well by doing all yourself.

In the crunch of the world recession of the 1980s decade, that was good advice. Be self-sufficient to survive when market forces have gone crazy: supply is down, demand is down, prices are up-and-down because even inflation itself does not know how high it has gone. Not the time to depend on others to plan your life! DIY (Do it yourself) is the operating instruction.

But the booms and busts in the net-OK of the world economy after the 1980s crisis encouraged new business strategies supported by the new technology for processes and quicker market information. Supply-side economics that fed consumerism stirred competition in business and whetted gourmand appetites for profits. Outsourcing has been the ready tool again for the business strategist who wants to multitask marketing, sales and promotions, and cut costs in production. Governments seem not to notice rampant mergers and acquisitions, in horizontal integration of businesses to expand market share that may lead to monstrous monopolies.

Comes the COVID-19 pandemic in March 2020, which has lingered for one and a half years, and going. The world economy is down — in a deep recession. Businesses have closed temporarily or permanently. Workers are restricted to rotation reporting (with no work, no pay) or outright lay-offs from their companies. The protocols of the pandemic have gravely affected labor and materials supply as well as delivery of products and services. Demand for most goods and services (except for food and necessities) has sunk, in the fear and anxieties of the people about health and survival.

Business strategies must be reviewed and new tactics implemented. Some companies have realigned jobs and reversed to insourcing in the forced vertical integration of processes and materials. Many outsourcing contracts from abroad for Business Process Outsourcing (BPOs) for the over 700 BPO companies in the Philippines have not been renewed, in the same uncertainty suffered under the malingering COVID pandemic. Sub-contracts for freelance workers have lessened in the realignment of dislocated regular employees to jobs vacated by hapless others who resigned, are on forced furlough, or were made to go in the cost cutting of floundering companies. Feels like déjà vu of the 1980s world recession and its aftershocks of financial crises.

“In terms of the coronavirus pandemic’s impact on businesses and households, the Philippines had it worst compared to Indonesia, Thailand, and Laos,” according to a study by Asian Development Bank (ADB) financial sector specialist Shigehiro Shinozaki (Rappler, Sept. 16, 2020). It showed that 70.6% of micro, small, and medium enterprises (MSMEs) in the Philippines were forced to temporarily close due to the COVID-19 outbreak. Philippine MSMEs also noted the most cancellations of contracts (19.1%) and delayed delivery of products and services (35%) during the lockdown. Note that the work-from-home setup is “not a serious option for MSMEs,” with only 13% to 21% of businesses in the four countries adopting the scheme. This means that small businesses adapted to the pandemic through temporary layoffs, rather than implementing work-from-home schemes that governments have encouraged. These MSMEs were mostly serving outsourcing contracts, while subcontracting products and processes to other MSMEs and individual contractors.

The 2020 List of Establishments of the Philippine Statistics Authority (PSA) recorded a total of 957,620 business enterprises operating in the country. Of these, 952,969 (99.51%) are MSMEs and 4,651 (0.49%) are large enterprises. The statistics emphasize the extreme vulnerability of the Philippine business sector to recessions and economic downturns, with the 99.51% MSMEs as most easily infected by financial and production factor crises. Size matters.

Indeed, technology has dramatically helped to somehow level the playing field for businesses, and the inter-dependency in globalization has reciprocal gains, but in the end, as a crisis shows, it’s every man for himself. Self-sufficiency is still the best strategy for a business.

 

Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Saudi Arabia targets net zero emissions by 2060

REUTERS
A Saudi flag flutters atop Saudi Arabia’s consulate in Istanbul, Turkey Oct. 20, 2018. — REUTERS/HUSEYIN ALDEMIR/FILE PHOTO

RIYADH — Saudi Arabia’s crown prince said on Saturday that the world’s top oil exporter aims to reach “net zero” emissions of greenhouse gases, mostly produced by burning fossil fuels, by 2060 — 10 years later than the United States.

He also said it would double the emissions cuts it plans to achieve by 2030.

Crown Prince Mohammed bin Salman and his energy minister said Saudi Arabia would tackle climate change, but also stressed the continued importance of hydrocarbons and said it would continue to ensure oil market stability.

They were speaking at the Saudi Green Initiative (SGI) ahead of COP26, the United Nations climate conference in Glasgow at the end of the month, which hopes to agree deeper global emissions cuts to tackle global warming.

The United States, the world’s second-biggest emitter, is committed to achieving net zero, meaning that it emits no more greenhouse gases than it can capture or absorb, by 2050. But China and India, the world’s biggest and third-biggest emitters, have not committed to this timeline.

Amin Nasser, chief executive of the state oil giant Saudi Aramco, said it was counterproductive to “demonize” hydrocarbons. He said Aramco aimed to expand its oil and gas production capacity while also achieving net zero emissions from its own operations by 2050.

He called for more global investment to ensure adequate crude oil supplies.

Prince Mohammed said in recorded remarks that the kingdom aimed to reach net zero by 2060 under its circular carbon economy program, “while maintaining its leading role in strengthening security and stability of global oil markets.”

He said Saudi Arabia would join a global initiative on slashing emissions of methane by 30% from 2020 levels by 2030, which both the United States and the EU have been pressing.

U.N. Secretary General Antonio Guterres, in a phone call with Saudi King Salman bin Abdulaziz, welcomed the kingdom’s initiatives to reduce emissions, state media said.

The SGI aims to eliminate 278 million tons of carbon dioxide emissions per year by 2030, up from a previous target of 130 million tons. The crown prince said the SGI initiative would involve investments of over 700 billion riyals ($190 billion) in that time period.

Saudi Arabia’s economy remains heavily reliant on oil, although the crown prince is trying to promote diversification.

Energy minister Prince Abdulaziz bin Salman said the world needed fossil fuels as well as renewables.

“It has to be a comprehensive solution,” he said. “We need to be inclusive, and inclusivity requires being open to accept others’ efforts as long as they are going to reduce emissions.”

He said net zero might be achieved before 2060 but the kingdom needed time to do things “properly.”

The non-profit Climate Action Tracker consortium gives Saudi Arabia its lowest possible ranking, “Critically insufficient.”

Saudi Arabia’s first renewable energy plant opened in April and its first wind farm began generating in August. — Reuters

In just 21 days, Facebook led new user to gore, fake news

REUTERS

IN FEB. 2019, Facebook, Inc. set up a test account in India to determine how its own algorithms affect what people see in one of its fastest growing and most important overseas markets. The results stunned the company’s own staff.

Within three weeks, the new user’s feed turned into a maelstrom of fake news and incendiary images. There were graphic photos of beheadings, doctored images of India air strikes against Pakistan and jingoistic scenes of violence. One group for “things that make you laugh” included fake news of 300 terrorists who died in a bombing in Pakistan.

“I’ve seen more images of dead people in the past 3 weeks than I’ve seen in my entire life total,” one staffer wrote, according to a 46-page research note that’s among the trove of documents released by Facebook whistleblower Frances Haugen.

The test proved telling because it was designed to focus exclusively on Facebook’s role in recommending content. The trial account used the profile of a 21-year-old woman living in the western India city of Jaipur and hailing from Hyderabad. The user only followed pages or groups recommended by Facebook or encountered through those recommendations. The experience was termed an “integrity nightmare,” by the author of the research note.

While Haugen’s disclosures have painted a damning picture of Facebook’s role in spreading harmful content in the US, the India experiment suggests that the company’s influence globally could be even worse. Most of the money Facebook spends on content moderation is focused on English-language media in countries like the US.

But the company’s growth largely comes from countries like India, Indonesia and Brazil, where it has struggled to hire people with the language skills to impose even basic oversight. The challenge is particularly acute in India, a country of 1.3 billion people with 22 official languages. Facebook has tended to outsource oversight for content on its platform to contractors from companies like Accenture.

“We’ve invested significantly in technology to find hate speech in various languages, including Hindi and Bengali,” a Facebook spokeswoman said. “As a result, we’ve reduced the amount of hate speech that people see by half this year. Today, it’s down to 0.05 percent. Hate speech against marginalized groups, including Muslims, is on the rise globally. So we are improving enforcement and are committed to updating our policies as hate speech evolves online.”

The new user test account was created on Feb. 4, 2019 during a research team’s trip to India, according to the report. Facebook is a “pretty empty place” without friends, the researchers wrote, with only the company’s Watch and Live tabs suggesting things to look at.

“The quality of this content is… not ideal,” the report said. When the video service Watch doesn’t know what a user wants, “it seems to recommend a bunch of softcore porn,” followed by a frowning emoticon.

The experiment began to turn dark on Feb. 11, as the test user started to explore content recommended by Facebook, including posts that were popular across the social network. She began with benign sites, including the official page of Prime Minister Narendra Modi’s ruling Bharatiya Janata Party and BBC News India.

Then on Feb. 14, a terror attack in Pulwama in the politically sensitive Kashmir state killed 40 Indian security personnel and injured dozens more. The Indian government attributed the strike to a Pakistan terrorist group. Soon the tester’s feed turned into a barrage of anti-Pakistan hate speech, including images of a beheading and a graphic showing preparation to incinerate a group of Pakistanis.

There were also nationalist messages, exaggerated claims about India’s air strikes in Pakistan, fake photos of bomb explosions and a doctored photo that purported to show a newly-married army man killed in the attack who’d been preparing to return to his family.

Many of the hate-filled posts were in Hindi, the country’s national language, escaping the regular content moderation controls at the social network. In India, people use a dozen or more regional variations of Hindi alone. Many people use a blend of English and Indian languages, making it almost impossible for an algorithm to sift through the colloquial jumble. A human content moderator would need to speak several languages to sieve out toxic content.

“After 12 days, 12 planes attacked Pakistan,” one post exulted. Another, again in Hindi, claimed as “Hot News” the death of 300 terrorists in a bomb explosion in Pakistan. The name of the group sharing the news was “Laughing and things that make you laugh.” Some posts containing fake photos of a napalm bomb claimed to be India’s air attack on Pakistan reveled, “300 dogs died. Now say long live India, death to Pakistan.”

The report — entitled “An Indian test user’s descent into a sea of polarizing, nationalist messages” — makes clear how little control Facebook has in one of its most important markets. The Menlo Park, California-based technology giant has anointed India as a key growth market, and used it as a test bed for new products. Last year, Facebook spent nearly $6 billion on a partnership with Mukesh Ambani, the richest man in Asia, who leads the Reliance conglomerate.

“This exploratory effort of one hypothetical test account inspired deeper, more rigorous analysis of our recommendation systems, and contributed to product changes to improve them,” the Facebook spokeswoman said. “Our work on curbing hate speech continues and we have further strengthened our hate classifiers, to include four Indian languages.”

But the company has also repeatedly tangled with the Indian government over its practices there. New regulations require that Facebook and other social media companies identify individuals responsible for their online content — making them accountable to the government. Facebook and Twitter, Inc. have fought back against the rules. On Facebook’s WhatsApp platform, viral fake messages circulated about child kidnapping gangs, leading to dozens of lynchings across the country beginning in the summer of 2017, further enraging users, the courts and the government.

The Facebook report ends by acknowledging its own recommendations led the test user account to become “filled with polarizing and graphic content, hate speech and misinformation.” It sounded a hopeful note that the experience “can serve as a starting point for conversations around understanding and mitigating integrity harms” from its recommendations in markets beyond the US

“Could we as a company have an extra responsibility for preventing integrity harms that result from recommended content?,” the tester asked. — Bloomberg

Chinese economy risks deeper slowdown than markets realize

REUTERS

CHINA’S economy risks slowing faster than investors realize as President Xi Jinping’s push to cut its reliance on real estate and regulate sectors from education to technology combine with a power shortage and the pandemic.

Bank of America Corp. and Citigroup, Inc. are among those sounding the warning that expansion will fall short this year of the 8.2% anticipated by the consensus of economists. The slump could last into next year, forcing growth below 5%, they warn. Outside 2020’s 2.3%, that would be the weakest in three decades.

Strategists at Bank of America muse that Mr. Xi may even be embracing a once-in-two decades restructuring of the economy akin to Deng Xiaoping’s modernizations of the late-1970s and Zhu Rongji’s revamping of state-enterprises and finance in the 1990s.

“If so, the data flow from China could confound even the pessimists, and we are on guard for that scenario unfolding,” the strategists, led by Ajay Kapur, told clients in a report last week, in which they predicted growth of 7.7% this year and 4% in 2022.

Beijing is determined to shift its economic model from its boom years, in which the country loaded up on debt and propelled itself to become the second-largest economy. Mr. Xi is now overseeing a plan to stabilize debt growth — in order to ease financial risks — curb inequality and channel financial resources into hi-tech manufacturing to counter the threat of technology restrictions from the US.

Data released last week already showed a sharp slowdown in growth to 4.9% in the third quarter from 7.9% in the previous quarter, with more pain likely to come as electricity shortages persist.

Even before the pandemic hit, China was surprising economists with slower-than-expected growth caused by Beijing’s resolve to ease debt risks, which meant it avoided broad stimulus even as the US-China trade war threatened expansion.

After modest easing to cushion the worst effects of the coronavirus, its debt-control policy resumed, with real estate companies such as China Evergrande Group feeling the biggest impact.

Mr. Xi also set about seeking to reshape the consumer technology, private tutoring and real estate sectors, with officials arguing they represent a wasteful use of the country’s limited resources. Officials have mostly embraced the resulting slowdown.

China’s Premier Li Keqiang in March announced a growth target of “above 6%” for the year. While analysts saw this as a signal that Beijing was prioritizing other policy goals such as financial stability and environmental protection above economic growth, most at the time saw the target as extremely conservative.

But Beijing has signaled in recent weeks that it could loosen some policies, telling banks to pick up the pace of mortgage lending even as it repeated vows not to use the property sector as a short-term stimulus.

People’s Bank of China Governor Yi Gang recently said he sees about 8% expansion for this year, and to achieve that, the economy would only need to expand 3.9% in the current quarter, according to calculations from Bloomberg Economics.

SLOWING GROWTH
China’s slowdown comes as the global recovery from Covid-19 risks losing momentum.

“When China’s economic engine sputters, growth fizzles the world over,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong.

Among those at risk from less investment in China are commodity exporters such as Australia, South Africa and Brazil. Slower trade could also hit the likes of Malaysia, Singapore and Thailand. The impact could be felt further afield, according to Tuuli McCully, Singapore-based head of Asia-Pacific economics at Scotiabank.

Financial market spillovers may be more contained given the 18% peak to trough correction in China’s CSI 300 Index this year did not spark global contagion, said Alvin Tan, head of Asia foreign-exchange strategy at Royal Bank of Canada in Hong Kong. One possible upside from a cooling Chinese economy is that it could alleviate global inflation pressures, Mr. Tan said.

For now, even the most pessimistic economists expect growth to come in above 7.5% this year, a relatively rapid rate for an economy the size of China’s. Beijing has set a goal of doubling gross domestic product from 2020 levels by 2035, which implies annual growth of around 5%. That may prove to be a floor for policy makers.

China could see real estate investment fall 10% in the first half of next year and still achieve 5% annual growth as its credit cycle is close to its bottom and fiscal policy could pick up ahead of a crucial Communist Party congress in the autumn, said Bo Zhuang, China economist at Loomis Sayles Investments Asia.

He predicts Beijing could set a growth target around 5.5% for next year.

Still, the recent weakness when combined with concerns over Evergrande is prompting analysts to wonder if they remain too sanguine on near-term prospects.

Bank of America’s strategists outlined a “bearish scenario” involving a disorderly adjustment to the real estate market in which property prices fall 10%, cutting sales and deterring banks from lending to the sector. In that scenario, growth could reach as low as 7.5% this year and 2.2% in 2022.

The other risk is that China’s policy makers may struggle to flick the switch back to growth mode if they feel that’s needed. Citigroup economists led by Xiangrong Yu noted that the electricity shortages that are crimping industrial production will make it harder to cushion growth by boosting investment in infrastructure. That kind of policy could only work next year once the power crunch eases, they said.

Local governments are also struggling to find viable projects to invest in while property developers’ tight financing has slowed their land purchases, threatening to undermine a $1-trillion revenue source for local governments. — Bloomberg

Content providers must offer a strong user experience, says Discovery 

Faced with a high level of competition in an era of streaming services, content providers must stay ahead by developing a strong user experience for clients, according to television company Discovery, Inc., which launched a subscription streaming service called discovery+ in the Philippines on Oct. 13. 

“The pandemic has absolutely accelerated streaming consumption and we’ve seen huge growth and investment in streaming platforms in the Southeast Asian market, especially in the Philippines. It’s important that content providers are clear on their value offering,” said Tony Qiu, Discovery’s general manager for East and Southeast Asia, in an exclusive interview with BusinessWorld. I

Like Disney’s own Disney+, which put many of its brands and channels onto a streaming service, discovery+ gives access to 20,000 episodes from Discovery brands like Animal Planet, BBC, Food Network, History Channel, and TLC, among others.  

The well-known and loved content will also be supplemented by new titles that will drop every week, added Mr. Qiu.  

Popular franchises include 90 Day Fiancé, Naked and Afraid, and Ghost Adventures, while the upcoming titles that Filipino subscribers can look forward to include 90 Days: The Single Life and Drag Race Philippines in 2022. 

AT ONE’S FINGERTIPS
On the reception of lifestyle and factual content in the country, Mr. Qiu reassured that Discovery’s 25 years of existence as a television channel in the Philippines ensures positive reception of the streaming service, paired with Filipinos’ eagerness for content. 

“We know how passionate Filipinos are about Discovery’s iconic shows and personalities. [The Philippines is] one of the world’s fastest growing markets,” he said. “Filipinos love streaming and have embraced having content at their fingertips whenever and wherever they want.” 

Despite the multiple options that people have in this day and age, a clear value proposition could attract consumers to a streaming service, he added. In the case of discovery+, the proposition is original, unscripted content covering food, true crime, relationships, lifestyle, and documentaries both new and old. 

As for the development of good deals for subscribers, Discovery acknowledged its partner for entering the country, Globe Telecom.  

“Direct-to-consumer partnerships are actually very critical, especially in driving the scale of business,” explained Mr. Qiu. “We bring exclusive offers to Globe’s customer base.” 

One of the deals that Globe, TM, and Globe at Home users can get for a limited time is P129 for one year of access to discovery+, instead of the standard price of P999. — Bronte H. Lacsamana

Philippines remains on FATF’s gray list

REUTERS

The Philippines remains under a “gray” list of countries under increased monitoring for money laundering and terrorism financing risks, despite some progress in implementing measures against such financial crimes, according to the Financial Action Task Force (FATF).

“Since June 2021, when the Philippines made a high-level political commitment to work with the FATF and Asia Pacific Group to strengthen the effectiveness of its anti-money laundering/counter-terorrism financing (AML/CTF) regime, the Philippines has taken steps towards improving its AML/CFT regime, by developing and implementing guidance on delistings and the unfreezing of assets for targeted financial sanctions related to proliferation financing,” the Paris-based global dirty money watchdog said in a statement on Friday.

The assessment was made during the FATF’s plenary from Oct. 19 to 21.

Anti-Money Laundering Council (AMLC) Executive Director Mel Georgie B. Racela said the government is committed to the timely implementation of the remaining action plan items to address the deficiencies.

“Despite the constraints of the COVID-19 pandemic, the Philippines has progressed toward improving its anti-money laundering and counter-terrorism financing (AML/CTF) regime,” Mr. Racela said in a Viber message.

“The Philippines’ national AML/CTF Strategy has already integrated the said Action Plans to ensure a whole-of-nation approach. With this progress, the country’s action plan items are down to 17 (from 18),” he added.

The FATF said the Philippines will remain under jurisdictions with strategic deficiencies alongside Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Haiti, Jamaica, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Senegal, South Sudan, Syria, Uganda, Yemen, Zimbabwe.

Jordan, Mali, and Turkey were also placed under increased monitoring.

Meanwhile, Botswana and Mauritius were able to exit the gray list.

Based on its assessment, the FATF pointed out that the Philippines still needs to prove the effectivity of its risk-based supervision of designated non-financial businesses and professions; show supervisors are using AMLC/CTF controls to mitigate risks related to casino junkets; and implement new registration requirements for money or value transfer services as well as slapping sanctions for unregistered and illegal remittance operators.

The country also needs to strengthen and streamline the access and accuracy of beneficial ownership information that are used by law enforcement agencies; boost usage of financial intelligence and increase in money laundering investigations and prosecutions; and show heightened identification, investigation, and prosecution of cases related to terrorism financing.

Finally, the FATF will be assessing the country’s ability in taking appropriate measures related to non-profit organizations without disrupting their legitimate activities; and to enhance the effectiveness of the targeted financial sanctions framework for both terrorism financing and proliferation financing.

Mr. Racela said such action plan items need to be implemented by supervisors, law enforcement and intelligence agencies, prosecutors, and other relevant government agencies within the timelines provided by the FATF.

“It must be understood, however, that demonstrating effectiveness, which is measured through sustained actions, takes time,” he said.

In June, the FATG placed the Philippines in its gray list.

Government officials are hopeful that the country can exit the gray list by January 2023. — Luz Wendy T. Noble

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