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Identifying various opportunities in automation

The world continues to undergo an entirely new industrial revolution powered by technological advancements and digitalization, and the global logistics industry can stand to benefit.

Already the industry has seen massive changes driven by technology, resulting in benefits such as increased productivity in the supply chain and minimizing costs and errors in all areas — from trucking transportation, international transportation (ocean and air), supply chain management, to shipment tracking.

Yet, a new frontier is emerging that could further take the logistics industry into the future: automation.

As global consultancy firm McKinsey & Company puts it, the history of logistics is also a history of automation, from the steam engine to the forklift to today’s robotic pickers and packers, giving plenty of precedent to the renewed interest in new machinery.

“Many trends are thrusting automation toward the top of the logistics CEO’s agenda, not least these three: a growing shortage of labor, an explosion in demand from online retailers, and some intriguing technical advances. Put it all together, and McKinsey Global Institute estimates that the transportation-and-warehousing industry has the third-highest automation potential of any sector,” McKinsey wrote on its website.

Global logistics firm DHL shares the sentiment, pointing out that logistics industry players from traditional warehousing to new e-commerce startups are moving towards automated processes to boost throughput, cut costs, and meet growing customer demand.

“As more processes along the supply chain are matched with robotics solutions, the robotics industry is only expected to grow. Logistics robots are diversifying and achieving proficiency that matches and exceeds human capabilities. Upgraded with enhanced hardware and developments in AI, new devices have human-like dexterity, improved vision, and quick, agile movement,” DHL noted.

“With better robots and more use cases, partnerships are being forged throughout the logistics industry — pairing traditional automation providers with a new wave of startups — to achieve next-level value with intelligent automation.”

Opportunities abound as logistics providers, retailers, and manufacturers are following suit, co-innovating products and services for efficiency gains in supply chain operations. Among the emerging trends, DHL observed, are autonomous mobile robots (AMRs), which are being adopted on a massive scale by supply chain players. Operating safely alongside human workers in mixed environments, AMRs can substantially improve productivity — up to 50% with point-to-point (P2P) transport with, say, bins or pallets, and up to 150% with assisted order picking, for example with e-commerce orders.

Not only that, AMRs are also widely deployed to clean facility floors or even perform functions like property mapping and surveilling. Whether AMRs are simply driverless versions of familiar vehicles like forklifts and yard trucks or completely new types of machinery, they have inherent built-in safety precautions and operation functions to support the reduction of hazards in facilities.

Stationary robots, commonly known as articulated robotic arms, meanwhile, are developing at a rapid pace, approaching human-like performance and throughput. DHL pointed out that some models have even exceeded this.

“As performance has improved over the past few years, a wider array of logistics applications has opened up to stationary robots beyond simply palletizing heavier goods and other less complex operations,” the company said.

“Random bin picking, co-packaging, sorting orders into put walls, inducting objects onto conveyor belts — all are now supply chain tasks that are within the realm of intelligent and fast articulated robotic arms, sometimes surpassing human counterparts. As stationary robots proliferate, their costs are lowering and return on investment can now take less than four years.”

Another promising field in logistics automation is micro-fulfillment. Micro-fulfillment is a focus topic for novel automation and robotics technologies, encapsulating the concept of small-scale warehouse facilities in urban locations, close to the consumer. These new mini-inventory and distribution hubs provide valuable opportunities for instant and short-time delivery to a large number of customers.

As real estate in cities becomes ever more expensive compared to that in rural areas, along with the shorter expected delivery times mandating 24/7 availability and uptime, fully automated systems and integrated robotics technologies allow logistics firms to create denser facility designs and achieve around-the-clock operations.

“The first wave of automation using intelligent robotics has arrived in the logistics industry. Driven by rapid technological advancements and greater affordability, robotics solutions are entering the logistics workforce, supporting zero-defect processes and boosting productivity. Mobile or stationary, robots will adopt more roles in the supply chain, assisting workers with warehousing, transportation, and even last-mile delivery activities,” DHL said. — Bjorn Biel M. Beltran

Elements for a resilient food system

In photo during the BusinessWorld Insights, in partnership with SM Foundation, are (clockwise, from top left) moderator Patricia Mirasol of BusinessWorld; and panelists Romeo S. Recide, International Rice Research Institute (IRRI) Philippines Representative and Secretary to the Board; Tamara P. Duran, an assistant FAO representative for programme; Ayn G. Torres, a policy specialist and researcher at World Agroforestry (CIFOR-ICRAF); and Charina A. Javier, science research specialist II at the Nutrition Assessment and Monitor Division of DoST-FNRI.

By Chelsey Keith P. Ignacio, Special Features Writer

The journey of foods from production to consumption encounters a variety of roadblocks in the Philippines. According to its “The State of Food Security and Nutrition in the World” in 2020, the United Nations (UN) Food and Agriculture Organization (FAO) recorded 59 million Filipinos suffering from food insecurity in 2017 to 2019, the highest number in Southeast Asia. Actions towards “eradicating hunger” experienced continuing challenges, among the causes was natural disasters.

The food situation in the country further became affected with the quarantine impositions due to the pandemic. From the “Rapid Nutrition Assessment Survey” conducted from November to December 2020 by the Department of Science and Technology – Food and Nutrition Research Institute (DoST-FNRI), 62.1% of the surveyed households experienced moderate or severe food insecurity.

Climate crisis and pandemic implications as vulnerabilities of the country’s food systems were also stressed in the BusinessWorld Insights on “Ensuring Resiliency in our Food Systems” held on Oct. 13. Experts from the food and agriculture sector nonetheless shared the means to cultivate a resilient chain of producing foods.

Field innovations

Romeo S. Recide, International Rice Research Institute (IRRI) Philippines Representative and Secretary to the Board, considered innovations as hope in addressing the impacts of different issues in the food system.

For Mr. Recide, a prime achievement in the collaboration between IRRI, the Department of Agriculture (DA), and the Philippine Rice Research Institute (PhilRice) was the food regulatory approval of golden rice in the country.

“Filipino farmers can now be the first in the world to grow this beta-carotene fortified rice, which has the potential to significantly reduce the incidence of childhood blindness among malnourished children,” he said.

The partnership has also developed a digital advisory for farmers about crop, nutrient, and pest management.

They also used satellite-based information to give details on the current situation of the area, yield, and possible interventions that the government has to carry out to protect the crop.

Another development of IRRI is rice straw management, which can be used to reduce greenhouse gas emissions.

Mr. Recide hoped that DA would soon consider and distribute drone technology to the field as well. “We have demonstrated how this is done not only in overseeing the crop situation but also in delivering fertilizer, pesticide application, and then [exceeding] in the farm, which is good for labor and efficiency,” he said.

“Increasing and intensifying climate change impacts, competition in the use of natural resources for production, and the growing populations are straining our food systems’ ability to deliver available, accessible, and affordable food. And the COVID-19 pandemic and lockdown have also exposed the fragility of food systems, either local, regional, or global,” Mr. Recide expressed.

“So, resilience needs to be built into our value chains from seeds and cultivation to harvesting and transport from farm to market. Advances in various fields show promise in delivering solutions to some of the challenges that we face.”

New approaches

Tamara P. Duran, an assistant FAO representative for programme, discussed some approaches to develop a better food system in the country.

In supporting the improved functionality of these systems in the pandemic response and recovery, Ms. Duran said that employing a holistic approach was crucial in evaluating and addressing constraints as well as trade-offs implied in the resolution.

“The focus should be building back better while leaving no one behind. This calls for promoting innovations for increased efficiency; enhancing inclusiveness and resilience of food supply chains; ensuring food safety and nutritional quality of diets; reducing food loss and waste; [taming] and strengthening agri-food enterprises; and fostering investment in the green recovery of food value chains,” she said.

The promotion of domestic food production and shorter supply chains are also imperative, as these are key to building a resilient and sustainable local food system.

Ms. Duran also shared that FAO recognized the value of innovations to enhance the agri-food system resilience, but emphasized that innovation does not only comprise technologies.

“[It is] also developing new kinds or worthwhile approaches or methodologies and making sure that they reach and are understood by the actual people who will be using them. This may include promoting biodiversity for food security and nutrition and new ways of resilient livelihoods for communities with different contexts,” she said.

And to be more resilient and sustainable, evidence and sufficient information are also valuable in the process. “It will help inform the decision-makers and policymakers where the scarce public resources should be allocated. And at the same time, it can help inform the different partners or actors on what are the gaps and where their contribution is most needed or more impact can be generated from,” she explained.

In ensuring the capacity of the country to foresee and withstand risks and potential threats to food security, Ms. Duran added that “planning and preparing in advance, having mitigation measures at hand, and making sure that everyone knows what to do are very much essential to prevent the recurrences of food supply disruption.”

Diversifying foods

Charina A. Javier, science research specialist II at the Nutrition Assessment and Monitor Division of DoST-FNRI, highlighted the need for diversification in foods.

Discussing the food system challenges in availability, which involves production and distribution, Ms. Javier noted that agricultural policies comprise more favor in cash crops that have reduced the focus on diversifying food and livelihood opportunities.

A study by the Australian Center for International Agricultural Research in 2020, she added, saw that the Philippines met rice requirements. But the country has an oversupply of protein sources like meat and fish products. While vegetables and fruits are insufficient, counting in both local produce and imports.

“There is a need for us to diversify the food that is available in terms of production and distribution,” Ms. Javier said. “We have to support small and medium enterprises to develop added-value products from our agriculture produce and use technology to connect our food producers and consumers.”

“The message number one of the nutritional guidelines for Filipinos is eating a variety of food every day,” she added. “I think it should also be our guide from the production to consumption, from farm to plate.”

Collective efforts

Ayn G. Torres, a policy specialist and researcher at World Agroforestry (CIFOR-ICRAF), said that solutions for issues in the food system resilience can be done on a larger or smaller scale.

Ms. Torres agreed on the possibility of nurturing vegetable gardens at home, whether integrated with trees or not, as long as diversified. However, the space to plant a nutrition-rich, diversified range of species can be an issue, especially for the poor in urban settlements where spaces can be cramped. “This is where a lot of public and private initiated efforts are very much appreciated,” she said.

“We should always highlight the role of the local government in these efforts. We have seen how much the power of the local government can do in terms of recovery response during the pandemic.”

She shared that local governments have also started community gardening to aggregate people to begin such gardening as well.

“We have to recognize that it can be done on a smaller scale, [and] we should look at it to try to level that up [so] more people can benefit,” she added.

Ms. Torres also noted that “while a bigger chunk of [food system] problems like economic and environmental can be solved at the policy or public sector level, we encourage a lot of private-sector movement also because that is [where] most of the innovations start.”

This session of #BUSINESSWORLDINSIGHTS was made possible by SM Foundation and was supported by British Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, and The Philippine STAR.

E-commerce’s impact on deliveries

With the travel restrictions and physical store closures due to the pandemic, many consumers have resorted to online shopping. E-commerce platforms have provided them convenience by getting their needs in a few clicks and wait for the delivery at their doorstep. 

Such the rise of customers depending on e-commerce since the past year, what are the implications for the logistics sector? 

Phil Teng, director of E-commerce & Procurement, Asia at third party logistics provider C.H. Robinson, considered some new challenges for the logistics industry as it faces the boom of e-commerce.

“Rapid growth in e-commerce since the ’90s has presented various challenges to the logistics industry in Asia and around the globe — including proper infrastructure and connectivity,” Mr. Teng wrote in an article on C.H. Robinson’s website. “There is an urgent need to innovate and expand capabilities to continue to meet high customer expectations of affordability, flexibility, and convenience, as well as a soaring demand for speedy delivery in urban areas.”

With such deemed challenges of e-commerce for logistics, how have the two sectors responded so far?

Currently, the delivery expectation among many consumers is fast, which can be within the day or in one or two days. For Filipino retailers to commit to this delivery demand, some developers are exploring the possibility of converting vacant mall spaces into micro-warehouses, according to Joey Roi Bondoc, an associate director at Colliers Philippines, in a BusinessWorld online forum last month.

This delivery time expectation has also pushed several retailers to start looking into warehouses near Metro Manila, in suburban areas, industrial locations, Southern Luzon, and Central Luzon. 

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 includes the cities of Caloocan, Malabon, Navotas, and Valenzuela. Outside the capital, demands for lease facilities are also seen in Bulacan and Pampanga.

KMC Savills likewise projected in a report last May that the increase in e-commerce spending could ramp up the demand for warehouse space, including in key locations beyond Metro Manila.

“One of the drivers of e-commerce growth is the untapped market in rural areas. It is expected that they will take advantage of shifting consumer behavior and will extend its reach driving demand for industrial space outside of NCR (National Capital Region),” the real estate firm said in the report.

KMC reported that e-commerce accounted for 48% of warehouse demand per industry. The firm added that the trend will continue to drive logistics leasing demand this year as the pandemic speeds up the shift to omnichannel retailing.

“Demand for warehousing will continue to grow even in the provincial areas as e-commerce expand in untapped markets. However, growth of the sector might be slow due to the absence of quality supply options that meet the strict specification requirements of e-commerce companies,” the firm said.

While e-commerce drives new demands for warehouses, it has pushed for transforming warehouses with having technological advancements as well.

According to an article by Builderfly, an e-commerce service from India, warehouse automation is among those being considered by e-commerce retailers, such as using robots and automated processing with cameras, barcode sensors, radio-frequency ID equipment, and laser sensors.

“Consumers, being a part of the highly technological world, highly expect efficient and speedy delivery, product ranges, and much more. And, their demands have been successfully met by the logistics industry with larges warehousing spaces, trimmed supply chain, and so on,” it said. — Chelsey Keith P. Ignacio

Diokno sees more harm in raising rates ‘too early’

PHILIPPINE STAR/ MICHAEL VARCAS
Global crude oil prices have surged in recent weeks, as more economies reopened and demand increased. — PHILIPPINE STAR/ MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

AS SOME central banks around the world are beginning to raise rates, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Sunday said tightening monetary policy too early may cause more harm to the Philippine economy’s recovery.

“To me, the harm (of) tightening monetary policy too soon exceeds the harm of moving too late, given that the Philippine economy is at its nascent state of economic recovery,” he told reporters via Viber message.

Mr. Diokno said he believes the elevated inflation in the past months is still “transitory” and fueled mainly by low supply.

“Is inflation transitory or the beginning of a longer-term problem? Central bankers and policy makers are divided. But based on available evidence, I will side with Team Transitory,” he said.

While the BSP staff sees inflation exceeding the target at 4.5% this year, Mr. Diokno said inflation is expected to return to within the 2-4% range at 3.3% and 3.2% by 2022 and 2023.   

Mr. Diokno said factors that could cause faster inflation over the near term include the potential impact of typhoons, the persistent African Swine Fever outbreak, and higher world commodity prices due to supply chain disruptions.

“On the other hand, the main sources of downside risks are the prolonged impact of the domestic economic growth due to delays in the easing of lockdown measures and the weaker-than-expected global recovery owing to the rapid spread of the more infectious Delta variant,” the central bank chief said.

Mr. Diokno pointed out that since inflationary pressures are coming from the supply side, “there appears to be no justification for monetary intervention.”

“There is no pressure on the demand side, such as increases in wages, transport costs, and housing. There is sufficient slack in the economy and real estate prices are steady with downward bias,” he added. “For example, would an interest rate hike bring about higher world crude supply? Of course not.”

In September, inflation eased to 4.8% from 4.9% in August. Inflation has mostly exceeded the 2-4% target by the central bank, except in July when it settled at 4%.

The central bank in its September policy review kept rates steady, citing the need to support recovery even as it raised its inflation forecast for the year to 4.4%.

Mr. Diokno acknowledged that some central banks have already started to increase their interest rates due to rising inflation pressures.

“Based on the evidence at the time of its decision, the Monetary Board will decide on the appropriate timing of its policy change. It won’t be influenced by opinion makers, market analysts or Twitters,” Mr. Diokno said.

The Bank of Korea and New Zealand have already raised interest rates, while the Monetary Authority of Singapore tightened monetary policy by raising the slope of its currency band.

The International Monetary Fund on Friday urged central banks to vigilantly watch out price dynamics and to look through whether inflationary pressures are “transitory.”

For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, some factors have shown that the elevated inflation could still be “transitory.”

He noted food prices usually spike after a typhoon, but typically normalizes after some time.

Mr. Asuncion said the current rise in oil prices can be attributed to both supply chain issues and higher demand as the economy reopens.

On the other hand, he said that core inflation remains steady, noting this is an indicator of long-term inflation trend. The core inflation stood at 3.3% in September, unchanged from its August print.

“I actually agree at this point that it’s too early to raise interest rates. Domestic demand is still not strong although it’s starting to improve. We should wait for real economic growth to return before such policy move,” he said in a Viber message, noting economic recovery across the world is diverging.

Meanwhile, some analysts said the faster increase in consumer prices also reflect some signs of pickup in demand due to uneven global recovery.

John Paolo R. Rivera, an economist at the Asian Institute of Management, said the BSP is faced with a tough balance to keep inflation stable while nurturing growth.

With the key policy rate at 2% and inflation at 4.8% in September, the country is experiencing a negative real interest environment.

“People’s purchasing power and already low income are being eaten up by inflation. It cannot keep up with the growth of purchasing power through interest (that) people earn in financial institutions with the value of the money they lose due to inflation,” he said in a Viber message.

Mr. Rivera warned high inflation caused by low supply will also coincide with increased consumer demand ahead of the holiday season.

However, Mr. Rivera acknowledged the BSP’s bias to keep its support for economic recovery. The economy rose by 11.8% year on year in the April to June period, but shrank 1.3% quarter on quarter.

“The problem with increasing interest rates is its consequence of contracting gross domestic product (GDP),” he said.

Third-quarter GDP data will be released on Nov. 9. The Monetary Board will have two more policy reviews this year set on Nov. 18 and Dec. 16.

China-funded projects may face scrutiny after Duterte leaves

REUTERS
Philippine President Rodrigo R. Duterte and Chinese President Xi Jinping attend a signing ceremony held in Beijing, China, Oct. 20, 2016. — REUTERS/NG HAN GUAN/POOL

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINES under a new government would probably cancel several China-funded projects after several African countries revoked similar contracts with shady state Chinese companies, according to political analysts.

“The same outcome will happen in the Philippines if the next president is not an ally of President Rodrigo R. Duterte,” InfraWatchPH convenor Terry L. Ridon said in a Facebook Messenger chat. Projects with “badges of fraud or corruption” may get suspended, if not canceled.

“Upcoming China-funded projects, on the other hand, may never see the light of day and may be given to other funders with more transparent and competitive proposals,” the former congressman said.

Several African countries have canceled China-funded projects “on the grounds of being exploitative and unfair,” according to the Free Press Journal.

The Democratic Republic of Congo should renegotiate its $6-billion infrastructure-for-minerals deal with Chinese investors, Reuters reported last week, citing the draft of a report commissioned by a global anti-corruption body of governments, companies and activists.

The deal that was first signed in 2008 was “unconscionable” according to the draft that urged Congo’s government to cancel an amendment signed secretly in 2017 that sped up payments to Chinese mining investors and slowed reimbursements of investment in infrastructure.

The Extractive Industries Transparency Initiative, which tracks revenue flows in the oil and mining sectors and counts more than 50 countries, including Congo, is set to release the final report this month.

There was also a move to cancel Chinese contracts in Kenya after its high court in July last year ordered the cancellation of a $3.2-billion deal with China to build a railway project, according to the Free Press Journal.

The court declared the entire project illegal after it failed to comply with the country’s laws, including procurement policies, it said.

“The recent cancellations of Chinese deals in Africa for inferior quality and noncompliance with regulatory processes should spur Filipinos and any concerned government officials to immediately look deeper into the Duterte administration’s deals with China,” said Sonny A. Africa, executive director at think tank IBON Foundation.

“While these are still very few and far below the grandiose government hype, the veil of opaqueness surrounding them is suspicious and raises alarm bells,” he added.

Mr. Africa said the slow progress of the administration’s infrastructure deals with China would probably trigger a shift in the country’s foreign policy.

“After five long years, the Duterte administration has clinched just five projects worth P48 billion,” he said. “This is just one (project) annually and a tiny sliver of a fraction of the 5,586 projects worth P6.7 trillion under the ‘Build, Build, Build’ infrastructure program.”

He said about four more projects worth P247 billion were still forthcoming. “These should be an additional prompt to a new administration that is hopefully not going to be as obsequious in its relationship with China as the current one.”

Mr. Duterte’s successor would probably review all Chinese investments in the country “because there are perceptions of anomalies and failures to follow basic rules and procedures of public bidding and procurement,” said Victor Andres C. Manhit, president of StratBase ADR Institute for Strategic and International Studies.

“The Filipino people demand transparency and accountability from these Chinese projects,” he said in a Messenger chat.

Mr. Ridon said the Philippines under the next government might follow suit “given the unending controversies involving China’s corporations and nationals.”

He cited the scandal involving the Duterte government and Pharmally Pharmaceutical Corp., whose suppliers are based in China.

The company, which was registered with the Philippine Securities and Exchange of Commission in 2019 with a paid-up capital of P625,000, is a unit of Taiwan-based Pharmally International, whose executives had been implicated in various crimes, according to Senator Ana Theresia “Risa” N. Hontiveros-Baraquel.

Chinese national Michael Yang, a former economic adviser of Mr. Duterte, had acted as a financier and guarantor for Pharmally, according to senators investigating the P8-billion deal.

The Chinese businessman had been implicated in the country’s illegal drug trade and appears to be a “go-to powerbroker in the Philippines for Chinese politicians and businessmen looking for smooth transactions in the country,” Senator Maria Imelda Josefa “Imee” R. Marcos said.

ANTI-BRIBERY
The review and potential probe of deals with China would be unprecedented because the President himself had defended Mr. Yang from attacks, Mr. Ridon said. The businessman has denied any wrongdoing.

“Its impact on future Philippine-China deals will be clearer once the Senate announces its verdict,” said John Paolo R. Rivera, an economist at the Asian Institute of Management.

Krizle Grace Mago, Pharmally’s head for regulatory affairs, told a Senate hearing last month the company had swindled the government by selling face shields that were either damaged or soiled. She later retracted her testimony.

“The Pharmally issue is a reminder of what can happen if the Philippines will not be vigilant,” Mr. Rivera said in a Viber message. “It will serve as a preview of what can happen when transactions and protocols are not aligned with domestic regulations.”

African anti-bribery enforcement involving Chinese companies is virtually nonexistent, Chinwe Esimai, managing director and chief anti-bribery officer at Citigroup, Inc. wrote in the Wharton School’s online business journal in 2019.

“With the Pharmally scandal, the government should not only check for track record and financial capacity, but also whether business activities are prospective platforms for money laundering operations,” Mr. Ridon said.

China was the biggest trade partner of Africa in 2020, with bilateral trade hitting $187 billion, according to a 2021 report on China-Africa Economic and Trade Relationship.

Mr. Duterte has led a foreign policy pivot to China and away from the Philippines’ Western allies.

“Should there be more issues arising from Chinese investments impeding the Philippines’ pandemic response, delays in Chinese-sponsored infrastructure projects may cause authorities and the public to reevaluate the costs and benefits of engagements with Chinese companies,” Mr. Rivera said.

The eco-political ambiance that favors China could change if an opposition candidate wins the presidency, he said. “It’s expected. Preferences will change. Another pivot may happen. Foreign policy may also change that may affect the status quo.”

“A more environment-focused administration may subject Chinese projects to more scrutiny, such as the Kaliwa Dam project,” Mr. Ridon said.

The government seeks to develop the Kaliwa Dam in Quezon and Rizal provinces as an alternative source of water for Metro Manila by 2025. Indigenous, religious and environmental activists have opposed the plan.

Presidential candidates must present a clear plan to reassess Chinese investments in the Philippines, Mr. Manhit said. “Did these projects benefit the Filipino nation and did not violate rules of procurement in our country?”

Mr. Ridon said the South China Sea dispute will remain a foreign policy concern regardless of bilateral relations with China.

“It should have no effect on trade and investments if Beijing is indeed serious in building its relations with Manila,” he said.

“We will have to see how a new president will eventually deal with China,” Mr. Ridon said. The public expects the next administration to assert a 2016 United Nations-backed arbitral ruling that favored the Philippines against China instead of undermining it, he added.

Consumer spending likely to inch up as restrictions ease

PHILIPPINE STAR/ MICHAEL VARCAS
The government has allowed cinemas to reopen with limited capacity after Metro Manila was placed under Alert Level 3. — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Reporter

THE POTENTIAL EFFECTS of looser Metro Manila mobility restrictions on consumer spending and this year’s economic growth have drawn mixed levels of optimism from economists and industry heads.

They are turning to the results of eased coronavirus disease 2019 (COVID-19) restrictions from countries with high vaccination rates to call for a faster inoculation rollout and expanded testing.

Cid L. Terosa, a senior economist at University of Asia and the Pacific School of Economics, said the new alert level will boost consumer spending because it removes mobility and transactional constraints brought about by stricter restrictions in the past. The improvement could help bring the economy towards the high end of the government’s lowered 4-5% target for the year.

Filipino consumers more optimistic in Q3 2021

“It may not move GDP beyond 5%, but it will definitely make it more possible to achieve at least 5% GDP (gross domestic product),” he said in an e-mail. “The economy needs to grow by at least 6% though to get the economy back on track towards the end of 2022.”

More business activity has been allowed in Metro Manila after it was placed on Alert Level 3 from Oct. 16 to 31.

Ser Percival Peña-Reyes, Ateneo de Manila University Center for Economic Research and Development (ACERD) associate director, said fewer restrictions would have little effect on consumer activity if public anxiety persists amid a slow vaccination rollout.

“I don’t think (the new alert level) will make that much of a difference if people are still scared to move around, because clearly not enough is being done to improve confidence, given that we are behind on vaccination,” he said in a phone interview.

The Philippines last Friday began vaccinating young people aged 12-17 against COVID-19. As of Oct. 14, the Philippines has vaccinated 21.6% of its population, according to Our World in Data website.

ACERD is retaining its 3-4% GDP growth forecast for 2021, although Mr. Peña-Reyes admits the projection could be optimistic.

Philippine economic growth projections have been slashed amid a Delta-variant outbreak that further dampened consumer and business confidence.

The International Monetary Fund (IMF) lowered its 2021 Philippine GDP forecast to 3.2%, from the 5.4% projection set in June. Fitch Ratings downgraded its projection to 4.4% from 5%, while the ASEAN+3 Macroeconomic Research Office (AMRO) cut its forecast to 4.3% from 6.4%.

Going into the fourth quarter, business leaders are confident that the new alert level in the capital region will boost consumer confidence and consumption, especially in the lead up to the holidays.

To achieve this, a retailers group head suggested that some cities be downgraded to Alert Level 2, adding that more transportation availability will improve consumer traffic.

“There should no longer be any getting back to stricter lockdowns and (they should be) allowing senior citizens and children to malls following strict COVID-19 protocols,” Philippine Retailers Association (PRA) Vice-Chairman Roberto S. Claudio, Sr. said in an e-mail.

“Sales will improve for restaurants, fastfood (chains) and retailers and this will further improve towards the fourth quarter holiday season.”

Philexport Chairman George T. Barcelon in a phone interview said pent-up demand and 13th month pay will help drive consumption during the holidays.

Some countries with higher vaccination rates have been planning for a COVID-19 response strategy that treats the virus as endemic instead of pursuing “Zero COVID.” This is the case for Singapore, although a recent spike in cases led the country to reintroduce restrictions.

The Philippines should adopt the expanded testing, treatment, and vaccination strategy of economies that are able to open up, Ateneo’s Mr. Peña-Reyes said.

Noting a resurgence in infection rates in countries with high vaccination rates, Mr. Barcelon said the Philippines should prepare quarantine centers and offer free COVID-19 testing.

“The vaccinated can infect others and be infected. We would like to have the economy open, definitely, but at the same time, we should err on the side of caution,” he said in English and Filipino.

“When there is testing from the grassroots, mobility applies to all sectors of our society: schooling, economy, and social. Testing is very crucial to open schooling.”

Share buybacks of listed firms ‘a delicate balancing act’

BW FILE PHOTO

By Keren Concepcion G. Valmonte, Reporter

SHARE buyback programs enable listed companies to maximize key opportunities to secure better business prospects and stabilize shareholders’ investments amid clouded market conditions, analysts said.

“Increased buyback activities by some listed companies are somewhat opportunistic amid relatively lower price of shares amid better future prospects for business growth and stock price appreciation, as well as the still relatively lower cost of funding to do such buybacks, all in preparation for better business or economic times ahead,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a Viber message last week.

DoubleDragon Properties Corp. has announced plans to buy back up to P500 million of its common shares using internal funds.

In a disclosure on July 30, the real estate developer said it aimed “to enhance shareholder value and to manifest confidence in the company’s value and prospects through the repurchase of the common shares of the company and through the return of a portion of the company’s capital to its shareholders.”

On Oct. 8, Alliance Global Group, Inc. (AGI) announced a P4-billion share buyback program. The company bought back nearly P112.54-million worth of shares as of Friday, Oct. 15.

In April, AGI’s Emperador, Inc. also approved a P1-billion share buyback program “to enhance shareholder value” using “sufficient retained earnings” to support the buyback program.

As of June 22, Emperador has repurchased P999.39-million shares.

RCBC’s Mr. Ricafort said these share buyback programs are “a delicate balancing act.” Funds should be “allocated judiciously” to maximize emerging opportunities that improve a company’s valuation.

“Using the listed company’s funds for more productive activities that help enhance the value of the enterprise would be the more preferred option, while excess funds would be allocated to finance share buybacks,” Mr. Ricafort said.

Share buybacks may also lead to a reduction in public free float or the shares that are held by the public.

“[This is] one of the criteria or requirements for listed companies, especially those that are included in the key stock market indexes locally and internationally, as a metric also for the stock’s liquidity in the market,” Mr. Ricafort said.

First Metro Investment Corp. Head of Research Cristina S. Ulang, meanwhile, said these share buyback programs are “more a play on share supply relative to demand.”

“Share buybacks don’t look as real as the fundamental drivers of shareholder value creation such as business [capital expenditures] or investments and their inherent yield on capital,” she said in a separate Viber message last week.

However, these programs “can [also] be a means for companies to grow because repurchased shares can be part of future asset exchanges and employee incentives.”

“Share buybacks have been historically key catalysts of share price appreciation in the emerging market equity space, benefiting shareholders’ return,” she added.

MPIC’s NLEX sees 25% increase in traffic volume this year

By Arjay L. Balinbin, Senior Reporter

NLEX Corp., operator of North Luzon Expressway (NLEX) and Subic Clark Tarlac Expressway (SCTEX), expects higher traffic volume this year, as quarantine restrictions are relaxed further.

“We expect traffic growth of 25% in NLEX and 23% in SCTEX versus the 2020 average,” Romulo S. Quimbo, Jr., NLEX Corp. senior vice-president for communications, told BusinessWorld in a phone message on Oct. 15.

NLEX had an average daily traffic of 235,000 in September, up from 230,000 in the same month in 2020.

Meanwhile, SCTEX’s average daily traffic hit 49,000 last month, up from 44,000 in September of the previous year.

“It will rise further as 4Q (fourth quarter) is seasonally higher. December is peak month with estimated traffic at 288,000 in NLEX and 70,000 in SCTEX,” Mr. Quimbo said.

NLEX Corp. is a unit of Metro Pacific Tollways Corp. (MPTC).

On Saturday, NLEX Corp. announced that newly installed acting secretary of the Department of Public Works and Highways (DPWH) Roger G. Mercado recently inspected the NLEX Connector “to familiarize himself with the construction progress and right-of-way requirements” of the project.

“NLEX Corp. is accelerating the construction of the NLEX Connector as the DPWH remains committed to fast-track the right-of-way delivery so motorists can soon benefit from this high impact infrastructure that will provide ease of travel and support economic growth,” the company said in an e-mailed statement.

The company targets to complete the first five kilometers of the P23-billion connector road project in the first quarter 2022.

Caloocan Interchange to España Boulevard is the first section of the project.

The eight-kilometer toll road project aims to link the tail of NLEX Harbor Link Segment 10 at Circumferential Road 3 (C3), Caloocan City to Polytechnic University of the Philippines in Sta. Mesa, Manila.

MPTC is the tollways unit of Metro Pacific Investments Corp. (MPIC), one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Subcompact sedan and dusted

The all-new Nissan Almera boasts a sleek yet spacious design that’s vastly more compelling than the homely styling of its predecessor’s. The new body features lower, wider, and longer dimensions using Nissan’s Emotional Geometry design language, while retaining the Almera’s vaunted roomy interior space. — PHOTO FROM NISSAN PHILIPPINES, INC.

The Nissan Almera and the hierarchy of wants and needs

SUBCOMPACT CARS are the next step up from tiny hatchbacks in the pecking order of automotive sizes and prices. These two categories usually cater to those shopping on a budget. In other words, these cars fulfill our automotive needs. Who wouldn’t want to be luxuriating in the serene smoothness of a Toyota Camry? But the reality is that the vast majority of the population is on a Vios budget — this Toyota subcompact being the country’s best-selling car.

The Camry is a want and the Vios is a need. That’s pretty clear-cut.

But Nissan has other ideas. Having pretty much abandoned the luxury sedan segment with the superb Altima no longer available (although the smooth Sylphy compact sedan still is), Japan’s number-two automaker is making its subcompact entry — the Almera — extra special. The company actually crafted an all-new model that transcends the needs for a subcompact sedan, making one actually want this car.

Much of that has to do with the exterior styling. The all-new Almera boasts a sleek yet spacious design that’s vastly more compelling than the homely styling of its predecessor’s. The new body features lower, wider, and longer dimensions using Nissan’s Emotional Geometry design language, while retaining the Almera’s vaunted roomy interior space. Key elements of the “Emotional Geometry” design include the distinctive V-motion grille, boomerang-shaped LED headlamps and taillamps, LED signature daytime running lamps, kick-up C-pillars, and a floating roof.

The new Almera, which is known as the Versa in the US market, now carries the same bold front end and sculpted body panels as the head-turning Sentra, Altima, and Maxima — all fast-selling sedans in North America. The previous Almera was no ugly duckling — just a wallflower — but that wallflower has become the belle of the ball.

Thankfully, the goodness is not just skin-deep. The new Almera now has an exciting turbocharged engine and, for the first time in a Nissan sedan, state-of-the-art Nissan Intelligent Mobility (NIM) features that provide monitoring and intervention technology. These features include Intelligent Forward Collision Warning, Intelligent Forward Emergency Braking, Blind Spot Warning, Rear Cross Traffic Alert, as well as the Intelligent Around-View Monitor with Moving Object Detection.

The new Almera is now powered with a compact and lightweight 1.0-liter turbo engine, which delivers greater power and better fuel efficiency, available in four variants with automatic and manual transmission options. The segment-first turbo engine has a power output of 100ps, a class-leading 152Nm of torque, and a claimed fuel efficiency of up to 23.3kpl for the manual version.

The all-new Almera’s interior has also been totally redesigned to accommodate a new seven-inch TFT meter with Integrated Drive-Assist Display, infotainment screen, black leather interiors with contrast stitching, as well as a new flat-bottom steering wheel with hands-free, meter, and voice recognition controls. The stylish passenger cabin features high-quality materials and exemplary craftsmanship with head and legroom to spare, retaining its reputation for best-in-class roominess.

The infotainment system provides convenience and seamless connectivity with an eight-inch Advanced Touchscreen Display with Apple CarPlay, bringing infotainment, navigation, safety, security, and more under a single platform.

“The all-new Almera is the smart and stylish sedan that first-time owners, growing families, and young professionals can trust,” says Nissan Philippines President and Managing Director Atsushi Najima. “As part of Nissan’s transformation plan in the Philippines, we are offering a unique and exciting challenger in the competitive passenger car segment.”

The all-new Nissan Almera starts at P728,000 for the EL MT, goes right up to P938,000 for the VE MT and P998,000 for the VE CVT, and tops out at P1,098,000 for the flagship VL N-Sport CVT. The starting and top-of-the-line prices are just right, although I feel there should have been a P800,000-something variant inserted in the yawning chasm between the P728,000 EL and P938,000 VE MT. A P210,000 price jump between the two lowest-priced variants seems too steep.

The new Almera comes in six colors: Cayenne Red, Gun Metallic, Galaxy Black, Premium Corona Orange, Brilliant Silver, and Pearl White (with a P15,000 premium for the latter).

It comes with a vehicle warranty of five years/150,000 km for the VE and VL variants. Similar to the Navara and Terra, the warranty of the new Almera is the first in its segment, providing customers a worry-free ownership experience.

New car buyers may have been focused on the compact crossover wars, but with the all-new Almera, the subcompact sedan segment — which has close to a dozen players — has just gotten a lot more exciting.

A matched set

BULLHEAD with Sneakers

WOMEN are told to pair their bags with their shoes (that is, if the old rules are still followed), but men play that game with watches.

“Both are best when form and function are in harmony,” said Filipino watch enthusiast group Filipino Time co-founder, Francis Aguila during a webinar with shoe brand Sledgers Philippines on Oct. 16. The webinar, streamed on Facebook, was titled “Fashionably on Time,” and featured an activity where men’s shoes were paired with watches. “As a guy, those are the two things that we really get to wear and show our personalities,” said Mr. Aguila.

Mr. Aguila was joined by Sledgers brand executive Noah Arota, and his colleagues at Filipino time, Federico Borromeo and Ferdinand Aguila. “It’s become quite apparent that watch lovers also tend to be shoe lovers,” said Mr. Arota. “This makes perfect sense in a lot of ways. A pair of shoes, much like a watch, is a great way for the owner — or us — to express their personality.”

“Watches and shoes are both highly collectible,” he said.

The watches and shoes the men would wear reflected their own lifestyles. For example, Mr. Borromeo is a polo player and riding enthusiast. Strangely enough, for this sport, he prefers diver’s watches due to their ease of use and legibility (the ease to read the time on a watch). His choices were the 11610LN Rolex Submariner, which was paired with cap-toe oxfords (called the Raul) from Sledgers. His other choice, the overtly masculine Panerai Submersible 389 (with a distinct crown protector) was paired with tan Chelsea boots from Sledgers, called the River.

Mr. Borromeo also talked a bit about his own watch-wearing habits. Asked if people still wore watches during the pandemic, Mr. Borromeo said, “I wear, like, three or four when I work from home, Francis,” he said. There’s one for coffee, one for breakfast, another for lunch, and another change for dinner. “It works!”

Filipino Time’s Mr. Aguila — who sat throughout the webinar with a vintage Stratocaster behind him — wears a smartwatch on one hand, and a “nice watch” on the other. His watches of choice are an IWC Mark XVI, with a big crown, a black dial, and rendered in stainless steel. His other choice is the Grand Seiko Snowflake (one that he wore during the webinar, shown in a customary “wrist check”), with a beautifully detailed dial. Mr. Arata recommended the Rhett penny loafers to go with the IWC piece, and the Ralph brogues for the Grand Seiko Snowflake.

Mr. Borromeo said about pairings, “It’s important to know the wrist size you have, and maybe a little bit on the shape,” he said. On wearing watches for packing for trips, Mr. Aguila recommends having a bit of versatility, such as having straps to swap on hand.

Finally, Mr. Aguila, a racing and driving enthusiast, showed his Seiko Bullhead, a vintage piece modeled on stopwatches in an homage to the precision his activities crave. Their pairing? A pair of black sneakers called the Rod, which were already on his feet during the webinar. His second choice: a Tudor GMT, was paired with the Ritchie, an easygoing suede moccasin.

Mr. Aguila added that, considering the injuries he has had from his multiple activities (he cites his knees, ankles, and back as among the anatomical parts battered): “Picking the right shoe size is more important that picking the watch size. The right shoe size makes so much of a difference to your daily life.” — Joseph L. Garcia

Century Pacific sees faster growth for Mindanao with more efficient logistics

LISTED firm Century Pacific Food, Inc. (CNPF) sees more investors and traders coming into Mindanao, where the company has major presence with its processed marine and coconut products, if the overall logistics network is made more efficient.

Wilhelmino Nicolasora, Jr., CNPF vice-president for domestic sales, said the “logistical challenge” in the country’s south was magnified by the coronavirus pandemic as restrictions made sourcing and movement of supplies more difficult.

“Efficiency in logistics networks will open more (export and import) opportunities in Mindanao,” he said last week during the second installment of the Davao Investment Conference 2021 Innovation Series that focused on the potential of the Mindanao market.

Mr. Nicolasora cited how improved infrastructure such as the newly upgraded airport in General Santos City, known as the tuna capital of the Philippines, would boost supply chains.

The company reported a 24% rise in net income to P3.9 billion last year, driven by its branded business that includes marine, meat, and milk products.

Mr. Nicolasora also said that while Mindanao is already a major export producer for the country, particularly agricultural commodities, promoting its potential to investors needs continued work.

“We have to break through the negative image of Mindanao… If its potential is unleashed, Mindanao is a powerhouse that can influence possibilities not just on a regional level, but on a national level too,” he said.

The six regions in Mindanao contributed 17.1% to the country’s economic output in 2020, with Northern Mindanao and Davao having the biggest shares at 4.7% each.

Luzon’s eight regions, including the capital, accounted for 69.2% of gross domestic product while the remaining 13.6% share was from the three Visayas regions.

NCCC
Lafayette A. Lim, president of the Davao-based NCCC Group of Companies with interests in retail and real estate development, said now is the opportune time for investors to venture into Mindanao.

“The saying ‘Give Mindanao a chance’ is outdated and no longer true. Overlooking Mindanao and taking it for granted is a bad business decision,” he said during the same forum organized by the Davao City business chamber.

Mr. Lim announced that NCCC, with its supermarket and non-food store chains, is preparing to enter the franchising industry.

“This is to allow aspiring business owners to benefit from the NCCC brand and technology. All in all, this makes faster growth in places where our stores are present,” he said.

Mr. Lim said the construction of NCCC’s “mega distribution center,” which will include a dry and cold storage facility, is also in the pipeline. — Marifi S. Jara and Maya M. Padillo

Cool(er) ray

Only 1,000 units of the Geely Coolray Sport Limited will be sold in the country. — PHOTO BY KAP MACEDA AGUILA

Geely’s best-selling crossover gets a limited-edition upgrade

FIRST OFF, one needs to acknowledge how the Geely Coolray was able to almost effortlessly (and single-handedly) deeply imprint a newcomer onto the Philippine automotive map. Since Geely’s introduction in 2019 (and the start of the Coolray’s sales), the model has become a certified hit — frequently topping the five-seater subcompact crossover segment to which it belongs.

Sojitz G Auto Philippines, official Geely importer and distributor here, will surely agree. On its website, the company reported delivering a total of 2,426 units in the first half of the year alone — a huge 342% uptick from the same period in 2020. Of this sum, 1,312 were Coolray units. The model itself spiked in sales by 153% versus the first half of last year (when it sold 518 units).

Obviously, a lot is riding on the Coolray’s shoulders. And Geely Philippines now quickly ups the ante in view of an abundance of segment competitors — along with the most recent variant introduction of a bitter rival.

Geely Philippines throws a high-value card down onto the pile: the Coolray Sport Limited. Priced at a reasonable P1.218 million, it now takes its place as the highest trim for the nameplate — with the other flavors being the Comfort, Premium, and the aforementioned Sport.

“This is a normal Sport, but we’ve made several changes to make it more exciting and dynamic. And it’s ‘limited’ because we’re only going to sell a thousand units of this in the market,” said Geely Philippines Marketing Services Manager Ryan Isana, in an exclusive interview with “Velocity.”

The Sport Limited receives 18-inch turbine-inspired black alloy wheels, wrapped with 215/55 Continental tires. “It looks more dynamic and sporty, which we think the model embodies,” continued Mr. Isana.

Second, the vehicle now features an electric tailgate with angle memory. “By just pressing the trunk release button found at the rear trunk door or at the key fob, the trunk door will automatically open. And with a touch of the close button, the rear trunk door will automatically close,” reported Geely Philippines in a release.

Admittedly, the brand had received inquiries from customers about this very feature right after it was launched. “People have been asking if there’s an option for a powered tailgate. We’re happy that Geely China obliged,” continued Mr. Isana.

Lastly, the Sport Limited distinguishes itself via ventilated front seats, with independent controls for both the driver and front passenger. These have three speed settings, or may be switched off completely. “Because it’s hot here in the Philippines, this is one of the quirky features we wanted to include,” he said.

Under its hood, the Coolray Sport Limited is powered by the familiar 1.5-liter turbocharged direct injection engine (delivering 177ps and 255Nm) with seven-speed wet type dual clutch transmission.

“The Coolray is the first high-performance SUV built on a BMA platform or the B-segment Modular Architecture. This BMA platform was developed in partnership with Volvo with the assistance of 100 modular architecture experts from over 20 countries. This platform was designed to exceed the criteria for a five-star Euro NCAP safety rating, making utmost safety standard for Geely vehicles,” added the company.

The crossover features a seven-inch LED instrument panel display which adjusts to the three driving modes (Comfort, Eco, and Sport). On the console, a 10.25-inch multimedia touchscreen with QD link and Android connectivity function enables efficient tethering. A G-Pilot system is highlighted by an Auto Parking Assist system for easier parallel and perpendicular parking with a touch of a button and four cameras depicting a 360-degree view of the vehicle.

A blind spot detection system alerts the driver of incoming vehicles, while a thoughtful tire pressure monitoring system provides instantaneous, on-demand reading of pressure and temperature of tires. Lastly, a remote start feature lets owners turn on the engine and air-conditioning system to cool the cabin before boarding the vehicle.

“The Coolray also has a lot of segment-defying features usually found in more expensive vehicles,” insisted Mr. Isana. Along with anti-lock brakes with electronic brakeforce distribution, the Coolray boasts brake assist, electronic stability and traction control, hill start assist, hill descent control, and cruise control.

Geely truly seems to be playing its cards right.

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