First electric scooter series on mission to push safer micromobility

May 16, 2022 | 2:24 pm

LONDON — Organizers of the world’s first electric scooter series say they are on a mission to promote and develop micromobility as a safe and integrated element of city life after a race debut in London.

Khalil Beschir, a co-founder of the eSkootr Championship (eSC), saw a role similar even to the one played by motorsport in the early days of the automobile.

“Yes, we are creating a new sport, we are creating an accessible sport,” the Lebanese entrepreneur and former car racer told Reuters ahead of Saturday’s race.

“At the same time we have a mission to help governments, cities, to develop safe riders and to work with cities on the right way of using these scooters.”

“It’s where cars used to be in 1910,” he said of the arrival in numbers of electric scooters on city streets four or five years ago.

“People complained about them, hated them when they came to the cities: ‘they are not safe, they are everywhere,’” he said. “We use the racing to be a lab, of safety, of infrastructure, of technology.

“This is the aim of eSC — to develop this, as motorsport and Formula One did with the car industry.”

Austrian former F1 racer and twice Le Mans 24 Hours winner Alex Wurz, who is also the chairman of the Grand Prix Drivers’ Association (GPDA), is a co-founder along with Brazilian former Formula E champion Lucas Di Grassi.

Formula One veteran Nico Hulkenberg has a team and there are plenty of people in the background with links to motorsport’s world body, the International Automobile Federation (FIA).

The series has, however, set up its own commission, headed by Mr. Wurz, with a stated aim “to regulate and promote the safe and sustainable development of micromobility in sport and urban micromobility”.

“We think that we have a really strong product,” Mr. Wurz, who first started working on the concept in 2018, told Reuters at a former newspaper printing site in London’s Docklands that hosted the first race.

“We have a huge opportunity for grassroots sport to be definitely the cheapest motorsport entry you can find and then a career ladder through to world championship level.

“Beside our sporting ambition, from the first minute I said micromobility is such a hot, fast growing topic and sector we have an obligation to create a synergy between racing and road safety.”

SPEED RESTRICTIONS
Insurers see e-scooters as inherently more dangerous than bikes or cars while trial projects for e-scooter providers in some cities have featured speed restrictions and tight regulations.

In London, electric scooters are a common sight but currently legal only on private land or via authorized hire schemes, although the government has said it is planning new rules to expand usage.

Mr. Wurz said it was “mind blowing” how many interested cities and stakeholders had approached eSC, and he hoped to have an influence on urban design.

“The way we are consuming mobility is fundamentally changing,” he added.

“In the future some of our roads will actually become living space, a shared space where you walk, some on cycles, some on electric scooters and we need to co-exist.

“And we can. That’s the journey — to educate people, to regulate, to create the engineering. How we are separated but yet together. The legislation needs to be in line.”

The eSkootr machines raced by 30 riders from 10 teams weigh some 40kg and feature two six kw motors with top speeds in excess of 100kph.

The tyres are produced from vegetable oil and the grip allows the male and female riders — drawn from sports ranging from snowboarding and speed skating to hockey, cycling and motorbikes — to lean 60 degrees into the corners.

The inaugural winner around the 12-turn 470 meter course was Swiss rider Matis Neyroud, ahead of Britain’s Dan Brooks and India’s Anish Shetty.

Other races will follow in Switzerland, Italy, France, Spain and the United States with Asia and Africa likely to be added from next season.

A global broadcast agreement has been signed for races to be shown in more than 200 countries on sports streaming platform DAZN.

“I think it will catch on. Everyone I’ve told about it and who has seen about it, they think it’s so interesting and going to be fun,” said Britain’s former BMX world championship bronze medallist Tre Whyte. “I just loved it straight away.” — Reuters

[B-SIDE Podcast] We can be heroes

May 16, 2022 | 2:20 pm

The story of the bayani — the local term for “hero” — is the story of the Filipino people.

In this B-Side episode, historian and author John Ray B. Ramos tells BusinessWorld reporter Tobias Jared Tomas about the lesser-known side of celebrated heroes and heroes who may have been forgotten: “Our history is not a history of defeat, it is not a history of being weak, but rather it is a history of struggle. Our heroes died and fought for the values and ideals we uphold today.”

A hero is different from a bayani.

Mythic heroes are celebrated for their personalities and their individual journeys. Bayanis, on the other hand, are tied to their background.

“You cannot separate Jose Rizal from Philippine society, or Andres Bonifacio from the Katipuneros. … You cannot remove them from their context,” said John Ray B. Ramos, a historian and the author of Bayani Biographies: Jose Rizal and the coauthor of Bayani Biographies: Andres Bonifacio, published by Kahel Press. “They are not much different from us. That’s what makes the stories of our bayanis inspiring.”

Stories matter.

Jose Rizal, Andres Bonifacio and Apolinario Mabini were “superfans” of Florante at Laura by Francisco Balagtas, an epic poem that was an allegory of Spain’s colonization of the Philippines.

“It contains themes of society being unequal, unfair, and full of injustices. It left a mark on our bayanis, which, perhaps, contributed to their ‘wokeness,’” said Mr. Ramos.

History should be taught because heroes die when they are forgotten.

“The story of our heroes will die if we do not continue telling them,” said Mr. Ramos.

“Keep telling our story of being Filipinos — our struggle for freedom, democracy, and equality is a very interesting and inspiring story to tell over and over, and to pass on to the next generations.”

Recorded remotely on April 27, 2022. Produced by Earl R. Lagundino and Sam L. Marcelo.

Collaboration redefines corporate social responsibility

May 16, 2022 | 9:00 am

SF_hands-holding-earth-csr-business-campaign-OL — Photo from rawpixel.com — freepik

By Adrian Paul B. Conoza, Special Features Assistant Editor

One of the many things that has gone widespread in the past years since the coronavirus disease 2019 (COVID-19) pandemic brought our then normal ways of life and work to a pause are collaborations. This was seen among companies within their respective industries as they dealt with their respective disruptions and, much more, between the private and public sectors in responding to the pandemic.

The latter was very much noticed in efforts to expand COVID-19 testing in the country; and, as representatives from the Asian Development Bank and ThinkWell Philippines noted, there is much to learn from it.

“The very nature of both public and private sectors allows for a more synergistic response as they bring to bear their respective strengths and adapt these to the context of the greater challenges and needs confronted by our country, such as the COVID-19 pandemic,” the authors wrote in a piece published on the website of Health Systems Governance Collaborative back in 2020.

This is also apparently a lesson companies are beginning to further appreciate as they push forth their corporate social responsibility (CSR) programs in the new normal.

For one foundation, the public-private model serves as the guidepost that drives its current CSR efforts and aligns them with what their partners in the public sector require.

“The collaboration between the public and private sectors is an integral partnership that sees both sides addressing what the other may not be able to. It is a co-beneficial collaboration that allows the private sector to alleviate some of the weight carried by the government, all for the upliftment of the lives of the Filipino people,” Melody M. Del Rosario, president of Metro Pacific Investments Foundation (MPIF), told BusinessWorld in an e-mail.

The CSR arm of the Metro Pacific Investments Corp., MPIF aims to address the socioeconomic issues of unemployment by creating livelihood opportunities for locals; access to quality education, by supporting scholars from underprivileged families; access to quality healthcare by mobilizing medical missions for coastal community folk; and access to nutrition and food security by distributing at-home planting kits and fresh vegetables to vulnerable communities.

“MPIF’s corporate social responsibility is not only confined to helping in times of need. Beyond relief and response, we have invested our efforts into long-term commitments with our partner communities — to inspire a movement that prioritizes positive and sustained impact in the long run,” Ms. Del Rosario, who also is MPIC’s vice-president for public relations and corporate communication, added.

The MPIF president shared how they apply public-private collaboration in their programs. “Across our main guiding pillars of social infrastructure, particularly for environment and economic empowerment, it is part of our program process to engage in meaningful discourse with our partner local government units to determine what initiatives will best benefit their communities in the long run, as well as which sectors of the community will best benefit from them. The public sector is involved throughout the implementation of our efforts from beginning to end,” she shared.

MPIF, nonetheless, has been an active collaborator with fellow companies within the Manuel V. Pangilinan (MVP) Group of Companies through Tulong Kapatid, the corporate social responsibility alliance of foundations and companies within the MVP group.

With sister companies and foundations such as One Meralco Foundation, PLDT-Smart Foundation, Makati Medical Center Foundation, Alagang Kapatid Foundation Inc., and Maynilad, Ms. Del Rosario shared, MPIF has determined its CSR pivot to be the champion of coastal and underwater protection and conservation in the group.

“Aligned with this is the empowerment of coastal communities, primarily with the provision of employment opportunities for the benefit of locals. The other companies focus on addressing other areas of social development,” the MPIF president continued.

Having witnessed these dynamics of collaboration adding further meaning to MPIF’s CSR initiatives, Ms. Del Rosario noted that CSR has been redefined from corporate social responsibility to collaborative social response.

“Rooted in the idea that no single company, organization, or government unit can take on this responsibility alone, it is imperative that we create, develop, and continue to foster meaningful partnerships that will benefit our country and our fellow Filipinos the most. Every ripple of intention and initiative that each sector makes can result in a greater wave of purpose and passion that will create a better and brighter future for everyone,” the MPIF president shared.

Moving forward from the pandemic, Ms. Del Rosario expects MPIF to continue addressing the same societal issues of unemployment, while nonetheless aiming to help more communities and organizations through their “tried-and-tested processes.”

“The public-private partnership will remain as our guidepost in developing our efforts and ensuring their long-term sustainability,” she stressed. “Guided by our mutual purpose of reaching out to change and uplift the lives of Filipinos, the collaboration with the public sector is at the heart of the legacy projects that we create and leave behind for our countrymen.”

Aligning employee values with your company’s purpose

May 16, 2022 | 8:55 am

SF_business-executives-applauding-their-colleague-after-presentatio-OL — Photo from peoplecreations - freepik

Much has already been said about the value corporate social responsibility initiatives brings to a company. Particularly, younger generations of employees place larger expectations on businesses to play their role in solving societal and environmental concerns, with some studies suggesting they care more about a company’s overall purpose than the paycheck it provides.

Such expectations have grown dramatically over the course of the pandemic. According to research done by global management consulting firm McKinsey & Company, nearly two-thirds of US-based employees surveyed said that COVID-19 has caused them to reflect on their purpose in life, with nearly half saying that they are reconsidering the kind of work they do because of the pandemic. Moreover, millennials were three times more likely than others to say that they were reevaluating work.

Professional services firm Pricewaterhouse Coopers (PwC) echo the sentiment. Employees who find value in what they do are more motivated, more productive, and are likelier to stay with a company than those who are simply going through the motions.

“Purpose at work is about how to get people aligned with something bigger. When you connect the company’s purpose to what individuals do at work, they see connections between what they do and how their contributions make a difference to the company and to society,” PwC wrote on their website.

“When an employer’s brand is consistent and aligned inside the organization as well as out, employees extend that brand to customers. Similarly, a person’s experience at work is deeply influenced by their organization’s culture — that is, the self-sustaining patterns of behaving, feeling, thinking and believing that determine ‘how we do things around here.’ A culture that is diverse and inclusive, where people feel trusted and heard, and where leaders lead by example, can instill a sense of fulfillment and inspire employees to deliver a higher quality of work.”

McKinsey noted that when an employee’s values are aligned with an organization’s purpose, it leads to stronger engagement, heightened loyalty, and a greater willingness to recommend the company to others.

Further research has found that despite nearly nine out of ten employees saying they seek purpose in life, and seven out of ten saying their sense of purpose is defined by work, only 15% of frontline managers and frontline employees say that they are living their purpose in their day-to-day work. Worse still, nearly half of the employees disagreed with the statement.

To compare, 85% of upper management and executives agree that their purpose is fulfilled by their daily work.

This “purpose hierarchy” gap has negative implications. Less satisfied respondents reported lower average work and life outcomes than more satisfied peers did—everything from reduced feelings of energy and life satisfaction to lower engagement, satisfaction, and excitement about work.

“While such gaps should distress you — many of the employees closest to your products and customers may have stopped relying on you for the purpose they say they want — the findings also offer hope,” McKinsey wrote.

“When employees at any level say that their purpose is fulfilled by their work, the work and life outcomes they report are anywhere from two to five times higher than those reported by their unfulfilled peers. And this finding holds regardless of whether employees currently rely on work for purpose. In other words, organizations should aspire to ensure that their employees’ purpose is fulfilled at work, whether or not employees initially think they rely on work for this. Employees — and the organization — stand to benefit anyway.” — Bjorn Biel M. Beltran

The value of CSR

May 16, 2022 | 8:50 am

The standards for businesses are steadily being raised as consumers make more of their decisions based on Corporate Social Responsibility (CSR). Today, companies, in turn, are fueling their efforts to meet customer expectations — creating a positive cycle of improvement in the economy.

CSR is not ‘alien’ to the Philippines as it is rooted in its culture, the bayanihan. This influenced the way Filipinos purchase goods and services, according to a study by Nielsen Global Survey of Corporate Social Responsibility in 2015 indicating that rather than thinking solely about the product, the significant impact on their buying decision has never been more about broader values, company behavior and ethics.

In 2020, a total of 209 lawmakers voted in favor of House Bill 6137, or the proposed Corporate Social Responsibility Act, while no one voted against it nor abstained. The bill seeks to encourage all domestic and foreign business organizations, established and operating under Philippine laws, to observe corporate social responsibility in the operations of their businesses in the country.

CSR, also known as corporate citizenship, is a thoughtful and practical way to give back to society and also means doing no harm to the communities and locations where companies operate, including not polluting the environment, neither selling unsafe products nor mistreating employees. Most often, a company will execute a combination of internal and external CSR strategies for a more holistic philanthropic approach.

Internal CSR strategies aim to reinvest in internal stakeholders like the employees by seeking to improve the work environment, expand benefits, and satisfy work-life needs. When organizations implement best practices internally, employees are more likely to engage in cooperative behaviors toward their coworkers and the organization.

External CSR focuses on those who are considered external stakeholders, including society, the environment, and local community members, and aims to support the improvement of any of the aforementioned entities, whether it’s establishing sustainability protocols or donating funds to charities. Involving stakeholders in CSR activities will ultimately lead to a positive outlook towards the product or service in the face of the social causes they care about.

On the other hand, ignoring CSR comes with greater costs — having a poor reputation for social and environmental impact can damage the profitability and success of a business. In the last decade, companies have been held to account for failures of transparency on environmental and social issues. Whereas, a good CSR practice would be but a way of preserving the status quo and of lending a brand ‘the aura of morality’.

In the Philippines, CSR’s early adopters are from staunch business networks like the Metro Pacific Investments Corporation (MPIC) who has been implementing CSR projects since 2009.

MPIC is a leading publicly listed investment management and infrastructure holding company with a diverse set of assets held through operating companies in transportation, energy, logistics, real estate and healthcare that help to form the backbone of the Philippine economy and society.

Recently, MPIC won big at the 11^th Asian Excellence Awards, earning six coveted recognitions for corporate governance, investor relations, and corporate social responsibility. This recognition is a testament to MPIC’s efforts to contribute to the United Nations Sustainable Development Goals (SDG), particularly SDG 8 Decent Work and Economic Growth, 11 Sustainable Cities and Communities, and 17 Partnerships for the Goals.

The MPIC’s CSR arm, MPI Foundation’s (MPIF) strategic programs have evolved throughout its 13 years of existence, now geared towards four fronts of social infrastructure: Education, Environment, Economic Empowerment, and Calamity Response & Relief Operations.

MPIC envisions to create holistically beneficial impact among its businesses, its employees, its stakeholders, and the environment, going beyond the interests of its firms by embracing responsibility for its companies’ actions and mindfully integrating CSR into its business model. — Allyana A. Almonte

Health and wealth go together with Sun Life

May 16, 2022 | 8:05 am

At the onset of the COVID-19 pandemic, many faced uncertainties especially when it came to their health and finances. After two years, some have learned to reinforce their habits to stay healthy–both in mind and body–but many have yet to protect their sources of income. The good news is, it’s never too late to secure your finances. For Filipinos eager to safeguard their health and ensure a brighter future, they have an ally in Sun Life Philippines.

In a recent virtual media conference for their new campaign dubbed Sun Life: Partner in Health, Sun Life Philippines Chief Client Experience & Marketing Officer Carla Gonzalez-Chong shared that in the past two years, Sun Life observed a rise in Filipinos getting health protection products. She also shared that the company saw a remarkable spike amongst the younger generation who are also starting to invest in mutual funds.

In support of their Partner in Health campaign, Sun Life launched videos of their brand ambassadors including Charo Santos-Concio, Matteo Guidicelli, and Piolo Pascual. Each video presented a message to their younger selves, and they talked about the lessons from their personal experiences which paved the way for their brighter life.

According to the ambassadors, securing their health and finances while they were young taught them to take sensible risks and live life to the fullest. This made them realize that all their choices were well worth it.

Ms. Santos-Concio advised her 20-year-old self to dream big, do more each day, be kind to herself, and value her health the most because it will pay off eventually. Mr. Guidicelli looked back at how happy and carefree his bachelor days were but guided his younger self to secure his health and finances not just for himself but also for his future family. Mr. Pascual encouraged his younger self to have faith, be resilient, and pursue his passions while protecting his health and assets, reassuring his younger self that it will all be worth it.

According to a 2021 Harvard study, the financial condition of a person dictates their financial safety or distress. If a person’s financial situation is in distress, prolonged stress reaction can lead to serious health issues that often result in yet more financial struggles.

Image courtesy of pressfoto from Freepik

The testimonials of the ambassadors show a significant connection between health and financial wellness, with evidence proving that increased financial security is associated with improved health outcomes and quality of life.

Through the inspiring stories of the mentioned celebrities, Sun Life encourages Filipinos to live a healthier life holistically to avoid financial hardships, as savings built over several years can easily be exhausted by rising medical costs of serious illnesses.

“Aside from advocating for financial education, we also value health literacy. That’s why we have partnered with various organizations to mount health-focused webinars. Sun Life believes that health is key to securing a brighter future and this pandemic only emphasized that we need to be more prepared and take the necessary steps in protecting our health,” Sun Life of Canada (Philippines), Inc. President Alex Narciso said.

To serve the health needs of its clients, Sun Life has strengthened its suite of health protection plans over the years and designed them to be more comprehensive than ever. One such product is the Sun Fit and Well, a new generation wellness plan that covers needs from prevention, diagnosis, and treatment all the way to rehabilitation.

Availing of these products is safe and convenient through Sun Life’s digitally-enabled selling process. This enables clients to consult with Sun Life advisors and get professional advice on their financial goals and learn about the products that would best fit their needs. Sun Life also launched the Remote Online Medical Exam, the first of its kind in the local life insurance industry, which allows clients to be a step closer to securing a policy in the comfort of their own homes.

With these innovative services along with their new campaign, Sun Life reaffirms its commitment as the Filipinos’ partner in health. Moreover, Sun Life also wants to reinforce the importance of taking care of health, bringing freedom and time to live life to the fullest.

To know more about how Sun Life can be your partner in health, visit https://sunlife.co/SLPIH.

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SOCResources announces annual stockholders’ meeting on June 17 via remote communication

May 16, 2022 | 8:00 am

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Citicore Energy REIT Corp. to hold annual stockholders’ meeting on June 8

May 16, 2022 | 7:55 am

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Analysts divided on rate hike move

May 16, 2022 | 12:33 am

fuel-gas-station-worker — An attendant fills a vehicle at a gasoline station in Tondo, Manila. — PHILIPPINE STAR/ RUSSELL A. PALMA

By Luz Wendy T. Noble, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) could still keep rates steady on Thursday as it waits for more proof of a robust economic recovery, although some analysts said a rate hike is likely after the strong first-quarter print.

A BusinessWorld poll of 17 analysts conducted last week showed they are divided on the BSP’s next move, with nine betting rates will remain unchanged, while eight are expecting a 25-basis-point (bp) hike.

The Monetary Board will hold its third rate-setting meeting for the year on Thursday. The key policy rate has been at a record low 2% since November 2020, when the BSP cut rates by 25 bps.

Some analysts believe that interest rates will remain untouched on Thursday to buy more time for the BSP to sift through data and ascertain if economic recovery has become entrenched.

“We believe that the BSP will not change the policy rate during its May 19 Monetary Board meeting as it is too close to the recent elections and they would likely want to digest the first-quarter gross domestic product (GDP) data in more detail,” Philippine National Bank economist Alvin Joseph A. Arogo said.

The Philippine economy expanded by 8.3% in the January to March period, a turnaround from the 3.8% contraction in the same period of 2021. The first-quarter GDP growth was faster than the 7.8% growth in the October to December period.

Despite the stronger-than-expected GDP growth in the first quarter, China Banking Corp. Chief Economist Domini S. Velasquez said there are still some economic indicators that showed some sectors have yet to recover from the pandemic.

“Looking at other leading indicators, consumer loans have only posted positive growth rates for two months; imports of durable or nonessential goods have slowed down; unemployment is back to pre-pandemic lows but recent gains in employment came from agriculture, likely due to government programs to create jobs during the pandemic; and underemployment rate remains quite high, which may indicate insufficient income for some,” Ms. Velasquez said in an e-mail.

She noted faster inflation could also eventually affect household consumption. Household spending makes up about three-fourths of the economy.

The BSP will likely wait for its next policy review and go for a 50-bp rate hike, said Ser Percival K. Peña-Reyes, associate director at the Ateneo de Manila University Center for Economic Research and Development.

He said the BSP now has to deal with increasing interest rate differentials that could attract funds back to the United States due to the Federal Reserve’s monetary policy tightening, which in turn would affect the peso’s strength.

“This could significantly affect our trade, which depends heavily on imports,” he said.

The Fed has already increased policy rates by 75 bps through a 25-rate hike in March and another 50 bps earlier this month.

The peso closed at P52.45 against the US dollar on Friday, already 2.8% weaker from its P50.999 close in 2021.

CASE FOR RATE HIKE
Meanwhile, some analysts believe the available economic data are enough for the BSP to prove that it can gradually withdraw support by raising interest rates.

“The most important change is that with GDP level now surpassing pre-pandemic levels, the BSP can focus squarely on tackling inflationary pressures. We further think that a total of 150 bps of rate hikes will be delivered this year,” ANZ Research Chief Economist for Southeast Asia and India Sanjay Mathur said.

Socioeconomic Planning Secretary Karl Kendrick T. Chua on Thursday has confirmed that Philippine GDP level is already beyond where it was in 2019, before the crisis. At constant 2018 prices, the size of the Philippine economy in the first quarter was valued at P4.618 trillion, already beyond the P4.463 trillion in the first three months of 2019.

Economic managers previously expected the economy will reach its pre-pandemic level only by the second half of 2022.

Headline inflation accelerated to a three-year high of 4.9% in April, reflecting the faster increase in food, utilities, and transport prices. This is already beyond the central bank’s 2-4% target range.

Last month, BSP Governor Benjamin E. Diokno said they may consider a rate hike in June. At that time, he said there is still no evidence of second-round effects from the demand side reflected by wage or fare hikes.

The Department of Labor and Employment this Saturday approved a P33 increase for the daily minimum wage in Metro Manila and by P55 to P110 for the Western Visayas Region. Meanwhile, several transport groups have also filed petitions to raise fares as pump prices continue to climb.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said economic recovery indicators reflect how monetary policy response is “already late.”

“Aside from credibility risk, the direct cost of avoiding a rate hike such expensive non-monetary measures (foregone revenues from lower tariffs, direct subsidies, direct imports of fish) are piling up and may be better allocated to other program priorities like education, health, etc,” Mr. Neri said.

“A May 19 hike also helps reduce speculation that all the consequences of rate hikes are being passed on to the new administration,” he added.

The BSP may also be looking at recent moves by its regional counterparts, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

“The likelihood of a hike this May is higher (50%+ higher) because of hotter-than-expected 1Q22 GDP growth print. BSP may also be looking at the signs on the wall from regional moves lately,” he said.

Last week, Bank Negara Malaysia in a surprise move raised its key policy rate by 25 basis points, as it tries to tame inflation. Singapore also tightened its monetary policy last month, while Indonesia and Thailand maintained rate settings.

At its March 24 meeting, the BSP raised its inflation forecast to a beyond-target 4.3% for 2022, factoring in the impact of the Russia-Ukraine war on commodity prices. It kept rates steady, citing the need to keep support to economic recovery.

A rate hike would be the first since 2018, when the central bank increased rates by 175 bps to curb inflation.

MSMEs may struggle to raise wages

May 16, 2022 | 12:32 am

Mural-man — A man walks past a mural in Paco, Manila, May 14. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Tobias Jared Tomas

MICRO, SMALL AND MEDIUM enterprises (MSMEs) may face difficulty in complying with the recently approved wage hikes in Metro Manila and Western Visayas as many businesses have yet to fully recover from the pandemic, industry groups said.

Analysts, on the other hand, said the wage hike may cause faster inflation.

“My concern is many MSMEs are having challenges with the present legislated wage, this increase will add burden to their precarious financial condition,” Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said via Viber.

He said this may lead more MSMEs to trim their workforce and raise prices of goods and services.

Many MSMEs, who represent 99% of enterprises in the Philippines, are still struggling to recover from the pandemic.

The Department of Labor and Employment on Saturday approved a P33 increase for the daily minimum wage in Metro Manila and by P55 to P110 for the Western Visayas Region.

The wage hike in Metro Manila will bring the new minimum wage in the capital region to P570 and P533 for workers in non-agricultural and agricultural sectors, respectively. It is expected to cover around one million minimum wage earners.

Meanwhile, P55 and P110 increases in Western Visayas bring the daily minimum wage in the region to P450 for businesses employing more than 10 workers, and P420 for establishments employing 10 or less workers.

Employers Confederation of the Philippines (ECoP) President Sergio R. Ortiz-Luis, Jr. said in a phone call that he hoped micro industries, which are businesses made up of less than 10 employees, would be exempt from the wage hike.

“Many businesses are not opening because of the expected wage increase,” Mr. Ortiz-Luis, Jr. said in mixed Filipino and English. “Larger companies might be able to afford it (wage increase), but micro companies might not.”

Management Association of the Philippines (MAP) President Alfredo E. Pascual said he recognizes the need to raise the minimum wage as prices of basic commodities have continued to rise.

“The increased minimum wages will put more pressure on small businesses, particularly those still in difficulty recovering from the pandemic. The increased wage burden should not result in business closures and job losses,” he said via mobile message, adding that the government may need to assist struggling small businesses in dealing with higher personnel costs.

Federation of Filipino Chinese Chambers of Commerce & Industry, Inc. President Henry Lim Bon Liong said in a DZBB radio interview that they would have to follow the law, but it will be difficult as businesses are still recovering from the lockdowns in the last two years.

“Many establishments and MSMEs are having a hard time, but I think we will try to manage,” he said.

Sought for a comment, Danilo C. Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation, Inc., said the industry will follow the law regarding wages.

Labor group Partido Manggagawa (PM) in a statement on Sunday opposed the move of some industry groups to be exempted from the wage hike.

“It is adding insult to injury to workers for the regional wage boards to exempt and defer the wage hike as demanded by employers,” PM Chairman Rene Magtubo was quoted as saying. “The minimum wage increases are not even enough to recover the value lost to inflation for the past three years. If the hikes are deferred and employers exempted, then the most vulnerable workers are left with nothing.”

PM earlier called for a P100 minimum wage hike.

PM said that a P33 increase for MSMEs with 10 workers would only incur an additional P8,580 in monthly labor expenses, a mere 0.3% of their P3-million asset size.

“This will definitely not bankrupt an MSME. But a lack of market because of low consumption will kill an MSME,” Mr. Magtubo said.

The Trade Union Congress of the Philippines said the wage increases granted by the NCR and Region 6 wage boards are “too small.”

“Such increases are too small and too insignificant which have no impact on improving the economic situation of workers and their families given the nonstop increases in prices of food and services,” it said. “The wage boards did not reckon with April inflation of 4.9% and the projected inflation of 5.5% come June.”

INFLATION IMPACT
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said in a Viber message that the Monetary Board will consider the wage hike in its policy meeting on Thursday.

He earlier said they will continue to monitor second-round effects that may be reflected by wage and transport fare hikes.

“Let’s expect more upward pressure on inflation. These are clear second-round effects at work,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“For this year, we are already expecting an inflation average for 2022 of 4.7%. So, reaching the target of 2-4% is out of the question and puts hiking key interest rates as paramount for the BSP,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said wage hikes could mean inflation estimates will be raised further.

“This could lay the groundwork in justifying any possible hike in local policy rates, after the stronger-than-expected gross domestic product data that suggests that the local economy is relatively stronger enough to weather any further policy rate hikes,” Mr. Ricafort said in a Viber message.

The BSP increased its inflation estimate for 2022 to 4.3% in March, citing the impact of the war in Ukraine to oil and commodity prices. However, it kept rates steady at that meeting as it stressed the need to continue supporting the recovering economy. — with Luz Wendy T. Noble and Kyle Aristophere T. Atienza

Debt service payments plunge in March

May 16, 2022 | 12:31 am

THE NATIONAL GOVERNMENT paid P67.39 billion in debt in March, plummeting from a year ago, due to huge amortization payments made during that period, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed the March debt service bill declined by 75% from P268.41 billion in March 2021, and increased by 121% from P30.42 billion seen in February 2022.

Of the total debt service bill for March, 82% went to interest payments, and the rest to actual principal repayments.

Interest payment rose by 16.5% to P55.5 billion in March from P47.67 billion in the same month a year ago.

Of the amount, interest on local borrowings jumped by 20% year on year to P47.4 billion, while interest on foreign obligations dipped by 2% to P8.22 billion.

Domestic interest payments consisted of P28.68 billion in fixed-rate Treasury bonds, P16.95 billion in retail Treasury bonds, and P1.60 billion in Treasury bills.

Meanwhile, principal payments for March slumped by 95% to P11.84 billion from P220.74 billion a year ago.

Payments to foreign obligations made up the bulk at P7.53 billion, representing 63.5% of the total, while payments for domestic debt reached P4.31 billion.

For the first quarter, the National Government’s debt service bill stood at P313.65 billion, falling by 40% from P521.50 billion a year ago.

Principal repayments made up roughly half of the total debt service bill at P164.32 billion in the first three months of 2022. This was 58% lower than the P395.65 billion in the first quarter of 2021.

Meanwhile, total interest payments for the first quarter reached P149.32 billion, declining by nearly 16% from the same period last year.

The government borrows from foreign and local sources to plug its budget deficit as it spends more than it makes to support programs that will stimulate economic growth.

The Philippines logged a debt-to-gross domestic product (GDP) ratio of 63.5% as of the first quarter. This is higher than the 60% debt-to-GDP ratio considered manageable by multilateral lenders for developing economies.

This year, the government expects the economy to grow by 7-9%. Philippine GDP expanded by a faster-than-expected 8.3% in the first quarter.

Fitch Ratings earlier this year affirmed the Philippines’ debt rating at “BBB,” the second-lowest investment grade, with a negative outlook. — Tobias Jared Tomas

PAL, Cebu Pacific seen to sustain revenue growth

May 16, 2022 | 12:08 am

By Arjay L. Balinbin, Senior Reporter

LOCAL AIRLINES will likely sustain the momentum in their revenues for the rest of the year amid easing of restrictions to further reopen the economy, analysts said.

“I think they will sustain the momentum, especially that the economy is increasingly being opened up and coronavirus cases are being managed until now despite after elections,” Astro C. del Castillo, managing director at First Grade Finance, Inc., said in a phone interview on Saturday.

“Many countries are also opening, so the demand for flights by Filipinos and foreigners are there, so I think, moving forward, the skies will be a bit clearer. But I’m sure there will still be remnants of dark clouds hanging in the air,” he added.

Flag carrier Philippine Airlines (PAL) and budget carrier Cebu Pacific have both reported higher revenues for the first three months of the year, with the former returning to profitability.

PAL, operated by PAL Holdings, Inc., generated P24 billion in revenues from a 201% growth in passenger revenues and a 72% growth in cargo revenues for the first quarter of 2022, as compared to the same period a year earlier, the flag carrier said in an e-mailed statement last week.

The airline reported a net comprehensive income of P1.2 billion for the first quarter, “a significant development that marks PAL’s return to profitability.”

“The last time that PAL registered positive first quarter results was in 2016,” it added.

Meanwhile, Cebu Pacific, operated by Cebu Air, Inc., saw its revenues for the period jump by 148% to P6.71 billion from P2.71 billion generated in the same period in 2021.

Its first-quarter performance was driven by passenger operations, which grew by 256% to P3.16 billion from P887 million in the same period last year.

However, its net loss for the period widened to P7.61 billion from a loss of P7.30 billion in the same period a year earlier. This was mainly due to forex translation of dollar-denominated loans and unrealized mark-to-market losses from the derivative value of its convertible bonds, the budget carrier said.

“Sales and income of airlines and related businesses/industries improved amid further reopening of the economy towards greater normalcy such as the lowest Alert Level 1 for Metro Manila and other areas since March 2022,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mailed reply to questions on Friday.

He noted that the resumption of foreign tourism for some fully vaccinated foreigners since February, as well as further recovery in domestic tourism and the resumption of face-to-face schooling have supported the recovery of many adversely affected businesses.

“Higher global oil/fuel prices could lead to higher costs and narrower margins (partly due to competition) for airlines, unless these are hedged on their oil/supplies.”

“Other risk factors include more contagious coronavirus variants that could still lead to some potential spike in new coronavirus cases in some countries that could again lead to potential risks of lockdowns/restrictions, which could again adversely affect businesses/industries/economies, as well as cause some disruptions in the local/global supply chains,” Mr. Ricafort added.

Transport expert Rene S. Santiago said it is still difficult to predict the pandemic measures of the next administration, as former Senator Ferdinand “Bongbong” R. Marcos, Jr., who emerged as the clear winner in the presidential race, has yet to present his plans.

Revenue growth for local airlines can be sustained “subject to no surge in coronavirus cases and no imposition of lockdown,” he noted.

Mr. Del Castillo said: “Reading between the lines, I think the next administration admitted that revenues are very much needed this coming year and the next few years. Given that, I’m sure they will be more liberal and open, supporting industries, especially our airlines wherein the movement of goods and services as well as passengers would be free-flowing to boost the economy.”

Cebu Pacific said that for the rest of 2022, it “sees a better business outlook driven by domestic recovery and reopenings of international destinations.”

“However, it remains cautious of the risks presented by increasing jet fuel prices and interest rates and depreciation of the Philippine peso versus US dollar.”

Cebu Pacific will “continue to invest in the modernization of its fleet and will remain committed to providing affordable and accessible air transport services for all,” it added.

PAL said it expects to return to pre-pandemic levels in its domestic network within the second or third quarter of 2022, while “continually adding flights on key international routes to the US, Canada, and parts of the Middle East and Asia.”

PAL shares closed 1.84% higher at P6.10 apiece on Friday, while Cebu Air shares closed 2.27% higher at 45 apiece.

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