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First e-book on Revised Corporation Code now available

Touted in the academe and in the legal industry as “well-researched, well-written, and heaven-sent’’—the very first e-book on the revised corporation code is now available.

Authored by University of Santo Tomas Faculty of Civil Law Dean and DivinaLaw Managing Partner Nilo T. Divina, “Questions & Answers on the Revised Corporation Code” is a comprehensive compendium of the jurisprudence on corporation law, SEC opinions, and other legal resource materials written in simple and concise language.

DivinaLaw Managing Partner Nilo T. Divina

Divina’s opus has been described as “straight-to-the-point and easy reading” by former University of the Philippines College of Law Dean Fides C. Cordero-Tan. “The Q&A format is genius. This is a good textbook for law students, resource material for non-lawyers (managers/corporate secretaries), and reviewer for Bar takers.”

In his foreword for the book, then-Supreme Court Chief Justice Diosdado M. Peralta hailed it as “a well-curated legal resource” and “a useful tool in navigating the new state of Philippine corporate law.”

The “Questions & Answers on the Revised Corporation Code” e-Book is available at the Central Books website: https://central.com.ph/bookstoreplus/products/AAD145/.

 

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Resilience and reinvention in the serviced apartment landscape

After facing the massive impacts of the coronavirus disease 2019 (COVID-19) pandemic, the Philippine tourism and hospitality sector begins to bounce back and reinvent itself as it taps into the various opportunities that a transformed market offers. 

Ms. Valerie Soliven, Rockwell Land Corp.’s Executive Vice President and Chief Revenue Officer, observed that the industry remains to be greatly challenged with extended restrictions on both local and foreign travel, yet the domestic leisure market was seen contributing to post-pandemic growth in the second quarter of 2021 while the economy was inching to return to normalcy. 

“However, this slow and steady recovery is still sensitive to the current conditions. Colliers announced in July 2021 that their year-end projection for the performance of Manila hotels remains at 30% occupancy rate,” Ms. Soliven added. 

Despite this, bright spots do remain. According to research by global property advisory firm Savills, while serviced apartments have not been immune to COVID-19’s impact, the sector is weathering the storm marginally better. 

In fact, serviced apartment brands operating in Asia-Pacific saw occupancy rates as high as 80%, even during the height of the crisis. Michael Roberts, director for hotels, Asia-Pacific at Savills, explained that the sector’s unique features of self-contained long-stay accommodation, alongside strict hygiene protocols required by highly regulated branded serviced apartments, have allowed the sector to outperform both mainstream hotels and the various alternative accommodation platforms like Airbnb. 

Rockwell Land’s Aruga Apartments is one such example. 

Ms. Soliven said that Aruga Apartments has been able to enjoy healthier occupancy rates relative to the industry, with bookings from existing corporate accounts and from the leisure market on account of its certificate to operate as a staycation hotel. Serviced apartments, she added, also performed better than regular hotels during the pandemic as they offer bigger spaces that come with a fully-equipped kitchen and some with balconies. 

Aruga Apartments by Rockwell remains resilient despite challenges brought about by the pandemic.

“Renowned for its signature attention to detail and foresight for the little things that matter, Aruga Apartments takes pride in its location being a coveted address for those that aspire a holistic lifestyle experience,” she said. 

Beyond its hotel service, Aruga Apartments was able to adapt its offerings and operational strategies to navigate the changes in the business landscape during the pandemic. Most recently, Aruga received accreditation from the Department of Tourism and Bureau of Quarantine to operate as a multiple-use accommodation establishment in addition to its certification to operate for staycations. 

Aruga Apartments caters to guests’ needs for either leisure stays or quarantine requirements.

With staycations being top of mind for local guests who are not ready to hop on a flight and the remote working lifestyle that business travelers now require, Aruga Apartments can cater to these new normal lifestyles and offer conveniences by being a stone’s throw away from the Power Plant Mall and being within a secure neighborhood with safe open spaces for wellness and health buffs. 

“With the proliferation of choices for accommodations these days, it is easy to get lost in the rush of brands and promotions; but the discerning traveler knows that now more than ever, safety and convenience are key,” Ms. Soliven said. “Aruga Apartments offers a prime location, enhanced safety protocols, as well as the standard of comfort and service the brand has been known to its loyal patrons and its community, the Rockwell Center. Whether guests are checking in for business, a staycation, or for quarantine, the Aruga team is committed to providing from essential to a tailor-fit, personalized and sincere service throughout their stay.” 

Stringent protocols are observed to ensure guests’ safety

The success of Aruga Apartments is further reflected in the property’s performance as an investment. Offering competitive recurring rental yields and hassle-free management, Aruga Apartments makes itself attractive as a viable real estate investment that remains resilient in the current conditions. 

“Investors looking to widen their portfolio can be assured that Aruga Apartments by Rockwell would be a hassle-free investment that will provide regular rental yields for the years to come and for investors to experience the joy of staying and celebrating family events for a fraction of the cost when staying elsewhere in the metro,” Ms. Soliven said. 

“While it’s always a good time to invest in real estate for capital appreciation, Aruga’s luxury homestay business model is backed by a brand with a reliable track record in property development and management. Experienced property managers and our hotel management arm are working hand in hand in realizing the value of our investors. Despite the challenges, the changes we have made have allowed us to keep our promise of delivering rental yields. We are optimistic that we have the right product in the new normal. During the first half of 2021, net rental yields averaged at 5% of their investment.” 

In keeping with Rockwell’s brand of exclusivity and luxury, Aruga Apartments provides over 100 units ranging from studios to two-bedroom accommodations, fully furnished in the Asian Contemporary style, infused with a sophisticated interior design and quality that is crafted to suit the needs of every kind of traveler. 

To learn more about Aruga Apartments and its sound investment opportunities, please visit aruga.com.ph/investment.

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GCash is top fintech brand in Philippines’ Top 100 Brands 2021

GCash, the country’s number 1 mobile wallet company, is the top financial technology brand to be included in the Top 100 Brands in the Philippines, according to Campaign Asia-Pacific and NielsenIQ. GCash is also one of Asia’s top 1,000 brands 2021. 

Asia’s Top 1000 Brands is a consumer opinion survey across 14 markets in Asia-Pacific and measures brand preference in 15 product/service categories. It shows brands that are succeeding with their marketing and brand-building efforts and reveals the favorite brands among consumers. This year’s study saw the changing consumer behavior among brands and their increasing digital services. 

The leading e-wallet made it to the list while also hitting an exponential growth of 46 million users in June 2021, from 20 million users in January 2020. The app also had over 13 million log-ins per day on the GCash app, peaking at 15 million in the second quarter of 2021. 

With its vision for financial inclusion for all, GCash has quickly adapted to the needs of the Filipino people by being a digital payment essential for individuals and entrepreneurs, especially during the pandemic. The top mobile wallet company worked with the government and became its financial aid tool, disbursing over P16 billion to more than 2 million Filipinos and raising over P21 million to more than 3 million Filipinos via digital bayanihan. 

“We are honored to be part of the top brands in the Philippines and in Asia. This award further inspires us to continue with our mission to empower as many Filipinos as possible by giving them access to digital financial solutions that can make their lives better and more convenient especially during this pandemic,” said Martha Sazon, President and CEO of GCash.

No other fintech brand made it to the top 50 of the prestigious list, where the ranking of GCash rose from the previous year’s 51st spot to this 24th in the country in 2021.  Among the high-ranking brands in the list are  Samsung, Apple, LG, Sony, Panasonic, Nike, Nestle, Google, Colgate, and Starbucks.

GCash’s leap in the list can be attributed to strong consumer spending via the app: This year, GCash processed an average of PHP 300 billion in monthly transactions and is on track in breaching its PHP 3 trillion Gross Transaction Value (GTV) target.

GCash also provides customers an easy and secure cashless payment platform through digital products and services like free money transfers from user to user, frictionless bank transfers, and bills payments. The mobile wallet company also offers businesses, especially MSMEs, a contactless way to accept payment for goods through the use of QR codes and P2P platform, which has empowered over 2.5 million GCash merchants and social sellers. 

Currently, a third of GCash’s monthly active users utilize at least one of the app’s digital products like GCredit, GSave, GInvest, or GInsure. GCash provides customers easy access to a pre-approved credit line to pay for bills or QR transactions with GCredit, safely deposit money with GSave, easily invest in a market fund with GInvest, and buy essentials on GLife.  With the health risks of the pandemic, GCash also offers customers  COVID-19 health insurance for as low as P39 a month via GInsure. 

“We are glad to see that GCash has become an extension of the Filipino digital life. It is our goal to democratize access to financial services because everyone deserves to have ways to protect and grow their money, especially during these difficult times,” said Martha Sazon, GCash President and CEO.

GCash was recently named as an “Outstanding Partner” by the Bangko Sentral ng Pilipinas at the agency’s 2021 Stakeholders Appreciation Ceremony. The recognition is for GCash’s continued support and commitment to deliver innovative financial solutions to all Filipinos, especially the unbanked and underbanked segments. 

GCash also garnered two awards from the prestigious Asian Banker Awards 2021, and was the sole Philippine fintech company to do so. It won awards for the “Best Financial Inclusion Initiative/Application” for its Social Amelioration Program together with the Department of Social Welfare and Development, and “Best Digital Brand Campaign” for its CSR response to COVID-19, further solidifying the company as the #1 e-wallet app in the country.

Many Filipinos have come to rely on GCash for their daily cashless payment transactions, helping sustain the economy during the pandemic and propelling the mobile wallet to becoming one of the most respected and widely used brands in the Philippines. According to Visa’s latest Consumer Payment Attitudes study, Filipinos using digital commerce platforms like GCash helped boost the usage of digital payments in the country. It was also expected that it will continue to grow as more Filipinos appreciate the benefits of contactless payments like GCash during the pandemic

For more information, visit www.gcash.com.

 

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Aug. inflation likely above target — poll

PHILIPPINE STAR/ MICHAEL VARCAS
The Philippine Statistics Authority will release August inflation data on Sept. 7. — PHILIPPINE STAR/ MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

INFLATION likely quickened in August and settled above the central bank’s official target range anew, as a weaker peso pushed food prices up, according to analysts.

A BusinessWorld poll of 16 analysts yielded a median estimate of 4.4% for August inflation, nearer the lower end of the 4.1% to 4.9% estimate given by the Bangko Sentral ng Pilipinas (BSP).

If realized, headline inflation would again breach the central bank’s 2-4% annual target range after slowing to 4% in July. It will be the quickest in three months or since the 4.5% in May, and much faster than the 2.4% in August 2020.

Analysts’ August 2021 inflation rate estimates

The Philippine Statistics Authority will release August inflation data on Sept. 7.

The weaker peso likely affected imports of raw materials for basic commodities, which in turn led to a faster rise in the consumer price index (CPI) in August.

The peso has been trading around the P49-50 versus the greenback in recent weeks. At its close of P49.76 per dollar on Aug. 31, the local unit weakened by P1.737 or 3.6% from its P48.023 finish on Dec. 29, 2020.

“With the depreciation of the peso, prices of inputs and raw materials especially imports may have contributed to the slight increase in price of some basic commodities,” said Mitzie Irene P. Conchada, an economist from the De La Salle University.

The weaker peso could overpower the downside risk to inflation caused by slower rise in transport prices and the impact of the lower import tariff for pork products to meat prices, said Alvin Joseph A. Arogo, vice-president and head of equity research division at the Philippine National Bank.

Meanwhile, weather disruptions likely caused the faster increase in the CPI, particularly for food prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Lockdown restrictions in August may have also disrupted supply chains. Metro Manila was under the strictest form of lockdown from Aug. 6 to Aug. 20 amid a Delta-driven surge in coronavirus infections.

“We think delivery delays and rescheduling due to checkpoints led to some additional upward price pressures but the increment may have been smaller than previous lockdowns,” Bank of the Philippine Islands (BP) Lead Economist Emilio S. Neri, Jr. said.

The central bank expects inflation at 4.1% in 2021 before easing to 3.1% in the next two years. The CPI rose by 4.4% in the seven months to July.

Last month, the Monetary Board kept the key policy rate at a record low of 2% as it vowed to support economic recovery.

With economic recovery expected to remain weak and inflation to remain elevated, analysts believe the BSP will retain its prudent pause.

In August, economic managers downwardly revised their growth target for 2021 to 4-5% from 6-7% previously, citing the impact of rising infections and reimposed lockdowns.

“The burden for reviving growth is removing mobility restrictions and fiscal support. So, all in all, we do not see the need for a shift in monetary policy,” ANZ Research Chief Economist for Southeast Asia Sanjay Mathur said.

Analysts said they expect the central bank to look past the above-target inflation, given it was mainly caused by low supply.

“Accommodative monetary settings are critical for an economy still grappling with elevated inflation and movement controls,” Moody’s Analytics Senior Asia Pacific Economist Katrina Ell said.

“Given the supply-side nature of the inflation breach, we continue to believe that BSP will look past this inflation uptick as monetary policy has no ability to control global oil prices and is incapable of making pork or vegetables cheaper,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said.

BSP Governor Benjamin E. Diokno said last week that they continue to have ample monetary policy space, noting higher prices are mainly caused by low supply which is already addressed by non-monetary measures.

For his part, BPI’s Mr. Neri said the BSP will likely lean towards keeping policy rates steady, in line with signals of major central banks like the US Federal Reserve and the European Central Bank. He said he believes the BSP “can justify carrying out a preemptive upward rate adjustment for the same reasons that Bank of Korea did back in August.”

“Like the Federal Open Market Committee, they [BSP] probably will make no mention of the side effects of negative interest rates on asset markets, on risk averse savers, bank fragility, income inequality,” he said.

The Monetary Board will have its next policy-setting review on Sept. 23.

US may increase South China Sea presence after exit from Afghanistan

An MH-60R Sea Hawk helicopter launches during flight operations aboard the US Navy aircraft carrier USS Ronald Reagan in the South China Sea, July 17, 2020. — US NAVY/MASS COMMUNICATION SPECIALIST 2ND CLASS CODIE L. SOULE/HANDOUT VIA REUTERS.

By Kyle Aristophere T. Atienza, Reporter

THE UNITED STATES military will probably increase its presence in the South China Sea after pulling out of Afghanistan, in a move that will counter Chinese militarization of the disputed water, political analysts said.

Celebratory gunfire echoed across Kabul as Taliban fighters took control of the airport before dawn on Aug. 31 after the withdrawal of the last US troops, ending 20 years of war that left the Islamic militia stronger than it was in 2001.

The withdrawal is a strategic “retrenchment” to free up US capability to compete with rivals like China and Russia, said Renato C. de Castro, an international studies professor at De La Salle University.

“The US has realized that staying in Afghanistan does not provide any benefits,” he said in a Zoom interview. “It’s not a maritime domain and they were putting a lot of money for nothing.”

“What do you do when you realize that your investment is not earning? You cut loose. This is what you call strategic retrenchment,” he added. “They have been spending so much resources on Afghanistan and these have to be cut because they have other priorities in the Indo-Pacific.”

The US could now focus on more pressing foreign policy issues, including the South China Sea dispute, Mr. De Castro said.

Taliban officials have indicated that they would boost ties with China and other nations.

The Taliban’s takeover could present political and economic opportunities for China, including developing Afghanistan’s vast mineral riches, AP reported. Beijing has said it was ready to help rebuild the impoverished nation, it said.

The Philippines should expect the US to deploy more patrol ships in the South China Sea, while helping its former colony boost its naval force, Mr. De Castro said.

“The focus of the US will be in this region,” he said. “They will give us more attention. We can expect more resources from them.”

The pullout indicates the seriousness of the US in meeting security challenges from regional powers, said Victor Andres Manhit, president of a local policy think tank.

The obsession to contain extremist groups in Afghanistan “gave China room to rise in the Indo-Pacific,” he said in a Facebook Messenger chat.

It also allowed Russia to disrupt Eastern Europe and the Middle East and enabled Iran and North Korea to advance their own nuclear ambitions, he said.

“Getting out of Afghanistan is part of a broader effort to refocus on core strategic challenges, specifically those in the Indo-Pacific region which the Biden administration considers more important,” Mr. Manhit said.

The US exit from Afghanistan, which led to the sudden fall of the capital Kabul to the Taliban, has sparked debates about the credibility of its commitment to allies, including the Philippines. The lack of an exit plan for Afghans who aided the American war against Muslim insurgents just worsened the speculation, according to international observers.

China’s Global Times has warned Taiwan leaders that the US would not fight if Beijing were to attack, saying that “they cannot count on Washington, as Afghanistan is not the first place where the US abandoned its allies, nor will it be the last.”

Jose Antonio Custodio, a security and defense consultant, said the US has to consider its own survival when trying to defend an ally such as the Philippines.

‘MATERIAL INTERESTS’
This should not be a problem as long as the Philippines and other partners are picking up their own weight in an alliance, he said in a Facebook Messenger chat.

The Philippines is unlikely to become the next Afghanistan in case it is attacked by China or local extremists because its interests “are very much well-aligned with those of the US,” said Robin Michael Garcia, a political economy professor at the University of Asia and the Pacific.

“The material interests of the US will always come first,” he said by telephone. “That’s a reality in international politics.”

The Philippines can still rely on American security guarantees in case of an attack in the South China Sea because the disputed waterway is a key global trade route, Mr. Garcia said.

“The US has always called for a rules-based order in the South China Sea and it has especially called for freedom of navigation because stifling of trade in that area will affect how much they earn,” he said. “It’s very clear that in the South China Sea, the interests of the US are huge because of trade.”

It’s difficult to compare the behavior of the US in the Middle East or in Afghanistan with its behavior in Asia, Mr. Garcia said. “The interests of the US are very much aligned with the interests of East Asian and Southeast Asian countries.”

International observers have said that the South China Sea is important for the regional ambitions of China, which has been competing with the US in trade.

The sea lanes that pass through the South China Sea are the busiest, most important in the world, Marvin Ott, an adjunct professor at the Johns Hopkins University, said in an article published by research group Wilson Center.

In 2016, the sea lanes in the disputed area carried a third of global shipping worth about $3.4 trillion, including almost 40% of China’s total trade and 6% of America’s, he said.

“Does the US still consider the West Philippine Sea important to its interests?” Antonio P. Contreras, a political science professor at De La Salle asked, referring to areas of the sea within the Philippines’ exclusive economic zone. “If so, they will not withdraw from it, they will still support us.”

“The dispute in the West Philippine Sea is not an issue of terrorism but an issue of free access,” he said. “Afghanistan is a landlocked country. What is its strategic importance to the US except that it is a breeding ground for terrorism?”

Meanwhile, Mr. Contreras said the miscalculation of the US in Afghanistan might become a harbinger for the decline of superpower interventionism.

“US credibility inevitably takes a hit no matter how justifiable the withdrawal from Afghanistan was,” said Herman Joseph S. Kraft, who heads the University of the Philippines Political Science Department.

Mr. Kraft said President Rodrigo R. Duterte, who had suspended a key military pact with the US, might use the issue to justify the pivot to China once the “human rights lobby (against the Philippine government) in the US Congress gains ground.”

Still, US-Philippines relations remain stable because “majority of the Philippine defense and military establishment remains committed to the alliance,” Mr. Custodio said. 

“No matter how local pro-Chinese elements belonging to the Duterte administration and even within the Philippine military will want to spin it, the Philippine-US alliance remains on stable ground,” he said. “It does the job in addressing the country’s existing security challenges without the need for an excessive US presence.”

Meanwhile, Mr. Contreras said Taliban victory in Afghanistan could boost the morale of extremist groups operating in Southeast Asian countries, including the Philippines.

“Extremist groups usually are inspired by this collective sense of affinity with Jihads all over the world,” he said. “Their morale will be boosted by that.”

The Philippines can expect support from the US in its counter-terrorism measures despite Washington’s shifting priorities, Mr. Custodio said.

“Even with the US pivot to Asia going on in the previous years, the US remained focused and dedicated in anti-terrorism support to allies and partners who experience domestic terrorist challenges,” the defense analyst said.

He noted that the US had extensively helped the Philippine armed forces when the Islamic State-linked Maute group attacked the Marawi City in southern Philippines in 2017 even while Washington was conducting freedom of navigation patrols in the South China Sea.

“It is not a zero-sum situation when it comes to terrorism vis-a-vis China for the US,” Mr. Custodio said.

The Philippines should expect more help from the US especially after President Rodrigo R. Duterte changed his mind about ending a visiting forces agreement with America, he added.

“These activities will cover a wide range of issues from counter-terrorism, external defense enhancement and humanitarian assistance and disaster relief,” he added.

From survival to growth: The BusinessWorld pandemic story

By Wilfredo G. Reyes, Editor-in-Chief

“Any advertising that would tend to draw crowds is to be refrained from,” a notice read, advising business owners to “(a)void crowding your store” and to “(k)eep all clean and sanitary,” while another noted that those “who generally throng the shops at this season of the year are staying home; but, on the other hand, a much bigger business is being done in delivery orders.”(1)

Such advisories and observations should be pretty familiar to anyone by now — except that these were published more than a century ago at the height of the 1918 Spanish flu pandemic.

As with individuals, businesses have been scrambling for lessons from the past that could guide their response to COVID-19, only to find very few parallels and that a playbook to survive and emerge stronger is a work in progress.

OUR STORY
BusinessWorld is no exception.

My stint at the helm of the editorial team began in January last year by, among others, reviewing SOPs for operations continuity, with disasters like massive floods of Ondoy’s magnitude and disruptive political events like coups d’etat in mind. True, the World Economic Forum’s Global Risks Report 2020, released on Jan. 15 that year, had counted “infectious diseases” as the 10th biggest risk in terms of impact, noting that “gathering pressures are straining health systems on many fronts” (reports of an outbreak of a strange strain of pneumonia began trickling out of China at the end of December 2019). Still, that was before the World Health Organization declared a pandemic in mid-March, so I suspect that risk was nowhere on the radar screens of most other companies at that time either. The Forum’s 2021 report, of course, listed infectious diseases and “livelihood crises” as the top two “clear and present dangers” for the next two years.(2)

It soon became clear to us that, unlike previous disruptions, this one would require more than just checking for casualties and those otherwise affected among staff, identifying those who can deliver the product and reviewing the day’s targets.

It was also clear, as the government first announced a lockdown in mid-March last year, that paralysis was not an option — especially not for an organization whose core mission has been to provide timely information to its public.

BusinessWorld’s story since then probably reflects what has been going on elsewhere. As the company stabilized operations (i.e., plugging productivity shortcomings we were blind to before) and health protocols in the wake of the initial jolt from a hard economic lockdown in March, a small team sprang to action and explored the potential of maximizing digital channels for delivering content.

Within three months from the March 2020 lockdown, BusinessWorld held its first of several online interview series with top corporate leaders here and abroad. The company has also held two two-day economic fora since then within a span of six months and will be holding another soon. Those are besides weekly BusinessWorld B-Side podcasts based on leads taken from reporters’ daily coverage (but which could not be expounded on in spot news reports) and virtual roundtables with experts on various issues (many suggested by readers) under the BusinessWorld Insights brand.

During annual strategic planning sessions since the early 2000s, those leading the company had pondered the right time to go headlong into digital space and the answer — especially from 2015 onward — had invariably been: “Not yet, but let’s prepare everyone to stand on the springboard to take that plunge.”

Well, as with most everyone else, the pandemic-driven economic crisis has advanced this digitalization timetable — by about two years by my estimate. And that is one of the very few silver linings our company counts amid all the dilemmas and tragedies this emergency has spawned.

The ramping up of digital initiatives while doing what it takes to maximize the traditional print medium reminds me of that age-old military strategy of strengthening the fort while sending out patrols to foray into uncharted territory. The beauty of digital is that it allows one to aggressively tap opportunities as they open, learn from both successes and failures, and adjust accordingly as you go along.

I identify with those executives who were surprised by just how nimble their organizations and staff turned out to be amid all this disruption.(3) Of course, there was the inevitable resistance to doing things differently and tossing out routines that no longer work; hence, it was imperative that clear signals emanated from the top that we are doing this and it is here to stay.

The digital platform not only enabled BusinessWorld to reach its audience immediately amid the disruption the pandemic and the economic lockdown caused, but it also unlocked previously hidden value by opening opportunities for more products and unearthing hidden talent among staff.

It is also a more sustainable way of ramping up content production and connecting with a much bigger crowd.

Physical distancing fostered closer digital interaction among departments and staff, and the constant push and pull of ideas led to improvements in existing procedures and products, as well as new ones. One editor has taken the initiative to enhance the knowledge of reporters by tackling key issues in monthly online discussions.

NO TURNING BACK
Companies and organizations are now at a crossroads in determining the way forward into a post-pandemic arena.

A scan of thought pieces of some of the world’s leading consultancies yields a sampling of insights on this point.

One is “we cannot snap back to old ways of working,” and this means finding ways to preserve and foster the environment that encouraged fresh, workable ideas. The pandemic is “a dress rehearsal for a new, more turbulent world,” said James Allen of Bain & Co., who emphasized the need to determine how one’s organization can become more resilient. “And so the resiliency question really is a conversation… about, where do you need to add buffer capacity to make sure the decisions we make can last through various crises?”(4)

For Boston Consulting Group (BCG), companies now need to stay on point in their long-term agenda, build “resilience to unexpected shocks and harness imagination to create new offerings or business models that could drive future growth.” Resilience, according to BCG, has six traits, namely:

• prudence, or developing early warning signals to detect potential threats and preparing for plausible negative scenarios;

• redundancy, which involves building buffers for critical supplies or capacities to limit the potential impact of a shock;

• diversity, which involves having a variety of capabilities or products;

• modularity, which requires separating business components in order to prevent failures of parts from affecting the whole;

• adaptability, or having the ability to rapidly adjust to new circumstances by experimenting, identifying appropriate responses and cascading them throughout the organization;

• embeddedness, which means aligning the business’s goals with those of partners and communities, facilitating external cooperation and support in a crisis.(5)

The pandemic has also highlighted the workforce as a key resource for weathering future crises, and not just a cost.

The World Business Council for Sustainable Development (WBCSD) and BCG cited the need to “retain flexible working practices beyond the crisis,”(5) while McKinsey & Co. said “remote work and virtual meetings are likely to continue, albeit less intensely than at the pandemic’s peak” and that most employees prefer a more flexible working model after experiencing work away from the office during the pandemic.(6)

WBCSD and BCG also cited the need to upskill, reskill and even redeploy employees “to enable them to succeed in the workplace of the future,” while Diane Brady said in The McKinsey Podcast that there is a need to hire and train for adaptability. “Look for people who demonstrate an ability to learn new things, who demonstrate learning agility, who demonstrate openness and ability to flex in different directions,” she said. “We’re all asked to do things that were not necessarily in our job description when we were hired. You can look for those types of skills in people, in addition to maybe the hard skills or the specific skills you’re looking for from a business need. But you can also train those skills.”(7)

Employee value is not lost on businesses in the Philippines, according to global advisory Willis Towers Watson, whose 2021 Employee Experience Survey in April found 95% of 91 employer-respondents saying enhancing employee experience will be a priority in the next three years compared with just 65% in a pre-pandemic poll. In the latest survey, most respondents cited positive employee experience as key to engagement (89%), productivity (88%), overall business performance (88%) and employee wellbeing (87%), while 76% said changing leadership competencies over the next three years is a priority in order to improve such experience.

BusinessWorld focused this anniversary issue on the stories of industries, companies and sectors as they chart their recovery, in hopes of contributing to this growing literature on crisis lessons.

Because the saga continues for all of us.

 

(1) “A look back at Butte during 1918 Spanish flu pandemic,” Montana Standard, March 29, 2020 (https://mtstandard.com/news/local/a-look-back-at-butte-during-1918-spanish-flu-pandemic/article_97f57c42-5a7d-533a-89c2-97680c94bf7f.html) and “Shop Trade Hit,” The Sun, Feb. 6, 1919, as uploaded on http://nla.gov.au/nla.news-article222644593.

(2) https://www.weforum.org/reports/the-global-risks-report-2020

https://www.weforum.org/reports/the-global-risks-report-2021

(3) For discussions on “A strategy for embracing uncertainty,” access https://www.bain.com/insights/a-strategy-for-embracing-uncertainty, Bain & Co., July 20, 2021.

(4) “Roadmap for a post-pandemic world,” Bain & Co., April 7, 2021 (https://www.bain.com/insights/roadmap-for-a-post-pandemic-world-video).

(5) “Winning the ’20s in an accelerated post-COVID world,” Boston Consulting Group (BCG), April 30, 2021 (https://www.bcg.com/publications/2021/how-pandemic-accelerated-business-leader-agenda).

“Back to the future: resuming the long-term agenda for business,” BCG, April 6, 2021 (https://www.bcg.com/publications/2021/three-pivotal-themes-for-the-long-term-business-agenda).

“COVID-19 Business Recovery: A guidance framework for a sustainable & inclusive ‘new normal,’” World Business Council for Sustainable Development and BCG, July 2020.

(6) “It’s time for leaders to get real about hybrid,” McKinsey & Co., July 9, 2021 (https://www.mckinsey.com/business-functions/organization/our-insights/its-time-for-leaders-to-get-real-about-hybrid)

“The future of work after COVID-19,” McKinsey & Co., Feb. 18, 2021 (https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19).

(7) “Building a learning culture that drives business forward,” McKinsey & Co., April 16, 2021 (https://www.mckinsey.com/business-functions/mckinsey-accelerate/our-insights/building-a-learning-culture-that-drives-business-forward).

Gross borrowings hit P2.27 trillion as of end-July

GOVERNMENT BORROWINGS increased by 22% in the seven months to July from a year earlier, as the budget deficit continues to widen. 

Data from the Bureau of the Treasury (BTr) showed gross borrowings increased to P2.27 trillion as of end-July, from the P1.857 trillion logged in the same period of 2020.

For July alone, the government borrowed P337.149 billion, 150% higher than the P134.532 billion logged a year earlier.

The government borrows from local and foreign creditors to plug the budget deficit that has ballooned since 2020, as tax collections plunged amid the economic slowdown. Economic managers expect the budget deficit to widen to 9.3% of the gross domestic product this year.

The budget shortfall stood at P121 billion in July.

More than half (53.4%) of the gross borrowings in July came from local sources while the rest came from external sources.

Domestic borrowings in July amounted to P180.36 billion, surging by 170% from the P66.837 billion in July 2020. Local debt during the month was sourced from fixed-rate Treasury bonds (T-bonds) worth P208.86 billion.

External gross borrowings more than doubled to P156.789 billion in July from P67.695 billion a year earlier. This includes P10.617 billion from project loans and P146.172 billion raised from global bonds.

Year to date, gross borrowings accounted for 75.6% of the P3 trillion the government is seeking to raise for 2021.

The P2.27-trillion borrowings consisted of 81% local debt, while the rest were from external sources.

The government raised P1.828 trillion from local lenders in the January to July period, rising by a third from the P1.375 trillion logged a year earlier.

These were made up of P463.322 billion in retail T-bonds, P779.86 billion in fixed-rate T-bonds, and P540 billion in short-term financing from the Bangko Sentral ng Pilipinas.

Excluding P53.108 in billion debt repaid and those that were settled via the Bond Sinking Fund, the government’s net borrowings in the first seven months stood at P1.775 trillion.

Borrowings from external creditors for the first seven months of the year fell by 8.2% to P441.736 billion from P481.152 billion in the same period of 2020.

About P146.172 billion was raised through global bonds in July. In April, the Treasury raised P121.967 billion via euro-denominated bonds and P24.188 billion through Samurai bonds. Meanwhile, project loans stood at P54.327 billion, while P95.082 billion came from program loans.

The BTr repaid P161.534 billion worth of foreign loans from January to July, reducing its net foreign borrowings to P280.202 billion.

This was comprised of P54.327 billion in project loans; P95.082 billion in program loans; P121.967 billion in euro-denominated bonds; P146.172 billion in global bonds; and P24.188 billion in Samurai bonds.

The higher gross borrowings as of end-July was no surprise given the need to support the economy during the crisis, Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said.

“This is seen coming due to the lingering effect of the pandemic resulting into the shortage of funds to finance the expenditure meant to control the pandemic, not to mention the need to stimulate economic activities,” he said in an e-mail.

Mr. Lopez is hopeful that the higher gross borrowings “will be a good avenue to bring back the growth experienced during the pre-pandemic era.”

The country’s debt stock hit P11.166 trillion as of end-July. — Luz Wendy T. Noble

Trying to get a read on the unpredictable post-pandemic economy

STOCK IMAGE | FREEPIK

By Beatrice M. Laforga, Reporter

IT’S BEEN about a year and a half since the first hard lockdown was declared in March 2020, and everyone has spent the past months basically winging it, with no firm roadmap emerging as yet for how the coronavirus disease 2019 (COVID-19) has reordered the world, or for how it may be about to reorder it some more before everything is done.

The losses to the economy have been estimated at about P2 trillion 2020 — the equivalent of between 40% and half of recent national budgets, so a proper read on the pace of the recovery is job one for many businesses trying to time their full-on return to the market.

“It will take some time before we’re able to go back even to 2019 per capita GDP (gross domestic product) levels, especially for hard-hit industries like the services sector,” Philip Arnold P. Tuaño, chairman of Ateneo de Manila University’s Department of Economics, said in a Zoom interview.

“Maybe in a few years we will be able to return back to some sort of normality.”

The economy slumped by a record 9.6% in 2020 due to the COVID-19 pandemic. While the government is aiming for a 4-5% rebound this year, economic managers have said that the economy will return to pre-crisis GDP level by 2022.

International development organizations like the Asian Development Bank, the International Monetary Fund (IMF) and the World Bank consider the economic recovery to be fragile, with growth this year likely to disappoint those who had been counting on a quick rebound.

The multilateral banks’ forecasts for Philippine GDP growth in 2021 are at 4.5%, 5.4%, and 4.7%, respectively, based on estimates issued in August.

While it may take time, there are some opportunities to be had for an economy where the new rules of the game have yet to be written, many of them to do with boosting long-term competitiveness and diversifying its sources of growth. Mr. Tuaño sees promise in boosting value chains, going into customization of services and diving deeper into sustainability.

There is no reason the Philippines can’t be a pioneer again, having joined the early Asian industrializers like Japan in the early 1900s in the so-called 5% industrial growth club. A United Nations in the Philippines policy brief issued in August (“Diversification, Jobs and the COVID-19 Recovery”) provides a helpful recap of the wrong turns taken by the economy since the 1980s. “The Philippines has missed several waves of industrial catch-up in the last century,” it said. “(The economy featured) weak industrial competitiveness and lack of productive employment, combined with the quiescence trap that keeps investment and demand for skills low.”

Mr. Tuaño said the areas of opportunity may lie in emerging sectors that have not yet been fully explored.

“The emerging economy will just accelerate some of the trends that we’ve had even before the pandemic, so one thing we have had was accelerating towards industry 4.0, like the increasing use of smart devices and digital finance. The pandemic has accelerated this because we’re forced now to go digital,” he said.

Conventional sources of growth like business process outsourcing (BPOs), retail and food processing have been successes for established conglomerates in the past, but sticking to these industries is no longer ideal as the pandemic drives massive change, Mr. Tuaño said.

“How do they ensure long-run growth even if all of the traditional sources of ’90s, 2000s economic growth become less and less important?” he said.

Stay-at-home orders, quarantine restrictions and fear of contracting the virus during the pandemic helped drive change by encouraging — even compelling — the use of electronic commerce and digital payments.

In the area of customization of services, companies can explore big data offerings optimized for various business models, according to Mr. Tuaño.

Developing local value chains by ramping up production of goods domestically is also another opportunity to invest in, especially after the pandemic exposed the vulnerability of economies when global trade flows are disrupted.

The Philippines can also go big on renewables where the market remains unsaturated but the resource potential is strong, he said.

The country is ripe for diversification, being a consumption-driven economy, in which household spending accounts for 70% of total GDP each year, while government spending amounts to around 20%.

BUSINESSES NEED TO GO WHERE THE GROWTH IS
The moves businesses make now will go a long way towards establishing their long-term viability, according to Benedicto V. Yujuico, president of the Philippine Chamber of Commerce and Industry.

“Going forward, they must learn how to innovate to remain competitive and profitable. Pandemic or not, businesses must use technology to implement digital transformation to stay ahead of the game,” he said.

The economy had been projected to become the 18th largest economy in the world by 2050, with an estimated GDP of $4.86 trillion, leapfrogging its ranking in 2019 of 30th, according to a report by Capital Economics issued in February.

What is the view from industries on the cutting edge? The need of the moment is having a vision of the future, responding quickly to the needs of the emerging environment, and taking calculated risk, according to Angelito M. Villanueva, the founding chairman of the industry group Fintech Alliance.ph and the chief innovation and inclusion officer for Rizal Commercial Banking Corp.

“To survive and thrive in this current situation… You really have to stay two to three steps ahead of everyone in the field and be able to understand the landscape, knowing what’s emerging and what the future holds,” he said. “It’s how you create the future now that will make you competitive.”

Mr. Villanueva, who was named “Chief Innovation Officer of 2021” by The Banker, said his industry has always anchored its innovations on the need and appetite of consumers, ensuring that any new products are supported by solid potential demand.

“That’s why innovation is not just a process of just-for-the-heck-of-it innovating; you have to be able to have a grasp of your environment or your ecosystem; otherwise, it will just be a shot in the dark. Pushing for any innovation has to be a calculated risk,” he said.

To help businesses thrive, the government will also play a key role in providing an enabling environment for innovation to flourish and allow the private sector to diversify into improving the quality of its goods and services.

Mr. Villanueva said some of the reforms he considers key are Republic Act No. 11293 or the Philippine Innovation Act, which supports and incentivizes innovations, and Executive Order No. 127, which promoted the use of satellite broadband nationwide, especially in far-flung areas.

However, he said digital infrastructure remains uneven especially in remote towns, hampering the digital sector’s potential growth.

Mr. Tuaño, the Ateneo economist, warns that much still needs to be done to close the widening income gap and support the vulnerable middle class in a prolonged public health crisis.

“The post-pandemic world will also show that the crisis has also exposed the socioeconomic disaggregation in society,” he said.

“I’m cautiously hopeful that we will still be able to compete with the rest of the region… because there’s a next generation of young professionals who are really interested in these areas; we see young entrepreneurs thinking of how services can be provided more to the rest of the society,” he added.

BusinessWorld’s 34th Anniversary Report: Bouncing back better

By Timothy Roy C. Medina, Associate Editor

THE DIFFICULT YEAR that coincided with BusinessWorld’s 34th anniversary saw the newspaper, like many organizations, having to evolve. At the same time, it had to deliver a day-to-day news product that met the usual high standards expected of the Philippines’ leading business newspaper, and introduce innovations to adapt to the “new normal.”

The pandemic might someday be remembered as the time when the newspaper became fully digital, not just in the way it delivered the news but also in ethos, with value-added products like podcasts, livestreamed BusinessWorld Insights sessions with industry experts, as well as one-on-one CEO conversations with senior editors. BusinessWorld was also in the process of becoming something of an events company even before the pandemic, organizing economic forums that were forced online starting in 2020 to keep participants safe.

For all that, we tried our best not to let the pandemic erode our core strengths. The BusinessWorld Anniversary issue is traditionally the venue for our journalists to practice the dying art of long-form writing, and our reporters went all-out to try to make sense of a confusing present and a clouded future. We are rightly proud of our extended stories, with the expectation that they consult the best-informed and widest range of sources possible.

This issue is ultimately a long and deep reflection on the economic recovery — when it might come and what form it may take, how to recognize the signs of its imminent arrival, how to reconfigure companies to face new realities. While we cannot possibly claim to tell experienced business leaders what the best course of action is in order to come out of this crisis with flying colors, what we can do is present a carefully curated selection of stories that might plant the seed of an idea in our readers. These are the lessons of transformation we found most relevant in the past year; we lived some of these lessons ourselves, and we hope you also find these stories a source of useful insight as your businesses evolve to meet the challenges ahead.

BusinessWorld’s 34th Anniversary Report can be found in Sections 3-12 and online (bit.ly/BouncingBackBetter). Scan QR code to be directed to the microsite.

Infrastructure companies looking for the next big thing as the pandemic drags on

NATHAN WATERS-UNSPLASH

By Arjay L. Balinbin, Senior Reporter

INFRASTRUCTURE COMPANIES are focused on finding new opportunities as they contend with pandemic disruptions to their operations as some construction markets dry up, while juggling an imminent full-scale migration to innovative building methods and data-driven processes.

During the dry months, the industry was working rapidly to maximize the good weather needed to pour concrete, and was not immune to the headaches posed by quarantines and labor shortages. Builders posted a growth rate of 25.7% in the second quarter, helping drive a gross domestic product gain of 11.8% for the period, the National Economic and Development Authority said.

Trade Secretary Ramon M. Lopez said the growth is a result of the government’s efforts to balance lives and livelihood as it takes “calculated and calibrated” measures to mitigate the risks that comes with reopening the economy.

The government’s pandemic-related restrictions are focused “on the less essential activities while allowing the rest of the economy, especially the essential and labor-intensive sectors… to operate, so as to save jobs and income,” he said in a statement.

Megawide Construction Corp. said that, as a result of the pandemic, there is greater pressure in terms of project delivery, taking into consideration the shortage in manpower and rising cost of materials due to limited production.

“Understandably, clients (are) more exacting in terms of meeting costs and timelines during the pandemic, which we (understand) as an experienced contractor,” Megawide Chairman and Chief Executive Officer Edgar B. Saavedra said in an e-mail interview.

“The entire industry had to quickly adjust to new safety considerations as well as government directives, apart from supply chain issues and the like. Fortunately, our vertical integration and earlier investments in engineering technologies such as precast enabled us to adapt quickly to both client and regulatory standards,” he added.

Aboitiz Construction Executive Director Antonio Peñalver said customer behavior remains the same, but the company is now more cautious in its decision making.

“(The company has) adapted to the new way of doing business, which is through virtual contacts,” he said in an e-mailed reply to questions.

“The awareness and concerns of our customers about health standards have heightened (to the point) that they would expect an equivalent level of safety or health assurance,” said Roberto V. Bontia, the president and general manager of MPT South Corp. and its two main expressway companies to the south of the capital — Cavitex Infrastructure Corp. and MPCALA Holdings Corp.

Mr. Saavedra said Megawide’s precast business, which started expanding prior to the pandemic, has given the company more opportunities.

“We are minimally affected by the labor shortage as precast installation requires minimal manpower compared to typical construction methods. It also enables us to practice physical distancing in line with government protocols. Finally, we were also able to catch up to project timelines because of the higher speed and standardization offered by the precast process,” he said.

NEW OPPORTUNITIES
Aboitiz Construction said the pandemic helped birth a “big shift” strategy.

“This a comprehensive business pivot that will enable the company to navigate the changing market dynamics, refocus priorities, implement changes, fuel recovery, and find new business value,” Mr. Peñalver noted.

To spur business growth, Aboitiz Construction is pursuing traditional industrial projects this year.

The company is “thriving further from transport and water-related infrastructures, marine works, and transmission lines and substations,” Mr. Peñalver said.

As for Megawide, Mr. Saavedra said the company intends to maximize the gains it has achieved, reorganize, and continue to pivot and look for new opportunities.

“We will focus more on infrastructure projects in lieu of residential and commercial projects; and continue maintaining a diversified order book, sustaining EPC (engineering, procurement, and construction) revenue growth momentum onwards from Q3 (third quarter of) 2020,” he added.

MPT South saw the importance of accelerating its pursuit of digital transformation and the systematic application and use of data it generates.

“These initiatives will drastically improve our key processes and most importantly the delivery of service to our customers, our motorists,” Mr. Bontia said.

Aboitiz Construction is also implementing an innovation program to improve the company’s practices, processes, and systems in support of its “big shift” strategy.

“To adapt (to) the impacts of the pandemic, our aim is to digitize and simplify our processes to harness execution excellence. With innovation, we want to address the issues and gaps in various areas of work in Aboitiz Construction. Our team members have a lot of ideas to improve our processes and we want these ideas to translate into real solutions that would create long-term value for our stakeholders and contribute to our business growth,” Mr. Peñalver said.

Megawide’s Mr. Saavedra said: “We will… continue improving and automating our processes, including engineering, procurement, human resources management and financial management initiatives and build on our five-year roadmap of core businesses, namely EPC, airport, and landport.”

POST-PANDEMIC MARKET
Aboitiz Construction believes the market will bounce back strongly after the pandemic crisis.

“A lot of projects that are on hold… and there will be massive demand for resources from construction companies,” Mr. Peñalver said. “Those who are ready for this surge in demand will surely benefit.”

“At Aboitiz Construction, we are making adjustments by preparing our people through training and studying new technologies that will promote efficiency. We are also strengthening our organization by hiring new talents to anticipate the requirements in the future,” he added.

Megawide expects a boom in infrastructure projects, particularly railways and utilities. As a result, the company’s precast technology “can be utilized to its full competitive advantage,” Mr. Saavedra said.

“Precast is less reliant on manual labor and enables faster completion and higher standardization with building components pre-manufactured off-site,” he said.

“Additionally, there are so many opportunities for railway infrastructure that will boost our order book to unprecedented levels, with a burn rate extended from 2-3 years to 4-5 years.”

Megawide also anticipates real estate or housing development along the railway alignment to follow such infrastructure developments.

MPT South expects the adoption of cashless payment systems to increase.

“To this end, we are already undertaking studies and projects for implementation by which we could improve our existing systems both at the front and backroom of our operations and processes, enabling a better, more efficient cashless setup,” Mr. Bontia said.

“The travel patterns of our customers in all likelihood would continue to adjust given the widespread adoption of work-from-home arrangements, as well as the shift in viewing health as a ‘common concern for the good of all,’” he added.

MPT South also expects to extract valuable insights as it gains traction on its digitalization and data analytics initiatives.

“They will be relevant in navigating the post-pandemic market dynamics and realities,” Mr. Bontia noted.

MPT South is a unit of Metro Pacific Investments Corp., one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group.

Satellite solutions: Filling in Mindanao’s digital gaps

By Marifi S. Jara, Mindanao Bureau Chief
and Arjay L. Balinbin, Senior Reporter

THE PANDEMIC highlighted digital connectivity as a need and not a want, on par with basics like food, water and electricity.

“That was the time when we shifted towards online, online everything,”

Rogel Mari Sese, chair of the Ateneo de Davao University’s (AdDU) Department of Aerospace Engineering, said in a virtual interview.

He took on that post in March 2020, the same month that the Philippines started implementing restrictions to mitigate coronavirus transmission, including the abandonment of face-to-face classes.

By June that year, AdDU was one of the first academic institutions in the country ready to go fully online with its academic programs.

“Our infrastructure, our system was prepared (to) easily shift towards online education,” he said.

“However, we looked at it also as an issue that we might have a good level of connectivity here in the campus, but the same cannot be said for our students in their homes, in their provinces; some are even from outside Mindanao.”

The Jesuit-run school launched a program providing WiFi access and soft loans to buy devices to students who needed assistance. But even with the tools available, getting online at stable and minimum speeds was a more fundamental problem in many areas.

The university’s leadership also knew that telecommunication companies could not possibly expand the country’s cable and cellular mobile networks in the time required.

The government’s National Broadband Plan released in 2017 acknowledges the lamentable state of the Philippines’ data network system.

“Despite the notable progress in the country’s overall internet performance, the Philippines lags behind its peers in terms of affordability, availability and speed of internet access,” states the plan prepared by the Department of Information and Communications Technology (DICT), then just a year old as an agency headed by a Cabinet-level minister.

It cites several international reports — including from the World Economic Forum and the International Telecommunication Union, as well as the Global Information Technology Report, among others — pointing to the country’s low ranking in terms of internet services.

The 2019 National ICT Household Survey, the first national baseline report conducted by the DICT and the Philippine Statistical Research and Training Institute, indicates that only about 50% of communities have telecommunication operators in their area, only 30% of the country’s more than 42,000 barangays have fiber-optic cables installed, only about 13% have free public WiFi in their communities, and only 15.7% of households have internet access.

These percentages are even lower in Mindanao, more so in the Bangsamoro provinces where, for example, the number of households with internet access was only 5.1%.

ACCESS MINDANAO
Mr. Sese, one of the country’s three astrophysicists and the former focal person of the Philippine Space Science Education Program, knew of a solution in his line of expertise that could immediately address the digital gap.

“I told Father Joel (E. Tabora, AdDU president), that it’s very easy. Instead of waiting for the telcos to lay the groundwork, the infrastructure, we utilize the technology that’s available, and has been available for almost 60 years, and that’s using satellites.”

And thus ACCESS Mindanao (AdDU Community Connectivity Empowered by Satellite Service for Mindanao) was born.

Launched in October 2020, the program that aims to establish a network of schools, hospitals, businesses, and communities that are linked to the internet through satellites now has 11 sites across Mindanao. The 12th — to be located in the island province of Dinagat — is set for installation in September.

Most of the locations are far-flung such as Tawi-Tawi, the country’s southernmost islands; or secluded like Barangay Demoloc in Malita, Davao Occidental; or are best with peace and security challenges.

Several others, which now form part of the project’s second phase, have been lined up in partnership with the Ateneo de Davao Academy of Life-Long Learning and the Commission on Higher Education for areas in Maguindanao, and local governments that put forward requests.

Ownership of the small-aperture antennas is immediately turned over to the beneficiary community, along with training on their maintenance and operation. Subscriptions to satellite services are partly subsidized by the ACCESS Mindanao program for a year.   

Mr. Sese said it costs an average of P350,000 to set up each site, including equipment, training, and logistics.

The AdDU-led project is supported by the DICT’s Mindanao clusters, Catholic church units, the Davao Medical School Foundation, the Mindanao Development Authority, and the host local governments.

The project’s ultimate goal is to see the launch of a national telecommunications satellite that will cover the whole archipelago, providing access to distance education, telemedicine, financial technology, e-commerce, government services, and disaster management and response.

“We’re not saying that this is something that can replace fiber optic or ground-based infrastructure,” Mr. Sese said. “We see it more as a complementary technology that can provide connectivity to the last-mile locations… and in any system, we always want redundancy… something to back it up (the ground network) as well.”

ON THE GROUND
The country’s major telecommunication providers are currently focused on their respective cable network expansions, but do recognize the potential role of satellite technology in achieving a truly inclusive digital Philippines.

They welcomed Executive Order 127, issued in March this year, that liberalized access to satellite technology for internet services.

“We believe that liberalizing access to satellite services will pave the way for a more robust digital infrastructure for the country and achieve our shared dream of nationwide connectivity,” said Converge ICT Solutions, Inc. Chief Executive Officer Dennis Anthony Uy in an e-mail interview. 

He added that the company is also open to “the possibility of harnessing satellite technology” in “some areas unreachable by fixed broadband,” citing mining locations and island resorts among the potential markets.    

Globe Telecom, Inc.’s Emmanuel Estrada, senior vice-president for Technology Strategy & Service Integration, said the company has been using satellite “as backhaul for its remote rural cell sites as well as (to provide) connectivity for some enterprise customers in remote locations.”

And it welcomes the opening of satellite access to other internet service providers saying, “it is very timely in the light of new satellite technologies and the need to provide inclusive connectivity to still unconnected areas in the country as it continues its journey towards the new digital economy.”

PLDT, Inc., the oldest of the big providers, now has its business strategy centered on “wired or wireless” networks “as these provide better quality (lower latency) and more affordable prices.”

“We used to have investments in three satellite companies because in the past, we used satellites to provide service. Owing, however, to the increasing demand for better-quality of service and at more affordable prices, we have slowly shifted clients using our satellite-based services into wired or wireless,” PLDT said in a statement.

The ACCESS Mindanao communities are currently using their new connectivity mainly for education — distance learning and teacher training programs, and health services. The Miarayon site, an upland community in Bukidnon, is looking into how farmers can tap the service for online market linkages.

Mr. Sese, who played a key role in the drafting and passage of Republic Act 11363 or the Philippine Space Act 2019, stressed that space technology such as satellites is “something that is not far off from our day-to-day lives.”

There are currently at least 15 telecommunications satellites with footprints in the Philippines, all foreign-owned.

He is hopeful that through a public-private partnership, the country will again have its own satellite that will initially require between P6 to P10 billion in investment.

“It makes sense for a country such as the Philippines where you have more than 7,600 islands to have one satellite that can connect everyone, no matter how isolated you are,” he said.

He drives home the point by quoting the National Space Act, “The Philippines will focus on space applications that can preserve and enhance the country’s national security and promote development that is beneficial to all Filipinos.”

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.

Goodbye office, hello hometown: Will remote work open up the countryside?

JCOMP-FREEPIK

By Luz Wendy T. Noble, Reporter

AFTER HIS MOTHER was diagnosed as terminally ill with cancer, it was time for Kenneth Tirado to come home. With the pandemic leaving many industries no choice but to work from home, he flew to Iloilo in March and from there was able to continue what he had been doing in Quezon City.

“This has been the longest time I’ve been home in a while,” Mr. Tirado said in a Zoom interview. He left in 1995 to study at the University of the Philippines Diliman and stayed in the city as he built his career. Since then, he has been coming home only for the holidays or reunions.

When the lockdown was announced in March last year, initially expected to last only a month, Lyanna Jeanelle M. Isip, who was then working in Makati, immediately sought permission to work offsite to avoid the stressful bus commute. What she thought would last for a week at most working out of Lubao, Pampanga turned out to be her life for more than a year.

“I was only able to move out of my place in Mandaluyong five months after because my housemates and I decided not to renew our contract. It was the practical thing to do, considering that we paid rent even for the months that we weren’t able to stay there,” Ms. Isip, a senior business development associate at P&A Grant Thornton, said in a Facebook message. 

Pre-pandemic, the word “epicenter” was associated more with earthquakes, but soon enough it became employed in the context of disease concentrations. Metro Manila used to be the place to stay for the ambitious and career-minded, starting with a move from the countryside to a leading university in the capital and often extending into work life. But the COVID generation is beginning to discover that careers can work even far from the city.

Virus-stricken as it is now, Metro Manila is still where much of the action is, but businesses and employees are increasingly confronting a decision to look at work beyond the physical constraints of the office — wherever that working space may be.

“There’s this segment of the population that still prefers Metro Manila as it is the economic capital. What changed was more of the way we do work now more than the image of Manila,” Asian Institute of Management (AIM) Economist John Paulo R. Rivera said in a Zoom interview.

Mr. Tirado and Ms. Isip are among the many with jobs in Metro Manila that decided to rethink the importance of place, a decision that often results in a move to the provinces as remote work becomes the norm for many companies.

“Doing work has changed. It has to be accompanied by the change in mindset that (careers don’t) have to be concentrated in the NCR (National Capital Region),” Mr. Rivera said.

This raises the prospect of an economic awakening in the countryside as many highly-skilled and well-paid workers escape the city and pursue their careers in more bucolic surroundings — while inadvertently helping achieve the city planner’s long-frustrated dream of decongesting the capital, he said.

“We already have enterprise zones outside of Metro Manila. It’s been the objective to reduce the population density of Metro Manila,” he added.

But moving back to the provinces was not all about being surrounded by lush greenery and fresh air.

Mr. Tirado and Ms. Isip had to make their fair share of adjustments in working far from the city. Both experienced problems with internet connectivity and power disruptions.

“I only had mobile data when I got here and it was really weak. I tried finding DSL, Fiber; there was none,” Mr. Tirado said. It took a month before he finally found a service provider.

The data connectivity challenge highlights the infrastructure gap in the provinces, Eliseo M. Rio, Jr., former acting secretary of the Department of Information and Communication Technology, said.

“Our major telcos are predominantly mobile network operators, whose networks are mostly for mobile subscribers. Unfortunately, they lack the necessary cell sites to provide adequate services to their subscribers,” Mr. Rio said in a Viber message.

He compared the Philippines, which has less than 30,000 cell sites for its population of about 110 million, to Vietnam where there are more than 70,000 cell sites for 98 million people. While companies have been investing in towers over the past two years, Mr. Rio said at least five years will be needed to reach Vietnam’s level of infrastructure development. Until that happens, levels of service here will lag.

“Filipinos mostly get their internet access from these cell sites, but because there are still not enough sites, they get congested, making our internet services slow and expensive,” Mr. Rio said.

Meanwhile, Ms. Isip said her work has been disrupted by rotational brownouts during the dry season. Mr. Tirado complained about power issues as well.

“You’re unlucky if it happens while you are in a meeting. We get brownouts whenever there’s a typhoon too,” he said.

While he has embraced his current work setup, Mr. Tirado said coming back to his hometown meant it was harder to access things that came easy in the city — including going to government offices and riding public transportation. He also had to adjust to early closing times for shops after he got accustomed to patronizing always-open convenience stores in Quezon City.

“The alternatives here are more difficult in terms of access to services because most are concentrated in the city,” he said.

A corresponding shift in the balance of opportunities and challenges has also arisen for businesses.

For the real estate sector, remote working arrangements meant greater demand for homes situated on their own lots, as well as lot-only properties outside the city, according to Joey Roi H. Bondoc, associate director for research at Colliers International Philippines. He said Cavite, Laguna, Batangas, Pampanga, and Tarlac are where they see the highest demand for such properties.

“We were already seeing a rise (in demand) even before the pandemic. The work-from-home schemes and the pandemic have only raised demand for these properties,” he said by phone.

Mr. Bondoc said there were also more inquiries from affluent clients for beachfront properties.

On the other hand, Mr. Rivera said the remote work trend is a bane for the transport sector, as people commuting to work have thinned out significantly. He said even forms of transport used by workers in Metro Manila to travel to their provinces have had to offer reduced frequencies as many decide to stay in the countryside at least for the time being.

IS TELECOMMUTING FOR EVERYONE?
Ms. Isip said her company has given its workers assistance in adjusting to the remote work setup which allowed her to establish a home office.

Living with her family meant she had fewer expenses compared to staying in Manila, so she was able to save money to enroll and pay for graduate school. She embodies how some professionals have opted to take up further studies via online learning, which has become more doable now that commuting from work to night school has been removed from the equation.

Even in education, connectivity issues are a hurdle which needs to be addressed by the government, according to Cristian T. Duque, a Business Development Officer at IT firm Nephila Web Technology, Inc., which provides services to educational institutions.

“We need to make sure schools, universities and other educational institutions have the ability and confidence to adapt their programs. Ideally, new legislation could provide clarity in this matter,” Mr. Duque said.

With people going to online learning, Mr. Duque said students may benefit from IT infrastructure and capacity building at educational institutions.

“This includes improving teacher skills but also providing them access to expert IT support, advice on digital pedagogy, data science training and professional communities of practice,” he said.

But Mr. Rivera also stressed that being able to work away from the office is not for everyone.

A study by the International Monetary Fund (IMF) found that workers in food and accommodation, and wholesale and retail trade have the least “teleworkable” jobs. Meanwhile, an assessment by the International Labor Organization indicated that a service economy like the Philippines lost 13.6% of the working hours that would have been worked had there been no crisis, the highest such losses in Southeast Asia.

“(Because) they have no flexibility to work from home and still do face-to-face work, they have to be declared essential. They have to be provided with at least a hike in their salaries, because they are essential,” AIM’s Mr. Rivera said.

With telecommuting possibly here to stay as the pandemic changes our idea of work, industries will have to adapt and support those that have chosen to work from their home towns or elsewhere outside the cities.

“If this is a pretty long-term issue, then one thing either the local government and National Government can do together is to improve social services, education, health, and child care, among other things. Overall, you need infrastructure to help people become more productive while they are in their provinces,” IMF Representative to the Philippines Yongzheng Yang said in a forum.

Colliers’ Mr. Bondoc believe that many companies will retain offices, although some businesses may adopt a “hub-and-spoke” model which will be smaller but nearer their employees. He said some companies may also opt to occupy flexible or co-working spaces.

“If you look at the profile of companies that still occupy offices — these are traditional, professional-service companies, business process outsourcing,” he said, noting the exit of Philippine Offshore Gaming Operators was also the biggest contributor to Metro Manila’s office vacancies.

Workers who moved to the countryside may be staying permanently or returning to their life in the city depending on the direction of the pandemic. Ms. Isip is leaning towards the latter.

“I have solid plans of going back to the NCR once things get back to normal. The years I spent away from home were the years that made me know myself better, and I’d like to know myself more,” she said.

On the other hand, Mr. Tirado, who works in Educator, a San Juan City-based social enterprise, is keen to stay in Cabatuan, a municipality north of Iloilo City, where he has grown accustomed to more family time even after his mother passed away. He said he will retain his role with Educator but will remain in Iloilo to help his family establish and manage businesses on their properties. 

“My family has been asking me to come home for a long time and I know that I will be able to balance my responsibilities here and in Manila. I think this will be the start of my telecommuting career,” he said, adding he may come to Manila when work requires him to do so.

Mr. Tirado’s case points to a wave of permanent provincial migration. Experts believe this presents an opportunity and a responsibility for both the public and private sectors.

“This is a call for the private sector to continuously diversify their portfolios because of the movement of people. It is high time that we invest in the provinces,” Mr. Rivera said.

Meanwhile, Mr. Rio noted how only 37% of homes in the Philippines have wired connections at home, noting obstacles such as delays in laying down cable “because of so many right-of-way issues, pole agreements, digging permits, etc.”

“The solution is for the government to encourage building more telecommunication infrastructure and facilitating local government unit permits for the infrastructure to be built,” he said.

Mr. Rivera highlighted the government’s role in making things easier for economic activity to flourish in the countryside.

“Make it easier for (companies) to establish businesses in the process. Who knows, even foreign investors when the pandemic is over will not just invest in Manila but also in the provinces because the government was able to facilitate ease of doing business and allow foreign investment to flourish across the country,” Mr. Rivera said.