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[B-SIDE Podcast] The five challenges to Philippine competitiveness

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Switzerland-based International Institute for Management Development (IMD) recently announced that the Philippines improved four spots in its 2022 World Competitiveness Yearbook.

Based on the 2022 version of the report, the country ranked 48th out of 63 economies, climbing up from 52nd place out of 64 economies in 2021.  

IMD looked at the competitiveness of the Philippines via 333 indicators categorized under four factors: economic performance, government efficiency, business efficiency, and infrastructure. The Philippines ranked higher in economic performance (53rd) and in infrastructure (57th), but went down in government efficiency (48th), and business efficiency (39th).   

Despite the improved ranking, IMD World Competitiveness Center Chief Economist Christos Cabolis tells BusinessWorld reporter Revin Mikhael D. Ochave that the Philippines in 2022 faces five key challenges, as provided by the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness.

TAKEAWAYS

The challenges, as explained by Mr. Cabolis in this B-Side episode, are:

Implementing effective post-pandemic economic recovery strategies while strengthening fiscal responsibility. 

“It is the provision of liquidity. Rightfully, the years of the pandemic create the necessity to try to balance that. We try to balance that in two ways. First is to phase out this liquidity support by strengthening the economy and secondly to see how the debt that has been acquired by the country can be sustainable. What exactly is the primary budget balance. How we can bring that in a manageable position, and therefore how we can strengthen the fiscal responsibility.” 

Regaining lost momentum in poverty reduction and inclusive economic development. 

“If one tries to see what are the short-run issues and solutions that the government has to try to tackle is the inflationary pressure. This exacerbates the issue of poverty and by addressing that, one hopes that the poverty issue can be eliminated. Poverty reduction is a much more complicated issue that needs to be addressed not only from the inflation point-of-view.

“Inclusivity of economic development is a must, especially if one tries to see what exactly is going on with the societal framework that we try to measure for each economy we study.”  

Promoting innovative governance and a smooth post-election transition of power. 

“This deals with how the government will be able to make the steps to have a transition in power which will be smooth and to build the credibility that the solutions that it will provide will be good for the country and also good for the residents of the country as a whole. 

“In general, what we see after elections is that new governments enjoy the positive sentiment of the people, the positive sentiment of the business community. Essentially, the challenge for the new government, in my opinion, will be to take that and use it effectively because most of the time, this does not hold for a long period of time. Use this as a springboard in order to accomplish some short-run objectives that they have in mind about the economy, which essentially will be the momentum to move into the more challenging parts of the future.”

Building resilient and future-ready health and education systems. 

“The health system should not only deal with the issue that we have right now, which is the COVID-19 pandemic. But essentially, look forward and try to make sure that it will be ready for the next pandemic. We are not yet out of the pandemic.

“We need more investments in education. What will be good to see is where these investments will have the highest impact. Most frequently, it is a portfolio of things that should happen. You cannot have new infrastructure unless you have people who will use these effectively. Investments should also be made for long-term learning.” 

Investing in sustainable infrastructure and reducing climate change vulnerability. 

“This is a very important task. What will be the future of the economy? What do we need to do? Do we need to continue whatever we do trying to increase certain parts of the economy or do we make a decision where we try to look at the issues that two generations from now will have to face?” 

Recorded remotely June 2022. Produced by Joseph Emmanuel L. Garcia and Sam L. Marcelo.

Read the related story: “PHL competitiveness ranking improves“

 

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Why Russia drives European and British gas prices

NORD STREAM AG

LONDON — The Nord Stream 1 pipeline that transports gas from Russia to Germany will undergo planned maintenance from Monday, cutting gas supplies to Europe and raising concerns about a prolonged halt to supply.

Russia has already reduced production to 40% of the pipeline’s capacity, which has helped to push up European and British gas prices. Benchmark contracts are trading around 350%-400% higher than this time last year.

Below are some of the factors explaining the impact of Russian supplies on Europe’s gas markets, including those that do not rely on Russian gas directly.

HOW MUCH GAS DOES RUSSIA SUPPLY?

Europe has historically relied on Russia for around 40% of its natural gas, most delivered through pipelines including Yamal, which crosses Belarus and Poland to Germany, Nord Stream 1, which runs directly to Germany, and pipelines through Ukraine.

A network of interconnecting pipelines links Europe’s internal gas markets.

Not all countries get gas directly from Russia, but if countries such as Germany, Europe’s top buyer of Russian gas, receive less, they must fill the gap from elsewhere, for instance from Norway, which has a knock-on effect on available gas for other countries.

As a result, changes in Russian supplies can cause as much gas price volatility in Britain as the rest of Europe, even though Britain typically gets less than 4% of its gas from Russia. Lower Russian supply means less could be available from its largest supplier Norway.

WHAT IS HAPPENING NOW?

Russian gas flows to Europe have already fallen in the first half of 2022, with flows through the three main pipeline routes down around 50% compared with the first half of 2021.

Flows through Yamal, which historically transported gas from Russia to Europe have been flowing eastwards, to Poland from Germany since the start of the year.

Flows through Nord Stream and via Ukraine, which were already down last year, began falling in March after Russia’s invasion of Ukraine, an action Moscow called a “special military operation.”

This year, Moscow has cut gas flows to Bulgaria, Finland, Poland, Danish supplier Orsted, Dutch firm Gasterra and Shell for its German contracts, after they all rejected a Kremlin demand to switch to payments in rubles.

Several companies such as Germany’s Uniper and RWE and Italy’s Eni made payments under Russia’s new scheme and continued to receive gas.

But many companies, including Uniper and RWE have since seen their supply curbed after Russia cut the capacity of the Nord Stream 1 pipeline.

While Italian Prime Minister Mario Draghi accused Moscow of using its gas supplies for political reasons, Russia said supply reductions were necessary because of the delayed return of equipment that had been sent for repair.

Germany’s Economy Minister Robert Habeck said Moscow could continue to suspend gas flows through the pipeline beyond the planned maintenance shutdown in an effort to destabilize Europe.

The Nord Stream cut has driven up European and British gas prices, which analysts said could rise further if flows do not return after the maintenance that is scheduled to end on July 21.

WHAT ABOUT THE ALTERNATIVES?

The European Union aims to end reliance on Russian fossil fuels by 2027 and has begun looking for alternatives, such as by increasing imports of global liquefied natural gas (LNG).

European imports of LNG rose about 56% in the first half of 2022 compared with the same period in 2021, Refinitiv data showed, reflecting more capacity in the United States and high prices in Europe attracting more cargoes.

But Europe has limited capacity to receive LNG and supply concerns deepened after production was halted at a major US export plant owned by Freeport LNG following an explosion.

Freeport said late last month it hopes to resume operations in part in early October with a return to full production by year-end but it will first have to satisfy the regulator it is safe to do so. — Susanna Twidale/Reuters

Death of ‘Abenomics’ father may give Japan scope to curb stimulus

JAPANEXPERTERNA.SE/FLICKR

TOKYO — The death of Shinzo Abe, namesake of Japan’s “Abenomics” policy, makes any immediate challenge to his legacy highly unlikely but could eventually allow Prime Minister Fumio Kishida to phase out Abe’s government spending and monetary stimulus.

In a rare act of political violence that shocked the nation, Japan’s longest-serving prime minister was gunned down on Friday while campaigning for Sunday’s parliamentary election, where his party’s coalition expanded their upper house majority.

Mr. Kishida is unlikely to do anything immediately that could antagonize lawmakers loyal to Abe, who led the biggest faction in Mr. Kishida’s Liberal Democratic Party (LDP) after stepping down as premier in 2020, analysts say.

But ultimately his absence and the LDP’s victory in Sunday’s election, helped by an Abe sympathy vote, could give Mr. Kishida political capital to change policy course.

Mr. Kishida’s LDP-led conservative coalition was set to increase its majority in the upper house in the election two days after Abe’s assassination.

People close to Mr. Kishida have said the premier and his aides want to move toward normalizing fiscal and monetary policies and gradually whittle down the Abenomics experiment launched nearly a decade ago.

“There likely won’t be a quick reversal of Abenomics, or an exit from ultra-loose monetary policy,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

“In the long run, however, the Bank of Japan must consider some form of tweak to its monetary policy given problems such as the weak yen,” he said. “That will mean former or incumbent BOJ executives will remain strong candidates as next central bank governor.”

Mr. Kishida, who belongs to a smaller LDP faction, remained under pressure from Abe and his supporters to maintain massive stimulus and choose a reflationist dove as the next Bank of Japan governor in April.

Abe’s absence could change the balance of power within the party, diminishing the influence of advocates of big government spending and ultra-loose central bank policies.

“Abe led a group of reflationist-minded ruling party lawmakers favoring big spending, so his absence will have a huge impact on the party’s power balance,” said Daiju Aoki, chief Japan economist at UBS Sumi Trust Wealth Management.

POWER BALANCE SHIFT 

Backed by huge public support for his campaign to pull Japan out of chronic deflation, Abe deployed in 2013 his “three arrows” — aggressive monetary easing, flexible fiscal spending and a long-term growth strategy.

The BOJ’s massive stimulus, driven by Governor Haruhiko Kuroda, helped reverse a relentless yen rise that hurt Japan’s exporters, boost stock prices, and improve business sentiment. Economists, however, criticized a lack of a credible growth strategy and reforms to help the economy shift sustainably into higher gear.

So far, Mr. Kishida has stuck with Abenomics, deploying big spending packages to cushion the economic blow from the COVID-19 pandemic and recently to soften the impact of soaring energy and raw material costs.

He has also endorsed the BOJ’s ultra-low interest rate policy, even as other central banks raises rates, sending the yen to two-decade lows.

“When we look at Japan’s gross domestic product, corporate profits and job conditions, it’s clear Abenomics has produced great results. What’s important now is to generate wage growth,” Mr. Kishida told a television program on Sunday.

Eventually, Mr. Kishida may seek to dial back some of the radical monetary experiment put in place by Mr. Kuroda, which has strained financial institutions’ profits and crippled pricing in the bond market.

Mr. Kishida’s administration was forced to water down Japan’s budget-balancing commitment after fierce pushback from Abe and his allies. Abe’s death could pave the way for Mr. Kishida to focus more on efforts to rein in Japan’s government debt burden, the biggest in the industrial world.

“Abe was a flag-bearer of those who support fiscal expansion. Those people lost their driving force,” said Mikitaka Masuyama, professor at the National Graduate Institute for Policy Studies. “I would not say Kishida’s position within the party is rock solid, but he is now more likely than before to have better control over the party.”

While the BOJ is unlikely to reverse ultra-loose monetary policy anytime soon, the fading influence of pro-growth lawmakers could also affect Mr. Kishida’s choice of BOJ governor.

The prime minister has the final say in who will succeed Mr. Kuroda, handpicked by Abe to deploy a monetary bazooka to eradicate deflation, when his second five-year term ends.

Masayoshi Amamiya and Hiroshi Nakaso, career central bankers, are considered among strong candidates, with Mr. Amamiya seen as taking a more dovish stance than Mr. Nakaso — who had cautioned about the drawbacks of prolonged monetary easing.

“Abe was said to have favored a reflationist-minded person head the BOJ. The change in the ruling party’s power balance could affect the choice of BOJ governor,” said Mr. Aoki of UBS Sumi. — Leika Kihara/Reuters

Candidates jostle to replace UK PM Johnson in packed race

10 Downing Street, the Official residence of the Prime Minister of the United Kingdom. -- 10 Downing Street/Flickr

LONDON — The contest to replace British Prime Minister Boris Johnson gathered pace on Sunday as five more candidates declared their intention to run, with many pledging lower taxes and a clean start from Mr. Johnson’s scandal-ridden premiership.

Mr. Johnson on Thursday said he would resign as prime minister, after lawmakers and cabinet colleagues rebelled over his handling of a series of scandals, including breaches of lockdown rules in gatherings at his Downing Street office.

He said he would stay on until a new leader was elected.

A member of a Conservative party committee which sets the rules for leadership elections said on Sunday the final result would be announced in September.

Junior trade minister Penny Mordaunt officially declared she was running on Sunday, joining transport Secretary Grant Shapps, finance minister Nadhim Zahawi and former ministers Jeremy Hunt and Sajid Javid, who announced their candidacies for the leadership in time for the Sunday newspapers, taking the total to nine.

“This is a critical inflection point for our country. I believe that a socialist or socialist-led coalition government at the next election would be a disaster for the UK,” Ms. Mordaunt said in a statement. “We must win the next election.”

The Conservative Party’s 1922 Committee of legislators, which sets rules for the party in parliament, will set out the exact timetable after a meeting on Monday.

Bob Blackman, an officer on the 1922 Committee’s executive, said that nominations would close on Tuesday evening, followed by a process to whittle candidates down to a final two by July 21.

Party members would elect a new party leader over the summer, who would then become prime minister.

“We’ll (select the final two) by the 21st of July, to allow the party membership sufficient time to have husting sessions and a postal ballot to then lead to a new leader being in place by the fifth of September,” he told Sky News.

LOWER TAX 

Entering the race, Messrs. Shapps, Zahawi, Hunt and Javid all pledged tax cuts, setting them against current favorite, former finance minister Rishi Sunak, whose budget last year put Britain on course for its biggest tax burden since the 1950s.

“I believe in a lower tax, lower regulation, cut-the-red-tape economy,” Mr. Shapps told Sky News, adding he would hold an emergency budget to bring forward a one pence reduction in the income tax rate which is currently planned in 2024, freeze a planned rise in corporation tax and look to reduce the size of the civil service.

Hunt, a former foreign minister who came second in the leadership contest in 2019 when Johnson came to office, and Javid, who twice resigned from Johnson’s government, both said they would cut corporation tax to 15%.

Mr. Hunt said that no Conservative should either raise taxes or offer unfunded tax cuts. Asked if cutting taxes would lead to inflation, Mr. Hunt said: “I don’t agree with that when it comes to business taxes.”

“If you stimulate consumer demand, when there’s some demand-led inflation, there is that risk, but we must bear down on inflation. That’s why I’d be very careful not to promise (tax) cuts that would stoke inflation,” he said.

The Mail on Sunday said Foreign Secretary Liz Truss would launch her campaign on Monday with a promise to cut taxes and tackle the cost-of-living crisis, while one of her main rivals for the role, Defense Secretary Ben Wallace, has ruled himself out. — Alistair Smout/Reuters 

Smart delivers best overall mobile experience with fastest and widest network – Opensignal  

PLDT mobile services arm Smart Communications, Inc. (Smart) delivers the best mobile network experience to Filipinos as it dominated the latest report by independent analytics firm Opensignal covering the essential aspects of service, including speed, coverage, and experience.

Opensignal’s Mobile Network Experience Report*, which covered the period Jan. 1 to Mar. 31, 2022, showed that Smart topped a total of 11 out of a possible 16 categories, knocking competition out of the park when it comes to serving the connectivity needs of subscribers.

In terms of speed, Opensignal recognized Smart for offering the Best Download Speed Experience; Best 5G Download Speed; and Best 5G Upload Speed.

On the other hand, in terms of coverage, Opensignal cited Smart for Best 4G Coverage Experience; Best 5G Availability; and Best 5G Reach.

Smart also earned the lion’s share of categories related to mobile experience, including Best Video Experience; Best Games Experience; Best Voice App Experience; Best 5G Games Experience; and Best 5G Voice App Experience.

Operator to beat in the Philippines

“For the first time, we have directly compared the mobile network experience and the 5G experience of our Filipino users in the same report and in another first we have also analyzed the consistency of our users’ experience. Smart is once again the operator to beat in the Philippines,” said Sam Fenwick, Opensignal senior analyst and author of the report.

“These citations are a testament to our sustained investments in our network, and our combined efforts to continuously improve our customers’ experience. As the economy reopens, our customers’ shifting needs will entail higher mobile usage. Opensignal’s report validates that we are best positioned to enable hybrid workplaces and online learning, the use of e-commerce and digital payments, and empower businesses to thrive in the post-pandemic next normal,” said Al S. Panlilio, PLDT Inc and Smart Communications President and CEO.
 
Outright winner and leader  

“Speed and coverage have never been more crucial in our increasingly digital world. They make a huge difference in experience – whether you’re making a video call to a loved one, sending an urgent file at work,  playing in competitive esports or executing a multimillion trade or life-changing decision. These citations attest to how Smart empowers subscribers to live more through its superior network,” said Francis E. Flores, Head of Consumer Business Group – Individual at Smart.

According to Opensignal, Smart users had the best experience when streaming video over mobile connections, making Smart the outright winner of the Video Experience award.

The report also showed that Smart users observed the fastest average 5G download speeds — 149.9 Mbps, making Smart the winner of the 5G Download Speed award and giving it a lead of 38.8 Mbps or 35 percent over its nearest competitor.

Opensignal also said that Smart is the 4G Coverage Experience award as Smart users were able to find a 4G signal in the most locations out of all the locations visited by their Filipino users.

From Batanes to Tawi-Tawi

To support the growing mobile data needs of Filipinos, Smart increased to 76,600 its total base stations nationwide as of March 2022, supporting its 3G, 4G/LTE and 5G customers from Batanes to Tawi-Tawi. This includes around 7,300 5G base stations.

The accelerated deployment of LTE, 5G, and fiber across the country is part of PLDT and Smart’s broader initiative to deliver world-class experience to customers nationwide.

*Opensignal Awards – Philippines: Mobile Network Experience Report April 2022, based on independent analysis of mobile measurements recorded during the period January 1 – March 31, 2022 © 2022 Opensignal Limited.

 

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CIBI appoints Yolanda Zubieta as new President & CEO

CIBI Information, Inc., the leading credit bureau in the Philippines, today announced that Yolanda Zubieta has been appointed as President & Chief Executive Officer, succeeding Marlo Cruz, who has been acting President & CEO for the past 15 years.

Zubieta, a Colombian national, officially joined CIBI recently. She brings over 20 years of experience in both the credit bureau and information space.

Prior to joining CIBI, she spent more than two decades leading Experian in various segments and has extensive sales and business development experience in multiple products, channels, and markets. Her last position with Experian was Head of Small and Medium enterprise (SME). She also served as General Manager of Sintecto, an information solutions and risk investigation company based in Bogotá, Colombia.

Yolanda holds a Bachelor’s degree in Business Administration with a post-graduate specialization in Sales Management and International Sales and an EMBA.

“Yolanda is the best person to succeed me,” said Marlo Cruz, CIBI’s outgoing President & CEO. “Yolanda’s background coupled with her extensive sales and business development skills should help CIBI strengthen partnerships, develop strategic alliances and expand our presence. We believe her strong experience will help focus CIBI during their revamp and return to market leadership.”

Yolanda believes that CIBI is making the necessary investments in all areas of the company to solidify their position as a leader in the industry and increase financial inclusion in the Philippines. “I have been overwhelmed by the warmth of the Filipino people, and I am confident that the quality of personnel that I have encountered at CIBI, coupled with the 40 years of experience CIBI has in the industry, and the great business environment in the Philippines will lead us to a great future in financial inclusion in this beautiful country.”

Zubieta is confident that the company is delivering streamlined and cost-effective solutions that make credit and job opportunities more accessible to businesses and individuals in various sectors.

CIBI is focusing all its efforts to deliver on its 2022 vision of being more innovative and data-driven across all of its business units, with Zubieta at the helm.

 

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PPA: Connecting the Philippines as one maritime nation

Time really flies… Fast! This as the Philippine Ports Authority (PPA) celebrates its 48th Founding Anniversary today with the theme: “Kaagapay sa Pag-ahon sa hamon ng Panahon.”

Let us go back in memory lane as we highlight the accomplishments of the agency leading to its status as one of the most successful Government-Owned and -Controlled Corporations as it continues to be a member of the ‘billionaires’ club in terms of dividend remittance.

While there is still a lot of work to be done, the realization of the plans and programs of the previous administration has prepared the PPA for years to come as the world recovers from the effect of the COVID-19 pandemic, and also as the PPA slowly transitions to the new administration.

The Get Go

In 2016, the PPA changed its mindset from top management down. This drastic paradigm shift was undertaken to implement change and improve the way PPA serves the public, the way the Authority carries out its projects, and raise the level of comfort and convenience it provides to the sea-traveling public.

From that time forward, PPA personnel slowly embraced and live the dreams and aspirations of the administration, thus, all other changes were very smoothly enforced.

This shift in outlook resulted in positive deviation across all aspects of operations of the agency and filled the first full year of the new leadership with great possibilities, anticipations, and enthusiasm.

Stepping Up The Pace

To continue the positive momentum, the PPA initiated another change in 2017, this time on the very symbol that represents the Authority, its Logo.

The reason behind the change is to integrate all aspects of port operations instead of focusing only on the core business of the agency.

Positive results were immediately seen with the Manila Ports, composed of the MICT, the South Harbor, and the North Harbor, as it jumped four notches higher in the Top 100 container ports in the world from 36th to 32nd and finished 22nd in the Top 100 container ports in Asia.

Year 2017 was likewise the year, where the Golden Age of Infrastructure was ushered in.

With the even better performance of the agency for the year, PPA was even more encouraged in pursuing its plans and programs the following year.

Full Steam Ahead

If in 2017 the PPA implemented the change to PPA Logo, the year 2018 showed the launching of the new PPA logo, signaling the rebirth of the PPA, armed with renewed enthusiasm and eagerness to dispense unparalleled public service not only to the port users but to the entire nation.

Accomplishments abound the PPA for the year 2018 starting from the APSN Green Port Awards for the Ports of Batangas and Cagayan de Oro.

The Development Academy of the Philippines also recognized the PPA and PMO Misamis Oriental/CDO for fostering a Green Culture for Port Operations and Management under the Government Best Practice Recognition.

The Port Management Offices also got their respective ISO QMS, EMS, and OSH certification.

The awards were testaments to the initiatives of the PPA toward environmental protection. The Authority slowly reaped the benefits of its hard work particularly in complying with the stringent requirements on Environmental Management and Occupational Safety and Health.

During this period, the PPA also emphasized its workforce development, both Organic and Outsourced, by implementing a bridging program to uplift the competencies of existing personnel while giving its outsourced personnel equal opportunity to dangle an entry-level position provided, they possess the required eligibility requirements.

This year, the PPA injected some P3.3 billion for its infrastructure projects in support of the BBB initiative of the National Government.

Cruise Control

Year 2019 was a milestone year for the PPA as it posted all-time highs in terms of shipcalls, passengers, cargo volumes, revenues, total taxes paid, and dividend remittance.

This kind of performance was due to the shift from manual to automated processes, installation of sophisticated, effective, and highly productive port equipment, compliance with the world’s best practices, and most especially the shift in the outlook of employees to public service with reliability, integrity, and accountability.

This enabled the PPA to help the government achieve its goal of giving comfortable lives to every Filipino not only through higher dividend remittances but also through efficient, effective, and fast delivery of port services to our stakeholders and port users.

During this period, the PPA invested P4.6 billion in its port projects, the biggest expense since 2010.

Year 2019 was also the second straight year that the PPA scored big in the annual port user satisfaction survey, particularly on the aspect of integrity. With a satisfaction rating of 4.43 or equivalent to Very Satisfactory on top of its port facilities and services rendered.

Undeniably, 2019 was a banner year for the Authority.

Speed Bump

Year 2020 was an upbeat year for PPA hoping to overshadow its performance from the preceding year until it hit a hump: the COVID-19 pandemic.

Nonetheless, PPA wasted no time and immediately mobilized its personnel and other resources to help the government respond properly to the health emergency initially by remitting in advance its dividend worth about P5 billion, which is 7.5% higher than the regular 50% required by law.

Despite the pandemic, PPA made sure that all ports remained open to handle the processing and delivery of cargoes, particularly essential products, to the rest of the country and to the country’s foreign trading partners while establishing the needed border controls as well as safety, security, and travel protocols to prevent any sustained COVID-19 transmission in any PPA port.

In cooperation with the private sector, led by the Lopez Group of Companies, the PPA established two COVID-19 recovery facilities, the first one in the Manila South Harbor in April 2020 and in Port Capinpin in Bataan in October of the same year. These amenities also served as quarantine facilities for on-signer and off-signer seafarers since the two ports were also declared as dedicated crew change hubs and guaranteed the movement of seafarers manning the international fleet. Eventually, several more ports under the auspices of PPA like Batangas and Davao were declared as additional crew change hubs.

PPA likewise granted Financial Assistance for the Critically Impacted Sector in line with RA No. 11494 or the Bayanihan to Recover as One Act as well as waived and/or reduced Port Fees and charges in consonance with the Hatid-Tulong Program of the Office of the President for Locally Stranded Individuals.

Several more initiatives were undertaken to show the bayanihan spirit between and among the PPA PMOs and help not only its affected personnel but also its nearby communities.

PPA was also able to complete more than 27 port projects despite the pandemic without any transmission or casualty due to COVID-19.

The pandemic, however, affected its volumes and revenues. Nonetheless, PPA saw an opportunity to work together with the government and improve its services given to the public.

The speed bump, it slowed down the Authority to get a 2020 vision of the future. With all the experiences from the pandemic, the PPA was prepared more than ever to face the new normal and sustain the progress with the end goal of giving Filipinos comfortable and convenient lives.

Moving Forward

The rebound from the pandemic. The PPA remained undeterred to move forward to deliver its contribution to the advocacies of the Government.

Recognizing the things that still needed to be done to provide seamless connectivity between and among the islands, the PPA prepared a plan to ensure that PPA ports are ready for the transition and ready for the future when nations are expected to recover from the adverse effects of the global health emergency.

PPA was able to complete 88 port projects, which included the new Port Operations Building at the Port of Dumaguete, the seven seaport development projects in Bohol, the seaport expansion project in Puerto Princesa, Palawan, the eight seaport developments in the twin provinces of the Mindoro island, and the seaport expansion and development projects in Zamboanga City.

PPA also revised its mission-vision statements and calibrated its core values to guide the PPA until 2030.

PPA also upped the ante by remitting at least 60% of its net income to national coffers.

Overall, the PPA exceeded expectations across all aspects of its operations. In fact, the 6-year dividend remittance or from 2016-2021 recorded by PPA overshadowed the combined dividend remittance post EDSA through 2015 and almost tripled the amount registered from 2010 through 2015.

In terms of infrastructure, the PPA completed 248 seaport development projects, which formed part of the total 586 seaport projects completed under the Build-Build-Build program of the Duterte Administration.

In fact, at least seven seaport projects can be inaugurated by the new administration in its first 100 days in office.

This is your PPA, 48 years after!

BSP has room to raise rates — IMF

A woman buys food items at a supermarket in Quezon City, March 4, 2022. — PHILIPPINE STAR/ MICHAEL VARCAS

By Keisha B. Ta-asan

THE BANGKO SENTRAL ng Pilipinas (BSP) has room to raise rates without derailing economic recovery, the International Monetary Fund (IMF) said.

“Considering the strength of GDP (gross domestic product) growth — as observed in the first quarter of 2022 — raising interest rates to contain inflationary pressures and thwart second-round effects on domestic prices is warranted,” IMF Representative to the Philippines Ragnar Gudmundsson said in an e-mail interview.

“With a policy rate at 2.5% and yearly inflation projected to run at about 5%, there is room to raise interest rates without undermining credit growth and the ongoing economic recovery,” he added.

The economy expanded by a faster-than-expected 8.3% in the first quarter of 2022. Economic managers are targeting 6.5-7.5% gross domestic product (GDP) growth this year.

Inflation rose 6.1% year on year in June, exceeding the central bank’s 2-4 target band for a third straight month. The average inflation rate in the first six months is 4.4%, still below the BSP’s full-year forecast of 5%.

The Monetary Board has raised benchmark interest rates by a total of 50 basis points (bps) so far this year via 25-bp hikes at its May 19 and June 23 meetings, which brought the policy rate to 2.5%.

BSP Governor Felipe M. Medalla last Thursday said they are ready to take more aggressive policy action amid rising inflation and currency pressures. The peso breached the P56 level against the US dollar last week.

“In particular, BSP is prepared to raise its policy rate by 50 bps by August. The BSP is ready to take further policy actions, if needed,” Mr. Medalla said.

UNCERTAINTY
The IMF’s Mr. Gudmundsson said monetary policy tightening and supporting economic growth “are compatible, not least in terms of ensuring the sustainability of growth.”

However, the outlook for the global economy is now clouded by the Russia-Ukraine war, a slowdown in China, and the monetary policy tightening in the United States, he said.

“Tighter global financial conditions do pose risks related to higher volatility for the emerging economies. Fortunately, the impact is somewhat mitigated in the Philippines by the flexible exchange rate and relatively low non-resident portfolio investment,” Mr. Gudmundsson said.

He noted the Philippines is “well-positioned to withstand external shocks,” as its economy is one of the fastest-growing in the region and has adequate foreign exchange reserves.

“Looking forward, it will be important to continue to adhere to sound macroeconomic policies, to rebuild buffers through gradual fiscal consolidation, to attract foreign investment, and to promote green and inclusive growth,” Mr. Gudmundsson said.

‘STILL LOW’
Finance Secretary and former BSP Governor Benjamin E. Diokno said that even with the central bank’s planned rate hikes, it will still be lower than the pre-pandemic policy rate of 4%.

“With Governor Medalla’s forward guidance, we will increase it by (50 bps) which will bring it to 3%. That will still be lower than where we came from. I think we should not panic that it is rising. It’s gradual,” Mr. Diokno said during a press briefing after the Development Budget Coordination Committee (DBCC) meeting on Friday.

“All of this is calculated so as to not jeopardize economic growth while at the same time, making sure that over the medium-term, inflation is brought back to within the target band,” BSP Deputy Governor Francisco G. Dakila, Jr. added.

At its June 23 meeting, the BSP raised its inflation forecast for 2022 and 2023 to 5% and 4.2%, respectively, taking into account higher oil and commodity prices.

The DBCC on Friday said the average inflation rate assumption was raised to 4.5-5.5% for 2022, from 3.7-4.7% previously, reflecting the impact of soaring transport, fuel, and food expenses.

It expects inflation to ease to 2.5-4.5 % in 2023, before returning to the 2-4% target range starting 2024 to 2028.

Former BSP Deputy Governor Diwa C. Guinigundo said monetary tightening will not necessarily have a large impact on economic activity.

“The Philippines is poised for some good recovery starting in the first quarter of the year. Even if the BSP should decide to tighten monetary policy to gain more traction in the event of another shock, the economy is robust enough to withstand more aggressive monetary action,” Mr. Guinigundo said in his July 8 column published in BusinessWorld.

But with rising inflation, Mr. Guinigundo said it was right for Mr. Medalla to embrace a more aggressive monetary policy.

“The BSP that we are seeing today has taken those baby steps, communicated its policy intent that is conditional to sustained price increases and exchange rate volatilities, and conveyed that it’s now on a warpath against inflation,” Mr. Guinigundo said.

Marcos economic team’s targets achievable — experts

Jeepneys wait for passengers at the corner of EDSA-Aurora Boulevard in Quezon City, July 1. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

By Diego Gabriel C. Robles

THE NEW growth targets set by President Ferdinand R. Marcos, Jr.’s economic team are achievable if the government will continue to reopen the economy, address its debt burden, and pursue aggressive infrastructure spending.

The Development Budget Coordination Committee (DBCC) on Friday approved the medium-term macroeconomic assumptions and fiscal program for 2022 to 2028. The DBCC set the gross domestic product (GDP) growth target at 6.5-7.5% this year, lower than the 7-8% given by the previous administration. However, it expects the economy to grow by 6.5-8% annually from 2023 to 2028, higher than the previous administration’s assumption of 6-7% from 2023 to 2025.

“Yes, these targets are achievable. In fact, if President Marcos Jr. is able to significantly root out corruption and cronyism, the GDP can grow at 8 to 10% annually during the second half of his term,” Bernardo M. Villegas, economist at the University of Asia and the Pacific, said.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said in an e-mail these adjusted targets can be achieved if the government ensures that there will be no new coronavirus disease 2019 (COVID-19) surges and that economic reopening will continue.

“Protecting economic recovery gains is also a matter of keeping inflation in check and not [letting] monetary policy tweaks get in the way of growing the economy in the short- to medium-term,” Mr. Asuncion said.

The DBCC also raised the average inflation rate assumption to 4.5-5.5 % for 2022, from 3.7-4.7% previously, reflecting the impact of soaring transport, fuel, and food expenses. Inflation is expected to ease to 2.5- 4.5 % in 2023 and return to the 2-4% target range from 2024 to 2028.

Also, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increased foreign and domestic tourism, as well as face-to-face schooling will help support the economy’s continued recovery.

“Other growth drivers include increased infrastructure spending; fiscal/tax reform measures that would pay for the debts incurred during the pandemic… increased local and foreign investments; further boosting the productivity and output of agriculture and manufacturing sectors,” Mr. Ricafort said in a Viber message.

The Marcos administration is targeting an infrastructure spending-to-GDP ratio of 5-6% annually.

Mr. Villegas said the Philippines is expected to attract at least $10 billion of foreign direct investments (FDIs) annually, after the amended Public Service Act opened up airports, seaports, subways, railways and other sectors to full foreign ownership.

“I foresee leading transport, telecom, and energy companies from South Korea, Taiwan, Japan, China, Spain and Germany, among others, investing heavily in our infrastructures, helping us to continue the ‘Build, Build, Build’ program despite the handicap of our debt burden. This is the only way we can continue to invest 6 % of our GDP in infrastructure,” he said.

Infrastructure development must also extend to the agriculture sector, Mr. Villegas said citing farm-to-market roads, irrigation systems, post-harvest facilities, and mechanisms for economies of scale such as cooperatives and nucleus estate farming.

Economists also underscored the need to implement fiscal reform and tax measures to pay for debt incurred during the pandemic.

“To achieve these goals, the government must address the debt burden by increasing tax collections,” Mr. Villegas said.

As of end-May, the government’s outstanding debt stood at P12.5 trillion.

Finance Secretary Benjamin E. Diokno last week said they will support the passage of a bill that would regulate or tax the consumption of single-use plastics, as well as a bill that would tax digital services.

The DBCC is targeting to bring down the debt-to-GDP ratio to 61.8% this year and all the way to 52.5% by 2028.

The country’s debt-to-GDP ratio stood at 63.5% as of the end of the first quarter, which surpasses the 60% threshold considered as manageable by multilateral lenders for developing economies.

UPPER MIDDLE-INCOME STATUS
Meanwhile, economists said the Philippines’ goal to achieve upper middle-income status may be achieved as early as 2025.

“By 2025, we shall be an upper middle-income economy with a per capita income of more than $4,000. With such an income, our 112 million population would be a predominantly middle-income society that will be the main engine of growth as the domestic market will provide enough economies of scale to all type of industrial products and services,” Mr. Villegas said.

Mr. Diokno last week said the Philippines will achieve upper middle-income status by the end of Mr. Marcos’ term in 2028.

The Philippines had originally targeted to graduate to the upper middle-income status by 2022, but this was derailed by the coronavirus pandemic.

Latest World Bank data showed the Philippines remains a lower middle-income country, as its gross national income (GNI) per capita stood at $3,640 in 2021. This is slightly higher than its $3,430 GNI per capita in 2020.

This fell within the lender’s income bracket for lower middle-income economies of $1,086-$4,255 GNI per capita, which was raised from $1,046-$4,095 GNI per capita last year to account for inflation.

The World Bank set the income range for the upper middle-income bracket of GNI per capita at $4,256-13,205, higher than the $4,096-$12,695 threshold last year.

“With the right policy mix and government’s capability to temper inflation, manage the pandemic, and mitigate unemployment rate, continue infrastructure projects, [and] enhance education, among others, all of these would help reduce poverty towards a middle-income status in the foreseeable future,” John Paolo R. Rivera, economist at the Asian Institute of Management, said.

DPWH identifies more priority PPP projects

Workers are seen at a construction site in Manila. — PHILIPPINE STAR/ RUSSELL PALMA

THE DEPARTMENT of Public Works and Highways (DPWH) has identified more priority public-private partnership (PPP) projects for implementation, including expressways in Cebu and Central Luzon.

In an advisory published in a newspaper over the weekend, the DPWH said it added 10 more to its list of priority PPP projects proposed for implementation.

The list includes the P12.6-billion Central Luzon Link Expressway (CLLEX) Phase 11, which will link Cabanatuan City to San Jose City in Nueva Ecija and the P56.9-billion Metro Cebu Expressway.

A PPP project is a service or business venture that is funded, constructed, and operated through a partnership between the government and the private sector. This financing mode is preferred if the government has limited resources to invest in important infrastructure projects.

Public Works Secretary Manuel M. Bonoan has said that the Marcos administration will work to entice more investors in its infrastructure program through PPPs.

To recall, former President Rodrigo R. Duterte had steered clear of PPPs which was preferred by the Aquino administration, due to allegedly disadvantageous provisions such as state subsidies and sovereign guarantees.

The DPWH also identified as a priority the P12.45-billion improvement, operation and maintenance of Kennon Road, a major access road leading to Benguet province.

Other PPP projects identified by the DPWH are the P44.6-billion North Luzon Expressway East Phase II, a 91.10-kilometer (km) expressway that is seen to enhance the transport network in North Luzon; the 15-km Floating Bridge, which will link Mindoro Island to Batangas; and the 226.5-km Pacific-Eastern Seaboard Expressway from Atimonan in Quezon to Dinagalan, Aurora.

Projects in Luzon include the 180-km Pangasinan-Nueva Ecija Expressway from Bolinao, Pangasinan, to San Jose City, Nueva Ecija; and the 190-km Dingalan-Capas-Botolan Expressway, an east-west toll road that is expected to expedite travel from Botolan, Zambales via Capas, Tarlac to Dingalan, Aurora and vice versa.

An expressway that aims to connect the provinces of Iloilo, Capiz, and Aklan was identified as a priority PPP project in the Visayas.

For Mindanao, the DPWH said the Naawan-Opol-Cagayan de Oro City-Villanueva Expressway is a priority project.

Finance Secretary Benjamin E. Diokno, who served as Budget secretary and was central bank governor under the Duterte administration, said at a Palace briefing last week that the PPP mode was not adopted in the previous government because “there were no available (PPP) projects ready for implementation.”

“Now, we are able to develop some… projects, ready to go, so if there are some private sector interests, we will welcome that,” he added.

At a press briefing on Friday, Mr. Diokno said that “there are some airports (that) we can actually offer… for unsolicited or solicited proposals.”

“For example, in Bohol. We constructed the Bohol International Airport. I think it will significantly improve the operations and management of the airport if the private sector will run it. We might consider giving it to the private sector,” he added.

Socioeconomic Planning Secretary Arsenio M. Balisacan has said the Marcos government “will invigorate our public-private partnership thrust to building infrastructure.”

“We… believe this private sector can bring in innovations, technologies in the improvement and management in our public services. There is much that can be gained from getting the private sector involved in our infrastructure development,” he said in a Bloomberg TV interview in June.

The government has set aside P1.199 trillion, or 5.5% of the gross domestic product, for its infrastructure program this year.

The Marcos administration is targeting an infrastructure spending-to-GDP ratio of 5-6% annually. — Arjay L. Balinbin

Filipino cockfighters who went missing show pitfalls of getting hooked

RELATIVES hold photos of some missing cockfighting aficionados (sabungeros) from Manila and Laguna, as they sought help from Malacañang, Jan. 31, 2022. — PHILIPPINE STAR/ MICHAEL VARCAS

By Patricia B. Mirasol, Reporter

DIANNE V. LOYOLA’S husband, whose job was to strap hook-shaped blades to the legs of roosters that spar to the death, went missing in January amid suspicions of game-fixing in the online version of a multibillion-peso industry that has since been banned.

The husband, Ferdinand, was one of about three-dozen cockpit workers and players from the main Philippine island of Luzon believed to have been kidnapped over a period of time, when many Filipinos locked down by a coronavirus pandemic got hooked on gambling including e-sabong or online cockfighting.

“E-sabong flourished in our village during the pandemic,” Ms. Loyola, a 32-year-old housewife from Tanay, Rizal, said by telephone in Filipino. “It’s easy to place a bet but it’s easy to lose as well.”

Cockfighting had become an online craze in the Philippines before the government banned the bloodsport amid the disappearance of the workers and players under suspicious circumstances.

The online game carried on livestreaming platforms allowed Filipinos to place bets on their mobile phones while locked down at home.

An international study by David Hodgins in 2021 found that gambling flourished during the lockdown, especially among younger males.

“As a gaffer (a person who puts blades on roosters’ legs) he came home with P500 per win,” said Ms. Loyola, whose husband used to sell motorcycles at Motorlandia. “In e-sabong, he got as much as P2,000. If the rooster lost, he didn’t get anything from his boss.”

Online cockfighting was bad for business, said Verman T. Reyes, who owns lending company Verman Loans, Inc.

“We have employees who got hooked on it,” he said in a Facebook Messenger chat. “Some of our collectors used company money to bet.”

He said some of these workers ended up borrowing to pay back his company. “Others couldn’t be traced anymore.”

Gambling destroys the family, said Randolf S. David, professor emeritus of sociology at the University of the Philippines.

“Trust is eroded, savings meant for emergencies are lost and worse, debts pile up,” he said in an e-mail, noting how the game has been made easily available by technology. “I am glad the government finally decided to stop it, but a lot have gone underground.”

IN JAIL OR DEAD
“Responsible governments that are aware of gambling’s effects on their citizens think twice before they license it under very strict regulations,” Mr. David said, noting that it could complement tourism and never as an exclusive revenue source.

Gambling addiction has social costs including domestic violence, child neglect and mental illnesses such as depression, Irene B. Dumlao, officer-in-charge and a director at the Social Welfare department, said in an e-mail.

Recovering gambling addicts advise that it is always best not to even start.

“Nothing can beat the first high,” said 41-year-old Reagan, a recovering gambling addict who has been sober for 11 years. “You’re constantly going to chase that high. I got caught in the thrill of the chase. The more I lost, the stronger my motivation to play.”

He said a gambler usually ends up either in jail, a health institution or dead.

Melbert John Santos, one of the 34 who went missing, was merely hired to drive a group of cockfighters to the AA Cobra Cockpit Arena in Sta. Cruz, Laguna early this year, his live-in partner Rowelyn S. Ebit said by telephone. “His father’s van was hired and he was asked to drive it,” she said. “He wasn’t a gambler.”

Gambling addiction is categorized as a substance-related and addictive disorder in the Diagnostic and Statistical Manual of Mental Disorders, the first recognized nonsubstance behavioral addiction.

Under a local law on mental health, people suffering from addiction may avail themselves of psychosocial and neurological services.

Gambling disorders may run in the family, said Beverly Denice T. Ongson, a registered psychologist and chartered business administrator of Dear Future Self PH, a mental health service organization. Trauma and social inequity are risk factors, she said in an e-mail.

“Counseling can assist the person in taking control of their gambling habits, mending broken relationships, coping with gambling urges and managing life or work stress,” she said. “It can also help maintain recovery and avoid triggers.”

“Sometimes, I thought of taking my own life,” said Reagan. “Sad to say, the addict holds the stability of the family. If we’re not okay everything falls apart.”

Ms. Loyola and the families of the missing cockfighters are still looking forward to the time when they will see them again.

“Our wish is for them to be released,” she said. “That’s what’s important, that we see our loved ones again.”

Everyone in the cockfighting arena in Sta. Cruz, is tight-lipped, Ms. Ebit said.

“I know that those who took them have families of their own,” she said. “A lot of children are waiting to be nurtured by their fathers again. I wouldn’t wish this to happen to anyone.”

Top Frontier maps expansion, plans expressways

TOP FRONTIER Investment Holdings, Inc., the largest shareholder of listed conglomerate San Miguel Corp. (SMC), has outlined the group’s plans for the coming years, including the expansion of its expressway projects.

“Our company’s strategic thrust is to continue the expansion of the existing businesses such as food and beverages,” said Top Frontier President and Chief Executive Ramon S. Ang during the company’s virtual annual stockholders meeting held on Friday.

“I think I may take the whole afternoon explaining about the expansion,” he added.

Mr. Ang said the construction of expressways and skyways would give greater access to New Manila International Airport, an ongoing project in Bulakan, Bulacan.

The company plans to expand Metro Manila Skyway Stage 3 (MMSS-3) to go through Sgt. Rivera in Quezon City to Road 10 (R-10) and Bulacan airport. It aims to shorten the travel time from Manila Hotel to the Bulacan airport to 15 minutes by car.

In addition to the expansion in MMSS-3 — an elevated expressway from Buendia, Makati City to the North Luzon Expressway in Balintawak, Quezon City — the company also plans to construct airport access through Tullahan.

Top Frontier plans to have at least eight new access to the Bulacan airport through the construction of more airport access in expressways: North Luzon Expressway (NLEX) through Mabalacat, Pampanga; NLEX through Tabang, Bulacan; and NLEX through Marilao, Bulacan.

The company also plans to build EDSA Buendia exit through MMSS-3 north and south-bound, which it will further on extend to Macapagal Ave., to NAIA Expressway (NAIAx) and to Manila-Cavite Toll Expressway (CAVITEx) plaza. It also disclosed a plan to build EDSA-Tramo-NAIAx, which will eventually be connected to the R-10 link.

In tollways, the company plans to build a 64-kilometer (km) Toll Road 4, which will be from Santo Tomas, Batangas to Lucena, Quezon, a 417-km Toll Road 5, which will be from Lucena, Quezon to Matnog, Sorsogon, and an expansion of Tarlac-Pangasinan-La Union Expressway (TPLEx) from Rosario, La Union first phase to San Juan, La Union and eventually to Laoag, Ilocos Norte.

Aside from expressway expansions, Mr. Ang also outlined expansions in its food and beverages business. The company is building six new breweries of two million hectoliters and is expanding its integrated poultry business of 960 million birds per year capacity to be ready-to-eat. A hectoliter is equivalent to 100 liters.

The company also has plans to expand power generation through the expansion of its clean energy and battery storage facilities, which is aimed at addressing a shortage in the current base load.

“Our company is in full blast — all its existing businesses and much, much more. We are also expanding into our cement manufacturing, we are expanding our bank — our Bank of Commerce is now a universal bank, and so much more,” Mr. Ang said.

“All businesses delivered strong results in the first quarter of 2022. Varying any surge in COVID cases we are confident that all our businesses will benefit from the opening of more sectors of the economy and be able to sustain [the company’s] growth in the full year 2022,” Top Frontier Director Aurora T. Calderon said during the same meeting.

In the first quarter, Top Frontier reported a decrease in attributable net income by 45.01% to P1.99 billion from the P3.62 billion recorded in the same period last year.

Meanwhile, it recorded an increase in revenues to P316.76 billion from the P201.16 billion recorded in the January-March period last year.

Listed holding firm Top Frontier holds a 65.99% stake in SMC. Other than its ownership in SMC and Clariden Holdings, Inc., the company has no other operations as of Dec. 31, 2021.

In the stock market on Friday, shares of Top Frontier remained unchanged at 117.00 apiece. — Justine Irish DP. Tabile

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