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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.

How businesses can bounce back better post-pandemic

RAWPIXEL.COM-FREEPIK

How can businesses bounce back better after the pandemic?

1. REALIZE THE WORLD HAS CHANGED.
For better or for worse, the pandemic has changed the world. Its effects may linger for some time, especially if COVID becomes endemic, just like the flu.

Its biggest effect will probably on human behavior, and that has deep implications for business, especially for high-contact businesses, because consumption depends on human behavior. Businesses will have to figure out how much human behavior has or has not changed due to the pandemic. Will social distancing become the norm? Will employees prefer work-from-home arrangements to have a better work-life balance? In the US, some firms are having a difficult time coaxing young employees to go back to the office physically.

There are many ways that human behavior has been impacted because of the pandemic and businesses will have to figure them out. There will probably be greater health consciousness. That will impact business from the kind of health insurance they give out as an employee benefit to greater demand for cleanliness and ventilation in the workplace, malls, hotels, or just about anywhere people congregate. Digital devices and services that minimize physical contact will probably become more widespread. Financial services, for example, will shift faster from going to the bank to make a deposit to apps that consumers can use to deposit, transfer money, or invest.

Businesses will probably have to rethink business travel because the new world will be one where destinations will require proofs of vaccination, travel health insurance coverage, and perhaps, some enduring health protocols. Business conferences may also need a rethink, and the business of event planners will change.

Consumption goods that can boast of anti-bacterial or anti-viral properties are enjoying a boom now, and that will probably endure. For example, there has been a shift toward coconut oil, especially extra virgin coconut oil, because of the perception that it helps in fighting COVID.

For sure, business opportunities will multiply in the health sector, from vitamin formulation to the provisioning of masks and other infection-control products. Globally, even before the pandemic, because of the ageing of populations in advanced countries, there was already an increased demand for healthcare workers. The pandemic has ignited probably an explosion of demand for them, as countries try to increase their respective healthcare capacities in preparation for another pandemic. There will be increased pressure to produce more nurses, doctors, medical technologists, and physical therapists so schools with these courses will probably enjoy a sustained boom.

2. FIGURE OUT THE NEW WORLD AND YOUR PLACE IN IT.
The world has changed during this time of lockdown, and not just because of the pandemic.

On the economy, for example, the world is experiencing much larger fiscal deficits, record low interest rates, and disruptions in global trade. What does this new environment mean? Economists are divided. There’s a group of economists, such as Harvard Professor Larry Summers, who believe that rising fiscal deficits and very loose money will cause inflation. On the other hand, there are some who think that rising prices, if any, are temporary and are the result of the short-term disruptions in the supply chain. Whether the future will be one of high inflation and higher interest rates or of low inflation and low interest rates will certainly affect how businesses are run.

To some, the high fiscal deficits and inflation are welcome developments because of structural stagnation, the idea that the economies of advanced countries are suffering from depressed demand due to demographic decline and other factors. In much of the developed world — China, Japan, the US and Europe — there’s a worrying trend of demographic decline — people are ageing, and birthrates are low. This would mean fewer younger people who consume and an older workforce.

Also, during this time of lockdown, the effects of climate change have accelerated. Record heat waves and forest fires in the United States and Europe have shown that climate change is real. The Philippines is one of those most vulnerable to climate change, from more severe storms to rising sea levels. Businesses must plan for these types of climate-induced natural disasters, as much as they must plan for the next pandemic.

3. DO INTENSE SELF-EXAMINATION.
After this pandemic, businesses must examine themselves and ask: have we built resilience into our businesses? Are we diversified enough in terms of markets, products, or location so that in case a natural disaster descends upon us, we won’t get wiped out? Are our balance sheets strong enough to cope with periodic setbacks due to natural disasters or are we too leveraged and therefore must still pay fixed interest charges resulting in grave losses?

Are we digital enough? How much of our business is digitized and therefore can cope with physical disruption? Are we going back to the office physically and if so, how? How do we redesign our offices so that they are healthier and safer places to work? Do we have to change our employee health plans?

How do we update our disaster resilience plans? Do we have to build our business in the cloud, rather than on our inhouse servers, which could be disrupted by earthquakes, fires, or other types of natural disaster?

The world indeed will be different post-pandemic. In fact, the virus may be here to stay, and life won’t go back to pre-pandemic days. What businesses should do is to draw rich lessons while the lockdowns and mobility restrictions were in force and evolve to adjust to the changed environment.

Businesses may be poorer because of the pandemic, but they should be richer in wisdom and lessons learned. This is how to bounce back better after the pandemic.

 

Calixto V. Chikiamco is a member of the board of IDEA (Institute of Development and Econometric Analysis).

totivchiki@yahoo.com

The future of the office is up for negotiation

By Bianca Angelica D. Añago

March 15, 2020 will be long remembered as the date people living in the lockdown zone lost their freedom of movement. But when the fallout from the pandemic clears and with the perspective afforded by time and ample reflection, it may also be viewed as a turning point for how people live, play, study, travel, consume — and perhaps most salient of all, work.

Exactly what the office will look like when that comes around is yet to be determined — the outcome of many little individual negotiations between employees and their bosses in every company. Future decisions made regarding where to work, how to communicate with colleagues, what new benefit structures and incentives will look like, what companies will need to spend to make the new set-up happen, are very likely being planned out today, ready for rollout when the time is right.

The analyst consensus is that hybrid work arrangements are likely to stay, with more employees taking advantage of the benefits of remote work, such as the elimination of commuting stress.

Calixto V. Chikiamco, board member of the Institute for Development and Econometric Analysis, said “some who do remote work now will probably choose a hybrid arrangement, where part of the time employees work from home and part of the time they report in person.”

Mr. Chikiamco added that it is difficult to resist the impulse to “go back to pre-pandemic normal life as much as possible.”

He does not expect face masks and physical distancing to continue once the pandemic is controlled, but companies will likely implement changes to ventilation or enclosed spaces like conference rooms, which could be moved to open-air locations.

Mr. Chikiamco said such effort and investment could ultimately pay off — if the changes have a positive effect on productivity, thereby benefiting the economy.

“However, the biggest concern of employees is not their physical health but their financial health — recovering the incomes they lost during the pandemic,” Mr. Chikiamco added.

Rene E. Ofreneo, professor emeritus of the School of Labor and Industrial Relations at the University of the Philippines, said: “office workers whose physical presence is not needed are likely to negotiate to maintain such arrangements.”

Mr. Ofreneo said the challenge to employers, however, is to identify and justify which roles can be performed successfully from home.

The benefits of hybrid work arrangements will be viewed differently by employers and employees, Mr. Ofreneo and Mr. Chikiamco said.

Employers, Mr. Ofreneo said, can save on utilities and rent, while employees will no longer need to spend on transport.

Mr. Chikiamco added that one of the benefits is the possibility of achieving work-life balance.

On the other hand, the loss of in-person work might mean that the company loses out on “social interaction and more productive gatherings,” he added.

He noted that the financial capacity of most companies was weakened by the pandemic, and doubted whether companies can afford major spending items such as upgraded health coverage.

“It will really be up to the government to implement an effective universal health insurance system that will cover the medical costs of citizens, especially in cases of catastrophic illness,” he said.

Mr. Ofreneo expects endless labor issues to arise from hybrid work arrangements, such as the “existence of employer-employee relationships, compensation standards for those who work from home, allowances for internet subscriptions,” among others.

Arguably the most sobering byproduct of the pandemic is how many people lost their jobs or had to endure reduced incomes, and how many may still do so as the pandemic rages on in its second year. The Philippine Statistics Authority estimates that the unemployment rate in 2020 more than doubled to 10.3% from 5.1% a year earlier, the equivalent of about 4.5 million jobless and seeking employment. The previous recent high for unemployment was April 2005, when the rate was 8.3%, equivalent to 2.9 million unemployed.

With about a year and a half of pandemic living under our belts, how has the crisis permanently changed the world of work?

NEW WORK ARRANGEMENTS
Faced with those prospects, there has been some resistance to going full WFH, and not just from bosses, but from workers as well.

A survey conducted by real estate consultancy Jones Lang LaSalle Philippines in March found that only 37% of the 3,300 surveyed believe they are more productive working from home than in the office.

“Over 75%… have missed being in the office physically at least part of the time and prefer to work remotely 1.5 days a week,” it added.

BusinessWorld also interviewed five senior decision-makers, either company executives or heads of human resource departments, and found a mixed bag — only two are open to hybrid work arrangements after the pandemic, for instance. The policies they expect to implement are all over the place. The common thread in their thinking appears to be that much will depend on the employee’s exact role or the nature of the industry.

“We are open to (work-from-home arrangements), especially when it’s possible,” Ronnie D. Traballo, chief executive officer of landscape construction firm Cypress Bomanite, Inc., said.

“As a construction company, though, most of the frontline workers need to be in the field; we get to utilize the WFH arrangement for back-end support,” Mr. Traballo added.

Jesusa A. Tanglao, human resources and administrative manager at ClearWater Resort and Country Club, said she backs a work-from-home (WFH) setup even after the pandemic, which she believes will “make employees more disciplined in terms of time management and work ethic.”

The other senior executives, who were opposed to indefinite WFH arrangements, cited the improved communication that comes with gathering in a physical office.

“I’m more used to working face to face (for a) better understanding of the person you’re talking to and for better communication,” John Ralph B. De Vera, corporate secretary at travel agency Global Connect Travel, Inc.

“It is sometimes difficult to work from home because you often do not understand each other” on tasks or deadlines, Mr. De Vera added.

Ryan S. Chua, president of gaming retailer Gameline, said, “Our team’s pretty small and lean; we work in a fast-paced industry, and most of our teammates find it less productive when they work from home.”

“It’s also easier to collaborate with each other considering that things can be very ad hoc in our industry,” Mr. Chua added.

Ronette M. Espiritu, co-manager and administrative head of the Sinag Kapihan coffee shop, said: “Work from home is not applicable to this type of job” as it would be difficult for café operations to run smoothly when even just one employee is working remotely.

NEW PHYSICAL SETUP
Despite the resistance, some degree of change is in the air, in the form of safety rules and digitalization of at least some processes and transactions.

In February, Reynaldo C. Lugtu, Jr., chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines (FINEX), wrote that Alibaba Cloud found in a survey that 94% of Philippine businesses consider cloud or online storage-based technology solutions to be a critical for mitigating the impacts of the COVID-19 pandemic.

Some 51% of businesses also reported adopting more cloud-based technology solutions.

Mr. De Vera of Global Connect Travel, Inc. ruled out going the full digitization route and maintained that his main priority remains workplace safety. He is preoccupied with the installation of adequate sanitation amenities, even when all workers have been fully vaccinated. He also intends to enforce physical distancing, “just to be safe that there is no virus transmission” in the office.

Mr. De Vera said his company is “used to working in physical space,” as in with meetings, speaking to clients, and conducting other transactions.

Mr. Chua of Gameline said digital adaptations to the pandemic are already in place at his company such as “e-commerce and productivity tools that can help our team work efficiently.”

“We’ve already adopted cloud solutions in order for our team to be more flexible,” he added.

Mr. Chua said his workplace will likely continue the practice of wearing face masks, sanitizing, and regular disinfection even after the pandemic ends.   

“We’ll continue to evolve in order to serve our customers better,” he said.

Ms. Espiritu of Sinag Kapihan said “proper hygiene and healthy living” will be key to workplace safety after the pandemic because “the virus is always there.”

The café plans to continue using temperature scanners, alcohol dispensers, foot baths, and face masks and face shields even after the pandemic.

Ms. Espiritu added that the café’s approach focuses on shifting to mobile wallets like GCash for payments, and to list menus on social media to minimize contact with frequently-handled surfaces.

The two executives most open to WFH, Mr. Traballo of Cypress Bomanite and Ms. Tanglao of ClearWater, are also aggressive in pushing for digitization.

Mr. Traballo said Cypress Bomanite has been using as many digital tools as possible, such as video conferencing applications; chat groups for team communication; sales force and customer relationship management software; and various business productivity tools on mobile devices.

Traballo hopes, however, that it will be possible someday to do away with masks.

Meanwhile, Ms. Tanglao said her company “will continue to implement our current physical work set-up which complies with the required physical distancing.”

“Our employees’ work stations are distant from each other, (and) they are still required to wear face masks, sanitize their respective stations, and observe the required health and safety protocols,” she added.

She said workers will maximize the use of Zoom or other video conferencing applications when possible.

IMPROVED HEALTH BENEFITS
Insurance company Manulife Financial Corp. found in a February survey that almost all of the 519 respondents in the Philippines said they have taken action to better protect themselves against the virus.

Of the 69% said they are now exercising regularly, while 61% said they improved their diet.

The executives who spoke to BusinessWorld also noted a shift in priorities with regard to employee health.

Mr. Traballo of Cypress Bomanite said aside from the regular benefits such as life and accident insurance, the company has also started focusing on employees’ mental health.

Mr. Chua of Gameline, Mr. De Vera of Global Connect Travel, Ms. Tanglao of ClearWater, and Ms. Espiritu of Sinag Kapihan named workplace health as their top priority.

Mr. Chua said he provided regular COVID-19 tests for his employees and facilitated vaccinations with the local government. Mr. De Vera said employees have individual health cards and that the company covers their employees’ hospital bills.

The future of work and workers

Of late, there have been numerous articles appearing in both domestic and international media about the “future of work.”  Understandably, most of them focus on such topics as working from home; closing the future skills gap in the digital sector; achieving more productive, efficient and meaningful interactions through innovative workplace technologies; and similar trends that have been intensified by the COVID-19 pandemic.  Without underestimating the importance of the digital sector to the Philippine economy, let us have a reality check about the nature of the Philippine labor force for many more years, even decades, to come.  As I discussed in a series of articles in this paper, the Philippines is straddling four industrial revolutions, i.e., the mechanical, the electrical, the electronic and the digital ones.  This can be discerned very clearly from data about our labor force.

As of May 2021, Filipinos and Filipinas who are 15 to 65 years old and are looking for work (the labor force) number 48.45 million.  Of these, 44.7 million are employed; 3.73 million are unemployed (7.7%) and 5.49 million are underemployed (12.3% have jobs but are looking for more work because of below-subsistence incomes). Of those employed, 57.8% are in services; 23.8% in agriculture and 18.4% in industry (manufacturing, mining, public utility and construction). In terms of sectors, there are 10.24 million working in wholesale, retail, repair of motors and motorcycles; 9.49 million are in agriculture and forestry; 4.40 million in construction; 3.53 million in manufacturing and 2.91 million in transport and storage (logistics).  Considering the types of occupations, 7.8% are managers; 5.9% are professionals; 3.5% are technicians and associate professionals; 5.9% are clerical workers and superintendents; 20.6% are service and sales workers; 11.5% are skilled agricultural, forestry, and fisheries workers; 6.9% are in crafts and related trades; 7% are plant and machine operators and assemblers; 29.9% are in elementary occupations; and 0.3% are in the armed forces.

Finally, the classes of workers are as follows:  61.8% are wage and salary workers who are classified further as follows:  4.3% are working for private households; 47.4% for private enterprises; 9.7% for government; and 0.4% for their own family businesses.  Those who are self-employed with paid employees are 28.5%; those employed in their own family-operated farm or business constitute 1.7% and unpaid family workers represent 8.0%.

It is obvious that those who can be in the digital sector or have the choice to work at home are a small minority of the Philippine labor force.  Some 76.2% or more than three-fourths of the workers are in occupations such as services and sales; agriculture, forestry and fisheries; crafts and related trades; plant and machine operators and assemblers; elementary occupations; and the armed forces.  These have very limited possibilities to work at home and are not part of Industrial Revolution 4.0 which mainly refers to Artificial Intelligence, Robotization, the Internet of Things, Big Data and related technology.  A rough estimate of those who are in the digital sector can be gleaned from figures arrived at by Frost and Sullivan for the IT & Business Process Association of the Philippines (IBPAP) in a study known as Accelerate PH (Future Ready) Roadmap 2022.  According to this study, the number of people employed in the IT-BPM sector is estimated at 1.15 million full-time equivalents in 2016 or 2.9% of Philippine employment. By 2022, it is expected that the number of full-time equivalents in the IT-BPM sector will grow to 1.8 million or about 4.1% of the total Philippine workforce. The pandemic might have slightly affected this forecast but in my opinion, the figure for 2022 may even be an underestimate. As the developed world follows the US in a strong economic recovery once the pandemic is put under reasonable control, the Philippines may actually become even a more preferred site for BPO-IT services as compared to its number one competitor, India, that has suffered a great deal more from the pandemic.  If we add to these 1.8 million workers in the IT-BPM or BPO-IT sector those working in the industrial, commercial and financial sectors who are in IT-related jobs, we may arrive at 2 million people who are directly involved in Industrial Revolution 4.0, still a small portion of the total Philippine labor force of close to 50 million.

The acceleration in the digitalization of many sectors of the economy will not necessarily lead to the loss of the traditional jobs, especially in the services industry which account for almost 60% of the labor force. Take, for example, the big jump in e-commerce made necessary by the many lockdowns during the pandemic. There might have been a big drop in the demand for waiters in restaurants but there has been an equally big increase in the demand, not only for those working in the kitchens of restaurants to prepare the food in the take-out market but also in the thousands of delivery people working for Foodpanda, Grab, Lalamove and similar delivery services, not to mention the increase in the demand for motorcycles, bicycles and even foot carriages. The same can be said of the drop of demand in sales clerks in the malls that have lost a great deal of their business because of the many lockdowns. The shift to e-commerce has led to a big increase in workers in the transport and logistics sector. The future of work is bright for those workers involved in transport and logistics as long as we can address the issue of how to provide these delivery workers with the same job security and workers’ benefits enjoyed by those in the formal sectors such as manufacturing and financial services.

In the banking sector, will there be a massive disappearance of demand for bank tellers because of the increased shift to digital payments being espoused by the Bangko Sentral ng Pilipinas? Because of the huge number of unbanked people in the Philippines, estimated to be 70% of the population, none other than Governor Benjamin E. Diokno of the BSP, is strongly advocating the move towards digital payments in the whole economy.  In a recent webinar sponsored by Megaworld International, he enthusiastically reported the phenomenal increase in the business of such digital payments platforms as Instapay, Pesonet, GCash and PayMaya from just 1% of total payments in 2017 to 5% in 2018 and 14% in 2019. Latest figures show 125 million transactions amounting to P1.7 trillion pesos in digital payments.  Will this trend lead to massive unemployment in the existing banks?  The answer can be found in a book, Thank You for Being Late by prominent US journalist and author Thomas Friedman. The short answer, which will be fully explained in my column “The Human Side of Economics,” is that there may actually be an increase in the number of bank tellers. The reason is that when you automate a job that has largely been done manually, you make it hugely more productive. When that happens prices go down and demand goes up for the product.  As the 70% unbanked people begin to have access to banking services, the volume of business will surely expand and the result could very well be an increase in the number of bank tellers who will be upskilled and reskilled to perform additional functions. This can be summarized in a dictum suggested by Friedman that Artificial Intelligence can actually lead an increase in the demand for Intelligent Assistants. As long as our society is ready to provide opportunities for our millennials and centennials for lifetime education, there will always be work for those willing never to stop learning.

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a  member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia

In navigating e-commerce, new online sellers need help too

BW FILE PHOTO

By Keren Concepcion G. Valmonte, Reporter

WITH mall shopping now a distant memory for many, how has the process of enticing customers to buy your wares changed in the e-commerce age?

“You have to really be able to know how people are using the different digital channels and being relevant there,” Roshan Ramesh Nandwani, chief strategy officer of advertising agency BBDO Guerrero, told BusinessWorld.

And while literally billions of pesos are riding on understanding consumer behavior when much of their spending has shifted online, perhaps the least understood aspect of this equation is how small businesses that are new to online selling can hit the ground running under pressure from an unprecedented economic crisis.

According to the 2020 e-Conomy SEA (Southeast Asia) report issued by Google, Temasek and Bain & Co., at least 37% of the Philippines’ digital service consumers were new to online services when the pandemic hit. The Philippine total is just above the 36% average for Southeast Asia. The e-Conomy report also found that 95% of the new digital consumers expected to continue using online channels post-pandemic. How might this new reality change the landscape for retail?

“There is a consumer behavior reset that is driving consumption patterns,” NielsenIQ Philippines, Vietnam, and Myanmar Managing Director John Patrick Cua told BusinessWorld.

One of the new consumption patterns that emerged during the pandemic is what NielsenIQ calls the “homebody reset” — a shift in spending favoring purchases made at home, rather than “discretionary out-of-home expenses.”

In response to these shifts, more companies, brands, and retailers have started to look for ways to get their products out on digital shopping platforms

“Over 300,000 sellers onboarded with Lazada Philippines since the start of 2021, and the number is growing steadily,” Lazada Philippines Chief Operating Officer Carlos Otermin Barrera told BusinessWorld, adding that the response of consumers has been “quite encouraging.”

But what sells?

MINDFUL CONSUMPTION
With the pandemic forcing consumers to rethink their priorities, purchases have come with more thought behind them, with an eye towards preserving cash possibly for the long haul.

NielsenIQ said it identified two new consumer categories that emerged during the pandemic. The first is what it calls the “cautious insulated,” who have not been affected financially by the crisis “but are watching what they spend much more.”

The second category is the “newly constrained,” who have experienced financial difficulty and are watching their spending accordingly.

Preliminary results from the June round of the Philippine Statistics Authority’s Labor Force Survey place the number of unemployed at around 3.764 million, up from the 3.730 million logged in May.

The June unemployment rate remained unchanged from May at 7.7%.

Meanwhile, the underemployment rate rose to 14.2% from 12.3%, equivalent to 6.409 million employed persons who are looking for more work or are seeking longer hours.

“Consumers prioritize essentials, stretching their money for old and new needs, while still embracing online and convenience,” Mr. Cua said. “Pre-COVID, we were spending more time out of the house, and eating out became the norm. The pandemic (saw a shift to) convenience, which took the form of home delivery and online shopping.”

Lazada said it saw a “huge uptick” in sales of essential goods during the pandemic. Groceries, household goods, and cleaning supplies saw growth of up to 15 times their pre-pandemic levels, while sales of masks and other personal protective equipment grew 10 times.

“(It’s) a perfectly natural phenomenon as more individuals were looking to sanitize living spaces and acquire the right equipment to protect themselves during the pandemic,” Mr. Otermin Barrera said.

Work-from-home also boosted Lazada’s laptop sales, which grew five times from pre-crisis levels, he said.

“Similarly, the lockdown created the unintended effect where some people had more time to pursue personal hobbies, and this was reflected by an uplift (by six times) in the sales of bakeware and supplies, along with increased interest in gardening supplies and home exercise equipment,” Mr. Otermin Barrera said.

Some opted to go for pre-loved items during the pandemic.

“With COVID and the general weak market outlook, we see our users turning into buying and selling second-hand,” Carousell Philippines General Manager Raffy Montemayor said. 

Buyers are getting the products they want for less, taking advantage of the decluttering trend among sellers, who also raise cash in the process.

“As online selling becomes a bigger revenue channel for brands and sellers, e-commerce platforms need to implement innovative retail strategies,” Martin Yu, director at Shopee Philippines, told BusinessWorld.

REACHING YOUR MARKET
“(With digital) it’s much faster… so quicker turnarounds, quicker response to what the culture is talking about, and much more rawness of content creation. It’s not as tailored as it was before,” BBDO Guerrero’s Ms. Nandwani said.

That trend is in part responsible for a widespread shift to digitalizing sales channels, though much work needs to be done to convince small businesses to jump in.

“There are various reasons why (small businesses) are reluctant to go online,” Martin Yu, director at Shopee Philippines, said. “Some are unfamiliar with the digital landscape, some are intimidated by cost implications, while some are not too familiar with how they can maximize their presence online.”

Small-business owner Sophia Stuart del Rosario started her business when the pandemic hit last year by selling her pre-loved items as well as starting her own makeup brand. 

The 18-year-old entrepreneur was nervous when she started selling her items over at Shopee since she did not have a significant following, so she went to a space she was more familiar with — social media.

“I decided to promote on Tiktok,” the youth-oriented short video platform, she said.

“It’s free and random people can see your videos. After I promoted on Tiktok, I gained followers, likes, and reviews, and sold items,” she said.

Shopee also helps small businesses in reaching a wider customer base through Google Ads with Shopee. It offers marketing support for brands, customizing their content according to what consumers are looking for.

“Shopee would give me analytics,” Ms. del Rosario said. “They also provide data on how many visited your store and how many users have added your items to their cart.”

Shopee also launched Shopee Thursdays in partnership with the Department of Trade and Industry (DTI) to provide “masterclass sessions” to teach current and aspiring entrepreneurs how to maximize e-commerce.

“To give visibility to local sellers in our platform, we launched the #TatakPinoy Virtual Trade Fair and National Food Fair to allow local entrepreneurs and food sellers to grow their brand presence online,” Mr. Yu said.

At Carousell, the platform organizes monthly community webinars.

“(We conduct) direct-to-consumer online activities to get feedback from sellers and share with them insider tips on Carousell trends to help them sell faster,” Mr. Montemayor said.

Carousell prepares a “Daily Picks” reel, curating items for users according to their browsing history, and a “Deals Near You” log, which matches buyers and sellers in the same area. 

“In the app, we also highlight what buyers are looking for to help sellers list more of those items,” Mr. Montemayor said.

Lazada’s flagship LazMall in the Philippines carries over 8,000 local and international brands. It helps sellers by offering a more personalized experience for their shoppers via algorithm-driven artificial intelligence (AI).

“At Lazada, we offer brands and sellers access to our proprietary operating data dashboard, which provides them with real-time, actionable, and cost-effective insights on buyers’ preferences,” Mr. Otermin Barrera said.

He said data insights are useful for sellers in mapping out consumer journeys — from providing product recommendations as well as “optimizing the delivery process.”

For consumers who are careful about what they buy online, the pandemic has taken away the experience of trying out the goods before purchase. Both Lazada and Shopee have branched out to provide programs that let sellers interact with their customers aside from chat. 

Lazada’s LazLive gives potential customers product demonstrations via livestream. Meanwhile, Shopee Live also allows sellers to interact with their customers.

It’s the closest consumers can get for now, at least.

“Our live streaming feature has enabled brands and sellers to better reach and engage Shopee users across the region,” Mr. Yu said. At Shopee’s yearend “12.12” birthday sale in 2020, Shopee Live logged 450 million views.

Lazada, on the other hand, launched LazTalent, in which individuals join Lazada’s content creation platform. The program provides individuals training to familiarize them with the basics of launching a brand and how to use the tools on Lazada.

“The initiative has led to a new job category — professional live streamers, especially at a time where the new digital economy is rapidly developing in local markets,” Mr. Otermin Barrera said. 

“This also enables us to localize our outreach to consumers in our key markets, creating a more personalized shopping experience for all,” he added.

BUILDING COMMUNITIES
Online platforms are trying to build communities as well. Carousell has “Carousell Groups,” in which buyers and sellers can meet those with similar interests.

“We have over 30,000 members in our Korean Fashion group, over 50,000 members in Book Lovers, and over 42,000 in our Mommies & Babies group,” Mr. Montemayor said.

Shopee has a similar interaction channel called Shopee Feed.

“Through Shopee Feed, we allow users to share content on what they are listing, buying, and selling with the larger Shopee community,” Mr. Yu said.

These online groups — whether as an in-app feature or as another group on a social media platform — have been found to be helpful in driving sales.

The caveat is that brands and companies need to remember to be “more authentic” as they are now speaking to communities, BBDO Guerrero’s Ms. Nandwani said.

“When you go into the sanctuary of these people, you need to make sure that you are able to deliver a message that is relevant to them, that is authentic to them because as soon as you don’t, they kick you out. And when they kick you out, it gets worse for you,” she said. 

Being “present online” via community groups is seen as a form of availability, breaking barriers to allow customers and potential consumers to be more connected to your product.

“Digital marketing allows smaller brands the opportunity to connect directly to target consumers based on what they search, what media they consume and who they are connected with,” NielsenIQ’s Mr. Cua said.

“Shopee is helpful in gaining sales since its more convenient for people,” Ms. del Rosario, the make-up seller, said, adding that her customers like availing vouchers and free shipping promos from Shopee.

“I use Instagram for promoting and adding creative pictures that can help to persuade the customers,” she added.

HERE TO STAY?
Consumers will continue to look for convenience moving forward. The benefits of having everything within reach through mobile phones is expected to stick even post-pandemic.

“Consumers will continue to be connected online. Online activity will grow together with increasing internet penetration and as more online services become widely available,” Mr. Cua said. 

Shopee expects investment in logistics to continue as a priority, and perhaps take on a greater importance, after the pandemic.

“Logistics will only grow in importance as consumers continue to go on e-commerce platforms for their daily needs and essentials, and as more brands and businesses continue to employ an omnichannel strategy to growth opportunities,” Mr. Yu said.

Shopee reported 8.5 times growth in shipped items, specifically food products, from its warehouse.

“With a large percentage of our constrained consumers, value for money will be important,” NielsenIQ’s Mr. Cua said.

Carousell is hoping that more people turn to buying second-hand items goods sellers no longer need.

“We think it makes a lot of sense — people save money, make money, and even create possibilities for someone else in the process,” Mr. Montemayor said.

“Companies must constantly stay in touch with the consumer and adjust their communication and product offerings,” Mr. Cua said.

Malls try to get a grip on the shifting retail environment

By Michelle Anne P. Soliman

FOR the time being, shopping in malls for leisure is a thing of the past, thanks to the coronavirus disease 2019 (COVID-19) pandemic. If and when we do enter a mall, it is for quick in-and-out transactions for essentials, not pleasure. This does not mean that wants have taken a back seat. Walks in the mall have been replaced in the meantime by long swipes of the finger or clicks of the mouse down e-commerce platforms, each scroll replacing the once-normal ritual of browsing.

SM Prime Holdings, Inc., the country’s biggest mall operator with over 70 locations, said the adjustments the business has had to make have been more or less fundamental.

“What the lockdowns essentially did was to change the rhythm of people’s everyday lives. Spending more time at home changed when and how often people patronize malls and other retail establishments. Curfews conditioned people to go home earlier. Restrictions taught people to adjust their visits to the mall,” according to Steven T. Tan, President of SM Supermalls and John Nai Peng C. Ong, Chief Finance Officer of SM Prime Holdings, Inc., in a joint e-mail to BusinessWorld. “Today, instead of going out together as a family on weekends, one family member has been assigned to go out and shop for other family members’ needs. Or instead of spending an entire afternoon in the mall, customers go on purposeful visits of one hour or less.”

Robinsons Retail Holdings, Inc. (RRHI), the second-largest multi-format retailer in the Philippines, notes that changes in consumer behavior have also reflected changing priorities. “The lockdown resulted in panic buying for essential goods which benefitted our grocery and drug store businesses. The non-essential formats, however, were greatly affected as the stores were not allowed to operate at the height of the lockdown,” said Gina Roa-Dipaling, Vice President of Corporate Planning and Investor Relations Officer for RRHI. She did note that “Sales performance of the non-essential formats, however, started to pick up in the fourth quarter (2020),” owing perhaps to a relative loosening of restrictions in that period.

The same pattern is evident even in the country’s leading luxury retailer, Stores Specialists, Inc., which distributes some of the world’s most coveted brands in the country, but also has a portfolio of food stores that might be deemed “essential.” Anton T. Huang, SSI Group, Inc. President, said in an email: “Sales of our more premium brands, including our home and food brands such as Shake Shack and SaladStop, have outperformed our broader portfolio.”

“These results point towards the resilience of SSI’s core customer base, and also make clear that customers’ shopping needs are of course driven by their current circumstances. For example, with many customers working from home, we’ve seen an increase in purchases of fashion, accessory and home items that would be considered investment or luxury pieces, while also seeing lower sales for categories such as footwear and cosmetics.”

Messrs. Ong and Tan of SM Prime note that the items that have continued to be strong sellers during the pandemic were comfort food, health and wellness products, athleisure and streetwear, pet care items, home improvement items and decor, and electronic games. “Gaming was one of the most popular ways to stay entertained and relieve stress amidst the pandemic and increased time at home,” they noted.

Roberto S. Claudio, Vice Chairman of the Philippine Retailers Association (PRA), summed up the pandemic shopping mindset: “Consumer priorities definitely focus on essential needs (food, medicines & some health/fitness needs… consumers will remain partly locked down so online purchasing will be the main purchase activity.”

Two of the e-commerce, leaders, Lazada and Shopee, are enjoying a newfound prominence in a mall-obsessed country. Lazada CEO Ray Alimurung said in an email: “As the lockdowns ensued in March of last year, we saw more and more Filipinos pivot online to source their essentials. As a digital platform, we utilized our capabilities to prioritize providing the Filipino community easy and convenient access to their everyday essentials. As a result, we saw a 15x increase in sales of essential goods as people went online to source their food staples, cleaning supplies and household needs.”

Martin Yu, Director of Shopee Philippines, in an e-mail to BusinessWorld, noted a similar shift: “At the onset of the pandemic, we saw a surge in demand for daily essentials.” The company had some adjusting to do to accommodate demand: “We introduced the 5.5 Shopee Mart Sale, to provide our shoppers with convenient access to personal and household items as well as great cost savings.”

Other sales by Shopee (usually on selected day-month promotional periods) also experienced such an uptick: “During 9.9., over 12 million items were sold in the first hour across the region and 700,000 items sold in a single minute at the peak. Another milestone for Shopee is during 11.11, we saw 200 million items sold in 24 hours regionally,” Mr. Yu said.

He added: “People went from casually shopping for leisure items to buying their groceries, clothing, and home products from online platforms like Shopee. During the last month of 2020, Shopee broke records on 12.12, selling 12 million items in the first 24 minutes.”

Both parties also discern a shift to an increasingly cashless future. Mr. Alimurung says, “We saw two-times increase in cashless payments made on the platform, as well as five times increase in digital bills payments. We ramped up our partnerships with financial institutions to enable Filipino consumers to have access to more safe and secure payment options fit for their needs and lifestyles.” These included the launch of credit and debit cards branded Lazada x UnionBank (which enabled consumers to earn rewards with every purchase in the form of Lazada Wallet credits), an expansion of a partnership with online banking service GCash, and deals and discounts with customers under partner banks.

“Shopee saw a four-times uplift in the total number of orders completed by mobile wallets across the region,” said Mr. Yu. “Shopee also saw an 18-times increase in orders paid for via ShopeePay, Shopee’s mobile e-wallet, during the 12.12 Big Christmas Sale last year.”

The rise of online shopping for both necessities and luxuries prompted leading retailers to adopt their own e-commerce platforms. While this is of course driven by consumer demand, the closure of some physical stores also necessitated the change.

“Given the various forms of lockdown implemented over the last 16 months to control the COVID pandemic, with our brick-and-mortar store network having to close down during ECQ (Enhanced Community Quarantine) periods, and given lower foot traffic in malls, the Group’s total revenue in 2020 was below 2019 levels,” said Mr. Huang. In response to this, the SSI Group “accelerated the ecommerce expansion of the SSI Group, and we saw e-commerce sales increase by 350% in 2020.”

In 2020, SSI opened marksandspencer.ph and trunc.ph, a multi-brand platform which offers items from a diverse collection of brands, from Gap to Gucci. Mr. Huang also noted the launch of an at-home concierge service (The Specialist) which allowed customers to shop SSI brands with the help of a personal shopper.

Messrs. Ong and Tan of SM Prime report the same uptick, saying: “The pandemic accelerated the take-up of online platforms. Our tenants have seen the share of their sales from online platforms increase from 5-10% of their business pre-pandemic to 15-20% of their business today. In some categories, this share is as much as 30-35%.  Our retail affiliates’ own online platforms have seen rapid growth similar to that of our tenants. Our eCommerce platform SM Malls Online has grown quickly in its first six months of operations, with four straight months of double-digit sales growth in 2021 and on track to hit a nine-digit 2021 sales target.”

RRHI’s adjustments included “aggressively pursuing e-commerce to serve more online shoppers, (and strengthening) essentials formats at the height of the lockdowns, where discretionary stores were temporarily closed and faced challenges to their operations,” according to Ms. Roa-Dipaling, noting the launch of the Robinson’s e-commerce platform, GoRobinsons.

“Those that could not jump to online transactions simply closed shop during ECQ & MECQ (Modified ECQ) quarantine,” said Mr. Claudio, noting that shopping traffic levels in physical spaces dropped 50-70%, when compared to pre-pandemic levels. These traffic levels, he said, are aggregate retail industry average figures and not specific to stores or malls.

All parties reported the pivots they have had to make in order to adjust to the new shopping landscape. “We have also expanded the number of third-party logistics providers that we work with in order to ensure faster delivery times, wider delivery coverage, and to enable the delivery of larger items, including larger home items such as couches and tables. We have also focused on ensuring that our e-commerce sites provide a seamless shopping experience, from the merchandise selection we have made available online, to the ease with which customers can return or exchange products,” said Mr. Huang. “We are the first retailer in the country to make luxury products available online and we have put a lot of work into ensuring that our logistics chain can safely and reliably deliver higher-value items to our customers.”

Ms. Roa-Dipaling added, “The business is evolving its merchandise mix to address shifting market preferences, such as introducing more diverse essential options in convenience stores and minimarts that are close to neighborhoods and increasing gourmet selections in premium stores. We are also expanding our order and delivery services by onboarding additional formats in GoRobinsons, our group-wide e-commerce platform. We are also strengthening our customer loyalty programs and partnerships.” She noted: “We are currently adjusting to the new dynamic of online retail and addressing inherent challenges in logistics, merchandise availability, and customer satisfaction. We are strategically strengthening our IT and analytics foundations to inform operational decisions across our formats.”

Messrs. Ong and Tan noted their own difficulties in their efforts to pivot operations. “The biggest logistical challenge for a mall is that a mall has hundreds of different stores to consolidate, unlike most e-commerce retailers that are focused on one store or one warehouse. This difference means that the back-end operations and logistics — from payments to inventory management to packing orders to delivery — are much more complex than your typical eCommerce retailer. Because of this difference, we had to create a unique operating model for our eCommerce platform, SM Malls Online.”

Even the success of Lazada and Shopee necessitated their own adjustments, mainly to serve greater demand. Mr. Yu said, “In 2020, Shopee Xpress, Shopee’s express delivery service, expanded its geographical coverage to reach even more users, including those in rural areas. Shopee also saw more brands tapping its logistics infrastructure with a three-times increase in brand items shipped from its warehouses in 2020.”

Mr. Alimurung said, “We ramped up our seller onboarding and saw three times more sellers onboarded daily (vs. the pre-COVID period). In addition to getting more local MSMEs online, we also ramped up our partnerships with local and international brands, onboarding over 2,000 (brands) on LazMall since the start of the pandemic.”

For all the adjustments, Mr. Claudio’s outlook was somewhat pessimistic: “Given the renewed lockdown in the second quarter, we are not confident of any growth this year.” The organization’s best estimates posit flat revenue compared with 2020.

“While a majority of instore retailers have mobilized to jump onto the online bandwagon, it is not enough to compensate for our lost revenue in our store operations. We see 2022 as the year that the retail industry might again experience growth. By that time, we will be in the new normal… (and ready for a) new retail omnichannel experience. By then, we will be able serve the customer in whatever way (they) prefer. If they want to be served at home, we will expedite delivery. If they want to go to the store, we will give them the best experience.”

Mr. Huang concurs. “E-commerce will continue to be an essential part of retail moving forward. Even more importantly, omni-channel retailing, or the ability to provide a unified digital and brick and mortar customer experience, will be one of the primary drivers of retail moving forward.” He notes, however, that “omni-channel retailing is only possible with both a strong digital and real-world presence. As such, we will continue to focus on maintaining an efficient, compelling and accessible brick and mortar store network; with our brick-and-mortar shops underpinning the Group’s ability to reach its customers, but also providing the basis for an omni-channel, or integrated approach to specialty retailing.”

Most of our respondents remain confident that the mall — and all its accompanying shopping rituals — will still hold a special place in the Filipino psyche when the pandemic ends. “We continue to be bullish about the future of malls. Malls in the Philippines function as a community venue for leisure and socialization, which is a fundamental human need that will endure even in a post-pandemic world. Given this, malls will continue to be a key venue for Filipinos because of their proximity to communities across the country,” said Messrs. Ong and Tan. — with Joseph L. Garcia

Schools team up with couriers, banks to help students deal with pandemic

By Angelica Y. Yang, Reporter

SCHOOLS in the Philippines have entered tie-ups with logistics service providers and banks to help students better deal with the impact of the global health emergency.

Last year, Polytechnic University of the Philippines (PUP) resorted to correspondence learning, allowing students from far-flung areas to receive hard copies or flash drives of course material from the school.

“PUP is home to students belonging to families that are economically-challenged. So many of our students do not have regular access to the internet…They do not have internet connections in their respective homes, so these students were given the opportunity to continue their studies through correspondence mode,” the university’s Executive Vice President Alberto C. Guillo said.

The school entered into an agreement with logistics firm Air21, which provided its services for free. The delivery of learning materials took up to a week for students residing in remote areas.

“We…delivered (the instructional materials) to them at their doorstep…so they can continue with their studies. We (found an) arrangement (that was) least-cost, if not zero-cost, on the part of our students,” Mr. Guillo said.

After the government imposed a hard lockdown towards the end of the first quarter last year, schools had to improvise in shifting to online learning platforms, and connectivity was foremost in the minds of many academics.

Spotty internet remained an issue in the country and elsewhere in Southeast Asia, according to University of the Philippines (UP) Assistant Vice President for Academic Affairs Alyssa M. Peleo Alampay.

The state university also decided to mail flash drives and hard copy of course materials to students with connectivity problems.

“We tried to benchmark with other higher education institutions in the ASEAN, (such as those in) Malaysia and Indonesia, and we saw that everybody was really going through more or less the same problems of connectivity and access,” she said.

“(We realized that) getting the actual, physical paper copy to the students is something we can do, so there was a very well-organized structure of sending USBs or hard copies of the material for all of the courses before the semester started,” she added.

Ms. Alampay said UP also helped out with the distribution of devices to school personnel and qualified students during the pandemic.

The global health emergency brought about the need for flexible payment schemes, which private school iACADEMY recognized when it decided to team up with financial institutions that offered such options to students.

“Due to financial challenges brought by the pandemic, a significant number of students put their studies on pause. To address this constraint, we partnered with financial institutions such as Metrobank and LANDBANK to ease payments and extend flexible options to our students,” iACADEMY said through its corporate communications department.

Metrobank offered students zero-interest installment plans while LANDBANK supported eligible applicants via its I-Study Lending Program, which charges interest rates of 5% a year.

iACADEMY added that it also partnered with companies that offered work-from-home arrangements to students taking up animation, design, and game development.

“This initiative helped our students not only to earn but also apply the skills they acquired in their courses. Through this, students were also given first-hand experience before they even graduate (by) working for these companies,” it said.

HURDLES OF ONLINE LEARNING
Former Education Secretary Armin A. Luistro, who served under the late President Benigno S.C. Aquino III, said that even those who were “most prepared” to fully shift to online learning had to undergo major adjustments.

“Teachers were not given enough time to shift. The pandemic happened at the tail end of the school year, so some schools were in their last quarter or just preparing for their final exams. The other difficulty is, in the beginning of the pandemic and even up to now, (it is) almost impossible to make any real projections or plans… when you cannot foresee when exactly the lockdowns will end,” he said.

Online learning has opened up avenues to access more information and gave teachers more opportunities to better engage students, but this was deemed only effective for those who could afford internet access and devices, according to Mr. Luistro.

During the pandemic, not all students and teachers had such access, and Alliance of Concerned Teachers (ACT) Secretary-General Raymond D. Basilio believes that this widened the gap between rich and poor.

“Our teachers were not provided the needed laptop computers and provision for internet load allowance. For our learners, not all were provided with devices and a means to save. It was left to (the family’s resources),” he said, referring to the experiences of ACT members.

As of May, the group had up to 220,000 members.

Mr. Basilio said online learning entailed additional expenses, which families struggling from the impact of the pandemic had to contend with.

“What will you prioritize? Buying rice or buying (mobile data) load for your child?” Mr. Basilio said.

Before the onset of the coronavirus disease 2019 (COVID-19), the world was already experiencing a learning crisis, but then 258 million children and youth of grade school and high school age were estimated to have dropped out, according to a World Bank Group report released in May 2020.

This time, the world is experiencing the “twin shocks” of school closures and a severe economic downturn which could have imposed long-term costs on education and development, against which governments must quickly implement countermeasures, according to the study findings.

Online learning may have hurdles, but it holds “a lot of promise” in democratizing and customizing education, according to Philippine Business for Education Executive Director Love B. Basillote.

“Not all learners are made the same way, and I think if done right and done well with adequate support, it can actually have the potential to address the learning crisis in the Philippines, making sure that our students are able to learn the competencies they need to lead productive lives,” she said.

She said the private sector can play a key role by working with the education authorities while holding them accountable for the system’s performance. She suggested that industry also look into providing discounts for students, participating in the delivery of devices for e-learning, and implementing office policies that provide “leeway” or support to parents.

INVESTMENT
According to Department of Education (DepEd) data released in May, the General Appropriations Act of 2021 earmarked P594.11 billion for the education sector, up 7.44% from a year earlier. This year’s allocation represents around 13% of the national budget.

Mr. Luistro, the former Education Secretary, said the government must channel more funds into education, citing recommendations made by the United Nations Educational, Scientific and Cultural Organization (UNESCO), which considers healthy education-spending levels to be about 15% to 20% of public expenditure.

“If you look at the Philippine economy, we are also lagging, so if the economy is not opening up…that means even if you do 20% of the national budget, that may be even less than the (education) budget of previous years, so that’s a cause for worry,” Mr. Luistro said. 

“It’s about the whole economy and you’re talking of parents who may have lost their jobs…Even if schools have all the gadgets (but) if students are hungry, learning will not happen so these are all interconnected, and the economy is critical in terms of playing catch-up with the learning crisis that has been there even before the pandemic,” he added.

The two public universities that spoke to BusinessWorld for this article are spending more on learning management systems (LMS) to meet the requirements of online learning, compared to their expenses pre-pandemic.

UP’s Ms. Alampay noted that the school has invested more in Zoom video conferencing platform subscriptions and library plans. The expenses were offset, however, by the absence of the usual daily operating costs like power and water consumption.

“(The) funds were actually put into these subscriptions which we hope we can sustain even after the pandemic, even after all this remote learning is done because, really, we want to go more into that hybrid type of delivery of our courses,” she said.

PUP’s Mr. Guillo said the school spent more on LMS subscriptions, as well as health-related items for its community members.

Data obtained by BusinessWorld indicate that PUP spent P21.26 million on office supplies, internet expenses, and video conferencing application subscriptions; and P2.90 million on items related to health and safety such as swab tests, personal protective equipment and disinfection supplies from 2020 to 2021.

Mr. Guillo said PUP will be investing more time in printing all of its instructional material for those in correspondence learning, adding that students in the program will continue to receive course packs through hard copy or flash drives in the coming semesters.

“We have received feedback that students who receive these instructional materials post on social media (to) say they are happy… We’re glad to know about it, even if it’s just a simple post,” he said.

Mass transport one of the keys to economic recovery

PHILSTAR

By Revin Mikhael D. Ochave, Reporter

OF THE many that need to happen for the economy to recover, perhaps the most overlooked is the state of the mass transport industry.

Robert Y. Siy, a development economist and city and regional planner, believes a stable public transportation system is crucial for keeping essential services running, eventually facilitating the reopening of the economy.

On the other hand, inadequate mass transport is a risk for crowding — which in turn is a risk for further outbreaks.

“If public transport is insufficient, people will be forced into long queues or crowd into limited public transport at stops, stations and terminals. Crowding increases the risk of virus transmission,” Mr. Siy said in an e-mail interview.

Mr. Siy said supply needs to increase, or at least to be kept from collapsing in the short term.

Failing this, commuters need options, like safe walking and cycling lanes. Such mobility options in turn decongest the transport system.

Bicycle and walking lanes “are also health-inducing and environment-friendly modes of travel, so it makes sense for the government to invest much more in public transport infrastructure and to allocate more road space to these modes,” Mr. Siy said.

“Apart from funding these improvements in our streets and bridges, a low-cost and high impact measure is to make selected streets in neighborhoods closed to through traffic, so these areas can be converted into parks and community public space while being safe for walking and cycling,” he added.

In July, the Department of Transportation (DoTr) opened a 313-kilometer Metro Manila bike lane network traversing Pasig, Marikina, Quezon City, Caloocan, Manila, San Juan, Mandaluyong, Makati, Pasay, Las Piñas, Parañaque, and Taguig.

The DoTr said the bike lanes are 1.5 to 3 meters wide depending on the availability of road space. The Metro Manila bike lane network is part of a broader national effort that also includes 497 kilometers in Metro Cebu and Metro Davao.

It added that the network can accommodate a total of 1,250 cyclists per hour for every meter of road space.

Mr. Siy urged the government to authorize all open-air jeepneys to operate, citing their ventilation advantage during the pandemic.

“Airconditioned buses, jeepneys and UV Express vans should be instructed to operate at all times with some windows open so there is constant air exchange,” Mr. Siy said.

He said there is also a need to review the rules on plastic barriers in vehicles and on motorcycle taxis.

“The plastic barriers within the vehicles may actually hinder the air exchange; on motorcycle taxis, there is questionable value in having the plastic barriers between the driver and passenger; it has also been reported as making the motorcycle less stable during travel,” Mr. Siy said.

John Paul C. Dungo, an architect, uses public transport to get from his home in Mandaluyong to work in Pasay.

Mr. Dungo typically rides tricycles, buses, and trains to get to work. Despite the pandemic, he said the number of commuters he encounters during his daily commute remains the same, which makes him wary.

“I usually catch three rides to get to the office. However, it is stressful especially during rush hour since there are a lot of people outside,” Mr. Dungo said in a mobile phone interview.

According to Mr. Dungo, vehicles he uses observe health protocols such as social distancing, with the exception of buses.

He said bus operators typically do not observe face shield rules and carry more passengers than the prescribed capacity.

“There are times when I ride a bus that people are standing in the middle with their face shields not worn properly. I am scared to go home during rush hour due to the volume of commuters which is why I usually let rush hour pass even if I get home later than usual, just to be safe,” Mr. Dungo said.

He said the operators are not entirely to blame, as often “it is the passengers who do not follow.”

Mr. Dungo said his company has offered a dormitory in Pasay to accommodate employees living some distance from the office. However, he opted not to live in the dormitory in an effort to limit his expenses.

“Employees in the dormitory do not pay rent. They just pay for utilities such as water and electricity and their daily needs. But I did not avail of the dormitory benefit because I want to save some money,” Mr. Dungo said.

Mr. Dungo said he has as yet remained safe and uninfected by coronavirus disease 2019 (COVID-19).

“There have also been no reported COVID-19 cases in our office since we follow protocols,” Mr. Dungo said.

Rene S. Santiago, a transport expert, said in an email interview that the government needs a more scientific approach to making transportation more resilient against the pandemic.

“In the early days, the government imposed so many requirements without science. The poster child is the plastic barrier for motorcycle riders, which are useless. More science is needed. It may involve systematic trial-and-error, as differentiated from error after error,” Mr. Santiago said.

Mr. Santiago said that economic recovery will falter if transportation does not improve.

He said more investment is needed in city sidewalks, adding that bike lanes should be more than “decorative.” He said more immediate alternatives are needed beyond long-gestation railway projects.

“Very little money is required to have mainstream mobility as a service,” Mr. Santiago said.

Land Transportation Franchising and Regulatory Board (LTFRB) Chairman Martin B. Delgra III said in a television interview in August that public transport in Metro Manila and across the country has returned to about 85% of pre-pandemic levels.

He said health protocol violations are still being reported in public transport like the absence of plastic barriers, overloading, and failure to wear face masks and shields.

During his sixth and final State of the Nation Address (SONA) in July, President Rodrigo R. Duterte touted improvements in the transport system, such as the improved Metro Rail Transit Line 3 (MRT-3), where train breakdowns have tailed off and capacity and speed have increased; the opening of the Light Rail Transit Line 2 (LRT-2) East Extension Project; and the opening of the Stage 3 of the Metro Manila Skyway.

Mr. Siy said work-from-home arrangements should continue, adding that companies that offer shuttle service to employees must do so with proper ventilation, which means open windows.

“The pandemic has demonstrated that many business and office functions in both the public and private sectors can be handled through work-from-home. As much as possible, to reduce the potential for virus transmission within an enclosed office space, such jobs should be permitted to continue done home,” Mr. Siy said.  

Ira Cruz, director of transport advocacy group AltMobility PH, said transportation should not be viewed as a medium for COVID-19 transmission, but instead as a means to move essential personnel, such as health workers and other frontliners.

Mr. Cruz said by mobile phone that the pandemic has “simply amplified” transportation issues that had not been addressed by the government.

“Mobility is a basic component in order to build livable and resilient cities — and a resilient city is conducive for economic growth. Mobility across cities plays an important role in supporting economic activity, which is why the efficient movement of people and goods should be guaranteed,” Mr. Cruz said.

“Suspending or limiting public transportation or condoning harsh conditions for pedestrians and bikers impairs the critical services that they provide — healthcare, food, and supplies,” he added.

Mr. Cruz called for the passage of the Magna Carta of Commuters to promote active forms of transportation.

According to Mr. Cruz, the bill aims to update government policy and standards to improve overall mobility, starting from better sidewalk design and implementation of bike infrastructure.

“The bill covers better pedestrian infrastructure such as sufficient and unobstructed sidewalks, favoring at-grade crossings, the availability of end-of-trip facilities such as bike parking, lockers, showers, and protected bike lanes,” Mr. Cruz said.

“The proposed bill also includes the prioritization of public transportation from road space to traffic signals, provision of decent and sufficient transit stops, availability of transit information, updated service standards, and a dedicated office for commuter welfare, among others,” he added.

George I. Royeca, co-founder of motorcycle ride-hailing firm Angkas and the organization’s chief transport advocate, said the private sector should continually invest in making public transportation more efficient via the use of technology.

Mr. Royeca said in a phone interview that such investments can include mobile applications for the scheduling of mass transit.

“If we had an app to find out exactly what the schedule is, it will make it more efficient for us to plan our day. You see this in other countries, with their trains and buses. So even something as simple as a scheduling app I think will make a huge difference,” Mr. Royeca said.

“We need to treat COVID as endemic. It is something that is going to be living with us just like traffic and we need to constantly find ways to make sure that we are protected from it. There are two things we need to think about. One is safety and protection from accidents on the road for our commuters, and number two is safety from any type of transmissible disease,” he added.

Meanwhile, Mr. Santiago, the transportation expert, said companies should draft hybrid working protocols to be able to operate even during lockdown. He said the pandemic made things especially difficult for the few commuters that needed to travel, thus increasing the risk of transmission.

“We have to learn to dance with COVID-19 and future epidemics. Business resiliency demands preparing flexible, smaller teams that can spring into action and sustain operations even if in degraded mode,” Mr. Santiago said.

Mr. Royeca of Angkas said work-from-home arrangements are going to be part of the landscape moving forward, but said face-to-face interaction is still necessary in many industries.

“You will need public transportation and you will need this kind of mobility because as we saw just before this lockdown, and as we vaccinate more and more people, we’ve had a sneak peek of the traffic we can expect all over again,” Mr. Royeca said.

The ‘workcation’ provides a lifeline to tourist destinations

PHILSTAR

By Jenina P. Ibañez, Reporter

THERE’S not much for tourism businesses to do but wait. After global travel stopped in March 2020, many shuttered completely — except for hotels offering quarantine rooms and serving the occasional demand for “workcations.”

Although recovery is not quite on the horizon yet, tourism businesses and analysts agree that the industry, when it restarts, will change. The industry must offer safer travel, which not only means an emphasis on sanitary practices, but also a move to outdoor, nature-based and disaster-resilient travel.

“We have still so many other places that we can develop and offer as new destinations where we can diffuse the overcrowding in the established destinations,” Tourism Congress of the Philippines President Jose C. Clemente III said.

He said in a phone interview that this would mean more locations, along with more activities that would allow travelers to explore nature, food, or historical sites.

Tourism Secretary Bernadette Romulo-Puyat in a mobile message said that travelers now prefer outdoor activities like going to the beach, hiking and biking. Eco-tourism sites, national parks, and wildlife sanctuaries stand to benefit.

Such a shift could require investment in infrastructure in sites outside the established destinations. And it could mean moving away from mass tourism, or large concentrations of travelers in limited areas. Some are still holding out hope that tourism will go back to how it used to be.

SURVIVAL
The tourism industry in 2019 was on the rise, accounting for 12.8% of gross domestic product (GDP). When the coronavirus disease 2019 (COVID-19) pandemic hit last year, tourism revenue plummeted 83% to P81.4 billion after the number of foreign visitors fell.

This means the sector’s direct gross value added accounted for just 5.4% of GDP last year — the lowest in at least two decades, according to preliminary data from the Philippine Statistics Authority (PSA), dating back to 2000 when the indicator was first compiled.

The Department of Tourism (DoT) could further reduce its projections for inbound tourist arrivals and receipts as pandemic-related uncertainties persist.

For now, tourism businesses — including travel agencies, tour guides, and event venues — are trying to survive until it is safe for travel to restart. Many are not operating.

“There really hasn’t been anything to adapt to. We’re still not in the post-pandemic scene. In the meantime, business essentially stopped for most of us,” Mr. Clemente said.

Smaller businesses are buoyed by lower overhead, he said, while larger companies are at a standstill and have had to temporarily lay off workers.

Government loans set aside for the industry have seen few takers while firms are still uncertain about their ability to pay them, although Mr. Clemente said such companies could use the loans to set up side businesses like food distribution as a way to survive.

Accommodation businesses have been able to pull through by chasing the “workcation” market, attracting people that want to do their remote work at tourist sites while lockdowns are declared in the major cities.

“Resorts are more flexible with the rates they’re giving out for workcations. Maybe they’re allotting more resources for that,” Mr. Clemente said.

One such company is Discovery World Corp., which runs luxury beach resorts and plans to integrate workspaces into its developments.

“We’re hopeful that as corporates come back to work, not everyone may go back to the 9-5, Monday to Friday work schedule and they may allow some flexible work to be done off site. And as a result of that, there would be more travelers who would be willing to work from resorts,” Discovery World Chief Executive Officer John Y. Tiu, Jr. said in an online video interview.

The Asian Institute of Management (AIM) Dr. Andrew L. Tan Center for Tourism expects the industry to keep plugging away with this approach, noting that Filipinos now view travel as a means to ease cabin fever and maintain good mental health.

“The ‘workcation’ model will persist as more employees become engaged in work-from-home setups. Being stuck at home for a year and more, a lot of Filipinos still yearn for a new environment to work in or to stay in for a period of time, maiba lang (just for a change of scene) as we put it,” AIM Research Manager Eylla Laire M. Gutierrez said in an e-mail.

If given the chance to go back in time, tourism business owners wish they had managed resources differently.

“The first thing I would do is take a good look at our organization and see where the excess expenses are. How can we trim the fat? How we can be more efficient in how we do our day-to-day business para ’di nasasayang ’yung pera (in order not to waste money)… be more watchful over the cash flow that you have (because) a lot of us were caught flat footed,” Mr. Clemente said.

“You’re anticipating other business to come in to cover all the payments that you need to make. A lot of us were caught in that dilemma. Since nakalabas lahat ng pera, nung nagsara lahat (Since all the money had been committed when everything shut down), our savings were not really enough to meet obligations, not only to clients for refunds, to our suppliers for payments we needed to make, but (also for) basic things like utilities, rental.”

GREAT OUTDOORS
The tourism industry will be different because demand will be different. As travelers avoid crowded areas to steer away from public health risks, AIM’s Ms. Gutierrez said that less popular areas will have a chance to attract more interest.

“When we look at the future of tourism, the promotion of mass tourism will be considered passe. Tourist perceptions/behavior/attitudes have changed because of the pandemic,” she said.

Ideally, she added, the pandemic should be treated as a time to invest in and fix tourist infrastructure found problematic or insufficient.

“On top of the usual infrastructure development projects such as roads and bridges, investments in medical facilities at tourist destinations must be made as well. Again, the new normal model integrates the value of health and safety at its core,” she said.

As the industry looks to diffuse travel, Mr. Clemente said that the country can be a choice destination for travelers if there is funding for infrastructure development in places like Dumaguete, Aurora, and La Union.

Discovery World’s Mr. Tiu said the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) should be expanded to address gaps in sewer infrastructure at tourist destinations.

“Maybe they can consolidate all that permitting and zoning under a more professionally-run organization, rather than leaving it up to the LGUs (local government units) who… a lot of the time are also underfunded,” he said.

“Tourism just grew faster than expected in a lot of these areas, so it’s not the government’s fault. It’s a matter of speeding up the infrastructure and funding to the local areas.”

The Department of Tourism, according to Ms. Puyat, is preparing an infrastructure development plan for 2022 to 2028, which aims to improve destination management infrastructure, including sanitation, engineered landfill, healthcare facilities and emergency response systems.

The TIEZA, she said, is poised to “implement and oversee the construction of sustainable, resilient, and inclusive tourism-related infrastructure in our local destinations.”

Hospital recovery to hinge on staff availability, collections

PHILIPPINE STAR/ MICHAEL VARCAS

By Vann Marlo M. Villegas, Reporter

HOSPITALS are hanging on as coronavirus surges come and go, but their long-term health will ultimately depend on finding adequate numbers of staff and collecting on their receivables from the national health insurer, among others.

Just before the August wave, hospitals had a brief respite from the frantic days of the March-April surge, allowing some industry associations to reflect on bigger-picture issues ailing their member-companies instead of being preoccupied with dealing with day-to-day crises.

First, a snapshot of where things stood before the Delta surge hit last month: In Metro Manila, the majority of cases was judged to be mild, not requiring hospitalization but merely isolation. But the August surge, thought to be caused by the more easily-spread Delta variant of coronavirus disease 2019 (COVID-19), threatened to overwhelm hospital capacity once again.

Speaking at a Zoom meeting in June, before the Delta surge, Private Hospitals Association of the Philippines, Inc. (PHAPi) President Jose Rene D. de Grano said: “The moderate and severe cases are the ones that are placed in the hospital beds in Metro Manila. More or less, right now it’s around 5% or less than 5% of the total active cases so there is not much.”

At the time, cases in the Visayas and Mindanao were increasing. “They were having the problem that NCR had (in March and April).”

Despite operating under pandemic conditions for over a year, hospitals were still having a problem with manpower, according to Philippine Hospital Association (PHA) President Jaime A. Almora.

Financial problems have also been exacerbated by the nonpayment of coronavirus claims by the Philippine Health Insurance Corp. (PhilHealth), he said.

“But we are coping,” Mr. Almora said in a phone interview, noting at the time that the pause in the coronavirus surge was allowing regular patients to come in for treatment.

This category of patient had largely been shut out by the pandemic because hospitals were swamped dealing with emergency respiratory cases, which required extra care in handling as well as expenses. Staff were also rotated to minimize their exposure, and had to be taken off duty if they tested positive.

Health department epidemiology bureau director Alethea de Guzman said in an online briefing in July that before the Delta surge in August, Philippine infection rates fell by 9% in the two weeks ending on June 26 while the average daily attack rate (ADAR) — new cases divided by population — was at 5.24.

Metro Manila at the time was also classified as low-risk with coronavirus infections declining by 26% in the same period while the ADAR was at 5.01.

Coronavirus cases in Luzon had been falling except for the Cordillera Administrative Region, Ilocos and Mimaropa, the Health department said.

Cases in Eastern and Western Visayas were rising, while Central Visayas plateaued after a sharp decline, according to Ms. De Guzman. Cases in Mindanao had been falling except for the Davao region, where the trend was inconsistent.

However, the Health department flagged the Eastern Visayas, Western Visayas, Davao region and Soccsksargen as “high-risk” at the time. Davao region had a high healthcare utilization rate and critical-risk intensive care utilization rate, while Western Visayas and Cagayan Valley had high-risk ICU usage rates.

Nationally, bed occupancy was at 46.1% out of the total 35,143 beds in 1,272 facilities as of June 30. A total of 870 facilities were at safe levels or less than 60% occupied, 88 were at moderate or 60-69% occupied, 110 were classified as high-risk or 70% to 84% occupied and 148 were critical, according to the DoH’s tracker website.

A total of 55.98% of 3,421 intensive care unit beds were occupied. Around 46.15% of 19,524 isolation beds were occupied, and around 43.3% of 12,198 ward beds were used.

The National Capital Region (NCR) reported a 37.7% occupancy rate during the pause between surges. Of the 159 facilities, 132 were at safe levels, six moderate, 11 high-risk and eight critical.

PROBLEMS, RECOVERY
Mr. Almora said the number of available nursing staff is falling due to migration and a preference for working in government hospitals.

Mr. De Grano said the number of nurses in private hospitals even before the pandemic had decreased by around 30% to 40%. “There are no available nurses right now because nurses went to the government facilities because they are offering higher salaries.”

Some were afraid of contracting coronavirus and expressed a preference for work in parts of hospitals that were less exposed, he said.

“We are used to working under stress under pressure, but the situation is far from normal,” according to Mr. Almora of the PHA.

Mr. Almora said hospitals will recover as long as problems do not pile up to the point that they are overwhelmed. He added that much depends on the national insurance agency, which has “absolute and total control” over hospital claims for treating COVID patients.

“We hope to recover (with the admission of) non-COVID cases. But the hospitals that have admitted COVID cases have used a lot of resources. So hopefully, babayaran ng PhilHealth ng tama (PhilHealth needs to do right by them with prompt payments),” he said.

Mr. De Grano of the private hospitals’ association also cited the cash crunch caused by the payment delays and the drying up of non-COVID cases.

“Private hospitals do not have subsidies like government facilities. So, they rely mainly on patients coming into the hospitals, from the admission of patients and their payments and for the services that they are using in the hospital.”

He said that some hospitals have availed of a debit-credit payment method (DCPM) scheme for their PhilHealth beneficiaries, but the reimbursement rate is “not enough,” claiming a yield of only around 35-36% instead of the 60% promised.

Some preferred to go through the normal process of filing claims which he estimated takes at least 60 days. Mr. De Grano added that payments for 2021 are being released but some hospitals are still complaining that they have not received payment for coronavirus claims for 2020, saying about P20 billion has yet to be reimbursed.

Senator Maria Josefa Imelda R. Marcos in a statement in late June said her office received complaints of at least P26 billion in claims that remain unpaid to private hospitals. She added that the DCPM did not cover unpaid claims from last year and the 60% target amount was not fully settled, citing one private hospital, which received only P430 million out of P1.2 billion in claims, a recovery rate of 36%.

“Complaints reaching our office show that at least P26 billion remains unpaid to private hospitals, while government hospitals are still owed hundreds of millions. Let’s not wait for them to shut down nor leave them ill-prepared to deal with the possible spread of the dreaded Delta variant,” she said.

Ms. Marcos added that hospitals also raised concerns over an online ledger known as the Reconciliation Summary Module, to which hospitals and PhilHealth subscribe. The system allegedly shows that PhilHealth has paid even when the amounts have not yet been deposited to hospital accounts.

PhilHealth on April 8 issued a circular concerning the DCPM, in which it committed to paying 60% of healthcare facility receivables, subject to a 2% expanded withholding tax for eligible private entities.

It was to pay the remaining 40%, also subject to 2% expanded withholding tax for private facilities, “following full compliance with existing claims processing requirements and procedures and full reconciliation of the 60%” initially paid.

This followed an order from President Rodrigo R. Duterte to the state insurer to fast-track the payment of hospital claims.

Initially, the payment method only applied to hospitals in Metro Manila, Batangas, Bulacan, Cavite, Laguna, Pampanga and Rizal. This was then expanded to high and critical-risk areas.

In a Facebook post on June 9, PhilHealth said P6.2 billion had been disbursed to 203 public and private healthcare facilities under the DCPM, 114 of which were from the capital region. The payment method is applicable to claims from between March 8, 2020 and April 7, 2021.

The DCPM does not include claims that are tagged as returned to hospitals, denied, endorsed to the Legal Department for further investigation and those paid as of April 7, according to the post.

PhilHealth recognizes the importance of paying the claims to the ability of hospitals to operate, PhilHealth Vice-President for Corporate Affairs and spokesperson Shirley B. Domingo said.

“PhilHealth reimbursements are important… Malaki na ang nako-contribute ng Philhealth sa mga cash flow… ng hospitals (PhilHealth accounts for a major part of their cash flow),” she said in a phone interview.

Ms. Domingo said there are many reasons for delayed payment releases, citing issues in claims processing, which sometimes result in “returned to hospital” claims due to deficient documentation.

The lockdown has also affected operations.

“Naapektuhan din kami sa pandemic on our part because marami rin nagkasakit sa amin ng pandemic, na-quarantine because of exposure and all that (We were also affected by the pandemic. Many of us got sick or were quarantined). Right now, many are still… working from home, but they continue processing the claims,” she said.

Ms. Domingo also questioned the claim that the DCPM is not yielding sufficient payments, saying that the regional offices have to reconcile the amounts with hospitals to account for claims that are returned to hospitals or denied.

“That’s why our regions are doing reconciliation with the hospitals on the actual amounts payable,” she said.

She said PhilHealth is monitoring the turnaround time of the regions and has found that some meet the 60 days’ deadline for regular processing.

“Iba-iba ang turnaround time kasi per region, lalo na smaller regions, mabilis mag-process ng claims, so depende ’yun sa region (Processing times vary, especially with smaller regions, which are faster)” she said.

OVERWHELMED
Mr. De Grano said that everyone should be prepared for some kind of epidemic, but the situation with the coronavirus “went to a magnitude that we cannot really handle.”

“They (hospitals) were overwhelmed by the magnitude of this pandemic,” he said.

“Lessons learned here is for the hospitals to really save… you cannot rely on PhilHealth or the government to pay you,” he said, noting that it takes 60 to 120 days for PhilHealth to pay up in general, with further delays for coronavirus cases.

He said that a year’s delay in the release of claims is not survivable for small hospitals. Some hospitals had to downsize or reduce working hours to avoid layoffs, while others took out bank loans to survive.

Mr. De Grano said the government is trying to balance its priorities between reviving the economy and dealing with the public health emergency.

He said a sense of complacency has set in when it comes to following the minimum health protocols.

“I think if… we are able to vaccinate a majority of our people, then we will no longer get into a situation where the hospitals are overwhelmed,” Mr. De Grano said.

VACCINATION
Mr. De Grano said the speedy rollout of vaccines will be key in heading off surges.

“If are able to do that, and then if we attain what herd immunity, even for 40% of our population, I think that will be a big, big help to our healthcare system. Eventually, we will be able to overcome this pandemic,” he said.

As of Aug. 5, around 23.2 million vaccine doses had been administered, with 10.7 million fully vaccinated.

Mr. Almora also said broader vaccination will help hospitals recover.

“That is the only solution,” noting that prevention is the best approach.

Building on the momentum of success at the Tokyo Olympics

By Michael Angelo S. Murillo, Senior Reporter

The 32nd Summer Olympics in Tokyo turned out to be an edition to remember, with the multi-medal haul, including a first gold, a watershed moment for Philippine sports.

As the pandemic-hit Olympics drew to a close on Aug. 8, the Philippines held joint 50th place in total medals won — boosted by the gold won by weightlifter Hidilyn F. Diaz — a far cry from previous Olympiads in which the country hardly figured in the race.

The Philippines also won two silver medals (Nesthy A. Petecio and Carlo Paalam) and a bronze (Eumir Felix D. Marcial) from the boxing team.

It was the first multi-medal showing for the Philippines since the 1932 Olympics in Los Angeles, where the contingent brought back three bronze medals.

“Well, definitely this speaks volumes about our capacity in terms of sports performance at the elite level. The road was not easy for the Philippines but I think because of the positive things that happened in the previous years, this was the result of it,” said Francis Carlos B. Diaz, a national team coach and dean of the University of the Philippines College of Human Kinetics, in an interview with BusinessWorld.

The UP dean believes the partnership between the government and private institutions, the effort to give elite athletes access to international training and competition, and providing for the athletes’ needs helped contribute to Team Philippines’ success.

He also noted the athletes’ determination to do well in the Olympics, which almost did not happen because of the pandemic, and “extrinsic motivations,” in the form of incentives both in cash and in kind.

“Every Olympics we qualify some athletes and we’re always hopeful. But we saw (results) from Day One and it’s truly inspirational to the Filipino nation. And it’s not just the winners but everyone who competed there,” he added.

Mr. Diaz, who served as the chef de mission for the Philippine delegation to the Tokyo Paralympic Games, also in August, said the Philippines’ breakthrough showing in the Olympics should be taken a starting point for future campaigns in order for the progress made not be wasted.

He said at least two areas within his area of expertise are likely to be impacted by the recent Olympic success — academic and administrative.

“As an academic, as a PE (physical education) teacher, this gives us hope to really motivate and provide our students with the best programs possible for them,” he said.

Mr. Diaz said appreciation for physical activity must start at a young age.

He said PE in the grade school level is currently allotted 40 minutes a week, since it is lumped under MAPEH (music, arts, physical education and health), which he believes will not do.

“If you look at the countries with a lot of medals, all of them start at a young age. Physical activities take place every day as provided by their schools’ PE programs. So we have to have a new (approach to) that,” Mr. Diaz said.

Administratively, meanwhile, the country’s sports leaders are recognizing the lessons from the Tokyo campaign.

“One standout lesson from Tokyo was the importance of providing holistic support to our national athletes,” he said.

The Philippine Sports Commission (PSC), per the data it provided, has released some P2 billion since 2017 for the national team, covering, among others, the foreign exposure of the Olympians and those who vied for Olympic spots.

The gold medalist, Ms. Diaz vouched for how steady support for athletes goes a long way.

“So that we can win more gold medals, the athletes need all the support they can get. I hope our sports officials have realized that,” she said during an online forum by the Foreign Correspondents Association of the Philippines.

Ms. Diaz went on to say that support should be in tune with the times and suited for what athletes truly need, and not just an exercise in saying that “support was given.”

“They should look at what the athletes really need, what works at the present. Sports leaders should not settle for just what they know, they have to make an effort to learn and take note as well of the needs of a particular sport or an athlete,” she said.

The message has not been lost, with the PSC acknowledging that the road to Tokyo could serve as a blueprint.

“One aspect is the preparation of the athlete, not just talent or having an excellent coach. They also need extensive international exposure, and the PSC spent an enormous amount on these athletes for that,” PSC Chairman William I. Ramirez said in a media forum.

Mr. Ramirez cited Ms. Diaz’s team, collectively known as “Team HD,” as one example.

For the Tokyo Olympics, Ms. Diaz had two coaches for weightlifting and strength and conditioning, a sports nutritionist and a sports psychologist, and also practiced yoga as part of her training. She said the support helped her face the challenges she encountered along the way.

And seeing the result, Mr. Ramirez said the PSC is inclined to continue on such a tack and add to it moving forward, saying: “It gives everyone more impetus to plan and start their preparations.”

Mr. Ramirez said the PSC will soon meet with its counterparts in the Philippine Olympic Committee to discuss the direction they will take, including the need to ask for more funds from the national government and more scientific training for the athletes.

Mr. Ramirez said the blueprint for future competition includes the next Olympics in Paris in 2024 and beyond, as well as other international competitions like the Southeast Asian Games and Asian Games.

PRIVATE SECTOR
UP’s Mr. Diaz said for sustained development and success, private institutions must be continuously encouraged as the government cannot do it alone.

He believes with Olympic success, private companies have an enhanced appreciation of what Filipino athletes are capable of, given the proper support.

The partnerships that national sports associations (NSAs) struck with private companies did wonders.

“Private sector support was very critical,” Mr. Diaz said.

He said sports organizations, and even athletes themselves, must present a compelling case to entice private groups to come on board.

“The NSAs have to exert the effort for the private sector to buy into their respective programs. They have to show they are guided by the right principles, governed properly and have a well-thought-out program,” he said.

Officials of the MVP Sports Foundation, Inc. (MVPSF) agree.

“This is a collective effort —the athletes must perform better because we can only go so far in terms of support,” MVPSF Chairman Manuel V. Pangilinan said in a television interview.

“We’re enablers only but the guy who lifts the weights, the guy who goes to the boxing ring, the guys who go to the basketball court, they must perform because that’s on them, we can only do so much. So they must perform better and they must win because it generates its own virtuous cycle,” he added.

The MVPSF, established 10 years ago, has been in many ways the public face of corporate support for sports. One of its goals has always been to help the Philippines win its first Olympic gold medal.

Since its inception, the organization has poured in at least P2 billion, apart from personal investments made by its officials.

In Tokyo, MVPSF was well represented as the majority of the athletes who competed were supported by the foundation in one form or another, including Ms. Diaz and the boxing team.

Seeing its efforts make significant headway, the MVPSF is now more determined to continue what it started.

Its plans now include establishing a Center for Sports Excellence, converting a 15-hectare property where the First Pacific Leadership Academy currently stands in Antipolo City to a sports center.

“It already has the hotel facilities there, rooms, and then space to build badminton courts, boxing gyms, basketball courts. And we’ll have sports psychologists, trainers, coaches living there as well, so it will effectively be a National Sports Center,” Mr. Pangilinan said.

Mr. Pangilinan is proposing an organization, Philippine Business for Sports Development (PBSD), to further augment private sector support for Filipino athletes.

“Scale of support will likely escalate and I think we should open up,” Mr. Pangilinan said.

“We should have a Philippine Business for Sports Development, invite major companies, sponsors, that might be willing to support,” he added, taking note of its impact on the training of elite athletes and grassroots sports initiatives.

More private sector support is something Skate Pilipinas, the federation for skateboarding, would welcome.

“Aside from having more skate parks, having clinics in different parts of the country to bring the sport to more people, to certify more coaches and judges, and hold events are very important to grow the sport. To help us do that, we will need the help of the private companies and sponsors,” national team coach Dani Garcia said at a media roundtable.

Skateboarder Margielyn Didal made history after competing in skateboarding in the sport’s Olympic debut in Tokyo. She finished seventh in the finals.

To be discussing Olympic success and catch a glimpse of potential upside moving forward is a welcome change, Mr. Diaz, expressing hope that all stakeholders work together to sustain the gains.

He said challenges still lie ahead, especially with the pandemic still very much a factor, but he believes collectively the community can manage the difficulties.

“There will be difficulties, of course. But I think during this pandemic, everybody learned how to adapt to the new normal. We just have to continue finding ways to help our athletes advance and Philippine sports in general. We have raised the bar in Tokyo and it’s going to be a big letdown if we do not follow up on that,” Mr. Diaz said.

Mr. Pangilinan, for his part, said whether in life or in sports, people must forge ahead.

“The essence of sports is to face up to the challenges and proceed with it. That’s the lesson for us,” he said.

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