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Tiktok partners with human rights org to fight online sexual exploitation 

International Justice Mission (IJM), a global organization focused on human rights and enforcement, and TikTok, a short-video sharing platform, launched a campaign called #Report2Protect to increase awareness and reporting of online sexual exploitation of children.  

Both IJM and TikTok influencers will release educational videos that show the hotline of the Philippine National Police – Women and Children Protection Center (PNP-WCPC), to urge anyone with information to contact authorities at 0919-777-7377 and 0966-725-5961.   

Filipino creators supporting the campaign include John Lloyd Castillo (@jlcastillooo), an online video creator; Mark Kelvin A. Aliliran (@kelvinmarkulit), an events photographer and videographer; Raethan Christian R. Supatan (@ethan_pptart), a PowerPoint artist and content creator; and Jan Abigail Maravilla (@coachubby), an accountant and software coach.  

“We at IJM are pleased to team up with TikTok to educate more Filipinos, especially the youth, about this threat and empower members of the community to contact authorities when they know a child is being sexually abused and exploited by traffickers who want easy money from online sex offenders,” said Atty. Samson R. Inocencio Jr., Regional Vice President of IJM Global Programs Against Online Sexual Exploitation of Children. “This crime inflicts deep trauma on child victims. Timely intervention is critical.”  

TikTok, one of the most popular apps among teenagers, has been under fire for having underage users despite its terms of service stating that users must be at least 13 years old to sign up for an account. Earlier this year, TikTok removed nearly 7.3 million accounts globally that were suspected to belong to underage children, accounting for less than 1% of all users.  

In 2020, the Anti-Money Laundering Council (AMLC) released a study that showed a surge in online child pornography transactions in the Philippines from March 15 to May 15, during the lockdown caused by the coronavirus disease 2019 (COVID-19) pandemic. During that period, 5,902 child pornography-related online transactions were recorded, compared to 369 transactions a year prior.  

IJM’s support since 2011 has helped Philippine authorities to rescue at least 828 victims, arrest 293 suspected perpetrators, and convict 115 of them. As a violation of the Anti-Trafficking in Persons Act or Republic Act (RA) No. 9208, online sexual exploitation of children is a crime with a maximum penalty of life imprisonment and a fine of P2 to P5 million.  

“This campaign not only encourages the community to report incidences of online sexual exploitation of children; it also sends a strong warning to traffickers that there is growing vigilance against this crime,” said Police Colonel Maria Sheila T. Portento, chief of the WCPC Anti-Trafficking in Persons Division.  

Any sexualized material that depicts or otherwise represents children falls under the term “child sexual abuse material” or “child sexual exploitation material,” according to the Terminology Guidelines for the Protection of Children from Sexual Exploitation and Sexual Abuse, also known as the Luxembourg Guidelines.  

“Online sexual exploitation of children is a serious problem in the country and the impact on its victims is devastating,” said Kristoffer Eduard M. Rada, TikTok’s head for public policy. “This partnership reiterates our commitment to combating this serious issue, and the opportunity for TikTok to strengthen our commitment in promoting a positive and safer online environment for children; keeping the platform a fun, creative and an inspiring place for creating and consuming content for everyone.” — Brontë H. Lacsamana 

Asian factory activity hit by rising costs, Delta variant

REUTERS

TOKYO — Asia’s factories hit a rough patch in July as rising input costs and a new wave of coronavirus infections overshadowed solid global demand, highlighting the fragile nature of the region’s recovery.  

Manufacturing activity rose in export powerhouses Japan and South Korea, though firms suffered from supply chain disruptions and raw material shortages that pushed up costs.  

China’s factory activity growth slipped sharply in July as demand contracted for the first time in over a year, a private survey showed, broadly aligning with an official survey released on Saturday showing a slowdown in activity.  

“Supply bottlenecks remain a constraint. But the PMIs (Purchasing Managers Index) suggest demand is cooling too, taking the heat out of price gains and weighing on activity in industry and construction,” said Julian Evans-Pritchard, senior China economist at Capital Economics.  

Indonesia, Vietnam and Malaysia saw factory activity shrink in July due to a resurgence in infections and stricter COVID-19 restrictions, according to private surveys.  

The surveys highlight the divergence emerging across the global economy on the pace of recovery from pandemic-induced strains, which led the International Monetary Fund to downgrade this year’s growth forecast for emerging Asia.  

“The risk is that growth scars linger for longer even if activity recovers in the coming months,” said Frederic Neumann, co-head of Asian Economics Research at HSBC.  

“Plus, cooling export momentum, far from a temporary blip, provides a hint of what to expect in quarters to come,” he said, adding that such uncertainty over the outlook would prod Asian central banks to maintain loose monetary policy.  

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 50.3 in July from 51.3 in June, marking the lowest level in 15 months, as rising costs clouded the outlook for the world’s manufacturing hub.  

The final au Jibun Bank Japan PMI rose to 53.0 in July from 52.4 in the previous month, though manufacturers saw input prices rise at the fastest pace since 2008.  

Japan also faces a surge in Delta variant cases that has forced the government to expand state of emergency curbs to wider areas through Aug. 31, casting a shadow over the Olympic Games and dashing hopes for a sharp rebound in July–September growth.  

South Korea’s PMI stood at 53.0 in July, holding above the 50 mark indicating an expansion in activity for the 10th straight month. But a sub-index on input prices rose at the second highest on record in a sign of the strain firms are feeling from rising raw material costs.  

Underscoring the pandemic’s strain on emerging Asia, Indonesia’s PMI plunged to 40.1 in July from 53.5 in June.  

Manufacturing activity also shrank in Vietnam and Malaysia, the PMI July surveys showed.  

While still grappling with infections, easing restrictions helped India’s factory activity bounced back in July as demand surged both at home and abroad.  

Once seen as a driver of global growth, Asian’s emerging economies are lagging their advanced peers in recovering from the pandemic’s pain as delays in vaccine rollouts hurt domestic demand and countries reliant on tourism. — Leika Kihara/Reuters 

Smart buildings: Cohesion CEO on the office of the future

Image via Cohesion

NEW YORK — Before the coronavirus disease 2019 (COVID-19) pandemic, Thru Shivakumar, co-founder and chief executive officer of Cohesion, was already working on apps to convert office buildings into smart spaces, powered by technology that enables interaction with tenants through phones and computers.  

Since the pandemic began, however, she is learning that the smart buildings of the future are going to look different from the ones she was planning prior to 2020.  

Chicago-based Cohesion, which works with companies worldwide to create software for “intelligent” buildings, sees an increase in the number of people who would use a building smartphone app to track cleanliness, air quality, and building security. Pre-pandemic, employees were more interested in amenities, such as restaurants and gyms.  

Ms. Shivakumar, 39, talked to Reuters about the workplace of the future. Edited excerpts are below.  

  1. How will offices change as they reopen?
  2. After every crisis, the pendulum doesn’t swing too far from the center. I don’t think that offices are gone and remote work is here to stay for good, but people will want more flexibility, more communication and more transparency. A smart building app is no longer nice to have. It’s a must-have. 
  3. What do employees want when they return to the office?
  4. Our research shows that over 60% of people have said they want to come back full-time. When employees return, their new priorities are health, wellness and security. People want outdoor spaces to get fresh air. 

We also know that people want to interact less with the office staff and have more ability to do their own thing — maybe they want to have an in-app key card, so you don’t have to take out a physical key card to enter.  

They don’t want to touch elevator buttons. They would like touchless controls or an application-driven elevator that knows where you’re going.  

Smart bathrooms where they can touch fewer things and surfaces are important, too. So is the ability to see what kind of air they are breathing.  

We’ve also heard that people don’t want to be inundated with all this information, but they want to know it’s there when they want to go see it.  

  1. What is the best job advice you’ve gotten? 
  2. One of my mentors early on told me to never say “no” to any project, and to deliver what I said I would deliver and when I said I would deliver it. 

In my 20s, I did so many mundane projects, but because I always delivered, I got a seat at the table. I never said I couldn’t get it done because I needed sleep. I just delivered.  

As you progress through your career, you’re not the individual contributor any more. You’ve got to make sure that your team delivers. Stay communicative and never think that anything is beneath you to do. There’s a lot of administrative work even in my job now. I never say it’s not my job to do it.  

  1. Have you developed any interesting work habits since the pandemic began? 
  2. Since I was in the office, I never got to cook in the middle of the day, but now I’m doing a lot ofinstapotcooking — a lot of cutting vegetables and dumping things in a pot, and I can still take a call with my AirPods while I’m doing it.  

Because we’re on video calls all day, my staff has seen me cooking an omelet in the morning.  

  1. You won a 200-person charity poker tournament in 2007 — what did you learn from that?
  2. It was a tournament to benefit sarcoma research in Chicago. I was one of the few females in it, and the only female at the final table. 

It was a fun experience. There was so much going on, and I could get distracted, but I had to have this sustained focus.  

Early on, I played some hands that some people wouldn’t have — I took some risks and, in the end, it was me against a professional poker player, and they said both of us won. 

My takeaway was that to be an entrepreneur you really have to be a risk-taker. — Cheryl Lu-Lien Tan/Reuters 

Downtrodden peso may extend drop on Philippine rating risk

BW FILE PHOTO

July was a brutal month for the Philippine peso and there appears to be little respite on the horizon. 

After capping its steepest monthly decline in over three years, the currency could extend losses due to a worsening virus outbreak and the risk of a sovereign rating downgrade. It may drop toward 51 per dollar, a level last reached in April 2020, according to ING Groep NV, Security Bank Corp. and Malaysian Banking Bhd. 

The peso’s resilience is being tested as the authorities struggle to contain the spread of the delta variant and slowing economic growth erodes government revenue. Volatility in the currency has increased, suggesting that traders could be bracing for more downside in the months ahead. 

“We do see the peso on the back foot from here on as growth will likely take a hit from the Delta variant, while investors become more worried about the fast deteriorating fiscal metrics,” said Nicholas Antonio T. Mapa, senior economist at ING in Manila. “A stark drawdown in gross international reserves may also open the floodgates for further peso weakness.” 

The peso declined 2.3% in July, its biggest monthly drop since January 2018 and the worst performance among Asian currencies after the Thai baht. It fell to as low as 50.5, its weakest level in more than a year. 

A key risk for the Philippine currency is the threat of a sovereign rating downgrade as the outbreak takes a toll on growth. Fitch Ratings revised the nation’s credit outlook to negative from stable in July, citing the impact of the pandemic on the economy and public finances. 

The Manila capital region, which accounts for about a third of the economy, will be in a strict lockdown from Aug. 6 to 20 and extra curbs on movements will be imposed in the interim, the authorities said last week. The restrictions on the capital will cost the Philippine economy P105 billion ($2.1 billion) a week, according to Socioeconomic Planning Secretary Karl Kendrick T. Chua. 

A slower pace of expansion could hurt public revenues and add to the debt burden. In its downgrade of the nation’s credit outlook, Fitch estimated that the general government debt-to-GDP ratio will rise to 52.7% and 54.5% in 2021 and 2022, respectively, from 34.1% in 2019. 

The peso gained 0.1% to 50.030 as at noon in Manila on Monday. The median forecast of a Bloomberg survey of strategists is for the currency to climb to 48.8 by year-end. 

WATCH LIST
For now, the peso may also be weighed down by weaker sentiment after the Philippines was added to the watch list for terror financing by the Financial Action Task Force, a global anti-money laundering body, in June. The inclusion may hurt investment, and make it harder to access financing from institutions such as the International Monetary Fund and the World Bank. 

“We could have seen an outflow as some companies may not be allowed to deal in jurisdictions that have been tagged as part of the grey list,” said ING’s Mr. Mapa. 

The Philippines could be removed from the FATF’s monitoring list on or before January 2023 or “upon successful completion of all action plans” that counter money laundering and terrorism financing, Bangko Sentral ng Pilipinas (BSP)  Governor Benjamin E. Diokno said in June. 

“The threat of the Delta virus variant could also lead to hot money outflows,” said Robert Dan Roces, chief economist at Security Bank in Manila. “It’s a highly uncertain environment,” adding that the peso may slide to the 51 level in the fourth quarter. — Bloomberg

Australia cranks up COVID curbs with Brisbane lockdown extended, army patrols in Sydney

Image via Steve Penton/CC BY 2.0/Flickr

SYDNEY — Australia’s Queensland state on Monday extended a coronavirus disease 2019 (COVID-19) lockdown in Brisbane, while soldiers began patrolling Sydney to enforce stay-at-home rules as Australia struggles to stop the highly contagious Delta variant of the coronavirus spreading.  

Queensland said it had detected 13 new locally acquired COVID-19 cases in the past 24 hours — the biggest one-day rise the state has recorded in a year. The lockdown of Brisbane, Australia’s third-biggest city, was due to end on Tuesday but will now stay in place until late on Sunday.  

“It’s starting to become clear that the initial lockdown will be insufficient for the outbreak,” Queensland state Deputy Premier Steven Miles told reporters in Brisbane.  

The rising new case numbers in two of the country’s biggest cities comes as disquiet grows on how the government of Prime Minister Scott Morrison is handling the pandemic.  

Although Australia’s vaccination drive has lagged many other developed economies, it has so far fared much better in keeping its coronavirus numbers relatively low, with just under 34,400 cases. The death toll rose to 925 following the death of a man in his 90s in Sydney.  

Australia is going through a cycle of stop-start lockdowns in several cities after the emergence of the fast-moving Delta strain, and such restrictions are likely to persist until the country reaches a much higher level of vaccination coverage.  

Prime Minister Morrison has promised lockdowns would be “less likely” once the country inoculates 70% of its population above 16 years of age — a percentage which now stands at 19%. Mr. Morrison expects to hit the 70% mark by the end of the year.  

Meanwhile the lockdown of Brisbane and several surrounding areas comes as Sydney, the biggest city in the country, begins its sixth week under stay-at-home orders.  

New South Wales state, home to Sydney, said on Monday it detected 207 COVID-19 infections in the past 24 hours as daily new cases continue to linger near a 16-month high recorded late last week.  

The state has recorded more than 3,500 infections since the outbreak began in June, when a limousine driver contracted the virus while transporting an overseas airline crew, and has asked for military personnel to aid efforts to enforce the restrictions.  

Some 300 army personnel, who will be unarmed and under police command, on Monday began door-to-door visits to ensure people who have tested positive are isolating at their homes.  

Army personnel also accompanied police officers around the streets of the areas of Sydney were most COVID-19 cases have been recorded. Footage published online showed police asking the few people encountered on the street as to why they were out of their homes in the largely deserted streets in Sydney’s south west. — Renju Jose and Colin Packham/Reuters 

After months of work, US senators unveil $1 trillion infrastructure bill

IMAGE VIA ARCHITECT OF THE CAPITOL

WASHINGTON — US senators introduced a sweeping $1-trillion bipartisan plan to invest in roads, bridges, ports, high-speed internet, and other infrastructure, with some predicting the chamber could pass this week the largest public works legislation in decades.  

The massive infrastructure package, a goal that has eluded Congress for years, is a top legislative priority for Democratic President Joseph R. Biden, Jr., who billed it on Sunday as the largest such investment in a century.  

Senators said the 2,702-page bill included $550 billion in new spending over five years for items such as roads, rail, electric vehicle charging stations and replacing lead water pipes on top of $450 billion in previously approved funds.  

“I believe we can quickly process relevant amendments and pass this bill in days,” Senate Majority Leader Chuck Schumer, a New York Democrat, said of the legislation after it was announced by a bipartisan group of senators.  

“This is a really important bill because it takes our big, aging, and outdated infrastructure in this country and modernizes it. That’s good for everybody,” said Senator Rob Portman, the lead Republican negotiator.  

However, some Republicans criticized the bill as too costly.  

“I’ve got real concerns with this bill,” Republican Senator Mike Lee said in a floor speech. “All is not well with the way we spend money.”  

It was not yet clear whether senators outside the bipartisan group that negotiated the bill will offer amendments that could possibly upset the delicate coalition that was cobbled together.  

If the bill passes the Senate, it must be considered in the House of Representatives, where some Democrats have blasted it as too small and the Democratic leadership has paired it with a $3.5 trillion “human infrastructure” bill to pour money into education, child care, climate change, and other priorities.  

Democrats want to offset that social spending with tax hikes on corporations and wealthy Americans earning more than $400,000 a year, measures opposed by Republicans, leaving the fate of both bills up in the air.  

Sunday night’s developments capped months of negotiating, and infighting, among several groups of senators and the White House.  

Initially, Mr. Biden said he was seeking about $2 trillion in a bipartisan bill, an amount that Republicans rejected as wasteful and unnecessary.  

A group of Republican senators then worked on a plan to spend far less, an effort that eventually died, raising questions if Congress could fashion a deal allowing the Democratic president to fulfill his Jan. 20 inauguration promise of working cooperatively with Republicans.  

A bipartisan group of senators, led by Arizona Democrat Kyrsten Sinema, a moderate, and the conservative Mr. Portman toiled for months, adding input from House centrists, on a new plan closer to what Mr. Biden would accept.  

Late in June the group said it had reached a $1.2-trillion deal, but filling in details took more than a month.  

With prodding from Messrs. Schumer and Biden, the negotiators put their staffs to work, nearly around-the-clock, culminating in Sunday’s final deal. — David Morgan and Richard Cowan/Reuters 

Death toll in Turkey wildfires rises to eight, coastal resorts affected 

Image via Gogolplex/CC BY-SA 4.0/via Wikimedia Commons

ISTANBUL — The death toll from wildfires on Turkey’s southern coast rose to eight on Sunday as firefighters battled for a fifth day to contain blazes still raging in coastal resort towns.  

Two more people died on Sunday due to wildfires in the southern town of Manavgat, Health Minister Fahrettin Koca said, adding that 10 others were receiving treatment in hospitals in the area.  

Most of more than 100 blazes that erupted in Turkey in the last five days have been contained, authorities said. However, fires were still blazing in Manavgat and in Marmaris and the inland town of Milas, Forestry Minister Bekir Pakdemirli said, prompting the evacuation of some residential areas and hotels.  

In the popular resort town of Bodrum, a group of tourists and hotel staff was evacuated by boat as flames spread and plumes of smoke filled the sky, footage showed. Pakdemirli said the blaze in the area had been contained by Sunday morning.  

The fires had already claimed the lives of five people in Manavgat and one person in Marmaris in recent days. Efforts were being made to put out six fires still blazing in Turkey on Sunday, according to Forestry Ministry data.  

Since Wednesday thousands of people have been evacuated from their homes. Locals as well as support teams from Russia, Ukraine, Iran, and Azerbaijan were deployed to help firefighters. The Turkish government pledged to rebuild damaged homes and compensate for losses in areas affected by the fires.  

Mr. Pakdemirli said at least 13 planes, 45 helicopters, drones, and 828 fire-fighting vehicles were involved in firefighting efforts.  

The EU said it had helped mobilize three fire-fighting planes on Sunday, one from Croatia and two from Spain, after Turkey activated a disaster response scheme to request help from other European countries. Turkey is not a member of the EU.  

In neighboring Greece, firefighters were trying to contain a wildfire burning in the west of the country that destroyed houses and left 15 citizens in hospital with breathing problems on Saturday, authorities said. Temperatures have been high in much of the country in recent days and are expected to reach 44 degrees Celsius on Monday and Tuesday.  

On the Italian island of Sicily, firemen said on Saturday they were battling for a second straight day wildfires that reached the town of Catania, forcing people to leave their homes and the local airport to temporarily shut down. — Reuters 

[B-SIDE Podcast] Olympic dreams deferred: Mary Joy R. Tabal   

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For every athlete whose Olympic dreams came true in Tokyo — like weightlifter Hidilyn F. Diaz and boxer Nesthy A. Petecio — there are so many others whose dreams were either dashed or delayed because of the coronavirus disease 2019 (COVID-19) pandemic. 

Tokyo 2020 was supposed to be part of the redemption arc of Mary Joy R. Tabal, who was looking to make up for Rio 2016, where she crossed the finish line well off her personal best. But canceled race after canceled race forced her to adjust her goals.  

Ms. Tabal, who made history in the 2016 Rio Games by becoming the first Filipino female marathoner to compete in the Olympics, shares the lessons she learned with BusinessWorld senior reporter Michael Angelo S. Murillo — lessons that we can apply to our own lives. 

TAKEAWAYS 

Goals can change mid-race. 

In Rio, Ms. Tabal remembers that cramping early in the race made her shift her mindset from bettering or matching her personal best to just finishing the 42-kilometer race and earning the title “Olympian.”  

She did it and had to be transported out of the race area in a wheelchair. 

This mental resilience served her again when the pandemic threw a wrench into her plans for Tokyo 2020. 

“I was really training and preparing to qualify for the Olympics but unfortunately so many races were canceled and I just had to deal with the reality that Tokyo was not for me. Sayang [too bad],” said Ms. Tabal. 

“The future is so uncertain; it keeps on changing. What’s important is to live one day at a time. You just have to focus on bettering yourself today and focus on doing something today. … Life is like a marathon,” she added.  

After disappointment, move on. 

Despite the disappointment and frustrations of not being allowed to at least vie for an Olympic spot, athletes just have to move on and take on new challenges. 

“After the disappointment, I had to focus my attention on other things, including the 2021 SEA Games in Vietnam (which has since been deferred to next year because of the pandemic). It is something to look forward to,” said Ms. Tabal. 

“One of the learnings here is to just be prepared. Things can change anytime. An opportunity can be taken anytime. Just take it a day at a time and focus on improving.” 

Keep your eye on the prize. 

Having experienced the Olympics, Ms. Tabal said that focus is paramount if you want to excel in elite competitions. “Be an Olympian and give your 100% so there won’t be any regrets after,” she said. 

While the Tokyo Games got away from her, the Olympic bid is still alive for Ms. Tabal, 32, who has heart set on competing in Paris 2024, finishing the six major marathons (she’s done Boston, which leaves Tokyo, London, Berlin, Chicago, and New York), and competing in the SEA Games and Asian Games.  

“And after maybe I’ll be given the chance to give back and help nurture young athletes to realize their dreams as well,” she said. 

 

Recorded remotely on July 16, 2021. Produced by Paolo L. Lopez and Sam L. Marcelo. 

Follow us on Spotify BusinessWorld B-Side

Open opportunities for fintech

In photo during this session of BusinessWorld Insights Fintech series are (clockwise, from top left) moderator Luz Wendy Noble of BusinessWorld; and panelists Edna C. Villa, assistant governor at the Bangko Sentral ng Pilipinas; V Ram, VP and CTO of Tata Consultancy Services; Sparky Perreras, co-founder and CEO at PearlPay Inc.; and Maria Lourdes Jocelyn Pineda, president of Tonik.

Driven by the digital push, fintech seen to further enable financial inclusion

By Bjorn Biel M. Beltran, Special Features Writer

Financial inclusion, that is, the state of which individuals and businesses have access to useful and affordable financial products and services that meet their needs — transactions, payments, savings, credit and insurance — has ever been a part of the country’s sustainable development strategy, a distant goal for the Philippines to strive for.

According to the World Bank, being able to have access to financial services facilitates day-to-day living and helps families and businesses plan for everything from long-term goals to unexpected emergencies. This is why it is important to have bank accounts, as these transaction accounts signify the first step that people can take to gain access to a wider range of financial services like credit and insurance; to start and expand businesses; to invest in education or health, manage risk, and weather financial shocks; and to improve the overall quality of their lives.

Now, amid the coronavirus disease 2019 (COVID-19) pandemic, there may be new opportunities that could push the country closer to this goal.

This is the topic of the first leg of the BusinessWorld Insights series “Fintech for a Financially Inclusive and Resilient Economy” held last July 14. Discussing how financial technology (fintech) is reshaping the financial ecosystem, some of the country’s most respected financial experts weighed in on how the adoption of fintech solutions, accelerated by the pandemic, can push for a more financially inclusive Philippines.

Transforming payments

“The BSP believes that enlarging the economic pie is a necessary condition to reach our vision of creating a high quality of life among all Filipinos. But while it is necessary, it is not sufficient. The larger economic pie must be available at least for more, if not for all,” Edna C. Villa, Assistant Governor at the Bangko Sentral ng Pilipinas (BSP), said.

Such ideals are the foundation for the BSP’s Digital Payment Transformation Roadmap (DPTR) for 2020 to 2023, which seeks to develop a digital payments ecosystem that targets current consumer and business needs to boost digital payments.

“We all know that payments is the most basic and most used financial service. Everyone uses it. It stands to reason therefore that there ought to be greater incentive to innovate in the payments sphere,” she said.

The transformation roadmap includes the acceleration of EGov Pay, the digital government collection system for taxes, licenses, permits, etc., established for secure, contact-free channels for Filipinos to transact with the government.

“The pandemic undoubtedly helped accelerate the preference for digital transactions. We are convinced that the trend will continue even post-pandemic. If we are to maintain the momentum, however, we need to be deliberate in innovating to pave the way for greater financial inclusion. For our part, the BSP will continue to provide what we believe is an enabling regulatory environment for fintech innovations.”

Digital transformation’s push

V Ram, vice-president and chief technology officer of Tata Consultancy Services, noted that by enabling more companies and financial institutions to consider digital platforms, the pandemic has pushed digital transformation by several orders of magnitude.

“The recent pandemic played a great role in accelerating the adoption of digital payments. The pandemic has pushed customers and companies over the digital technology tipping point and transformed adoption for many businesses into a priority. In just a few months, the crisis has accomplished years of digital transformation in most banks and companies by five to seven years,” he said.

He added that during the pandemic, most companies across the world has put up at least temporary solutions to meet the newly scaling demands, much more than what they thought would be possible, allowing for new opportunities for the sector.

“As it was, the world continues to enjoy a modicum of entertainment, even if it was not in their regular settings like in the cinema. Trade and commerce also held up pretty well from short-term impacts thanks to fintech. Now is the chance for us to accelerate and take things forward. This is where we see fintech reshape the financial ecosystem,” he said.

Taking financial inclusion further

Sparky Perreras, co-founder and CEO at PearlPay Inc., said that fintech companies have an opportunity to position themselves as the bridge to connect rural communities with the greater financial world.

“When COVID-19 struck, the biggest problem in terms of the business challenges for community based financial institutions is in disbursing the loan proceeds. Because they don’t have the digital channels in place to disburse the loan proceeds for their existing customers due to the lockdown, their business for loans has been badly affected, as loan customers are forced to visit physical rural branches or micro-finance institutions just to receive the loan proceeds,” he said.

“That’s one problem that we are passionate to solve by enabling these rural banks and microfinance institutions to join the digital revolution and digital economy.”

Maria Lourdes Jocelyn Pineda, president of Tonik, further emphasized that the country should take this chance to push towards the ideal of financial inclusion.

“The need for financial inclusion has never been better understood as it is in the present. Most economies are radically transformed because of the pandemic,” she said.

“Consumer needs have accelerated the evolution and with this has come the pressing need for the financial sector to truly embrace customer centricity. The new normal has efficiently curved the expectations of the banking customers, who now seek and choose institutions that they can entrust their money in a relationship built on mutual trust, transparency and benefits of the customers.”

Furthermore, she added that the Philippines is in no better position to take advantage of these opportunities, due to the unique characteristics of the Filipino population regarding digital adoption and literacy.

“As the country is the world’s leader in internet and social media usage, we believe that the Philippines is ripe for becoming a real leader in digital banking. To edge closer to a fully digitalized and cashless society, we must begin to listen and to address the customer need for a more inclusive and accessible way in banking that lets them grow their money the way they want to,” she said.

This session of BusinessWorld Insights was presented by Tata Consultancy Services and GCash with the support of Globe, InLife, and PayMaya.

July inflation seen within BSP target

PHILIPPINE STAR/ MICHAEL VARCAS

By Luz Wendy T. Noble, Reporter

HEADLINE INFLATION likely eased to a seven-month low in July, and returned to within the central bank’s target range, with analysts noting that improved meat supply and a slower rise in transport costs likely offset higher prices of fuel and other food items.

A BusinessWorld poll of 15 analysts yielded a median estimate of 4% for July inflation.

If realized, this would mark the first month since December that inflation settled within the 2-4% target of the Bangko Sentral ng Pilipinas (BSP). It would also be nearer the lower end of the BSP’s 3.9-4.7% estimate for July.

Analysts’ July inflation rate estimates (2021)

The July print also likely eased from June’s 4.1%, and is the slowest increase in the consumer price index (CPI) since the 3.5% in December 2020. However, it is much faster than the 2.7% a year ago.

Analysts attributed the slight easing in the CPI reading last month to improvements in the supply of meat, even as Typhoon Fabian drove prices of other food staples higher.

“Pork prices would still gradually ease in the coming weeks and months as a result of lower import tariffs on pork and higher import volumes, thereby could help ease food prices,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Security Bank Corp. Chief Economist Robert Dan J. Roces expected a slightly faster increase in food prices month on month as fish and vegetable prices went up as the typhoon damaged crops.

The Department of Agriculture said farm damage caused by the typhoon hit P615.72 million as of July 30.

The impact of the continued rise in global oil prices may have been offset by the better supply of meat products in the local market, Alvin Joseph A. Arogo, research head at Philippine National Bank, said.

In May, the government increased the minimum access volume and cut tariff rates for pork imports effective for a year. This was aimed at boosting local supply, after soaring prices pushed inflation beyond the target in recent months.

Meanwhile, global oil prices have steadily risen in the past four months amid continued demand and tight supply. In the local market, prices of gasoline, diesel, and kerosene have gone up by P12.85, P10.30 and P8.70 per liter, respectively, year to date as of July 27.

Moody’s Analytics Senior Asia Pacific Economist Katrina Ell said another key factor for easing inflation is the relatively slower rise in transport prices.

To recall, the transport index in July 2020 rose by 20.1% due to higher commuter costs. The government continued to limit public transportation capacity, even as the lockdown eased last year.

This year, the central bank expects inflation to average 4%. The CPI reading in the first half of the year was still above target at 4.4%.

The Philippine Statistics Authority (PSA) will report the July inflation data on Aug. 5.

The easing inflation and the rising number of coronavirus cases with the Delta variant strengthen the case for the BSP to retain its loose policy, analysts said.

“The sustained accommodative monetary policy environment is critical to support the economy as it continues to battle elevated infections alongside movement controls. Domestic demand will stay suppressed until infections drop further and the vaccination program gathers further steam,” Ms. Ell said.

ANZ Chief Economist for Southeast Asia Sanjay Mathur noted that BSP Governor Benjamin E. Diokno has signaled the central bank’s commitment to support the economy until next year.

“There is no reason to assume that this reaction function has changed and if anything, easing inflation can only fortify it,” he said.

Mr. Diokno in June said they will retain an accommodative monetary policy until economic recovery becomes more sustainable, which he believes will happen around the second half of 2022.

On Friday, the BSP chief said this accommodative monetary policy is more crucial given that while the economy is already recovering, the rebound has been “slower-than-anticipated.”

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the BSP could go for a “preemptive” hike under conditions such as the US Federal Reserve announcing its 2022 plan for reduction of asset purchases, which could cause strong depreciation for emerging market currencies like the peso, or when the second-quarter gross domestic product (GDP) exceeds market expectations.

The PSA will release second-quarter GDP data on Aug. 10.

The Monetary Board on June 24 kept the key policy rate at a record low of 4%. It will have its next policy review on Aug. 12.

‘Hot money’ enters PHL for 2nd straight month

MORE FOREIGN PORTFOLIO investments (FPI) entered Philippine markets than left it for a second straight month in June, when lockdown restrictions were further eased amid a drop in daily active cases.

“Hot money” — dubbed as such for the ease by which these funds enter and flee an economy — yielded a net inflow of $334.51 million in June, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Friday evening.

This is a turnaround from the $235.14-million net outflow a year earlier, but 20% less than the $416.74 million in net inflow seen in May.

For the first half of 2021, hot money still posted a net outflow of $106 million as the coronavirus crisis continued. This was, however, much smaller than the $3.3-billion outflow seen in the January to June 2020 period.

The BSP said market sentiment in June was lifted by the House of Representatives’ approval of the proposed third stimulus package under Bayanihan to Arise as One Act (Bayanihan III), which allocates financial aid for all Filipinos.

The improving flows of foreign direct investments; the progress of the vaccination program; as well as the central bank’s decision to keep policy rates at record lows also helped boost market sentiment, the BSP said.

Also in June, the International Monetary Fund slashed its 2021 growth forecast for the Philippines to 5.4% from 6.9%, while the statistics agency’s data showed an unemployment rate of 8.7% in April 2021, inching up from 7.1% in March.

The net inflow in hot money seen in June reflects better investor sentiment as the country had a “relatively more managed pandemic situation” than neighboring economies in terms of the Delta infections, Asian Institute of Management economist John Paulo R. Rivera said in a Viber message.

In June, Indonesia, Thailand, and Vietnam began seeing a Delta-driven surge in COVID-19 infections. At that time, active cases in the Philippines had fallen from the peak in April when daily infections rose by more than 10,000.

Rizal Commercial Banking Chief Economist Michael L. Ricafort said in a Viber message that the net inflows of hot money were backed by a better investment climate with the economy’s gradual reopening.

FPI inflows in June more than doubled to $2.105 billion from $1.019 billion a year ago and by 44% from May’s $1.458-billion level.

But outflows also rose 41% to $1.771 billion from $1.254 billion in June 2020 and by 70% from the $1.041 billion in the previous month.

The United Kingdom, United States, Singapore, Luxembourg, and Norway were the top five sources of inflows for the month, the central bank said.

The bulk or 91% of the investments went to securities listed in the Philippine Stock Exchange such as food, beverage and tobacco companies, property firms, banks, holding firms, and retail companies. The remaining 9% were invested in government securities.

Investor sentiment in the coming months would depend on how they view the impact of the upcoming two-week enhanced community quarantine (ECQ) in Metro Manila and nearby provinces on the economy, Mr. Rivera said.

“Short-term investors may veer away (from the Philippines) because of the immediate impact of the upcoming enhanced community quarantine on businesses,” he said.

Metro Manila and nearby provinces will be placed under an ECQ from Aug. 6-20, as the government tries to curb a Delta variant-driven spike in coronavirus cases.

Mr. Ricafort said inflows for the fund-raising activities of some firms may help offset the risk-off sentiment caused by the lockdown.

Filinvest REIT. Corp. is conducting a P12.6-billion initial public offering (IPO), while Del Monte Philippines, Inc. is also set to launch a P44-billion IPO this month.

The BSP expects hot money to yield a net inflow of $5.5 billion this year. — Luz Wendy T. Noble

PHL exporters seek support amid carbon tax proposal

PHILIPPINE STAR/EDD GUMBAN

By Jenina P. Ibañez, Reporter

PHILIPPINE EXPORTERS are seeking financial and technological support from developed countries to address carbon emissions as the world’s biggest economies mull climate-related tariffs on traded goods.

The European Union (EU) last month unveiled a proposal to impose carbon border taxes on carbon-intensive overseas businesses, which was designed to protect European industries cutting emissions from being at a competitive disadvantage to imports.

In the United States, Democrats in their budget plan proposed a tax on imports from countries that do not have strong climate change policies.

“There has to be a fair approach,” Philippine Exporters Confederation, Inc. (Philexport) Chairman George T. Barcelon said in a phone interview last month. “If (developed countries) are more advanced in technology, there should be technological targets.”

“All these industrialized countries that started 150 years ago somehow have to take responsibility too. What they are imposing now are burdens on developing countries to follow this stringent policy at their own expense.”

The EU policy could take effect in 2026 and is expected to affect countries like China and Russia most, or large exporters of aluminum and steel. Proposed tariffs would first be placed on steel, aluminum, cement, fertilizers and electricity.

An analysis from the United Nations Conference on Trade and Development (UNCTAD) found that the tariffs based on a carbon price of $44 per ton could translate to a $5.9-billion income loss for developing nations against income gains among developed countries.

“Developed countries, as a group, wouldn’t suffer export declines since many tend to employ production methods that are less carbon intensive in the targeted sectors than many developing nations,” UNCTAD said.

Developed countries are expected to experience higher welfare loss when the tariff is introduced, however, while effects on employment could be minimal for most economies.

In principle, Mr. Barcelon said that larger economies looking to impose carbon tariffs should contribute more to helping reduce emissions.

“There should be a counterpart, wherein can you help finance some of this pollution reduction projects in our country?”

Several manufacturing industries, he said, use power linked to carbon emission. And exporters charged with carbon tariffs would shift the costs to buyers, he added.

Sergio R. Ortiz-Luis, Jr., Philexport president, said in a mobile message that exporters are focused on addressing global supply chain woes and pandemic-related losses.

Container shortages and an ensuing surge in freight rates are causing shipment delays and losses for companies, the industry group said in May.

“With so many logistics and financial problems on the table, I don’t know exporters are even doing anything about the carbon tariffs,” he said.

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