House probe sought on farmers being forced to sell crops at loss

March 8, 2022 | 8:05 pm

A RESOLUTION has been filed in the House of Representatives seeking an investigation into reports that farmers are being forced to sell their produce at steep discounts, amid stiff competition from smuggled vegetables.

House Resolution No. 2513 urged the House Committee on Agriculture and Food to investigate instances of farmers selling their harvests of onions, cabbage and celery at below cost. Aggregators are allegedly offering lower farmgate prices to make up for the rising price of fuel, while farmers themselves have had to pay more for fertilizer and other inputs.

According to the resolution, Fernando Bagyan of Apit Takto Kordilyera, a peasant alliance in the Cordillera region, told legislators that farmers were left with no recourse but to sell at low prices, or to leave their fields unharvested, with the rotting crops serving as fertilizer for the next planting.

House Minority Leader and Bayan Muna Representative Carlos Isagani T. Zarate said that smuggling of agricultural products has worsened due to the government policy of encouraging food imports. Mr. Zarate’s party-list filed the resolution.

“Smuggling is also exacerbated by the import policy of the Duterte administration, thereby further hurting farmers,” Mr. Zarate told BusinessWorld via Viber. “Farmers are forced to compete with the lower-priced imports” and sell low just to make a sale.

Food security is at risk because of rising prices of fuel and fertilizer, he added, calling the government’s response to the Ukraine crisis “slow” and “reactive” measures in response to the Russia-Ukraine crisis. — Jaspearl Emerald G. Tan

Canada to provide P178M to Bangsamoro dev’t fund

March 8, 2022 | 8:05 pm

THE government of Canada will contribute about P178 million to a sustainable development project in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).

In a document dated March 7, the World Bank said Canada will provide the equivalent of $4.38 million in Canadian dollars for the Bangsamoro Normalization Multi-Donor Trust Fund over the next three years.

The World Bank in May last year said it started to manage the trust fund receiving foreign financing for BARMM development. The fund is expected to support the peace process in the region and boost the local economy through resources from development partners.

Canada will make five deposits between March 31, 2022 and June 30, 2025. The first installment at the end of this month was the equivalent of $2.75 million in Canadian dollars.

Canada and the World Bank may review the rate at which payments are made based on the speed of implementing projects and the availability of other funds.

The trust fund aims to help former Moro Islamic Liberation Front (MILF) combatants and redevelop six previous MILF camps into “peaceful and productive communities.”

The fund will finance studies on normalization in the conflict-torn region, knowledge-sharing activities, communication materials development, and regular consultations.

It will also finance impact assessments on the normalization process and provide technical assistance and training to government agencies involved in the process.

The fund will also provide grants for national and local government agencies for operational and technical support.

Support for former combatants and their communities includes unconditional cash transfers, vocational training, micro-enterprise promotion, and employment assistance. — Jenina P. Ibañez

PSG’s Mbappé suffers injury during training ahead of Real Madrid clash

March 8, 2022 | 7:24 pm

PARIS Saint-Germain (PSG) said forward Kylian Mbappé suffered a foot injury during training on Monday, casting doubts over his participation in the return leg of their Champions League last-16 tie against Real Madrid on Wednesday.

Mbappé scored a stunning individual goal in stoppage time to give PSG a 1-0 home victory over Madrid in the first leg in February.

“Kylian Mbappé suffered a shock to the left foot during training today,” PSG said in a statement. “He was treated this afternoon. The clinical examination is reassuring and a new check-in will be made in 24 hours.”

The 23-year-old Mbappé missed his side’s 1-0 Ligue 1 defeat by Nice on Saturday due to suspension, in which PSG managed just two shots on target.

PSG turned down multiple bids from Madrid for the 23-year-old last year, who can leave as a free agent at the end of the season when his contract expires. — Reuters

Kane grabs double as Tottenham thrashes Everton

March 8, 2022 | 7:24 pm

LONDON — Everton’s Premier League relegation fears deepened considerably as they collapsed to a 5-0 defeat at Tottenham Hotspur with Harry Kane scoring twice for the rampant hosts on Monday.

Michael Keane’s calamitous own goal began the rout in the 14^th minute and Son Heung-min made it 2-0 before Kane slotted home his first of the evening to make it 3-0.

Half time substitute Sergio Reguilon made it 4-0 with his first touch of the game and Kane’s sumptuous volley completed a thoroughly miserable trip to the capital for Everton.

Tottenham has now scored nine goals without reply in their last two league games and are level on 45 points with sixth placed West Ham United having played two games less.

Everton’s seventh loss in eight league games left them one place and one point above the bottom three and manager Frank Lampard faces a big task to ensure top-flight survival.

The Merseyside club’s 22 points is their lowest ever top-flight haul after 25 games.

While Tottenham played fluently in their biggest home league win since 2019, Everton was woeful.

Tottenham fans enjoyed taunting former Chelsea great Lampard who took charge at the end of January in the wake of Rafa Benitez’s sacking.

Disorganized in defense, lacking bite in midfield and nonexistent up front where they did not even manage an attempt on target, they made life easy for Tottenham who is now only three points behind fourth-placed Arsenal having played a game more.

“Individual errors led to goals which took the game away from us. It’s difficult when you’re 2-0 or 3-0 down,” Lampard said. “The reaction was not good enough. It was the reaction of a team used to losing away from home. We need to sort it out.”

Asked about the prospects of Everton preserving their top-flight status that stretches back to 1954, Lampard pulled no punches. “I could tell there was a fear of relegation when I came in. The base stats don’t lie.

“This challenge isn’t bigger than I expected, I knew it would be.”

Lampard said that Everton was “comfortable” in the opening stages but when Keane, under pressure from Kane, volleyed Ryan Sessegnon’s cross past Jordan Pickford they disintegrated.

Three minutes later, Kane found Dejan Kulusevski who in turn released Son who netted with a shot Pickford might have saved.

Son wasted another glorious chance soon after before Matt Doherty’s perfectly weighted through ball sent Kane clear on goal and the England skipper was never going to miss.

If Lampard had harsh words at half time, it had no effect on his players who switched off immediately after the interval as Kulusevski slid a ball across the area for Reguilon to slot in.

Kane’s second, in the 55^th minute, was the pick of the bunch and took him to sixth on the all-time Premier League scoring list above Thierry Henry with 176 goals.

Watching Doherty’s lofted diagonal ball like a hawk, he let the ball drop over his shoulder before volleying home past his England team mate Pickford who endured a miserable birthday.

“The top four has to be our ambition. We are not the finished article yet but the manager has had time to settle in and physically, I think we are in a really good position,” he said.

“We are in there and in the mix and we have to feel that pressure if we want to be a top team.” — Reuters

FIFA opens special transfer window for foreign players in Russia

March 8, 2022 | 7:24 pm

PARIS — The International Federation of Association Football (FIFA) is opening a special transfer window for foreign players stranded in Russia because of the invasion of Ukraine, soccer’s world governing body said on Monday.

“In order to facilitate the departure of foreign players and coaches from Russia, in the event that clubs affiliated to the Football Union of Russia (FUR) do not reach a mutual agreement with their respective foreign players and coaches before or on 10 March 2022… the foreign players and coaches will have the right to unilaterally suspend their employment contracts with the FUR-affiliated clubs in question until the end of the season in Russia (30 June 2022),” FIFA said in a statement.

“The suspension of a contract… will mean that players and coaches will be considered ‘out of contract’ until 30 June 2022 and will therefore be at liberty to sign a contract with another club without facing consequences of any kind.”

FIFA’s move is only a temporary measure that will not provide much help, the players’ union (FIFPRO) said, demanding that players should be allowed to terminate their contracts.

“The decision… to allow foreign players to only suspend their contracts and thus only temporarily leave Russian clubs is too timid,” FIFPRO said in a statement.

“It will be hard for players to find employment for the remainder of the season with uncertainty looming over them and, within a few weeks, they will be in a very difficult situation once again.

“It is unsatisfactory even for players who are tied to short-term contracts in Russia — where contracts typically end in December — and who may not want or be able to return after 30 June 2022… FIFPRO communicated to FIFA last week that these players should be allowed to terminate their contracts.”

FIFPRO asked that FIFA, and its European counterpart UEFA, set up a fund to help players and coaches in Ukraine.

“It is disappointing that other stakeholders in this process were not prepared to agree to this important step,” it said.

“For players, coaches and others in Ukraine, we consider it essential that UEFA and FIFA widen professional football’s response to the war by establishing a fund to support all those in the industry who are affected.”

Russia calls its actions in Ukraine a “special operation” designed not to occupy territory but to destroy its neighbor’s military capabilities and capture what it regards as dangerous nationalists. — Reuters

City Football Group bids for Atletico Mineiro

March 8, 2022 | 7:23 pm

RIO DE JANEIRO — City Football Group (CFG), the Abu Dhabi company with investments in Manchester City and 10 other football clubs, has made a bid to buy Brazilian league champions Atletico Mineiro, Brazil website Globoesporte.com said on Monday.

The group offered around one billion reais ($195.64 million), the report said, but the bid was rejected as being too low.

City refuted the report and said no bid has been made for the Belo Horizonte club and no bid will be made in the future.

Atletico would not comment, saying it was “speculation.”

Atletico is heavily indebted to a group of local businessmen who loaned money to the club over the last few years and turned it into one of Brazil’s most successful.

The team won the Brazilian league and cup double last season and is building a brand-new stadium. Globo said the debt last year hit 1.3 billion reais.

If the deal was done Atletico would be the latest Brazilian club to fall into private hands since legislation was passed last year allowing outside investors to own Brazilian teams.

Until then, clubs had been owned by their members.

In recent months, Cruzeiro have been bought by a consortium led by Ronaldo, Botafogo were purchased by a group led by a part-owner of Crystal Palace, and a US investment firm took control of Vasco da Gama.

CFG is one of the most powerful names in football and the majority owner of Manchester City, New York City FC, and Melbourne City.

It also has invested money in Yokohama F. Marinos in Japan, Montevideo City Torque in Uruguay, Girona in Spain, Sichuan Jiuniu in China, Mumbai City in India, Lommel SK in Belgium and Troyes in France. — Reuters

Joel Embiid pours in 43 as 76ers top skidding Bulls

March 8, 2022 | 7:22 pm

JOEL Embiid compiled 43 points, 14 rebounds and three blocked shots to lift the host Philadelphia 76ers past Chicago 121-106 on Monday, sending the Bulls to their fifth loss in a row.

Embiid finished with at least 40 points and 10 rebounds for the 10^th time this season.

James Harden added 16 points, 14 assists and eight rebounds for the 76ers, who won for the sixth time in seven games. Tyrese Maxey scored 17 points, Georges Niang added 14 and Matisse Thybulle had 12.

Harden, who made 1 of 5 attempts from 3-point range, tied Reggie Miller for third all-time in career 3-pointers with 2,560. The Golden State Warriors’ Stephen Curry tops the list with 3,101 entering his Monday night game, and Ray Allen is second with 2,973.

Zach LaVine led the Bulls with 24 points while DeMar DeRozan added 23 points, 11 rebounds and eight assists. Coby White contributed 19 points, Tristan Thompson had 13 points and nine rebounds, and Ayo Dosunmu scored 11 points.

Embiid received a long pass from Danny Green and scored for a 51-45 lead with 4:23 remaining in the second quarter.

The Bulls closed within 55-51 when LaVine threw down a dunk with 2:13 left.

Green went to the locker room with 53.5 seconds to go with a left middle finger laceration.

The Sixers, who announced that Green wouldn’t return, led 59-53 at half time thanks in large part to Embiid’s 19 points in 18 minutes.

DeRozan paced the Bulls with 15 points before the break.

Philadelphia went ahead 71-61 when Embiid scored in the low post with 8:15 left in the third. After an empty possession by the Bulls, Embiid grabbed an offensive rebound and converted for a 12-point advantage.

Thybulle received a pass from Harden and dunked and Embiid added a dunk for a 77-61 lead.

Dosunmu drove to the basket and scored to get the Sixers within 78-66 with 4:48 remaining.

Embiid scored four points in the final minute and a half, and the Sixers pulled out to an 88-77 lead at the end of the third.

Chicago went on a quick 6-2 spurt to open the fourth and the deficit was 90-83.

Niang dropped in a 3-pointer with 9:18 left to extend Philadelphia’s lead back to 10.

The Sixers led 103-90 when Embiid posted up and threw down a one-handed dunk with 6:01 to go.

The Bulls cut the deficit to 112-102 with 2:36 left but got no closer. — Reuters

The best of Tatum

March 8, 2022 | 7:22 pm

The famed Kevin Durant-Kyrie Irving pairing that (along with now-departed James Harden) figured to lead the Nets through the 2021-22 season greeted the opening tip for just the fourth time the other day. That said, there was every reason for the visitors to approach their set-to against the Celtics with confidence. Never mind that they had hitherto lost 12 of their last 16 matches, including 11 straight to bridge January and February.

Which was all well and good, and certainly logical to expect. After all, Durant and Irving are All-Stars who have the body of work proving that they make each other, and those around them, better. There was just one problem, however: They were about to face the Celtics, a heady 22 and 11 at the TD Garden, and, more importantly, in the midst of a run that had them on top in 15 of their last 18 contests. In other words, they were in the territory of enemies who surged while they swooned.

As things turned out, the Nets did perform better — make that much better — than they were able to in recent memory. They shot higher than 50% off six more field goal attempts, including 44% from three-point territory, and 90% from the charity stripe. They even had eight more rebounds, adding to the factors that a cursory glance at the stat sheet would indicate a favorable outcome. Unfortunately, the Celtics took 18 more free throws, all but negating their other perceived advantages.

Most crucially, the Celtics had Jayson Tatum emerging as the best player on the floor. Considering that he shared it with Durant and Irving, it was no mean feat. When the battlesmoke cleared, the green and white went away with the victory in large measure because he could not be stopped. He wound up with 54 points (off 30 shots), but, even though his output accounted for over four-tenths of the 126 markers on the board, it was his exemplary decision making that underscored his otherworldly effort.

Clearly, Tatum was buoyed to show his best given the quality of the competition. As he noted in his post-mortem, “Those matchups — when you’re playing one of the better teams in the league, two of the best guys — as a competitor, those are the kinds of moments that as a kid you looked forward to,” Tatum said. “When those opportunities come, you try to make the most of it.” He did, and the Celtics prevailed as a result.

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Fair winds for fair use

March 8, 2022 | 5:44 pm

YOUTUBE--SOCIAL-PLAY — WIKIMEDIA COMMONS

Fair use is a privilege to use copyrighted material in a reasonable manner without the consent of the copyright owner or copying a theme or idea rather than their expression. Fair use is considered as breathing space for creators, so that they can build on and improve upon existing works.

This privilege is supposed to benefit both the creator and society as a whole. The concept of fair use seems to be straightforward but, in application, finding the balance between the original creator’s rights and fair use by the subsequent user has proven to be difficult. The tides in the past year, however, have shifted towards an equitable interpretation of fair use.

1. AN EQUITABLE FOUR-FACTOR TEST

In 2021, the Supreme Court of the United States (“SCOTUS”) issued a binding precedent for “fair use” for the first time in over 25 years.

In Google LLC v. Oracle America, Inc. (“Google Decision”), Oracle accused Google of stealing copyrighted pieces of its source code for use in Google’s Android smartphones. Google, on the other hand, argued that the Java source code is too functional to be protected by copyright law and that it is subject to copyright’s fair use doctrine.

On April 15, 2021, SCOTUS resolved the 10-year dispute when it ruled that Google’s use of the Java source code was within the bounds of fair use. The Google Decision assumed that the Java software language was copyrightable, and it applied the four-factor test in determining Google’s fair use.

The four-factor test considers the following:

1. The purpose and character of the use

2. The nature of the work

3. The amount of substantiality of the portion used in relation to the work as a whole

4. The effect of the use on the market or potential market for the original work¹

The Google Decision is seen to be a move that can spur innovation and creativity, by giving breathing space to creators who wish to build on existing works.

In the Philippine context, it is worthy to note that the same four-factor test is listed in Section 185 of the Intellectual Property Code. Section 185 also specifies the allowed “purpose and character of use,” namely: (1) criticism and comment; (2) news reporting; (3) teaching; and (4) scholarship, research, and similar purposes.

In ABS-CBN Corporation v. Gozon, et al., G.R. No. 195956, the Supreme Court of the Philippines also affirmed the use of the four-factor test.

While the Google Decision is not binding precedent in the Philippines, it indicates a shift towards an equitable interpretation of the four-factor test for fair use.

Since fair use cases are few and far between, the influence of the Google Decision for future fair use cases may be significant. It is important to remember, however, that the Google Decision was centered on computer software.

It is too early to tell if the Google Decision will influence a broader interpretation of fair use law generally, or if it will remain an isolated case.

2. FAIR USE AND THE MONETIZATION OF YOUTUBE

Outside computer software, YouTube has also stepped towards the direction of an equitable interpretation of fair use. YouTube is more known as a source of entertainment and personal viewing, but it has also increased its role as an important tool for businesses.

The increase in users magnified the potential for the monetization of YouTube channels through subscriptions and marketing partnerships.

YouTube is the home of millions of pieces of content, and fair use issues continue to be a challenge to its content creators. The anime YouTube channel called Totally Not Mark (“TNM”) recently influenced a change in YouTube’s copyright and fair use rules for content creators.

TNM’s channel includes criticism and/or analysis of anime samples from several companies, including Toei Animation. Toei Animation filed around 150 copyright strikes against TNM, which led to the takedown of hundreds of TNM’s videos.

For TNM and other small to medium content creators, takedowns of videos may prove to be a severe blow to the profitability and marketability of their YouTube channels.

With the increase of users who rely on YouTube monetization, YouTube must be extremely careful in its copyright takedown measures.

In 2022, however, YouTube ruled in favor of TNM and all 150 copyright strikes against the channel were removed. The whole issue also influenced a change in YouTube’s copyright and fair use rules, which now allow for flexibility among international copyright laws.

A video may be taken down in one country but left up in another. The new rule then heavily depends on specific national copyright laws, and videos are most likely to be allowed in countries like the Philippines and the United States which apply the four-factor test.

In the context of the Philippines, Filipino content creators may then be able to rely on fair use in having their videos accessible in the Philippines. Conversely, videos are most likely to be taken down in countries like Japan, which has stricter copyright rules.

The Google Decision and the new YouTube rule on fair use show that in both the level of the courts and in platforms that host content, fair use is sailing towards an equitable interpretation. This is a win for content creators.

¹ United States Copyright Act of 1976, Section 107.

This article is for general informational and educational purposes only and not offered as, and does not constitute, legal advice or legal opinion.

Shiela Marie L. Rabaya is an underbar associate in the Intellectual Property Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). She may be reached through slrabaya@accralaw.com

8830-8000

A new grand strategy for a new dangerous world

March 8, 2022 | 5:42 pm

A quote attributed to Russian revolutionary Vladimir Lenin goes: “There are decades where nothing happens; and there are weeks where decades happen.” And indeed, on the week of Feb. 24, as Russia launched a full-scale invasion of Ukraine, we saw decades unfolding before our eyes.

The world was aghast at the sight of hundreds of Russian tanks, supported by thousands of airborne and mechanized troops, going into Ukraine. The invasion started with a combination of air and ground assault, aiming to take control of a critical airport not far from the Ukraine-Russian border.

This event ended months of wild speculation and heated debates regarding the purpose of Moscow’s build-up of its forces proving Washington’s repeated warnings of an imminent Russian military operation was to be the largest conflict in Europe since the end of the Second World War.

This development raises the risk of spillover and escalation given reports of Ukrainian military units seeking safe haven into territories of east European North Atlantic Treaty Organization (NATO) member states. This creates a possible scenario in which a hot pursuit of fleeing Ukrainian units by Russian forces into NATO member states’ territories can draw the alliance directly into conflict with Russia.

The presence of Russian forces near NATO’s borders pushed the alliance to boost its political and military support to Ukraine as it defended itself against a full-scale invasion. NATO member states poured thousands of anti-tank weapons, hundreds of air-defense missiles and thousands of small arms and ammunition stocks to the Ukrainian army. Prior to the invasion, Ukraine also acquired critical weapon systems including Javelin missiles and anti-aircraft missiles from NATO member-states.

In another unprecedented development, the European Union funded Ukraine’s weapons acquisition as the world’s largest economic bloc announced new sanctions in response to Russia’s invasion of Ukraine.

Unnerved by the continuing resistance of Ukrainian forces boosted by NATO and EU military assistance, Russian President Vladimir Putin accused leading NATO powers of making aggressive statements and imposing illegal financial sanctions against Russia because of its invasion of Ukraine. As the United Nations General Assembly (UNGA) held an emergency session to discuss Moscow’s invasion of Kyiv on Feb. 28, Russian nuclear deterrent forces went on high level alert.

THE NEED FOR A GRAND STRATEGY
The developments triggered by Russia’s invasion of Ukraine, given their apparent magnitude, are generating shock waves across Europe and beyond.

This requires the Philippine government to formulate a new grand strategy that will mitigate the adverse effects of the strategic shock waves emanating across Europe and spilling over to the Indo-Pacific region.

Any serious and enlightened president must be guided by a grand strategy to prevent the country from being subjected to the malevolent actions of other states, and to minimize the possibility of being a victim of accidents, tragedies, and misfortunes.

It magnifies a president’s foresight and determination to effectively combine willingness and opportunities to achieve wide, and predetermined objectives through crafty decisions that minimize political and economic costs.

The National Security Strategy or NSS contains a country’s grand strategy for the coordinated use of all the instruments of national power — from diplomacy to military capability — to pursue the objectives that defend and advance the national interests. It consists of a set of ideas for using a nation’s resources to achieve its interests over the long run.

THE PHILIPPINES’ FIRST GRAND STRATEGY
A new president must begin with a grand strategy. The term grand signifies the large-scale nature of the strategic undertaking in terms of time (long-term, ideally measured in decades), stakes (the interests concerned are the large, important, and most enduring and vital ones), and comprehensiveness (the strategy provides a blueprint or guiding logic for nation’s policies across many areas).

A president chooses or designs his or her grand strategy based on a deep-seated belief on how the country should deal with the international challenges or opportunities it faces at a given point in history. National leaders should view grand strategy as a means to maintain and/or strengthen their hold on executive power.

In 2018, President Rodrigo Roa Duterte signed the first NSS since the Philippines became an independent republic in 1946. The NSS paints a realist picture of the country’s external environment. Though unconfronted by any direct threat of foreign aggression since the end of the Second World War, it warns that the current regional security environment has become increasingly uncertain and dangerous for the country.

The 2018 NSS did not mention any specific country that threatens the Philippines. Instead, it raised three important issues concerning the Philippines’s external security environment such as the perils of traditional geopolitical threats, the need for the Philippines to develop a credible defense capability and strengthen its comprehensive strategic alliances or cooperation with its friends and security partners.

A comprehensive study I authored as part of the Stratbase ADR Institute’s thrust of forging a strategic agenda for the upcoming new government, entitled “A National Security Strategy (NSS) for the 17^th Philippine President: The Case for A Limited Balancing Strategy,” highlights the importance of converting the current administration’s defense and security stance into a “well-thought, comprehensive, and formal national security strategy” that can guide the Philippines in the next six years and beyond.

We are two months away from elections. Our next president must draft a new Philippine grand strategy that will take into account the strategic shock waves generated by the escalating conflict in Europe, triggered by Russia’s invasion of Ukraine, as well as the possibility that these conflicts might actually spread into the Indo-Pacific region.

Dr. Renato Cruz De Castro is a trustee and convenor of the National Security and East Asian Affairs Program, Stratbase ADR Institute.

A strategic plan for the IT-BPM industry

March 8, 2022 | 5:41 pm

(Part 1)

After the OFW (overseas Filipino workers) sector, the IT-BPM (Information Technology-Business Process Management) industry is the second largest service-oriented engine of growth of the Philippine economy.

Not only does it have a direct contribution to Philippine GDP through the average annual earnings of $23 billion–$25 billion of the approximately 1.4 million workers in the sector, there are the many multiplier effects on real estate, education, food establishments, public utilities, and leisure and recreation centers, among others.

Because of the unique demographic dividend that the Philippines is still enjoying amid a rapidly aging First World (including some emerging markets whose fertility declines have come prematurely), one can assume that this sector will continue to be a major source of GDP growth and employment for the Philippine economy for many years to come.

The young, growing and English-speaking population of the Philippines gives it, together with India, a competitive advantage in providing the human resources for the global IT-BPM sourcing market. Total revenues of the Philippines’ IT-IBM sector in 2021 during the height of the pandemic still reached a hefty $29 billion, employing 1.4 million.

In this series of articles, we shall present a preliminary version of the strategic plan that the IT & Business Process Association of the Philippine (IBPAP) is in the process of formulating for their sector in the coming decade or so after the pandemic.

We shall first present a summary of the document entitled “Accelerate PH (Future Ready) Roadmap 2022” that was prepared by the association in collaboration with Frost & Sullivan in 2015.

The purpose of this quick review of this data-filled study is to serve as part of the SWOT analysis that is essential to any strategic planning process. We shall draw from this Roadmap the key strengths of the Philippine IT-BPM sector and the opportunities that it faces in the coming decade or so.

The pandemic of 2020 to 2022 has hardly slowed down the growth of the global IT-IBM sourcing sector that in 2015 was projected to grow to $249.4 billion by 2022, with IT Services accounting for $147.3 billion and BPM for $102.1 billion.

The overall IT services global market was expected to remain larger than the BPM market as companies seek to outsource their IT services in their quest towards becoming leaner and more productive.

The global IT Services sourcing market was expected to grow from the 2015 to 2022 period at a compounded annual growth rate (CAGR) of 5.8%.

As a sign of the resilience of the Philippine IT-BPM sector, despite the slowdown occasioned by the pandemic in 2020, the sector started to grow at more than 5% annually in 2021 and is expected to grow even at a higher rate in 2022.

It is interesting to note that the post-pandemic world will be dominated by the Indo-Pacific region which is expected to lead in economic recovery, especially the three large economies of China, India and the ASEAN Economic Community, to which the Philippines belongs.

This will reinforce the trend that already existed before the pandemic as regards the demand for IT-BPM services. The Asia-Pacific region was already contributing 73% of the overall global headcount in this sector, with the two largest IT-BPM destinations — India and the Philippines — located in this region.

This dominance of the Asia-Pacific region will even be reinforced by the trade agreement called the Regional Comprehensive Economic Partnership (RCEP) that came into force on Jan. 1 after having been approved by Brunei, Cambodia, Laos, Thailand, Vietnam, Australia, China, Japan, New Zealand, and South Korea.

Although President Duterte already gave his approval to RCEP, the concurrence of the Senate is still being awaited. Some delay is expected because of strong objections, especially coming from the agricultural sector due to fears that the trade agreement will seriously hurt the small farmers.

Despite some delay, however, the RCEP will significantly benefit the IT-BPM industry. According to the Asian Development Bank (ADB), digital services trade in the Asia-Pacific region has grown faster in the last 15 years compared to other parts of the world. Among the 15 countries that will eventually be part of RCEP, the Philippines has the greatest competitive advantages in digital services trade.

Prior to the pandemic, there was already a very discernable increased attractiveness of what are referred to as Tier II and Tier III locations, cities which are outside the metropolitan areas like Manila or Cebu.

As the Frost and Sullivan report indicated, Tier I cities were becoming too overcrowded and too expensive to operate with multiple suppliers sourcing for the same talent pool.

The untapped talent pools in emerging locations, decentralizing strategies by governments to develop other areas, and infrastructure improvements (like the Build, Build, Build program of the Duterte Administration) in newer locations were becoming increasingly attractive to IT-IBM providers.

One can predict that after 2022, there will be more locators of IT-BPM providers in such emerging Tier II and Tier III regions as Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon), Central Luzon (especially the so-called Pampanga Triangle of Angeles City, San Fernando, and Clark-Subic), Western Visayas (the Iloilo-Bacolod tandem, two cities that will be connected by a bridge passing through Guimaras), and Davao and Cagayan de Oro in Mindanao.

There are actually already Tier III cities like Puerto Princesa in Palawan, Dumaguete in Negros Oriental, and Antique and Capiz in Panay, and Naga in Camarines Sur.

The study also enumerated the competitive advantages of some of the leading destinations of IT-BPM outsourcing services. The Philippines is together with India as the leaders in global competitiveness; with China and Mexico considered as global alternatives; and Chile, Brazil, and Poland as developing global destinations.

In Southeast Asia, other weaker alternatives are Thailand, Indonesia, and Malaysia. Our major competitor is India, which is neck-and-neck with us in attracting contact centers, IT outsourcing, and non-voice BPM.

The strengths of the Philippines in the IT-BPM sector are as follows: 1) The number one service provider in the global voice BPM market, followed by India (in fact, Indian IT-BPM enterprises are locating some of their operations in the Philippines); 2) Traditionally serving the contact center market, particularly the United States. The country, however, is beginning to focus on growing IT and non-voice BPM services as part of its national strategy rather than remain just as a contact center destination. As Artificial Intelligence (AI) and robotics are increasingly applied to this industry, customer services will be increasingly automated or robotized. There is need to shift to more knowledge-and skilled-based services; 3) The Philippines has a large pool of English-speaking IT and accounting graduates; and 4) Filipinos are in demand because of their high service standards, highly developed soft skills inherent to Filipino culture and familiarity with and affinity to Western culture (especially North American culture).

Probing deeper into country attractiveness, the study utilized a broad range of global benchmarking parameters covering multiple areas such as business costs, regulations, infrastructure, and education to assess the overall attractiveness of each country as an IT-BPM destination.

In summary, India and the Philippines as global IT-BPM leaders excel, or at the very least score reasonably well, in areas pertaining to business costs and education. Both countries, however, show ample room for improvements in areas relating to infrastructure capabilities.

From a cost of doing business perspective, parameters commonly benchmarked in the selection of an IT-BPM location include labor and building costs, infrastructure and connectivity, as well as inflation and tax related expenditures.

(To be continued.)

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

Southeast Asia shows the high cost of fast growth

March 8, 2022 | 5:40 pm

WITH China’s technology giants facing a plethora of struggles, Southeast Asia was supposed to be the hip new market that offered a well of fast-growth companies. That’s coming at a heavy cost.

Earnings reports from e-commerce and gaming provider Sea Ltd. as well as food and deliveries giant Grab Holdings Ltd. are a stark reminder that years of break-neck speeds have been largely driven by subsidies and marketing. That wasn’t a problem when deep-pocketed venture capitalists like SoftBank Group Corp. and Temasek Holdings Pte. were pumping money in during their startup phases.

But now they need to walk on their own. And they’re stumbling.

Sea last year posted a 127% increase in sales driven by its Shopee online retail platform. Grab posted a less-impressive 44% rise as it continues to battle pandemic lockdowns. Crucially, though, losses widened for both Singapore-based companies.

Although sales in Sea’s e-commerce division more than doubled in 2021, its cost of revenue for that sector also doubled, as did corporate-level marketing expenditure. The result is a widening of its net loss to more than $2 billion. Grab, which listed on the Nasdaq via a SPAC (special purpose acquisition company) merger in December, saw its loss expand 30% to $3.6 billion.

Grab’s numbers are dramatic. While the company cut base incentives — the amount paid to merchants and drivers in commissions and fees — it drastically increased the total doled out to suppliers as well as to consumers (in the form of discounts and promotions). This is normal for a startup that’s adding users hand over first and doubling revenue each year. It’s irrational behavior when all that effort allows you to boost monthly traction users by a mere 3% in a year.

Sea’s story is similar, and it has continued on in the same vein because it raised more than $7 billion in debt and equity in 2021, taking total fundraising above $11 billion over the past two years. So while its 2017 stock market debut in New York means Sea is no longer a private company, its current strategy could best be described as a publicly listed startup. It can keep burning investor cash to chase unprofitable growth because there remains trillions of dollars of cheap money sloshing around the world thanks to a decade of quantitative easing.

That’s not going to last. The impact of Russia’s invasion of Ukraine makes the size and timing of US-led rate rises uncertain, but their arrival is guaranteed. That could be a real problem if funding dries up, Southeast Asian economies slow, and revenue growth dips before they even have a chance to turn a profit. Some policy makers in the region are already shifting their focus toward battling inflation as it becomes a risk to their pandemic recoveries.

Investors have already punished both companies for their profligacy — both are trading at around half of where they were at the start of the year — but that share slide might continue unless management quickly shows an ability to tighten the purse strings and display some fiscal discipline. In other words, they need to show that they can grow up.

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