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Biden signs ‘Buy American’ order, pledges to renew US manufacturing

Revitalizing the manufacturing sector, which accounts for about 12% of the US economy, is a key part of the Biden administration’s broader push to drive up wages, create more union jobs, support minority-owned businesses, and strengthen US supply chains, White House officials say. — PHOTO FROM JOE BIDEN FACEBOOK PAGE

WASHINGTON —  President Joseph R. Biden, Jr., vowed on Monday to leverage the purchasing power of the US government, the world’s biggest single buyer of goods and services, to strengthen domestic manufacturing and create markets for new technologies.

The Democratic president signed an executive order aimed at closing loopholes in existing “Buy American” provisions, which apply to about a third of the $600 billion in goods and services the federal government buys each year. The order will make any waivers more transparent and create a senior White House role to oversee the process.

“I don’t buy for one second that the vitality of American manufacturing is a thing of the past,” Mr. Biden told reporters before signing the order. “American manufacturing was the arsenal of democracy in World War Two and it must be part of the engine of American prosperity now.”

Mr. Biden reiterated plans announced on the campaign trail to replace the fleet of federal cars with US-made electric vehicles.

Revitalizing the manufacturing sector, which accounts for about 12% of the US economy, is a key part of Mr. Biden’s broader push to drive up wages, create more union jobs, support minority-owned businesses, and strengthen US supply chains, White House officials say.

Boosting US manufacturing has proven a vexing challenge for previous administrations, including that of former President Donald J. Trump.

“America can’t sit on the sidelines in the race to the future. Our competitors aren’t waiting,” Mr. Biden said. “To ensure the future is made in America, we need to win not just the jobs of today, but the jobs and industries of tomorrow.”

Manufacturers have been attracted by lower wages and weaker environmental standards in China and other countries in recent decades. This exodus has resulted in critical gaps that have been laid bare during the coronavirus disease 2019 (COVID-19) pandemic, such as the making of medical equipment.

China overtook the United States as the world’s top manufacturer in 2010, and was responsible for 28% of global output in 2018, according to United Nations data.

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) welcomed Mr. Biden’s order. “This order is a good first step in revitalizing US manufacturing, which Trump’s policies failed to do over the past four years,” AFL-CIO President Richard Trumka said.

TOUGH CHALLENGE
Major US retailers, including Walmart Inc, have launched high-profile “Made in America” campaigns, only to court foreign manufacturers afterward.

Rebuilding supply chains and developing new ones is key to US economic growth, trade experts say.

The US trade deficit surged to $68 billion in November, its highest level in 14 years, as businesses filled shelves with foreign goods and supplied domestic factories reliant on foreign parts, offsetting a rise in exports.

Mr. Biden’s order directs federal agencies to reevaluate the threshold used to determine US content, to prevent companies that sell to the government from importing largely foreign-made goods and selling them as US-made after making minor tweaks.

New percentages for required US content will be determined as a result of the process to be launched on Monday, officials said.

Canada, the second-largest US trading partner, is worried Canadian companies and workers could bear the pain if trading relations between the neighboring countries deteriorate.

“We are always concerned by ‘Buy American’ … for sure that is going to be an issue very, very high on our agenda in our work with the Biden administration,” Canadian Finance Minister Chrystia Freeland told reporters in Ottawa.

Asked if the order would be seen as protectionist, a Biden administration official said Sunday night that it would be fully consistent with US commitments under the World Trade Organization, and Washington would work with trade partners to modernize global rules. — Andrea Shalal, Alexandra Alper, and Timothy Aeppel/Reuters

Duterte tells Filipinos to stab fraudsters who use his name in corruption

MANILA – Philippines President Rodrigo Duterte said on Monday Filipinos should stab fraudsters who use his name and the names of other cabinet officials for corrupt purposes.

Corruption is, with red tape, an obstacle to the Southeast Asian nation’s competitiveness, deterring investors and delaying much-needed projects.

Duterte warned against dealing with people who use his name or those of other senior government officials to try to secure business contracts and accelerate the processing of documents.

Describing such fraudsters as “parasites” and “leeches” preying on the naive, he offered advice for victims in a televised weekly address that provides updates on the government’s response to the COVID-19 pandemic.

“Just stab them. Do not shoot because it’s noisy and you can easily get caught,” Duterte said.

His comments are likely to upset human rights groups and government critics.

Duterte is not eligible for re-election when his six-year term ends, but fulfilling his campaign pledge on corruption could boost the chances of his chosen successor in the 2022 elections.

Thousands of suspected drug dealers have been killed in Duterte’s signature anti-narcotics campaign, and Duterte has consistently enjoyed high approval and trust ratings even though his statements on violence and killings have upset rights groups and the opposition.

Presidential spokesman Harry Roque did not respond to a request for comment past office hours. Spokesmen for Duterte have previously said the president is used to using colourful language, hyperbole or jokes. — Reuters 

What executives learned from leading amid the pandemic

Corporate leaders share lessons on dealing with the current crisis in Part 1 of BusinessWorld Insights Leadership Series

As the pandemic challenged businesses in diverse ways, chief officers are at the forefront of responding to its impacts and adapting to its disruptions.

The speakers at the first session of BusinessWorld Insights series on “Leadership in the C-Suite” recalled the challenges that their companies have faced during the crisis, out of which came remarkable lessons that can spur today’s business leaders to lead with agility, wisdom, and determination in spite of uncertain times.

The online session last Jan. 20, themed “Inspiring Courage: Leading during Uncertain Times,” had in the panel Atty. Emmanuel P. Bonoan, vice-chairman, chief operating officer, and head of advisory at KPMG in the Philippines (R.G. Manabat & Co.); Kenneth S. Yang, president and CEO of Golden Arches Development Corp. (GADC); and Steven P. Tan, president of SM Supermalls. BusinessWorld Editor-in-Chief Wilfredo G. Reyes moderated the session.

Setting an ethical framework

Atty. Bonoan of KPMG Philippines shared that the crisis further intensified what he does as a leader. For instance, their firm has been reviewing cashflows on a daily basis, while he has been listening more carefully to every part of their organization.

But more than these, the crisis further intensified his sense of ethics and morality. He stressed that more than testing the management skills of corporate leaders, the pandemic has presented a direct challenge in making decisions that balance the sustenance of businesses and the well-being of its employees.

To strike such balance, he recommends employing an ethical framework to guide leaders towards sounder decisions.

“In these times, more than ever, a leader has to rely on a moral and ethical framework. This framework should have been developed not in this time of crisis, but during ‘ordinary times’,” Mr. Bonoan said.

This framework, he continued, is grounded on one’s personal outlook or moral compass formed by his or her experiences, the company culture, and the discernment of the company’s purpose.

“If the leaders have committed to the welfare of their employees, then their actions in time of [this pandemic] would most likely be guided by that philosophy that they have set for themselves,” Mr. Bonoan said.

Going back to purpose can be maximized by leaders to motivate their employees, he added.

“For us, it’s a commitment to our clients, commitment to our people, and a commitment to our communities,” the KPMG Philippines executive said. “When you’re aware of that purpose, when you live it out, then your employees believe in you and are motivated by that.”

Mr. Bonoan also noted that as companies rebound at present, leaders should have the ability to plan around shorter time frames and look at cashflows more closely and, at the same time, ensure they are not scrimping on the quality of their service. “Now is the time to show our commitment to our clients, that we’re going to go the extra mile for them,” he said.

Preparing beforehand, communicating constantly

Mr. Yang of GADC, which operates the McDonald’s (McDo) franchise in the Philippines, recalled that they have addressed the pandemic’s impacts by implementing safety protocols and leveraging delivery, drive-thru, and other innovative channels.

The protocols, in particular, were set in place through the M Safe program, wherein Mr. Yang communicated in a video how they ensure safety at every McDo branch.

As Mr. Yang shared, the company has prepared for this response even before the pandemic hit the country.

“We were actually prepared in the sense that we’ve heard the news already from China and globally…and so we anticipated that,” he said. “The video is just one small thing because behind that video was a whole set of operational procedures which we continue to update today.”

This kind of preparation will be more crucial for leaders in the now normal, he added. “When things are really fluid, you really need to have the ability to plan for multiple scenarios. You need to have consultations with all the stakeholders, including the government,” Mr. Yang said, adding that execution is only assured when there is thorough alignment in the whole organization.

The CEO also stressed how valuable communication is within employees. “[E]nsure that communication is there, telling them the truth about what’s happening [and] what we need to do. If that is really clear to them, they will actually step up and are self-motivated to do what they need to do,” he said.

Agility and collaboration

Mr. Tan of SM Supermalls shared that consumer confidence has not yet fully returned to normal in spite of malls being open again. Yet, he hopes this year will be a year of recovery for their business.

He believes achieving that rebound requires teamwork. “In order to recover, this has to be a collaborative effort to rise above this adversity,” Mr. Tan said.

The SM executive saw this teamwork when the company cut the rents paid by tenants to support them during this difficult period. “We really feel that working together with our tenants is really key to be able to help… the businesses, the MSMEs, [right up to] the employees of our tenants,” he said.

Aside from this action, the business also accelerated its digital and mixed channels such as its online shopping platforms and curbside pick-up points.

All these pivots visibly have come at a fast pace, as Mr. Tan emphasized that leaders should learn to make agile actions when the unprecedented comes.

“Agility is key. You have to be fast. You have to be responsive. Forget about the past; move on. Move forward so that you could really address the situation,” Mr. Tan said, adding that leaders should also be transparent and always give an open ear to their employees.

Taking care of employees is likewise important for the SM Supermalls president, and he sees SM Supermalls do this by living up to its culture of malasakit (compassion).

“We make them feel the bayanihan spirit of helping each other. If they see that you are really helping a lot of people, they will really make sure that they will also protect the business,” Mr. Tan said.

“Help your tenant and work with your tenant partners, work with your employees, and help your community. Anyway, we are all interconnected,” he also advised.

BusinessWorld Insights Leadership Series is presented by InLife, with the support of Management Association of the Philippines, British Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines, Philippine Chamber of Commerce and Industry, and The Philippines STAR.

Marina Bay beckons as Singapore gears up for ‘Davos in Asia’

With Singapore’s borders largely closed, and the pandemic still raging across the world, there is still significant uncertainty over plans for the island nation’s 2021 alternative. But its tentative restart of smaller conferences offers a glimpse into what Davos attendees might expect if they are able to travel safely and to meet in person rather than remotely. Image via Reuters

SINGAPORE — Once part of daily life for Singapore, conferences in the era of coronavirus disease 2019 (COVID-19) are a meticulously planned operation in the global business hub, which is due to host “Davos in Asia” in May.

After safety marshals check masks are properly fitted and social distancing adhered to, registration is accompanied by a swab of both nostrils by medics in top-to-toe protective suits.

Guests then wait 10 to 15 minutes for a rapid antigen test result and can proceed after receiving a text message that reads: “You’re Okay!”, accompanied by a smiley face.

“Singapore is just gearing up,” said Irene Lim of think-tank Institute of Policy Studies, which this week held an event for around 250 local delegates at the city state’s Marina Bay Sands complex, which has facilities for more than 45,000 conference attendees, a hotel, casino, and restaurants.

Organizers of the World Economic Forum’s (WEF) annual meeting are also targeting the venue, sources told Reuters, to host the 2021 event after the gathering normally held in the Swiss Alpine ski resort of Davos was canceled due to the COVID-19 crisis.

The WEF is also holding a virtual event this week, the time when global political and business leaders would normally gather amid high security in the remote Swiss town.

With Singapore’s borders largely closed, and the pandemic still raging across the world, there is still significant uncertainty over plans for the island nation’s 2021 alternative.

But its tentative restart of smaller conferences offers a glimpse into what Davos attendees might expect if they are able to travel safely and to meet in person rather than remotely.

Guests arriving at the glitzy Singapore complex, which had a starring role in the 2018 movie Crazy Rich Asians, first have their temperatures and contact tracing devices, either a Bluetooth-powered app or a pocket-sized dongle, scanned.

Then in the resort’s ballroom red ropes section participants into 40–50 person groups to limit mingling, while questions from the audience trigger a frenzy of microphone cleaning by glove-wearing stewards.

In a country that has helped bring the coronavirus under control through its strict rules, there is also a reminder to guests that any breaches will not go unheeded.

A menu placed at each seat advertising a lunch of kale salad and salmon, includes an advisory saying the government may request footage of the event “to conduct checks and investigations on adherence” to safety measures.

“It’s been quite a surreal experience. Quite different from what it was before,” conference participant Ian Mak said. — John Geddie and Joseph Campbell/Reuters

South Korea’s Q4 GDP beats expectations, poised for strong 2021 rebound

SEOUL — South Korea’s economy grew at a faster-than-expected pace in the fourth quarter as it ended the coronavirus-stricken year solidly poised for a recovery in 2021 thanks to surging exports.

Gross domestic product (GDP) grew a seasonally adjusted 1.1% in the December quarter from the third quarter, the Bank of Korea (BOK) said on Tuesday, faster than the median estimate of 0.7% in a Reuters poll and following a 2.1% expansion in the September quarter.

That limited the contraction over the whole year to 1.0%, which is likely to be the smallest GDP slump among the Organization for Economic Co-operation and Development in the year of the pandemic that has killed more than 2 million worldwide.

“Recovery momentum should gather pace from the second quarter onwards, led by strong export prospects as global growth and 5G deployment pick up speed,” said Lloyd Chan, an economist at Oxford Economics.

“A vaccine rollout around February should also stimulate domestic demand, as it would reduce the need for stringent containment measures,” he said.

South Korea’s economy has had a sharp albeit uneven bounce since the second quarter when it suffered its steepest downturn in over a decade.

A recent Reuters poll of 27 economists forecast the economy to grow 3.0% this year, in line with the BOK’s projections.

December exports rose 12.6% from a year earlier, the biggest expansion in 26 months.

Underlining the optimism, shares of Samsung Electronics has surged about 50% in the fourth quarter alone as it reported a 26% jump in its fourth quarter profit.

But the number of jobs plunged at the sharpest rate in over two decades in December, while private consumption over the fourth quarter declined 1.7% in a sign the recovery is still fragile amid a third wave of the coronavirus now sweeping the country.

Construction investment rose 6.5% from a quarter earlier, marking the best performance since the fourth quarter of 2019.

On a year-on-year basis, the economy shrank 1.4% in the fourth quarter, versus the 1.7% decline forecast in the poll.

Last year, the government pledged fiscal stimulus of about 310 trillion won ($281.4 billion), while the BOK cut interest rates by 75 basis points to 0.5%.

Most analysts expect the BOK to retain its accommodative policy stance in 2021.

“BOK will keep emphasizing financial stability, but that does not mean any unwinding of easier monetary policy adopted after COVID-19,” Lee Seung-hoon, an economist at Meritz Securities said. — Cynthia Kim/Reuters

Moderna says it believes vaccine will work against new variants

Moderna Inc. said on Monday it believes its coronavirus disease 2019 (COVID-19) vaccine protects against new variants found in Britain and South Africa, although it will test a new booster shot aimed at the South African variant after concluding the antibody response could be diminished.

The company said in a news release it found no reduction in the antibody response against the variant found in Britain. Against the South African variant, it found a reduced response but still believed its two-dose regimen would provide protection.

The emergence of new variants in Britain, South Africa and Brazil has created some concern that mutations in the virus may make vaccines less effective.

Moderna said it is looking at whether a booster shot—either of its existing vaccine or of a new shot designed to protect against the South African variant—could be made available in future if evidence were to emerge that protection declined.

“The virus isn’t going to stand still,” Moderna President Stephen Hoge said on a conference call. “While the current strains appear to be well-protected by our COVID-19… it’s important that we remain vigilant and develop potential tools and countermeasures that would allow us to continue to beat back the pandemic.”

Moderna said it expects its current vaccine will remain protective for at least a year after completing the two-dose course. It does not expect to test a third dose until at least six months after that course is finished.

Jefferies analyst Michael Yee said in a research note it was encouraging that the antibody response of the Moderna vaccine to the South African variant was still above the levels that provide protection.

Mr. Yee also said the speed with which Moderna was able to design a new booster shot candidate was proof of the flexibility of the new mRNA technology upon which it is based.

Dr. Paul Offit, an infectious disease expert at the University of Pennsylvania and a member of the US Food and Drug Administration’s vaccine advisory panel, said he was only mildly concerned the vaccine would not be protective against the variants.

“It is a little worrisome that you see a lesser neutralizing antibody response, but that doesn’t necessarily mean that you are unprotected,” he said, noting that even these lower levels may still be enough to protect against serious infections.

“The goal of this vaccine is to keep you out of the hospital and to keep you out of the morgue. If you get a symptomatic infection or mildly symptomatic infection that is not a burden to the healthcare system,” Mr. Offit said.

Pfizer Inc. and BioNTech SE have also said tests showed their vaccine is effective against the variant found in Britain, but have not yet disclosed results against the South African variant.

That variant first found in Britain has caused a massive surge in cases there and has also been found in more than a dozen US states. US public health officials expect it to be the dominant variant in the United States within six weeks. — Reuters

Economic recovery in Philippines hinges on kids leaving lockdown

For CK Colindres and her two children, 12 and 2, weekends were always spent strolling in malls and dining out in the Philippine capital of Manila. That all changed when the pandemic struck.

They’ve been cooped up at home since the government ordered minors to stay indoors to curb virus transmissions, the only country in Southeast Asia to impose such restrictions, where children and teens make up over 40% of the population.

The 40-year-old mother is among the millions of parents officials need to go out and spend more, hoping to reinvigorate a consumer-led economy that plunged into recession last year. To do that, it’s becoming clear the government needs to lift restrictions on those parents taking their children with them.

“A big part of the economy doesn’t function” when children aren’t allowed out, Economic Planning Secretary Karl Chua said last month. The 11.5% drop in gross domestic product in the third quarter could have been shallower by 4 percentage points if there were no restrictions on family activities, he said. The government forecasts growth at 6.5% to 7.5% this year.

Half of consumer demand isn’t likely to return if the restrictions on minors remain, Chua said. Parents are also the largest contributors to the nation’s 574 billion-peso ($11.9 billion) informal dine-out market, including fastfood restaurants, he added.

Efforts by President Rodrigo Duterte’s administration to balance health and economic risks have been challenged by the emergence of a more-contagious strain of the coronavirus. His office late Monday reversed a decision announced only on Friday to lower the age restrictions, reinstating an order preventing children under 15 from leaving home. Duterte said the move was a precaution against the new variant and “that order will subsist until such time that everybody will be safe by the vaccine.”

The Philippine policy has been driven by a concern that children can spread the virus within the extended households that are common in the country, including to grandparents or elderly relatives who are most vulnerable.

The restrictions on minors stand out globally. Countries including France have kept schools open during their latest lockdowns, while others like Singapore exempt young children from mask-wearing mandates. There’s mounting concern that isolating kids will exact a social and mental toll, especially on those from disadvantaged backgrounds.

Singapore Example

The Philippines has the second-highest number of coronavirus infections in Southeast Asia, with more than 500,000 cases. The nation also has one of the region’s deepest pandemic-induced economic slumps, with recovery momentum expected to be weaker than its peers due to a more conservative outlook on fiscal stimulus.

“The example of other countries might shed some light. In Singapore, where schools reopened relatively quickly after the circuit breaker period in June, overall retail sales have already returned to near pre-Covid levels by November,” said Euben Paracuelles, Singapore-based economist at Nomura Holdings Plc.

“The caveat is that the authorities were strict in implementing the remaining safe-distancing measures,” Paracuelles said. “So compliance was high, limiting transmissions and allowing further economic reopening by December.”

Spending will improve if the government builds confidence by controlling the virus outbreak, said Dan Roces, chief economist at Security Bank Corp. in Manila. “There is a greater chance that parents will let kids go out if their own confidence is better.”

Beyond Economics

There’s more upside to allowing kids outdoors than just a boost to the economy, according to Stella Quimbo, a congresswoman representing Marikina, part of the sprawling Metropolitan Manila, and a former economics professor at the University of the Philippines. The capital region accounts for about a third of the economy and more than half of the nation’s coronavirus cases.

“Lifting movement restrictions on the youth will not only help stimulate the economy, but will also help stimulate their minds and reduce the risks of mental health problems,” said Quimbo. “They have been locked up inside their homes for so long. We need to balance the problems of Covid and mental health.”

There might be some hesitancy if restrictions are eased. Colindres, for instance, said she would still opt to stay indoors with her kids.

“Health is top priority for me and my husband,” she said. “We don’t want to take the risk of our children getting sick. Malls and recreation areas will always be there anyway.” — Bloomberg

[B-SIDE Podcast] Charter change, explained

Follow us on Spotify BusinessWorld B-Side

Charter change (cha-cha) is once again alive in Congress. Although business groups support the initiative to liberalize the economy, they say that amending the Constitution 15 months before the national elections will only be “divisive.” 

Lawmakers, they added, should instead focus on passing pending measures reforming the country’s existing economic policies while the country is in the middle of a pandemic.

In this episode of B-Side, Ako Bicol Party-list Rep. Alfredo A. Garbin, Jr., chairman of the committee on constitutional amendments, speaks with BusinessWorld reporter Kyle Aristophere T. Atienza about the resolution filed by House Speaker Lord Allan Q. Velasco in 2019, which seeks to amend the “restrictive” economic provisions of the Constitution. 

Resolution of Both Houses No. 2 seeks to insert the phrase “unless otherwise provided by law” to several sections of the Constitution, namely on national patrimony and economy; education, science, technology, arts, culture and sports; and general provisions on media and advertising.

House legislators have assured that the House proceeding on charter change would only focus on the Charter’s economic provisions, which bar foreign investors from owning more than 40% of certain industries. 

Economist Gerardo P. Sicat and former National Economic and Development Authority chief Ernesto M. Pernia support the said amendments, citing the need to speed up the country’s economic recovery from the pandemic.

Senators Ronald M. Dela Rosa and Francis N. Tolentino, meanwhile, are pushing to amend the Charter’s provisions on “democratic representation.” They filed their counterpart version in December 2020.

The committee is expected to bring the bill to the plenary by February.

This episode of B-Side was recorded remotely on January 16. Produced by Nina M. Diaz, Paolo L. Lopez, and Sam L. Marcelo.

Follow us on Spotify BusinessWorld B-Side

Philippines bucks global decline in FDI

FOREIGN DIRECT INVESTMENTS to the Philippines likely went up in 2020, according to a report by the United Nations Conference on Trade and Development. — PHILIPPINE STAR /MICHAEL VARCAS

By Jenina P. Ibañez, Reporter

FOREIGN DIRECT INVESTMENTS (FDI) to the Philippines rose by almost a third in 2020, a stark contrast with the collapse in global FDI amid the coronavirus disease 2019 (COVID-19) pandemic, according to preliminary estimates by the United Nations Conference on Trade and Development (UNCTAD).

In its latest investment trends monitor released on Monday, UNCTAD said that the Philippines bucked the trend as FDI flows went up 29% to $6.4 billion in 2020 from $5 billion in 2019. 

In contrast, global FDI plunged by 42% to around $859 billion last year, mostly due to investment declines among developed countries. FDI in Southeast Asia last year declined by 31% to $107 billion after flows to largest recipients Singapore and Indonesia shrank.

“FDI flows to developed countries fell drastically by 69% to values last seen almost 25 years ago… At an estimated $229 billion, inflows in developed economies were only one third of the low point after the global financial crisis in 2009 (at $714 billion),” UNCTAD said.

China was the largest FDI recipient with $163 billion in inflows, followed by the United States with $134 billion.

UNCTAD’s investment trends monitor estimates annual figures based on partial-year data.

The latest data from the Bangko Sentral ng Pilipinas showed FDI flows to the Philippines fell by around 10% to $5.255 billion in the first 10 months of 2020. The central bank set a target of $6 billion in total FDI for the year.

UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion called UNCTAD’s assessment on Philippine FDI growth against an overall decline in Southeast Asia a “surprise.”

He noted in an e-mail that although he does not have the data, outsourcing investments in the Philippines grew during and after the Severe Acute Respiratory Syndrome (SARS) epidemic in 2003-2004.

“I suspect that this may be the case here. A lot of global firms might be finding themselves looking (at) how to cut cost and one way is to outsource,” he said.

European Chamber of Commerce of the Philippines President Nabil Francis said in a mobile message that the assessment demonstrates the country’s ability to attract investments amid the pandemic.

“Hence, we urge the Philippine government to keep the momentum going through the passage of key economic reforms,” he said, noting amendments to the Public Services Act, Foreign Investments Act, and Retail Trade Liberalization Act.

“The Philippines is among the world’s most restrictive countries to foreign direct investments. Foreign investment reacts positively to liberalizing foreign restrictions.”

WEAK OUTLOOK
In the report, UNCTAD said the outlook for global FDI is expected to remain weak this year.

“Although the global economy is expected to initiate a hesitant and uneven recovery in 2021 and GDP growth, gross fixed capital formation and trade are projected to resume growth, investors are likely to remain cautious in committing capital to new overseas productive assets,” it said.

Potential increases in FDI flows, UNCTAD added, would be based on cross-border mergers and acquisitions — especially in healthcare and technology — instead of new investments on productive assets.

“Risks related to the latest wave of the pandemic, the pace of the rollout of vaccination programs and economic support packages, fragile macroeconomic situations in major emerging markets, and uncertainty about the global policy environment for investment will continue to affect FDI in 2021,” the report said.

PHL business optimism falls to lowest since 2016

HALF of midsized Philippine businesses have either “a slightly or very optimistic economic outlook” for the next 12 months, the P&A Grant Thornton International Business Report showed. — REUTERS

ECONOMIC OPTIMISM among Philippine midsized businesses continued to fall in the second half of 2020, as the pandemic continued to weigh heavily on the economy.

The P&A Grant Thornton International Business Report (IBR) on Monday said that almost half (49%) of the 50 midsized Philippine businesses surveyed have either “a slightly or very optimistic economic outlook” for the next 12 months.

This was five percentage points lower than the 54% in the first half last year, which was already the lowest percentage of optimistic businesses since the 68% in first quarter of 2016.

The pandemic wreaked havoc on the Philippine economy, which shrank by an average of 10% in the first nine months of 2020. Economic managers expect the full-year economic contraction at 8.5-9.5%.

Unlike the Philippines, there was an improvement in business optimism around the world in the second half of 2020, the IBR showed. The report indicated 57% of the 10,000 businesses surveyed across 32 countries had an optimistic outlook for the next 12 months, an improvement from the 43% in the first half of 2020.

The survey also showed some Philippine businesses are becoming less hopeful on their growth prospects this year.

“With optimism steadily sinking among the mindset of mid-market leaders, other key indicators are also sluggishly turning downwards,” Grant Thornton said.

Philippine businesses expecting a rise in revenues in the next year fell two percentage points to 43%, while those expecting profitability slipped three percentage points to 47%.

In contrast, the percentage of firms that anticipate an increase in exports went up to 48% from 44%, with those expecting more revenue from non-domestic markets jumping to 47% from 36%.

Although businesses that expect to boost employment went up by six percentage points to 51%, the IBR said it will remain below pre-pandemic levels.

Businesses continue to express concern about economic restraints, as varying degrees of lockdown restrictions remain in place. More than half named economic uncertainty as the top constraint to growing their business. Around 47% also said they expect finance shortages despite monetary easing and fiscal support.

“As optimism has decreased, this has materially flowed through to orders, with 56% citing shortage of orders as a constraint. Businesses are also concerned about availability of skilled staff and labor costs with 50% of businesses citing each as a constraint on their ability to grow,” the report said.

Half of the businesses surveyed raised concern over high labor costs, availability of labor, and red tape.

Businesses are, however, continuing to invest, especially in research and development (51%), staff skills (50%), and technology (47%).

“With second and third waves of COVID-19 hitting many markets, the need to invest in enhancing an existing product portfolio, digital business models and having people with the skills to operate in a virtual world for the foreseeable future continues to drive investment decisions,” Grant Thornton said.

P&A Grant Thornton Chief Executive Officer and Chairperson Ma. Victoria C. Españo said that the overall data showed that mid-market business leaders are realistic about potential challenges in the first half of 2021.

Global businesses expecting revenue increases went up to 45% from 34%, while those anticipating profitability increased to 44% from 32%. Those with improving employment prospects also increased to 38% from 28%.

“While the outlook is showing real improvement with both economic optimism and expectations around revenue and profits on the rise, it is important to note the context of these increases. In many cases the improvements we are seeing are due to firms benchmarking the next 12 months against the very depressed economic environment of 2020 due to COVID-19,” Ms. Españo said.

“Even with vaccines being rolled out in some markets, the reality is it will still be some time before we return to anything approaching normality.” — Jenina P. Ibañez

PHL business optimism sinks to new low in second half of 2020

PHL business optimism sinks to new low in second half of 2020

ECONOMIC OPTIMISM among Philippine midsized businesses continued to fall in the second half of 2020, as the pandemic continued to weigh heavily on the economy. Read the full story.

PHL business optimism sinks to new low in second half of 2020

MIAA board shuts door to Megawide’s NAIA rehabilitation proposal

By Arjay L. Balinbin, Senior Reporter

THE MANILA International Airport Authority (MIAA) board has junked the appeal filed by Megawide Construction Corp. and its foreign partner GMR Infrastructure Ltd. seeking to overturn the revocation of its original proponent status (OPS) for the  Ninoy Aquino International Airport (NAIA) rehabilitation.

“I was not present in that meeting, but I was informed that Megawide’s motion for reconsideration was indeed denied by the MIAA board,” Justice Secretary Menardo I. Guevarra, a member of the MIAA board of directors, told BusinessWorld in a phone message on Monday.

Sought for comment, Megawide said via Viber: “We respect the government’s decision on this matter.”

In a phone message to BusinessWorld on Monday, MIAA General Manager Eddie V. Monreal said it would issue a statement “once an official document is released citing the board’s decision on the matter.”

“The statement shall be publicized in accordance with proper protocol (i.e. resolution is signed, decision was rightfully communicated to all parties concerned),” he added.

Transportation Secretary Arthur P. Tugade and Transportation Undersecretary Manuel Antonio L. Tamayo serve as the MIAA board’s chairman and alternate chairman, respectively. Mr. Monreal serves as vice chairman.

Aside from Mr. Guevarra, the other members of the MIAA board are Office of the President Undersecretary Jesus Melchor V. Quitain, Civil Aviation Authority of the Philippines Director-General Jim C. Sydiongco, Tourism Secretary Bernadette T. Romulo-Puyat, Finance Secretary Carlos G. Dominguez III, and private sector representatives Leoncio Dakila S. Nakpil and Leonardo P. Lopez.

Mr. Dominguez said in a Viber message, “The DoF, as part of the board, is awaiting the proper clearances and protocols regarding board resolutions. Once cleared, we will share the official position on the matter.”

On Jan. 15, the listed builder said it was willing to move on to other projects “that have equal significance” if the MIAA board decides not to reinstate the tandem’s original proponent status (OPS) for the NAIA rehabilitation project.

According to Megawide,the National Economic and Development Authority-Investment Coordination Committee last November asked for the submission of additional requirements that demonstrate the consortium’s capability to undertake the P109-billion project. The Megawide-GMR tandem submitted documents showing its financial capability on Nov. 20.

However, the MIAA board in December revoked the OPS granted to Megawide-GMR.

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