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IOC’s Bach will be in Tokyo for talks with Games organisers

BERLIN — International Olympic Committee (IOC) President Thomas Bach will be in Tokyo for three days next week to review preparations for the postponed 2020 Olympics and back organizers amid the ongoing coronavirus pandemic.

Bach told a news conference on Wednesday he would be in Tokyo between Nov. 15 and 18, but did not provide details on possible meetings with government officials or Prime Minister Yoshihide Suga.

“It (the trip) is important because we are now coming to a crucial stage of putting this toolbox together with COVID-19 counter-measures to get the feeling what will be needed next year,” he said.

“I hope after this visit we can give even more confidence to all the participants of the Games about the safe environment they will see in about nine months from now.”

The IOC and Japanese organizers took the unprecedented decision in March to delay the Games by a year to 2021 due to the pandemic, a costly postponement that still has many moving parts given the spread of the virus.

Bach said it was still too early to say whether spectators or even international visitors would be part of the Olympics in July and August, but he believes recent events held in Japan provide confidence that some fans will be in the arenas.

Japan hosted a one-off gymnastics meeting on Sunday, seen as a crucial trial run for having international athletes travel to and compete in Japan during the Games.

“(The IOC is) more and more confident that we will have a reasonable number of spectators,” Mr. Bach said. “How many and under which conditions, again, depends very much on the future developments.

“The message I want to deliver in Tokyo is that we are fully committed to the safe organization of the Games,” Mr. Bach said. “This is the principle to which we remain committed; that these games will happen in a safe environment.” — Reuters

‘All eyes’

Tiger Woods was most definitely not the pre-tournament favorite when he teed off with playing partners Shane Lowry and Andy Ogletree at Augusta National last night, Manila time. The honor went to United States Open champion Bryson DeChambeau, whose impressive length off the tee figures to tame the course. As the defending Masters titleholder, however, all eyes stayed on him. Never mind that sports books had a dozen or so names ahead of him, and that his 35-to-one odds reflected his poor form in recent memory.

The phrase “all eyes” is, to be sure, relative considering that the Masters will be held on a November weekend for the first time in history. With the novel coronavirus pandemic wreaking havoc on the schedule, golf’s premier event has been compelled to compete with football, invariably deemed much more appealing to broadcast viewers. And with no spectators allowed on the course, players will be crafting shots in silence. Whereas outstanding efforts used to be accentuated even more by rousing cheers, they will now be greeted sans any responses save for those from flightmates.

Woods has been hyped by the resplendent reactions throughout his storied career, but the peace and quiet may yet serve him in good stead given his utter lack of competitiveness since he stunned all and sundry by claiming his 15th major trophy at Augusta National last year. He has been okay at best, but nowhere near good enough and often enough to make the first page of leaderboards. If anything, his Masters prognosis is optimistic; a significant change in priorities, an absence of reps, and the ravages of time are offset only by his familiarity with the layout.

Don’t tell that to Woods, though. He’s still bent on winning. And he still believes he can emerge triumphant in golf’s holiest of grails. Last year, the right mix of talent, perseverance, and luck propelled him to success. This time around, he’ll need more — much, much more — than his fair share simply to keep pace. All the same, he’ll be walking the terrain with pride. He is, after all, the reigning Masters champion—until he isn’t.

 

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.

Graphic design platform offers free marketing templates for MSMEs

Graphic design platform Canva launched Canva for Negosyo to help entrepreneurs take their negosyos (businesses) online. 

Canva for Negosyo has free resources—including branding video tutorials, informational blogs, and customizable marketing templates—useful for designing and managing a small online business. Fashion and food images, curated based on the common needs of MSMEs, are available too for those with a limited budget for photography.

Creating an account is not necessary to access these resources. 

“We want to be the Filipino entrepreneurs’ ally and give them a headstart as they take their businesses online,” said Maisie Littaua, head of growth for Canva Philippines. Many micro, small, and medium enterprises (MSMEs) are transitioning their businesses digitally to keep up with the times, but find themselves in an unfamiliar environment where they have little to no experience. 

BusinessWorld reported that “the Department of Trade and Industry tallied 839,444 business registrations between January and early November, outpacing the 2019 full year by 32%. … Online business registrations totaled 82,870 from the start of the lockdown in March to Nov. 4. There were only 1,753 registrations for online businesses in January.”

Five toolkits available on the Canva for Negosyo page represent businesses that are among the most popular with entrepreneurs: lutong bahay (home-cooked meals); manufactured skincare products; DIY laundry shops; electronics; and cafes.

“These are the types of businesses that can also scale up so there’s a need for consistent branding to grow their business, so these toolkits are made for that,” said Ms. Littaua.

Canva for Negosyo has a Facebook community where entrepreneurs can interact and collaborate with fellow users. Some of the most common queries asked in the group include those in relation to design improvement plus requests for specific business templates. Canva is open to expanding its collection based on the needs of Filipino business owners. 

Apart from Canva for Negosyo, the design and publishing platform also offers Canva for Education, a creativity and collaboration tool with education-specific content for teachers. A series of webinars acquainting Filipino teachers with the tool led to the creation of a similar support group on Facebook for educators. — Patricia B. Mirasol

Green Modern Process Infographic

MMC settles into ‘healthy normal,’ plans to expand services in 2021

Makati Medical Center (MMC) announced a downward trend in COVID-19 admissions, positivity rates, and healthcare worker infections, and an upward trend in operational capacity. 

“We have observed the highest protocols and now our patients are back. We call it a healthy normal. We continue to invest despite the pandemic,” said MMC President and Chief Executive Officer Pilar Nenuca Almira, in a November 10 media roundtable discussion. 

Initiatives for 2021 include the creation of a transplant center, the expansion of the renal care center, and the acquisition of new magnetic resonance imaging (MRI) and catheterization laboratory machines. 

This year, MMC unveiled telepharmacy, telepsychiatry, and home care services; a wellness center in Ayala North Exchange that has x-ray and electrocardiogram (ECG) services, as well as a breast clinic that is completely detached from hospital premises. 

INFECTION CONTROL
From declaring its first case on March 8, to having its first mortality the second week of April, MMC has since settled towards what it calls a “healthy normal.” Of the 5,321 COVID-19 patients it treated as of October 16, 95% (or 5,072) were deemed recovered, a favorable rate compared to the national figure of 86% (or 310,642) as of October 20.

“In mitigating the impact of a pandemic, nothing is ever too much, too fast, too soon. We need to coexist with the virus,” said MMC medical director Dr. Saturnino P. Javier 

MMC tests its frontliners for COVID-19 every two weeks; those identified in a contact trace are likewise tested immediately. Team modules for psychosocial counseling have also been mandated for healthcare workers to help address any mental health issues. 

Dr. Javier stressed the importance of communication and collaboration in times of crisis.  

Patients who enter the hospital and are suspected of having COVID-19 are designated in hot zones (areas where infected patients are examined and treated). The rest are designated in cold zones (uncontaminated areas). Everyone admitted must further undergo a confirmatory COVID-19 test.

The enforcement of infection prevention and control protocols—together with bed capacity expansion, infrastructure revision, COVID-19 laboratory accreditation, and telemedicine adoption—all contributed to MMC’s coping with the pandemic. 

“The enforcement of strict infection prevention and control protocols can be summed up with the letters BCD: barrier, cleanliness, and distance,” said Dr. Javier. “The most important, though, is the letter A: awareness of all these protocols.” — Patricia B. Mirasol

Venio provides nano-credit assistance to the unbanked

Venio provides unbanked consumers with nano-credit assistance by making credit facilities accessible through a smartphone app. Users enter their details in the app to apply for a loan and then wait for the app’s decision. 

Approved nano-sized loans—typically between US$1 and US$5 or the market currency equivalent—can be used “same as cash” within the Venio Marketplace to purchase goods and services such as food, communication, transportation, and medicine from partner merchants.

Included in its retail network are a growing number of Philippine sari-sari stores as well as international retailers such as Grab and McDonald’s.

“We focus on these small ‘nano’ sized loans as it is a unique offering and other players are not offering credit facilities of this size,” said founder and CEO Warren Platt. “The fact that Venio is offering loans of these sizes means that we can reach customers no one else is and people that have been excluded by the financial system.” 

Of the nearly 400 million adults in Southeast Asia, 198 million remain unbanked and do not own a bank account. In the Philippines, the number stands at 44 million, according to a 2019 report by Google, Temasek, and Bain & Co. Nikkei Asia also reported that in the Philippines, 52 million people, or nearly 80% of adults, are ineligible for bank loans. Many end up borrowing money from acquaintances or loan sharks to cover unforeseen expenses. 

Venio’s mobile application is designed to encourage responsible lending and borrowing as well as allow customers to build their own credit history. Loans are available without any upfront collateral provided on the part of the customer. Each transaction is charged with a 15% convenience fee.

A proprietary scoring algorithm takes over 60 data points from the user’s handset, details on the user’s profile, and further user application data. According to Venio:

• “Geolocation data showing the person goes to the same place five days a week for eight hours would suggest they have a job;

• A download in English could suggest higher education and so earnings potential (the app can be accessed in either English or Filipino);

• Educated users are likely to store contacts with capital letters at the start of their names; and

• Customers having a lot of contacts with post-paid phone numbers would suggest they move in a relatively better-off circle.”

“When done responsibly, nano-credit can really work for people,” said Mr. Platt, who added that initial repayments and secondary loan repayments continue to be greater than expected. 

Venio, which means “come” in Latin, has expanded its services nationwide across the Philippines on the back of launches across Manila, Cebu, and Davao. It has also launched operations in Mexico on the back of an oversubscribed debut in the Philippines. — Patricia B. Mirasol

The social (selling) network

By Mariel Alison L. Aguinaldo

In the world of live selling, e-commerce becomes a social experience, a welcome development for shopaholics in lockdown. A seller sets up a livestream—an online broadcast—and transacts with buyers in real time via chat and other features, depending on the platform they’re using. Online shopping break outs of the rigidity of a website page and turns into a fun interactive video event. 

“Given the current effects of the pandemic, … there is indeed a need to fill and digitally capture that social and relationship building aspect of the shopping experience,” said Samantha Rodriguez-Tung, senior vice president for eCommerce at Kumu, a livestreaming application.  

The presence of other buyers watching the broadcast is reassuring since they act as fellow witnesses to the quality of the products and the selling process itself.

“There’s social proof when you are broadcasting… because other people can comment and you can see your friends also commenting,” said Irene Chan, marketing manager of BeLive, a livestreaming platform for e-commerce retailers, influencers, small business owners, and content creators, in an interview with BusinessWorld.

Buyers—who usually belong to a brand’s established customer base or an e-commerce marketplace—can communicate with other participants in the comments, asking for more details or sharing their thoughts about the products. 

Daniel Mayer, chief executive officer and co-founder of BeLive, shared that a broadcast in June by one of their users, e-commerce platform Fingo Thailand, hit over 11,000 concurrent live views and more than 11,000 comments. Another partner, beauty brand Beautéderm, hosted a livestream in July with Filipino celebrities Darren Espanto, Camille Prats, and Darla Sauler. It generated over 20,000 comments.

For many people, live selling has also become a form of entertainment. A good host can quickly become an influencer, creating a community of ardent followers. There’s Austin Li, a Chinese livestreaming personality who first became famous for selling 15,000 lipsticks in five minutes in 2018. In his broadcasts, Li chats with his viewers while trying on shade after shade on his lips in record time. These broadcasts have cemented his celebrity status over the years: he has around 40 million followers on Douyin, China’s equivalent of TikTok.

For shopKUMU, an upcoming “shoppertainment” or shopping entertainment platform by Kumu, livestreams will be hosted by celebrities like Bela Padilla and Ces Drilon. Homegrown Kumu talents like PrimaClara and Apple Chiu, who all have their own respective following, will also be featured.

Live selling even has the potential of transporting people to other places through its livestreams and products. When COVID-19 endangered the livelihood of fishermen from Zhejiang province in China, the local government held a broadcast at sea in partnership with Taobao Live, the live selling segment of the e-commerce company. They captured the first fishing ceremony of the year and hired chefs to cook dishes from the day’s catch. Buyers could then buy these fresh fish during the broadcast. 

The potential of live selling is the stuff of dreams for many sellers, especially in markets like China where it is massively popular. Red Dragonfly, a Chinese shoe retailer, experienced a 114% year-on-year sales boost in its flagship stores during a livestream in March of this year. In 2019, Viya Huang, another Chinese livestreaming celebrity with a loyal following, sold out 15,000 bottles of Kim Kardashian-West’s perfume within minutes.

The practice is also picking up in other parts of Asia. Lazada reported that the gross merchandise volume (GMV) generated through LazLive increased by 45% month-on-month in April. In Thailand, a Shiseido LazLive broadcast garnered 90,000 viewers and generated 40 times GMV uplift compared to a non-livestreaming hour.

 While live selling may be especially popular now, Mr. Mayer believes that it will outlast the pandemic because sellers will need as many revenue channels as possible. It also provides a convenient form of retail that is much more interactive than other alternatives.

 “Live [selling] allows retailers to meet their customers where they are and sell their products in a friendly and intuitive way… While it’s hard to replace the energy of face-to-face interaction, livestreaming offers businesses an avenue to continue making an income in an authentic way even during periods of sheltering-at-home,” said Mr. Mayer.

Tech experts voice concerns of gig worker surveillance in pandemic

LONDON – Growing armies of gig workers have little to no say in how they are being monitored during the coronavirus pandemic, researchers and advocates told a conference on Wednesday, calling for better oversight in how tracking tools are deployed.

From Singapore to Estonia, business is turning to technology to help people resume work and travel, with apps, scanners, and so-called immunity passports, but digital rights experts warn against privacy and increased surveillance.

Gig workers – independent contractors such as drivers who perform on-demand services – are most vulnerable to surveillance as they have no safeguards like minimum wage or health cover, researchers told the Thomson Reuters Foundation’s annual Trust Conference that was held online.

“Tools to monitor gig workers were at play before the pandemic when it was a harder sell, but when introduced during COVID you have public health as a legitimate reason,” said Urvashi Aneja of policy and advocacy collective Tandem Research in India.

In India, contact-tracing mobile app Aarogya Setu is mandatory for food-delivery workers, government and some private sector employees.

Such tools can track gig workers’ location at all times, regardless of whether they are at work or not, said Aneja, whose organisation has been reviewing tech tools used during the pandemic.

“One of the things that gig work does it that it fragments the labour force, so the ability and the spaces to collectively bargain, for workers to come together, is also decreasing,” she added.

Workers’ increased engagement with tech platforms fuels a model where “we are turned into monetised bits that are bought, sold and traded”, said Safiya Noble, a leading technology scholar at the University of California, Los Angeles (UCLA).

Monitoring technologies like facial recognition tends to single out minorities for unfair treatment, and provide little recourse for them to seek redress, said Noble.

Aneja agreed, saying “not only is tech created in the Global North, it’s critiqued in the Global North”.

“We need to build up civil society so that the critique doesn’t replicate the same power imbalances as the product.”

Alice Munyua, director of innovation and public policy for Africa at Firefox browser maker Mozilla, called for more tools to help create a “healthy internet”.

The company developed Facebook Container, a Firefox extension that allows users to isolate their web activity from Facebook sites like Instagram and Messenger.

“This prevents Facebook from following you around the web … the less data they have on you the less they can give away,” she said. — Thomson Reuters Foundation

Typhoon Vamco lashes main Philippine island, kills one

MANILA – Typhoon Vamco soaked and lashed provinces in the Philippines’ main Luzon island overnight, killing one person while three more are missing, the local disaster agency said on Thursday.

Vamco, with maximum sustained winds of 155 km per hour (96 miles per hour) and gusts of up to 255 kph (158 mph), made landfall three times starting on Wednesday night in Quezon province, south of the capital Manila.
The local disaster agency reported a 68-year-old man was found dead on the roof of his house in a coastal community in Camarines Norte province, where three more people are missing.

Vamco, the 21st cyclone to hit the country this year, battered the Philippines still reeling from Molave, the world’s most powerful typhoon this year that killed 25 people and destroyed thousands of homes early in November.
It will leave land on Thursday afternoon, but not before bringing torrential rains and strong winds as it passes through rice-producing provinces in the world’s largest rice importer.

In the capital, residents were mopping up after heavy downpours that flooded roads and homes, said Marcelino Teodoro, mayor of Marikina City, a suburb of metropolitan Manila.

“Many of our residents were soaked overnight. In some areas, floods have reached the second floor and roofs,” Teodoro told DZBB radio station.

Nearby dams are close to spilling, which could aggravate flooding, the disaster agency said.

Airline flights and mass transit in the capital were suspended while the coast guard stopped port operations. Government work was suspended and financial markets were shut.

The Philippines, an archipelago of more than 7,600 islands, experiences around 20 tropical storms annually.
Vamco is forecast to head towards Vietnam next, with the weather agency there expecting the storm to hit the central region on Sunday, bringing intense rains.

Floods and mudslides over the past month have killed at least 160 people in central Vietnam, left dozens missing and damaged 390,000 houses. – Reuters

BusinessWorld Insights: What’s Next for Renewable Energy

The Philippine government laid out several legislations and policies pushing industries to consume renewable energy.

Join the final session of BusinessWorld Insights’ Sustaining Sustainability series and know more about the latest developments and the needed actions to take in relation to the use of renewable energy sources.

Take part in this discussion with the theme: “What’s Next for Renewable Energy” with speakers Senator Win Gatchalian, National Renewable Energy Board Chair Monalisa Dimalanta, Energy Development Corporation President and COO Richard Tantoco, Greenpeace Southeast Asia Executive Director NaderevSaño, WWF Philippines Climate and Energy Programme Head Atty. Angela Ibay; and moderator BusinessWorld Editor Victor Saulon LIVE and FREE on BusinessWorld’s and The Philippine STAR’s Facebook pages!

#BUSINESSWORLDINSIGHTS​ Sustainability Series is made possible by Globe, Energy Development Corporation, First Gen Corporation, Meralco, The Philippine STAR, and Olern; with the support of the Management Association of the Philippines, Bank Marketing Association of the Philippines, British Chamber of Commerce Philippines, Financial Executives Institute of the Philippines, and Philippine Chamber of Commerce and Industry.

FDI inflows up for 4th straight month

Foreign direct investments to the Philippines grew for a fourth month in a row in August. — REUTERS

FOREIGN INVESTMENTS to the Philippines grew for a fourth straight month in August due to renewed investor confidence despite the coronavirus disease 2019 (COVID-19) pandemic, the central bank said.   

Data from the Bangko Sentral ng Pilipinas (BSP) showed net inflows of foreign direct investments (FDI) climbed by 46.9% to $637 million in August, from the $434 million logged in August 2019. However, this was 20% lower than the $797 million in July.

“The FDI net inflows increased for the fourth consecutive month, owing to investors’ renewed confidence as the National Government’s fiscal stimulus and BSP’s accommodative monetary policy stance to mitigate the impact of COVID-19 pandemic gained traction along with the easing of quarantine measures in the country,” the central bank said in a statement on Tuesday evening.

For the first eight months, FDI inflows dropped 5.6% to $4.432 billion from $4.693 billion a year ago.

“The four consecutive months of growth since May resulted in the considerable narrowing of the cumulative net FDI contraction of 27.9% in April 2020,” the BSP said.

The central bank slashed its projection for total FDI inflows this year to $4.1 billion due to the impact of the pandemic, less than half of its earlier projection of $8.8 billion.

The higher FDI net inflows were mainly due to the 72.2% surge in net investments in debt instruments to $459 billion.

Equity other than reinvestment of earnings rose by 32.9% to $107 million, as placements jumped 30% to $118 million. Withdrawals went up by 7.1% to $10 million.

During the month, most of the equity capital placements came from Japan, the United States, and the British Virgin Islands.

“Investments were channeled largely to manufacturing, real estate, financial and insurance, administrative and support service, and wholesale and retail trade industries,” the central bank said.

Meanwhile, reinvestment of earnings declined by 17.9% to $71 million.

Analysts said the continued improvement in FDI inflows may suggest investor confidence is returning, as restriction measures have been eased to boost economic activity.

“As the Philippines is relatively stable politically compared to neighboring countries, it boosted investor confidence allowing certain growth momentum to recover — one of which are FDIs,” Asian Institute of Management economist John Paolo R. Rivera said in an e-mail.

Inflows of FDI are likely to continue rising in the next months as investors await developments in the search for a COVID-19 cure and vaccine.

“I expect that FDI will remain in its bullish status in the coming months owing to the possible solution to the pandemic and the steady improvement in the economic activity of the local economy,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said. — Luz Wendy T. Noble

Think tanks cut PHL outlook after weak Q3

By Beatrice M. Laforga, Reporter

TWO THINK TANKS lowered their growth forecast for the Philippines this year, after latest data showed a steeper-than-expected contraction in the previous two quarters that signaled a shaky recovery from the coronavirus pandemic.

Fitch Solutions Country Risk & Industry Research trimmed its gross domestic product (GDP) for the Philippines to -9.6% from its earlier forecast of -9.1%. It raised its GDP outlook for next year to 7.6% from 6.2% previously, mainly due to base effects.

“We at Fitch Solutions believe the Philippine economy will struggle to maintain its recovery momentum in Q4 2020 as domestic containment measures weigh on activity and demand. In 2021, base effects and supportive fiscal and monetary policy stances should drive a rebound, with the economy returning to pre-pandemic levels by mid-2022,” Fitch Solutions said in a note released on Wednesday.

The economy contracted by 11.5% in the third quarter after the 16.9% plunge in the second quarter. A BusinessWorld poll of 19 economists last week showed a median forecast of a 9.2% decline in the third quarter.

Coronavirus curbs around the country have gradually been eased since June, but slow state spending and a two-week lockdown in August put a damper on economic recovery.

Fitch Solutions said ongoing mobility restrictions to slow the spread of the coronavirus disease 2019 (COVID-19) weighed on household spending and investments.

Household spending contracted by 9.3% year on year in the third quarter, although this was slower than the 15.3% fall in the second quarter.

Despite a drop in the number of new COVID-19 cases, the think tank said there is a risk that a virus resurgence could slow the pace of economic recovery through the first half of 2021.

Potential investments will likely be postponed while households will remain conservative on spending amid an uncertain environment, Fitch Solutions said. It expects private consumption to contract by 7.8% this year, shaving 5.3 percentage points off the country’s consumption-driven GDP.

“Consumer sentiment for the next three months also indicates a sharp decline in Q3 2020 relative Q1 2020. The subdued outlook dims our view on a strong service sector recovery, which accounts for around 62% of output,” it said.

The economy’s struggle can be seen in the latest manufacturing Purchasing Managers’ Index (PMI) data, which showed a contraction in October.

Fitch Solutions said the economy can only expect limited foreign support to fuel recovery as foreign direct investments (FDIs) remained dampened.

“Fixed capital investment growth is set to remain challenged, eroding headline growth by 10.1 percentage points in 2020,” it said.

On the other hand, Fitch Solutions said economic recovery will be supported by the projected V-shaped rebound in China and better demand in the United States and in Asia-Pacific region, but the return to lockdown in several European countries poses downside risks.

Meanwhile, Capital Economics’ Asia Economist Alex Holmes said in a note on Tuesday that they also slashed the outlook for the Philippines this year to -9.5% from -8% previously.

“The Philippines saw a lackluster rebound in GDP in Q3 and improvements are likely to be harder to come by in the quarters ahead. Output is unlikely to regain its pre-crisis level until late next year,” the note read.

Mr. Holmes said the country’s recovery will be slow as domestic demand loses its momentum with mobility restrictions still in place.

With the sharp contractions in the previous two quarters that put the country in a recession, the government’s projection of up to -6.6% GDP for 2020 is no longer possible, National Statistician Claire Dennis S. Mapa said.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the Development Budget Coordination Committee (DBCC) will revise its macroeconomic projections given the latest data.

The economic team expects a 6.5-7.5% growth in 2021 and 2022.

Mr. Chua said GDP is expected to be better in the fourth quarter as restrictions were further loosened.

For next year, both think tanks expect growth will be largely due to a low base in 2020. Economic output will only go back to its pre-pandemic level in late-2021 for Capital Economics, or by mid-2022 for Fitch Solutions.

“While growth will look strong next year, this is due to a favorable base. More instructive is that output is unlikely to regain its pre-crisis level until late-2021 and we estimate that by the end of the next year the economy will still be over 10% smaller than if the pandemic had not happened,” Mr. Holmes said.

To support next year’s rebound, Fitch Solutions said the central bank should keep its policy rates steady until the end of the year so loan growth will have more time to recover, while the government should ramp up its spending on infrastructure to create jobs.

“Improving orders and global sentiment will also aid investment plans which have lagged in 2021 and could provide upside to the recovery in fixed capital investment,” Fitch Solutions said.

“The pandemic remains a major uncertainty and headwind to the Philippines economic recovery. Indeed, another upsurge in cases domestically could force the reimplementation of local lockdowns, hampering activity,” it added.

Senate approves FIST bill

By Charmaine A. Tadalan, Reporter

THE SENATE on Tuesday approved a measure allowing financial institutions to offload bad loans to asset management companies in order to cushion the impact of the coronavirus pandemic on their finances.

With 18 affirmative votes, no negative and abstention, the chamber passed Senate Bill (SB) No. 1849, the Financial Institutions Strategic Transfer (FIST) Act,” in anticipation of an increase in nonperforming assets (NPAs).

“This is a proactive response to the pandemic that should free up P1.19 trillion worth of loans and allow banks to lend to some 600,000 MSMEs (micro, small, and medium enterprises) and save over 3.5 million jobs,” Senator Grace S. Poe-Llamanzares said in a statement on Tuesday evening.

The measure was approved by the Senate on second and third reading on the same day, as President Rodrigo R. Duterte certified the bill as an urgent measure.

Ms. Poe-Llamanzares, who chairs the Senate Banks and Financial Intermediaries Committee, previously said the industry’s NPAs are projected to reach P635 billion by the end of the year.

As of end-September, bad loans stood at P364.672 billion, up from P227.660 billion last year and P304.997 billion as of end-August. Gross nonperforming loan (NPL) ratio reached 3.4% as of September, the highest since May 2013.

SB 1849 provides for the creation of FIST corporations that will be allowed to invest in or acquire NPAs and engage third parties for its management, operation, collection and disposal.

“This is a much-improved version of the SPV (Special Purpose Vehicle). The FIST does away with the requirements that delayed the transfer of assets without diminishing the rights of borrowers under existing laws,” she said.

Ms. Poe-Llamanzares was referring to Republic Act No. 9182, the SPV Law of 2002, that was enacted to help banks recover in the wake of the Asian Financial Crisis.

The FIST bill expanded covered institutions to include lending companies and other credit-granting companies, licensed by the BSP, which were under the SPV law. It also prohibits government financial institutions from setting up their own FIST corporations.

Under the bill, FIST corporations are allowed to transfer or purchase assets that became nonperforming before Dec. 31, 2022.

The counterpart measure, House Bill No. 6816 was approved on third reading in the House of Representatives in June.

House Committee on Banks and Financial Intermediaries Chairman and Quirino Rep. Junie E. Cua said he expects the Bicameral Conference Committee to approve the measure within the month, in time for its signing by the end of the year.

“I hope we can finish it within the month because we are rushing it,” Mr. Cua said in a phone interview on Wednesday. “Para by January, naka-ready na ’yung batas. Gagawin pa ’yung IRR (Implementing Rules and Regulation).”

Ms. Poe-Llamanzares had said the bill, as approved by Senate, can be implemented without an IRR.

The FIST bill was among the coronavirus disease 2019 (COVID-19) response measures the Senate wants to pass by yearend. This is on top of the P4.5-trillion national budget for 2021 and the Corporate Recovery and Tax Incentives for Enterprises bill that will lower corporate income tax to 25% immediately and streamline fiscal incentives.

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