Pandemic spurs Africa’s mobile telcos to ramp up banking bid
JOHANNESBURG/ABIDJAN — When coronavirus disease 2019 (COVID-19) hit Ivory Coast, Bonaventure Kra, who works at an import-export business, began to worry. Handling hard cash all day was a risk. Queuing in crowded bank branches exposed him to infection.
Then, in the midst of the pandemic, French telecommunications giant Orange launched an entirely digital bank — its first full banking venture in Africa.
“Going back to cash would be like travelling back in time,” Kra said in the country’s commercial capital, Abidjan. “I intend to use it permanently.”
Africa’s mobile phone operators are ramping up plans to bring banking to millions of Africans, in some cases for the first time, after the coronavirus crisis caused a surge in use of digital financial services.
Orange, MTN, Telkom and Vodacom are lowering fees, rolling out new lending services ahead of schedule, and expanding mobile payment networks with the aim of finally denting the so-far unshakeable dominance of cash.
“It’s one of those industries that we consider to be ripe for disruption,” Sibusiso Ngwenya, financial services managing executive at South Africa’s Telkom, told Reuters.
With their revenue under threat as governments cap data prices and customers abandon voice phone services for free messaging apps, telcos have sought to leverage their reach into remote villages and urban shanty towns in a pivot to banking.
The global health crisis has been an unexpected catalyst, with some African governments releasing COVID-19 stimulus grants via mobile money platforms and central banks easing regulations, including limits on mobile transactions.
Orange added over five million new customers for its mobile money services in April and May alone. MTN hit one million South African users in June, when it had expected half of this, and recorded a 28% jump in mobile money transactions per minute across all its African markets in the first half of the year.
TAKING ON THE CASH KING
Cash is still king in Africa.
It accounts for around 99% of transactions in Nigeria, the continent’s most populous country, and dominates even in South Africa (90-95%) where banking penetration is relatively high, according to a 2017 estimate from consulting firm McKinsey.
World Bank figures indicate just under 43% of sub-Saharan Africans over the age of 15 had a bank account in 2017. The region’s total population stood around 1.1 billion last year.
That compared with 55% in Latin America and the Caribbean, almost 70% in South Asia and around 74% in East Asia and the Pacific.
That presents a huge opportunity, said Francois Jurd de Girancourt, head of McKinsey’s financial institutions practice Africa. Prior to the crisis, it rated the continent as the world’s No. 2 market in terms of growth and profitability potential with banking revenues set to hit $129 billion by 2023.
Telcos are well-positioned to secure a piece of that pie.
By last year, sub-Saharan Africa boasted 469 million mobile money accounts — more than any other region in the world — according to industry body GSMA.
Mobile phone penetration outstrips access to banks. Operators’ distribution models are low-cost. And telcos possess a wealth of customer data they can use to assess lending risk, a big advantage in a region where most markets lack credit bureaus.
Vodacom, the African unit of Britain’s Vodafone, is now moving to expand lending, insurance, and payment businesses currently available only in South Africa to other markets.
It has advanced by months launches of initiatives like overdrafts for the mobile money agents that work on its behalf, helping customers open accounts and withdraw and deposit cash.
It has also accelerated plans for cash advances to merchants at registered pay points, its financial services CEO Mariam Cassim told Reuters.
Orange has Mali, Burkina Faso, and Senegal in its sights as expansion markets for Orange Bank Africa, with the timetable dependent upon local regulatory approval.
Both MTN and Telkom, meanwhile, are preparing to offer micro-loans in South Africa, the companies said.
MTN, Africa’s largest operator, will roll out a mobile money offering for businesses, which is currently being piloted in Rwanda, to other markets by the end of the year. It will also pilot an initiative to digitise cash-heavy small businesses in South Africa, namely small shops known as spazas and often located in townships, executives told Reuters.
And after growing the number of vendors accepting payment via its platform by 100,000 in the first half of the year, it has now doubled an end-2021 target to 1 million.
“We are… using the opportunity that the crisis is offering us to really accelerate,” said Serigne Dioum, who heads MTN’s mobile financial services division.
‘NO LOSERS’
Mobile operators still have a long way to go to overtake traditional lenders.
Banking revenue pools in sub-Saharan Africa stood around $70 billion in 2019, according to a McKinsey estimate, while the main mobile operators earned less than $3 billion from financial services.
Some regulators remain wary of mobile money, and many informal businesses still don’t accept digital payments.
Such factors mean mobile money adoption varies wildly across the continent. Cash use actually rose in some countries during the pandemic.
M-Pesa, run by Vodacom unit Safaricom, dominates the financial system in Kenya. But both MTN and M-Pesa have in the past been forced to drop mobile money initiatives in South Africa after struggling to attract customers.
“You need a massive market share to be making a lot of money just from payments,” said McKinsey’s Jurd de Girancourt, adding that telcos will need customers to use other services too.
“It’s fine if you are M-Pesa. But we’re probably not going to see that,” he said.
Big banks, historically deterred by low incomes and poor infrastructure, are also fighting back and pushing into underserved segments.
They are agreeing partnerships with fintech firms, building their own networks of agents to distribute banking services and launching rival offerings.
They also partner with telcos, marrying their vast balance sheets with the mobile firms’ wide customer bases.
South African lender Absa is set to launch partnerships with mobile operators in Tanzania and Uganda, its head of retail banking in Africa Vimal Kumar told Reuters.
Absa is also expanding its Kenyan digital offering to cover full-service banking with roll-outs in Zambia, Botswana and Mauritius set for later this year and the rest of its markets in 2021.
“There is no loser,” Kumar said. “The opportunity is so large that no one player is going to be able to dominate.” — Reuters
PSE index rebounds ahead of BSP policy review
By Denise A. Valdez, Senior Reporter
LOCAL SHARES picked up on Wednesday as bargain hunters flocked the bourse in anticipation of the central bank’s interest rate decision on Thursday.
The benchmark Philippine Stock Exchange index (PSEi) grew 22.63 points or 0.38% to close at 5,864.23, while the broader all shares index climbed 7.75 points or 0.22% to end at 3,528.85.
“The market closed slightly higher today ahead of some economic announcements scheduled to be released in the coming days,” Timson Securities, Inc. Trader Darren T. Pangan said in a mobile message on Wednesday.
The Bangko Sentral ng Pilipinas’ Monetary Board will review its policy settings on Thursday. Analysts expect rates to remain at their current record lows, based on a BusinessWorld poll of 15 economists.
Sentiment likewise improved on improved manufacturing activity in China in the month of September, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.
“China’s official manufacturing PMI (purchasing managers’ index) stood at 51.5 while the Caixin/Markit manufacturing PMI came in at 53.0, both indicating an expansion. Participation improved with net value turnover rising from yesterday’s P4.2 billion to P5.2 billion,” Mr. Tantiangco said in a Facebook message.
Index heavyweights from the property sector were likewise instrumental in the improvement of the PSEi, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail.
“The general sentiment remains cautious, but will improve if economic activity continues to pick up and new coronavirus cases continue to decline. Investors are also watching out for the effects of the recently passed economic stimulus package,” Mr. Mangun added.
“The market will continue sideways until investors see more concrete signs of the economic rebound,” Mr. Mangun said. Timson Securities’ Mr. Pangan put the PSEi’s support at 5,750 and resistance at 6,000.
Four sectoral indices ended with gains at the close of trading on Wednesday. Property rose 42.68 points or 1.58% to 2,740.29; mining and oil added 36 points or 0.61% to 5,906.49; holding firms improved 31.18 points or 0.51% to 6,058.65; and services increased 6.33 points or 0.43% to 1,453.88.
The two sectoral indices with losses were financials, which slipped 8.36 points or 0.72% to 1,141.80; and industrial, which dropped 36.64 points or 0.46% to 7,901.21 at the close of the market.
Value turnover on Wednesday slid to P5.48 billion from P5.67 billion in the last session. Some 1.07 billion issues switched hands, lower from the previous day’s 1.45 billion issues.
Decliners outpaced the growth of advancers, 98 against 91, while 49 names ended unchanged.
Net foreign selling continued for a 14th straight day on Wednesday, growing to P585.58 million from P551.77 million on Tuesday.
Peso inches up versus the dollar on eased lockdown
THE PESO inched up versus the dollar on Wednesday amid the extended implementation of the general community quarantine in Metro Manila and expectations the central bank will keep rates unchanged at its meeting today (Oct. 1).
The local unit closed at P48.495 versus the dollar on Wednesday, up by less than a centavo from its P48.50 finish on Tuesday.
The peso opened Wednesday’s session stronger at P48.41 against the dollar. It reached a peak at P48.38 but succumbed to the dollar’s strength as it closed nearer to its intraday low of P48.50 versus the greenback.
Dollars traded rose to $726.57 million on Wednesday from $536.21 million on Tuesday.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso inched up versus the dollar following the extension of current quarantine protocols in Metro Manila, which boosted sentiment as more people can return to work.
Meanwhile, a trader said in an e-mail that the peso rose as the market expects the Bangko Sentral ng Pilipinas (BSP) to keep benchmark rates steady as it meets today.
The BSP is widely expected to leave benchmark interest rates untouched as it wants to leave some room for further adjustments in case economic recovery lags, analysts said.
In a BusinessWorld poll held last week, 14 of 15 analysts said they expect the Monetary Board (MB) to keep interest rates steady at its fifth policy-setting review for the year on Oct. 1.
The MB has cut rates by 175 basis points so far this year. Rates on the overnight reverse repurchase, lending, and deposit facilities are currently record lows of 2.25%, 2.75% and 1.75% respectively.
Mr. Diokno earlier said the current policy stance may be kept for the next few quarters. He said the BSP still has bullets when needed and is committed to a “long-term low inflation regime” and will continue to do what they have done “for maybe another two years.”
For today, Mr. Ricafort sees the peso moving from P48.45 to P48.55 versus the dollar while the trader expects it to range from P48.30 to P48.50. — KKTJ
Countries told to start vaccine delivery planning

By Beatrice M. Laforga and Vann Marlo M. Villegas, Reporters
COUNTRIES such as the Philippines should start planning now to deliver coronavirus vaccines to ensure faster recovery from the health and economic impacts of the pandemic, according to the Asian Development Bank (ADB).
The supply of COVID-19 vaccines — now in development in a dozen or so countries — will not be sufficient given the expected global demand, Patrick L. Osewe, chief of ADB’s Health Sector Group, said in a blog posted on the multilateral lender’s website.
But once the vaccines become available, there will be a massive global effort to get the vaccines to all countries and territories, he said.
“As scientists continue to work at great speed to develop safe and effective vaccines, countries must also strengthen their capacity to distribute and administer them as quickly and efficiently as possible,” Mr. Osewe said.
Socioeconomic Planning Undersecretary Rosemarie G. Edillon told an online briefing on Tuesday the government formed a group headed by Health and Science and Technology officials who are planning the orders and distribution of the vaccines.
Part of the plan is Philippine participation in clinical trials of potential vaccines, she said.
The Philippines started joining worldwide clinical trials for COVID-19 vaccines in July to make sure the country will get prioritized once the vaccines become available and speed up a drug’s registration.
Budget Assistant Secretary Rolando U. Toledo said the Budget department’s Procurement Service had also been tasked to plan for the vaccine orders.
ADB’s Mr. Osewe said countries should start planning on the vaccine’s storage, distribution, handling and stock management. It should also plan the hiring of people who will deliver and administer nationwide vaccination programs. Their vaccination infrastructure should be improved and expanded, he added.
The Philippines has allotted P2.5 million under next year’s national budget for COVID-19 vaccines that will cover 3.9 million Filipinos for its free vaccination program for the poor.
Mr. Osewe said the public should also be involved in identifying sectors that should be prioritized, but the decision must be carefully studied.
“The question of who should receive the first doses of the vaccine is complex,” he said in the blog. “Frontline workers are often at the top of proposed priority lists. Yet this category alone requires careful consideration — who is considered a frontline worker? Which frontline workers should be prioritized? Who will follow and in what order?” he said.
“These are all questions that will have to be answered and clearly communicated to the public,” he added.
Countries might need to prioritize people at higher risk or those living in areas where the disease is spreading rapidly. “They should also model different scenarios for vaccinating the general population and set expectations accordingly,” according to the blog.
A vaccine delivery or execution plan should also be in place to ensure a smooth implementation of the vaccination program, Mr. Osewe said. The public should likewise be educated about its benefits.
The vaccination program should be monitored and evaluated for accountability, Mr. Osewe said.
Meanwhile, an antigen test from South Korea that the World Health Organization (WHO) approved for emergency use has failed the government’s evaluation, according to the Department of Health.
The SD Biosensor COVID-19 antigen test had a 71% sensitivity, lower than WHO’s recommendation of 80% sensitivity and 97% specificity, Health Undersecretary Maria Rosario S. Vergeire told an online news briefing on Wednesday.
Ms. Vergeire said they were still studying its use after WHO included the South Korean product in its emergency-use listing.
The use of rapid antigen test kits for detecting coronavirus patients will be pilot-tested in Baguio City as it partially reopens to domestic tourists on Oct. 1.
The Health department said in a statement last week antigen tests were being used to determine active infections through swab samples, similar to the reverse transcription polymerase chain reaction (RT-PCR) tests.
Results from these tests come out faster at four to six hours compared with up to three days for the RT-PCR test.
Meanwhile, the Department of Health (DoH) reported 2,426 coronavirus infections on Wednesday, bringing the total to 311,694.
The death toll rose by 58 to 5,504, while recoveries increased by 585 to 253,488, it said in a bulletin.
There were 52,702 active cases, 86.4% of which were mild, 9% did not show symptoms, 1.4% were severe and 3.2% were critical.
Metro Manila reported the highest number of new cases with 887, followed by Cavite with 201, Rizal with 147, Negros Occidental with 115 and Batangas with 99.
Of the new deaths, 20 came from Metro Manila, 16 from Western Visayas, eight from the Calabarzon region and five from the Davao region.
Central Visayas and Zamboanga Peninsula reported three each, Soccsksargen reported two while the Bicol region had one death.
More than 3.48 million individuals have been tested for the COVID-19 virus, the agency said.
Poll body ordered to comment on Marcos plea to void results in three provinces
THE SUPREME Court has ordered Election officials to answer a plea by losing vice presidential candidate Ferdinand R. Marcos, Jr. to void election results in three Mindanao provinces as part of his electoral protest.
The high court gave the Commission on Elections (Comelec) 20 days to comment on the pleading, it said in a statement on Wednesday.
Mr. Marcos earlier asked the court, sitting as the Presidential Electoral Tribunal, to nullify the ballots in the provinces of Lanao Del Sur, Basilan and Maguindanao, citing massive fraud.
The tribunal also ordered the Comelec and Office of the Solicitor General to answer the question of whether the court is empowered to annual election results without ordering special polls.
They should also answer the question of whether an order for special elections would infringe on the election body’s mandate.
Mr. Marcos, son of the late dictator Ferdinand E. Marcos, filed the election protest in June 2016 after losing by a hair to Vice President Maria Leonor G. Robredo.
The court also ordered that copies of its October 2019 order be given to the Comelec and Solicitor General. The order showed that Ms. Robredo’s lead over Mr. Marcos in the pilot provinces of Camariñes Sur, Iloilo and Negros Oriental rose by about 15,000 votes after a recount.
The tribunal asked the parties last year to comment on the order before it could rule on Mr. Marcos’s other plea for a recount in 27 other provinces.
Victor D. Rodriguez, a spokesman for Mr. Marcos, said they welcome the “latest assertion” of the tribunal on the validity of their call to void election results in the three Mindanao provinces.
“Notwithstanding such affirmation, we view with extreme reservation the route chosen by the justice in charge,” he said in a statement.
“Instead of directly proceeding with the technical examination and forensic investigation he lamentably added another layer that would cause tremendous delay in referring the matter to the Office of the Solicitor General and the Comelec to file their respective comment,” he added.
Mr. Rodriguez said the Marcos protest was “under real threat of becoming moot and academic by events leading to 2022” including preparations for the national elections.
Ms. Robredo’s camp said the court order would hasten the case. “Marcos already lost the game,” her lawyer Maria Bernadette Sardillo said in a statement. “Let’s already finish this one.”
“We fully believe that the high tribunal will uphold Vice President Leni Robredo’s victory,” she added. — Vann Marlo M. Villegas and Kyle Aristophere T. Atienza
MRT-3 trains to run faster starting Oct. 1 — transport agency
THE METRO Rail Transit Line 3 (MRT-3) will run 10 kilometers per hour faster to 40 kph starting Oct. 1 after repairs made by Japanese contractors, according to the Transportation department.
“The operating speed will gradually increase from 40kph in October to 50kph by November and to 60kph by December,” the agency said in a statement on Wednesday.
“Our commuters have suffered enough from the past,” Transportation Secretary Arthur P. Tugade said in the statement. “It is only right that we give them back their dignity in commuting using the MRT-3.”
The operator fixed MRT-3 cars, air-conditioners, elevators and escalators in the past months, allowing the trains to run at a record speed last week, he said.
The government hired Sumitomo Corp., Mitsubishi Heavy Industries Engineering, Ltd. and TES Philippines, Inc. to overhaul all the 72 light rail vehicles of the MRT-3.
The contractors also replaced tracks, fixed power and overhead catenary systems, upgraded signaling, communications and CCTV systems, and repaired all escalators and elevators.
MRT-3 ticket sales fell by 7.7% to P1.91 billion last year while ridership in the Baclaran-North Avenue line dropped by 7.1% to 96.93 million, the Department of Transportation said.
In 2017, ridership was 140.15 million, up 4.6%, while ticket sales hit P2.78 billion, 3.7% higher than a year earlier. — Arjay L. Balinbin
Majority rejects Cayetano’s resignation as House Speaker
A MAJORITY of congressional representatives voted to reject Speaker Alan Peter S. Cayetano’s resignation on Wednesday, negating a deal for Marinduque Rep. Lord Alan Q. Velasco to take over the House leadership.
Mr. Cayetano offered his resignation after a long privilege speech during the plenary debate on the proposed P4.5 trillion national budget for 2021, saying Mr. Velasco is “too excited” to take over the speakership amid legislative priorities.
There were 184 affirmative, one negative, and nine abstain votes to the move to reject the resignation put forward by Anakalusugan Partylist Rep. Michael T. Defensor.
There are 304 House members.
Deputy Speaker Luis Raymund F. Villafuerte Jr., from the 2nd District of Camarines Sur, said in an ANC interview earlier in the day that an agreement was reached Tuesday night in Malacañang to keep the term-sharing pact brokered by President Rodrigo R. Duterte in 2019.
Other lawmakers present during the meeting were Majority Floor Leader Ferdinand Martin G. Romualdez, Oriental Mindoro 1st District Rep. Doy C. Leachon, and Senator Christopher Lawrence T. Go who is a close aide of the President.
The President held a separate meeting with the two speakership contenders and Mr. Go.
Before his privilege speech, Mr. Cayetano said allies of Mr. Velasco led a text message brigade asking colleagues not to listen to him.
He said they were meddling in the speakership because they are aiming for key positions in committees.
Mr. Cayetano, who was Mr. Duterte’s vice-presidential running mate in 2016,
said Mr. Velasco would either lose the ‘numbers game’ or face a coup d’etat for being unpopular and seeking to pass the national budget “as it is,” or without any amendments.
Mr. Villafuerte earlier slammed Mr. Velasco’s alleged detachment from the ongoing budget deliberations.
“Lord (Velasco) said before that if he’ll be the speaker, he will pass the budget as per the National Expenditure Program. What does it mean? He’ll pass it ‘as it is’ Not a single peso (will be) realigned. So, congressmen asked: How can that be?” he said.
“With all due respect to Cong. Lord, have (sic) he read the budget? How can he say that he will pass it as is?” Mr. Villafuerte added.
The deputy speaker also said Mr. Velasco needs to earn the respect of his colleagues in the house, including himself.
“It’s a question of confidence,” Mr. Villafuerte said. — Kyle Aristophere T. Atienza
Nationwide round-up
Senate moves to restore P45M in VP’s budget
A SENATE panel on Wednesday moved to restore about P45 million in the Office of the Vice President’s (OVP) budget for next year, intended for the purchase of service vehicles and research activities. The OVP proposed P723.387 million for its 2021 spending plan, which is P15.3 million higher than its 2020 funding. The Department of Budget and Management (DBM), however, only approved P679.73 million under the 2021 National Expenditure Program. “We have a lot of vehicles which cannot be used anymore,” Vice-President Maria Leonor G. Robredo told the Senate panel during budget deliberations. “We have about six vehicles that we cannot use anymore for our relief operations, we have been using private vehicles,” she said. Out of the P45 million, P11 million will be used to procure six new service vehicles, while the rest will be spent for surveys for their research and other maintenance and operating expenses. “This is for the survey that is also part of the research and development allocation that was given to us last year. We included that again in the budget but they removed it also,” she said. Ms. Robredo said the research and development budget of the OVP for 2020, worth P69.2 million, was realigned to help fund the Bayanihan to Heal as One Act, under Republic Act No. 11469, which involved response measures for the coronavirus crisis. Senate Minority Leader Franklin M. Drilon proposed to restore the original budget submitted by the OVP, and was supported by Senators Francis N. Pangilinan, Maria Lourdes Nancy S. Binay, Juan Edgardo M. Angara and Manuel L. Lapid. — Charmaine A. Tadalan
DoLE rolls out aid for college-level OFW dependents
THE DEPARTMENT of Labor and Employment (DoLE) will be rolling out its cash assistance program for college level dependents of overseas Filipino workers (OFWs) affected by the coronavirus pandemic. In a statement on Wednesday, DoLE said application is now open for its “Tabang OFW” grant to college students. The program, to be implemented through the Labor department’s regional offices, has a total allocation of P1 billion, with each beneficiary to get a one-time P30,000 cash aid. “The assistance is on a first-come, first-serve basis that is why we advise our OFWs to apply at our regional offices this early. They will facilitate the preparation of payment, including the release of the financial benefit to the grantees,” Labor Secretary Silvestre H. Bello III said. The grant is open to college students who are financially dependent on OFWs who were displaced or repatriated due to the coronavirus crisis. The beneficiary must be currently enrolled in a tertiary institution. Tabang OFW will cover the beneficiary’s “textbooks or learning materials, academic and extra-curricular expenses, and stipends including board and lodging, clothing, transportation, health or medical needs, and school supplies.” The DoLE program is in partnership with the Commission on Higher Education. — Gillian M. Cortez
Sandiganbayan denies provisionary release of Enrile’s ex-aide
THE ANTI-GRAFT court Sandiganbayan denied the motion for provisional release filed by Jessica Lucila ‘Gigi’ Reyes, former chief of staff ex-senator Juan Ponce Enrile, who has been detained for six years over her involvement in the controversial pork barrel scam. Ms. Reyes filed her motion on May 28 based on humanitarian grounds, citing the risk of contracting the coronavirus disease 2019 (COVID-19) at the Camp Bagong Diwa, which she described as a “congested detention facility with occupants exponentially more than its maximum capacity.” The Sandiganbayan, voting 3-2, rejected the plea saying “there is no positive showing that accused Reyes is in actual or even imminent danger of being infected by the COVID-19.” The anti-graft court said that during its visits to Camp Bagong Diwa, it was shown the “cell where accused Reyes will be detained by herself separate from the other detainees.” It further negated the “probability that she would be infected by the virus from other inmates.” Ms. Reyes was diagnosed with hypertensive urgency and neurocirculatory asthenia in 2014. The anti-graft court, however, said these issues have already been medically diagnosed as not life-threatening. “It is worthy to mention that compared to other detention facilities where there has been transmission of COVID-19 among its detainees and staff, there is no report that there are inmates, or even personnel, of Camp Bagong Diwa who have tested positive for COVID-19,” the court said. An impasse of votes in the regular division prompted the Third Division of Sandiganbayan to create a special division, in which two special members were needed to “break a tie.” — Kyle Aristophere T. Atienza
Telcos see better connectivity in 3 years with expedited permits
By Arjay L. Balinbin, Senior Reporter
BETTER CONNECTIVITY in remote areas is expected to be achievable with stimulus legislation shortening the permit waiting times for cellular towers and triggering a “Build, Build, Build”-type boom for telecommunications infrastructure, an industry official said.
“In 2020, we might exceed the number of sites we added last year. The passage of the Bayanihan Act II will simplify further this process. It is a real window of three years that will usher in a very real Build, Build, Build for telcos and digital infrastructure,” Globe Telecom, Inc. Chief Technology Officer Gil B. Genio said at a BusinessWorld Insights forum Wednesday.
The President recently signed Republic Act No. 11494 or the Bayanihan to Recover As One Act (Bayanihan II), an economic stimulus program that also granted the government the power to simplify the permit process for building cell towers.
A measure amending the 83-year-old Public Service Act (PSA) to ease foreign ownership restrictions in certain sectors, including telecommunications, is also expected to benefit the country in the long term, as it will allow more competition, according to Senate Public Services Committee Chairperson Grace S. Poe-Llamanzares, although safeguards have to be clearly determined to avoid any single country from gaining control of the industry for the sake of national security.
The Anti-Red Tape Authority is also flexing its powers under Republic Act 11032, the Ease of Doing Business Law, by deeming as approved any telecom permits left pending after seven days.
Mr. Genio said that if Globe, PLDT, Inc.’s wireless arm Smart Communications, Inc., DITO Telecommunity Corp., and the authorized common tower firms can build about 50 to 60 thousand cell towers in the next three years, the country will get a workable level of penetration for mobile internet.
“I am actually optimistic and hopeful that we will get there,” Mr. Genio said.
PLDT-Smart Senior Vice-President for Network Planning and Engineering Mario G. Tamayo said: “We recognize that there are still opportunities to have more of our countrymen connected and the demand will only continue to increase, and that is why we continue to invest. Our main aim is to bring the Philippines, with the help of our government, to the level of the best in the region.”
He said PLDT and Smart are in talks with some tower firms authorized by the Department of Information and Communications Technology (DICT), as part of their effort to expand their services to more areas, especially remote areas.
“We started talking and we are setting to pilot about 200 sites,” Mr. Tamayo said.
“PLDT and Smart will continue to invest in building the network. In terms of affordability, we are trying to balance the needs of our customers and their capability to avail of our services. We always make sure that we offer reliable services. Expect improvement in our services this year and next year,” he added.
LIBERALIZATION
Ms. Poe-Llamanzares expressed disappointment about the results of the 2019 National ICT Household Survey, which found that the majority of Filipinos have no access to the internet, especially in the Bangsamoro region.
“The average speed in highly urbanized cities registers from 4.59 megabits per second (mbps) to 5.54 mbps; whereas in rural areas, it registers at 2 mbps in Luzon and Visayas, and 1 mbps in Mindanao,” she added.
She identified four issues that need to be addressed by the government and the private sector, such as the lack of infrastructure due to expensive and prolonged network rollouts; the lack of competition; a shortage of spectrum frequency and lack of transparency in their allocation; and a lack of performance standards against which service providers can be held to account.
“It has been my advocacy to allow foreign ownership in most of the industries in the country except for power distribution and transmission and water distribution and sewerage services,” she said, noting that the bill amending the PSA “seeks to encourage more players to come into the Philippines.”
The senator added that Globe and Smart are trying to fulfill the country’s needs, but if more competition is allowed, the public will have more options and the industry will be forced to compete and provide better service.
The bill, however, has “reached some sort of a halt at the Senate because of the timing,” she said, adding that there are concerns about allowing liberalization to happen “at this point in our political history,” as one particular country “might dominate” and “jeopardize our national security.”
“Without mentioning the country, alam na ninyo kung ano ang ating pinag-uusapan dito (we all know what I’m referring to),” Ms. Poe-Llamanzares said, alluding to concerns about the Chinese stake in DITO.
The debate now, she said, is centered on how lawmakers are going to put more safeguards in the bill, “so that we will not be threatened by one country or just a few countries dominating or probably dictating the course of the economy.”
“We are putting in safeguards which will allow the President to cancel any contract that might prove to be a national security threat. There has to be proof that there is a national security threat, and we have to list down what those conditions are,” she said.
DICT Deputy Spokesperson Adrian G. Echaus asked for support for his department’s initiative in accelerating the implementation of the National Broadband Program, which involves the construction of a national fiber optic backbone and securing additional internet capacity through the Luzon bypass infrastructure.
He added that the department also hopes to provide next year free WiFi to 5,100 more sites, including government hospitals, national and local government offices, public libraries, public parks, plazas, public schools, state universities and colleges, TESDA institutions, and transport terminals.
Mr. Echaus said the department’s Free WiFi project currently services 5,046 sites.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.
FMIC, UA&P expect recovery gaining momentum in Q4
THE recovery will start picking up in the fourth quarter, helping mitigate the damage done by the pandemic and leading to a 2020 contraction in gross domestic product (GDP) to as much as 8.5%, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P).
“Although the deep dive in Q2 which impacts also Q3, suggests (a decline in) full-year GDP (of) 6.5% to 8.5%, we expect a more positive outlook for Q4 with the Philippine economy slowly recovering and milder restrictions in place starting September,” FMIC and UA&P said in the September issue of their joint “Market Call” report.
The economy contracted by a record 16.5% in the second quarter after a minus-0.7% performance in the first three months.
The strictest form of the lockdown was imposed between mid-March and May. Restrictions have been eased since but safety protocols remain and low consumer confidence continues to dampen business activity.
FMIC and UA&P said early signs of a “mild” recovery started showing up in late August with the release of improved economic data on employment, inflation and remittances.
Unemployment declined to 10% in July from a record 17.7% in April, while inflation eased to a three-month low of 2.4% in August.
OFW remittances posted a second month of growth in July to $2.783 billion, up 7.8% year on year.
“A slew of recently released economic data, including job recovery, slower inflation, sustained growth in OFW remittances and milder quarantine restrictions starting Sept. 1 have raised hopes of faster economic recovery by Q4,” according to the report.
It said sustained government spending has also helped stimulate the economy. Spending rose 0.38% to P283.3 billion in August, against a 10% year-on-year uptick in July.
“The national government shall ramp up spending, especially on infrastructure and health facilities, to inject vitality into the weakened economy,” it said.
The report projected “more jobs recovery and growth in OFW remittances” in the coming months as the economy reopens further.
FMIC and UA&P said inflation might have peaked at 2.7% in July and will likely average 2.4% by years’ end, well within the 2-4% target range set by the central bank.
Economic managers expect 2020 GDP to decline 4.5%-6.6% this year.
The World Bank on Tuesday slashed its outlook to minus 6.9% from the minus 1.9% baseline estimate it gave in June.
The Asian Development Bank also trimmed its forecast to minus 7.3% from a minus 3.8% forecast in June, while the ASEAN+3 Macroeconomic Research Office cut its estimate to minus 7.6% from minus 6.6% previously.
S&P Global Ratings, Fitch Ratings and Moody’s Investors Service also downgraded their 2020 GDP forecasts to minus 9.5%, minus 8% and minus 7%, respectively. — Beatrice M. Laforga