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NFT sales surge as speculators pile in, skeptics see bubble

Screenshot via OpenSea/MichaelK

LONDON — Non-fungible token (NFT) sales surged in August, according to the largest platform for the burgeoning digital asset class, as speculators bet growing interest across the art, sport, and media worlds will keep prices rising.  

The niche crypto asset, which is a blockchain-based record of ownership of a digital item such as an image or a video, exploded in popularity in early 2021, leaving many confused as to why so much money was being spent on items which do not physically exist.  

The frenzy has now reached new highs. Sales volumes recorded on the largest NFT trading platform, OpenSea, have hit $1.9 billion so far this month, more than 10 times March’s $148 million. In January 2021, the monthly volume recorded on the platform was just over $8 million.  

The jump was driven by secondary market sales, OpenSea said.  

“What we have seen are a few NFT collections popping up in the last few weeks that have been very successful at launch and sold out. That activity has then filtered over to OpenSea where buyers look to flip their NFTs for a higher price,” said Ian Kane, a spokesman for DappRadar, which tracks the market.  

Reuters found one NFT representing an image of a cartoon ape that was sold on OpenSea for 39 ETH — the cryptocurrency ether — last week (around $124,205 at time of purchase), by an account which had bought it for 22.5 ETH ($61,329) two weeks earlier, according to analytics platform Etherscan.  

Another NFT of an abstract digital artwork sold for 1,000 ETH ($3,322,710) on Monday having been sold for 0.58 ETH ($1,366) in June.  

NFT market data varies depending on providers’ methodology, but DappRadar recorded 32 known NFT sales above $1 million in the past 30 days.  

MichaelK, a 30-year-old NFT buyer who asked not to give his full name, said he has spent about $250,000 on NFTs since September. He said he keeps 90% of his wealth in cryptocurrencies and NFTs. 

Earlier this month, he bought an NFT of a cartoon penguin for around $139 worth of ether, then sold it four days later for around $3,956, according to Etherscan.  

Other instances of high-return “flips” are visible on his OpenSea account, including a cartoon squiggle NFT bought for 0.01 ETH ($33), then sold for 1.5 ETH ($4,900) within seven hours.  

‘BUBBLICIOUS STUPIDITY’  

MichaelK said the US Federal Reserve’s ability to control the money supply played a role in his decision to speculate on largely unregulated crypto assets.  

“When people hear these statistics they might think that I’m completely crazy… I look back at them and I say, you’re holding a currency that’s printed daily, to me you’re crazy.”  

He said COVID-19 forcing people to spend more time at home, online, helped NFTs take off.  

“I don’t want to look at it as a bubble. I want to look at it as something new that’s going to be a big wave,” he added.  

Rising cryptocurrency prices may have also played a role in the surge. NFTs are often valued in ether, which has risen around 23% in August.  

Rabobank’s head of financial markets research for Asia-Pacific, Michael Every, said that he was “gobsmacked” by the “bubblicious stupidity” of the NFT market.  

He said that he saw the appeal of high returns for young people who would otherwise struggle to build wealth or get on the housing ladder, but compared it with buying a lottery ticket.  

Mr. Every said NFTs were a bubble which would “absolutely” pop. — Elizabeth Howcroft/Reuters 

Philippines approves commercial use of genetically engineered rice

COMPANY HANDOUT

The Philippines said on Wednesday it has approved the commercial propagation of genetically modified Golden Rice after more than a decade of field tests that drew strong opposition from anti-GMO activists.  

The Southeast Asian country, which is one of the world’s biggest rice importers, is the first nation to approve the Vitamin A-enriched grain for commercial cultivation, according to the Philippines-based International Rice Research Institute (IRRI), which helped develop Golden Rice.  

Formal biosafety approval was issued last month, the Department of Agriculture (DA) and its attached agency, Philippine Rice Research Institute (PhilRice), said in a statement.  

“With the biosafety permit, DA-PhilRice has now commenced producing seeds for cultivation, which usually takes 3–4 cropping seasons,” said Ronan Zagado, the government spokesman for the Golden Rice initiative.  

Golden Rice will be initially deployed in areas with high prevalence of Vitamin A deficiency by the third quarter of 2022, before it can become commercially available for public consumption, he told Reuters.  

The Philippines had been expected to approve the widespread planting of Golden Rice as early as 2011, but faced public concerns over health risks and opposition from various sectors.  

Greenpeace has denounced the approval and called on the agriculture department to reverse the decision.  

“The DA needs to ensure that farmers are central in a green and just recovery from the pandemic, and are supported by resilient food and farm systems in the face of the climate emergency,” said Wilhelmina Pelegrina, senior campaigner for Greenpeace Southeast Asia.  

PhilRice executive director John de Leon, however, allayed health risk concerns.  

“We have generated extensive data on the safety [of Golden Rice] in terms of national and international safety standards,” he said.  

Golden Rice has received food safety approvals from regulators in Australia, New Zealand, Canada, and the United States, and is undergoing final regulatory review in Bangladesh, according to IRRI. — Reuters 

Pag-IBIG posts P16.11B net income in H1 2021; up 14%

Pag-IBIG Fund posted earnings of P16.11 billion in the first half of 2021 amid the challenges posed by the continuing health crisis, a 14% increase compared to the same period last year, its top officials reported on (Wednesday, 25 August).

From January to June, Pag-IBIG Fund’s gross income reached P27.14 billion while its net income amounted to P16.11 billion. Compared to the same period last year, gross income grew 13% and net income increased 14%, driven mainly by earnings from its housing and short-term loans (cash loans), and trading gains.

“We are happy to report that Pag-IBIG Fund remains strong amid the pandemic. The double-digit increase in our income figures proves that we remain as one of the best performing government corporations in the country today. This places us in a strong position to continue providing social services to more Filipino workers, in line with President Duterte’s directives as we continue to recover from the challenges caused by the pandemic,” said Secretary Eduardo D. del Rosario, Chairman of the Department of Human Settlements and Urban Development (DHSUD) and of the 11-member Pag-IBIG Fund Board of Trustees.

He added that as of July, Pag-IBIG Fund has so far released P52.22 billion to finance the acquisition of 51,206 homes for its members. During the same period, the agency released P25.42 billion in cash loans, helping over 1.18 million members answer their immediate financial needs as the health crisis continues. Savings from its members also reached P37.46 billion as of July, strongly driven by the agency’s popular MP2 Savings where members have collectively saved P15.83 billion.

Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti, meanwhile, emphasized that the agency’s gains shall redound to the benefit of its members. He noted that under its charter, Pag-IBIG Fund is mandated to return at least 70% of its annual net income to its members in the form of dividends which are credited to their savings.

“The true owners of Pag-IBIG Fund are the Filipino workers. That is why it is our responsibility, as the administrators of the Fund, to manage their contributions prudently and excellently. Last 2020, we gave back 92.15% of our net income to members in the form of dividends, even though our Charter mandates only a 70% minimum. With our strong fiscal standing, our members can rest assured that our programs shall remain available to help them recover from the pandemic and that each hard-earned peso they save with us remains secure and continues to grow,” Moti said.

Earlier this month, the agency received its 9th consecutive unmodified opinion from the Commission on Audit (COA) for its financial statements for year 2020. This is the highest rating that state auditors give to a government agency or corporation, to mean that the financial statements of an agency are presented, in all material respects, in accordance with applicable financial reporting frameworks.

 

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BoP surplus widens to $642M in July 

THE COUNTRY’S balance of payment (BoP) position recorded a wider surplus of $642 million in July, mainly backed by foreign currency deposits and income from the central bank’s offshore investments.

This is significantly bigger than the $8-million surplus logged a year earlier, based on data released by the Bangko Sentral ng Pilipinas (BSP). It ended two months of the BoP position in deficit, and is a turnaround from the $312-million gap in June.

“The BoP surplus in July 2021 reflected mainly the National Government’s net foreign currency deposits with the BSP and the BSP’s net income from investments abroad,” the central bank said in a statement on Wednesday.

However, this was partially offset by the National Government’s foreign currency debt obligations worth $465 million and the central bank’s net foreign exchange operations valued at $398 million.

The bigger surplus was also due to the proceeds from the global bond sales of the National Government, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

The Philippines raised $3 billion (P146 billion) from dollar-denominated global bonds which were offered in 25-year and 10.5-year tranches. These bonds were issued on July 6.

The BoP gives a glimpse into the country’s transactions with the rest of the world. A deficit means more funds left the country, while a surplus shows that more money came in.

At its end-July position, the BoP reflects the country’s gross international reserves of $107.15 billion, higher by 1.31% than the $105.76 billion as of end-June.

This level of foreign exchange buffers is enough to cover 12.2 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to about 7.7 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity. 

For the first seven months of 2021, the country’s BoP position stood at a deficit of $1.3 billion, a reversal from the $4.117-billion surplus a year ago.

“This cumulative BoP deficit was partly attributed to wider merchandise trade deficit,” it said.

The year-to-date BoP gap reflects muted demand for imports amid the ongoing pandemic, Asian Institute of Management economist John Paolo R. Rivera said in an e-mail.

Based on data from the Philippine Statistics Authority, the trade deficit in the first half of the year widened to $17.44 billion, 53.3% up from the $11.37-billion gap in the comparable period of 2020.

This year, the central bank expects the BoP to reach a $7.1-billion surplus.

Mr. Ricafort said the BoP position in the coming months will likely be supported by steady inflows of remittances and business process outsourcing revenues.

Cash remittances rose 7% to $2.638 billion in June from a year earlier. This helped drive the 6.4% rise in the first semester’s remittances $14.918 billion. The BSP expects cash remittances to grow by 4% in 2021 after a 0.8% decrease last year due to the pandemic. — Luz Wendy T. Noble

BIR to reinstate VAT zero-rating on exporters’ local purchases

REUTERS

By Beatrice M. Laforga, Reporter

THE BUREAU of Internal Revenue (BIR) is looking to reinstate the value-added tax (VAT) zero-rating on local purchases of raw materials by exporters, following an appeal from the pandemic-hit industry.

The BIR has drafted a revenue regulation (RR), which would exempt raw materials sold by local manufacturers to eligible export companies from the 12% VAT.

Once signed, this will finally resolve the conflict between the controversial RR 9-2021 that was issued in June, and the implementing rules of the Corporate Recovery and Tax Incentives for Enterprise (CREATE) Act, said George T. Barcelon, chairman of the Philippine Exporters Confederation, Inc. (Philexport).

Under the draft regulation, goods eligible for VAT zero-rating are raw materials, inventories, supplies, equipment and goods sold to export enterprises and will be used “directly and exclusively” in registered projects and activities.

The draft also stated that exporters have to be registered with the investment promotion agency to avail of the incentive, as cited in the implementing rules of CREATE.

Aside from goods, the sale of services to the eligible export company that will be used for a registered project would also qualify for the VAT zero-rating.

To recall, the BIR on July 28 suspended the implementation of the RR 9-2021 that had imposed the 12% VAT on previously exempt materials sold by local manufacturers to exporters, after objections were raised by the industry.

The BIR had defended the issuance of RR 9-2021 in June, saying it was complying with the conditions set by the Tax Reform for Acceleration and Inclusion (TRAIN) Law on its refund system.

Mr. Barcelon said the imposition of 12% VAT in June hurt the industry, as exporters dealt with additional taxes alongside higher shipping costs and the impact of the pandemic.

“We hope there will be a finality on this issue especially now that exporters are facing challenging times. We have this issue on freight costs for exporters both in and out, it’s been going up drastically and this issue [on VAT zero-rating] also hampered the sector. Exports have been picking up but we are held up by the hard lockdown,” he said over a phone call.

During the online public consultation on the draft regulation on Wednesday, BIR officials said another Revenue Memorandum Circular will be issued to clarify other issues raised by stakeholders, such as the refund of VAT paid to vendors when RR 9-2021 was in effect and if domestic market enterprises are qualified to avail of the VAT zero-rating.

Many items in the draft regulation were still unclear even after the public consultation, according to Maria Lourdes P. Lim, the tax managing partner of Isla Lipana & Co., PwC Philippines.

“For one, it limits the VAT zero-rating on local purchases and VAT exemption on importation to export enterprises which is not in accordance with the law as CREATE did not make a distinction… [It also] seems to limit the coverage of ‘direct and exclusive use’ to ‘direct costs’ to qualify for VAT zero-rating which is not expressly provided in CREATE unlike in the case of duty-free importation,” Ms. Lim said in a mobile phone message.

Instead, Ms. Lim said the “reasonable interpretation” is for the purchase to be zero-rated if the company’s business is solely for the registered activity, while those purchases that cannot be separated from the unregistered activity should subject to the 12% tax rate.

Once the new regulation takes effect, she said the BIR should clarify what will happen if the supplier passed on the VAT to the exporting company and those that did not do so even if the sale is subjected to VAT.

“In the interest of fair play, perhaps BIR should apply prospectively and provide first clarity before strictly implementing,” she added.

Aside from goods and services from local manufacturers, the BIR also laid out other transactions that are VAT-exempted in the draft regulation including the sale and actual shipment of goods from the country to another country; the goods, supplies, equipment, and fuel sold to be used in international shipping or air transport operations coming from Philippines’ ports; and the sales to entities whose exemption from direct and indirect taxes where granted via special laws or international agreements, among other things.

CARS participants reach a third of local production target as of May, says Lopez

REUTERS
Newly assembled Toyota Vios sedans are seen at a stockyard of the Toyota Philippines manufacturing plant in Sta Rosa, Laguna in this Aug. 11, 2014 file photo. — REUTERS

TWO CAR COMPANIES participating in a government incentives program to support domestic parts production have manufactured just over a third of their target as of May, the Trade department said.

Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. are participating in the Comprehensive Automotive Resurgence Strategy (CARS) program, which offers fiscal support to car companies that each produce 200,000 units of high-volume car models in the country over a six-year period.

The two companies have produced a total of 147,000 vehicles by May 2021, Trade Secretary Ramon M. Lopez said in a manufacturing summit on Wednesday.

Mitsubishi has a 2023 deadline to meet the local production target for its Mirage compact car, while Toyota has until 2024 to produce its Vios model in the country.

“The CARS program today has generated P9.1 billion in capex (capital expenditure) investments,” Mr. Lopez said, noting that the program has created 100,000 jobs and registered nine parts makers.

The program has also saved the economy $700 million in foreign exchange as of June, and it can save the economy another $1 billion in foreign exchange by 2024, he said.

The program covers body shell assembly, large plastic assembly, and common parts production.

The government is considering a three-year extension of the compliance period after an auto industry group asked for a review due to a sales slump amid the pandemic. The 200,000-unit requirement will be retained.

Car sales in 2020 declined 39.5% to 223,793 units, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association.

Sales have so far improved in 2021 as total vehicle sales surged by 46.1% to 154,265 units in the first seven months compared with the low base in 2020.

Mr. Lopez said the department’s electric vehicle strategy builds on the CARS program.

“We are preparing the electric vehicle (EV) investment strategy to attract investments in key activities critical to the industry’s development such as the EV assembly, auto electronic and other parts manufacturing, EV battery charging and energy storage systems manufacturing, battery recycling, and engineering service outsourcing,” he said.

The Bureau of Customs earlier this month told car manufacturers receiving support under the CARS program to present tax payment certificates within 30 days in order to avail of incentives. — Jenina P. Ibañez

Passage of key bills to ease FDI restrictiveness

PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Reporter

IMPROVEMENTS in the Philippine foreign direct investment (FDI) restrictiveness ranking would depend on the passage of laws further opening up the economy, business and government leaders said.

The Philippines ranked third most restrictive out of 83 economies on the FDI Regulatory Restrictiveness Index compiled by the Organization for Economic Cooperation and Development (OECD), based on 2020 data.

On a scale of 0 (open) to 1 (closed), the Philippines scored 0.374, behind just Palestine and Libya. Most FDI restrictions came from the primary, telecommunications, media, business services, and transport sectors.

“We are relying on the meaningful amendments and improvements in the remaining certified urgent bills,” Trade Secretary Ramon M. Lopez said in a Viber message last week.

Mr. Lopez is referring to measures proposing amendments to the Retail Trade Liberalization Act (RTLA), Public Service Act (PSA), and Foreign Investments Act (FIA) that were certified by President Rodrigo R. Duterte as urgent.

Changes to the RTLA include lowering the required minimum paid-up capital for foreign companies that seek to enter the Philippine retail sector, while amendments to the PSA would lift foreign ownership restrictions in the public service sector. The measure amending the foreign investment law will lower the number of direct local hires required for foreign companies.

“(These) will ease restrictions on the entry of foreign equity investments in the country,” Mr. Lopez said. He has been pushing for the passage of the pending bills within the third quarter.

John Forbes, senior advisor at the American Chamber of Commerce of the Philippines, said that the Philippines’ ranking could discourage foreign investors from considering the Philippines as it signals that the country’s doors are closed.

Mr. Forbes also referred to the RTLA and PSA, along with the Resolution of Both Houses 2 (RBH 2) which could amend economic provisions in the 1987 Constitution.

“If passed by the Senate and approved in a plebiscite, RBH 2 would allow the next Congress to pass new laws to open advertising, media, and other restricted sectors in the Constitution,” he said in a mobile message.

“The power to vastly improve this rating and eventually increase actual foreign investment and create new jobs is with the Congress, if it listens to the reform advocacies of President Duterte and most of the business sector.”

Government officials and business leaders had also advocated for the passage of the economic bills last year, when the Philippines also had a score of 0.374 in the same index.

British Chamber of Commerce of the Philippines Executive Director Chris Nelson said in a phone interview that the bills have been made more urgent due to the coronavirus disease 2019 (COVID-19) pandemic.

“The need I think has increased significantly. There’s always a need to increase foreign direct investment, but now with the economy under pressure… the need has increased even more,” he said.

“The government has recognized the need to pass these bills, and I think the focus and attention on opening up the economy has further amplified.”

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said that some FDI entered the country this year through progress made on tax reform, which he said narrows that tax rate gaps between the Philippines and other Southeast Asian countries and provides more certainty on investment incentives.

“More FDIs could still be spurred further by still near record low interest rates locally and worldwide, thereby making borrowings more compelling to finance investments worldwide, including those for FDIs destined for the country,” he said in an e-mail.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed FDI inflows fell by 25.4% year on year to $429 million in May. Despite the decline in May, FDI net inflows jumped 37.8% to $3.48 billion in the first five months of 2021.

Citicore Power plans 200 MW of solar farms

By Angelica Y. Yang, Reporter

LOCAL renewable energy (RE) firm Citicore Power, Inc. hopes to develop up to three new solar farms with a total capacity of 200 megawatts (MW) next year in Luzon.

“We’re looking at least two to three new solar farms that we will be constructing for the full-year 2022. We’re looking at a total of around 200 megawatts for these… projects and these are all in Luzon,” Citicore Power President Oliver Y. Tan told BusinessWorld in an online interview last week.

He added that the firm will be “very busy” next year as it develops these new projects.

Mr. Tan provided no further details on the specific locations of the solar farms, adding that the firm still needed to speak with local municipalities regarding the planned projects.

When asked about the projected investment for the new facilities, he said that it will form part of the power company’s capital expenditures (capex) for 2022, which the firm will finalize soon.

Citicore Power has earlier expressed its intent to launch an energy-focused real estate investment trust (REIT) offering by the end of this year. It hopes to raise up to P10 billion from the offer, with the proceeds going to 1,500 MW of pipeline solar projects in Luzon.

In the past two weeks, Citicore Power has filed the energy-focused REIT’s registration statement with the Securities and Exchange Commission and listing application with the local bourse.

“The company is looking at potential offer period sometime in November,” Mr. Tan said.

Asked for updates on the firm’s 72-MW solar farm in Arayat-Mexico, Pampanga he said that the project’s phase one is “progressing very well” as it is on track to meet its target to go online by early next year.

“In fact, we’re looking at energization by Q1 (the first quarter of) next year,” he added, referring to its joint venture with the Ayala-led AC Energy Corp. The 72-MW facility broke ground in June.

Citicore Power previously said it had allotted P4 billion in capital expenditures for solar and hydro projects this year. Of the amount, some P2.5 billion will go to solar facilities, while P1.5 billion is allocated for hydro projects.

Robinsons Land ‘better prepared’ as REIT starts offer period

By Keren Concepcion G. Valmonte, Reporter

THE real estate investment trust (REIT) unit sponsored by Robinsons Land Corp. (RLC) started its offer period on Wednesday, after securing a permit to sell from the Securities and Exchange Commission.

RL Commercial REIT, Inc.’s offer period will last until Sept. 3. Its initial public offering (IPO) comprises of 3.34 billion common shares owned by RLC, with an overallotment option of up to 305 common shares. It aims to raise as much as P23.5 billion.

RLC plans to use the proceeds from the initial public offering (IPO) of its real estate investment trust (REIT) unit to build more projects in all the businesses it currently engages in.

“They will be used specifically to build, number one, more office buildings; number two [and three], for our residential projects, both the vertical as well as our landed housing projects; number four, for our logistics and industrial facilities,” Frederick D. Go, chairman of RCR, and president and chief executive officer of RLC, said in a briefing on Wednesday.

He added that the proceeds will also be used for RLC’s destination estates, which include Bridgetowne in Quezon City and Pasig, Montclair Project in Pampanga, and Sierra Valley Gardens in Rizal.

“And of course, included there would be our land banking activities, as well as the construction of our malls and hotels,” said Mr. Go.

RCR is being branded as the largest REIT in the country. Its initial portfolio includes 14 commercial real estate assets with a combined gross leasable area (GLA) of 425,315 square meters (sq.m.), having an independently appraised value of P73.9 billion as of end-June.

The 14 RCR buildings are located in central business districts across Makati, Bonifacio Global City, Ortigas, Quezon City, and Mandaluyong as well as in key cities of Naga, Tarlac, Cebu, and Davao, making the offer the “most geographically diverse Philippine REIT.”

“I think the choice of the office REIT is primarily because the BPO (business process outsourcing) industry is the bedrock of our business and the BPO industry is an essential service industry and they continue to operate even during these difficult times, these challenging times,” Mr. Go said.

RCR pushed through with the listing even amid the pandemic, saying it waited for years to launch the product and it also noted market support for REIT listings.

“Last year, during the height of the lockdown… the business was extremely resilient even if we didn’t know anything about this virus,” Mr. Go said.

“We’re now so much better prepared to handle the virus so if we were resilient then, I believe we are so much more resilient today,” he added, expressing optimism on the progress of the country’s vaccination drive.

RLC has a potential infusion pipeline spanning around 422,000 sq.m. for RCR, the addition of which will be subject to market conditions and the approval of regulatory bodies, among others.

RCR said will be complying with the REIT law in terms of dividends. At its P6.45 per share offer price, the company said it has an implied 2022 dividend yield at 5.96%.

On Wednesday, shares of listed sponsor RLC at the stock market closed unchanged at P16.84 each for the third straight day.

PHL e-commerce seen to hit $15 billion by 2025

DESPITE its low penetration rate, the Philippines’ e-commerce sector is anticipated to jump in 2025, with gross merchandise value expected to reach $15 billion.

“The industry remains underpenetrated despite soaring sales,” said Franklin Templeton Emerging Markets Equity’s Senior Research Analyst and Assistant Portfolio Manager Yi Ping Liao and Institutional Product Specialist Claus Born in an analysis e-mailed to reporters on Tuesday.

The e-commerce penetration rate in the Philippines is only 5%. The average penetration rate in Southeast Asia is 6%, with Singapore having the highest penetration rate of 14%, followed by Indonesia at 8%.

The country’s e-commerce market had an estimated gross merchandise value of $4 billion last year, when the coronavirus pandemic started to affect most of the industries.

“The e-commerce wave has altered the retail landscape, leaving many incumbents on the back foot. Physical department stores have lost market share,” the Franklin Templeton Emerging Markets Equity team said.

“Multinational brands leveraging traditional distribution channels to dominate consumer spending have seen increasing competition from small and nimble local brands capturing demand online,” the team noted. “Besides conventional shopping platforms such as Lazada and Shopee…, livestreams and other social media channels have become new tools to win sales.”

The paper also said digital economies in the regions like Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam offer “immense opportunities,” as they represent a huge addressable market with an overall gross domestic product of around $2 trillion.

Aside from e-commerce, two other areas of the region’s overall digital economy standout: financial technology (fintech) and gaming.

“Underbanked and cash-reliant populations have reeled in an array of fintech companies. Many offer e-wallets as a gateway to access a wider suite of financial products,” Ms. Liao and Mr. Born said.

They said the digital payment gross transaction value in the region could double to $1.2 trillion by 2025. It was $620 billion last year.

As for the gaming sector, the team said: “Successful games have found a global audience. Games are also evolving into social forums integrating chat functions and more modes of entertainment to boost user engagement and monetization potential.”

The region’s gaming market was valued at roughly $5 billion last year, and it is expected to grow to $13 billion by 2025.

Coronavirus travel restrictions “drew even more users to gaming, a pastime that could stick beyond the pandemic,” Ms. Liao and Mr. Born said.

“A flood of capital into Southeast Asia’s internet economy has minted unicorns across the private and public markets.”

“Several private companies have initial public offerings in sight. We expect a string of internet company listings to rejuvenate Southeast Asia’s equity universe, whose old-economy heavyweights have been overshadowed by North Asia’s technology giants,” the team added. — Arjay L. Balinbin

Colliers sees ‘confidence’ in Cebu office market

By Jenina P. Ibañez, Reporter

OUTSOURCING and traditional transactions in the Cebu office property market has been increasing in the first half in a segment where vacancy has remained stagnant, Colliers Philippines said.

Transactions in the first half of 2021 went up 142% to 19,000 square meters compared to the same six-month period last year. Broken down, 7,300 square meters (sq.m.) came from the traditional sector, while 6,200 came from the voice outsourcing sector.

Another 5,300 sq.m. came from the knowledge process outsourcing industry.

“Traditional and outsourcing firms became the stable demand drivers. So, this actually is a good indicator that there is already a bit of confidence in the market, and there’s already movement in the market because these companies have already taken up space,” Colliers Cebu General Manager Gerard Thomas S. Padriga said in a briefing on Wednesday.

“This positive outlook also translated to positive net take up for two consecutive quarters.”

Mr. Padriga said that the vacancy rate is at 21.7% in the first half of 2021, and Colliers is forecasting an increase to over 24%.

“This may be a cause of concern for some, but you have to understand that there is a net take up here of about 11,000 square meters for the first half,” he said.

“Definitely, the market has been starting to recover. There is already movement in terms of expansions and new setups.”

A Cebu outsourcing organization said last month that it expects to continue remote work arrangements for between two and five more years as it sought faster rollout of telecommunications services outside the capital.

Cebu IT-BPM (Information Technology-Business Process Management) Organization President Exuperto P. Cabataña said that 60-75% of outsourcing staff could be assigned to work remotely for the foreseeable future.

SEC describes role in regulating fintech as ‘delicate balancing act’

THE Securities and Exchange Commission (SEC) emphasized the two-fold role regulators play in promoting innovation in financial technologies (fintech), while keeping investors protected and ensuring market stability.

“It’s a delicate balancing act,” SEC Commissioner Kelvin Lester K. Lee said at the 15th Regional Leadership Program for Securities Regulators organized by the Monetary Authority of Singapore with independent nonprofit organization Toronto Centre on Monday.

“On one hand, as regulators we don’t want to stifle innovation. In fact, we want to encourage growth. But on the other hand, we need to be aware of the risks, some of which are very uncertain at this point, that may arise by allowing new innovations to operate,” he added.

Mr. Lee noted how the coronavirus disease 2019 (COVID-19) pandemic put fintech innovations at the forefront, allowing individuals to have easier access to financial services even if there are restrictions in movement.

The SEC recognized that fintech and innovation now play an important part in the country’s economy, however, it keeps in mind the potential risks it comes with.

“We don’t want to unduly expose investors and the public, and the financial system to the risks that can be brought about by improperly vetted innovations,” Mr. Lee said.

The regulator’s newly launched Philifintech Innovation Office (PIO), an office under its Corporate Governance and Finance Department, will be taking on the responsibility of regulating fintech activities within the country.

The SEC aims to have an activity-based approach instead of an entity-based one when regulating fintech, as well as put up “principles-based” regulations. It aims to “remain technology neutral.”

The PIO wants fintech services to have room for growth through promoting an “innovative culture in the corporate sector.”

“Our aim is that through our innovation office, we can regularly touch base with our stakeholders, and we get to learn from each other,” Mr. Lee said.

The SEC said it is finalizing rules on digital asset exchanges, digital asset offerings, and online lending applications.

“Our approach at the commission is that we make every effort to keep an open mind to allow innovations to flourish without losing sight of our mandate to protect the investing public and secure our corporate and capital market sector,” Mr. Lee said. — Keren Concepcion G. Valmonte

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