Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 7622

Why natural gas is a great energy choice for companies

Properly functioning facilities cannot be underestimated in business. Facilities adequately supplied with power can significantly contribute to the productivity of employees and, in the long run, the profitability of an establishment. In addition, we must also be careful about the potential emissions and pollutants from energy sources, aside from ensuring their reliability.

Cleaner energy sources, however, could provide the same amount of power supply at a lower cost and without polluting the environment, depending on where it’s sourced. Among these sources is natural gas. It has been part of the country’s energy mix since the Malampaya Gas Field, the biggest commercial gas discovery in the Philippines to date, started operating. First Gen Corporation — the largest off-taker of natural gas and generator of natural gas-fired power electricity in the country — currently sources its natural gas from this indigenous field, off the coast of Palawan.

Considered the cleanest source of fossil-based energy, natural gas can provide businesses with a cleaner, affordable, and more reliable energy supply with minimal impact to our environment.

Powering establishments better

Natural gas is a cleaner choice for businesses to consider. According to the International Gas Union (IGU), natural gas releases about 50% less carbon dioxide (CO2) than coal, and natural gas-powered electricity generation produces less than half of greenhouse gas emissions than coal and up to a third less than oil. In 2019, the use of natural gas plants, instead of coal, helped the country avoid 8.6 million tons of greenhouse gas emissions equivalent (tCO2e). That is similar to removing the emissions of 1.9 million passenger vehicles on the road annually.

The use of natural gas can help reduce global CO2 emissions almost immediately, especially in developing nations like the Philippines. Moreover, it significantly helps reduce the emissions of harmful air pollutants such as Particulate Matter (PM), nitrogen oxide (NOx), and sulfur oxide (SOx).

Natural gas also has been found to have lower generation costs. Data from Japan’s Ministry of Economy, Trade and Industry shows that spot liquefied natural gas (LNG) prices have decreased from an average arrival-based price of 6.7 USD/MMBTu in December 2019 to 2.6 USD/MMBTu last May.”

Furthermore, a 2018 report by the Institute for Energy Economics and Financial Analysis stated that excessive reliance on imported coal is one of the main reasons the Philippines has the highest electricity prices in the ASEAN region. It concluded that natural gas, together with other energy sources “can be combined to create a cheaper, more diverse, and secure energy system”.

Liquefied natural gas (LNG), the liquid form of the source that could be shipped over long distances, is also found to be cheaper. According to IGU, switching to LNG from oil does not only deliver big emissions reductions but can also provide significant savings. Compared to oil, natural gas is much cleaner, more affordable, and more reliable — crucial for areas that need dependable electricity. 

Moreover, natural gas is reliable, since its plants typically operate with fewer outages compared to coal plants. Natural gas plants are also very efficient — requiring less fuel to generate the same amount of electricity. Finally, natural gas is recognized for its flexibility, or its ability to provide electricity or change its output rapidly. This is crucial to providing sufficient electricity since it helps support solar and wind power when there is no sun and wind. First Gen also has clean and renewable sources in its portfolio that include geothermal, hydro, wind, and solar.

Cleaner, more energized environment

Aside from helping businesses run more efficiently, natural gas also enables them to do their part in mitigating the impact of climate change.

Aside from releasing fewer Greenhouse Gases, natural gas plants help avoid additional hazards to their immediate surroundings. Unlike coal, natural gas does not leave behind ash or other pollutants that are harmful to both humans and the environment when combusted. 

As a result, using natural gas does not degrade the quality of the air we breathe, and can help greatly reduce incidents of respiratory diseases such as emphysema and asthma.

Natural gas can meet growing global energy demand as well. A recent outlook from the EIA projected the world energy consumption to grow by nearly 50% between 2018 and 2050. Most of the growth is driven by regions with strong economies, particularly in Asia.

This growing demand requires additional power sources, and natural gas is a viable option, with enough abundance and accessibility, aside from its reliability and minimal impact on the environment. Moreover, the flexibility of natural gas makes it compatible with variable wind and solar energy, allowing it to provide power when they are unavailable. Because of this, natural gas also supports the introduction of cleaner sources of energy, without compromising energy security. 

Given all its advantages, natural gas is a truly valuable source of energy. First Gen maximizes this source through its natural gas-fired power plants, which have a combined installed capacity of 2,017 MW. Bundle that with its diversified and flexible portfolio, it is clear to see how First Gen is positioned to address growing energy demands — including that of businesses — while keeping our environment clean.

First Gen’s portfolio of clean and renewable sources that include geothermal, hydro, wind, and solar, make First Gen one of the country’s leaders in clean and renewable energy.  As such, it continues to work towards helping the Philippines transition into a more sustainable and decarbonized future.

Peso set to stumble with drop in foreign bond sales

Philippine borrowers are looking to raise fewer bonds overseas in the coming months, taking away a pillar of strength for the peso.

The peso led the advance among Asian currencies this year with 4.1% gains as the nation’s borrowers raised a record $11.4 billion dollars via international bond sales in 2020. However, the tide is turning as cheaper funding costs in the domestic market keep borrowers from venturing abroad.

Overseas borrowings are one of the factors that have made the peso Asia’s best performing currency this year, said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. “We’re not seeing that next year, and if imports rise as the domestic economy recovers, the peso could go back to 50 per dollar next year.”

San Miguel Corp., is prioritizing the local market for fund-raising. “The peso’s strength all the more makes it more prudent to borrow from the domestic market,” Eduardo Edeza, treasury head at the Philippines’ largest company, said in a mobile-phone message. The peso is hovering around a four-year high of 48.48 per dollar recorded on Sept. 1.

The government also pared its foreign-currency funding plan for 2021 to 15% of its borrowing needs from 25% this year.

That’s bad news for the peso as some of the funds repatriated from offshore bond sales contribute to foreign inflows into the country. “It’s a factor but not the main one,” Jun Trinidad, a consultant for market strategy at Union Bank of the Philippines said, referring to foreign bond sales. The currency may remain supported if demand-driven consumption stays weak, he said.

In a sign of comfort with the currency’s gains, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said late last month that the peso’s performance has helped keep import costs low and that the currency could benefit as coronavirus curbs are eased and the economy further reopens. — Bloomberg

39% of companies have experienced videoconferencing attacks

By Mariel Alison L. Aguinaldo

Thirty-nine percent of companies all over the world encounter video conferencing attacks, according to the Cyber Readiness Report 2020 by data protection firm Acronis.

Video conferencing attacks occur when perpetrators hijack a video call. Singapore had to stop its teachers from using Zoom when obscene images and strange men making lewd comments appeared on their classes’ screens. In the Philippines, an online forum by business advocacy group Go Negosyo was disrupted by the appearance of photos from an animated pornography scene.

“Before the pandemic, there were just a few vulnerabilities reported, and when the pandemic started, the attention of the security researchers obviously moved to those kinds of software. As a result, vulnerabilities in software like Slack, Zoom, and Microsoft Teams hit the news every few weeks. I believe there is a strong correlation between the vulnerabilities published and attacks occurred. After all, the former enables the latter,” said Kevin Reed, chief information security officer at Acronis, through an online text message.

Fifty-four percent of companies have also experienced phishing attempts, wherein perpetrators pose as legitimate institutions in e-mail messages to collect sensitive data like credit card details. Close to 45% have experienced Distributed Denial-of-Service (DDoS) attacks, where perpetrators overload a machine or network resource with requests to disrupt the services of a host connected to the Internet.

The COVID-19 pandemic normalized remote work among many companies, along with it the use of digital technology to enable long-distance collaboration. According to the same survey, 69% of remote workers have started using workplace collaboration tools like Zoom and Webex.

However, 6% of this number did not report this action, which suggests that remote workers may have installed and managed these tools themselves. This creates security vulnerabilities that can be exploited by perpetrators.

Companies should choose a cybersecurity solution that is the best fit for them, according to Acronis. This may be done by examining how they run their business and identifying their use cases for the solution.

“A product can do thirty things, but quite frankly, some [consumers] don’t care that it does thirty things. There are four or five things that are really important to them because it’s based on their business case,” said Steve Brining, partner technology evangelist for Cyber Protect at Acronis, during a virtual presser on September 9.

“When that’s identified… you have to turn around and say, ‘Do I have the personnel for this thing?… Do I have to change my processes to fit the technology, or does the technology have to be modified to fit my processes?” he said.

Companies also have to assess the solution’s usability for their employees. “The more simplistic it is, the better it is… Is it easy for me to use, or do I really have to be the cyber dude… to be able to do this?” said Mr. Brining.

The Acronis Cyber Readiness Report 2020 surveyed 1,700 IT managers and 1,700 remote workers from industries such as healthcare, hospitality, and sports and entertainment. The respondents came from Australia, Bulgaria, Canada, France, Germany, India, Italy, Japan, Netherlands, Singapore, South Africa, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, and the United States.

External trade weakness persists in July

PHILIPPINE international trade performance further contracted in July as trade activity remains subdued in the country and in the rest of the world, the Philippine Statistics Authority (PSA) reported on Thursday.

Preliminary data by the PSA showed merchandise exports in July declined by 9.6% to $5.654 billion compared to a revised 12.5% decline in June and a 4.8% growth recorded in July 2019.

The July result marked the fifth straight month of decline for exports, as well as the slowest decline so far this year following double-digit declines that started in March.

Meanwhile, merchandise imports declined for the 15th consecutive month in July by 24.4% to $7.481 billion, worsening from the year-on-year declines of 23.1% in June and 0.9% in July last year.

The trade deficit in July stood at $1.827 billion, lower than the $3.641-billion gap in the same month last year. This was, however,  the biggest in four months, or since March’s shortfall of $2.368 billion.

The country’s total external trade in goods — the sum of export and import goods — was $13.134 billion in July, 18.6% less than the $16.145-billion total in the same month last year. So far, total trade amounted to $80.771 billion, 23.6% less than $105.725 billion in January-July 2019.

For the seven months to July, exports were down 16.4% to $34.135 billion, which is above the Development Budget Coordination Committee’s (DBCC) revised projection of a 16% fall for the year.

Meanwhile, the import bill declined by 28.1% to $46.636 billion on a cumulative basis against the DBCC’s revised target of an 18% contraction for 2020.

Year to date, trade balance amounted to a $12.501-billion deficit, narrower than the $24.066-billion trade gap in 2019’s comparable seven months. – Lourdes O. Pilar

Pag-IBIG Fund earns COA’s highest opinion anew for 8th straight year

For the eighth consecutive year, Pag-IBIG Fund has again earned the highest opinion from the Commission on Audit (COA) for the presentation of its financial statements, top officials announced on Tuesday (Sept.8).

State auditors, in a letter dated August 28, informed the agency that it has rendered its highest rating – referred to as an unmodified opinion – on the fairness of the presentation of Pag-IBIG Fund’s financial statements for the year 2019.

“This is yet another milestone in Pag-IBIG Fund’s history. Consistently earning the highest opinion from COA for eight consecutive years serves as proof that Pag-IBIG Fund – the Filipino workers’ fund – is being managed properly. We have been true to our promise of upholding excellence and integrity in serving our members and other stakeholders as we heed the call of President Duterte in ensuring that public offices, especially those that provide social services like ours, are corruption-free,” 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.

From 2012 to 2017, COA has rendered unqualified opinions on Pag-IBIG Fund’s financial statements and unmodified opinions for the years 2018 and 2019. Auditors use both the unqualified opinion and unmodified opinion, which are the highest opinions that COA can give to a government agency or corporation, to mean that the financial statements of a company or agency are presented, in all material respects, in accordance with applicable financial reporting frameworks.

“We have been saying for several years that we have achieved our best year ever. But 2019 stands out as the most special. In terms of performance, we reached our highest ever net income of P34.37 billion. We also posted a record-highs in housing loan takeout worth P86.74 billion which benefitted 95,276 borrowers, and in short-term loans totaling P53.83 billion which assisted 2.59 million members. With our 2019 performance capped by this unmodified opinion from COA, this shows that we have achieved our best performance ever in terms of both numbers and the integrity in our operations. In 2020, with the economic slowdown, we may not see such record-breaking numbers but two things are for sure –first, the economic slowdown will not stop us from extending benefits to our members and second, is that we will remain transparent in our operations and in serving our members with excellence and integrity,” Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti said.

BSP to issue own securities next week

The Bangko Sentral ng Pilipinas will launch its maiden securities offering on Sept. 18. — BLOOMBERG

THE central bank is set to begin selling its own securities on Sept. 18, saying this will become an additional tool in managing liquidity in the financial system.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Wednesday said it will initially offer P20 billion worth of 28-day BSP bills. The final offer volume will be confirmed on Sept. 16.

“As part of its initiative to shift to a more market-based monetary operations, the BSP will offer its own securities via auction in the form of bills and bonds, starting Sept. 18,” he said on Twitter.

The central bank said the auction volume for the debt papers will be small at the start, but this will be gradually increased based on market response and consistent with liquidity forecast.

“The inclusion of BSP Securities issuance in the standard monetary operations of the BSP provides an additional instrument for managing liquidity in the financial system and support the implementation of monetary policy under the Interest Rate Corridor (IRC) framework,” the BSP said in a statement.

It said the issuance of BSP securities does not mean there will be a change in the central bank’s monetary policy stance.

In 2016, the BSP adopted the IRC system to guide short-term market interest rates through the overnight reverse repurchase rate, which is currently at a record low of 2.25%. It also includes the overnight lending and deposit rates of 2.75% and 1.75%, respectively, applicable to banks when borrowing or depositing to the BSP.

The BSP bills will have the same tenor as the 28-day term deposit papers that are auctioned every Wednesday.

“They will be offered simultaneously at first, but on different days. Eventually, the 28-day TDF (term deposit facility) will be phased out,” Mr. Diokno said.

The sale of the securities is allowed under Republic Act 11211 or The New Central Bank Act, which was signed into law in February 2019.

“The issuance of securities by the BSP will add to the existing supply of risk-free financial instruments in the banking system, which in turn could help in the development of the local bond market,” the BSP said.

National Treasurer Rosalia V. de Leon said there will be “no crowding out effect” as even the BSP’s TDF remains oversubscribed.

“We closely coordinate with BSP on our respective issuance including segment of curve. No crowding out effect,” Ms. De Leon said in a Viber message to reporters.

On Wednesday, the BSP’s weekly TDF auction garnered bids worth P541.442 billion going beyond the P360-billion offer. This was also higher than the P502.084 billion in bids logged the previous week for the P310-billion offering.

“The BSP bond issuance would be one of the main monetary policy tools to mop (up) excess liquidity, eventually with much longer tenors and to complement the weekly TDF auctions,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

He added timing of the issuance of BSP securities is acceptable given the “large excess liquidity” in the financial system.

Domestic liquidity or M3, which is considered to be the broadest measure of money supply, grew 14.5% year on year in July, easing from the 14.9% pace in June, preliminary data from the BSP showed. — Luz Wendy T. Noble

Meralco rates fall for fifth straight month

Consumers in Metro Manila will see lower electricity bills this month. — BW FILE PHOTO

POWER RATES in Metro Manila will go down again this month with typical households likely to see a P12 cut in their bills, Manila Electric Co. (Meralco) said on Wednesday.

In a statement, the utility giant said the September electricity rate fell by P0.0623 per kilowatt-hour (kWh) to P8.4288/kWh from last month’s level. The rate is its lowest since September 2017.

Meralco power rates continue to drop for the fifth month as the generation charge remains low with supply contracts still relaxed due to the impact of the global coronavirus pandemic on power consumption.

Households consuming 300 kWh, 400 kWh, and 500 kWh can expect their bills to decrease by P18.69, P24.92, and P31.15, respectively

Meralco’s generation charges, which form the bulk of consumer bills, were trimmed by P0.0381/kWh to P4.0860/kWh this month.

The company said its force majeure claims in September saved P463 million, which is equal to P0.1710/kWh. This as supply contract charges, which make up 54.8% of its energy requirements, were down by P0.3032/kWh.

Overall, Meraclo’s savings from relaxed supply contracts reached P2.4 billion since March. Power players are able to invoke a force majeure claim in their supply deals if an unexpected event makes it impossible for them to fulfill contract obligations.

Power charges from the Wholesale Electricity Spot Market (WESM), where Meralco sources 11.6% of its supplies, were lower at P0.0147/kWh, attributed to the slump in electricity usage during the return to a strict lockdown in the first two weeks of August.

Further, charges from independent power producers, which deliver 33.6% of the utility’s energy needs, slightly increased by P0.0601/kWh because of the drop in average plant dispatch.

Charges for transmission also declined by P0.0112/kWh due to lower ancillary service rates, while taxes and other charges levied on customers dropped by P0.0130/kWh.

Last month, Meralco was ordered by the government to provide subsidies amounting to P275 million to more than two million poor customers with below 100 kWh monthly usage. The amount represents the cut in their distribution, supply, and metering charges, which make up 22.4% of their total bills.

The listed utility was also slapped with a P19-million fine over alleged violations of the Energy Regulatory Commission’s (ERC) advisories on billings during the lockdown months.

In a recent House hearing, the company said it is extending until end-October its self-imposed moratorium on sending disconnection notices to customers who are unable to settle their arrears since the lockdown started.

Meralco will also continue to waive the P47 convenience fee imposed on customers who pay their bills via the company’s app or website.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. 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. — Adam J. Ang

Senators question 2021 budget’s priorities amid coronavirus crisis

The Health department’s budget for 2021 is 14% lower than this year, despite the ongoing pandemic. — PHILIPPINE STAR/MICHAEL VARCAS

SENATORS on Wednesday questioned the economic team’s priorities under the proposed P4.5-trillion national budget for 2021 as allocations for health and social safety nets were cut and funds for infrastructure projects increased despite the ongoing pandemic.

Senator Franklin M. Drilon asked economic managers why the Department of Health (DoH) budget was slashed by 14% to P131 billion in 2021, when the agency’s role in restoring confidence in the public health system is crucial for economic recovery.

“It’s P153 billion for this year as adjusted with Bayanihan I and II and yet for next year, we are only allocating P131 billion. Isn’t there something wrong with this? When in fact we should recognize that economic recovery depends upon protecting public health because that is where the confidence of the consumer has weakened,” he said during the Development Budget Coordination Committee (DBCC) briefing at the Senate on Wednesday.

Even if there are questions over the DoH’s handling of the health crisis, Mr. Drilon said it is still important for the government to give a bigger budget to improve testing, contact tracing and treatment of those infected by the coronavirus disease 2019 (COVID-19).

Budget Secretary Wendel E. Avisado said the DoH’s budget was higher this year because they made substantial investments such as buying testing machines and other equipment to deal with the health crisis.

“Next year, what will be covered mostly are the consumables, the test kits and therefore, that is where we wanted to ensure that there will be more than enough consumables to be able to correspond the capital investments that we had this year, and other accompanying items,” Mr. Avisado said.

Senator Cynthia A. Villar also pointed out only 30 out of 70 DoH-operated hospitals have set up COVID-19 testing facilities despite the increased budget.

“Apart from testing, there is also the question of contact tracing and our ability to treat and therefore this is an issue that I take with you because the budget didn’t sufficiently address the protection of public health which for this budget is key for economic recovery,” Mr. Drilon added.

Senator Risa N. Hontiveros-Baraquel also raised concerns the estimated P20 billion to be set aside for the free vaccination program against COVID-19 may not be enough.

Ms. Hontiveros estimated around P189 billion would be needed to subsidize the vaccines for 18 million poor families, assuming there are five members in a family and three doses worth P700 each would be needed.

Finance Secretary Carlos G. Dominguez III said the budget for the vaccination program was only based on estimates given by the Health department. In July, he said P20 billion will be able to provide free vaccines worth P1,000 each for 20 million Filipinos.

“Pati ang Secretary ng Health ina-underestimate ’yung kailangan ng department nila para magsagawa ng isang seryosong (Even the Health Secretary is underestimating the budget they need to implement this) vaccination program. P20 billion is only one-ninth of the P189 billion that we initially computed on this end… At pag kaharap ang isang napakatinding virus tulad nito (and if we are facing a serious virus like this), ideally, it’s universal vaccination so malayong malayo pa tayo,” Ms. Hontiveros said.

There is P2.5 billion allocated for the purchase of COVID-19 vaccines under next year’s budget and another P10 billion in standby funds under the proposed Bayanihan to Recover as One Act (Bayanihan II).

Mr. Dominguez said the program will be funded through the state-run banks, which is “outside of the budget” for next year but will be paid in future spending plans of the government.

NO MORE SAP
Mr. Drilon also expressed concern over the lack of funding for a Social Amelioration Program (SAP) next year, given that the poverty incidence in the country is expected to worsen because of the pandemic.

Mr. Avisado said while the cash aid program has already been discontinued once lockdown was eased, the government still has other job-generating programs and social safety net programs.

The government rolled out a P200-billion emergency cash aid program to 18 million poor families in April during the lockdown.

Under the 2021 budget, P149 billion was allotted for social protection programs, 16% lower than the P177.2 billion for this year.

Meanwhile, Senator Panfilo M. Lacson asked the economic team to explain why the country’s two major infrastructure agencies still received substantial budget allocations despite their history of underspending.

His presentation showed the Department of Public Works and Highways (DPWH) had the biggest unused budget in 2019 worth P83.7 billion, while the Department of Transportation (DoTr) ranked fourth with P21.65 billion.

The DPWH received the second-largest budget allocation for next year worth P667.3 billion, up 52% from the P438.9 billion it has this year. The Transportation department ranked seventh with a P143.6 billion budget, up 71% from the P84 billion in 2020.

“With the performances of the two BBB (Build, Build, Build) frontline departments, will the two agencies be able to deliver in 2021? Although construction works [for this year only] resumed in May, ’yung efficiency remains low due to the protocols and restrictions being implemented,” Mr. Lacson said.

Mr. Avisado said the DPWH and DoTr committed to ramping up the implementation of all infrastructure projects.

“Hopefully they do their best to comply. In terms of policy, I think we all agree that we cannot afford delays especially at this time given that we have already suffered enough under the current conditions,” he said.

The budget for infrastructure projects was increased to P1.107 trillion next year from the reduced P785.5-billion budget this year as the implementation of the “Build, Buid, Build” program was seen to help with economic recovery.

“In your planning and projections, have you considered the efficiency of the construction in relation to the infrastructure strategy under the present pandemic? Kasi if things remain constant in 2021, how do we foresee the efficacy of the rebound strategy,” Mr. Lacson said. — Beatrice M. Laforga

Duterte needs to put policy reforms in place by yearend — analyst

By Luz Wendy T. Noble, Reporter

THE Duterte administration needs to put policy reforms in place to attract more foreign investments by end-2020, before the presidential election campaign gets underway, according to an analyst.

“With elections approaching in 2022, policy reforms are needed before end-2020, to bear fruit and pre-empt rising political uncertainty as presidential campaigning begins,” Michael Langham, Senior Asia Country Risk Analyst at Fitch Solutions, said in an e-mail to BusinessWorld.

“A cross-party commitment to attracting FDI (foreign direct investments), with a clear policy path would prove particularly effective in reducing uncertainty for foreign investors.”

Several key reform measures are still pending before Congress, which is also tackling the 2021 national budget. Legislators will soon be preoccupied with campaigning, with general elections scheduled on May 9, 2022. President Rodrigo R. Duterte’s term ends on June 30, 2022.

“In the very near term, the delays in containing the COVID-19 outbreak will hamper FDI into the Philippines. However, looking ahead to 2021 and 2022, when we expect both domestic and foreign investment into the country to rebound, reforms which liberalize barriers to investment could lure in some investment,” Mr. Langham said.

The government has been pushing for amendments to the Retail Trade Liberalization Act (RTLA) and Public Service Act (PSA), both of which have been approved by the House of Representatives but remain pending at the Senate.

The proposed revisions to the RTLA will lower the required minimum paid-up capital for foreign companies that seek to enter the local retail market, while amendments to the PSA would lift restrictions on foreign ownership in some sectors.

Mr. Langham noted the retail sector would be attractive to investors, especially since private consumption is a key driver of domestic growth.

“As such, FDI into the sector could ramp up over the coming years given the strong fundamentals driving the sector, namely a growing population and relatively fast-paced levels of economic growth,” he added.

However, Mr. Langham said FDI inflows that could come in from such reforms would not likely boost the Philippine economy’s long-term growth prospects.

“We believe reforms targeted at opening up export-oriented sectors or encouraging investment into infrastructure, including telecoms and utilities, would prove more effective for boosting longer-term growth. Delays over tax reforms, poor logistics and uncertainty surrounding government attitudes towards PPPs (public private partnerships) have hindered FDI inflows into these sectors,” he said.

Mr. Langham said the Philippines will need to catch up with regional peers that have acted swiftly with tax incentives to attract FDIs amid the pandemic and the continued US-China trade war.

Another key piece of legislation being pushed by the Duterte administration is the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which would immediately reduce corporate income tax to 25% from 30%. It is still pending at the Senate.

Meanwhile, Christian de Guzman, senior vice-president at Moody’s Investors Service, said the country’s underdeveloped infrastructure as well as the “complex regulatory environment” are some factors that hurt its attractiveness to foreign investors, albeit some progress has been made in recent years.

“To the extent that the Philippines has shown improvement in these areas… there has been an uptick in FDI over the past few years versus the earlier part of this decade,” Mr. De Guzman said. He pointed out the country’s improved ranking in the World Bank’s Ease of Doing Business report last year where it ranked 95th from 124th in 2018.

Mr. De Guzman said “a more definitive containment“ of the pandemic will be significant to investor sentiment as well.

The Philippines’ rules on FDI remained one of the most restrictive in the world. The country ranked fourth out of 84 economies on the FDI Regulatory Restrictiveness Index compiled by the Organization for Economic Cooperation and Development (OECD), using 2019 data.

In May, net inflows of FDI rose 28% year on year to $399 million from $280 million, reversing three months of decline due to the crisis. However, FDI inflows are still down by an annual 25% to $2.379 billion in the first five months of 2020.

FDI inflows were already in a slump in 2019, falling 23.1% to $7.647 billion as investor sentiment was clouded by global uncertainty, regulatory risks and delays in the Philippines’ tax reform program.

Ayala firms plan permanent ‘hybrid’ work setup

THE Ayala Group is considering making hybrid work arrangements permanent as it increases its focus on digital transformation for its operations.

In a speech at the Ayala-FINEX Finance Summit held virtually on Wednesday, Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala said the conglomerate is currently evaluating the need for office spaces.

“Over the last few months, we’ve been conducting extensive research and consultations on the feasibility of a hybrid work arrangement for our employees. We’re making this relatively permanent,” he said.

“We’re applying the principle of outcomes-based evaluation and task-based approach with the way we work… We’re beginning to think in concrete terms rather than just in an impulsive and reactionary way,” he added.

Since the start of the coronavirus pandemic in March, companies across the country have been forced to implement work-from-home arrangements to comply with government protocols that restrict mobility.

The Ayala Group had to adjust by allowing the majority of its over 50,000 employees to stay at home, Mr. Zobel said. As of end-August, around 38% of the group’s workforce continue to work from home.

He noted the changing landscape for workspaces is a consideration for its own business, Ayala Land, Inc., which is a major real estate player in the country.

“Reimagining the future of work is just one element of this larger digital transformation journey that’s beginning to take place. As it stands, redesigning the relationship between work and the office already requires a high degree of openness, flexibility and trust in the institution that you’re working for,” Mr. Zobel said.

The Ayala Group formalized its digital transformation in mid-2019 when it established AC Analytics as a data science unit. It also opened a $195-million venture capital fund to scout for startups that it may invest in.

These strides were in congruence with the company’s belief that digital transformation requires more than just adapting new tools and equipment, but also institutionalizing a “mindset of experimentation”, Mr. Zobel said.

Learning from the group’s alternative work arrangements in the past months, the Ayala chief executive said work flexibility does not necessarily lead to a huge drop in productivity.

“I think productivity should not be the key focus at this point in time. It’s too much shift, too much change. Productivity will come at a later stage,” Mr. Zobel said. “I think more important right now is the ability to adjust, to change, and to do it in a healthy way where we are all in a mentally good place.”

The Ayala Group has businesses in real estate, banking, telecommunications and utility, among others.

In the first semester, Ayala Corp.’s net income dropped 79% to P7.9 billion, due to loan loss provisions from its banking unit, suspension of mall operations of its real estate unit, and one-time gains in 2019 from divesting in power and education.

Shares in the company lost P2 or 0.28% to close at P716 each on Wednesday. — Denise A. Valdez

Globe’s partner tower companies to build 900 more cell sites

GLOBE Telecom, Inc. expects 900 more cell sites to be built soon as its partnerships with tower builders are now in advanced stages, the Ayala-led telecommunications services provider said.

In a statement, Globe said its partnerships with tower companies Aboitiz InfraCapital Inc. (AIC), ISOC-edotco, Transcend Towers Infrastructure (Philippines), CREI Philippines (CREI), and Frontier Towers & Associates (FTA) “have advanced to active acquisition and build phases.”

Globe said AIC is expected to build about 200 more sites in Cebu, Davao, and Subic. It added it had already finalized a pole lease agreement with the Aboitiz Group unit.

The telco also expects the completion of 300 macro sites in Luzon and the assignment of 400 more sites to cover more areas, including Visayas and Mindanao, within this year.

“The count is projected to increase expansively once the pilot sites of these projects are launched,” Globe said.

“First to deliver a tower for activation is ISOC-edotco, a collaboration between ISOC Infrastructure and edotco, a Malaysia-based tower company, with more currently underway and are expected to be completed shortly,” it added.

Globe Chief Finance Officer and Chief Risk Officer Rizza Maniego-Eala said: “These infrastructure partnerships demonstrate Globe’s commitment to improve the network quality experience of our customers.  It is, likewise, highly supportive of the government’s initiative to increase ICT infrastructure in the country.”

In December last year, ISOC-edotco announced its plan to build 70 common towers in Cavite province.

The joint venture has committed to spend $100 million for the construction of common towers in the country “in the next three to five years.”

The Department of Information and Communications Technology has been pushing for telcos to share infrastructure since 2017, saying every tower in the country serves more than 7,000 subscribers, as opposed to the ideal of having 1,000 subscribers per tower, and the usual 2,000 subscribers per tower in countries with faster internet.

The government is hoping 50,000 shareable towers will be built within the next seven to 10 years to keep up with the tower density in neighboring countries. — Arjay L. Balinbin

Smart 4G/LTE now on Pag-asa Island, West Philippine Sea

SMART COMMUNICATIONS, Inc., the wireless unit of PLDT Inc., said the controversial Pag-asa Island in the West Philippine Sea is now covered by its 4G/LTE network service, enabling the island’s residents to communicate via chat apps and video calls.

Pag-asa Island in the municipality of Kalayaan, Palawan Province, is the Philippines’ “most remote cell site,” Smart said in a statement on Tuesday.

News reports in June said visitors of the island, including government officials, had received “welcome messages” from foreign telecommunications service providers, particularly from China and Vietnam.

On Tuesday, Smart said its engineer, Edbert Aquitania, received a “Welcome back to the Philippines!” message “upon firing up the LTE site.”

To recall, the Philippine government filed a diplomatic protest against China last year after the Armed Forces of the Philippines-Western Command spotted the presence of at least 275 Chinese vessels near Pag-asa Island.

“This development marks another step towards improved communications for the people of Pag-asa, who were first connected via mobile communication in 2005, when Smart turned on its 2G service on the island,” Smart said.

Smart also said it would continue to rollout its LTE services nationwide.

“To date, Smart’s high-speed broadband service is available in 93% of the country’s cities and municipalities and serves 95% of the population,” it noted.

PLDT and Smart have already spent about P260 billion since 2015 to improve and expand the reach of their services.

“Amid the regained momentum of its network rollout efforts following the easing of lockdown restrictions, PLDT has leveled up its target capital expenditures for 2020 back up to about P70 billion,” Smart noted.

On Monday, Smart announced that it is working to increase by 40% the number of its LTE base stations in South Cotabato, North Cotabato, Sarangani, and Sultan Kudarat or the SOCCSKSARGEN region.

“By making LTE more available and increasing our network capacity, our customers in General Santos City and other areas in the region can use our network to stay connected with loved ones, access online learning platforms, work remotely, and run their businesses from the safety of their homes, especially in the New Normal,” PLDT-Smart Senior Vice President for Network Planning and Engineering Mario G. Tamayo said in a statement.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

1...7,6217,6227,623...12,768Page 7,622 of 12,768
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube