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The show must go on: Theater industry counts the cost of a lost season

By Michelle Anne P. Soliman, Reporter

In mid-March, Black Box Production had to cancel the sold-out final shows of its extended rerun of Dekada ‘70 the Musical. The Luzon lockdown had rendered in-theater shows all but impossible.

“‘Yung last week namin na-cancel (Our last week was canceled). Fortunately, we were still paid for the remaining shows,” Joshua Martin Tayco, an ensemble cast member, said in a video interview.

Mr. Tayco also lost to the lockdown his slate of appearances in the second quarter. He was scheduled to stage a play about climate change with the support of the Department of Education (DepEd). He was also due to act at this year’s 16-th edition of the Virgin Labfest (VLF), which had been scheduled for June.

At the start of the quarantine, Mr. Tayco and his colleagues retained some hope that VLF would go ahead, because the original lockdown was scheduled to end in mid-April.

However, restrictions on movement did not actually ease until mid-May with the shift to a more permissive form of quarantine, and then only for businesses deemed essential. Mass gatherings remained restricted.

CANCELED SHOWS
The lineup of theatrical productions canceled or postponed by the lockdown include PETA’s Under My Skin, which canceled the tail end of its run. The Sandbox Collective had just completed its first weekend SandboxFest 2020 with Every Brilliant Thing and was set to launch Lungs. Repertory Philippines’ Anna in the Tropics, and Atlantis Theatrical Entertainment Group’s The Band’s Visit did not make it to opening night; Dulaang UP’s Nana Rosa, and Ateneo Blue Repertory’s Next to Normal canceled their remaining shows; GMG Productions’s Matilda The Musical shut down after its opening weekend.

Philippine Legitimate Stage Artist Group, Inc. (Philstage), which represents 16 professional theater and dance companies, reckons that its members had about 600 matinee and evening performances scheduled this year. The lockdown displaced 1,700 artists and theater production staff. Its estimate for foregone revenue is about P500 million.

“Between cancellations and postponements, our members are basically left with no programming for the rest of the year in the traditional sense — that is mounting shows and live events in bricks-and-mortar spaces for live audiences, and no sources of income,” Philstage vice president and Representative Christopher de Venecia of the fourth district of Pangasinan said in an e-mail.

“Most of our revenue streams come from individual ticket sales and wholesale in the form of show buying and blockbuying, and we haven’t enjoyed strong and constant institutional support to help us underwrite our costs” he added.

A survey conducted by the National Economic and Development Authority (NEDA) and the Department of Finance (DoF) in April found that the hardest-hit sector in terms of revenue losses was the arts, entertainment, and recreation sector with average lost sales of 82.3%. The study assumed that the industry will be closed for nine months this year. (https://lga.gov.ph/media/uploads/2/Publications%20PDF/Presentation%20Material/2020/LU%2019%20NEDA%20Sec.%20Chua.pdf)

The Cultural Center of the Philippines (CCP) estimates its revenue hit at about P90 million at least, the cancellation of at least 800 events including outreach programs and festivals; and the disruption to the work of at least 3,000 artists and production staff since the beginning of quarantine.

The staff of CCP’s resident company Tanghalang Pilipino was fearful for the future after it had to cancel the remaining shows of Batang Mujahideen — the last in the lineup for the company’s 33rd performance season.

“Noong nalaman namin na magkakaroon ng quarantine, ang reaction ng staff medyo natatakot at kinakabahan (When we learned about the quarantine, the staff reacted with fear and anxiety),” Tanghalang Pilipino’s marketing manager Juan Lorenzo Marco said in a Zoom interview.

Tanghalang Pilipino artistic director Fernando Josef said the company is waiting on the CCP to reopen before it can return to the stage. “Apektado talaga kami (We are really affected),” he said.

The CCP announced in April that it will be closed for shows and programs until the end of the year.

Mr. Josef said savings will serve the company in good stead, allowing it the luxury of exploring new media that will allow the CCP to expand its reach beyond the physical confines of a theater.

“We still feel a bit safe in terms of being able to survive with the savings of Tanghalang Pilipino. We are not as threatened and helpless as other companies. At the same time, we are studying how to transport live performances from the CCP stage to a new medium and how we can push through our vision and mission as a theater company,” he added.

DIGITAL MIGRATION
While live performances have yet to return to to theaters, artistic creativity retains an outlet online. In recent months, theater companies have made recordings of their previous productions available on the internet, mounted livestream performances as fundraising projects, and conducted online workshops.

Tanghalang Pilipino’s Messrs. Marco and Josef said that the marketing team has been preparing digital promotional materials.

In April, Tanghalang Pilipino launched the #PansamanTanghalan series on its YouTube channel with selected musical numbers from its original productions. In June, it launched #PantawidNgTanghalan on iWant featuring six original productions in a fund-raising effort “to sustain the company’s commitment to bringing artistically-excellent and socially-relevant productions to the public.”

The Philippine Educational Theater Association (PETA), which had to cancel 75 dates across three scheduled productions this year, also began to produce free online content through PETA Theater Online, which audiences could access and engage with via PETA’s social media platforms.

“The pandemic has shut down anything that requires a live audience, and that may be for a while. So making shows available online allows the company to be virtually in touch with its audiences, especially during this time, bringing people together, hopefully helping them feel less alone,” Maria Gloriosa Santos-Cabangon, PETA’s executive director, said.

The CCP, meanwhile, brought out of the vault shows it had been digitizing initially for archival purposes.

CCP Vice-President and Artistic Director Chris B. Millado said in a Zoom interview that the CCP’s online content will be transferring from YouTube to Vimeo in August for a subscription fee. The YouTube channel will be maintained for selected free content.

“This is our way of making our work sustainable. Whatever fee that comes in there will continue to fund activities in the future. And hopefully this becomes a fund that will be able to remunerate our artists, and at the same time, be viable to performing arts companies that are shifting content online. So it becomes a template or business model for them too,” Mr. Millado said.

In June, the CCP eventually went ahead with VLF with live-streamed performances, while offering recorded performances on Vimeo for a fee.

Vimeo was also tapped for fund-raising projects that included online performances and workshops.

In May, Philstage, SPIT MNL, Third World Improv, the Theater Actor’s Guild, and Artist Welfare Project, Inc. (AWPI) oranized the Open House fundraising project, which has disbursed P858,000 to support 429 displaced workers; while online concert series fundraiser Bayanihan Musikhan, initiated by National Artist for Music Ryan Cayabyab, raised more than P122 million in cash and kind to help the urban poor affected by COVID-19 crisis.

Full House Theater company’s streamed Ang Huling El Bimbo,which gained 7 million views during its free 48-hour stream on YouTube in May, raised funds for ABS-CBN Foundation to benefit families affected by the COVID-19 crisis.

“At the moment, it’s really about migrating online and being able to monetize our content. The free model that was employed by Open House which encouraged donations through several channels is not sustainable as halfway through the two month-long fundraiser, we started experiencing donor fatigue. It’s understandable since audiences are logically tightening their purse strings because of uncertainty with quarantine and the new normal,” Mr. De Venecia said.

“Our members are exploring other ways, beginning with those like Repertory Philippines, PETA, and Twin Bill productions who will be offering online summer workshops. We’ll be monitoring these closely in the coming months to see if a pay-per-view or pay-to-participate model will be sustainable for the industry in the new normal,” he added.

“Our well-loved REP Workshops for the Performing Arts are going online and we have a lot of enrollees, from our loyal base of workshop students and new ones as well. The online workshops will also provide a good financial avenue for our workshop teachers,” Repertory Philippines Artistic Director Liesl Batucan said in an e-mail.

According to Ms. Santos-Cabangon, venue rentals are also being explored as a possible source of revenue.

“PETA Theater Center spaces which includes the black box theater and studios (could be rented out) for video and photo shoots, etc. The Center also has an open-air roof deck available for outdoor events. PETA has already set guidelines for venue use based on the safety protocols issued by the Department of Health (DoH),” she said.

ADJUSTING TO NEW REALITIES
The CCP is currently preoccupied with the safety of artists using the venues, while precautions for the visiting public are still being discussed.

“Our production and exhibition department has started to come up with protocols regarding ushers since they are the first to greet and come in contact with guests,” Mr. Millado said.

Mr. Millado said one of the measures being looked at is keeping seats at least one meter apart. “We still have to make a decision in terms of physical distancing as it applies to audiences who might walk in.”

Another option is also mounting “hybrid shows” with performances that are physically distanced without a live audience but streamed online.

Philstage has joined a new alliance of the live-events industry, the National Live Events Coalition Philippines (NLECPh). The alliance is currently drafting a safety manual for the performing arts, production designer and Philstage associate artistic director Mio Infante said.

“We are currently working on it and presenting it (for accreditation) to the DoH, Department of Trade and Industries (DTI), and Department of Labor and Employment (DoLE), so that they understand that we are also working on our end to get ourselves heard,” Mr. Infante said.

The manual provides guidance on return-to-work safety and sanitation, interactions, pre-production, rehearsals, and audience health.

“Aside from the fact that when you are ready to open, how is your consumer confidence? Will you have people to watch your shows? You have to prepare for it,” he added.

Citing lessons from the the lockdown, Mr. De Venecia said: “Given that the arts is always a response to the times, we’re expecting the majority of our works to be influenced and inspired by the events that took place during the quarantine and the new normal. You can expect that the creative hunger of our artists are alive more than ever.”

The fitness industry is stuck on a treadmill and yearns for ‘essential service’ status

By Michael Angelo S. Murillo, Senior Reporter

WIDELY CONSIDERED a growing industry before the pandemic, fitness centers ground to a halt during the lockdown, with indoor workouts in close proximity to other users deemed a high-risk activity. Gym owners are still hoping for an eventual rebound, but are resigned to the fact that they may have to drastically change their ways.

A market intelligence firm, Ken Research, estimated that the fitness industry in the Philippines was headed for a period of accelerating growth in an outlook over a five-year time horizon ending 2023, driven by growing health consciousness and awareness of chronic problems like obesity and heart disease.

Ken Research found that the industry grew at a compund annual rate of 7% between 2013 and 2018, marked by the opening of a number of fitness centers, with much of the growth attributed to the need to serve the fitness needs of women. Its forward-looking five-year growth forecast was for compound annual growth of 11%.

“The fitness industry in the country was booming, and it was actually a saturated market. We have all sorts of gyms opening up. We have the big international chains like Gold’s Gym and Anytime Fitness opening up. You also have the small studios opening up that focus on boxing, indoor cycling and combat sports like jiu-jitsu and they are all over. There are also the small grit-and-grind gyms,” said Gab Pangalangan, UFC Gym Philippines marketing manager, in an interview.

“You might find that it’s a crowded space, but there is demand for it as everyone is looking to stay fit, especially in the city where the traffic is bad, people are busy in the office, everyone is looking for an outlet. So fitness is something people want to integrate into their daily lives. And gyms help in that not only in the physical aspect but also the mental aspect. It’s a competitive market,” he added.

Then came COVID-19 (coronavirus disease 2019).

Mr. Pangalangan said industry was not prepared for the pandemic, even though foot traffic started dropping off as early as January, when first reports of the outbreak in China emerged.

Hard-core gym-goers were still coming regularly but Mr. Pangalangan said it semed like “something was on the horizon.”

The fear of going out in public gained momentum in late February and early March, when the first community-transmission cases emerged in the Philippines, forcing the government to declare a public health emergency and a lockdown over Luzon. The measures include the closure of “non-essential” industries, which included gyms.

“The impact was across the board. Some industries are doing better but this pandemic has hit all businesses hard,” said Mr. Pangalangan, who is also a fitness coach and the founder of the combat sports website DojoDrifter.

“The (fitness) industry relies on people to keep it going. It relies on membership sales. It relies on personal training sales. So if there are no people to sell memberships to, there is no revenue. That is a big concern and nobody was really prepared for this. I think no one predicted this happening,” he added.

In the US, major fitness chain Gold’s Gym, which also has branches here, filed for Chapter 11 bankruptcy protection in May.

It was not closing down but just taking “quick, decisive actions to enable us to get back on track.”

Mr. Pangalangan, whose UFC Gym Philippines is a fitness gym and not a fight facility despite being affiliated with the Ultimate Fighting Championship, said he now believes some “casualties” in the industry are inevitable.

COACHES, TRAINERS STRUGGLE
Also feeling the sting of the COVID-19 impact are coaches and trainers, who earn most of their income from one-on-one and group training sessions with clients.

“Definitely the pandemic has had a very significant impact on trainers of all types of programs, both group exercise, and personal trainers. Income has taken a big hit. While some have basic salaries, the bulk of what we take home comes from one-on-one and group training. It’s a very different situation now that we’re no longer meeting people on a daily basis,” said freelance fitness coach Richard Mariano.

Martin Casupanan finds himself in the same boat as the trainers, but with a twist — he also owns a fitness gym.

“We can’t open our gym. There is no flow of income, and it’s tough for us as we rely a lot on what we earn from the gym,” said Mr. Casupanan, owner of Premiere Fitness Gym in Bacoor, Cavite.

In June, the industry saw a glimmer of hope when the government, through the recommendation of the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF), eased the lockdown settings to a more permissive General Community Quarantine (GCQ) — but gyms remained closed, having been classified as low priority among businesses looking to reopen.

Mr. Pangalangan said it’s a struggle to persuade the authorities to let gyms open.

“If people aren’t convinced that gyms are essential and we are viewed as a form of amusement, then that is a big problem for us,” he said.

Mr. Pangalangan said in the event of a reopening for the industry, restoring confidence among gym users is essential — and so is investment in safety measures and sanitizing equipment.

He said when gyms reopen, he expects distancing, masks, and gloves to be standard, alongside capacity limits and temperature checks.

“As an industry, we don’t want to be a cause of a sudden spike in COVID-19 infections,” said Mr. Mariano, whose freelance practice is affiliated with a number of fitness centers.

THE NEED TO ADAPT
Mr. Pangalangan said one of the ways his company has been adapting is to stay connected with clients online.

“During this time you can see the importance of going digital. If you did not have a website or any digital resource set up then the pandemic was tough. It’s not just about having these things. You have to learn them too,” he said.

He said UFC Gym’s social media accounts saw an increase in followers, including non-members, following the release of free workout videos.

UFC Gym is also offering paid online and personal training classes so its coaches can earn.

“If people cannot go to the gyms for now, we’ll bring the gym to them,” Mr. Pangalangan said.

Messrs. Mariano and Casupanan are also going online.

“While I don’t see the physical gym totally going away as I am sure there are still people willing to go and train in gyms, the industry nonetheless has to start offering services beyond enclosed concrete walls,” Mr. Mariano said.

“I only recently tried doing an online group workout. I hope things pick up. It’s just some close friends and clients for now. I will try to provide online one-on-one coaching after I have a regular group class,” Mr. Mariano said.

“I’m currently doing online coaching to support my day-to-day needs,” Mr. Casupanan said.

As things remain clouded for the fitness industry with COVID-19 remaining uncontained, Messrs. Pangalangan, Mariano and Casupanan said they remain hopeful of better days ahead, while asserting that fitness services are all the more relevant now after the lockdown denied many gym users access to exercise.

“We feel strongly that the fitness industry is an essential service. Pursuit of fitness and health, physical and mental, is important… We feel strongly that gyms have to open. Of course we respect the decision of the authorities but we are just hoping for consideration and be in the conversation to be allowed back,” Mr. Pangalangan said.

“We are at the mercy of this pandemic. If we get things back to what they were before, then I feel gyms will thrive. People are still looking for that outlet. Going to the gym is part of the lifestyle and part of staying healthy. It’s still good to go to the gym. But that’s an optimistic view. It will take time. It’s going to be a tough spot. But I choose to be optimistic,” he added.

“Another thing that COVID-19 has taught us is everyone should be mindful of their health. And gyms can certainly help them with that,” said Mr. Casupanan.

While waiting for the situation to settle, Mr. Pangalangan said the industry has no option but to take a page from the lessons of physical training — and remain strong.

“It’s not about who saves the fitness industry. We have to come together, communicate, set aside alliances and help the industry. To the gym-goers, stay safe and talk to your coaches and help your gyms in any way you can. We are all in this together.”

Cameras roll again in Nollywood but Nigeria’s cinemas still dark

ABUJA/LAGOS — Nigeria’s film industry is creeping back to work after lockdown, and one of the first productions to resume is a new television series about a highly infectious disease that has ravaged the world.

Cameras stopped rolling weeks ago due to the coronavirus pandemic, which has killed more than 300,000 people worldwide, including 200 in the West African country.

Better known as Nollywood, the multibillion dollar industry churns out movies and TV shows at a rate second only to India’s Bollywood and employs one million people. But productions have had to be stripped right back.

Filming for the TV series Meadows, shot in the capital Abuja, restarted in mid-May after being halted for two months. Its production team, excluding actors, has been cut back to around seven people — around a quarter of the people in a regular Nollywood crew.

“I have to do lots of things myself,” said director Samuel Idiagbonya, who is now also in charge lighting.

The crew wear face masks, actors keep their distance from one another as they deliver their lines and undergo regular temperature checks.

The global pandemic has left Nollywood in deep trouble, according to industry executives and financial analysts.

Cinema closures across Nigeria due to the lockdown have been “catastrophic” for the industry, which gets half of its revenue from ticket sales, according to Bismarck Rewane, who heads the Lagos-based consultancy Financial Derivatives.

Cinemas in Nigeria are still shut indefinitely and the consultancy predicts that up to 250,000 people employed in Nollywood, from designers to box office attendants, could lose their jobs.

Moses Babatope, managing director of Film One Entertainment, believes that the pandemic has caused Nollywood losses of around 3 billion naira ($8.33 million) since mid-February.

An increase in home viewing has boosted sales to streaming platforms including Netflix, but meanwhile revenue from other clients such as airlines has dried up, said Babatope, who is secretary of a film industry body.

The shuttering of the cinema chain he co-founded and which accounts for 60% of his distribution revenue, has forced him to furlough around two thirds of his staff.

“If this goes on much longer, a lot of cinema businesses will struggle to come back, including ours,” said Babatope.

Fred Amata, president of the Directors Guild of Nigeria, said social distancing would make most scripts unworkable.

Nollywood’s films are famed for tales of romance and witchcraft and often depict lavish social gatherings that are the bedrock of Nigerian life.

The scene evolved from visual pulp fiction and poor production in the 1990s to a thriving industry that has grabbed the attention of global entertainment brands.

“It all seems so bleak,” Amata said.

But on a mild Wednesday evening in May, a crowded car park in the capital Abuja offered a potential ray of hope as tens of cars lined up facing a big screen — one of around a dozen drive-in cinemas which have popped up around the country.

Charles Okpaleke, the producer behind the Abuja site, said he wanted to respect both cinema and social distancing in a way that was financially viable.

“In every setback there’s an opportunity,” he said. — Reuters

Coronavirus poses existential threat to some of world’s museums — UNESCO

PARIS — The coronavirus lockdowns have hit the world’s museums very hard and more than 10% may never reopen while others will have to put new projects on hold, the United Nations’ cultural body UNESCO said.

A survey of almost 1,600 museums in 107 countries by the Paris-based International Council of Museums (ICOM), which is affiliated with UNESCO, showed that almost all museums around the world were closed because of the COVID-19 (coronavirus disease 2019) pandemic.

The private museum sector fears numerous bankruptcies in the coming months. In African, Asian and Arab countries, more than a quarter of museums fear they may have to close for good, the survey showed.

“Even losing one museum, one cultural center or one theater will affect diversity,” said Ernesto Ottone Ramirez, UNESCO Assistant Director-General.

Many major institutions such as the Prado in Madrid get more than 70% of their income from tickets sold to tourists and the months-long closures caused by the pandemic would weigh on their finances for years to come, he said.

Many developing countries and those emerging from wars will see progress set back many years, Ottone Ramirez said, citing Somalia and other African countries where UNESCO has been helping local authorities to set up museums.

In the Philippines, Indonesia, Montenegro and Iraq, among others, several new projects have ground to a halt.

“It will take time to recover the progress made in the last 20 years,” Ottone Ramirez said. — Reuters

Pandemic to accelerate adoption of automated processes

By Jenina P. Ibañez, Reporter

When canned food company Mega Global Corp. studied the new workplace physical distancing rules, it estimated the drop-off in productivity at 50% at least. So it decided to bring in robots.

Mega Sardines Vice-President for Business Development Michael Tiu Lim said the company had already automated processes like fish cutting to minimize contact with the food, and was planning to expand further. The pandemic, and the resulting adjustments to workplace safety, accelerated these plans.

“We’re just waiting for (lockdown) to be lifted but once it’s lifted, within one year’s time most of us if not some of us (in manufacturing) will have some form of automation in place… So it’s just a matter of fast-tracking some of these plans.”

He said the company does not want to remove jobs in favor of automation, but it will have to do so to continue producing quality goods within the safety norms.

That trend might accelerate the job losses that were already high when the lockdowns forced businesses to close, leading to a second wave of layoffs.

Employment in the Philippines started falling after lockdown measures ground business to a halt. The total number of unemployed hit at least 7.3 million in April, for record jobless rate of 17.7%. At least 40,000 overseas Filipino workers have been repatriated due to the pandemic.

Mr. Lim said fully automating the company’s facilities could cut employment by up to half.

“Equipment doesn’t get sick. Maybe they need down time, but they don’t get sick,” he said.

SAFE OPERATIONS
Physical distancing measures are being applied globally in an effort to protect people from the coronavirus disease 2019 (COVID-19) pandemic. While employers wait for a vaccine, the private sector has been looking at all the possible ways to operate safely.

Some companies are trying to mitigate the workplace risk by offering rapid antibody tests, though doctors have warned that these tests produce high false positive rates.

Many others are thinking of taking the automation route.

Asian Development Bank (ADB) Southeast Asia Technology and Innovation Specialist Sameer Khatiwada said that the bank had projected in 2018 that technology will impact routine jobs in the manufacturing and services sectors. He expects the pandemic to hasten this trend.

More than 40% of business leaders in a 45-country survey conducted by auditing firm Ernst & Young released in March said that they are accelerating investment in automation in response to the crisis.

But just because businesses can automate, does not mean that they will.

“This will depend on the cost,” Mr. Khatiwada said in an e-mail.

“Businesses will weigh labor and other costs associated with hiring workers against the cost of acquiring and maintaining a new machinery or an AI (artificial intelligence) enabled service delivery system.”

COST OF TECHNOLOGY
Electronics exporters, for now, are prioritizing returning to their previous levels of production after manufacturing operations were disrupted by lockdown restrictions.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said the sector has always been moving towards expanding automation, and that companies will look at using these technologies to improve physical distancing.

But he also expects a combination of automation and manual labor in the industry.

“It’s cheaper to do it manually than maintaining the robots — expensive parts and all that. So it has to be a good balance. You don’t just automate for the sake of automating.”

Automation is less expensive than it was a decade ago, according to Allan S. Angeles, the president of industrial automation company Tenshi Technology. He said China started producing cheaper equipment and now accounts for up 60% of the automated systems in Philippine manufacturing.

Mr. Angeles cited as an example surgical mask production, where machines can easily outpace human workers, 10 of which can make around 100,000 masks a month, he said.

“When you do it fully automated, only three persons can produce three million in one month.”

MIGRATING TO WHERE THE FUTURE JOBS ARE
Automation, for some sectors, moves job availability from one area to another. Mr. Khatiwada said that as retail moves to e-commerce, there will be fewer people needed to work in malls and shop floors but there will be bigger demand for delivery drivers.

For manufacturing, he said training institutions will have to adapt to changing labor demand.

Mega Sardines’ Mr. Lim said that if he automates the jobs of 200 people, he will hire five to work on the machines that replaced them.

“It won’t be at the same level. Yes, we’ll probably create 10 jobs, 20 jobs but we’ll probably lose 10 times more (than) that.”

And the training available for the highly technical automation jobs does not provide the needed skills.

Tenshi’s Mr. Angeles said the graduates he hires to work on industrial automation systems are largely unprepared for the challenges.

“Karamihan ng mga engineers natin, technicians natin… pagka pinasok mo kaagad sila sa (multinational), almost zero knowledge sila. Ite-train pa sila ng company (Most of the engineers and technicians who join multinationals have almost zero knowledge and need to be trained by the company),” he said.

He added that one possible response would be to create an automation industry of our own, which would require related industries like steel to ramp up if a company is to build the machinery domestically some time in the future.

The payoff would be an employment boom in the automation industry, to perhaps double its current level of about 5,000 workers.

The Philippine manufacturing sector in total, according to 2017 government data, employed over 1.2 million people.

LOSING BARGAINING POWER
The pace of automation will be dictated, at least in part, on what the pandemic does to the cost of labor.

“If keeping a large number of workers in a confined space becomes more costly in terms of healthcare measures that will need to be undertaken, then businesses will rethink their production lines,” ADB’s Mr. Khatiwada said.

The history of pandemics before COVID-19 typically saw wages rise because surviving workers had to pick up the slack and do the work of the dead, giving them more bargaining power.

According to Rene E. Ofreneo of the UP School of Labor and Industrial Relations, the immediate concern is the millions of jobs being lost now, noting that the pandemic will have a years-long effect on employment, especially if there are waves of reinfection.

“Ang bargaining power ng labor ngayon is so weak. In fact, nakakaawa (The bargaining power of labor right now is weak, and pitifully so).”

He also wonders if health safety measures could spell the end of contractualization — the illegal practice of maintaining staff on short-term contracts, which denies them a path to permanent-employee status and the resulting protections and benefits.

It is possible, he said, that companies applying physical distancing will prefer to retain a small number of versatile staff, throwing out of work large numbers of contractual employees who have to work in close proximity.

JOB CREATION
The pandemic, Mr. Ofreneo said, has the potential to shift the global manufacturing supply chain.

He said the economic downturn caused by the pandemic could cause more countries to apply protectionist measures, with developed countries reshoring production previously located in cheap-labor countries.

“Tinamaan ang global value chain ng mga multinationals… diyan nakadikit ang ating mga semiconductors, electronics, auto parts. Nagkakaroon ng restructuring. (The global value chain was hit by the pandemic, and that’s what our semiconductor, electronics and auto parts industries are attached to).”

“Some countries like (the United States)… have become very protectionist… technology is giving them a means to make this happen.”

He said for some time now jobs in the Philippines have been migrating to the US or Germany for on-demand production.

The global supply chain had been shifting because of the US-China trade war, with some multinationals considering reshoring manufacturing based in China or moving these operations to Southeast Asia.

SEIPI’s Mr. Lachica said that electronics multinationals temporarily moved some operations out of Philippines after facilities that were unable to fully operate during the lockdown, but he believes that the right incentives regime could keep attracting new foreign investment into the country.

To create jobs, Mr. Ofreneo said the Philippines should focus on moving up the value chain, and expanding industries geared towards the domestic market.

“Everywhere is very grim. In a situation like this, napakahalaga ng papel ng gobyerno (the government’s role will be critical),” he said.

“They are in a position to create jobs. That’s why bakit ganun pa rin ang obsession -— ’yung campaign for foreign direct investment (I am wondering why the obsession remains with FDI). I’m not against it (but) assuming may makuha kang magiinvest… bago manganak ng trabaho ’yung investment siguro two to three years (It will take two to three years for such investment to translate to expanded jobs)… What we need are jobs now.”

ADB’s Mr. Khatiwada believes the government infrastructure program will create plenty of construction jobs, despite the challenges on job creation from advances in robotics and computing power.

“We should not be pessimistic. New and better jobs will also be created,” Mr. Khatiwada said.

Will the coronavirus kill the office as we know it?

By Denise A. Valdez, Reporter

FLEXIBLE working options used to sound like a luxury, or overly ambitious proposals from younger and trend-chasing employees repelled by the idea of working in an office. But for years the office did its job as a workplace, and it made little sense for most people to try work-from-home.

That was before 2020, which has shown a knack for upending just about every aspect of society. The coronavirus disease 2019 (COVID-19) outbreak made everyone question how they went about their everyday lives, and one of the things that came in for a rethink was office work.

Businesses everywhere were forced to adopt work-from-home starting late in the first quarter as governments imposed lockdowns to prevent the spread of the coronavirus, as case numbers rose inexorably to the millions.

This was reflected in a 5.5% rise in Metro Manila office vacancy rates and a 26% drop in new office supply, consultancy firm Colliers International Philippines said.

“When the lockdown was imposed, BPO (business process outsourcing) companies had to hold off expansions,” Colliers Research Manager Joey Roi H. Bondoc said. “We have a couple of deals that were supposed to be closed during that period, but some major clients had to step back and reevaluate their expansion plans.”

Similar decisions have been made on the other side of the fence. Some property developers have opted to suspend projects this year to gauge market demand and preserve cash.

One of these is Ayala Land, Inc., which decided not to launch any new projects this year. Another is Robinsons Land Corp., the property arm of JG Summit Holdings, Inc., which is likewise deferring some projects to cope with the pandemic.

“I think overall, property developers are trying to look at the demand in the market, and while they still can, they try to delay, push back some of their projects. That’s one of the reasons why we’re seeing a slowdown in terms of supply by 26%,” Mr. Bondoc said.

Claro dG. Cordero, Jr., research head at the Philippine office of Cushman & Wakefield, said the priority of property developers in the meantime is improving sanitation standards to suit current needs.

But he noted that the firm is on the watch for trends that may emerge from the pandemic, including the trajectory of the BPO industry as foreign firms adjust their operations and decide which functions to offshore

“While we say there are certain functions that can be relegated to work-from-home, bigger corporates in the other advanced economies will tend to look to offshore more of these functions outside of their headquarters. And us, being a repository of these outsourcing jobs, are likely to benefit from this heightened demand, or what will be a heightened demand for BPOs,” Mr. Cordero said.

The need of the moment is to find ways to maximize the efficiency of current offices. Mr. Cordero said his own firm is reconfiguring space to install more health and safety measures ahead of the return of the workforce.

This strengthens the argument over the next two or three years for a multi-location strategy, with some employees working from home and a skeletal force staying in the office.

Over the long term, however, the only recourse might be to enlarge offices to accommodate full staffing levels.

“Despite the costs attached to having an office, we still project companies to keep their physical space… Some (considerations for) maintaining the office premises are the solid infrastructure particularly the internet connection and equipment, office environments that are conducive to work, and human connection,” JLL Philippines Head of Research Janlo C. de los Reyes said.

He noted that the pandemic may have strengthened the case for flexible workspaces, but in modified form. Not the open and collaborative space that the co-working industry used to promote, but a recalibrated space that allows for physical distancing.

“We anticipate a slight increase in demand for flexible workspaces in the short term as companies may explore additional sites or back-up premises for their operations that are situated closer to their workforce given the logistics challenges and safety concerns,” Mr. De los Reyes said.

He added one of the alternatives companies are exploring is the decentralization of office sites outside central business districts to mitigate risk.

This idea is not limited to locating across Metro Manila, as Colliers’ Mr. Bondoc said companies are growing more keen on provincial locations in their business continuity plans as well.

When Luzon was put under strict lockdown in mid-March, he said companies were suddenly left with no choice but to suspend operations, as most businesses were concentrated in Metro Manila and nearby provinces.

“If we look at the business continuity plans of a lot of companies, now the option to look for sites outside Metro Manila is of utmost priority. Why? Because if another lockdown is imposed in Metro Manila or Luzon, they will be shutting down operations, and that would affect their financial performance,” Mr. Bondoc said.

Companies do not want a repeat of what happened in March, and are looking at viable locations like Cebu, Davao, Bacolod and Iloilo.

Cushman & Wakefield’s Mr. Cordero said in order to keep attracting locators, landlords should be offering greater flexibility in terms of rent concessions and sharing capital expenses to meet the additional public health requirements.

He noted the new safety norms may stick around long after the pandemic, and some design practices such as open-plan offices may no longer be viable.

Outsourcing firm, Teleperformance, said it continues to pursue expansion plans in the Philippines despite the pandemic.

Teleperformance Philippines Chief Operating Officer Mike Lytle said in an e-mail that the company is opening a new location in Cavite by the third quarter. It also remains hopeful of continuing the expansion of its Quezon City operation.

“In spite of the challenges businesses are faced with during this pandemic, we continue to pursue our growth agenda. Brands and companies are looking for a resilient partner that can help them adapt to the rapid changes that we are all trying to cope with, and we are confident that Teleperformance can fulfill those needs,” Mr. Lytle said.

Teleperformance also implemented a work-from-home scheme during the lockdown to cope with distancing protocols. The company plans to continue this in the future, blended with work in its physical office.

For new sites, Mr. Lytle said the company is looking to “create a space that is more flexible and geared for virtual delivery.” Part of this is leveraging what would normally be recreational space to add to the footprint of areas where social distancing is more challenging, like the pantry.

While work-from-home works to a certain extent, Mr. Bondoc said companies will also need to occupy more space to maintain physical distancing. He said one possibility would be to repurpose mall retail space as offices for lease.

“There are certain areas in Metro Manila where we see a high vacancy in malls. We raised the question of (whether) these vacant spaces are feasible as flexible work space. Will the vacant mall spaces be viable, ideal for co-working spaces? I think that is one option that developers should consider,” he said.

Should these plans be borne out, Mr. Bondoc said mall foot traffic could improve, which in turn will help retailers stay afloat. “It’s actually hitting two birds with one stone. You have co-working tenants, then you also have another potential customer of your mall. I think it’s a win-win.”

These office configurations remain to be seen as companies plan their expansions, particularly those in the BPO industry, which are the primary drivers of office leasing in Metro Manila.

Another outsourcing firm Alorica said despite the quarantine restrictions, it continues to hire employees to add to its workforce.

“We have seen the impact of the pandemic on unemployment; hence our recruitment team has been aggressively identifying organizations who are assisting displaced employees in finding a new work ‘home,’” the company said.

Alorica has been recruiting over the phone and via virtual interviews due to the restrictions on face-to-face meetings. Its recruitment chatbot, which was in place before the lockdown, also recorded an increase in online applications during the quarantine.

Alorica said even though BPOs are exempt from the lockdown, the company also employed work-from-home schemes to help contain the virus.

“Eligible employees have been given company-owned equipment to transition to a temporary work-at-home environment… Where work-at-home is not possible, we’re operating with a reduced workforce of employees who have voluntarily agreed to work onsite,” Alorica said.

Mr. Bondoc said not all companies can implement work-from-home schemes, as some employees deal with sensitive information that would require heightened data security protocols.

“Our estimate would be at least 40% of employees will still have to work in a traditional office space because of the sensitive information that they handle,” he said.

Another major challenge is the instability of internet connections in most households. Mr. Cordero of Cushman & Wakefield said that for the most part, the work-from-home scheme has only been resorted to because companies have no other option.

Lizanne H. Tan, head of commercial leasing at JLL Philippines, believes working from home cannot be the new normal until certain conditions are met.

“Most companies realize that although they were able to continue their operations from home during the lockdown, fast and reliable internet connectivity and enhanced data security are key to ensure that their employees are productive and the business continues to work efficiently. Until these conditions are met, work-from-home arrangements are likely temporary,” she said.

Thus, while work-from-home allowed companies to work effectively during the lockdown, offices will remain important for much of the workforce.

“In the Philippines’ case, until we have that missing link of improved infrastructure network, then I think there will still be a question as to how long work-from-home will be the mode of work. Definitely offices will still be relevant,” Mr. Cordero said.

The pandemic’s silver lining: a headlong rush into online selling

By Adam J. Ang

If Baguio’s Good Shepherd nuns can adjust seamlessly to the pandemic by selling online, any business can.

The Good Shepherd setup is as traditional and artisanal as it gets —jams and bread pepared by novices and supervised by nuns, working within easy reach of some of the country’s most productive highland farms.

Over the years, the picturesque hilltop convent with the viewing deck and the signature ube jam has become a destination in itself, though in recent times its products have also found retail distributors outside of Baguio. Its jars of nostalgic Baguio goodness have also attracted the ultimate compliment — imitators and counterfeiters.

The shop is, strictly speaking, a sideline for the Religious of the Good Shepherd Catholic congregation, whose day job is educating indigenous youth in the Cordillera region.

But as with many sidelines, enterprising sellers have their pick nowadays of online platforms. The sisters, whose products carry the convent’s “Mountain Maid Training Center” branding, went with Facebook.

The social network’s Facebook Shops offering is geared at helping small businesses continue selling during the pandemic. Facebook-owned Instagram also introduced a similar feature.

“We hope these tools can relieve some of the pressure small businesses are facing right now and help businesses of all sizes prepare for the future,” Facebook said in May.

Good Shepherd is no isolated case. The number of brands that joined Lazada’s platform during the quarantine doubled over the 2019 total. Newcomers included listed food manufacturer Universal Robina Corp. and NutriAsia, Inc., a leading condiment producer.

‘SHOPPER-TAINMENT’
Lazada, a unit of Alibaba Group, said activity on its platform spikes at lunchtime, suggesting that customers peruse the platform’s product lineup during work breaks.

“The current situation gives businesses, especially MSMEs (micro, small, and medium enterprises), more awareness of e-commerce and how they can take their businesses online, expanding their goods and services to a wider audience,” Lazada said.

Between March and May, online users spent an average of 15 minutes per visit on the platform, well above the previous activity levels pre-quarantine. Transactions on Lazada rose over 9%.

The impetus was a life-changing pandemic that locked down Luzon in mid-March and might prove to be a turning point in getting businesses and buyers hooked on e-commerce.

At the height of the lockdown in April, the total value of electronic payments transactions hit P53 billion, or an average of P6,130 per transaction, according to Philippine Payments Management, Inc., an industry partner of the Bangko Sentral ng Pilipinas.

On Lazada, customers are also finding entertainment in the form of LazLive, a so-called shopper-tainment feature, which draws around 70,000 views per show.

“Shopping online is no longer just a buy-and-sell transaction. The customer journey is omnichannel, so it is important to drive brand engagement and touchpoints with customers, both on online and offline channels,” it said.

One key online battleground during the lockdown was consumer essentials, which might have migrated decisively to online even beyond the emergency, with shoppers remaining wary of safety issues associated with shopping on site.

At least four in 10 digital consumers in Southeast Asia were found to have spent more on packaged and fresh groceries online this year, with at least 80% of them indicating their intention to continue purchasing groceries online in the future, according to Facebook, citing a study by Bain & Co.

In March, ride-hailing company Grab launched GrabMart in the Philippines, partnering with more than 150 stores, from big supermarkets to small retailers, with a delivery area of 17 cities in and around Metro Manila.

Its partners include convenience store chains Lawson and Family Mart, supermarket brands Robinsons Supermarket and Ultramega, fresh produce and meat sellers The Meat Market and Zagana, drugstore chains Family Doc and Generika, and telecom brands Smart and PLDT Home.

“By tapping existing technologies, our extensive delivery network, and operational footprint, we were able to quickly scale GrabMart in Metro Manila to help more Filipinos purchase their essential needs,” EJ dela Vega, Philippine head of GrabMart and GrabFood, said.

Grab’s grocery delivery operation, which is still in the beta stage, is seeking to expand its universe of customers beyond the core ride-hailing business.

GrabMart is currently available in over 50 cities across Southeast Asia.

THE PAIN OF DIGITAL TRANSFORMATION
The process of transforming to online sales is far from painless. It is also slow, and not everyone may have developed a sense of urgency to migrate despite the pandemic.

In a survey of small-business decision-makers across the region, printer company Epson noted that small businesses have “barely” started their digital transformation with the adoption of e-commerce “generally low across markets.”

The cost of new tools and technology for digitalization were cited as the most common hurdles, followed by lack of knowledge and skills.

In the Philippines, replacing old systems and processes remains a hurdle for small and medium enterprises (SME), particularly within the food and beverage companies and medium-sized manufacturers.

“Although SMEs have generally begun to adopt digital technology, more work is needed to help and encourage these companies… beyond customer-facing areas of the business,” Epson Philippines General Manager for Marketing Eduardo Bonoan said.

Global market research firm Euromonitor International said, however, that high levels of mobile e-commerce usage primes the channel for eventual expansion.

“Retailers increasingly adopted multi-channel strategies to take advantage of the growing consumer demand for the convenience provided by e-commerce, and particularly mobile e-commerce,” it said in its annual Top 100 Retailers in Asia report.

Bricks-and-mortar retailers are looking for ways to adopt online platforms, and that often requires a rethink of how they do business, a process made easier when platforms make the transition seamless.

Lazada has found that sellers with established online businesses typically “revisit their priorities in the interest of capturing new digital marketplace opportunities and (gaining) new consumer segments.”

“Through our platform, we want to ensure that their experience is easy and seamless, arming them with the tools and training that they need to start and grow their e-commerce business.”

Grab is also promising the same smooth transition to online for merchant partners. It is currently developing a self-serve platform to provide small businesses access to sales analytics, advertising tools, and more. “We will announce more of this in the coming days,” Mr. Dela Vega said.

IN-STORE SALES: NOT DEAD YET, BUT CHALLENGED
Businesses restarting with the easing of lockdown measures will have to deal with pent-up demand for physical shopping, according to Colliers International Philippines, citing the findings of a March survey.

But foot traffic will remain low for the time being as social distancing measures still apply and as the world waits for a vaccine.

The lingering fear of public places outlines the challenge to traditional retailers: Lazada is seeing an upward trend in online shopping for essential goods, which it attributed to customers seeking to avoid “unnecessary” physical contact.

“The pandemic accelerated the shift of purchasing essential goods towards e-commerce and we believe this trend will continue on as people discover the convenience and quality of goods they purchase,” Grab’s Mr. Dela Vega said.

Retailers with a strong digital presence prior to the pandemic are “likely to fare better” as customers already know them, Euromonitor found, which dovetails with a Facebook finding that online consumers prefer established online brands because their supply chains are presumably more reliable and robust.

Paul A. Santos, who chairs the Philippine Retailers Association, said e-commerce will remain complementary to in-store selling, though it will likely be dragged in unexpected directions with e-commerce serving as a “catalyst” in dictating future business priorities.

He noted that the Philippines retains a large segment of lower-income consumers, who prefer physical stores and may not have the capacity to make online payments.

“Retail will bounce back in all of its forms, but I think what it will look like in the future is different.”

Ecozone investments to shrink this year

Limited public transportation has prompted many Filipinos to use bicycles to go around Metro Manila. — REUTERS

By Jenina P. Ibañez, Reporter

THE Philippine Economic Zone Authority (PEZA) expects new investment pledges to slump this year, as the coronavirus pandemic weighs heavily on the global economy.

At the same time, many export companies are struggling to maintain operations and employment even as lockdown restrictions ease due to the limits on public transportation.

In a mobile message, PEZA Director General Charito B. Plaza said she is expecting “a total 50% of last year’s investments plus 10%-15% growth.”

PEZA’s approved investment pledges for 2019 stood at P117.5 billion, a 16% decline from the year earlier.

Ms. Plaza said the investment promotion agency is currently holding virtual investor forums and is trying to create more economic zones in the countryside.

PEZA approved P22.5 billion worth of investment projects in its July 10 board meeting, majority of which are new activities from existing locator companies.

The agency in the first five months of 2020 approved P29.5 billion in investments, or 32% less than the same period last year.

Prior to the pandemic, PEZA said it was targeting 5-10% investment growth this year. The agency has yet to release updated investment targets.

EXPORT FIRMS STRUGGLE
Many exporters are now struggling as the pandemic disrupts production, supply chains and the availability of workers.

Philippine Exporters Confederation, Inc. (PhilExport) President Sergio R. Ortiz-Luis, Jr. said in a phone interview on Friday that many employees of export companies are still unable to come to work given limitations with public transport.

Export companies have manufacturing facilities that require in-person work.

“Unfortunately, ang isang perennial problem di pa naso-solve mabuti: maraming pwede na magtaas ng employment… pero hindi pa rin dahil sa problema ng sasakyan (Unfortunately a perennial problem that hasn’t been solved is that the many companies that can increase employment are not able to because of transportation problems),” he said.

Mr. Ortiz-Luis said many companies also fear that employees would get infected with the coronavirus disease 2019 (COVID-19) as they seek alternative transportation.

The government has urged companies to provide shuttle transportation for their employees. Export-oriented companies have been allowed to maintain at least partial operations since the lockdown started in March.

The Department of Transportation allowed the gradual resumption of public transportation in phases, with limited capacities.

Mr. Ortiz-Luis said many small companies have been seeing lower operations.

“‘Yun naman medyo malaki (company), nagre-retrench sila dahil hindi naman na-solve ’yung public transportation crisis plus the fact na napakagastos nitong transportation (The bigger companies are undergoing retrenchment while the public transportation crisis hasn’t been solved and providing transportation is expensive),” he said.

The Philexport official said rehiring will not happen within six months, especially as companies look to expand their facilities to comply with physical distancing measures.

“Ang mangyayari diyan, bawas lang nang bawas muna ng tao (They will just keep reducing employment),” he said.

Merchandise exports declined by 35.6% to $3.99 billion in May compared to a year earlier after it had declined 49.9% to $2.83 billion in April, the Philippine Statistics Authority reported. Year-to-date exports in May fell by a fifth to $22.56 billion.

“Nag-iimprove pero nag-iimprove lang na lumiliit ’yung negative. (Exports are improving in the sense that the decline is shrinking),” Mr. Ortiz-Luis said.

The Philippine unemployment rate surged to 17.7% in April from a year earlier, the highest since the government adopted new definitions for the Labor Force Survey in 2005. This translates to 7.25 million unemployed Filipinos, or more than three times the 2.27 million unemployed a year earlier.

Buy now, pay whenever? Lockdown lift for online shopping loans

BROWSING online during lockdown, Jessica Friend spotted a pair of Ray-Ban sunglasses she liked, but the price tag made the 30-year-old Ohio resident think twice.

What persuaded her to click “buy,” Ms. Friend said, was the short-term credit offered by Afterpay, which split the $260 payment into four interest-free instalments.

Afterpay is among a handful of alternative credit firms which offer small loans, mostly to online shoppers, and make their money by charging merchants a 4%-6% commission.

These buy-now-pay-later (BNPL) firms have benefited from a shift to online shopping during the coronavirus crisis in countries including the United States, where state aid has also boosted retail sales.

“I’m more inclined to use them because they make it easier to afford to get the things I want all at once … and when I want to splurge on something,” Ms. Friend said of the loans.

Some investors are now betting shoppers will stay away from stores as coronavirus cases rise again in several countries around the world, boosting business for BNPL firms.

But swelling subscriber numbers may also increase bad loans, mainly among first-time users who are more likely to default.

And as job losses rise and government aid ebbs, the business model will face its first real test in a recession.

“Much still hinges on any virus second waves and government wherewithal to keep boosting demand,” said Andrew Mitchell of Ophir Asset Management which owns shares in Melbourne-based Afterpay, whose market value has risen to $12.55 billion from over $100 million four years ago.

While a move to online shopping was underway before the pandemic, the shift has accelerated under lockdown and Afterpay signed up more than a million new active US customers between March and early May, taking its overall base there to 9 million.

Meanwhile retailers desperate to move merchandise have also become more receptive to partnerships with BNPL firms, which unlike credit cards or mortgages, make loans instantly.

Klarna, Europe’s biggest fintech startup, said that since March enquiries from retailers who may want to partner with it jumped by 20% on average globally.

With 7.9 million US subscribers, Sweden’s Klarna has since signed up outdoor gearmaker The North Face, Disney’s streaming service and cosmetics retailer Sephora.

Most of the growth has been in higher-margin discretionary spend categories such as fashion and fitness gear, said Puneet Dikshit, a McKinsey partner in New York, who expects the sector to generate $7 billion to $8 billion in volumes this year in the United States, growing by more than 150% annually. — Reuters

Alcoholic drinks now allowed at dine-in restaurants

Restaurants with dine-in operations are required to follow minimum health standards prescribed by the government. — REUTERS

RESTAURANTS with dine-in operations will now be allowed to serve each customer up to two alcoholic beverages, the Department of Trade and Industry (DTI) said.

DTI Memorandum Circular 20-39 issued on July 17 officially increases the dine-in cap to 50% for areas under general community quarantine (GCQ) and 75% to areas under modified general community quarantine (MGCQ) starting on July 21. Metro Manila is currently under GCQ.

Restaurants and fastfood establishments are allowed to serve all types of food and beverages, but alcoholic beverages are limited to two individual servings per customer.

Buffet services are allowed if there are food servers and covers for the food trays.

Families living in the same household may dine together in one table that is separated at least one meter from other customers’ tables. The family must show proof that they stay in one address.

The establishments may operate up to 11 p.m. daily.

“(Local government units) are enjoined to adjust curfew hours up to 12 midnight to allow greater daily turnover of dine-in services and enhance income opportunities for workers,” the memorandum said.

Establishments primarily serving alcohol, such as bars, are not allowed to operate, according to a resolution from the Inter-Agency Task Force on Emerging Infectious Diseases (IATF).

Most cities have lifted their respective liquor bans. Makati City has approved an ordinance banning individuals from drinking liquor outside of their residence during a state of calamity or public health emergency.

Restaurants with dine-in operations are required to follow minimum health standards prescribed by the government, including registration with Safepass or staysafe.ph, distribution of contact tracing forms, thermal scanning of all personnel, suppliers, and customers, and provision for sanitizers.

DTI also requires establishments to improve their exhaust system, implement a “no face mask, no entry” policy, and implement physical distancing.

DTI also asks establishments to minimize music to discourage loud talking, “which increases the likelihood of droplet transmission.”

Establishments are also encouraged to adopt additional measures, including installing air purifiers and acrylic dividers at least 18-inches high for face-to-face seating.

Various government agencies, including the Trade, Health, Tourism, and Labor departments, may conduct restaurant inspections.

Establishments that do not comply with the health guidelines after a warning may be temporarily closed down.

Barbershops and salons may also operate with up to 50% of their capacity for GCQ areas and 75% for MGCQ areas. — Jenina P. Ibañez

Embracing digital, hoping for stimulus — and waiting for transport to normalize

By Charmaine A. Tadalan, Reporter

THE fitful resumption of bricks-and-mortar business and the cost of installing new safety measures have left companies no choice but to embrace the tricky double act of plunging headlong into contactless sales methods, while ensuring supply and transport disruptions don’t shut them down.

But beyond what they can do to help themselves, they are also counting on outside intervention — in the form of the stimulus packages currently awaiting passage in Congress. The return of something as mundane as buses on the road would also be nice.

Paul A. Santos, chairman of the Philippine Retailers Association and president of the Picture City chain of photography stores, said building confidence and minimizing face-to-face interactions are the main task for companies.

“In the short term, it is the industry’s mission to restore confidence in consumers and employees that shopping and working in-store is as safe as circumstances will allow,” Mr. Santos said in an e-mail.

“Going into the medium-term, it must accelerate the adoption of techniques that will fulfill shopper’s needs and wants, and yet minimize, if not eliminate, points of contact with humans in the purchasing cycle — the age of contactless commerce, of which e-commerce is just one of the methods.”

Mr. Santos said industry is complying with the health recommendations of the government and the medical community, including face masks, distancing and disinfection.

“At the same time, retailers are rapidly adopting contactless commerce techniques, and one of them, which is contactless payments, is by far the easiest to implement,” he said.

“E-commerce, however, is also sought after, because it creates an entirely new goods distribution channel and at the same time it has the potential for creating synergies with retailers’ bricks-and-mortar assets.”

During the lockdown, e-commerce allowed retailers to reach their customers via delivery and in-store pickup.

Mr. Santos said physical stores may soon implement a semi- or fully automated checkout system or even develop an artificial and virtual reality system for certain activities like clothes fitting or cosmetics sampling.

The digital transformation, however, must also allow for worst-case scenarios like a second-wave outbreak.

“To prepare for this eventuality, retailers must formulate continuity of business operations plans, which should include boosting online distribution efforts,” he said.

“Also, retailers must be ready to move essential back-office functions, like inventory, purchasing, financial management, and human relations to the cloud, to permit work-from-home operations.”

SUPPLY CHAINS
The British Chamber of Commerce of the Philippines (BCCP) said digitalization is considered central to any business recovery, and that extends to gaining some control over vulnerable supply chains, Executive Director Chris Nelson said in a phone interview.

The chamber has over 300 members, consisting of multinationals as well as small- and medium-sized businesses, which Mr. Nelson said the BCCP is more concerned about.

“I think the internet and digital will be critical to companies,” he said, with many members adopting work-from-home arrangements and leaving e-commerce to do the heavy lifting on sales. His caveat was the need for added vigilance on security of company systems.

In addition, Mr. Nelson also said companies will be focusing on improving supply chains and points of vulnerability.

“There will be a review of supply chains — how they can get things closer or shorter… and how can they then distribute to their business and partners,” he said, noting that speedy and reliable delivery will be a competitive advantage.

“This is a very unusual economic crisis… it’s a crisis where people couldn’t go out or are very restricted on how they can go out and therefore, for many people, home is where you can reach them.”

Francis del Val of Cobena Business Analytics and Strategy, Inc. said companies that can go digital are more likely to stay afloat.

“What’s going to be the key to be able to survive and thrive in this new normal is digital transformation,” Mr. Del Val said during the BusinessWorld Insights forum on June 10.

“Businesses that are digital are going to be more successful because they are going to be more productive, more efficient and profitable.”

WHERE GOVERNMENT SUPPORT COMES IN
Mr. Nelson said beyond what companies can do for themselves, the government’s actions will also be key in ensuring a smooth restart to the economy. He identified as most critical among the pending measures the P1.3-trillion stimulus package targeted mainly at micro-, small-, and medium-sized enterprises (MSMEs).

“The public and the private sector have to work together in order to avoid a deep recession and the impact on unemployment and economically challenged families,” he said.

“I think that will be as critical as the recovery strategies of the company.”

The measure he was referring to is House Bill No. 6815, the “Accelerated Recovery and Investments Stimulus for the Economy of the Philippines Act,” which will provide P50 billion in loans to MSMEs in 2020 and beyond.

“We understand constraints, but stimulus needs to be done now as quickly as possible in order to ensure that the economy has a V-shaped recovery.”

The bill was passed by the House of Representatives, but remains pending at the Senate.

PUBLIC TRANSPORT
Philippine Exporters Confederation, Inc. Vice Chairman George T. Barcelon concurred, saying: “I hope the money is channeled to MSMEs so that they can afford to get their people back to work and at the same time, start economic activity.”

Mr. Barcelon said exporters were hit hard by the lockdown and have not yet returned to their pre-pandemic levels of activity.

“The industry has been affected badly for eight weeks of whatever form of lockdown. Even now, we still don’t have public transportation and that is what has affected businesses,” he said.

Mr. Barcelon said the three major factors businesses need to recover — market demand, mobility of the workforce and supply chain efficiency.

The Inter-Agency Task Force running the government’s pandemic response allowed a phased-in resumption of public transportation, with trains, taxis, and shuttle services returning on June 1-21. During that same period, no provincial buses were allowed to enter Metro Manila.

Public utility buses, modern jeeps and UV Express units, meanwhile, were allowed to resume in the second phase starting June 22-30.

Mr. Barcelon added that companies are expected to work out with financial institutions how to extend loan deadlines and obtain credit to finance a return to operations.

“We’re in the planning stage right now and then also a lot of companies (are) short of financing and need to work out (funding) through their banks,” he said.

Mr. Barcelon’s recovery timeline for the economy is indefinite though he finds it unlikely to happen in the “next three months.

Debt service payments drop by 10% in May

THE government’s debt service bill declined by 10% in May, as both amortization and interest payments fell, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed the National Government made debt payments worth P24.642 billion in May, down 10.09% from P27.407 billion paid in the same month last year. This was also lower than the debt service bill of P148.34 billion in April.

Interest payments made up 74.48% of the total, with 25.52% allocated for principal repayments.

For amortization, the government allotted P6.289 billion, lower by 18.73% from P7.738 billion a year ago. These were all paid to external creditors in May.

Interest payments also declined by 6.69% to P18.353 billion from P19.669 billion a year ago. Local lenders were paid P14.466 billion, broken down into P7.73 billion in interest payments for fixed-rate Treasury bonds, P4.86 billion for retail Treasury bonds and P1.876 billion for Treasury bills.

The remaining P3.887 billion went to interest payments to foreign lenders.

In five months to May, the government’s total debt service bill hit P512.96 billion. This is 49.54% of the programmed P1.033-trillion debt payments target for 2020, based on the Budget of Expenditures and Sources of Financing report.

This includes P352.845 billion in amortization and P160.115 billion in interest payments.

In 2019, total debt payments reached P842.449 billion, up 16.1% from P725.589 billion settled in 2018.

The government borrows from both domestic and foreign lenders to plug the budget deficit which is seen widening to 8.4-9% of gross domestic product this year as economic activity slows down amid the crisis.

Separately, BTr data showed gross borrowings reached P1.509 trillion from January to May, already exceeding the P1.02 trillion raised for full-year 2019.

Excluding the repayments made, net borrowings totaled P1.342 trillion during the five-month period.

The economic team projected that borrowings for this year will be higher than the initial plan to raise P1.4 trillion. However, there is no revised borrowing program released so far. — B.M.Laforga

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