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PHL secures $900M in loans from World Bank

People use a boat to travel within Amulung municipality in Cagayan after heavy flooding due to typhoon Ulysses, Nov. 19. — PHILIPPINE STAR/MICHAEL VARCAS

THE WORLD BANK approved two loans worth $900 million (P43.3 billion) for projects aimed at supporting the country’s economic recovery through a wider adoption of digital technology and programs to alleviate poverty in rural communities.

In a statement on Thursday, the multilateral bank said its board of executive directors approved a $600-million (P29-billion) loan that will promote competitiveness and boost resilience to natural disasters, and a $300-million (P14.4-billion) loan to provide additional financing for the National Community Driven Development program.

The World Bank said the first loan will support “reforms to hasten the adoption of digital technologies, promote greater competition, and reduce the costs of doing business to revive more economic activities and jobs in the country.”

Among the reforms to be supported by the loan include the proposed indemnity insurance to protect public assets against natural disasters, the faster rollout of the national ID program, and the shift to digital transactions for Customs procedures.

“Reforms to improve digital infrastructure and speed up adoption of digital technologies will not only help the country’s efforts to recover from the impacts of the pandemic but will also boost its export competitiveness that is vital for creating more and better jobs in the future,” Ndiamé Diop, the country director for Brunei, Malaysia, the Philippines and Thailand of the World Bank, was quoted as saying in the statement.

Meanwhile, the $300-million loan will provide more funds for the Department of Social Welfare and Development’s existing program that assists local governments in implementing community-based projects in poor municipalities.

“Community-driven development approaches have shown to be effective in accelerating community reconstruction following disaster events and efficiently putting money for priority needs of communities around the world,” said Mr. Diop.

With the community-driven strategy, poor communities will be able to organize themselves, assess their situation, and come up with project proposals to address the issues, which will then be submitted for potential funding if deemed necessary.

Most of the community projects involve the provision of basic facilities such as the construction of roads, water systems, school buildings and day care centers. The program targets poor barangays and municipalities that have limited internal revenue allotment.

Amid a coronavirus pandemic, the communities can obtain funds for their isolation facilities, rehabilitation of water and sanitation facilities, construction or improvement of health stations, as well as the maintenance of these establishments.

The World Bank previously lent $479 million (P23 billion) for the program launched in February 2014.

Between 2014 and 2020, the program supported more than 28,000 completed community-based projects across 19,000 villages in 830 municipalities. The bank estimated this benefited 7.8 million families.

The multilateral bank extended loans to the Philippines worth $1.88 billion (P86.5 billion) as of Dec. 15 to boost the government’s pandemic containment efforts. — Beatrice M. Laforga

Delayed passage of CREATE seen to hurt MSMEs’ recovery

Small businesses will pay lower corporate income tax if the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill is passed into law. — PHILIPPINE STAR/EDD GUMBAN

THE DELAY in Congress’ approval of the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act will likely hurt the recovery prospects of businesses affected by the coronavirus pandemic, a senator said.

This after the House of Representatives decided to convene the Bicameral Conference Committee in January to reconcile the conflicting provisions of the House and Senate versions of the CREATE bill.

“As your Chair of the Senate Committee on Ways and Means, I would like to put on record that this delay in the passage of CREATE this year is a huge setback,” Senator Pia S. Cayetano said during the plenary session, Wednesday evening.

“Precisely why we had daily deliberations to the extent of setting aside other very important bills is because we recognize the importance of this bill particularly for the MSMEs (micro, small, and medium enterprises) and the business sector,” Ms. Cayetano said.

Economic managers earlier said the timely passage of the CREATE bill, which cuts corporate income tax and rationalizes fiscal incentives, will help the economy bounce back faster from the recession.

Under the approved Senate Bill No. 1357, CREATE seeks to immediately cut the corporate income tax to 25% from 30% starting July 2020. It will also cut the corporate income tax for enterprises with net taxable income not exceeding P5 million and net assets worth up to P100 million to 20%. 

The CREATE bill will also allow exporters and domestic industries to enjoy four to seven years of income tax holiday. Exporters and critical domestic industries may continue to pay the 5% on gross income tax earned (GIE) in lieu of all local and national taxes for 10 years.

The Fiscal Incentives Review Board, to be led by the Finance and Trade departments, will be mandated to review incentives granted by investment promotion agencies. It will also have the authority to approve investments worth more than P1 billion.

“I’d like to point out that the reason the incentives portion was so important was because we wanted to plug the leakages and we wanted accountability,” Ms. Cayetano said.

“There is roughly P400 billion last recorded, I believe that was 2017, unaccounted for incentives that are being given away,” she added.

The House lawmakers have raised concerns on some key provisions of the Senate version of CREATE, such the revenue sharing scheme between the local government units and the National Government for registered businesses whose Special Corporate Income Tax lapsed. — C.A. Tadalan

The pandemic creates an appetite for stimulus that’s hard to satisfy

By Kyle Aristophere T. Atienza

MARITES A. SOTELO, 53, owns a small food store near a public school in Alicia, Isabela — scene of some of the worst Cagayan Valley floods after Typhoon Ulysses (international name: Vamco) in November.

That means that on top of the pandemic, which deprived her of her clientele after the schools closed, Ms. Sotelo has had to deal with the economic damage done to her town by the typhoon, which caused the Cagayan River to overflow its banks — to the extent that she wishes for more government aid for small businesses.

Her plight, multiplied millions of times across the country, has helped create unprecedented demand for stimulus funds, with Congress enacting economic revival packages in the hundreds of billions of pesos. Meanwhile, economic managers have tried to persuade legislators to accept smaller amounts, citing limits to the resources available to the government.

The recovery is hanging in the balance, with the Philippines’ fiscal response deemed by analysts to be among the smallest in the region, shedding light on the central conflict currently simmering within government — legislators eager to spend, and economic managers trying to impose restraint.   

The rush to stimulate the economy kicked off shortly after the initial declaration of a state of calamity on March 16 via Proclamation No. 929, which recognized the outbreak as a public health emergency. Such declarations under Philippine law are designed to expedite the release of government funds to support urgent spending priorities.

Congress responded by passing the P275 billion Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act (Bayanihan I), which granted Mr. Duterte special powers to realign funds from within the P4.1-trillion national budget for 2020. The law provided for, among others, cash handouts of between P5,000 and P8,000 a month over two months for 18 million low-income families.

The law, which was signed by Mr. Duterte on March 25, was initially only valid for three months, though efforts to extend this period were ongoing at deadline time.

BAYANIHAN II: ‘LESS OF S STIMULUS’
By June, as the lockdown dragged on, the calls emerged for more stimulus, particularly after the Philippine Statistics Authority (PSA) reported record unemployment of 17.7% in April, equivalent to 7.3 million jobless.

The result was RA No. 11494 or the Bayanihan to Recover as One Act (Bayanihan II), which authorized P165.5 billion in additional funding for coronavirus-related spending and economic stimulus measures. The actual funding level was P140 billion, with the balance of P25.5-billion contingent on further fund-raising or savings — among the first clues that the government was straining to raise money. The law was originally designed to lapse before the end of the year, but as of mid-December, efforts were underway in Congress to extend its validity, as well as the period when 2020 Budget funds can be used.

IBON Foundation Executive Director Sonny A. Africa described Bayanihan II as “less of a stimulus” because it was largely funded by budget re-alignments and not new spending, as was Bayanihan I.

“The Philippine response is even weaker than those countries that are less ‘financially strong’ or creditworthy which indicates that we really have more fiscal space than the economic managers admit,” Mr. Africa told BusinessWorld.

Two months before Bayanihan II was passed by the House in August, the chamber had approved at plenary level a P1.3-trillion stimulus package, the proposed Accelerated Recovery and Investments Stimulus for the Economy (ARISE) bill. It was written by House Stimulus Committee Chair Stella Luz A. Quimbo, and was intended mainly to aid small firms severely impacted by the pandemic.

The Department of Finance, however, put its foot down, calling the package “fiscally unsustainable.” Finance Secretary Carlos G. Dominguez III, citing the need to keep resources in reserve for a long pandemic, balked at a bill that was equivalent to about a quarter of the annual budget. The Senate has thus far yet to pass its version of the ARISE bill.

“An effective stimulus program involves spending more. More borrowing will not be a problem if the economic managers let go of their narrow obsession with credit ratings and instead give more attention to what the economy and the people need,” Mr. Africa said.

He described the size of the Bayanihan packages as only a fraction of the P3 trillion in projected borrowing for 2020.

REVIVING THE ECONOMY
Ms. Quimbo, a former University of the Philippines economist who is currently pushing a Bayanihan III bill, said the packages enacted so far are “not sufficient for the genuine economic recovery of the country.”

Ms. Quimbo said an additional economic stimulus package is needed to ensure that recovery targets are met, and estimated the amount needed at P1.56 trillion. In mid-November she filed HB No. 8031 or the proposed Bayanihan to Arise as One Act (Bayanihan III).

“Given the numbers, I hope our economic managers would… agree to support Bayanihan III,” Ms. Quimbo told BusinessWorld.

The Bayanihan III bill provides for an additional P400-billion stimulus package, boosted by the need to rehabilitate areas that sustained damage from typhoons Rolly (international name: Goni) and Ulysses.

Apart from the DoF’s default position of spending restraint, the pro-stimulus camp also has to contend with the administration’s desire to leave an infrastructure legacy when it steps down. The government has gone on record as saying that it is depending on infrastructure spending to lift the economy.

Mr. Africa said a P1.5-trillion stimulus program, which includes P752 billion in emergency assistance for low-income families and P680 billion for small businesses and the agriculture sector, will be needed to bounce back from the pandemic.

It’s a standoff whose resolution may ultimately decide how soon the recovery will come.

Reading the telco results for clues on the digital shift

By Arjay L. Balinbin, Senior Reporter

PLDT, INC. and Globe Telecom, Inc. reported mixed earnings in the first nine months of the year, but the telecommunications incumbents are expected to outperform the broader economy going forward as the pandemic hastens the adoption of digital processes and work practices.

Globe’s attributable net income for the nine months to September came in at P15.87 billion, down 10.25% from a year earlier. On an EBITDA basis (earnings before interest, taxes, depreciation, and amortization), earnings declined 2.8% to P56.25 billion, amid pressure on revenue during the pandemic.

Globe’s service revenue for the first nine months was P109.1 billion, down 1% from a year earlier, after a weaker performance by its mobile, corporate data and fixed-line voice business segments.

On the other hand, PLDT’s nine-month attributable net income grew 23.1% to P19.68 billion. Revenue increased 7% to P133.22 billion, while EBITDA improved 13.7% to P65.86 billion.

PLDT noted that it saw strong performances across the board for the nine months, as customer demand spiked for digital services during the pandemic.

In an e-mail replying to queries from BusinessWorld, Fitch Ratings analyst Janice Chong said PLDT’s continued outperformance was “driven by its robust fixed-line position and stronger mobile network capacity to accommodate competitive data offers.”

“Its heavy capital expenditure (capex) investments over the past few years and the recent reallocation of 2G spectrum to 4G have improved network quality and coverage,” she noted.

PLDT’s capex amounted to nearly P260 billion over the past five years.

The pandemic, however, forced a slight rethink of capex plans, with PLDT lowering its guidance for the year to P70 billion from P83 billion while Globe guided capex lower to P50.3 billion from P63 billion. 

Kerwin Chan, equity research analyst at COL Financial Group, Inc., said in an e-mail interview that the two companies experienced delays in their network rollout plans due to the lockdown restrictions. 

“Moving forward, we expect both telcos to ramp up their rollout plans and expand capacity as data demand grows in the post-pandemic world,” he added.

COL Financial Group considers both telcos to have “performed well and mitigated the impact of the pandemic,” Mr. Chan said.

In a phone interview, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the telecommunications sector is riding out the pandemic in strong position to capitalize on the digital shift.

“This is because of growing opportunities as the economy shifts to the digital space where we are seeing a lot of activity happening online. You have  work-from-home setups, online business transactions, and online classes.  Given these, we are expecting growth in demand for data services,” he said.

Asked how the industry will deal with the greater reliance on home broadband during the public health emergency, Mr. Tantiangco said: “We are seeing a boost in fixed line, in the home broadband segment, but that doesn’t mean to say the mobile data segment is going to be left behind. We are still expecting strength from the mobile segment. We are seeing a shift from the traditional text messages and calls to the mobile data segment, so that’s where we are seeing the growth.”

Fitch Ratings’ Ms. Chong said the limited fixed-line infrastructure in the Philippines means that telcos would need to meet growing demand for home broadband through wireless connectivity.

“Despite the lockdown restrictions and people staying at home, both telcos were still able to book flattish to slight growth in their mobile data segment. Moving forward, we expect mobile data revenue to grow as mobility increases and channels for mobile top-ups become more accessible,” COL Financial’s Mr. Chan said.

OVERCOMING RECESSION
Nomura Global Markets Research expects the economy to contract by 9.8% this year, with the Philippines dealt further setbacks by late-year natural disasters.

The economy remained in a recession in the third quarter as GDP contracted by 11.5% after the record 16.9% plunge in the second quarter, according to the Philippine Statistics Authority. GDP grew by 6.3% in the same period last year.

Ms. Chong said the incumbent telcos are expected to outperform GDP given the essential nature of their services.

“Our forecast assumes flat to low single-digit growth for 2020, despite a stronger-than-expected 1H20 (first half) increase of 3%. However, downside risks that could delay sector recovery in 2H20 (second half) include continuing restrictions on mobility and prolonged relief measures extended by telcos,” she added.

Ms. Chong said Fitch also expects telcos “to continue to take a more lenient approach on payment collection through the year in light of the recession, and to start to tighten consumer credit in 2021.”

Mr. Chan of COL Financial noted that both Globe and PLDT have briefed analysts that they expect “flattish growth” for this year.

“They emphasized possible downside risks to their forecast for the year due to possible worsening of economic conditions,” Mr. Chan said.

Still, COL Financial believes that the telcos “can stand firm” despite the negative economic conditions, he added, noting that higher data usage is expected as users embrace the digital transformation in the new normal, although the spending habits of the lower-income segments have likely changed due to the economic slowdown.

5G COVERAGE
Globe and Smart Communications, Inc., the wireless arm of PLDT, introduced 5G technology in 2019 and 2020, respectively. They are currently expanding the coverage of their commercial 5G services nationwide.

Mr. Chan expects that budgets for the 5G rollout will only make up a small percentage of both telcos’ capex for next year, due to the dearth of 5G-compatible devices in the Philippines.

Fitch Ratings’ Ms. Chong said the Philippines is likely to depend heavily on the standing 4G network to meet robust demand for data “in the next few years.”

She said the momentum of 5G rollouts will depend on the affordability of 5G devices, particularly in a prepaid market “that currently yields a monthly average revenue per user (ARPU) of $2 for mobile services and $20 for home broadband.”

“Globally, 5G has so far offered limited success in consumer segments, due to the lack of differentiation from existing 4G services and, therefore, the ability to charge premium pricing. We expect operating cash flow to lag significantly behind investment, keeping free cash flow constrained over the next three years,” Ms. Chong said.

COMPETITION
There will be “tighter competition” among telcos next year because of the expected commercial rollout of Dito Telecommunity Corp., Philstocks Financial’s Mr. Tantiangco said.

“If Dito Telecommunity matches the services of Globe and PLDT-Smart, of course it’s going to capture a bigger market share, and this could lead to slower revenue growth for the incumbents,” he said.

Ms. Chong said aside from regulatory pressures, competition will be a major factor for future investment, “driving net leverage — measured as funds flow from operations (FFO) net leverage — higher at around 2.6x-2.8x over the next two to three years.”

She said network expansion is likely to accelerate over the next few quarters, following the capex delays due to the pandemic restrictions.

Who will dominate the industry next year? “We believe PLDT’s broader service diversification and entrenched fixed-line position will mitigate revenue pressure in its wireless business, compared with Globe. An under-served fiber broadband market offers long-term revenue opportunities for fixed-mobile convergence over the next few years,” Ms. Chong said.

Mr. Tantiangco expects new entrants aside from DITO. “If an industry is booming or if an industry is going to be profitable, it’s going to entice more players so they can take advantage of the opportunities as well,” he said.

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.

Dropouts push private schools to the brink as public education picks up the pieces

By Jenina P. Ibañez, Reporter

CLASS SIZES at private schools are shrinking, which in normal times might be taken as a mark of quality because they imply lower student-to-teacher ratios. However, the underlying reason is far more disturbing: students are dropping out because many parents have suffered setbacks to their livelihoods and can no longer afford tuition.

In response, private schools have asked for aid to help students pay for school fees, a big ask in the middle of a pandemic when the government is committing every last possible peso to containing the coronavirus.

The other side of the coin is that more than 400,000 students moved to public schools this year. In a online interview, Education Undersecretary Jose L. R. Mateo said 860 private schools have shut down, 97% of them elementary schools.

The consequences are not difficult to imagine: former private-school students who still want to continue with their education may have little recourse but to transfer to public education, in the process creating a resource crunch there and overburdening public school teachers even further.

The pandemic has not spared larger private schools, according to Joseph Noel Estrada, managing director of the Coordinating Council of Private Educational Associations (COCOPEA), where even for those that remain open, the story is declining revenue alongside increased expenses, mainly spending on digital teaching systems.

“Private schools have tried many approaches to this, from scaling down operations, cutting down on expenses to more extreme measures like laying off faculty and teachers… some have even retained faculty and teachers under a ‘no work-no pay’ scheme since the lockdown,” he said in a phone interview.

Mr. Estrada said that the industry lost around half of its students compared with the previous school year, with only around two million enrolling. Tuition discounts of 20-30% were also offered to help students in financial distress, he said.

Meanwhile, with the public school system absorbing new students, the main problem appears to be transitioning the teaching staff to new reality of virtual teaching.

“Blended learning is hard. Public school teachers are using their messenger apps to accommodate the questions of students and the parents helping them,” according to France L. Castro, a party-list legislator representing the Alliance of Concerned Teachers (ACT).

“They need internet allowances… That’s an additional cost for them,” she said in a phone interview, pointing to the urgency of digital literacy training.

The scramble for resources extends to the Department of Education (DepEd). While education agencies including DepEd collectively have the largest share of the 2021 budget, Ms. Castro maintained that the annual teachers’ allowance increasing to P5,000 from P3,500 next year is not enough to cover distance learning expenses.

FUTURE OF EDUCATION
Mr. Estrada said part of the burden on private schools is that they need to comply with government regulations setting online teaching standards which were set even before the pandemic. These rules were meant to deter “fly-by-night” operators from offering teaching services.

“Now, everyone needs to go into online and flexible learning. We should be allowed to transition smoothly, in a less regulated environment,” he said.

He said that the government required all schools to acquire learner management systems and to hire personnel available round the clock to address online complaints.

Despite the possibly contentious idea of the government supporting students in private education, COCOPEA is asking the government to provide tuition subsidies to keep schools alive, to the extent of invoking Article XIV of the Constitution, which “recognizes the complementary roles of public and private institutions in the educational system.”

As a practical matter, the DepEd’s Mr. Mateo said government support for private institutions will help decongest public schools. The government is not in principle averse to the idea of funding students going into private education — the DepEd itself maintains a program subsidizing students enrolling in private senior high schools.

“Assuming for the sake of argument there is a law that will allow us to support (private) elementary schools — the bigger question is do we have the money? Is Congress giving us sufficient funds?”

Ms. Castro said even online learning’s promise of, at minimum, saving students the trouble of commuting to school, is predicated on better access to devices and improved internet infrastructure.

On the private side of the fence, an underlying issue is the need for a policy environment that inspires confidence. Mr. Estrada said clarity is needed on how the government intends to regulate and support online learning going forward, which is seen as key to unlocking the investment needed to operate under the new constraints imposed by the pandemic.

“Doing online involves costs, WiFi capabilities,” he said. “So you need to have to have some certainty also.”

National ID poised to fulfill promise of better aid distribution

By Beatrice M. Laforga, Reporter

REYNALDO L. ANGARA, 70, a barangay chairman in Tondo, Manila, confessed to struggling with distributing Social Amelioration Program (SAP) cash aid in April, when poor recipients needed it most after the lockdown took away their ability to earn a livelihood.

The main difficulty, he said, was the inability of many to produce valid and reliable identification.

Tasked with gathering initial information and identifying possible beneficiaries, Mr. Angara also cited the absence of guidance from higher-ups on how to establish identity and ensure that the aid goes to the poorest segments of society.

“Ang problema, kaya di mabigay ’yung SAP, ang policy nila ibibigay sa mga poorest eh since wala namang ID ang mga tao, hindi ma-identify kung ito mayaman, may trabaho o may mga ari-arian kasi ang ID nila, ’yung iba wala talaga (The problem in distributing SAP was that most of the poorest families it intended to reach do not have valid ID. Lack of ID makes it difficult to determine their financial status),” he said in an interview.

That month, the government launched its P200-billion SAP to provide emergency relief to 18 million low-income families severely affected by the strict lockdown imposed in mid-March.

Much of the economy shut down, workers’ incomes were slashed while many were laid off, but the P5,000-P8,000 cash aid per family per month went a long way towards ensuring their survival. However, it was distributed slowly in the absence of a reliable database.

“Had the National ID been in place, it would have been easier to establish the identities of people registering for the various social protection programs made available during the pandemic,” Jose Ramon G. Albert, a senior research fellow at the Philippine Institute for Development Studies (PIDS), said in an e-mail.

To identify potential beneficiaries, the staff of the Department of Social Welfare and Development (DSWD) relied on a list created at the start of the program, along with the department’s own database. Interviews by local officials were also conducted for validation, a process made much more difficult by stay-at-home orders and social-distancing rules.

President Rodrigo R. Duterte himself expressed dissatisfaction with the delayed implementation of the national ID system, saying it could have helped speed up the process of reaching aid beneficiaries.

“Wala tayong ID system until now. Kung may ID system lang tayo, na-iwasan natin itong mga ito (We have no national ID in place; we could have avoided the delays in distributing aid),” Mr. Duterte said in an online speech in April.

Republic Act No. 11055 or the Philippine Identification System (PhilSys) Act, was signed into law in August 2018 to establish a national ID, cut down on redundant government-issued IDs, and help cardholders more easily establish their identity when opening bank accounts.

The law authorized a P27.8-billion budget to set up the system covering the entire population eventually, with the Philippine Statistics Authority (PSA) designated the main implementing agency and the central bank tasked with printing out the physical cards.

National Statistician Claire Dennis S. Mapa, who  heads the PSA, said the agency was given a total of P7.1 billion between 2018 and 2020 to procure all the systems needed to launch the program and start the registration process.

“The DSWD is looking forward to the PhilSys so that we can efficiently and effectively deliver the social services… for the poor families and other vulnerable sectors. With a national ID in place, the DSWD will make use of it to identify beneficiaries of our various social protection programs,” DSWD Spokesperson Irene B. Dumlao told BusinessWorld by telephone.

Ms. Dumlao said the department’s programs that will be facilitated by the national ID are the Pantawid Pamilyang Pilipino Program (4Ps), the Sustainable Livelihood Program, the Social Pension for Indigent Senior Citizens, the Supplementary Feeding Program, and the Unconditional Cash Transfer Program.

The PSA was still finishing the procurement process when SAP was launched, and with ongoing safety protocols and mobility restrictions, mass registration only started in October.

To date, more than 5.035 million heads of household have been pre-registered as of Nov. 16, well past the halfway point of the government’s target of nine million individuals by year’s end. Pre-registration is the first of a two-step process in applying for the national ID, in which PSA personnel conduct house-to-house visits to targeted households to gather basic demographic information and schedule the next step.

Crunch time for the program could be 2021, when 40 million more are due to be registered, which will include a biometric scan, a key security feature of the ID.

The agency’s budget for the program next year was also increased to P4.1 billion to further accelerate the rollout. Mr. Mapa said the bulk of the budget will go to the printing of physical cards and the actual registration, which will involve deploying PSA personnel to field offices near the registrants.

The agency is currently in the planning stages with the DSWD, the main agency in charge of aid distribution, Rosalinda P. Bautista, deputy national statistician and an assistant secretary at the PSA, said in an interview.

“The DSWD plans to utilize the national ID system to ensure proper identification of our clients or beneficiaries and thereby eliminating misrepresentation and duplication of claims and assistance. The national ID system will further systemize the targeting and will facilitate the identification of vulnerable sectors and groups. This will also help the department proactively develop and deliver social protection programs,” the DSWD’s Ms. Dumlao said.

The national ID will contain a unique serial number — the PhilSys Number (PSN) — giving cardholders the ability to monitor transactions using their PSNs.

The hope is to reduce the risk of fraud, double registration and money laundering because of the centralized database, and help cardholders build up a credit history, especially among the unbanked.

“This will be especially beneficial in social welfare and social security programs, where the PhilSys will contribute to ensuring that the right beneficiaries are receiving benefits (e.g. through verification and by linking the PSN to a beneficiary’s financial address), and the financial sector, where the PhilSys will contribute to addressing money-laundering risks and better credit history data,” PSA’s Ms. Bautista said.

The registrars found that 88% of the participants in the initial phase of registration do not have formal bank accounts, raising the prospect of increasing their access to financial services. Possession of a bank account will help even more in depositing future aid packages.

PIDS’ Mr. Albert noted that registration with the national ID should be mandatory because it may be difficult to convince many individuals to register if they have other government-issued IDs.

“What should be set up are accountability mechanisms to ensure that people are protected and not being harmed by the use of data,” he added.

While restrictions due to the pandemic have hampered the implementation of the national ID this year, the PSA is hoping that delays will be minimized in 2021 as registration ramps up.

On the ground, Mr. Angara, a barangay captain for nearly three decades, said he hopes the national ID will finally be rolled out, foreseeing an easier time for his constituents in obtaining government aid, business permits, and job applications.

“Malaking tulong sa amin yun. Nakakaawa naman ang mga tao, entitled sila sa government benefits pero dahil lang walang barangay certificate, hindi makakakuha. (It will be a big help for us. It is a shame that people entitled to government benefits cannot avail because they do not have at least a barangay certificate),” he said.

Motorcycle delivery riders, more essential than ever, have seen job security elude them

By Revin Mikhael D. Ochave, Reporter

ARIES JAY C. DE GUIA, 28, a motorcycle delivery rider in Valenzuela City, considers himself lucky these days to clear P500 a day — less than half of what he used to earn before the pandemic, and below the prevailing minimum wage for Metro Manila.

Mr. De Guia said before the crisis he typically had four to seven bookings a day, peaking at 13 during busy periods. Now demand has turned uneven, and he is down to two or three.

The ordinary risks undertaken by delivery couriers, like road hazards or scam orders, have only multiplied during the pandemic, but their plight has become a grim struggle for survival, at a time when their services have never been more essential.

The National Wages and Productivity Commission pegs the daily minimum wage rate for the National Capital Region at between P500 to P537, highlighting the precarious employment arrangements for delivery couriers, rooted in hiring practices that have proved hard to eradicate.

Raul M. Francia, Department of Labor and Employment (DoLE) Information and Publication Service Director, said in a mobile phone message that motorcycle delivery drivers are engaged via contracts of service.

“They have no employee-employer relationship. Therefore, they don’t enjoy job security,” Mr. Francia said.

On Nov. 18, riders of a food delivery service protested outside the DoLE office in Intramuros, Manila, alleging unfair labor practices.

At a Senate hearing on the DoLE 2021 budget, Senator Emmanuel Joel J. Villanueva said the problem was the absence of guidelines for employing delivery riders, owing to the “new economy” nature of the work.

Mr. Villanueva said such workers, at minimum, need to be granted basic benefits such as Social Security System (SSS) and PhilHealth coverage.

In a mobile phone message, transport expert Rene S. Santiago said the labor problems are akin to the long-running struggle to wean the jeepney industry from the infamous “boundary” system.

“No benefits, no security, mostly no SSS coverage. Our existing labor laws are obsolete when it comes to the digital age,” Mr. Santiago said.

Ride hailing and delivery company Grab Philippines said it provided its motorcycle and car drivers alternative sources of income during the early months of the lockdown.

In April, the company said drivers with its GrabCar service transitioned to the delivery business after consumers were unable to move around due to movement restrictions.

“With public transportation being suspended following the announcement of the enhanced community quarantine, Grab has been able to offer virtual training to its GrabCar driver-partners and quickly on boarded them as GrabFood, Grab Express, and GrabMart delivery-partners for the time being,” the company said.

In a mobile phone message, Angkas Chief Transport Advocate George I. Royeca also said the company now sees an entrenched place for its delivery businesses like Angkas Padala and Angkas Pabili.

“Delivery will definitely still be a part of our ecosystem, although our core competence really focuses more on transportation,” Mr. Royeca said.

Mr. Santiago said motorcycle delivery is here to stay “as sellers and buyers get used to online trading,” calling the segment “the bright star of an economy in recession and in recovery.”

Mr. De Guia said he will continue with motorcycle delivery not just because of need, but also, despite the many issues, “this makes me happy.”

Traditional retail ponders its future as e-commerce takes hold

By Charmaine A. Tadalan, Reporter

PREI T. VALENCIA was a twice-a-month online shopper before the quarantine. These days she places online orders weekly for clothes or electronic device accessories. She even bought furniture online once.

“Now that everything’s online, it’s a lot easier to shop. Even SM and Robinsons malls are on Lazada or Shopee, or have their own e-commerce sites,” she said over Facebook Messenger on Nov. 18.

“I really don’t mind paying for shipping or delivery fees because I’d rather spend extra than risk exposure outside.”

Before COVID-19, malls would typically be packed as the weather turned cold, but the pandemic has chased foot traffic away, calling into question retailers’ ability to survive without revenue from the year’s busiest shopping season.

Ms. Valencia found herself attracted to online merchants’ offerings like mid-year sales and monthly promotions. The shift away from malls, when multiplied across millions of consumers, has left an entire industry wondering how to move forward.

According to Philippine Retailers Association (PRA) Vice-Chairman Roberto S. Claudio, “The prolonged lockdown has shown up in the reduced revenues of almost all retailers. Sales have dropped between 50-80% from pre-pandemic levels.”

“Some retailers are less affected, some more. While online sales increased from 100-500% from online capable retailers, it was not enough to cover for the lost sales in brick & mortar stores,” Mr. Claudio said in an e-mail in October.

Malls had to cut back on operations to essential stores only after the government locked the country down in March to contain the outbreak.

The government started easing restrictions in June, allowing selected businesses to reopen at limited capacity. This was further relaxed in October when the Department of Trade and Industry allowed 100% capacity for establishments in areas under general community quarantine and 75% in salons.

“The pandemic has accelerated the inclusion of online channels for all retailers. What was predicted to take another five years to reach this level of digital transformation was accelerated by this pandemic,” Mr. Claudio also said.

Citing data from the 2020 World Retail Congress, he said e-commerce in developed countries increased to 25% from 16% and to 8% from 3% in emerging countries. Even with e-commerce growing rapidly, traditional retail remains dominant, while leaving the bricks-and-mortar segment the option of setting up online channels themselves.

“I personally do not see online retailing completely taking over from in-store retailing. Retailing as an industry will become omni-channel,” Mr. Claudio, who is also chairman of Toby’s Sports, said.

“Retailers without online capabilities will develop digital infrastructure. And I predict e-commerce retailers will start opening showrooms combined with digital hubs.”

While malling behavior may have changed, the industry is poised for a comeback, Mr. Claudio said, with new offerings beyond shopping, like resorts, museums, and cultural and educational facilities, among others.

Kantar Philippines notes that Philippine online shopping, while growing, also lags the region.

In May, Kantar reported that the Philippines’ online penetration was 6% for fast-moving consumer goods (FMCG), against 34% for Vietnam, 24% for Malaysia, 20% for Thailand, and 8% for Indonesia.

The equivalent number for the Philippines in September has since risen to 7.3%, still behind our neighbors’ totals in May.

“When it comes to FMCG in the Philippines, compared with other countries in Asia, we’re still the country with the lowest penetration online,” Marie-Anne Lezoraine, general manager of Kantar’s Worldpanel Division Philippines, said in a virtual interview in October.

Ms. Lezoraine added that hypermarkets, supermarkets and grocery stores in general increased their market share during the lockdown.

“All of those channels have been impacted by the current situation, but those are the ones performing relatively better. Sari-sari stores (neighborhood Mom-and-Pop outlets) are the ones that have been suffering,” she said.

The frequency of shopping is at an all-time low as people limit their activities due to mobility restrictions, budgetary constraints and fear of infection, according to Kantar. It also found changes in consumer behavior as shoppers prioritize basic necessities and cut back on impulse buying.

“There was an element of unplanned purchases and of course, with the frequency of shopping declining, there’s less of those impulse purchases now when people go to the store,” she said.

“The shopping basket is a little bit more valuable but the frequency dropped… people are spending less.”

One of the Worldpanel findings was that both the well-off and poorer consumer segments tended to maintain their spending on essentials, with the middle classes most likely to cut back. She said the lower end of the market likely was already down to bare essentials and has “less to cut.”

“They are focusing on the essential therefore the room to cut to reduce the expenditure was probably smaller,” she said.

With the situation still fluid, traditional retail is still grappling with the adjustments forced on them by changing market conditions. But if the development of online channels is inevitable, the question can be distilled to how the bricks and mortar segment can beat them, or join them.

The rise of the pandemic side-hustle

By Adam J. Ang

AS media group ABS-CBN Corp. was battling to keep its Congressional franchise, it began to dawn on Dominique Muli, a production assistant for ABS-CBN News Channel (ANC), that her budding media career might be cut short.

The 21-year-old pivoted, in the process fulfilling her longstanding dream of running an online thrift shop selling clothes.

“I accepted that possibility, arms wide open,” she said in a message, in anticipation of retrenchment, though she did manage to stay on the job. “Because if I did not, I wouldn’t have taken the leap of opening up an online shop.”

She is hardly alone — the economic fallout from the coronavirus pandemic has forced wage earners to seek alternative income streams to help them and their families survive.

Unlike Ms. Muli, Mutya Pancha was already out of a job in late August when she and her family decided to put up a food business.

“At first, we were reluctant to proceed,” the 23-year-old designer said in an online chat. “Most of us in the family are also working or studying.”

Now that Ms. Pancha had more time on her hands after resigning from her old job, her family thought it was a good time to launch the business, known as Oliva.

Combining all their savings, the family started taking orders from the small selection of home-cooked meals and bread that they knew how to make.

Ms. Pancha says it took them some time before finding the right suppliers for ingredients and kitchen equipment, as well a suitable pricing structure for the Oliva product line, which is available for pickup in Taguig or delivery within Metro Manila.

They knew they were good cooks to start with, but competition was stiff. They had to ask a neighbor, a former cook who lost her job during the pandemic, to help out, and eventually, become a partner. “We have to make sure what we serve will satisfy the consumers,” Ms. Pancha said.

Mutya, the family’s eldest daughter, has taken on the role of receiving online orders and helps with meal preparation.

TAKING THE LEAP
In her student days, Ms. Muli was fond of thrift shopping, both in-store and online. At work, she viewed such shopping sprees for cheap pre-loved clothes as an occasional treat.

With only P8,000 in savings from her old job, she put up The Thrift Spies on Instagram.

Her two younger sisters help her scour Metro Manila for used-clothing finds, a segment of the fashion market known in Filipino as ukay-ukay.

“We love handpicking all the clothes kasi (because) if it’s something we’d wear, then it’s something we would sell.”

She was worried that her first two collections would “flop,” she said. “But I had my sisters with me (and) they were as hopeful as I was, and that was enough for me to keep pushing.”

The self-made businesswoman had to buy supplies like hampers and hangers “bit by bit.” Recently, she was able to buy a custom two-level clothing rack, which made it easier to locate products that have been ordered.

ACQUIRING SKILLS
Ms. Muli, a 2019 journalism graduate, was initially not confident about starting a business. She had to pick up the skill as she went along, but one aspect of the job — interacting with clients — did not prove to be a problem.

She spent some time observing how owners of Instagram shops operated, from marketing to advertising. “All these I learned through shadowing.”

Competition became the least of Ms. Muli’s concerns. “You’d be surprised that sellers do not treat you as competition,” she said. “They have been approachable so far. If you have any questions about the business they will help you. There is no tension at all.”

MAINTAINING BUSINESS AFTER THE PANDEMIC
While many businesses have scaled back their retail presence, the Panchas were due to launch a physical store in November.

With the easing of quarantine restrictions and the holidays right around the corner at the time of this writing, they decided it might be a good time to launch a bricks-and-mortar business. Ms. Pancha, whose first plan was to help out in the business as a sideline, eventually decided to go full time.

Meanwhile, Ms. Muli does not plan to let go of her business when her day job becomes more demanding of her time when the health emergency subsides.

With her profits going mostly to paying for apartment rent, Thrift Spies is “something I don’t mind doing,” she said. Still, she hopes it won’t have to come down to choosing between her business and her career.

“I will insist on sustaining my online shop even when normal business conditions return.”

San Miguel also wants to rehabilitate NAIA, says head of gov’t airport body

By Arjay L. Balinbin, Senior Reporter

SAN MIGUEL Corp. (SMC) and the Philippine Airport Ground Support Solutions, Inc. also want to get the contract to rehabilitate the Ninoy Aquino International Airport (NAIA), the Manila International Airport Authority said on Thursday.

“There are two more: Philippine Airport Ground Support Solutions, Inc. and… San Miguel Corporation,” MIAA General Manager Eddie V. Monreal said at a Senate hearing on Thursday afternoon, when asked by Senator Maria Lourdes Nancy S. Binay who the third and fourth proponents are after the tandem of Megawide Construction Corp. and India-based GMR Infrastructure Ltd. (Megawide-GMR), whose original proponent status (OPS) has been revoked.

When asked if there were efforts already to talk to the third proponent, Mr. Monreal said: “Sa ngayon, wala pa po (For now, none yet).”

Also at the hearing, Transportation Secretary Arthur P. Tugade said the Megawide-GMR tandem could still appeal for reconsideration, while MIAA implements its own reconstruction and rehabilitation program.

“Kung gusto nila mag-apila sa desisyon, sa aking pananaw, pwede pa silang mag-apila, habang ginagawa ng MIAA ang kanilang reconstruction and rehabilitation program,” Mr. Tugade said.

(If they want to appeal the decision, in my view, they can still make an appeal while the MIAA is doing its reconstruction and rehabilitation program.)

Mr. Monreal said it was the MIAA Board that decided on the OPS of Megawide-GMR.

“Should Megawide-GMR ask for a reconsideration, we will present it to the board, so that the board can act on it favorably or not,” he explained.

“We will see how the board takes it,” he added.

On Thursday morning, SMC President and Chief Operating Officer Ramon S. Ang told BusinessWorld that the company was only interested in operating and maintaining (O&M) the airport.

SMC is also building an airport in Bulacan.

The Philippine Star first reported that SMC had submitted an O&M proposal for NAIA.

Sought for comment, Terry L. Ridon, convenor of infrastructure-oriented think tank Infrawatch PH, said in a phone message: “This development gives rise to a clear suspicion of collusion for the irregular revocation of the second private proponent’s original proponent status: that the OPS revocation was made to accommodate another private proponent to rehabilitate NAIA.”

“Nonetheless, the SMC proposal should be scrutinized not only on financial and technical competency, but also on concerns of anti-competition, given that it has already been awarded the right to build its airport in Bulacan,” he added.

Mr. Ridon also said that controlling two airports within the Greater Capital Region “may give rise to higher terminal and airport fees for passengers, airlines and service providers.”

“Furthermore, strict scrutiny should be undertaken on SMC’s debt-equity ratio, given that it will already undertake high financial leverage to fund the development of its Bulacan airport costing at least P735 billion,” Mr. Ridon said.

Holiday retail workers seek ‘temporary lifeline’ in warehouse jobs, if they can find one

THIS TIME of year, hundreds of thousands of seasonal retail workers across North America and Europe would usually be wrapping gifts, stirring hot chocolates, tidying Christmas displays or assisting the flurry of last-minute shoppers.

But the balance of available holiday jobs this year has radically shifted from storefront to warehouse and delivery amid record purchases online. And with millions of retail workers in the United States and Europe already laid-off, competition for what remaining jobs are left is fierce, economists say.

The supply of available holiday jobs in US customer-facing retail fell by a third to 302,100 this year from around 466,400 jobs last November, data from the Bureau of Labor Statistics gathered by consultancy Challenger, Gray & Christmas showed.

Macy’s, Inc. cut seasonal hires to 25,000 this year from 80,000 in 2019. JC Penney Company, Inc. narrowly rescued from bankruptcy in early November, is hiring just 1,700 people in contrast to 37,000 last year. For a graphic, click here ‘Tis the season: Fewer retail jobs up for grabs.

Meanwhile, applications for US storefront retail positions have jumped by around 34% year-on-year, according to November data from jobs site Glassdoor.

Kayla Frederick, 31, was laid off from her position as leasing assistant for a tour bus company in Florence, Alabama in April as venues closed and tours were canceled because of the pandemic. In November, she started her first ever seasonal job in a local clothing boutique’s warehouse, pulling online orders, folding inventory and tagging intake items.

“I never expected to be laid off this long,” Ms. Frederick said. “I’m thankful this gave me a job.”

In Europe, data from jobs sites like Indeed, Adzuna, Student Jobs and CV Library paints a similar picture of lower vacancies and rising applications. The number of available seasonal jobs in the UK was down by a third year-on-year in November to 13,600, according to Adzuna data.

CV Library reported a 60% drop in the number of customer-facing retail jobs listed in the UK compared to last year — but clicks per job have doubled. In Germany and the UK, sales associates at jobs site Student Jobs reported increased contact from frustrated students not hearing back from companies inundated in applications.

Data from Indeed in the UK showed a jump of around a third in clicks per posting on seasonal jobs this year compared to last, according to a report by Indeed’s UK in-house economist Jack Kennedy.

“Jobseekers may be looking at Christmas jobs as a potential temporary lifeline as job losses mount,” Mr. Kennedy wrote.

‘NEW WORLD OF RETAIL’
UK postal service Royal Mail increased its seasonal hires to 33,000 this year from 20,000 in 2019, while FedEx Corp in the U.S. hired a quarter more seasonal workers, taking total hires to 70,000 from 55,000, labour statistics bureau data showed.

“This is likely a window into the new world of retail,” Daniel Zhao, senior economist at Glassdoor, said. “What was done out of necessity during a pandemic is likely to become an annual online shopping tradition for future holidays.”

Glassdoor saw a 120% year-on-year increase in applications for e-commerce roles like delivery drivers, warehouse workers and order pickers in the United States and a 45% jump in the UK.

Oscar Jiminez, a twenty-two year old college senior in Southern California, is among the lucky ones. He landed seasonal employment in October in a gig he believed would have him working as a customer service agent on an “essential” retailers’ sales floor. But he found himself in a warehouse at the back of the store instead.

“This wasn’t exactly in my job description.” Mr. Jiminez said. “So far I’ve been picking orders, going around the store, finding things people purchased online and getting them ready for curbside pickup, ship-to-home… I’m constantly on the move.”

Some supermarkets are also pushing up hiring. In the UK, British supermarket Tesco posted 2,000 more seasonal vacancies than last year. It posted its seasonal vacancies on student jobs site E4S a month later than usual because of lockdown uncertainty, but still received over twice as many applications, according to website data.

German supermarket giant Lidl took on 2,400 apprentices this year in Germany, 40% higher than last year’s intake. Lidl and Amazon.com, Inc. were already boosting their staff by a significant amount throughout the year to deal with the surge in demand, reducing the need for temporary seasonal hires, the companies said.

Amazon hired just 100,000 seasonal staff this year in the United States, half last year’s total of 200,000, because it had already boosted operational hires by 275,000 throughout the year, it said in September.

Lidl took an opportunistic approach to finding candidates this season in Germany, where a partial lockdown is likely to be toughened in coming days. “Bar work is so yesterday,” read a November 30 recruitment ad. “Look forward to a secure job for €12.50 an hour — switch industries and get into retail.”

Lidl pulled the ad within a day after backlash from the gastronomy sector on social media, it told Reuters, apologizing for the distress the message caused. It declined to say how many new positions it had on offer. — Reuters

Ayala Corp. decouples chairman and CEO positions

By Revin Mikhael D. Ochave, Reporter

JAIME Augusto Zobel de Ayala will be solely focusing as Ayala Corp.’s chairman of the board, the conglomerate said on Thursday, after some of its subsidiaries earlier made announcements of succession moves.

Mr. Zobel will transition from his previous role as chairman and chief executive officer after the move is approved by Ayala Corp.’s board. The change will take effect on April 23, 2021 after the company’s annual stockholders meeting.

Further, the statement said Fernando Zobel de Ayala will become Ayala Corp.’s president and chief executive, moving from his previous position as president and chief operating officer, which will also take effect on the same date.

Both will still hold their existing positions as chairman or vice-chairman in different subsidiary boards across the Ayala group of companies.

“Fernando and I are very fortunate to work with a deep leadership bench, and we are confident that planned leadership transitions such as this are critical ingredients for sustainable success,” Mr. Zobel said.

“Moreover, we have the opportunity, with this move of decoupling the Chairman and CEO roles, to reflect an evolving global best practice in Environment, Social and Corporate Governance,” he added.

The move by Ayala Corp. is part of several leadership changes recently made by its subsidiaries.

In separate regulatory filings on Wednesday, Bank of the Philippine Islands (BPI) and Globe Telecom, Inc. announced their respective position changes.

BPI’s board of directors approved the succession of Jose Teodoro K. Limcaoco as president and CEO of the bank, replacing Cezar P. Conzing.

The move will be effective on April 22, 2021, also after the bank’s annual stockholders meeting.

Mr. Conzing will remain as a board director and an executive committee member after his tenure as president and CEO.

Meanwhile, Globe announced the nomination of Maria Louisa Guevarra-Cabreira as the successor of Alberto M. de Larrazabal as its chief commercial officer, to be decided via an election during the organizational meeting of the company’s board of directors after the annual stockholders meeting on April 20, 2021.

Mr. Larrazabal has been nominated to replace Mr. Limcaoco as chief finance officer, chief risk officer, and chief sustainability officer of Ayala Corp. to take effect during the organizational meeting on April 23, 2021.

For the third quarter of the year, Ayala Corp. posted a P3.4 billion attributable net income, 59% lower compared with the P8.3 billion it had last year.

Its core subsidiaries also recorded lower profits, with Ayala Land, Inc. down 77% to P1.8 billion, BPI by 34% to P5.5 billion, and Globe by 22% to P4.4 billion.

On Thursday, shares in Ayala Corp. at the stock exchange fell 1.06% or P9 to end at P840 apiece.

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