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SSS wants to cover more informal sector workers

THE state-run Social Security System (SSS) wants to include workers in the informal sector in its pension coverage as part of a plan to improve the system.

There were only 108,779 members from the informal sector as of end-September, according to SSS data. Meanwhile, 44,093 members were registered through the Cooperative Accreditation Program and 230,069 members were covered as job order personnel of government offices, the pension fund said in a staement on Thursday.

“For many years now, we have been reaching out to them, strongly encouraging them to pay their SSS which is the cheapest and most accessible retirement savings today,” SSS President and Chief Executive Officer Aurora C. Ignacio said in a statement.

But their varied work arrangements and intermittent income have prevent them from regularly paying SSS premiums, she added.

“A challenge for us now is to create a special pension fund program for informal sector workers like farmers, fisherfolks, among other groups, considering their income spread,” Ms. Ignacio said. — Beatrice M. Laforga

Islamic banking rules to be OK’d this month

THE central bank is likely to approve this month the rules that will enforce Islamic banking in the Philippines, which is expected to attract more local and foreign banks, Bangko Sentral ng Pilipinas (BSP) Managing Director Arifa Ala said on Friday.

The implementing rules for Islamic banking will outline the licensing framework and the Shari’ah governance, she said on the sidelines of an Islamic finance conference.

The draft rules have been presented to the banking industry for feedback and the final version will be approved by the policy-making Monetary Board before they are released this year, Ms. Ala said.

Local and foreign banks, are waiting for the rules before making any decisions. Adnan Chilwan, the group chief executive officer of Dubai Islamic Bank and a resource speaker at the event, along with several local and foreign players, had expressed interest in the Philippine Islamic banking market.

Mr. Chilwan told the conference the Philippines is attractive to foreign investments given its focus on inflation and overall economic growth. — Beatrice M. Laforga

Bourse ends flat, but stays above 8,000 and up for fifth week in a row

LOCAL SHARES ended flat on Friday in the face of MSCI rebalancing and signs of improving Sino-US trade ties, staying above 8,000 for the fifth straight day and gaining for the fifth week in a row.

The 30-member Philippine Stock Exchange index (PSEi) went down 8.05 points or 0.1% to close at 8,065.76 — but was still up 0.31% from the week-ago 8,020.68 finish on Oct. 31 — while the broader all-share index edged up 1.03 points or 0.02% to end 4,823.80.

“The market ended virtually flat today, losing just eight points to settle at 8,065.76. Today’s wild ride was largely caused by the effects of the MSCI rebalancing which affected AGI (Alliance Global Group, Inc.) and DMC (DMCI Holdings, Inc.) significantly. Thankfully, the other components of the PSEi were able to close flat or up to prevent a break below 8,000,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

Shares in Alliance Global and in DMCI Holdings were two of the most active stocks on Friday, yielding 6.02% to P10.62 apiece and by 5.22% to P7.63 each, respectively. They led the eight stocks that dropped on Friday’s list of 20 most active issues.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan cited developments in the US-China trade war as one of Friday’s prime movers. “Philippine shares fell after the world’s two largest economies reportedly agreed to remove existing trade tariffs, sparking a huge rotation into equities and out of bonds. As tensions decreased, investors left the Philippines and re-invested into asset classes closer to their region of domicile,” he said in a mobile phone message message.

Reuters reported that major Wall Street indices closed Thursday at record highs after Beijing said it had agreed with Washington to remove tariffs in phases and was also considering restrictions on poultry imports. The Dow Jones Industrial Average ended up 0.66% at 27,674.8, the S&P 500 climbed 0.27% to 3,085.18 and the Nasdaq Composite gained 0.28% to 8,434.52.

Many major Asian bourses went the opposite direction on Friday, with the Shanghai SE Composite, Hong Kong’s Hang Seng, South Korea’s KOSPI, India’s S&P BSE Sensex, Singapore’s Straits Times Index and the MSCI Asia APEX 50 giving up 0.49%, 0.7%, 0.33%, 0.81%, 0.65% and 0.69%, respectively.

Only Japan’s Nikkei 225 and TOPIX indices ended up, by 0.26% and 0.27%, respectively.

Back home, the six sectoral indices were divided between those that gained and those that lost.

Those that gained consisted of industrial, which climbed 72.88 points or 0.7% to end at 10,478.33, services which went up 4.2 points or 0.27% to 1,551.96 and financials which climbed 4 points or 0.2% to 1,946.75.

Losers consisted of holding firms which went down 52.72 points or 0.66% to 7,933.32, mining and oil which shed 24.39 points or 0.26% to 9,092.61 and property which gave up 0.96 points or 0.02% to 4,170.89.

Some 689.053 million shares worth P6.834 billion switched hands on Friday, higher than Thursday’s 474.535 million shares worth P5.118 billion.

Stocks that lost edged out those that gained, 100 to 70, while 66 others ended flat.

Investors abroad were predominantly bearish for the third straight day, with net foreign selling growing threefold to P485.408 million from Thursday’s P161.758 million. — Vincent Mariel P. Galang

Building a kumunity of global Pinoy talents

Many know KUMU as the live-streaming startup taking the worlds of both local startups and mobile audiences by storm. Today, it’s the country’s fastest-growing social media app, celebrating Filipino talents across the globe.

For Rexy Josh Dorado, KUMU’s president and co-founder, it’s the culmination of a career built on advocacy, championing the countless talents of the Filipino diaspora.

Rexy’s passion for supporting Filipino ventures began at the Kaya Collaborative, a program he founded that connects foreign-based Filipino leaders to high-impact organizations in the Philippines.

“Kaya Collaborative boiled down to the question: How do we channel the talents of the Filipino diaspora to support innovation and opportunity in the Philippines?,” Rexy said. “Over the course of five years, we saw Filipino-American, Filipino-European, Filipino-Canadian leaders open their eyes to a Philippines that was brimming with possibility. And seeing it all happen, again and again, had a similar impact on me.”

It was in working with global leaders that Rexy learned the ins and outs of building and scaling an organization with Filipino values at its heart. And it was at Kaya Collaborative that he met one Filipino leader in particular that would introduce Rexy to the next chapter in his advocacy. Enter Roland Ros, now-CEO and founder of KUMU.

 

“I met Roland when I recruited him to the Kaya Collaborative board, and in the year leading up to KUMU we had countless brainstorming sessions on how to leverage technology for the Philippines and the Filipino community,” Rexy said. “When he told me his idea for KUMU, I knew it was the best way to bring together everything I had experienced since the start of my journey.” 

“Good partnerships are founded on real mutual benefit and dedication,” Rexy said. “Both parties need to have their hearts in it, and they need to be united in their why. That sounds obvious, but it’s harder than it sounds; when partnerships fall apart, it’s often because one side can’t keep up with the other. And the reasons usually have more to do with motivation than ability.”

The factors of a partnership that lead to KUMUnities

Early in his entrepreneurial career, Rexy had been on both sides of futile partnerships. 

“I’ve been frustrated by partners who didn’t prioritize the project enough,” he said. “And I’ve also fallen short on partnerships where our involvement came from a “why not” rather than a strategic “why.” Once the rubber hits the road and reality struck, we struggled to keep up with the demands of the partnership in the midst of all our other priorities. In both cases, neither side ends up happy.”

According to Rexy, what’s imperative is the vision and purpose that make the work worth it. “It’s not enough to have just the project leaders dedicated and aligned,” he said. “There needs to be buy-in across the full implementing team or, depending on the scale of the project, across both organizations.”

“We’ve seen collaborations pushed forward by an excited champion, only for it to stall when the boots on the ground didn’t know or feel that it was important enough to prioritize.”

In leading KUMU, Rexy and his team remain optimistic about Filipinos all over the world embracing its features and brand identity. Today, the team’s efforts are paying off, with over a million downloads across app stores. 

The brand is quickly becoming a household name across the Filipino diaspora.

The KUMU code according to Rexy

In light of his app’s massive success, Rexy shares what he believes are the main factors behind KUMU’s early victories:

  • Purpose – Everyone needs to be driven by a shared mission, and you can never remind people enough of why they’re there. Roland has a talent for this that I haven’t seen in anyone else, and it keeps people excited and driven in the face of the impossible.
  • Honesty – Open and transparent communication is important, especially when you have big goals to hit in a short amount of time. Teams fall apart when people aren’t upfront about their problems, or feel like they can’t confront people when they need to.
  • Focus – The worst thing a team can do is too many things at once. Everyone needs to be rowing in the same direction, building a shared momentum, and it’ll take saying “no” to a lot of things if you don’t want to get stuck rowing in circles.

How 5G helps Filipinos work in their pajamas

Scan through the job listings for openings in the Philippines, and it would be needle-in-the-haystack rare to find an option for remote working. If you do happen to find one, it would most likely be offered by an international company with local presence. Filipino businesses just don’t believe in telecommuting, and that’s unfortunate, given the archipelago would especially benefit from this work arrangement.

The first reason is traffic. Filipinos waste so much of their lives stuck in gridlock on EDSA – man-hours that could be more productively spent. One would wager that most Filipinos would be willing to work a slightly longer work-week from home to spare themselves the inconvenience of having to commute to work. Most studies on telecommuting show that remote workers are generally more productive than on-site workers. 

The second reason is quality of life. Commuting through traffic is not only a waste of time, but it’s one that can take years off your life. Just imagine breathing in all that pollution while sitting in the back of a jeepney or an Angkas. And several studies have shown that the further you commute for work, the more you are likely to be overweight. Why? Because it’s easier to succumb to fast food and other temptations when you’re strapped for time and far from healthier home-cooked options.

If there are compelling professional and personal reasons to embrace remote working, why, then, are Filipino companies so in favor of on-site working? While there are cultural reasons at play – Filipinos do like the face-time – the biggest roadblock to remote working is technological: the internet. Unlike in more developed countries like the United States, Filipino internet is not stable or speedy enough to allow for remote working at scale. Companies will not like it when their remote worker becomes unreachable for hours at a time, or becomes unintelligible over static during the middle of a teleconference. At present, remote work just doesn’t work.

But a sea of change could be coming in the form of 5G (learn more about it here).

Significantly faster mobile internet, to the tune of 500 to 1500 Mbps, will make remote working more palatable to Filipino companies. But as mentioned the issue is also a cultural one, so Filipinos eager to work from the comfort (and convenience) of their home must do their part to advocate for telecommuting as a work option – here’s what you can do.

Collaborate with your company’s human resources. HR departments are generally in favor of any initiative that improves employee welfare because it serves the business goal of improving retention. Suggest a framework for a pilot telecommuting program that will enable business unit heads the ability to monitor and evaluate the productivity of remote workers.

The goal is to get them comfortable enough to allow the pilot program in the first place, and bake in enough transparency and accountability to prove it in fact makes employees more productive, not less. If your team is composed of various digital marketers, suggest key performance indicators that can be tracked remotely for each. To facilitate everyone toward their goals, you can even adopt a collaboration software like Trello or Monday. The more you make your team results- or deliverables-oriented rather than time-oriented, the greater your chance of 

Advocate for a high speed internet provision. Although 5G is still not available in most areas of the Philippines, remote workers can still enjoy other forms of high speed internet, like fiber courtesy of internet service providers like Converge. For any pilot telecommuting program to succeed, there needs to be adequate resources in place. You thus have to make the business case to your finance, procurement, or appropriate department that remote workers must have an allowance or provision for high speed internet.

This ask may be the toughest one, given that it’s not just a change in policy. You must argue that the cost of high speed internet will be offset by the additional gains in productivity brought on by working from home. You, in short, need to prove that telecommuting from home is a revenue center rather than a cost center.

Consider investing in the 5G industry. Many people mistakenly believe that the adoption of technology takes on its own natural course. This could not be further from the truth. The adoption of a particularly technology is hastened – or indeed, slowed – by a variety of human factors, such as policy, business, or even culture.

Though 5G may seem like an abstract industry – as removed from the average person as the electrical grid or sewage system – there are avenues to support it. One of them is social trading platform eToro, which recently announced a portfolio of 45 companies involved in deploying 5G worldwide. 

The portfolio is one of eToro’s industry-focused Copyportfolios, which allow consumers to invest in a group of companies related to a particular sector. In the case of the 5G portfolio, it’s tech manufacturers like Intel and Hewlett-Packard as well as telcos like Telenor and China Telecom, which partnered with Mislatel Corp to become the Philippines’ third telco after Globe and Smart.

Channels like eToro’s 5G portfolio give Filipinos to put our money where are mouths are. Rather than just complain about having to commute to a strict 9-to-5 job, we can finally do our part to accelerate the adoption of technology that will make remote working a commonplace option. Remote working may not be an Instagrammable laptop on the beach every day, but it will mean a higher quality of life.

TV special, app features mark Lazada’s 11/11 sale

ASIDE from a TV special on the night before the e-commerce platform’s biggest sale of the year, Lazada also announced several new features to make the app a “lifestyle destination,” according to a Philippine executive.

“If you make the shopping experience enjoyable and entertaining, it becomes an experience they would want to keep doing,” Neil Trinidad, chief marketing officer of Lazada Philippines, said of the rationale in introducing new features and games during the sale’s alaunch on Nov. 7 at the Green Sun Hotel in Makati City.

He added that since they’re not a simple e-commerce platform anymore (the company introduced live-streaming for brands and games for consumers to win coins which can be exchanged for vouchers) they are now calling themselves a lifestyle destination.

For this year’s sale on Nov. 11, Lazada has unveiled two new games: Moji-Go which uses face recognition technology and asks players to imitate scrolling emojis to win coins; and LazCity Wonderland which allows players to build a virtual city of brands where they can get shopping vouchers.

A live-stream in-app game show, Guess It, has also been introduced this month and has aired across six markets. The four-hour-long show is fashioned after the long-running The Price is Right game show franchise on television where contestants compete to guess the prices of the select items which will be on sale.

Two new shopping features were also introduced: the Image Scan where buyers can use their cameras to scan items they want to buy and Lazada will give them options based on their selection; and Magic Mirror, a brand partnership the company has with beauty brand L’Oreal which allows buyers to try on lipstick shades using Augmented Reality before buying.

“To transform the shopping experience, we need to put the consumer at the heart of what we do. For us, effective innovation should make the online shopping experience even easier, more seamless, and more engaging,” Ray Alimurung, CEO of Lazada Philippines, said in a release.

On Nov. 10, 10:30 p.m., Lazada will be airing its TV special on ABS-CBN. Titled Lazada 11.11 Super Show, the show will be hosted by Vice Ganda, Billy Crawford, Karylle, and Mimiyuuh with performances by James Reid and Maja Salvador, among others.

The show will also feature a special simulcast performance by Grammy Award Winner Taylor Swift performing at the TMall Gala Show. This performance will be live-streamed on the Lazada app.

“We want to get more people excited about shopping online. For people who shop on Lazada, it’s the shopping festival they look forward to but we know in the Philippines that a lot of our shoppers and consumers still watch TV and are reached by traditional media,” Mr. Trinidad said.

As the year comes to a close, Mr. Alimurung said next year they will focus on expanding their electronic payment channels in order to make it easier for people to shop cashless on Lazada. — Zsarlene B. Chua

IBM launches new partnerships, innovations to better scale AI on the cloud

Recognizing that organizations are slow to adopt AI, due in part to rising data complexities, IBM today announced new innovations that further advance its Watson Anywhere approach to scaling AI across any cloud, and a host of clients who are leveraging the strategy to bring AI to their data, wherever it resides.

“We collaborate with clients every day and around the world on their data and AI challenges, and this year we tackled one of the big drawbacks to scaling AI throughout the enterprise – vendor lock-in,” said Rob Thomas, General Manager, IBM Data and AI. “When we introduced the ability to run Watson on any cloud, we opened up AI for clients in ways never imagined. Today, we pushed that even further adding even more capabilities to our Watson products running on Cloud Pak for Data.”

Increasing data complexity, as well as data preparation, skills shortages, and a lack of data culture are combining to slow AI adoption at a time when interest in AI continues to climb. Between 2018 and 2019, organizations that have deployed artificial intelligence (AI) grew from 4% to 14%, according to Gartner’s 2019 CIO Agenda survey. Those figures contrast with the rising awareness of the value of AI. According to the 2019 MIT Sloan Management Review and Boston Consulting Group study, Winning with AI, 9 out of 10 respondents agree that AI represents a business opportunity for their company. Adding to growing enterprise complexities, a 2018 IBM Institute for Business Value study said that 76% of organizations surveyed reported that they are already using at least two to 15 hybrid clouds, and 98 percent forecast they will be using multiple hybrid clouds within three years. 

The innovations announced today are designed to help organizations overcome the barriers to AI. From detecting ‘drift’ in AI models to recognizing nuances in the human voice, these new capabilities can be run across any cloud via IBM’s Cloud Pak for Data platform to begin easily connecting their vast data stores to AI. 

As evidence of the growing appeal of this approach to enable AI to run on any cloud, IBM today announced a number of clients that are leveraging Watson across their enterprises to unearth hidden insights, automate mundane tasks and help improve overall business performance. Companies like multinational professional services firm KPMG, and Air France-KLM, are leveraging Watson apps, or building their own AI with Watson tools, to facilitate their AI journeys. 

“IBM’s strategy for developing AI tools that enable clients to run AI wherever their data is, is exactly the reason we turned to OpenScale – we needed multicloud scalability in order to give clients the kind of transparency and explainability we were talking about,” said Steve Hill, Global and US Head of Innovation at KPMG. “Supporting the client’s environment, whatever it may be, reflects the understanding that IBM has not only about AI, but about the expanding enterprise.” 

KPMG, the multinational professional services network and long-time IBM alliance partner, for years has integrated the latest cognitive and automation capabilities into services across its businesses from governance, risk, and compliance to taxes and accounting. Earlier this year KPMG turned to IBM to collaborate on a new service that would provide KPMG clients greater governance and explainability of their AI, no matter where that data resides, no matter what cloud and no matter what AI platform the company was using. KPMG developed the KPMG AI in Control solution leveraging the Watson OpenScale platform, to give clients the ability to continuously evaluate their machine learning and AI algorithms, models and data for greater confidence in the outcomes. Last month, KPMG teamed with IBM to release a joint offering of this solution to clients called KPMG AI in Control with Watson OpenScale. 

And to help accelerate customer service and improve the passenger experience, Air France-KLM and its customer service team developed a voice assistant called MIA (My Interactive Assistant), which uses IBM Watson Assistant with Voice Interaction. Air France-KLM collaborated with IBM to develop the voice assistant to improve the customer experience by reducing file processing time. Since the beginning of the pilot in July in a single country, MIA has responded to 4,500 calls from people needing additional information about their flights or their travel plans. 

MIA asks the customer for his reservation reference number (PNR) and extracts from this PNR all information relating to the passenger, including name, flight number and telephone number. If needed, the voice assistant can quickly pass the call to a human agent who can take over. The agent will already have all the necessary information on the screen in the background and will therefore be positioned to resolve the request. By design, the higher the number of requests handled by MIA, the more intelligent it will be over time. Other use cases are also under study.

New Capabilities Come to Watson Apps and Tools

IBM rolled out an array of new features and functionality to several of its key products today, including the following:

Watson OpenScale – With rising data privacy regulation and growing concern for how AI algorithms are reaching their results, bias detections and explainability are becoming critical. Last year, IBM launched OpenScale, the first AI platform of its kind to do just that – provide organizations the ability to look for bias and govern their AI and query it to understand how it arrived at its results. With such insights, clients can gain greater confidence in their AI and in their results. Today we announced a new capability called Drift Detection which detects when and how far a model “drifts” from its original parameters. It does this by comparing production and training data and the resulting predictions it creates. When a user-defined drift threshold is exceeded, an alert is generated. Drift Detection not only provides greater information about the accuracy of models, but it simplifies, and hence, speeds model re-training. 

Watson Assistant – Building on IBM’s leading position in enterprise AI assistants, IBM today announced several new key features to the conversational AI product that allow users to deploy, train and continuously improve their virtual assistants quickly on the cloud of their choice. For example, the new Watson Assistant for Voice Interaction is designed to help clients easily integrate an AI-powered assistant into their IVR systems. With this capability customers are able to ask questions in natural language. Watson Assistant now can recognize the nuances of the way people speak and will fast-track the caller to the most appropriate answer. Clients can also blend texting and voice at the same time, allowing instantaneous information exchange. IBM also announced that Watson Assistant is now integrated with IBM Cloud Pak for Data which enables companies to run an assistant in any environment – on premises, or on any private, public, hybrid, or multi-cloud. 

Watson Discovery – IBM announced several key updates to Watson Discovery, the company’s premier AI search product that leverages machine learning and natural language processing to help clients find data from across their enterprises. New to the platform is Content Miner, which allows for the searching of vast datasets for specific content types, such as text and images. A new simplified setup format helps non-technical users to can get up and running quickly, while a new “guided experience” dynamically recommends next steps in configuring projects. All of which results in a more agile data discovery process.

Cloud Pak for Data – IBM advances its first-of-a-kind, integrated data analytics platform, with key new features and support. The platform, which has supported Red Hat OpenShift, one of the leading Kubernetes-based container orchestration platforms, since its launch 18 months ago, is now certified on OpenShift. With full certification brings added confidence to clients knowing that all the components came from a supported source, container images contain no known vulnerabilities and most importantly that the containers running throughout are compatible across Red Hat Enterprise Linux environments, regardless of the cloud, and whether private, public or hybrid. 

In addition to certification, this latest version now comes with a host of capabilities standard as part of the base platform. Among the new capabilities is Db2 Event Store, for storing and analyzing more than 250 billion events per day, in real-time, and Watson Machine Learning, equipped with AutoAI. AuoAI is IBM’s innovative automated model building program that enables data scientists and non-data scientists alike to build machine learning (ML) models with ease. As its name suggests, AutoAI automates such tedious and complicated tasks of ML, including data prep, model selection, feature engineering and hyperparameter optimization, to truly speed clients’ adoption of AI. Now these tools come standard with Cloud Pak for Data to be used and scaled across any hybrid multicloud environment.

In addition, Cloud Pak for Data now features open source governance in the base platform, enabling users for the first time to set policy for, and govern the use of open source tools and programs within the enterprise to enable more efficient model building, testing and deployment. 

To empower developers to take advantage of the IBM Cloud Pak for Data platform, IBM also announced the Cloud Pak for Data Developer Hub. Here, developers have step-by-step tutorials, code patterns, ongoing support and information on in person workshops taking place in their area for hands-on labs.

OpenPages with Watson – IBM today also announced new features and capabilities to OpenPages with Watson in version 8.1. This governance, risk and compliance (GRC) platform, helps clients as they set and manage operational risk, policy and compliance, financial controls management, IT governance, and internal audits. Version 8.1 comes integrated with a new rules engine, new intuitive views, visualizations, advance workflow features, and a personalized workspace, all of which is designed to enable users to be more productive and effective in managing their risk. One result of the additional engagement and automation features is a more risk-aware culture that empowers more people to participate in managing important risk and compliance activities.

Economic growth closes in on target

By Beatrice M. Laforga

THE COUNTRY’s economic growth in the July-September period beat market expectations as it rebounded from the first and second quarters and from a year ago on the back of bigger government expenditures that added to the lift from robust household spending, the Philippine Statistics Authority (PSA) reported on Thursday.

Gross domestic product quarterly performance (Q3 2019)

Gross domestic product (GDP) growth clocked in at 6.2%, marking the fastest clip this year so far and picking up as well from the year-ago six percent.

That compares to the six percent median of 13 economists BusinessWorld polled late last week and the Bangko Sentral ng Pilipinas’ (BSP) 5.8-6% estimate range.

Late enactment of this year’s national budget and a ban on new public works 45 days ahead of the May 13 midterm elections resulted in subdued infrastructure spending that left last semester with a muted 5.5% GDP expansion against the government’s 6-7% target for the year.

The latest pace brought year-to-date GDP growth to 5.8%, closer to the lower end of the full-year goal though still a slowdown from the past year’s 6.2%.

“This means that the Philippine economy will have to expand by at least 6.7% in the last quarter of the year to meet the low end of the full-year target of 6-7% for 2019 — a challenge that we are confidently taking on,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a press conference in Pasig City.

He noted that, in Asia, the Philippines placed behind Vietnam’s 7.3% but outpaced China’s six percent, Indonesia’s five percent and India’s expected third-quarter growth “of below six percent.”

For BSP Governor Benjamin E. Diokno, “third quarter GDP growth of 6.2%… suggests that the Duterte administration’s catch-up [spending] plan is working.”

“The six-percent full-year GDP growth target is a tall order after a slower-than-expected first half, but still doable.”

Mr. Diokno, who has said that the central bank will likely pause monetary policy easing after cutting this year benchmark rates by a total of 75 basis points and banks reserve requirement ratio by 400 bp, noted that “current monetary policy remains appropriate. The economy is back on tract to a strong growth path.” The central bank is scheduled to hold its remaining policy reviews for 2019 on Nov. 14 and Dec. 12.

Mr. Pernia noted that “the stronger growth in public spending in the third quarter contributed significantly to our Q3 performance.”

FACTORS
Government final consumption expenditure picked up by 9.6% from 7.4% and 7.3% in the first and second quarters, respectively, though still lagged behind the 14.3% logged in last year’s third quarter.

The Budget department has reported that the government spent about 17% more at P1.04 trillion in the third quarter from P886.2 billion a year earlier, a marked improvement from the 2.3% contraction in the second quarter and 0.8% in the first quarter. Infrastructure spending alone amounted to P234.8 billion in the third quarter, 7.7% more than the P218.1 billion recorded in the same period last year.

Growth of household final consumption expenditure picked up to 5.9% from slowdowns to 5.5% in the preceding quarter and to 5.3% the past year.

Capital formation, however, weighed on growth with a 2.1% contraction that was nevertheless smaller than the second quarter’s 8.5% drop.

Under this expenditure category, fixed capital formation turned around to a 2.1% growth from the preceding quarter’s 4.6% drop, though it was still slower than the past year’s 16.6% increase. Durable equipment contracted by 9.1%, though smaller than the second quarter’s 12.8% drop, while construction surged by 17.3% from the second quarter’s 2.8% increment and the year-ago 13.3%.

“Construction activity was the bright spot for overall fixed capital investment, posting a strong 17.3% expansion but ultimately was unable to lift the segment into positive territory. Capital formation accounts for roughly 25% of the economy and as a whole, it weighed down on growth by 0.56 percentage points,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila Branch, said in an e-mail.

For UnionBank of the Philippines, Inc. Chief Economist Carlo O. Asuncion, the drop in capital formation reflected foreign investors waiting “on the sidelines” especially in terms of business expansion as the government overhauls fiscal incentives.

Mr. Asuncion said this was shown in the continued decline of foreign direct investments, which latest data bared a 40.59% drop in July to $543 million from $914 million a year ago.

“This capital formation contraction will bear on further economic growth. Investments are important to employment and increased consumption. Note that 60-70% of the Philippine economy is reliant on domestic consumption,” he said in a mobile phone message yesterday.

There was not much lift from foreign trade, however, as export growth slowed to a nearly flat 0.2% from 4.8% in the second quarter and 14.2% in the third quarter. Under this item, merchandise exports actually fell by 1.3% compared to the second quarter’s 4.9% and third quarter 2018’s 16.8%, while service export growth picked up to 8.1% from 4.3% in the second quarter and third quarter 2018’s 1.9%.

In a note sent to journalists on Thursday, HSBC Global Research Economist Noelan Arbis said “private consumption and fixed investment are both likely to drive growth faster in 4Q, on a sequential and seasonally adjusted basis (high base effects could lead to a lower y-o-y reading)”.

Capital Economics Asia economist Alex Holmes, however, doubts that growth rebound can be sustained, saying in a note: “We don’t think Q3’s strong figures mark the start of a sustained rebound.”

“On the plus side, consumption should continue to grow at a decent rate, helped in part by a sharp slowdown in inflation, which will have boosted consumers’ purchasing power.”

The BSP’s third-quarter Consumer Expectations Survey showed the overall confidence index (CI) at 4.6% in those three months, capping four straight quarters of pessimism and marking the best result since the 9.5% recorded in 2017’s last three months.

The “next quarter” CI (looking ahead to the fourth quarter) came in at 15.8%, the best reading in seven quarters or since the 17.5% recorded in 2017’s last three months.

On the other hand, the third-quarter Business Expectations Survey put the overall CI at 37.3% for those three months, lower than the second quarter’s 40.5% though still better than the year-ago 30.1%. The “next quarter” expectation level (for the fourth quarter) was at 56.1%, better than the second quarter’s 47.6% and the year-ago 42.6% and the best reading in three years or since the 56.8% recorded in 2016’s third quarter. — with input from Reuters

Gross domestic product quarterly performance (Q3 2019)

THE COUNTRY’s economic growth in the July-September period beat market expectations as it rebounded from the first and second quarters and from a year ago on the back of bigger government expenditures that added to the lift from robust household spending, the Philippine Statistics Authority (PSA) reported on Thursday. Read the full story.

Gross domestic product quarterly performance (Q3 2019)

Trade dep’t, foreign chambers differ on reduced retail capital requirement

By Charmaine A. Tadalan
Reporter

A SENATE technical panel tackling proposed amendments to the retail trade law on Thursday zeroed in on the provision that will reduce the minimum paid-up capital for foreign entrants and possible safeguards for small local businesses.

The Senate Trade, Commerce and Entrepreneurship technical working group tackled Senate Bill Nos. 14 and 921, which will amend Republic Act No. 8762, or the “Retail Trade Liberalization Act of 2000.”

Its proposals include reduction of the minimum paid-up capital for foreign companies entering the retail sector to $200,000.

The law currently allows foreign entrants to set up wholly owned enterprises with minimum paid-up capital of $7.5 million; while enterprises with $2.5 million to $7.5 million will be wholly owned by foreigners except for the first two years.

The Joint Foreign Chambers of the Philippines, represented by American Chamber of Commerce of the Philippines, Inc. Senior Adviser John D. Forbes, supported the provision, while the Department of Trade and Industry (DTI) proposed a higher limit at $300,000.

“For DTI, what we are proposing is $300,000 which translates to P15 million,” Assistant Director Alice M. Opeña of the DTI-Bureau of Micro, Small & Medium Enterprise Development said during the hearing, Thursday.

“What we want is a kind of protection for the sector.”

The Philippine Competition Commission (PCC), for its part, proposed to impose the reduction in tranches as a safeguard for micro, small and medium Enterprises (MSMEs). PCC Legislative and Policy Officer Christina Faye Condez-de Sagon said the commission recommends to “lower the current limit eventually.”

“Obviously the concern here is MSMEs — allow them to eventually catch up, absorb the necessary technology and know-how as these new retailers or businesses come in.”

This was supported by Laban Konsyumer, Inc. member Joaquin Tamano, Jr., who said the group was more concerned about the impact of the abrupt adjustments than the amount that will be proposed in the final version. “Whatever the amount, whatever the limit, I agree that we go by tranches, and then at a certain level, we stop and reassess and then decide whether we want to move down again.”

Both bills also provided to remove the $250,000 capital per store requirement for enterprises, engaged in high-end or luxury products.

It also removes other requirements such as the five-year track record in retailing and five retailing branches or franchises in operation anywhere in the world or at least one store capitalized at a minimum of $25 million, among others.

Senate Minority Leader Franklin M. Drilon’s version proposed to also reduce the proportion of locally manufactured products required to be carried by foreign retailers to 10% of the aggregate cost of their stock inventory from the 30% currently.

The said measure is among the bills pushed by the Cabinet economic cluster for approval in the first regular session of the 18th Congress, which closes June 5 next year. It is also on the list of measures which 14 local and foreign business groups submitted to Malacañang and Congress last July.

Its counterpart measure, House Bill No. 59, sponsored by Valenzuela-1st district Rep. Weslie T. Gatchalian, bagged approval by the Committee on Trade and Industry and now awaits plenary action in the chamber.

The House version proposed to reduce the minimum paid-up capital to $200,000 and the minimum percentage of locally manufactured products to be sold by foreign retailers to 10% from the current 30%.

The House bill also eliminates the required net worth, number of retailing branches and retailing track record conditions for foreign firms to enter the country’ retail industry.

Bigger WESM charge pushes up Meralco bills

THE MANILA ELECTRIC CO. (Meralco) said on Thursday that electricity rates in November will increase by P0.4717 per kilowatt-hour (/kWh) as the power generation charge rose during the month.

For the average household consuming 200 kWh, the increase will bring power cost to P9.5579/kWh from P9.0862/kWh in the previous month. This translates to a P94 increase in the monthly electricity bill for November.

Consumers using 300 kWh, 400 kWh and 500 kWh can expect their monthly bills to increase by P141.51, P188.68 and P235.85, respectively.

Meralco said the higher charges at the wholesale electricity spot market (WESM) led to the overall increase in the generation charge.

“Despite the adjustment, electricity rates this month are still almost P1/kWh lower than in April 2019,” it said.

From P4.5406/kWh in October, the generation charge for November increased to P5.0317/kWh, an upward adjustment of P0.4911/kWh.

Charges from the WESM rose by P3.8016/kWh because of the tighter supply conditions in the Luzon grid. This was after the National Grid Corporation of the Philippines (NGCP) placed the grid on yellow alert on Oct. 14 and 15 due to forced outages of several power plants and the maintenance shutdown of the Malampaya natural gas facility from Oct. 12-15.

WESM charges also rose as the net settlement surplus (NSS) refund, which was ordered by the Energy Regulatory Commission (ERC) on Aug. 1, 2019, was significantly lower for November at around P21 million. “ERC-ordered NSS refund last September and October totaled approximately P1 billion, which greatly contributed to the lower generation charges for the two prior months. The NSS refund is expected to end this month,” Meralco said.

During the period, the share of WESM to Meralco’s supply requirements was at 16%.

Meralco said the cost of power from the independent power producers (IPPs) and power supply agreements (PSAs) went down by P0.0476/kWh and P0.2643/kWh, respectively.

The decrease was due to higher average plant dispatch, lower coal prices, and the strengthening of the peso against the US dollar, it said.

“Around 97% of IPPs costs and 60% of PSA costs are dollar-denominated. IPPs and PSAs provided 39% and 45% of Meralco’s supply needs, respectively,” it added.

Meanwhile, transmission charge for residential customers decreased by P0.0767/kWh as a result of lower NGCP ancillary service charges. Taxes and other charges posted an increase of P0.0573/kWh.

“Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 52 months, after these registered reductions in July 2015,” the utility said in its press release, reiterating that it does not earn from the pass-through charges, such as the generation and transmission charges. — VVS

BoI pledges more than double as of September

THE BOARD of Investments (BoI) more than doubled its approved investments to P764.7 billion in the nine months to September from a year ago, the agency said in a press release on Thursday.

“The sustained high growth of investments is proof of the business sector’s strong confidence in both the Philippines’ economic fundamentals, as further shown by the acceleration of the third quarter gross domestic product (GDP) growth to 6.2% and the reform agenda of President Rodrigo Roa Duterte,” the agency quoted its chairman, Trade Secretary and BoI Chairman Ramon M. Lopez, as saying.

SOURCES AND DISTRIBUTION
Foreign investments made up 31.4% of total investments committed through the BoI, up from eight percent a year earlier. Foreign investments surged sevenfold to P239.9 billion from P33.6 billion a year earlier, while domestic investments increased 54.7% to P524.9 billion from P339.3 billion.

Among foreign investors, Singapore remained the top source with P170 billion. South Korea came second with P34.1 billion, followed by Thailand (P8.6 billion), Japan (P6 billion) and the United States (P2.4 billion).

Mr. Lopez said that the growth in foreign investment share is expected to continue as the Philippines steps up economic cooperation with non-traditional partners.

Investments outside Metro Manila, or the National Capital Region (NCR), accounted for 98.2% of the total with P750.9 billion, with CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon) topping regions with P354 billion. Central Luzon was the runner up at P42.4 billion, followed by NCR (P13.8 billion), Central Visayas (P10.1 billion) and Cagayan Valley (P10.05 billion).

The information and communications technology (ICT) and power sectors were the biggest recipients of investment pledges, posting a combined P652.9 billion that accounted for 85% of the total value.

“This massive infrastructure buildup for more power and connectivity across the archipelago is critical towards addressing binding constraints to the Philippines’ competitiveness,” Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo said in the same statement.

Investments in manufacturing grew 190% to P63.5 billion from P21.9 billion last year.

The tourism sector recorded P9.5 billion worth of hotel and accommodation projects, nearly seven times more than the P1.2 billion pledged last year.

“With the innovative advocacy campaigns of the Department of Tourism, the Philippines experience an overwhelming surge of domestic tourists which reached over 110 million in 2018 and already exceeded the 89.2 million target by 2022 as stated in the National Tourism Development Plan (NTDP),” Mr. Rodolfo said.

“So we look forward to the coming years for a tourism boom with the recent announcement of a well-known brand (Marriot) to triple its portfolio by building 21 more hotels and the aggressive expansion of more affordable hotels (like RedDoorz) in the country,” he added.

Notable projects approved by BoI included Orion Pacific Energy Inc.’s P130-billion 1200 megawatt coal-fired power plant in Quezon City, Petron Corp.’s P10.9-billion solid fuel-fired power plant in Bataan, 6 Barracuda Energy Corp.’s P7.6-billion wind power project in Northern Samar, Cebu Air, Inc.’s P1.7-billion operational lease of Airbus A320 NEO plane, Cavite Gateway Terminal Inc.’s P1.35-billion seaport terminal, and Starlite Gallant Ferries, Inc.’s P1.1-billion domestic shipping project. — J. P. Ibañez

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