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PSE index ends lower ahead of long weekend

LOCAL STOCKS extended their decline on Friday as investors bought shares ahead of the long weekend.

The benchmark Philippine Stock Exchange index (PSEi) let go of 37.37 points or 0.63% to close at 5,884.18; while the broader all shares index dropped 9.83 points or 0.27% to end at 3,534.58.

The market has been declining for two consecutive weeks and the lack of a strong catalyst to drive investors in may be the main culprit, Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan said.

“Lack of cohesive economic plan for the people and for the business community is what keeps this market not enticing for the bull to enter,” he said in a message.

Looming worries over the coronavirus pandemic still haunt the local market, pushing the PSEi in red territory in seven out of nine trading days during the past two weeks.

Mr. Tan also said the upcoming “ghost month” festival next week may be a factor that’s pushing investors away. The ghost month is believed by some investors as a period of bad luck.

“Weak trading volume and value will be seen in the upcoming trading days,” he said.

The local bourse is closed on Monday in observance of National Heroes’ Day.

Other Asian markets were mixed on Friday. Japan’s Nikkei 225 and Topix indices were down 1.41% and 0.68%, respectively, primarily due to the reported plan of Prime Minister Shinzo Abe to step down due to health reasons.

US markets were also mixed on Thursday. The Dow Jones Industrial Average and S&P 500 indices were up 0.57% and 0.17%, respectively, while the Nasdaq Composite index declined 0.34%.

Back home, nearly all sectoral indices ended Friday’s session lower. Property lost 48.36 points or 1.75% to 2,710.60; mining and oil slid 49.79 points or 0.82% to 6,005.07; holding firms cut 48.40 points or 0.78% to 6,099.90; industrials fell 40.78 points or 0.52% to 7,791.26; and financials shed 2.72 points or 0.24% to 1,129.70.

The sole gaining index was services, which increased 18.21 points or 1.24% to 1,482.93 at the close of market.

Some 3.73 billion issues valued at P8.26 billion issues switched hands, against the previous day’s 5.08 billion issues worth P17.46 billion.

Decliners bested advancers, 102 against 87, while 56 names ended unchanged.

Net foreign selling grew to P1.63 billion on Friday from P1.11 billion the previous day. — Denise A. Valdez

Efforts to prevent child abuse stepped up in light of online learning

By Mariel Alison L. Aguinaldo 

The Department of Education (DepEd), in partnership with the United Nations Children’s Fund (UNICEF), is drafting a supplemental policy to the Child Protection Policy that seeks to protect students from different kinds of online abuse as the start of virtual classes draws closer.

The agencies are consulting stakeholders, including non-governmental organizations (NGOs) and local government units, to address the risks that come with home-based schooling and online learning, said Gil Anthony Aquino, child rights senior officer at DepEd, during a webinar hosted by social media platform TikTok.

DepEd will launch a webinar series this September with the theme, “Isulong! Karapatan ng Bata sa Edukasyon sa Panahon ng COVID-19.” Fourteen sessions have been planned; among the topics to be discussed are positive discipline and education for parents, child rights in education, and risks in online and home-based learning.

TikTok, which organized the event, shared that private messaging is disabled for users under 16 years old; photo- and video-sharing on private messages and comments are also not allowed. The family pairing feature, launched in April, allows parents to sync their accounts to their children’s accounts. This enables them to restrict age-inappropriate content and limit usage of the app.

“This is a very participatory way by which parents could be directly involved in controlling how their family members use TikTok,” said Donny Eryastha, head of public policy for Indonesia, Malaysia, and the Philippines at TikTok.

With President Rodrigo R. Duterte banning face-to-face classes for schools until vaccines are available, DepEd developed the Basic Education Learning Continuity Plan which provides different modes of learning for students. For many children, this means more time spent using digital devices and consequently, a higher chance of being exposed to abusive online activities.

International Justice Mission, an NGO focused on human rights, estimated that in 2017, there were 81,723 Internet protocol addresses used for child sexual exploitation in the Philippines. Of 90 online sexual child abuse cases investigated between 2011 and 2017, 21% of the 381 victims were between 13 to 15 years old while 16% were between 10 to 12 years old.

To make these efforts against online child abuse more effective, UNICEF calls on parents to take protective measures within their means. This includes practical interventions like covering web cameras when not in use and maximizing safe search and privacy settings on web browsers. Moral support and vigilance can also encourage a children to speak up when they experience online abuse.

“If they do report, we need to support them… If a child appears to be upset or secretive with online activities or if they’re experiencing cyberbullying, we need to work with our children to establish rules on how, when, and where devices can be used,” said Maria Margarita P. Ardivilla, child protection specialist at UNICEF.

“Creating a Safe Online Environment for Creative Expression,” a webinar organized by TikTok, was held on August 27.

The hybrid work model is here to stay, study says

By Patricia B. Mirasol

The hybrid work model is here to stay, found a study by digital research and advisory platform Ecosystm. Companies must rethink their digital priorities to ensure effective communication and collaboration can continue amid this reality. 

Below are insights from the study commissioned by Poly, a global communications company:

The hybrid or blended work model is here to stay

Working from home will become the norm for organizations planning to reduce their spending on commercial office space. Forty percent surveyed expected to continue using virtual meetings, and almost half (47%) expect increased use of collaborative tools and platforms, even after COVID-19. 

In Australia, several large organizations have announced that working from home will be common and will continue even after the pandemic. In the Philippines and India, business process outsourcing (BPO) providers are piloting different models by having some employees work from home and others in the office. Organizations are still experimenting to find the right model that caters to their needs. 

Working from home does not suit everyone, said Pierre-Jean Châlon, Poly’s senior vice-president for the Asia Pacific. “Over time there will be a threshold for this. It is hard to tell when.”

Workplaces will be fitted out based on collaboration needs

To facilitate remote work during the lockdown, more than a third (36%) of organizations provided laptops for employees. A higher percentage (41%) deployed collaborative software, whereas 29% provided funding/ equipment for home office environments. 

Basic connectivity is an issue in emerging economies. Unstable network connectivity required immediate investments in devices to improve Internet speed, which may not have been part of the IT budget. The unplanned spending was deemed necessary since a bad Internet connection hampered back-end processing functions as well as the quality of communications.

Videoconferencing will drive workplace engagement 

Organizations invested in conferencing technologies and video became the de-facto standard for meetings. Sixty-three percent in the Asia Pacific increased investments in conferencing devices and headsets to address the COVID-19 collaboration challenges. This trend is expected to continue as video banking, teleconsultations, and online learning become mainstream. It has also facilitated engagement between supervisors and agents in the customer care sector. 

Cloud video adoption is also expected to continue to grow, as 33% of organizations increased their investments in cloud video and collaboration solutions. Demand is expected to continue over the next year, as companies scale their technology capabilities to meet remote workforce needs.

Samir Sayed, Poly’s managing director for ASEAN and Korea, said that solutions for the next normal include experience-driven audio innovations such as Poly’s NoiseBlockAI and Acoustic Fence technologies. The former is designed to keep non-human noises such as keyboard typing and paper shuffling from impacting your meetings. The latter captures only the voices within a defined zone in open spaces; all other noises are canceled out. “Audio solutions are designed for the last mile of experience. If your collaborators can’t hear you, if you can’t hear them, engagement goes down and productivity suffers.” 

Data security protocols remain crucial

Organizations doubled down on cybersecurity as governments have detected persistent and increasing cyber-attacks on businesses. Forty-seven percent re-evaluated cybersecurity risks and measures; the leading measure in the Asia Pacific to enable remote working was implementing Virtual Private Network (VPN) access. Forty-four percent implemented or boosted their VPN infrastructure to allow employees access to internal tools and confidential data. Previously, VPN usage was “insignificant” and deployed only for remote employees. A slightly lesser number (43%) made changes to data protection and compliance policies. 

Ecosystem said data security protocols remain crucial because customers want to know they are accessing a secure system and that their data is safe. 

The data cited is from the ongoing “Ecosystm Digital Priorities in the New Normal” study that evaluates the business and technological impact of COVID-19. It has over 800 responses from technology leaders in the Asia Pacific to date and continues to receive feedback.

Four rules to follow in a family business

By Mariel Alison L. Aguinaldo

Working with family can literally be bad business. Stories of feuds that have led to broken bonds and lawsuits act as cautionary tales for those who even think of going down that path.

But others will say that it is one of the best decisions that they have ever made. AIDE, a mobile platform that allows users to book medical professionals for home visits, is run by three of four Bugayong siblings. Pamela Bugayong-Donatao, the eldest, is the chief operating officer; Paolo Bugayong, the middle child, is the chief executive officer; and Dr. Patrick Bugayong, the youngest, is the chief product officer. Furthermore, their parents and their remaining sibling are shareholders. 

“I really can’t find another better partner than these guys. For me, they are my perfect co-founders,” said Mr. Bugayong during a webinar organized by StartUp Village, a business incubator and accelerator. 

Whether it’s at home or at the office, relationships need to establish a common ground to work. Here are four rules that family entrepreneurs can follow to help ensure peace and collaboration among themselves.

  1. Treat each other like professionals.

    Every group of siblings has its ate and kuya, but the implications of these titles must disappear inside the office. “We all have our positions, and we respect each other when it comes to those positions… That’s the most important rule to me, as the youngest,” said Dr. Bugayong.

    This professionalism must extend to compensation. Rewards should be based on work and not on personal factors.

  2. Communicate with each other.

    When it comes to communication, family members shouldn’t rely on their deep personal understanding of each other and their ability to read one another when it comes to business matters. Having grown up together doesn’t guarantee seeing eye to eye.

    The Bugayongs have what they call “talk time,” where the siblings discuss what’s happening in their respective departments.“Communication is key if you want your business to be successful,” said Mrs. Bugayong-Donato. “Everybody is free to express their own ideas and share their suggestions.”

  3. Talk about work at home if you must, but know when to stop.

    On the other side of the coin, family members should know when to stop talking shop. Rules vary when it comes to bringing work to the dinner table; the Bugayong siblings have accepted that they cannot help it. “We really just tend to divert and go into discussion a little bit about AIDE, then go back again,” said Mr. Bugayong.

    While this may be the general rule, siblings must be sensitive to each other. “If you’re tired, someone just presses a button like, ‘Let’s just talk about it on Monday or when we’re in the office,’ and everyone’s just, ‘Okay, let’s just talk about it next time,’” said Dr. Bugayong.>

  4. Enjoy your family’s company.

    Not everyone has the pleasure of working with their siblings, especially if they have a great relationship. This should be maximized and strengthened whenever possible, whether it’s through hosting regular lunch-outs or goofing around during breaks.

    Sibling support becomes even more important and meaningful during tough times. “If you’re having a bad day, just have a drink with your siblings, and everything becomes okay after a few beers,” said Dr. Bugayong.

Regional Updates (08/27/20)

3 isolation facilities with 120 beds completed in Iligan City

THREE EXISTING multi-purpose buildings in Iligan City, which has the highest number of coronavirus disease 2019 (COVID-19) cases in Northern Mindanao at 186, have been converted into isolation facilities. The completed projects have a total capacity of 120 beds, which will free up hospital beds for moderate, critical or severe COVID-19 patients, said the Department of Public Works and Highways (DPWH) in a statement on Thursday, following the formal opening of the facilities. DPWH implemented the conversion in partnership with the city government. The facilities will be operated by the city health office for the isolation of probable COVID-19 cases and returning residents. Of the total cases in Iligan, 33 are in hospital, 121 in isolation, 24 recoveries, and eight deaths. Cagayan de Oro City, the Northern Mindanao regional center, previously offered the use of some of its isolation units to Iligan City. The entire region had 1,222 cases as of August 26, including 669 recoveries and 20 deaths. Majority of the cases at 855 are returning residents from overseas or other parts of the country.

Toll road operators ordered to go on full cashless system by Nov. 2

ALL TOLL roads will be required to have a full cashless system by November 2 as part of measures to avoid coronavirus transmissions. “Magiging (It will be) cashless, contactless na transaction ang toll ways, no later than November 2, 2020 ayon sa DOTr (according to the Department of Transportation),”

Palace Spokesperson Harry L. Roque said on Thursday. Existing toll roads operated by private firms are all in Luzon, located in surrounding areas north and south of the capital Metro Manila. One of the operators, San Miguel Corp. (SMC), said they support and are ready for this measure to ensure the safety of both motorists and their employees. “We have completed the reconfiguration of these cashless lanes to help ensure a smooth transition and hopefully, minimal delays for motorists. Implementing this measure is a priority for us because it is in line with government health regulations and it will better protect both our motorists and expressway employees,” SMC president Ramon S. Ang said in a statement.— Gillian M. Cortez

Elite police team to be deployed to Jolo

THE PHILIPPINE police chief, Gen. Archie Francisco F. Gamboa, has rejected calls to sack the entire police force of Jolo, Sulu following the deadly twin explosions that killed at least 14 people and wounded at least 75 others on Monday. Instead, Mr. Gamboa ordered the deployment of one Special Action Force (SAF) battalion. The SAF commandos, considered as the the elite police unit, will help local security forces in hunting down members of the Abu Sayyaf, the Islamic State-linked group that has claimed responsibility for the bombings. “Unless there is sufficient evidence establishing criminal involvement or administrative lapses leading to the attack, the PNP (Philippine National Police) maintains full confidence in our ground personnel,” Mr. Gamboa said in a statement on Thursday. The additional 284-man SAF contingent will augment 60 others who were posted in Sulu prior to the bombings. — Emmanuel Tupas/PHILSTAR

‘Hot money’ flees PHL for 5th month

FOREIGN PORTFOLIO investments (FPI) fled the Philippines for the fifth straight month as investor confidence remained weak amid uncertainties brought by the coronavirus disease 2019 (COVID-19) crisis.

FPI — also referred to as “hot money” due to the ease by which these funds enter and leave an economy — yielded a net outflow of $453.17 million in July, data from the Bangko Sentral ng Pilipinas (BSP) on Thursday showed. This is the fifth consecutive month of FPI net outflow since March.

The July figure is a reversal from the $15.02-million net inflow logged a year ago. It is also nearly double the $235.38- million net outflow in June, but slimmer than May’s $1-billion outflow.

For the first seven months of the year, net outflows surged to $3.8 billion, more than five times bigger than the $706-million net outflow in the January to July 2019 period.

Uncertainty over the extent of the COVID-19 pandemic’s impact on the global economy and financial system continued to dampen investor confidence, the central bank said in a statement.

Tensions between the United States and China, as well as “corporate governance issues” involving water concessionaires Manila Water Co., Inc. and Maynilad Water Services, Inc. also weighed on sentiment, the BSP added.

For the month of July, FPI inflows totaled $719.11 million, 57% lower than the $1.68 billion last year and 29% down from June’s $1.019 billion.

Meanwhile, outflows in July amounted to $1.172 billion, a 30% decline from the $1.665 billion seen a year ago, and 6% lower than the $1.254 billion in June.

“Singapore, the United Kingdom, the United States, Bahamas, and Hong Kong were the top five investor countries for the month, with combined share to total at 84.6%,” the BSP said.

The bulk (96.5%) of the investments went into the stock market, specifically utilities companies, holding firms, real estate, banks, and retailers. The rest flowed into government securities.

The central bank projects $2.4 billion in hot money inflows this year, just nearly a third of the previous forecast of $8.2-billion net inflows penciled in November 2019.

The key to improving hot money flows is more than just reopening the economy or easing restriction measures, said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion.

“A more fundamental improvement in FPI would entail more ‘confidence’ in the government’s efforts at virus containment and how the government responses, through monetary and fiscal policies, are being effectively carried out,” he said in an e-mail.

The Philippines has the most number of COVID-19 cases in Southeast Asia, with 205,581 infections as of Tuesday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the passage of timely legislative measures such as the Bayanihan to Recover as One Act (Bayanihan II) and the CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) bill will stimulate economic activity and boost investor sentiment.

The Bayanihan II, a P165-billion stimulus program to respond to the pandemic, is awaiting President Rodrigo R. Duterte’s signature. Meanwhile, the CREATE bill, which will immediately slash corporate income tax to 25% from 30% is still pending in the Senate. — Luz Wendy T. Noble

Gov’t plans to borrow P160B in September

By Beatrice M. Laforga, Reporter

THE National Government is looking to raise P160 billion from the domestic market in September, after the issuance of 35-day papers was shelved as the central bank plans to offer its own securities.

According to an advisory posted Thursday, the Bureau of the Treasury (BTr) said it will borrow P100 billion in Treasury bills (T-bills) and P60 billion via the Treasury bonds (T-bonds) next month.

Auctions for T-bills will be held weekly, while T-bonds will be offered fortnightly.

The BTr will auction off P5 billion worth of 91- and 182-day debt papers each, and P10 billion worth of 364-day securities every Monday.

The Treasury is also planning to raise P30 billion from the issuance of three-year T-bonds on Sept. 11, and another P30 billion from 10-year notes on Sept. 24.

However, it will no longer offer 35-day T-bills every other week unlike the previous months. The Treasury reintroduced the tenor in its borrowing program in April to offer to accommodate the demand for short-tenored securities.

A bond trader said the decision not to offer the 35-day instruments next month may have considered the upcoming issuance of the Bangko Sentral ng Pilipinas’ (BSP) own securities.

The central bank in July said it will launch its own securities within the third quarter, which will reportedly be offered in small volume with short-term maturities.

“The move to go back to 10-year (papers) is not a surprise given the disappointing 20-year auction. While issuing a 3-year paper (assuming it’s a new bond) makes sense because we lack a proper benchmark on that space and many are still looking to extend to one to three years for slight yield pickup,” the trader said via Viber on Thursday.

The September borrowing plan is lower than P170 billion originally programmed for August.

However, the BTr raised P143.033 billion from the local market this month, broken down into P113.033 billion in T-bills and P30 billion in T-bonds.

The Treasury rejected all bids during the Aug. 25 auction for the 20-year T-bonds after rates shot up.

It also raised a record P516.3 billion from its offer of five-year retail Treasury bonds earlier this month. The bonds fetched a coupon of 2.625% amid strong liquidity in the market.

The government is looking to borrow around P3 trillion this year from local and foreign lenders to plug a budget deficit that may hit 9.6% of gross domestic product.

It plans to maintain a 74:26 borrowing mix in favor of domestic sources to mitigate external volatilities and shocks.

Business group pushes for public transport reforms

By Arjay L. Balinbin, Senior Reporter

PUBLIC TRANSPORTATION should not be suspended whenever the government implements lockdown or quarantine measures to curb the spread of the coronavirus disease 2019 (COVID-19), a business group said.

The Management Association of the Philippines (MAP) on Wednesday submitted to Transportation Secretary Arthur P. Tugade a set of recommendations to further improve the state of public transportation amid the pandemic, including allowing rail transit to operate at 50% capacity and adopting a congestion pricing scheme for private vehicles in Metro Manila.

“COVID-19 is a virus we may have to live with over an indefinite period requiring periodic quarantine/lockdown (hopefully on a localized basis); thus, we strongly recommend that public transportation be reclassified as an essential industry that must not be suspended during a selective quarantine/lockdown but the number of buses, jeepneys, light rail trips and tricycles should be reduced to comply with the level of quarantine/lockdown,” the MAP said.

The business group suggested allowing the rail transit system in the National Capital Region (NCR) operate at a 50% load factor, similar to jeepneys and buses under a general community quarantine (GCQ).

The MAP noted the movement of people and cargo via rail is “one of the most efficient forms of public transportation as it allows high passenger throughput, exclusive right of way and use of full rolling stock.”

Light Rail Manila Corp. (LRMC), the private operator of the Light Rail Transit Line 1 (LRT-1), told BusinessWorld the Philippines is the “only country in the world left with tight load restrictions.”

“All ASEAN countries have lifted public transport restrictions. Rail also offers the fastest journey. It is safer since there is less time for possible exposure….  We are confident that we’ll be able to continue operating LRT-1 safely should the rail transit system be allowed to operate at a 50% load factor,” Jacqueline S. Gorospe, LRMC corporate communications head, said in a phone message.

With Metro Manila under GCQ, the LRT-1 is allowed to ferry 158 passengers or 12% of its capacity per trip, while the LRT-2 can ferry 160 passengers or 10% of its capacity per trip. The Metro Rail Transit Line 3 is allowed to have 153 passengers or 13% of its capacity for every trip, while the  Philippine National Railways train can have an average of 148 passengers or 20% of its capacity.

To address problems regarding public buses, the MAP said all buses should have speed limiters to ensure they will comply with the maximum speed limit of 40 kilometers per hour. Buses should also follow a fixed headway of two to three minutes, with one minute to unload and pick up passengers at designated stops.

“The timing of the bus arrivals and the MRT arrivals/departures from the MRT station should be synchronized as much as possible so that a seamless flow between MRT and bus passengers is achieved,” it said.

The MAP also suggested stiff penalties for bus drivers who violate speed limits and loading/unloading times. A bus driver may face cancellation of driver’s license, while the bus operator may be slapped with a P50,000 fine. 

“Ang average speed naman talaga sa EDSA is less than 40 kilometers per hour…. Siguro they recommended that because there are barriers on the side and we saw a lot of accidents because of that,” Victory Liner Spokesperson Alex R. Briones said in a phone interview.

Mr. Briones said there are already existing regulations on speed limits, so what is needed is strict implementation.

Meanwhile, the MAP emphasized that jeepneys are necessary to meet the transport demands in Metro Manila. The business group proposed a fixed salary for jeepney drivers and the reorganization of routes.

“There is a need to deploy jeepneys as soon as possible due to public need for which rationalization of jeepneys should be considered in terms of consortia, a strict vehicle inspection system and driver’s fixed salaries (rather than the current boundary system),” the MAP said.

CONGESTION PRICING
For the medium term, the MAP suggested a congestion pricing for private vehicles in order to address NCR’s traffic problem.

“Congestion pricing should be considered for private vehicles to manage congestion in the still to be identified business centers and chokepoints in the 17 LGUs that compose the NCR,” it said.

Transportation Assistant Secretary Goddes Hope O. Libiran told BusinessWorld via phone the concept of congestion pricing, which has been proposed by various groups, is not a priority of the department for now.

“It’s not timely to implement that kasi may mga limitations pa sa travel because of the general community quarantine. I proposed that five years ago because of the traffic congestion, but it cannot be immediately implemented because you need time to put the electronics, the devices to implement that. It needs about a year or two to do that,” transport expert Rene S. Santiago told BusinessWorld in a phone interview.

“It’s worth a study now but you cannot implement it during this time…. Apply the road congestion pricing when all the transport capacities are all there,” he added.

Rebound in excise tax collections seen starting 2021

THE government expects excise tax collection on goods to bounce back next year as economic recovery is seen picking up from this year’s slump.

The Bureau of Internal Revenue (BIR) aims to collect P432.807 billion in excise taxes in 2021, up 51% from this year’s already revised P286.57-billion target, according to the latest Budget of Expenditures and Sources of Financing (BESF).

However, the target is still 16% lower than the P517-billion excise tax goal penciled in before the coronavirus pandemic hit.

Broken down, the BIR is expected to collect excise taxes worth P204 billion from tobacco products; P114 billion from alcohol products; P48 billion from fuel; P40 billion from sweetened beverages, P7.1 billion from mining; P2.7 billion from automobiles, among others.

For 2022, the BIR’s goal is to collect P540.2 billion in excise taxes on goods, but is still 8% lower than the pre-pandemic estimate of P588.29 billion.

The bureau targets to generate P271 billion from excise taxes on tobacco products; P129 billion from alcohol products; P50 billion from fuel; P43 billion from sweetened beverages, P8.2 billion from mining, and P3.1 billion from automobiles.

The projected excise tax collections in 2021-2022 are seen rebounding from the P286.576 billion goal for this year, which was revised from the P193.757-billion goal adopted in May.

However, this is still a fifth smaller than the initial P360-billion goal set prior to the coronavirus pandemic and 10% lower than the P317.27 billion it collected last year.

The estimated excise tax revenues already included proceeds from the measures under the Comprehensive Tax Reform Program.

Economic managers slashed revenue targets over the near term because of the expected sluggish economic activity, said Finance Undersecretary and Chief Economist Gil S. Beltran in a text message on Wednesday.

The economy plunged into recession in the second quarter, and is seen to further shrink by as much as 6.6% by yearend. In 2021-2022, gross domestic product (GDP) is expected to bounce back by 6.5-7.5%. — Beatrice M. Laforga

UN pushes sustainable shift to digital finance

THE UNITED NATIONS (UN) has encouraged countries to ramp up the use of technology in financial services while ensuring its sustainability to help them achieve their Sustainable Development Goals (SDGs) by 2030.

In a report released Thursday, the UN’s Task Force on Digital Financing of the SDGs said the coronavirus-induced crisis made people more aware of the importance of digital finance as it helped in fast-tracking the release of cash handouts to affected sectors and in allowing retail businesses to go online to stay afloat, among others.

“This surge in the digital world amplifies the opportunity and the need for it to be harnessed in the longer-term pursuit, and financing, of sustainable development,” the report titled “People’s Money: Harnessing Digitalization to Finance a Sustainable Future” read.

“The international community should act in reshaping financial systems in line with sustainable development. If we fail to do so, we will fail to deliver the 2030 Agenda,” it added.

It said the push for digitalization should be “citizen-centric” where citizens are empowered both on their basic financial affairs and about public financing as well. This could also widen financial inclusion, it said.

“Digital technologies, which are revolutionizing financial markets, can be a game-changer in meeting our shared objectives,” UN Secretary-General António Guterres was quoted as saying.

The Task Force made three recommendations: advancing catalytic opportunities; building foundations for sustainable digital finance such as infrastructures, digital ID, planning, institutions and capacity-building, as well as strengthening related policies and regulations.

It laid out five catalytic opportunities to guide countries in aligning digital financing with the SDGs, namely: “to channel domestic savings into development financing; enhance financing for small- and medium-sized businesses (SMEs); digitalize public financing and make public budgets and contracts transparent; embed SDGs into decisions financial and capital markets; and shape consumption decisions through improved information and choice architecture.”

However, the UN warned that new risks may emerge as digitalization efforts ramp up, such as the increase in fraudulent transactions, illicit financial flows and security breaches.

“Digitalization may increase short-termism in financial markets. Digitalization increases the likelihood of a new generation of highly concentrated financial markets because of its tendency to provide ever-increasing benefits to scale. It may reduce an autonomous economic policy space through the loss of control over macroeconomic and monetary policy,” it said.

The Task Force, established by the UN Secretary General in November 2018, is mandated to study and recommend short to medium-term framework on how digitalization can be used to accelerate financing of the SDGs.

The recent publication is the Task Force’s final report.

The UN Secretary General has set a roadmap for digital cooperation aiming to achieve universal connectivity by 2030; promote digital public goods; expand digital inclusion; improve digital capacity-build; make sure human rights are protected; support global cooperation on artificial intelligence; establish trust and security; and build better architecture for cooperation.

Member states of the UN committed in 2019 to achieve the SDG agenda by 2030, which includes the goal to end poverty and hunger, provide quality education, promote inclusive economic growth and reduce inequality, among others. — B.M. Laforga

BSP wants to count green loans against Agri-Agra compliance

THE CENTRAL BANK is looking to encourage lenders to build up their  sustainable loans by counting these as part of the mandated Agri-Agra credit,  Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“We are looking for regulatory incentives that can be granted to banks that adhere to these principles. This includes our proposal to consider lending for green projects as compliance to the Agri-Agra requirements,” Mr. Diokno said in an online briefing on Thursday.

Under Republic Act 10000 or the Agri-Agra Reform Credit Act, lenders are required to allocate 25% of their loanable funds to the agriculture and agrarian reform sector.

However, compliance with the agriculture segment quota was only at 10.8% while the agrarian reform side only consisted 1.09% of banks’ total lending, both well below the 15% and 10% credit quotas, respectively. Mr. Diokno has said they observed banks would rather pay the 0.5% penalty instead of loaning to the sector which they perceive to be high risk and high cost.

The central bank chief said BSP Circular No. 1085 which lays out a sustainable finance framework for banks so far does not prescribe a minimum loan requirement for green and sustainable products.

“This will depend on the bank’s strategic objectives and risk appetite in relation to the adoption of sustainability principles,” Mr. Diokno said.

Lenders will be given three years to adapt to the provisions of the sustainable finance framework, which lays out the adoption of sustainability principles through environmental and social risk management systems.

So far, local banks have issued sustainability bonds worth $1.795 billion and social bonds totalling P21.5 billion, BSP data showed.

In 2019, 10.6% of the total loan portfolio of the banking system went to finance green and social projects that are in line with the Sustainable Development Goals of the United Nations, the BSP said. — L.W.T. Noble

Meralco fined for lockdown billing woes

THE CORPORATE regulator has fined Manila Electric Co. (Meralco) P19 million for ignoring advisories on billing customers during the lockdown.

The utility giant failed to inform clients that their bills for March to May had been estimated, while failing to comply with an order to allow them to pay in installments, the Energy Regulatory Commission (ERC) said in a statement on Thursday.

“Meralco’s neglect to provide accurate and timely information especially during this time of pandemic has created chaos and confusion to most of the electricity-consuming public,” the regulator said.

“This serious neglect by Meralco resulted in a multitude of complaints filed by its consumers to this commission,” ERC Chairman and Chief Executive Officer Agnes VST Devanadera said.

The regulator said it had evaluated billing statements submitted by complainants, its own employees, the office of Senator Sherwin T. Gatchalian and consumer group National Association of Electricity Consumers for Reforms.

It charged the utility P100,000 for every continuing violation that started on May 5, when the ERC first issued its advisory on lockdown billings, to July 9, when Meralco issued personalized letters to consumers explaining their bills.

The company will study the order and file an appropriate pleading after consulting its lawyers, said Meralco’s Regulatory Management Head Jose Ronald V. Valles in a statement. It said it had not received the ERC ruling dated Aug. 20.

Clean power advocacy group Power for People Coalition welcomed the regulator’s decision, but said the fine was unlikely to hurt Meralco financially.

“We prefer that ERC instead look into the issue of consumer money that Meralco is holding on to, as these refunds amount to billions and can have a direct positive impact on the cash flow of residential customers, more than any fine ever could,” it said.

Ms. Devanadera said distribution utilities should take the commission’s advisories “very seriously.”

“Our advisories were issued to aid electricity consumers in light of the ongoing pandemic,” she said. “It was supposed to provide a respite from the various financial woes of consumers.”

A number of consumers reported a spike in their May electricity bills, which later turned out to be just estimates. The government had allowed such estimates based on consumers’ power usage three months before the lockdown.

This prompted ERC to order electricity distributors to conduct physical meter readings and charge consumers for actual consumption during the quarantine months.

President Rodrigo R. Duterte locked down the entire Luzon island in mid-March to contain a coronavirus pandemic. People should stay home except to buy food and other basic goods, he said.

The lockdown on the island was extended twice and thrice for Metro Manila. The lockdown in most areas has since been relaxed.

Meanwhile, the ERC ordered Meralco to cover the distribution, supply and metering charges of its lifeline customers — those that consume less than 100 kilowatt-hours — at the next billing cycle. The charge accounts for about a fifth of the utility’s total charges.

The estimated P200 million worth of discount is a form of temporary economic relief for more than two million poor consumers. The company must file a compliance report to the ERC.

Meralco President and Chief Executive Officer Ray C. Espinosa told congressmen at a hearing on Wednesday that the company would shoulder P101 million in distribution charges on its lifeline customers.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Adam J. Ang

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