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Police chief admits failure of intelligence in journalist’s arrest but makes no apologies

PHILIPPINE NATIONAL Police (PNP) chief General Oscar D. Albayalde admitted there was a failure of intelligence after cops arrested a journalist whom they mistaken for a wanted person. “Basically, our law enforcers, ‘di naman kilala ‘yung (they don’t know the) subject… ‘yung complainant ‘yung mas nakakakilala (the complainant knows better). Ito (This) they based their actions on the informant,” said Mr. Albayalde in a press briefing at Camp Crame on Monday, June 10. The police arrested on Sunday Davao Today columnist Fidelina Valle, 61, at the Laguindingan International Airport after she was mistaken for a certain Elsa Renton, who was reportedly a member of a communist movement.

Mr. Albayalde said such “isolated” cases of an arrest with a mistaken identity have happened before, and that they are ready to assist Ms. Valle if she was “violated” or harmed by the police during the arrest and wants to lodge a complaint. “We are glad to assist her…kung meron man siyang (If she has a) complaint, we will not hesitate to file charges against our people,” the PNP chief said. — Vince Angelo C. Ferreras

DENR-12 takes steps to protect areas where Philippine eagles have been spotted in SOCCSKSARGEN

THE DEPARTMENT of Environment and Natural Resources (DENR)-Region 12 is stepping up its campaign to help protect the Philippine Eagle by securing areas where they have been spotted. “Region 12 has recorded various sightings of the Philippine Eagle in the region. This is a good indication that these sightings from four provinces manifest that we still have healthy forests,” said DENR Regional Executive Director Red Nilo B. Tamoria during the launching of the Philippine Eagle Week (PEW) at the Atrium of Robinsons Place in General Santos City last week. Region 12 is composed of the provinces of South Cotabato, Cotabato, Sultan Kudarat, and Sarangani, and General Santos City (SOCCSKSARGEN). “Identifying these areas is crucial as basis to protect and conserve them to ensure their numbers will not decline,” Mr. Tamoria is quoted in a statement released by the agency. Leonisa C. Alfaro, assistant division chief of the Conservation and Development Division, said Philippine eagle sightings have been recorded in the Allah Valley Protected Landscape at Barangays Lamlahak and Tasiman of Lake Sebu within Allah Valley Watershed Forest Reserve, and Mount Sinaka of Arakan, North Cotabato. “There were already efforts to establish these areas as a critical habitat in partnership with the local government units (LGUs),” she said. The national bird has also been seen flying in Mount Busa, which is identified as key biodiversity area. Mapping on the site has already conducted and regular monitoring is slated for the coming year, she added. Ms. Alfaro said the DENR is working with the Philippine Eagle Foundation (PEF) and LGUs to involve communities in the conservation efforts. “We are strengthening our monitoring by involving organized community groups as front liners in ensuring that this species should survive in the wild,” she said. As part of the risk management program, the PEF, through the DENR, recently sent a pair of Philippine eagles — named Geothermica (male) and Sambisig (female) — to the Jurong Bird Park operated by the Wildlife Reserves Singapore (WRS). “This move has been proposed to DENR 10 years ago as part of a larger risk management program for the species’ population,” PEF Executive Director Dennis I. Salvador said in an earlier interview. The Philippine Eagle Week, established through Presidential Proclamation No. 79 of 1999, is celebrated June 4-10 every year. — with a report from Maya M. Padillo

Nation at a Glance — (06/11/19)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Nation at a Glance — (06/11/19)

The Future of Business: Next-Wave Disruptions & Opportunities

Keynote Speech of Jaime Augusto Zobel de Ayala, Chairman and CEO of Ayala Corp., at the BusinessWorld Economic Forum

Former Prime Minister Cesar Virata; Hon. Jorge Moragas; Ambassador of Spain to the Philippines, Ambassador Joey Cuisia; Miguel Belmonte, President and CEO of the Philippine Star; esteemed speakers, partners, colleagues, and guests.

Ladies and gentlemen, good morning. I’m delighted to be here with you today. When Miguel Belmonte, a dear friend of mine, reached out and asked me to talk a little bit about the future of business in the Philippines, I couldn’t say no. I am a great believer in the continuous evolution of businesses to stay relevant with the times. It is a principle that we have applied at Ayala, and I thank the organizers for giving me an opportunity to share some thoughts as we begin today’s forum.

Today, let me walk you through three things…

First, how the landscape we currently operate in is extremely dynamic, and how we as companies can no longer be reactive to the changing times.

Second, the importance of innovation, and how building an innovation mindset becomes an imperative for our organization to remain agile enough to respond to rapidly changing technological and behavioral trends.

Finally, what transformation could look like in a conglomerate like Ayala.

Let me tackle the first point which is that we live in a world of accelerated change. The breakneck pace of technological progress has given rise to new possibilities — but at the same time, this increasingly rapid rate of change has dismantled those who were not nimble enough to adapt. A 2018 study by Innosight — a strategy and innovation consulting firm that we’ve worked with in Ayala to better understand and navigate disruption — found that the average lifespan of S&P 500 companies has fallen from over 60 years in the 1960s to just 24 years in 2016, and this is expected to shrink further to just 12 years by 2027. Taking the place of traditional firms in the S&P are younger, more nimble companies like Netflix, Google, Amazon, and eBay.

Here in the Philippines, there seems to be a pervasive mindset that industries may be slower to change or that disruption will hit us gradually. However, I would urge all of us to look at these industries — e-commerce, fintech, and telecommunications — and how the rise of technologies and new players have changed the landscape dramatically in the past decade alone. These changes are happening quickly and are by no means limited to these industries alone. We also see new technologies emerging in healthcare, education, automotive, and energy, among many others.

Now, more than ever, businesses can no longer be reactive — companies that do not innovate run the risk of being irrelevant. We need to be proactive in finding gaps in our current systems and areas ripe for transformation, and we need to act swiftly, even if it means we have to be the ones disrupting ourselves. Thus, I think, a paradigm shift is necessary — businesses should realize that what brought success in past years will not be the same ones that will bring success in the future.

There are examples to draw from across the world. In terms of innovative responses to technological change and market preferences, consider Apple, which continues to be a trailblazer through cutting-edge design and the ecosystem it has begun to create. In the field of social impact innovation, global groups such as Coca-Cola and Nestlé have institutionalized inclusive business models through community-based entrepreneurship in many of the emerging markets that they deal with.

The transformation across these companies required clear strategic planning, investments in both infrastructure and people, patience, but more importantly an innovative and open mind. This is key to ensuring the sustainability of our businesses in this dynamic world.

Which brings me to my second point — At Ayala, we have embraced innovation. Our capability to reinvent ourselves as a company has led to our continuing to be vibrant and engaged, even after 185 years. The strategic choices we have made came as a result of our willingness to tread in uncharted waters and go beyond business as usual. This includes our efforts at establishing the first bank in the country; establishing the country’s first mass transportation system; and our pioneering effort in land distribution, and urban planning and development.

Over the last few years, we have made a deliberate attempt at institutionalizing an innovation mindset across the group. We believe that critical to our future growth and success is the kind of innovative and disruptive thinking that start-ups and young entrepreneurs have been able to embody.

We established a unit called Ayala Innovation, a think-tank center of excellence to drive disruptive thinking across the group. The team has a mandate to constantly be on the lookout for trends and help build future-ready businesses, and to nurture the group’s network to foster collaboration and find synergies. More importantly, Ayala Innovation has set out to build capabilities across the group through training programs aimed at inculcating curiosity, meaningful risk-taking, and grit — essential qualities of corporate entrepreneurs and innovators.

As a result, this innovation mindset has become part and parcel of our identity, and is what lies at the heart of the digital transformation we are currently undertaking. While we are at the early stages of our journey, I would like to take a few minutes to tell you a little bit about the way we have been preparing ourselves to perhaps give everyone an idea of what innovation and transformation could look like in a large corporation in the Philippines.

Leveraging the advances in data infrastructure developed by the telecommunications industry, we believed there was opportunity to start incorporating more digital tools in our products as well as in our internal processes — with the ultimate goal of improving the customer experience and bringing down costs through increasing efficiency in operations.

Our business units have been pursuing their own transformation journeys for quite some time, although separately, at different levels, and at varying speeds. Last year, we held our strategic planning sessions in Shanghai and Silicon Valley to get an idea of what disruption and innovation was like in both the East and the West, and we collectively decided to formalize this journey and be more strategic and unified in our efforts towards building the Digital and Future-Ready Ayala.

There are five components to this transformation:

  1. Transforming existing businesses
  2. Exploring new business models and opportunities
  3. Venture capital investments
  4. Leveraging data and analytics
  5. Upskilling and empowering our talent

Let me briefly take you through each component.

The first involves transforming existing businesses to be resilient to disruption amidst continuing success. Our largest business units — Ayala Land, BPI, Globe, and Manila Water — have long been critical pieces of the group. We have further empowered these core businesses to build internal capabilities and engage in transformation initiatives that are relevant to their own companies and industries. These initiatives may or may not be digital in nature, but ultimately allow the business to thrive in this new environment.

For instance, a few years ago, Ayala Land restructured itself to transform into a multi-entity property company with businesses catering to different market segments. This transformation entailed carving out Ayala Land from the parent company, allowing it to become its own business group with a devolved leadership structure, where each company is led by its own CEO and team. This gave the subsidiaries the capacity and flexibility to adapt to the needs of their own markets. The changes that we made years ago are now bearing fruit — the success that Ayala Land sees today and the resilience it exhibits, despite the ups and downs of the industry, can be partly attributed to our willingness to allow organizational changes like this to happen.

Similarly, BPI is essentially also transforming itself into three banks. The first one is our traditional brick-and-mortar bank, which we will continue to grow. The second refers to BPI’s digital initiatives. While not a separate bank, these initiatives have grown in magnitude in the last few years with more than three million clients now transacting online. These digital efforts complement our traditional services by making transactions more seamless and accessible for our clients. Noel Santiago, Chief Digital Officer of BPI, who is overseeing the company’s various digital transformation initiatives, is here today, and will be able to speak more on this component.

Finally, we have BanKo, our platform for promoting financial inclusion in the Philippines. BanKo works closely with other thrift and rural banks, microfinance institutions, NGOs, and cooperatives to significantly increase our reach, particularly in areas where financial services are lacking. From only 10 branches servicing 2,500 clients in 2016, BanKo has seen tremendous growth in the last few years and now has over 200 branches across the country, providing ₱4 billion in loans to almost 60,000 clients. These three tentacles — our brick-and-mortar branches, our online initiatives, and BanKo — allow us to cater to the needs of many people, with our client total base growing to more than eight million today.

It’s worth noting that no transformation within financial institutions can occur without the proper regulatory framework in place. We are thankful that the Bangko Sentral ng Pilipinas has been proactive along this front — from creating a conducive environment for experimentation that allowed fintechs to blossom; to allowing international players to also participate in our banking sector; and to strongly pushing for greater financial literacy and inclusion among our people as a key thrust of government. These measures drive us incumbents to be more creative and innovative in the way we design and deliver our services.

For the second component, we keep an open mind and are continuously exploring new technologies and business models. I think this is very nicely illustrated in our ongoing efforts in AC Industrials, AC Health, and fintech.

AC Industrials, our holding company for industrial and automotive technologies, is building a portfolio that will allow it to be a significant player in the future of mobility. IMI, for instance, has been pivoting its manufacturing capabilities to supply components for autonomous and electric vehicles. Supporting this are AC Industrials’ recent ventures in complementary technology companies such as VTS, a metal mesh sensor manufacturer, and Merlin Solar, a manufacturer of next-generation solar panels.

AC Health, one of our youngest business units, was a company that was born from an innovation exercise. We conducted in-depth market research to better understand the pain points of the local healthcare industry, and found that there was massive opportunity to utilize new technologies to improve accessibility and affordability of healthcare products services.

Within its portfolio today is our pharmacy Generika, which is complemented by FamilyDoc, our chain of community-based 3-in-1 clinic, laboratory, and diagnostics facilities focused on primary care. The clinics are powered by our healthtech company VIGOS, leveraging technology to drive down costs and increase efficiencies. We also have investments in disruptive start-ups, MedGrocer and AIDE, that augment our efforts to build an integrated healthcare ecosystem that blends traditional facilities with digital solutions.

Finally, we at Ayala are very excited about fintech as an emerging industry. Earlier, I spoke a little bit about how BPI has been making strides in transforming its core operations, and we have complemented our banking assets with investments in mobile wallet GCash. These two, together with our transportation payments solution beep, have a combined reach of more than 20 million customers and over 58 thousand merchant partners. These assets are working more closely together to both enhance the customer experience and promote greater financial inclusion in the country.

The third component of our transformation journey involves the bolder and more deliberate steps we are taking regarding venture capital as a tool to be closer to new disruptive technologies.

We would like to be more active in finding and seeding budding entrepreneurs and start-ups, both to learn from them and to enable the entire start-up ecosystem to thrive. Our two corporate venture capital arms — Kickstart, which currently operates under Globe, and AC Ventures — will be working together to scout for investment opportunities. This will be enabled by a new $150 million fund called the ACTIVE Fund that will search for promising companies and entrepreneurs from both the Philippines and overseas, with technologies or business models that complement or augment the capabilities of our existing businesses.

As we scout for potential investments, we are keeping an eye out for opportunities within four key themes: a frictionless future, automation to augmentation, a world of plenty, and new frontiers in real estate.

We also view our venture capital investments as a way to have our eyes and ears on industries we are not currently in, to see if there are any gaps we could potentially address. Let me take e-commerce as an example. As most of you are aware, we invested in Zalora Philippines a few years ago. Our investment has given us a much deeper understanding of the e-commerce industry and we saw the need to develop stronger logistics infrastructure.

We thus leveraged Zalora’s existing fulfillment assets and supplemented it with additional resources to establish Entrego, our new logistics platform that is now the fastest-growing courier, express, and parcel services provider in the country. Zalora and Entrego work closely with our existing payments platforms to explore avenues to better facilitate online transactions. Entrego’s CEO, Cons Robertz, will be speaking in one of the panels today and can tell you more about the many exciting initiatives they have.

The fourth component is centered on data and analytics which we believe will be a key strategic advantage in the near future.

We are taking the first steps in our journey to significantly boost our data analytics capabilities. While we recognize that we may not be as advanced as our peers in the region, within the group, we do have some expertise in this field. For instance, Globe has launched Gie and Thea, hybrid agent-bots built using machine learning capabilities which help us address customer needs online in a much quicker way. Peter Maquera, Senior Vice-President at Globe, will touch more on how advances big data and mobile technology are shaping our future.

We hope to expand this capability and build on it at a group-wide level. We are currently building AC Analytics, which will serve as the group’s central hub for insights and data science. Broadly, our data analytics initiative involves harnessing the vast amounts of data across our businesses and use these to be more scientific and accurate in knowing customers, to continuously design products and services that address the needs of these customers and our partners, and to generate meaningful insights to guide our strategic decisions.

As a group, substantial resources are being devoted to develop and acquire data science talent, and also institutionalize a culture of collaboration among our companies. More broadly, we hope that by investing in this space, we are able to do our part in building a stronger data science community here in the Philippines. We’ve already seen how Filipinos can excel in this high-potential field globally, and with the group’s size and reach we believe we can make a strong impact.

The final component of our transformation journey — which perhaps may be the most crucial — deals with empowering our talent and shifting our culture towards a mindset of curiosity; openness to failure; innovative, yet meaningful thinking; and flexibility in work.

Last year, we formally launched Ayala University, our internal platform for continuous learning. Among the many programs in its portfolio, we have launched an Innovation Learning Program in partnership with the Global Innovation Management Institute, which exposes our talents to innovation frameworks and provides a safe space of Ayala’s innovators to develop disruptive solutions to persistent challenges. Since launching the program in 2017, we now have close to 150 professionally certified innovation managers initiating new projects across the group.

We have also partnered with online learning platform Degreed, which allows all our employees to access the most relevant content from various sources around the world, to truly institutionalize the practice of lifelong learning and prepare our workforce for the workplace of the future. I believe Susie Lie, Vice President at Global Business Solutions which handles the Degreed platform, is also with us today. Since launching Degreed, the take-up within our group has been phenomenal, with over 90% of planned subscriptions being activated within the first three months.

We also remain cognizant of the changing demands and habits of an increasingly younger workforce, which includes different working styles and means of communication, and we remain committed to finding ways to adjust to these. Our Human Resources teams across the group have been hard at work transforming the way we recruit, train, engage, and retain our talents. In the works are a platform to increase employee engagement, programs for inter-company cross-posting for short-term projects, and programs on flexible workplaces for Ayala employees, among others.

In summary, the pace of change today is rapidly accelerating. In the same way that the world we live in today is vastly different from what it was just a decade ago, our world 10 or even five years from now will be very different from the world we see today. And while it is difficult to paint an exact picture of what this world will look like, I think safe to say it will be one defined by frictionless transactions; greater integration and enabling capabilities of machines; advances in digitization, analytics, and cybersecurity; and by new ways of working, living, and communicating. This requires organizations to continuously adapt and transform as new industries and technologies emerge.

Secondly, it is imperative, I want to reiterate, for businesses of all sizes to harness innovation and to foster creativity and critical thinking within its workforce, in order to remain competitive and relevant amidst emerging technological and behavioral trends. We should not be pursuing innovation for innovation’s sake — rather, innovation should allow us to address customer needs, and find and minimize gaps and inefficiencies.

Finally, as a large institution, we at Ayala have chosen to take the leap and pursue various simultaneous initiatives. This includes our programs aimed at building an innovation mindset, and our five-point transformation framework, where we seek to:

  1. Transform our existing business units
  2. Explore new business models and opportunities
  3. Be more deliberate about our venture capital investments
  4. Leverage data and analytics tools to guide our decision-making
  5. And continuously upskill and empower our talent

We are still at the early stages of our transformation, and it is an ongoing challenge. The path we follow is not set in stone — we welcome new discoveries along the way, and we will revector or pivot when necessary.

To close, allow me to emphasize that transformation requires clarity of vision, courage to stay on the course, and boldness to disrupt yourself and challenge long-held conventions. It certainly won’t be easy, but I believe it is very much possible. Thank you very much, and I wish everyone a productive and insightful day.

On redefining the future of business

By Bjorn Biel M. Beltran, Special Features Writer

In fast-changing times, it is the responsibility of leaders and visionaries to redefine what it means to contribute to society and prepare for the coming future. The landscape of Philippine business particularly has vastly changed with the impact of emerging technologies coinciding with the rise of a new generation of workers.

With technology having a bigger role in changing the way firms do business, success has become a matter of leveraging emerging fields like automation, artificial intelligence (AI), data analytics, blockchain, the Internet of Things, among many others. It is now becoming more crucial to have a deep and nuanced understanding of their intended and unintended impact.

It is to this goal that BusinessWorld, the most read and most respected business newspaper in the Philippines, once again held its annual BusinessWorld Economic Forum in the Grand Ballroom of Grand Hyatt Manila in Bonifacio Global City, Taguig City on May 31.

Already on its fourth year, the forum has become the country’s most anticipated event for gathering thought leaders, industry experts, business executives, government policy makers, innovators, academicians, technology providers and more to discuss the myriad realities and concerns that are transforming the landscape of Philippine business. This year, more than 700 high-level attendees came together to explore the theme, “The Future of Business: Next-Wave Disruptions & Opportunities,” highlighting the promises and dangers of technology and how these will impact businesses over the next 10 years.

In photo (L-R) are Danie Laurel, moderator and anchor at One News; Miguel Belmonte, president and CEO, BusinessWorld; Jaime Augusto Zobel de Ayala, chairman & CEO, Ayala Corp.; His Excellency Cesar Virata, former Prime Minister of the Philippines; and Roby Alampay, moderator and editor-in-chief of BusinessWorld.

Leading the discussion is Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corp. As head of one of the oldest and largest conglomerates in the Philippines — one that has interests in a wide spectrum of industries like retail, education, health care, management, automotive, energy, and banking — he shared his insights on the changing times and underscored the importance of vigilance amid such disruption.

“Here in the Philippines, there seems to be a pervasive mind-set that industries may be slower to change, or that disruptions will hit us a little bit more gradually,” he said in his keynote address.

“However, if you look at industries like e-commerce or FinTech, the pace of change in telecommunications, and how the rise of technologies and new players have changed the landscape dramatically in the past decade alone, you’ll see that change is happening here as quickly as it is anywhere else. And if one doesn’t accept that, you really have a good chance to be left behind.”

Mr. Zobel de Ayala presented examples of how Ayala Corp. is leveraging innovation to create opportunities for the company as it moves forward into the future, through investments, the constant monitoring of trends and technologies, and nurturing a skilled and collaborative environment.

Keynote Speaker Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corp.

“Now more than ever, in many ways for all of us in the business environment, the private sector can no longer be reactive. Companies that don’t innovate really run the risk of becoming irrelevant in our market. We need to be proactive in finding gaps in our current systems, even when it means that we have to be the ones disrupting ourselves,” he said.

Following Mr. Zobel de Ayala was a series of talks on the impact of automation and artificial intelligence on people, skills, and management. Opening the session was Kristine Romano, managing partner of McKinsey & Company Philippines, who explored how the job market will be changed, rather than be displaced by, emerging technologies.

Ms. Romano proposed that as technologies such as AI and robotics become more sophisticated, workers would need to learn new cognitive skills in order to adapt. Rizalina G. Mantaring, president of the Management Association of the Philippines, followed it up with her talk about defining management and leadership in a workplace wherein both humans and robots cohabitate.

In this new workplace, skills are the primary currency. That is according to Susie Lee, vice-president of Global Business Solutions at education technology firm Degreed. A new set of skills would be needed to navigate the problems and obstacles of the future — exactly the kind that the newest generation of workers, the Gen Z, are equipped to face. Pauline G. Fermin, managing director of Acumen Strategic Consulting, Inc., urged companies to welcome this new generation and adopt to their tech-centric worldview to effectively build the needed capabilities of the future.

The following session discussed the unstoppable growth of digital commerce, and how big data and mobile technology can shape the future of retail. Shiv Choudhury, partner and managing director of Boston Consulting Group Singapore, shared his strategies for retail through adopting agile, democratized technology, utilizing e-commerce and analytics, and ensuring a personalized, omni-channel experience for consumers.

Globe Telecom Senior Vice-President for Enterprise Group Peter D. Maquera, meanwhile, identified the opportunities presented by big data and mobile technology in retail by providing statistics on the sustained growth of Filipino mobile users and the data they are willing to provide companies in exchange for services like e-commerce and delivery. Lazada Philippines CEO Ray Alimurung, in his talk about New Retail, said that Southeast Asia is currently the “battleground” in e-commerce, with the industry growing to about $240 billion by 2025.

Mr. Alimurung welcomed the early age of New Retail, and encouraged innovators to explore concepts like livestreaming, offline to online capabilities, and gamification to provide new and better experiences to consumers. Such innovation is also needed in the area of logistics, Entrego Philippines President Constantin Robertz said, as the industry is undergoing an explosion brought about by e-commerce and mobile delivery. Digital transformation, he said, is changing the requirements of traditional business supply chains, and he believes that logistics is an industry ripe for rapid transformation.

Satoru Suzuki, president of Toyota Motor Philippines

Also in need of innovation and commitment is the industry of automobiles. In an era of climate change, sustainability is a more important goal than ever. Toyota Motor Philippines President Satoru Suzuki envisioned the future of mobility as he presented his company’s plans to become a more sustainable company by 2050. Toyota’s measures include shifting to electric vehicles, reducing carbon emissions, water wastage, and utilizing renewable energy in its production cycle.

“Toyota continuously strives to implement the appropriate measures towards this cause, ever exceeding customer expectations, enriching lives and commitments. By doing so, we’ll be able to achieve sustainable mobility for all,” Mr. Suzuki said.

To explore financial technology and the future of money, Frost & Sullivan, Asia Pacific Managing Director and Partner Shivaji Das highlighted social, regulatory, technological, and business model trends driving change in the banking sector worldwide. Trends like virtual banking, augmented reality, cloud computing, cognitive security, and analytics are pushing banks on the path towards a digitized future. Noel A. Santiago, chief digital officer of the Bank of the Philippine Islands, contextualized such trends and changes, exploring what such digital transformation means for local banks. He suggested that banks should work with financial technology start-ups who are fluent in these emerging technologies, and leverage their skillsets for a mutually beneficial partnership.

Lito Villanueva, founder of FinTechAlliance.ph, extolled the benefits of a cashless economy, illustrating how it might empower the unbanked and underbanked sectors and engender financial inclusion, after which Bangko Sentral ng Pilipinas Senior Director and Officer-in-Charge for Financial Technology Vicente T. De Villa III followed up with a talk on how financial institutions can utilize technology to fortify their future.

One News channel on Cignal TV will present a BusinessWorld Economic Forum Special on June 12, 9:30 a.m., with host Daphne Oseña-Paez.

The final session of the Economic Forum further delved into the promises of the future, as it focused on the next generation of technology and how the future of the economy can change the world. Launching the discussion was Alliance Global CEO Kevin Andrew Tan, who shared his company’s insights on the trends of tomorrow. Ever more connected by technology, Mr. Tan said that society will also change shape accordingly, bringing forth a society that is always on-demand and is driven more by community and shared values.

Andrés Ortola, country general manager of Microsoft Philippines, envisioned a future wherein AI will empower the productivity and the imagination of the workforce, accelerating the rate of innovation even further. Maria Francesca F. Tan, CEO of the MFT Group of Companies, expanded on this by discussing which industries are most likely to see such changes sooner rather than later, and what the role of private equity will be in this new, unknown world.

Jojo Gendrano, PLDT Enterprise first vice-president & head of Enterprise Core Business Solutions, explored the horizons of the connected age. Finally, Aileen Judan-Jiao, president and country general manager of IBM Philippines, capped off the forum with an in-depth look into the future of technology, her predictions on the next wave of disruptive technologies, and how they will yet again change life as we know it.

The BusinessWorld Economic Forum 2019 was presented by BusinessWorld Publishing Corp., with co-presentors LT Group, Inc., Entrego, and GT Capital; sponsors: (Platinum) Megaworld, PLDT, Toyota, and Lexus; (Gold) Ayala, BDO, Federal Land, MFT Group, Metro Pacific, San Miguel Corp., SM Investments Corp., and Turkish Airlines; (Silver) Aseana City, FWD, Globe, Meralco, and RCBC; and (Bronze) Aboitiz, BPI, Double Dragon Properties Corp., First Gen, National Home Mortgage Finance Corp., Pag-IBIG, SGV, Viventis and Degreed, Wilcon Depot, and Cross; with partners Grab (mobility), The Philippine Star (print), One News (broadcast), Fiera De Manila, Inc. (event), and Barcotech (registration).

Assessing the technological shifts driving the future workplace

By Adrian Paul B. Conoza, Special Features Writer

Changes in the workplace have been more imminent than before with the arrival of new technologies and a new work force.

Automation and artificial intelligence (AI) are seen to benefit businesses and the economy for their ability to increase labor and capital productivity in workplaces by taking over mundane tasks and orienting employees towards core business processes.

At the same time, technologies are getting more involved at work, a new work force is being assembled as Generation Z (Gen Z) are beginning their careers, bringing along a different set of skills, ideas, and attitudes to workplaces as they blend in with older generations.

Miguel G. Belmonte, president and CEO of BusinessWorld, delivers the welcome address.

These ways in which work is currently being shaped were further explored in the first session of this year’s BusinessWorld Economic Forum held on May 30 at the Grand Hyatt Manila in Taguig City.

Comprising the session’s panel are women leaders who shared their certain expertise revolving around the theme “Automation & Artificial Intelligence and How They Will Impact People, Skills and Management”: Kristine Romano, managing partner for Philippines of McKinsey & Company; Rizalina Mantaring, president of the Management Association of the Philippines (MAP); Susie Lee, vice-president of Global Business Solutions at educational technology company Degreed; and Pauline Fermin, managing director of Acumen Strategic Consulting, Inc.

Ms. Romano started the session by sharing a recent study by McKinsey & Company about “Workforce Transition in a Time of Automation.” She emphasized that while AI and automation have created significant value and are being felt in certain industries, they will not replace human beings. They will rather change the way people work.

Kristine Romano
Managing Partner, Philippines,
Mckinsey & Company

One of the findings of the study, which Ms. Romano highlighted, is that on average 6 out of 10 jobs, at least 30% of their activities can be automated.

With this potential in automation technologies, more advanced capabilities will be required of future workers. She added that while skills evolving around physical capability and sensory perception are replaceable, cognitive capabilities are not yet fully automatable by existing technology.

Another point of Ms. Romano’s talk is that the question of AI and automation taking over the workplace is always when. How quickly this occurs depends on many underlying societal factors such as feasibility, cost of developing and deploying solutions, labor market dynamics, economic benefits, and regulatory and social acceptance.

Moreover, she described the impact of AI and automation as taking place “gradually, then suddenly.”

“In the future, we don’t really feel it, but once it accelerates, everybody’s going to start doing it. That’s why the imperative for all of us is we have to start today,” she concluded.

Rizalina Mantaring, president, Management Association of the Philippines

This technological change apparent in work pushes for a change in leadership and management as well, as the second speaker, Ms. Mantaring, pointed out.

MAP’s Ms. Mantaring, who is also the chairman of Sun Life Financial Philippine Holding Co., Inc., first explained the place of machines inside and outside the workplace. She observed that machines are replacing humans, from the automation of factories to the employment of “intelligent agents” in a call center.

Moreover, she said that machines are making humans better, as exemplified in doctors assisted with AI and machine-aided operation. It is also changing business models, such as in the insurance industry, where risk modeling of actuaries have become real-time and risk rating more accurate.

This technologically developing environment, which Ms. Mantaring regards as “the age of super machines,” calls for upgraded management. “Because we have super machines, we need super managers,” she said.

According to Ms. Mantaring, the super manager is a creative innovator, who envisions the future and sees possibilities. They are also empathetic mentors who can guide employees in their career. These managers should be equipped with complex problem solving, critical thinking, creativity, and people management skills.

Susie Lee, vice-president of Global Business Solutions at Degreed

The third speaker, Ms. Lee of Degreed, centered her presentation on the rising importance of skills in the future.

“Your role as [leaders] is really about how you would ensure the enablement of your people so that you have the right skills in your organization to help drive that transformation,” she said.

Ms. Lee emphasized that learning does not drive business, but skills do. At a time when things like skills are getting hard to predict, organizations need to be agile and to stay relevant.

“We need to prepare for the future of work and the skills that we need,” she said.

Ms. Lee also called for leaders to prepare their organizations to build high-demand skills. These skills fall under power skills (e.g.: creativity, empathy, collaboration) and technical skills (e.g.: cloud computing, digital literacy).

She encouraged leaders to challenge outdated strategies and to get the right technology to upscale organizations.

Pauline Fermin,
managing director, Acumen Strategic Consulting, Inc.

Completing the first session was Ms. Fermin of Acumen, with insights about who the Gen Z are, especially in light of their increasing entry into the work force.

“The Gen Z’s experience of the world is fundamentally different from other generations, thus making their mind-set different as well,” she said of the profile of the generation that is entering the work force.

This difference in mind-set is manifested in three ways. First, digital media and the Internet are fully integrated with their experience of the world and how they define being. Second, they are “highly in touch with everything that’s happening in their lives in a world that is expansive and has no borders”, and as a result they take action on whatever happens within them and utilize available channels in order to make their voices heard.

Third, Gen Z find their own anchor in purpose and authenticity. “They seek meaning beyond what’s in the surface. They’re disillusioned when it comes to false information,” Ms. Fermin further explained. “They want to see organizations, brands, leaders, and people who clearly articulate their purpose and consistently live them out in ways they can understand.”

Given this distinct mind-set of Gen Z, Ms. Fermin recommended leaders to respond by communicating, teaching, and coaching them in a way that effectively builds needed capabilities.

She also noted that there must be intergeneration understanding within organizations as Gen Z’s will intersect with previous generations at work.

On the other hand, businesses “must be digitally-enabled and workflows should be reconfigured” to draw Gen Zs. They should also support a work-life balance within Gen Z talents in order to retain them. Finally, they are encouraged to build authentic brands built upon transparency and commitment not only to attract but also to retain and engage Gen Zs.

Grappling with tech-fueled disruptions in the retail industry

Technological innovations have turned the world of retail upside down. More and more consumers are using their mobile devices to shop instead of going to the malls, and to have their purchases delivered straight to their homes. Big box retailers are closing down branches, while e-commerce retailers are mushrooming. With big data, retail companies can now gain greater insights into the behavior of their customers and deliver a seamless omnichannel experience.

At the recently concluded BusinessWorld Economic Forum 2019, held at Grand Hyatt Manila in Taguig City, four speakers helped hundreds of participants make sense of the impact of digital commerce, big data and mobile technologies on the retail industry, and how they will shape it in the coming years.

These personalities were Shiv Choudhury, partner and managing director of Boston Consulting Group in Singapore, a management consulting firm; Peter Maquera, senior vice-president of the enterprise group at Globe Telecom, one of the largest mobile phone companies in the country; Ray Alimurung, chief executive officer of Lazada Philippines, a leading online shopping company; and Constantin Robertz, president of Entrego, a logistics solutions provider.

Shiv Choudhury, partner and managing director of Boston Consulting Group in Singapore

In his talk, Mr. Choudhury stressed that disruption is not a question of if but when and that retailers have two options: adapt or die. Two examples that failed to do the former — and almost suffered the latter fate — were the American department store chain Sears, which filed for bankruptcy late last year, and Blockbuster, a provider of video rental services in the US, which used to operate thousands of stores but now has one left.

Mr. Choudhury suggested a “TEAPOT” strategy for adapting to a changing retail landscape. “T” stands for technology, and he noted that there must be a radical change in the kind of tech investments retailers make. If five years ago they were after “large, enterprise-wide” technologies like warehouse management systems and enterprise resource planning software, in the next five years, they may do well to invest in “specific, small and agile” technologies such as business intelligence and analytics and social listening tools. “E” stands for e-commerce, and Mr. Choudhury noted that it’s too large to ignore. The “A” in the “TEAPOT” strategy is analytics.

Mr. Choudhury emphasized that it must become a retailer’s core advantage. The “P,” meanwhile, is personalization, which he noted will be “base expectation” and involves offering the right experience through the right channel at the right time for everyone. “O,” which is omnichannel, is now how consumers behave. And “T” stands for team. Mr. Choudhury noted that change will come from the top and suggested “weeding out the few people who oppose.”

Peter Maquera, senior vice-president, Enterprise Group of Globe Telecom

In his presentation, Mr. Maquera called attention to how big data is changing retail. It allows retailers to “collect transaction, interaction and external data” to understand who is likely to buy their products and to create unique offers. It also helps optimize pricing, conduct intelligent inventory management, and make accurate sales forecasts. He also showed several findings of the 2019 report published by We Are Social and Hootsuite about the digital behaviors of the Filipino consumers. Among the striking findings: 90% of Internet users in the country searched online for a product or service to buy; 70% of them actually purchased a product or service online; and 57% made an online purchase via a mobile device.

Mr. Maquera also discussed one of his company’s innovative products, GCash, a mobile money service regulated by the Bangko Sentral ng Pilipinas that lets users send and receive money and pay bills, among many other things. The service has around 20 million customers and 65,000 partner merchants. He also mentioned RUSH, their customer engagement program.

Ray Alimurung, chief executive officer of Lazada Philippines

E-commerce in Southeast Asia, which has more than 600 million people, is growing, Mr. Alimurung emphasized. Citing data from Google and Temasek, a global investment company, he noted that the region’s Internet economy will reach $240 billion by 2025, while the e-commerce market in the Philippines will be worth $10 billion by the same year.

Lazada is a giant in the e-commerce market of Southeast Asia. Its Web site enjoys tens of millions of monthly Web visits. According to App Annie, a provider of mobile market data, Lazada’s app was the top shopping app in the region in 2018. In the Philippines, the e-commerce company has a seller base of about 50,000 offering around 80 million products. The company also has three fulfillment centers, a “sort center,” and 50 logistics hubs. According to Mr. Alimurung, their mission is to accelerate progress in Southeast Asia through commerce and technology. He also noted that they “fire up” the growth of the so-called “super e-businesses” in the region.

In addition to his company, Mr. Alimurung discussed the emergence of the “new retail,” which is consumer-centric and characterized by the seamless integration of the offline and the online. Among the “new retail” features of Lazada’s app include live streaming, which allows brands and sellers to engage directly with customers, and games (Lazgames), through which shoppers can win and collect vouchers.

Constantin Robertz, president of Entrego

The growth of e-commerce means a “parcel explosion,” according to Mr. Robertz. He noted that digital transformation is changing the requirements of traditional business supply chains and that logistics is getting more complex. He also noted that in the country logistics is a “big” and “unresolved” challenge that “touches everyone.” According to a report released late last year by the Department of Trade and Industry and the World Bank, manufacturing companies in the Philippines face higher logistics costs than those in the neighboring countries of Indonesia, Vietnam and Thailand.

Entrego is a relatively new player in the local logistics industry, having started in 2017. It offers express parcel delivery, freight forwarding and fulfillment and contract logistics services. Mr. Robertz said their company has already built a nationwide delivery network with 54 distribution hubs and has become a trusted partner for a diverse set of clients. Entrego has more than 200 full-time employees and over 2,000 delivery representatives.

Dealing with the most constructive yet destructive force in the financial sector

By Mark Louis F. Ferrolino, Special Features Writer

For several decades, traditional banks have held a dominant market share with little modification to their business models. These businesses, however, are now facing new pressures as technological advances have taken financial sector by storm, which resulted in the entry of new market players offering consumers a different approach to financial services.

It is now becoming obvious that technological change is the most constructive, and at the same time, the most destructive force in the financial ecosystem today. Incumbents — even established giants — have to adapt, or else they will be left behind as the storm of disruption gets stronger.

This had been one of the key insights discussed at the recently concluded BusinessWorld Economic Forum held last May 30 at the Grand Hyatt Manila in Taguig City, with the theme “The Future of Business: Next-Wave Disruptions and Opportunities.”

In one of the afternoon sessions titled “Financial Technology and the Future of Money,” industry leaders, composed of Frost & Sullivan Asia Pacific Managing Director and Partner Shivaji Das, Bank of the Philippine Islands Chief Digital Officer Noel A. Santiago, FinTechAlliance.ph Founding Chairman Lito M. Villanueva, and Bangko Sentral ng Pilipinas (BSP) Senior Director and Officer-in-Charge for Fintech Sub-Sector Vicente T. De Villa III, discussed how recent technological trends and developments are affecting the financial landscape.

DIGITAL DISRUPTION IN THE FINANCIAL INDUSTRY

According to Mr. Das who opened the session, key technologies, such as natural language processing, augmented reality, virtual reality and cognitive computing, are shaping the financial industry by bringing an array of innovation opportunities. These include personalized virtual banker, augmented banking, biometric mobile wallet and virtual branch, among others.

Shivaji Das, managing director and partner of Frost & Sullivan Asia Pacific

Considering the various benefits of technology, he said that traditional banks and financial institutions have given importance to digital transformation in recent years.

The J.P. Morgan Chase & Co., an American multinational investment bank and financial services company, for instance, has invested a lot in financial technology (fintech). The firm allocated more than $11.5 billion for its technology spending in 2018 and devoted $3 billion to technology innovation in machine learning and robotics, among others.

The approach of exploring and integrating technologies in their businesses has helped traditional banks improve their performance in finance, customer service innovation, business innovation, and efficiency and employee capacity, Mr. Das said.

Having a population with a median age of 24 (which comprised of a segment considered as the most digital native) and a double digit growth in Internet access and smartphone penetration, Mr. Santiago believes that the Philippines is now ready for digital shift. The biggest opportunity, among others, he said, is that 95% of transactions in the country are still done via cash and cheque.

Noel A. Santiago, chief digital officer, Bank of the Philippine Islands

“This is very right for digitalization. The country is ready, the population is ready,” Mr. Santiago said, noting that banks must continue to innovate then. “It is a business imperative for banks all over the world, especially in emerging market that the pace and promise of innovation are being fulfilled. Banks must do more to keep up or they will left behind,” he said.

Many banks, however, are not innovating as fast as they should be to remain competitive, said Mr. Santiago. Citing a survey conducted by Inclusive Digital Finance, he shared that 80% of thrift, rural and cooperative banks as well as microfinance firms in the country are not ready to embrace digital technology.

To help banks with their digital transformation journey, Mr. Santiago said that they need to capitalize on infrastructure and delayer with technology, while fortifying their security. Banks should also prepare for open banking, adapt a mobile-first and innovation mind-sets, and consider customer experience as one of their top priorities.

“We really have to put digitalization as part of our imperative,” Mr. Santiago said, noting that such transformation will reduce the cost of banks and will therefore permit a much higher level of engagement to segments who need access to financial services.

Aside from bringing profound changes on how financial services are being offered, the waves of digital innovations have also influenced how consumers complete their payment transactions, giving way to a cash-lite society.

Lito M. Villanueva, founding chairman of FinTechAlliance.ph

Mr. Villanueva said that digital trends shaping the future of money are already being observed. One of which is the decreasing usage of cash. China, for example, has recorded a staggering mobile transaction volume of about $41.5 trillion in 2018. Meanwhile, in Sweden, only one in 10 consumers paid for something in cash.

Other trends cited by Mr. Villanueva include growing smartphone ubiquity; increasing disintermediation; and accelerating usage of distributed ledger technology, a consensus of replicated, shared and synchronized digital data geographically spread across multiple sites, countries or institutions.

A cash-lite economy has several benefits, said Mr. Villanueva. It promotes transparency, cultivates cost and process efficiencies, generates more data, provides convenience, and levels the playing field.

“Providing a delightful customer experience will always be the end-goal of any digital initiatives,” Mr. Villanueva explained. “As we often hear, technology is the best equalizer, especially driving financial inclusivity.”

However, technology alone is not enough to reach and cater to the unbanked and underserved Filipinos. Mr. Villanueva said that it also requires a concerted efforts from different sectors.

“Collaboration and synergy are critical to the success of this objective. This challenge is too enormous, too important for any single player to take on their own. Let’s put all our hands on deck. The more united we are, the swifter we create a digital economy that uplifts the lives of every Filipino,” Mr. Villanueva said.

SECURING A COMPETITIVE ENVIRONMENT AMIDST DIGITAL REVOLUTION

Playing its crucial role in creating an enabling environment alongside emerging technologies, the BSP, according to Mr. De Villa, has launched several initiatives aimed at allowing industry players to take full advantage of innovations without compromising consumer protection, security and financial stability.

Vicente T. De Villa III, senior director and officer-in-charge for Fintech Sub-Sector, Bangko Sentral ng Pilipinas

“We always endeavor to provide an environment that encourages financial innovation. We want to see the development of new and innovative financial services that can help advance inclusive growth and deliver more efficient financial services to the general public,” Mr. De Villa said. “We seek to continually build a regulatory environment that allows innovations to flourish yet still mindful that risks must be effectively managed and consumer welfare remains protected.”

In this case, Mr. De Villa said that BSP ensures proportionality in the practice of supervision, maintains multi-stakeholder collaboration, and guarantees that innovations always work for the benefits of the consumers.

Among others, the BSP espouses a flexible “test-and-learn” approach to financial innovation that provides an opportunity for innovators to participate in the financial system as players in their own right or as partners of more traditional players like banks. The central bank also launched the National Retail Payment System, a policy and regulatory framework that aims to establish a safe, efficient, reliable, affordable and inclusive retail payment systems in the country.

“We strive to maintain a forward looking approach to ensure that regulatory and supervisory frameworks are in tune with the emerging trends and developments. We continue to improve our capabilities for more proactive surveillance and monitoring of market so we can readily adjust to future challenges and opportunities ahead,” Mr. De Villa said. “We endeavor to promote financial innovation, while, at the same time, establishing adequate safeguards to manage relevant risks.”

Looking at the future, Mr. Das said that banking will evolve to leverage technology in ways that will have a much deeper implication to customer service than current use cases. By 2030, he sees that the banking service provider landscape will consist of different types of firms who, in order to remain competitive, will attempt to leverage certain advantages that are difficult for others to replicate.

The exciting possibilities of next-generation technologies

The global economy is undergoing disruptive changes prompted by the emergence and adoption of technologies such as mobile and cloud computing, cryptocurrency, the Internet of Things, autonomous driving system and artificial intelligence (AI). While these innovations have raised a wide variety of concerns, including fear of widespread job losses, they have no doubt been instrumental in the creation of better and often cheaper products and services and enabling start-ups to challenge the dominance of established players, at least in industries where barriers to entry are low. And the possibilities they offer are exhilarating.

Last May 30, BusinessWorld, the country’s most read and most respected business newspaper, held its fourth Economic Forum at the Grand Hyatt Manila in Taguig City, which revolved around the theme “The Future of Business: Next-wave Disruptions & Opportunities.” The fourth and final session of the day-long conference that drew hundreds of participants focused on next-generation technologies and the future of economy.

That session featured five prominent personalities in the local business community: Andrés Ortola, country general manager of Microsoft Philippines; Kevin Andrew Tan, chief executive officer of Alliance Global Group, Inc., a conglomerate with interests in food and beverage and real estate industries, among others; Maria Francesca Tan, chief executive officer of the MFT Group of Companies, a private equity firm; Jojo Gendrano, first vice-president and head of core business solutions at PLDT Enterprise, the business-to-business arm of PLDT; and Aileen Judan-Jiao, president and country general manager of IBM Philippines.

Andrés Ortola, country general manager of Microsoft Philippines

Artificial intelligence, on which his presentation centered, was described by Mr. Ortola as a game-changer. Microsoft, he noted, believes that artificial intelligence does three significant things: empower developers to innovate, empower organizations to transform industries and empower people to transform society.

There are now millions of developers using Microsoft Azure Cognitive Services that help them “build intelligent applications without having direct AI or data science skills or knowledge,” a page on Microsoft’s Web site explains. “The goal of Azure Cognitive Services is to help developers create applications that can see, hear, speak, understand, and even begin to reason.”

Mr. Ortola showed some findings of a 2019 study conducted by Microsoft and IDC Asia/Pacific, a provider of market intelligence and advisory services, that suggested that AI would accelerate the rate of innovation improvements in the Philippines.

Of the 1,605 business leaders in the Asia-Pacific region who participated in the study, 109 were from the Philippines. When these Philippine-based business leaders were asked the question, “With the introduction of AI, what is the percentage of additional new innovative products and services your organization expect[s] to produce today and in three years from now?” their answers were 32% and 56%, respectively.

The study also suggested that AI would nearly double employee productivity gains in the country. The respondents saw a 27% improvement in productivity gains among employees today and expected that number to increase to 52% in 2021.

When it comes to using AI to transform societies, Mr. Ortola brought up their company’s “AI for Good” program. One project of that program is “Seeing AI,” an app that “narrates the world around you.” Designed for the “low vision community,” it harnesses the power of AI to describe people, text and objects.

Aileen Judan-Jiao, president and country general manager of IBM Philippines

Meanwhile, according to Ms. Judan-Jiao, the market is entering a new chapter in cloud and digital; whereas the first chapter is all about consumer-driven innovation, digital and AI experimentation and public cloud, the second chapter concerns enterprise-driven innovation, the embedding of digital and AI in the business and hybrid cloud.

She noted that unprecedented technological, social and regulatory disruptions are giving rise to the next era of business reinvention, with business platforms at its heart.

She devoted the rest of her talk to automation, and how intelligent automation in particular is reshaping the future of work, and how industries, from insurance (for underwriting risk and modelling) to telecommunications (for predictive maintenance) to health care (for sepsis outcome prediction), are embracing AI. She also remarked on the potential of quantum computing to revolutionize entire industries, like pharmaceuticals and transportation.

Maria Francesca Tan, chief executive officer of the MFT Group of Companies

In her presentation, Ms. Tan provided a list of industries that she thinks are worth investing in: health care, finance, industrial, food and beverage and technology. To be able to meet tomorrow’s challenges, she offered two solutions that companies may want to consider: evolve through robust internal operating controls and processes and evolve through value creation and operational excellence. She also listed the three trends that would shape the future of investment: artificial intelligence, health tech and co-working.

Jojo Gendrano, first vice-president and head of core business solutions
at PLDT Enterprise

Mr. Gendrano, in his talk, noted how mobile technology has made a leap roughly every 10 years (from 2G to 3G to LTE and now to 5G). 5G, the fifth-generation cellular network technology, promises Internet speeds that are multiple times faster than 4G currently offers. It was also noted in his presentation that 5G is “ultra-reliable” and able to support low-latency communications.

Technology, according to Mr. Tan, is evolving faster than our needs, and it enables brands to enjoy a competitive edge and a positive reputation.

Kevin Andrew Tan, chief executive officer of Alliance Global Group, Inc.

He discussed some business trends during his presentation. The first is that people nowadays are always connected, spending hours on the web and checking their phones frequently. Another is the emergence of an on-demand society, in which businesses are valued based on the speed of their response. Then there’s the sharing economy. The fourth trend Mr. Tan mentioned is the social impact that customers today look for. He noted that people consider the value a business brings to the society and that businesses with positive impact grow faster.

Mr. Tan went on to discuss some endeavors of Alliance Global companies. One of the companies under the conglomerate, McDonald’s Philippines, is making customer experience in its stores more interactive through digital technologies. Meanwhile, Megaworld Corp. has been integrating smart home technology into its properties, like The Albany in Taguig City.

More economic measures pushed

THE 17TH CONGRESS, which closed its third and last regular session on Tuesday, passed an “acceptable” number of laws, key officials of business chambers said, but noted the lack of measures on economic liberalization.

Business leaders, in separate interviews, commended the 17th Congress for passing “landmark legislation,” but pushed for other measures to increase investments and boost the economy.

“Overall, I think the number of laws that have been passed is acceptable. The laws passed are slightly higher than the 16th Congress, but much lower than the 15th,” Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon said in a phone interview on Thursday.

Tuesday marked the last session day of the 17th Congress. Bills that failed to secure both chambers’ final approval will have to be filed and go through public hearings and plenary debates anew in the 18th Congress which opens on July 22.

The PCCI chief noted in particular Republic Act (RA) 11223 or the Universal Health Care Act, which will provide health care to all Filipinos; RA 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which reduced personal income tax while tweaking levies on selected goods; and the measure further increasing excise tax rates for tobacco products, which was passed last week and is awaiting President Rodrigo R. Duterte’s signature.

British Chamber of Commerce of the Philippines (BCCP) Chairperson Chris Nelson, in a phone interview on Thursday, also noted RA 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act.

“The 17th Congress passed landmark legislation like the Ease of Doing Business, Balik Scientist, TRAIN, Extending Drivers License and Passport Validity, Agricultural Free Patented Reform, Central Bank Reform, National ID, Department of Housing, among others that will help make the country more competitive,” Federation of Filipino Chinese Chambers of Commerce & Industry, Inc. (FFCCCII) Trade and Industry Committee Chairman George Siy said in a text message on Friday.

ECONOMIC LIBERALIZATION
Meanwhile, the business groups said the sector was left wanting more economic measures, specifically those opening the country to more foreign investments, which they hope incoming legislators can act on once they start their terms.

“I was looking for the passage of the Retail Trade Liberalization Act. I was also looking at the Foreign Investments Act, both of which are to drive more foreign direct investments,” BCCP’s Mr. Nelson said.

He also pointed out the delay in the issuance of the implementing rules and regulations of RA 11032. “I think the Ease of Doing Business Law will, once it’s fully implemented, have a great benefit on the country. But it’s not yet fully implemented,” Mr. Nelson said.

PCCI’s Mr. Barcelon added that the sector is still awaiting the passage of the measure proposing to reduce the corporate income tax in the Philippines — currently the highest among Association of Southeast Asian Nations members.

“I think the one that we’re still waiting for is the reduction on the CIT, corporate income tax. Other than that, we haven’t seen any laws that really will help boost the economy,” he said.

He said he hopes the 18th Congress will also pass proposed amendments to the 82-year-old Public Service Act, which will lift foreign ownership limits in certain sectors, as well as other measures that will reduce prices of basic goods and improve human resources.

“The Public Service Act, it would be good, or even logistics. There should be more competition that opens up for investors to come in so that the cost can be lowered,” he said.

“What we look forward to is for the government to pass laws that would help reduce the cost of living. I hope the 18th Congress would be able to act on some of this. The priority bills of the President, I think only less than half were passed during the 17th Congress,” Mr. Barcelon said.

“Our leaders showed amidst differences, we must work for the country. Given the regional competition happening, now more than ever, we have to row forward together to overcome and ride the upcoming tides,” FFCCCII’s Mr. Siy said.

Out of 28 measures in the Common Legislative Agenda for the 17th Congress approved by the Legislative-Executive Development Advisory Council, lawmakers were able to pass 14, including three bills that form part of the government’s Comprehensive Tax Reform Program.

Two are still awaiting Mr. Duterte’s signature (the security of tenure bill and the bill increasing taxes on tobacco products), while one priority measure that hurdled Congress was vetoed (coconut levy fund bill). — Charmaine A. Tadalan

SSS hires fund managers for P7B in investments

THE Social Security System (SSS) has hired local fund managers to manage P7 billion of its Investment Reserve Fund (IRF) over two years to boost its financial standing, it said in a statement over the weekend.

SSS President and CEO Aurora C. Ignacio said the pension fund allocated the total equally to three Balanced Fund mandates, three Pure Equity Fund mandates, and one Pure Fixed Income Fund mandate.

“The SSS management believes that it can benefit from the investment value-added services of the fund managers such as training, access to proprietary investment analysis and information and access to business analytics,” Ms. Ignacio was quoted as saying in the statement.

SSS deployed P1 billion each to Rizal Commercial Banking Corp., BPI Asset Management and Trust Corp. (BPI AMTC) and ATRAM Trust Corp. under the Balanced Fund mandates.

Meanwhile, the fund managers for the three Pure Equity Fund mandates were BPI AMTC, Metropolitan Bank and Trust Co. and Philequity Management, Inc., also with P1 billion apiece.

BPI AMTC will likewise manage P1 billion under the Pure Fixed Income Fund mandate.

The P7 billion awarded to fund managers is out of the P9-billion investment portfolio the pension fund opened for bidding last year. The total was divided equally among the three investment instruments. According to the bid documents, the firms will manage SSS’ funds for two years.

“The remaining P2 billion allotted for two local fund managers will be opened for rebidding this year,” Ms. Ignacio said.

The SSS is allowed to appoint local or foreign fund managers to manage its IRF.

At end-2018, its reserve fund stood at P495.6 billion, the pension fund said. Bulk or 43% of its investible funds is in government securities, while about 19% is in equities. Another 19% is allocated for loans to SSS members, while 8% is in corporate notes and bonds, 7% in real estate, 3% in bank deposits, and 1% in mutual funds.

In July last year, SSS invested P3 billion of its investment reserve fund in three local mutual funds, divided equally between Philequity Management, Inc., Sun Life of Canada Prosperity Balanced Fund, Inc. and Philippine Stock Index Fund Corp.

The state pension fund is eyeing to finally invest overseas as its new charter allows a bigger chunk of its reserve fund to be parked in foreign-currency securities.

Republic Act No. 11199 or The Social Security Act of 2018 — the amended charter of the Social Security Commission, which is the policy-making body of the SSS — allows the pension fund to put up to 15% of its investible funds in foreign currency and investment-grade instruments.

The funds can be invested overseas, provided that the instruments are listed in bourses and that the issuing company has a proven track record of profitability over the last three years.

The SSS also wants to hire fund managers and advisers for its offshore investments. — RJNI

DICT hopes to give Mislatel permit to operate this month

By Denise A. Valdez
Reporter

THE Department of Information and Communications Technology (DICT) said it is targeting to award the Mislatel consortium with its frequencies and permit to operate by the end of this month, as the incoming third telecommunications player expects to begin operations by 2020.

DICT Acting Secretary Eliseo M. Rio, Jr. said the Mislatel consortium is in the process of securing the go signal from the Securities and Exchange Commission (SEC). After getting the SEC’s nod, only then can the DICT award the certificate of public convenience and necessity (CPCN) to the group.

Aside from the CPCN, the government is set to award the Mislatel consortium with frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz.

“They are now working for the approval of their consortium with our SEC. By the end of this month, they will be given their frequencies and their permit to operate, or CPCN,” he said during the DICT’s third founding anniversary at the Quezon City Circle on Sunday.

The Mislatel consortium is the winner of the government’s bid for a new telecommunications player last year, where it sought for a competitor to industry giants PLDT, Inc. and Globe Telecom, Inc. It is composed of China Telecommunications Corp., and Davao-based businessman Dennis A. Uy’s companies — Udenna Corp. and Chelsea Logistics Holdings Corp.

Under the terms of reference for the third telco bidding, the winning bidder should secure “SEC clearance that the terms of the Bidding Agreement comply with the relevant rules on the limitation of foreign equity ownership.”

Mr. Rio told reporters he is hopeful the group will secure SEC approval this week so the DICT may proceed with the awarding of frequencies and CPCN to Mislatel immediately.

“Pag nakuha nila yun, hopefully by this coming week, pwede na sila magpunta sa DICT. But they still have to post a performance bond of P25.7 billion bago ibigay ng DICT yung kanilang CPCN at yung mga frequencies (Once they get the SEC approval, hopefully by this coming week, they can go to the DICT. But they still have to post a performance bond of P25.7 billion before the DICT can give their CPCN and the frequencies),” Mr. Rio said.

Mislatel Spokesperson Adel A. Tamano confirmed in a mobile message to BusinessWorld the group has started the process for its SEC application, but cannot guarantee that it will get the SEC nod this week.

“We have started the process for our SEC application. When we get the CPCN will be dependent on the SEC, NTC (National Telecommunications Commission), and DICT. And we are doing the steps needed to comply to get the CPCN,” he said.

Mislatel earlier said it aims to start commercial operations in the second quarter of next year.

Mr. Rio noted once the government gives the CPCN and frequencies to Mislatel, it will start monitoring Mislatel’s compliance to its commitments, such as the fulfillment of its promise to provide an average broadband speed of 27 Megabits per second (Mbps), cover 37.03% of the national population and invest P150 billion in capital and operational expenditure in the first year of its operations.

If Mislatel fails in fulfilling its commitments, the government will recall the CPCN and frequencies it will award to the group.

“We are promising our people that by next year, they will feel a very big improvement in our ICT environment, because by that time, we will have the third telco operating already…. By next year, the DICT envisions a faster, reliable and consistent internet connection brought on by helping market competition of telcos,” Mr. Rio said.

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