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ASEAN Nikkei PMI tuns more positive in May as orders pick up

MANUFACTURING activity expanded in May in the Association of Southeast Asian Nations (ASEAN), driven by expansions in output and new orders, according to the Nikkei ASEAN Manufacturing Purchasing Managers’ Index (PMI) prepared by IHS Markit.

According to the report, ASEAN headline PMI increased to 50.6 in May from 50.4 in April, “signalling only a slight improvement in the health of the manufacturing sector.”

A reading above 50 signals a contraction in purchasing, considered a leaing indicator for future manufacturing activity and potentially economic growth. A reading below 50 signals a contraction.

The report said the May reading is the highest since August 2018.

The report covers seven of the 10 ASEAN members. The manufacturing PMI consists of five sub-indices, with new orders having the heaviest weight at 30%, followed by output at 25%, employment at 20%, suppliers’ delivery times at 15% and stocks of purchases at 10%.

An IHS Markit report released earlier gave a PMI reading for the Philippines at 51.2, from 50.9 in April, showing a “modest but stronger improvement in the health of the manufacturing sector.”

According to the ASEAN report, Myanmar had the top PMI reading in the region of 54.2. PMI readings for Vietnam were at 52; Indonesia, 51.6; Thailand, 50.7; and Malaysia, 48.8. There is no available PMI data yet for Singapore, but the report said it likely recorded a downturn, along with Malaysia.

“ASEAN manufacturing firms saw an established recovery of business conditions in May, building on the progress made after the downturn at the start of the year. Output grew more strongly as firms enjoyed the quickest increase in sales for nine months. Specifically, the PMI signaled an improved picture for the region’s export market which remained broadly stable following an eight-month sequence of decline,” David Owen, IHS Markit economist, was quoted in the report.

According to the report, stronger demand drove the growth for the month, which supported the fastest expansion of production in six months. Also, firms raised their inventories of inputs for the first time since September 2016, the report said, but noted that this performance was marginal.

Input prices rose at a quicker pace, with all seven countries reporting increase in manufacturing costs for the first time in seven months, due to firmer demand which led suppliers to raise prices, the report said, while unfavorable exchange rates and higher fuel costs were also factors.

The report said business sentiment about output 12 months in advance improved in May, with sentiment at its highest in two and a half years, with five of the seven countries expressing a more positive outlook.

“…given the impact of the US-China trade war last year, businesses will be downbeat on news of tariff increases in May. Export demand from China may be damaged once more, possibly leading to another period of declines in foreign sales. Luckily, domestic markets are holding up, offering hope of continued strength in new factory orders,” Mr. Owen said. — Reicelene Joy N. Ignacio

Readiness for workforce change in region requires education reform, collaboration, experts say

ASIA SOCIETY

THE Asia Society said it backed improving education systems and providing upskilling programs in collaboration with all stakeholders as a means of preparing the region for the changing nature of the workplace.

On Tuesday, Asia Society Chair Doris Magsaysay-Ho said at the “One Step Ahead” Manila forum organized by the non-profit: “(O)ur aim is to come up with solutions and share best practices on dealing with the challenges of the future of work. Navigating this complexity needs a multi-sectoral, multi-level approach.”

Ayala Corp. Chairman Jaime Augusto Zobel de Ayala gave the keynote address during the forum and underlined the importance of hard-to-find emerging skills as an asset to survive ongoing disruption in the workplace. These skills are critical not just for workers but also for the future executives and managers of businesses, he said.

“There is an increasing demand in technical skills, some of which still don’t exist in our organizations today like programming and other areas of computer science, and data science which are increasing in demand but are very difficult to find… Social skills and complex cognitive skills such as leadership skills, creativity and communication and critical skills, will also be important… and lastly, soft skills will also be valid,” he said.

He added that private enterprises also play a role in helping workers transition to change. He said: “I’m a strong believer in the private sector in bringing widespread and meaningful change… these developments are challenging both the private and public sector.”

In government, Technical Education and Skills Development Authority (TESDA) Deputy Director General for Policy and Planning, Rosanna A. Urdaneta, said there is a need to improve TVET (Technical and Vocational Education and Training) program. TESDA, along with other stakeholders, hopes to instill not only the importance of inclusiveness but also readiness for globalization in its National Technical Education and Skills Development Plan (NTESDP).

She said at the forum: “We’re always saying that we have to think global and act local so for the NTESDP, we came up with two strategies and that is TVET for global competitiveness and workforce readiness. The other is TVET for social equity and poverty reduction.”

Skills Future Singapore Chief Human Resources and Chief Data Officer Michael Fung said TVET should be prioritized as much as improving the curriculum. He recommends combining both systems to better prepare students for the workforce.

He said during a panel discussion: “We’re really seeing that divide between the academic education and vocation education… if you start in a vocational track, it should mean that you can come back to your academic track. You should be able to access vocational-type skills and training so you’re ready for the workforce.”

International Labor Organization (ILO) Technical Officer for the Enterprise Development and Skills Jordi Prat Tuca said collaboration by all sectors is needed to successfully transition workers to meet the demands of disruption.

“Government has to be involved… so we can see policies or sectors that we can address. Then you need employers… and employers organizations and their representations… and finally, it is critical that workers should be part of it because we are talking about the human capital and how it drives businesses to the future. Yes, it’s human to machine, but it’s still human, not machine to machine,” he said during an interview with BusinessWorld on Tuesday. — Gillian M. Cortez

PHL now seen least likely in Asia to benefit from US-China trade war

THE Philippines was the least likely to benefit from the United States-China trade war out of 13 Asia-Pacific economies, Japanese banking group Nomura said in a report, which assessed their first quarter trade performance.

In its “Emerging Markets Special Report” published June 3, the Japanese bank said the Philippines was 22nd on the list of potential beneficiaries from the trade tensions out of 50 economies studied.

The economy that benefitted most from the trade diversion was Vietnam with a potential boost of 7.9% to gross domestic product (GDP).

Following Vietnam was Taiwan at 2.1%, Chile at 1.5%, Malaysia at 1.3% and Argentina at 1.2%.

Vietnam and Taiwan benefitted mainly from additional US imports while Chile, Malaysia and Argentina gained mainly from additional China imports.

Meanwhile, the boost to Philippine trade was equivalent only to 0.1% of GDP.

The Philippines’ US imports are estimated to have risen 0.2% as a result of the trade war, Nomura said.

Meanwhile, trade with China associated with import substitution declined 0.1%..

The Nomura report also found that the loss to China (-0.5% of GDP) is more than the loss to US (-0.3% of GDP), in line with the higher share of US exports in China’s GDP.

Among the regions, Asia, except China, and the Americas, except the US, are the biggest gainers, with Asia benefitting more from additional US imports representing lost Chinese orders, and the Americas gaining more from additional Chinese imports representing lost US orders.

In a study last year that selected trade war gainers, Nomura said the Asian countries that will benefit most are Malaysia, Japan, Pakistan, Thailand, the Philippines and Vietnam.

The 2018 Nomura report is in line with the findings of a United Nations Conference on Trade and Development (UNCTAD) report which estimates that, of the $250 billion in Chinese exports subject to US tariffs of 25%, a full 82% will be captured by firms in other countries, 12% will be retained by Chinese firms and only 6% will be captured by US firms.

The UNCTAD study expects the Philippines to capture about 3.2% of the trade diverted from US and China.

Economists and analysts have also said the Philippines stands to gain in the trade war in the short term, citing possible relocations of directly affected firms.

However, the Philippine Economic Zone Authority (PEZA), the country’s second biggest investment promotion agency, has said the Philippines is missing out on investment opportunities due to uncertainties surrounding the government’s push to alter the fiscal incentives regime.

PEZA Director-General Charito B. Plaza said she has met with about 20 firms, mostly from China, inquiring about the possibility of transferring operations here. Some, however, have already transferred elsewhere. — Janina C. Lim

Online hiring activity rises 11% year on year in April

FREEPIK

JOB RECRUITMENT site Monster.com said April online hiring activity rose 11% year on year led by strong growth in the fast-moving consumer goods segment.

In a statement on Tuesday, Monster said “E-recruitment in the Philippines witnessed positive year-on-year growth of 11% between April 2018 and 2019, according to the latest Monster Employment Index (MEI).”

The April 2019 MEI also reported that the fast-moving consumer goods (FMCG) industry had the highest year-on-year growth with 22%. Other high-growth industries were hospitality (21%); logistics, courier/freight/ transportation, import/export and shipping (16%); healthcare (15%); and IT, telecom/ISP (14%).

The only industry that did not report growth was the education sector, which Monster.com said “saw a 6% decline between April 2018 and April 2019.”

Monster.com-Asia Pacific and Middle East CEO Abhijeet Mukherjee said in a statement that while hiring demand continued with its momentum in the first few months of 2019, there are still some risks to the health of the online employment market.

“The job market reported stable momentum despite the 5.6% growth in the 1st quarter of 2019, and with the ongoing trade war and other economic headwinds businesses will remain cautiously optimistic,” he said.

MEI also reported the top-growing occupations were those in HR & admin and as well as finance & accounts. Monster.com said “HR & admin professionals received the highest spike in demand with 19% year-on-year growth for the month of April, followed by finance & accounts talent with a 18% growth in yearly demand.”

Recruiting activity for the other occupations listed in the MEI all grew. Other top growth occupations were purchase/logistics/supply chain professionals (16%); hospitality & travel (13%); and marketing & communications (12%).

Occupations posting the lowest growth were: software, hardware, and telecom (11%); customer service (11%); healthcare (10%); sales & business development (5%); engineering/production and real estate (3%). — Gillian M. Cortez

DA to discuss greater Japan access for PHL produce

THE Department of Agriculture (DA) said it is set to meet with a Japanese government delegation to tackle greater access for some Philippine agricultural products to Japan.

“The first issue is the recognition of the Philippines as an FMD (foot and mouth disease)-free country, which is critical for our exports. Number two, market access for Hass avocado. Number three our request to exempt compliant exporters from 100% mandatory inspection for bananas. Number four, the tariff on bananas,” Agriculture Secretary Emmanuel F. Piñol said in a news conference.

Mr. Piñol said that he is scheduled to meet with his counterpart, Minister Takamori Yoshikawa, on June 5. He also said that the recent lifting of a ban on importing of fish from the Fukushima region may have contributed to a “cordial atmosphere” during initial meetings.

“I noticed a more cordial atmosphere even in the bilaterals…” he said, noting that “the decision of the Philippines to ban the ban on fish coming from Fukushima” may have improved the atmosphere.

“I am expecting positive results,” he said.

On May 29, Mr. Piñol announced the lifting of an import ban on four fish species from Fukushima — cherry salmon, sand lance, Japanese dace, and ayu or sweetfish — after 7 years. This order was approved the Bureau of Fisheries and Aquatic Resources (BFAR).

The ban was implemented in 2012 in the wake of the Fukushima Daiichi Nuclear Power Plant disaster in 2011.

“I consider the ban, issued by the previous administration, as… an overreaction to an issue which did not really affect the Philippines,” he said in a social media post. — Vincent Mariel P. Galang

Bataan freeport bills ratified in House, Senate

THE House of Representatives and the Senate ratified on Monday the bills that seeks to expand the powers and functions of Authority of the Freeport Area of Bataan (AFAB).

House Bill 6524 and Senate Bill 2133, which form the basis for the proposed Freeport Area of Bataan Act, gives AFAB additional land in Mariveles which used to be part of the Bataan Economic Zone, and other areas in Mariveles not currently included in the FAB Main Zone.

The bills seek to develop AFAB into a decentralized and self-reliant research, development, engineering, medical, and education center in line with the provisions of the Local Government Code.

The measure gives additional powers to the AFAB include the authority to undertake the establishment, operation, and construction of airports, shipping facilities, and other such projects.

The bills also give AFAB the authority to operate or to license tourism- related activities such as games, amusements, nature parks, recreational and sports facilities, online gaming, and other such activities.

The roles of the AFAB administrator and chairman were separated as well. — Vince Angelo C. Ferreras

Congress ratifies Solar Para sa Bayan bill

THE House of Representatives and the Senate ratified on Monday the proposed measure granting a renewable energy distribution franchise to Solar Para Sa Bayan Corp. (SPSBC).

The two chambers separately ratified the bicameral committee report on House Bill 8179 allows SPSBC to “construct, install, establish operate and maintain” distributed energy resources and microgrid systems for 25 years.

SPSBC is controlled by Solar Philippines President Leandro L. Leviste, the son of Senator Loren B. Legarda.

The measure was ratified by the Senate over the objections of Senator Sherwin T. Gatchalian.

“My objection is based on a substantive insertion in the Bicam Report that will negatively affect the power industry because of the implementation of this franchise,” said Mr. Gatchalian in his speech.

He added, “This insertion is in the definition of an underserved area, which will now include areas ‘where electricity services have been interrupted at least twelve (12) times in the twelve (12) months preceding the date of the determination that such area is underserved.’”

The bill authorizes the company to supply remote, unviable, unserved, or underserved areas in thirteen provinces.

These are Aurora, Batangas, Bohol, Cagayan, Camiguin, Compostela Valley, Davao Oriental, Isabela, Masbate, Misamis Occidental, Occidental Mindoro, Palawan, and Tawi-Tawi.

The bill acknowledges that SPSBC is not entitled to “any government subsidy” in setting rates, while empowering the Energy Regulatory Commission to set its rates. — Vince Angelo C. Ferreras

Finance dep’t sets 2022 target date for rolling out e-invoicing system

THE Department of Finance (DoF) hopes to fully implement the electronic invoicing system by December 2022, resulting in administrative savings for the government and streamlining of tax processes, the Department of Finance said.

“Progress has been made in modernizing information technology services for taxpayers. However, further reforms are needed. The Bureau of Internal Revenue (BIR), in partnership with the government of Korea, is set to complete the development of the e-invoicing system by end-2022,” DoF Assistant Secretary Antonio Joselito G. Lambino II said in a statement on Tuesday.

“This agenda requires a high level of commitment and the tax bureau has initiated foundational activities such as business process mapping starting this year,” Mr. Lambino added.

According to Mr. Lambino, the e-invoicing system will “result in administrative savings and make the bureau more resilient and easily adaptable to changes in policy and technology.”

Mr. Lambino noted that digitizing the invoice system will cut down on redundant data entries which are currently required in tax returns that already form part of other requirements in paying taxes.

Mr. Lambino said the current tax system has a tendency to “overemphasize controls and monitoring over the welfare of taxpayers and the overall ease and efficiency of compliance.”

He said that with the transformation, the DoF hopes to optimize business processes and improve the digital literacy of BIR’s workforce.

Earlier, Korea International Cooperation Agency (KOICA) President Lee Mikyung said in a statement that South Korea will increase its assistance to the Association of Southeast Asian Nations (ASEAN).

“With the new set of policies presented by the Korean government, our volume of assistance to ASEAN countries will be increased by 2.8 times in 2022 compared to that of 2017. That means the volume of assistance to the Philippines will be naturally increased,” Mr. Lee said.

Mr. Lee said South Korea’s other initiatives for the Philippines include education, information and communications technology (ICT). — Reicelene Joy N. Ignacio

Luzon grid goes on six-hour yellow alert Tuesday

THE Luzon grid went on yellow alert for six hours Tuesday as power reserves thinned.

In an advisory, the National Grid Corp. of the Philippines (NGCP) said the yellow alert on the country’s largest power grid was in effect between 10:00 am to 4:00 p.m. yesterday.

The grid’s available capacity stands at 11,746 megawatts, while peak demand is at 10,831 megawatts, according to the NGCP.

A yellow alert signifies that power supply is approaching critical levels.

The NGCP had not provided details on the alert by deadline time yesterday.

NGCP yesterday reported emergency power interruptions affecting the franchise area of Camarines Sur III Electric Cooperative, Inc. at 3:00 to 5:00 p.m., citing the shutdown of the Naga-Iriga 69 kilovolt (kV) line as requested by Gallintina Inc. for the reconnection of the new Gallintina dressing plant.

Scheduled power interruptions were also expected in parts of Quezon province on June 8, from 8:00 AM to 6:00 PM, due to corrective and maintenance work on the Gumaca-Progreso 69 kV Line and Gumaca-Atimonan 69 kV Line.

Specific areas suffering outages will be determined by the Quezon I Electric Cooperative Inc.

The NGCP also advised of scheduled power interruption in parts of Davao de Oro (Compostela Valley), Davao del Norte, and Davao Oriental, specifically the franchise areas of Davao del Norte Cooperative Inc. and Davao Oriental Electric Cooperative, Inc, on June 15 from 8:00 AM to 6:00 PM. This is due to the repair and maintenance of structures along Maco-Banaybanay 69kV Line.

Specific areas affected will be determined by the electric cooperatives. — — Janina C. Lim

Palace: Comelec has legal basis to drop Smartmatic

By Arjay L. Balinbin
Reporter

MALACAÑANG on Tuesday said there is enough legal basis to drop the partnership of the Commission on Elections (Comelec) with Smartmatic, saying the company “has not been efficient” in the previous elections.

“The legal basis: if you have not done efficiently what you’re supposed to do. That’s the legal basis,” Presidential Spokesperson Salvador S. Panelo said in a press briefing when asked to comment on Comelec Spokesperson James B. Jimenez’s statement that there should be a legal basis for such a move.

He added, “Kung iyong (if the) glitch will result in the delay, substantial delay in the results, if I were the lawyer, I would argue [that] there’s a breach, kasi hindi mo sinunod iyong kontrata mo (Because you did not follow your contract). Dapat walang (There should be no) delay.”

Mr. Jimenez said in a chance interview with reporters last Monday that there has to be a legal basis despite the reported glitches during the May 13 elections.

He said Smartmatic had “nothing to do with the counting of votes.”

On the Position of President Rodrigo R. Duterte on the matter, Mr. Panelo said: “The President’s position is very clear. There have been allegations of certain glitches that somehow affect the impression that this Smartmatic is competent…. If you recall, during the presidential elections, there were strong allegations that the President lost three million votes. And presently, the opposition is also complaining about the votes that they got….”

For his part, House Minority Leader Danilo E. Suarez of the 3rd district of Quezon said in a press conference on Tuesday, “‘Yung failure ng election ay hindi sa Smartmatic, it was Comelec itself…Lahat ng ginagawa ng Smartmatic, kinuha nila. Everything was Smartmatic’s before… Kaya ‘yung blunder dito sa SD cards na nagkasira-sira, we really have to ask Comelec what happened there.” (The failure of election is not by Smartmatic but by the Comelec itself. Comelec took off from everything Smartmatic did….That’s why the blunder regarding the SD cards, we really have to ask Comelec what happened there).

Duterte reshuffles MWSS board

By Arjay L. Balinbin
Reporter

PRESIDENT Rodrigo R. Duterte has appointed retired Army General Ricardo C. Morales as a member of the Board of Trustees of the Metropolitan Waterworks and Sewerage System (MWSS), replacing the Board’s Vice Chairperson Reynaldo V. Velasco.

Meanwhile, Franklin J. Demonteverde, the current Board chairman, will “become a member of the JBC (Judicial and Bar Council),” according to Mr. Velasco in an interview with Palace reporters.

Mr. Duterte signed on May 27 Mr. Morales’s appointment paper, which Malacañang released to reporters on Tuesday.

Mr. Morales will serve the unexpired term of office of Mr. Velasco which “began on 01 July 2018 and will end on 30 June 2019.”

Mr. Velasco said he “will become chairman” of the MWSS Board of Trustees, and Mr. Morales will become the new administrator of the MWSS once the Board appoints him as vice chairperson.

May proseso ‘yan (There is a process for that). He has to take his oath of office and at the same time he has to be accepted by the Board. The Board will be the one to appoint [him]…. Ino-nominate siya (They will nominate him),” he said.

Mr. Duterte announced last month that he was going to replace the chairperson of the MWSS.

The announcement came after the water supply crisis hit Metro Manila in March.

The President told MWSS officials and water concessionaires on March 20 to “shape up or ship out” and even threatened to terminate the concession agreements.

ACCRALAW co-founder Teodoro D. Regala, 85

LAWYER Teodoro D. Regala, one of the leading figures in the country’s legal profession and a co-founder of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), passed away on June 1. He was 85.

A statement by the firm cited Mr. Regala as having served as its managing partner from 1981 to 1985. Mr. Regala co-founded ACCRALAW together with Manuel G. Abello, Jose C. Concepcion, Avelino V. Cruz, and the late senator Edgardo J. Angara.

Mr. Regala, who was born on Dec. 27, 1933, has had “a long scope of accomplishments that span more than 50 years during which he earned the respect of his peers and the adoration of those whom he had worked closely with,” ACCRALAW said in its statement.

“He leaves behind a legacy of excellence in Philippine corporate law practice,” the statement also said. “His most recent accolades include recognition by Chambers Asia-Pacific and Chambers & Partners as one of the Senior Statesmen for Corporate/Mergers & Acquisitions for 2018 and citation as one of the top 100 lawyers in the Philippines in Vantage Asia‚ The A List.”

The statement also cited Mr. Regala as having been “actively involved in several organizations such as the Inter-Pacific Bar Association, the UP Law Alumni Association, the Harvard Club of the Philippines, and the Union Church of Manila (UCM) Philippines Foundation, Inc.”

Mr. Regala earned his Bachelor of Arts degree in 1953 and Master of Arts in Economics in 1954 at the University of Sydney. He also earned his Bachelor of Science in Jurisprudence and Bachelor of Laws degrees from the University of the Philippines in 1959.

Under a scholarship grant, Mr. Regala obtained a Master of Laws degree from Harvard University where he graduated in 1960. He also took special courses in Corporate Taxation and Securities Regulation at the New York University School of Law in 1961. Mr. Regala was admitted to the Philippine Bar in 1962.

He is survived by his wife Carminda, children Karina, Teodoro, Jr., Risa, and Pia, and 13 grandchildren. — Vann Marlo M. Villegas