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The world experienced a lot of “firsts” this monumental 2020. First Zoom wedding, first no All Saints/Souls’ day commemoration at the cemeteries (all memorial tombs will be close to public a week prior to Nov. 1), first no Christmas or year-ender parties. Indeed, the coronavirus has swiftly changed people’s ordinary way of living. The biggest lifestyle change happened in education and in work. The new normal is online schooling and work from home, at least for those who have been blessed to hold on to their office jobs.
As we move towards the eighth month of the pandemic and quarantines in many parts of the world, we would think that by now people have gotten used to virtual meetings; apparently far from it. Still, many people that I meet virtually keep their cameras off during the entire duration of the meeting. While many people have a valid reason for not having a high-speed internet provider in their residences, some are just procrastinating to upgrade their internet connection to enable videoconferencing.
Finance Secretary Carlos Dominguez III has stated time and again that the 2021 national budget is crucial to the recovery of our pandemic-ravaged economy. In media briefings, he said there is no Plan B and if the passage of the appropriations bill is delayed, the government will have to operate on a reenacted budget just like in the first quarter of 2019. In hindsight, we know about its dire repercussions on the country’s GDP growth last year.
Today’s environment presents unprecedented challenges for the banking sector. The lingering uncertainties brought about by the constantly evolving economic and financial landscape require us to rethink the way we operate and respond to these attendant risks. Regulators are not exempted. Banking supervisors continue to step up efforts in strengthening supervisory, examination and enforcement powers and aligning regulations with international best practices.
The Bayanihan to Recover as One Act set aside an allocation of P55 billion to provide low interest loans to sectors severely affected by the coronavirus pandemic. Of this amount, P18.4725 billion is for the Land Bank of the Philippines, P10 billion for Small Business Corp. (P4 billion for MSMEs, cooperatives, hospitals and overseas Filipino workers and P6 billion for tourism); P6 billion for the Development Bank of the Philippines; and P5 billion for the Philippine Guarantee Corp. The remaining P15.5275 billion is a standby fund to be infused into Landbank and DBP as additional capital.
The internet and digital technology have many benefits and advantages but have also introduced new risks and dangers. With greater internet access, bad minds have quickly seized opportunities to exploit people’s vulnerabilities, especially children. Online human trafficking includes online sexual exploitation of children (OSEC), “the production, for the purpose of online publication or transmission, of visual depictions of the sexual abuse or exploitation of a minor for third party who is not in the physical presence of the victim, in exchange for compensation.”
In recent years, the Philippine economy has relied on three major pillars of growth: the remittances of overseas Filipino workers (OFW), the business process outsourcing (BPO) industry, and the tourism sector. Of the three, only the BPOs have survived the pandemic since many OFWs lost their jobs while the airlines and hospitality establishments are on the brink of collapse.
One of the pressing issues of the day is the plan of Congress to provide a two-month moratorium or grace period on loan payments. It was originally a one-year debt moratorium under the house version of the Bayanihan II. The time frame was criticized for its possible impact on the banking industry in terms of risk and liquidity.
When the Philippines’ second-quarter economic performance data was released last week, Acting Socioeconomic Planning Secretary Karl Kendrick Chua remarked: “Our country is facing the biggest crisis in nearly eight decades.” His reference point was the Second World War in the 1940s, when the economy plunged 70% compared to pre-war output, according to a study done by former Economic Planning Minister Gerardo Sicat.
Risk is the possibility of a loss due to an uncertain event that may occur in the future. It includes the probability of the event as well as the severity of the impact. One cannot predict with precision how events will turn out despite all due diligence. This calls for active preparation. A major risk management tool is insurance as a protection for the unknown.
At the Threshold of New Beginnings is the title of a coffee-table book launched by the Rotary Club of Makati West (RCMW) last month. The book traces the history of RCMW starting from the tumultuous year of 1969 up to the last ‘old normal’ year of 2019 and even beyond, touching on the early months of the current global crisis.
“It took us 12 years to build Airbnb, and we lost almost everything in four to six weeks,” Brian Chesky, the CEO of Airbnb, said in an interview on CNBC, indicating that the company was preparing to go public this year, and now that is up in the air. He is just one of the countless entrepreneurs who now face an uncertain future due to the global pandemic that is wreaking disruption in all facets of life.
In the World Bank’s 2019 Migration and Development Brief, the Philippines ranked as the world’s fourth-largest remittance destination after India, China, and Mexico, while among the top originating countries of senders were the US, Singapore, and Hong Kong.
Running a business in Asia, says Sunil Puri, Senior Director of Center for Creative Leadership, is like driving a car at top speed on a poorly lit street at night, with a visibility of just 200 meters. The driver is the CEO and the board directors are the navigators of the trip.
As the government looks for measures that will allow the country to build up from the economic debacle brought about by the COVID-19 pandemic, the message of former President Manuel Roxas comes to mind. Allow me to share the statement of President Roxas on signing the Rehabilitation Finance Corporation (RFC) legislation on Oct. 29, 1946.
WHEN lockdowns and community quarantines were implemented in many parts of the globe, suddenly everything became digital, including the traditional face-to-face conferences, trainings, public fora, and corporate presentations. Enter the now-ubiquitous webinar!
“You never want a serious crisis to go to waste.” I first heard this line during the global financial crisis of 2008. In a media interview, it was stated by then US presidential candidate Barack Obama’s campaign manager Rahm Emanuel, who subsequently became the White House chief of staff and the mayor of Chicago.
John Clements CEO Carol Dominguez invited me to join Professor Marc Bertoneche of Harvard Business School in the John Clements Leadership series on the topic Managing Cash Flow During the COVID-19 Crisis. Marc reminded that cash is king (or queen), and more so today that it’s even like god (with small g)! He said there is a need to reward the cash culture in any business today — to shift the focus from profit and loss/balance sheet to cash flow. It’s very important to stabilize and keep essential operations going. Liquidity is of immediate concern. On the cash to cash conversion of a business cycle, these are his suggestions:
I have looked forward to 2020 for about three years as it was my forecasted early retirement year. For someone who has been in the work force for around four decades, idea of letting go and taking care of a travel bucket list was enthralling. My plans were meticulous to include advance airfare and hotel bookings to ensure cost savings. Likewise, in a number of cases, the reservations were on a confirmed and nonrefundable basis.
Consumers stopped buying many things since the start of the global coronavirus crisis. Malls and retailers closed down. Only certain food deliveries, banks, grocery stores, and pharmacies are open. Businessmen, entrepreneurs, and marketers are struggling to stay afloat, and they will continue to struggle even after the quarantine.
More than any other time in the history of the world, small businesses will need the support of the government. In general, most small businesses are enterprises that survive on recent sales in order to move forward as an ongoing concern. The business model depends on recurring transactions. With the lockdown in place, and people prohibited from moving about, it is the small neighborhood business that immediately suffers.
Since Monday after the President’s announcement of the lockdown, I’ve worked from home -- had a video call meeting with business executives from nine Asian countries, conducted my graduate school class using an online collaboration tool, and electronically met with some clients and partners.
The Go Negosyo Woman 2020 Entrepreneurship Summit at the World Trade Center was a full house of about 8,000 participants. The summit highlighted women’s contribution in the Philippines and ASEAN with wonderful lessons in entrepreneurship, agriculture, style and substance, tourism, diplomacy, finding confidence and in life!
Seventeen years ago, I wrote about the concept of “Family Loans”, inspired by Robert Merton and Zvi Bodie in their innovative text Finance. Whenever I raise the issue in my Finance classes, I realize the concept can benefit today’s millennials. Allow me to revisit the same topic.
It’s been well accepted by CEOs and senior executives that the world is indeed getting more volatile, uncertain, complex, and ambiguous brought about by fast changing consumer preferences, break-neck speed of technological advancements, and the entry of nimbler technology competitors.
As we move to a new decade, businessmen and professionals are developing their reading lists to propel them to the next level of success. Here are three books on corporate leadership and business wisdom that will serve as executives’ guides for expansion and evolution:
Baby Boomers versus Millennials. This has been a trending topic lately from print to internet to social media. Ironically speaking, while there’s a miscommunication between these two generations, majority of the millennials are children born and raised by my fellow boomers.
It’s been five years since digital transformation (abbreviated as DX) reached global mainstream consciousness. We owe it to technology vendors who hyped the term in their patently self-serving motives. What have we learned from the past and what prospects are in store for companies that will embark on DX? Let’s examine the evolution of DX over the years, globally and in the Philippine context.
As we welcome the start of a new decade, it is heartening to know that the Philippines will remain among the fastest-growing economies in the world, based on a recent report from the UK-based Economist Intelligence Unit (EIU) titled “The Next Decade.”
A balanced and developed finance system will have both well functioning financial intermediaries and market based institutions contributing to the economy’s growth. This is achieved through several channels: (1) acquisition on information about firms; (2) provision of risk-reducing arrangements; (3) pooling of capital; and (4) ease of making transactions. Information gathering is key to monitor the efficiency and productivity of projects. The system increases the pool of available funds and hedging of risks lead to better allocation to productive uses of funds mobilized from savers. With good governance, the financial systems can help to retain domestic savings at home.
Kudos to the Filipino athletes who achieved podium finishes in the ongoing Southeast Asian (SEA) Games. At the rate they’re winning medals, it is almost certain that Team Philippines will become the overall champion of the 30th SEA Games just like when we last hosted the biennial event in 2005.
The Asian Bankers Association (ABA) celebrated its 36th annual event last Nov. 14-15 in the Philippines, hosted by Philippine National Bank (PNB), gathering a large group of top bankers and finance executives from 25 countries from Asia and key markets across the globe. ABA provides a forum for advancing the cause of the banking and financial industry in the region by promoting regional economic cooperation. ABA’s membership is composed of 100 of the leading banks and financial institutions in the Asia-Pacific region. With this year’s theme, “Reshaping the Asian Financial Landscape,” the conference tackled the relevant topics of sustainable financing, cyber-security and digitalization. The speakers were experts who shared their experiences and knowledge in the current trends of banking. Attendees discussed and shared experiences as they tackled the most relevant developments facing the Asian financial landscape today. At the forefront was the integration of digital technology into the financial landscape and how digital banking and the wave of technologies are now disrupting the banking industry.
For this column, I will share a vision of family welfare and productivity that was penned some thirty (30) years ago in the crafting of a strategic vision for the then newly reformed Development Bank of the Philippines. I believe it is a yardstick that can be applied to any organization wanting to serve the cause of development. However, the yardstick is now confronted with new hurdles.
At the turn of the millennium, the Southern Tagalog region was the country’s biggest in terms of land area and population. Designated as Region IV by the national government for administrative purposes, it consisted of six provinces in the southern part of Luzon and five island provinces adjacent to the Visayas.
Modern banks play two important roles in the financial system. One, they are at the heart of the clearing and payment system so that transactions are consummated as seamlessly as possible. Two, they are major intermediaries in the reallocation of money or credit from those with excess of funds, the savers, to those with needs or opportunities, the borrowers. Banks make money from spreads or margins as well as from fee business. Traditionally, banks who are able to handle the functions well and efficiently are able to make a lot of money for their main profit objective.