2015, 2016 augur well for the economy

THE final figures are yet to come but it is reasonable to expect that economic growth in 2014 will be significantly lower than the 7.2 percent posted in 2013.

Socioeconomic Planning Secretary Arsenio Balisacan estimates that growth, in terms of Gross Domestic Product (GDP), in the fourth quarter should be at least 8.2 percent to reach the low end (6.5 percent) of the government’s target for the whole year, given the 5.8 percent growth for the first three quarters of 2014.

However, the last time the Philippine economy breached the 8.0-percent GDP growth level was in the second quarter of 2010, when it reached 8.9 percent. During that year, GDP grew by 7.6 percent, which remains a record.

The government has admitted that the slower growth in 2014 was due to lower spending on public projects. As a result, public construction contracted from a double-digit growth of 19.1 percent in the third quarter of 2013 to -6.2 percent in the same period this year. In contrast, private construction grew by 15.7 percent in the third quarter of 2014 compared to 1.6 percent a year ago.

The lower government spending in 2014 was due to issues surrounding the Priority Development Assistance Fund and the Disbursement Acceleration Program. This resulted in confusion and restrained spending. I think these issues have been addressed and government spending will be smoother beginning in 2015.

I consider the performance in 2014 as a break in the upward trek of the Philippine economy, which remains one of the fastest-growing in Southeast Asia.

My prognosis for the economy is good, both for 2015 and 2016. This is because our fundamentals remain strong. We are also seeing developments that are expected to improve our growth prospects.

Inflation, which measures the movement of prices of basic goods and services, slowed down to 3.7 percent in November 2014 from 4.3 percent in October. The government’s inflation target for 2014 is plus or minus 4 percent.

Interest rates also remain low.

During its meeting on December 11, the Bangko Sentral’s Monetary Board decided to keep its policy rates, which private banks use to set their lending rates, at 4.0 percent for overnight borrowing and 6.0 percent for overnight lending.

I believe fuel prices (gasoline and diesel) are a big factor behind the low inflation, and the decision of the Bangko Sentral to keep interest rates low.

In its update on economic prospects, the Asian Development Bank said declining oil prices could bring about a positive surprise for developing countries in Asia, like the Philippines, most of which are oil importers. The reduction in fuel prices is good for the business sector, especially for the real estate industry. I won’t call the current state of the real estate industry as a boom, but I see no reason to expect a serious drop in sales.

In addition, we are facing an election year. While the elections are scheduled for 2016, election-related spending will start by the middle of 2015, so it will have a positive impact on the economy as early as next year.

Election spending will peak in 2016, which means higher GDP growth. Hopefully, the high growth rates in 2015 and 2016 will be achieved with low inflation.

I think there will be “one-for-the-road” drive for infrastructure development. Traditionally, outgoing administrations want to leave as many visible projects as possible as part of their legacy. There’s a lot of work to catch up with respect to roads, bridges, ports and other infrastructure projects.

Another development that I believe will contribute to higher growth in the next two years is the return of President Aquino’s high approval and trust ratings. Based on the survey conducted by Pulse Asia in November 2014, the President’s ratings stood at 59 percent and 56 percent, respectively, making him the most trusted among the top five national government officials.

The President’s relentless campaign against corruption instills confidence on the minds of the people, which translates, in turn, to consumer confidence.

This was confirmed by a separate survey conducted by the Bangko Sentral.

According to the monetary authority’s Consumer Expectations Survey, which was conducted on October 1 to 11, consumer sentiment improved in the fourth quarter of 2014 compared to the same quarter in 2013.

The improved confidence, in turn, contributes to higher consumer spending, which continues to account for a major share of the economy’s growth.

These factors are on top of the traditional growth drivers, specifically the business process outsourcing industry, remittances from overseas Filipinos and the tourism industry.

I will continue the discussion on the country’s outlook, including the challenges to growth, next week. In the meantime, with the current year closing after tomorrow, let me wish all Filipinos a peaceful and prosperous New Year. (To be continued)

For comments, e-mail mbv.secretariat@gmail.com or 

visit www.mannyvillar.com.ph.

source:  Business Mirror Column of Sen. Manny Villar

A future and a hope with SSS

TODAY is the last day of the year and, like most people around the world, Filipinos are busy preparing to welcome 2015 with a bang. New Year’s Eve fare often includes something sticky, like glutinous rice cake (biko), and 12 round fruits; and traditions handed down to us by our Chinese forebears, including the practice of lighting firecrackers and other pyrotechnic items. Aside from the preparations for the media noche, or New Year’s Eve dinner, it is also the time for most of us to reflect and thank God for what we have accomplished in the year that passed, and a time to pray and plan for the year to come.

The revelry and enthusiasm that characterize New Year’s Eve celebrations in the Philippines are indicative of the Filipinos’ resilience and optimism. No matter how bad the year that passed was, many look forward to the new year with the hope that things would be better. This hopeful attitude is confirmed by the results of a nationwide survey showing that 93 percent of Filipinos look forward to 2015 with hope, instead of fear.

The Social Security System (SSS), as an institution, also looks forward to the coming year with the great expectation that it will do even better than what it had accomplished in 2014, which is a banner year for the pension fund. As of end-October, the SSS disbursed more than P85.6 billion in social-security and employees’ compensation benefits to more than 2.6 million pensioners and beneficiaries out of the more than P100 billion that it collected from members’ contributions. It earned P37.3 billion in net revenues, 13.4 percent higher than in 2013 for the same period. Its membership grew by 3.7 percent to over 31.8 million. To improve service delivery and give the public greater access to its services, the SSS officially opened eight new branches as of end-October, 10 service offices nationwide and two overseas representative offices.

For 2015 the SSS hopes to surpass its accomplishments in 2014 as it continues to work strongly in pooling its resources, while taking cognizance of the economic and sociopolitical developments in the country. Its major strategic objectives include the improved compliance of employers and members; improved service delivery; better benefits for members; effective fund management; and a more responsive organization.

With its policymaking body— the Social Security Commission— and the SSS management working hand in hand and fully committed to achieve these objectives, SSS members can, indeed, look forward to the new year with hope for a better future.

As we wonder what is in store for us in 2015, I leave these words of assurance fromJeremiah 29:11 of the Good Book: “‘For I know the plans I have for you,’ declares the Lord, ‘plans to prosper you and not to harm you, plans to give you hope and a future.’”

A happy and prosperous New Year to everyone!

For more information about the SSS and its programs, call its 24-hour call center at (632) 920-6446 to 55 from Monday to Friday, send an e-mail tomember_relations@sss.gov.ph or visit its website at www.sss.gov.ph.

Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante. bmirror@ gmail.com.

I suspect that view would be a mistake this time around. The world is experiencing much more than a temporary dip in oil prices. Because of a change in the supply model, this is a fundamental shift that will likely have long-lasting effects.

Through the years, markets have been conditioned to expect members of the Organization of Petroleum Exporting Countries (Opec) to cut their production in response to a sharp drop in prices. Saudi Arabia played the role of the “swing producer”. As the biggest producer, it was willing and able to absorb a disproportionately large part of the output cut in order to stabilize prices and provide the basis for a rebound.

It did so directly by adhering to its lowered individual output ceiling, and indirectly by turning a blind eye when other Opec members cheated by exceeding their ceilings to generate higher earnings. In the few periods when Saudi Arabia didn’t initially play this role, such as in the late 1990s, oil prices collapsed to levels that threatened the commercial viability of even the lower-cost Opec producers.

Yet, in serving as the swing producer through the years, Saudi Arabia learned an important lesson: It isn’t easy to regain market share. This difficulty is greatly amplified.

source:  Business Mirror's Column of Susie Bugante

Bank lending growth slows

Credit growth slowed in November but remained supportive of the domestic economy as bulk of the loans went into production activities, Bangko Sentral ng Pilipinas data showed.

Lending by universal and commercial banks, less their placements with the central bank, rose 20 percent to P4.317 trillion last month from P3.598 trillion in the same period in 2013. The growth rate is slower than the 21.1 percent recorded in October, the BSP said.

Together with placements with the BSP, lending went up 18.9 percent to P4.585 trillion from P3.856 trillion. Again, the expansion rate is a deceleration from the 20 percent seen in October.

 “The continued expansion in bank lending is expected to support the growth of the domestic economy,” the BSP said.

Loans for production activities continued to make up bulk of the credit during the month at 90 percent. 

These borrowings climbed 18.6 percent to P3.842 trillion from year-ago levels and were mainly put into real estate (P772.015 billion); manufacturing (P683.504 billion); wholesale and retail trade (P620.051 billion); electricity, gas and water (P450.935 billion); and financial intermediation (P364.865 billion) activities.

Consumer loans, meanwhile, swelled 20.7 percent to P331.686 billion in November from P274.718 billion in the same month a year ago.

This was driven by a 5.7-percent expansion in credit card loans to P160.679 billion, and a 22.7-percent surge in borrowings for car financing to P113.432 billion. Other consumer loans during the period ballooned 90.7 percent to P57.575 billion.

 “Going forward, the BSP will ensure that credit and liquidity conditions keep pace with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the central bank said.

source:  Philippine Star

YEARENDER: Intense competition among telecom companies expected to continue

Dominant carrier Philippine Long Distance Telephone Co. (PLDT) and Ayala-controlled Globe Telecom Inc. see no let up in the intense competition in the capital intensive telecommunications industry.

PLDT chairman Manuel V. Pangilinan expects intense competition to go beyond 2014 dragging the bottomline of telecom providers in the country.

“We expect competition to remain keen in the fourth quarter of the year, and possibly beyond 2014 as well,” Pangilinan said.

This prompted PLDT to slash its profit guidance for 2014 due also to the changing revenue-mix in the telecom industry.

The PLDT Group revised downwards by four percent its full-year profit guidance to P37 billion from P39.5 billion as competition is expected to “remain keen in the fourth quarter of the year, and possibly beyond 2014 as well.”

The company’s core net income slipped one percent to P28.6 million in the first nine months of the year from P28.8 billion in the same period last year. This was due to the P4.4-billion increase in cash operating expenses for repairs and maintenance as well as selling and promotions expenses and rent, the P2.1 billion higher provision for income tax, and the P300-million rise in subsidies to support initiatives to grow the data business and the postpaid subscribers.

PLDT’s reported net income likewise declined by three percent to P28 billion from P29 billion due to the P200-million decline in core net income, the P2.1-billion revenues from the discontinued operations of its business process outsourcing (BPO) business, the P400-million decline in foreign exchange and derivative losses as well as the P200-million impairment of transport network assets affected by network upgrade.

On the other hand, the company’s consolidated service revenues inched up by one percent to P122.9 billion from January to September this year compared to P121.6 billion in the same period last year.

Revenues from mobile Internet, wireless broadband, and fixed broadband jumped 19 percent to P30.8 billion from P25.9 billion while revenues from fixed line voice, domestic cellular voice and short messaging system (SMS) dropped three percent to P73.7 billion from P75.8 billion.

Likewise, revenues form national long distance fixed line and international cellular business fell seven percent to P18.4 billion from P19.9 billion.

Pangilinan said the shift in revenue mix in favor of mobile Internet as well as wireless and fixed broadband is not unique to the Philippines but is also happening in other countries.

“The shift that is happening in the telco business model not only happening here but the rest of the world,” he said.

He expects increased price-led competitive intensity in the prepaid cellular market, continued decline in inbound international revenues, the negative impact on SMS of the increasing popularity of messaging apps as well as higher operating expenses, will continue to exert downward pressure on profitability in the ensuing quarters.

For his part, Globe president Ernest Cu said the company continues to focus on improving customer experience to sustain the growth momentum of its earnings.

“We are pleased with our third quarter results which prove that our growth momentum remains intact despite the intensifying competition,” Cu said.

Globe recorded a 22-percent jump in core net income to P11.58 billion in the first nine months of 2014 from P9.53 billion in the same period in 2013 as service revenues grew eight percent to hit a historic high of P72.7 billion from P67.26 billion on the back of revenue increases across all segments.

Revenues from its mobile business went up by six percent to P57.57 billion; broadband business by 16 percent to P9.04 billion; fixed line data by 16 percent to P4 billion; and fixed line voice by seven percent to P2.09 billion.

The telco provider’s operating expenses and subsidy went up by 10 percent to P42.94 billion in the first nine months of the year from P38.96 billion translating to a 198 percent jumped in net income to P10.53 billion from P3.53 billion.

“Our strategy of focusing our efforts towards providing a differentiated customer experience has paved the way for our continued success. We have been consistently growing our mobile business with the solid customer base expansion and the strong demand for our mobile data services,” he added.

London-based Fitch Rating said revenues of both PLDT ad Globe would rise by a mid-single digit rate on the back of the fast-growing data services that would offset the stagnating voice as well as declining text and international businesses.

The rating agency sees the operating earnings before interest, taxes, depreciation, amortization, and rent or restructuring (EBITDAR) margins of PLDT to narrow to 47 percent for PLDT and to 44 percent for Globe.

The lower narrow EBITDAR could be traced to unlimited tariff offerings, cheaper data plans and higher handset subsidies.

Fitch said the capital expenditures of major players in the Philippine telecommunications industry is expected to hit around P60 billion next year from P58 billion this year.

The international credit rater said both PLDT and Globe would invest heavily to expand their fiber networks and at the same time cope with fast growing demand for data services.

Fitch pointed out that the higher capital expenditures of around 24 percent to 25 percent of revenues next year would translate to negative free cash flows for both PLDT and Globe.

It also took note of the higher dividend payment due to larger profitability that currently stands at 100 percent for PLDT and 85 percent for Globe.

As such, Fitch said the profitability of PLDT and Globe would likely decline next year.

“Profitability will also deteriorate as a lower-margin data service replaces higher-margin legacy services, including voice, text and international traffic,” Fitch said in the report.

Battle for subscribers heats up

Battle for subscribers continues to heat up with both PLDT and Globe offering customers “freebies” to lure them to shift to another network.

The PLDT Group had a subscriber base of 75 million as of end-September comprising of 69 million wireless subscribers as well as 3.7 million broadband subscribers and 2.2 million fixed line subscribers.

Wireless giant Smart Communications Inc. had 25.7 million subscribers as of end-September while Talk ‘N Text had 27.8 million, and Sun Cellular with 15.5 million.

Mobile internet usage surged 112 percent to 27,687 terabytes in the first nine months of 2014 from 13,030 terabytes in the same period in 2013 as 25 percent of cellular subscriber own smartphones.

The PLDT Group started offering “free internet” to all subscribers of Smart Communications Inc., Talk ‘N Text, and Sun Cellular last Sept. 26 up to Jan.5.

Pangilinan pointed out that the promo had an encouraging result with more than 50 percent of users being non-data users and over 10 percent being new subscribers.

“The pressure on revenues and margins is not coming from the free internet, broadband and data. Revenues on that side of the business has been growing significantly,” he clarified.

On the other hand, Globe’s subscriber base jumped 17 percent to 42.85 million as of end-September in 2014 from 36.52 million in the same period in 2013. Prepaid users grew 18 percent to 40.69 million while postpaid subscribers rose nine percent to 2.16 million.

Hours after the PLDT Group announced its “free internet” service, Globe revived its free Facebook offer that was initially launched in October of 2013. The initial promo was extended several times until April 2014.

Globe spearheaded the shift from unlimited time-based data plans to volume-based consumable plans to allow its customers to equally enjoy improved mobile data experience and ensure the most appropriate and affordable pricing for data plans.

Globe introduced the new GoSURF consumable data plans in April this year where Globe and For the last quarter of the year, she pointed out that Globe continues to strengthen its content play catering to various digital lifestyles, bundling its GoSURF data plans with exclusive content such as the National Basketball Association (NBA) League Pass.

With its groundbreaking partnership with the NBA, Globe is offering its prepaid, postpaid, and Tattoo customers access to the NBA League Pass, allowing them to watch NBA games live and on-demand through multiple devices.

Aside from sports, Globe also launched partnerships with premium content providers such as WattPad to give users access to books, stories and other pieces of literature as well as with leading local and international TV channels that enables Globe and TM customers to watch videos on their mobile phones for as low as P1.

Higher capex

Both PLDT and Globe are expected to shell out higher amount for capital expenditures in 2015 particularly for long term evolution (LTE) networks to provide faster internet connection to their subscribers.

PLDT president Napoleon Nazareno earlier said the company decided to increase its capital expenditures budget to P34.5 billion instead of P32 billion this year to enhance its 3G coverage in all cities and 92 percent of all municipalities; widen fiber optic cable network to 90,000 kilometers; fortify the northern and southern Luzon aerial fiber optic cable; expand its 4G network footprint; expand its fixed and mobile broadband packet core network; and roll-out fiber-to-the-home infrastructure.

“We expect higher capex levels for 2014, to be carried over into 2015 in light of the market’s continued appetite for data services. While we have already modernized and expanded our networks, we are accelerating our data capacity build-out due to the free internet promo as well as our TD-LTE build-out to meet increasing fixed wireless data demand,” Nazareno said.

Nazareno pointed out that the PLDT Group would be spending higher amount for 2015.

For his part, Cu said Globe is spending as much as $650 million for its capital expenditures for 2015 to boost the capacity of its network and provide faster Internet services to the company’s 43 million subscribers.

“The continuous investments that networks need to put on the ground to build more capacity and coverage and we are doing that. This year is about $650 million and a similar number will be put forth next year and a lot of it devoted to providing LTE capacity,” Cu said.

He pointed out that Globe would continue to invest to improve its network to cope with the growing demand for data.

“We will continue to invest in our network to make it better and better through the years,” he added.

Acquisitions, overseas expansions

The PLDT Group made its biggest foreign investment when it spent €333 million to acquire a 10 percent stake in Rocket Internet last Aug. 7. The stake of PLDT in Rocket Internet was diluted to 6.6 percent after the German firm went public but the value of the investments has gone up to €419 million.

Orlando Vea, chief wireless adviser of Smart, earlier said PLDT and Rocket Internet are presently developing a “proof of concept” that integrates Smart Money’s payment platform in selected Rocket e-commerce businesses in the Philippines including Zalora, EasyTaxi, and foodpanda would be launched in the Philippines.

Rocket Internet’s most prominent brands include leading Southeast Asian e-Commerce businesses Zalora and Lazada, as well as fast growing brands with strong positions in their markets such as Dafiti, Linio, Jumia, Namshi, Lamoda, Jabong, Westwing, Home24 and HelloFresh, in Latin America, Africa, Middle East, Russia, India and Europe.

Leading mobile money service Smart e-Money Inc. (SMI), a unit of PLDT’s Smart Communications Inc., has tied up with Zalora Philippines to launch MePay - a breakthrough electronic and mobile payments platform for the unbanked and uncarded.

Smart is looking at a 100 percent growth in the value of transactions handled by Smart eMoney that amounted to $4.5 billion in 2013.

Meanwhile, the plan of Globe to take over cash-strapped Bayan Telecommunications Holdings Inc. of the Lopez family suffered a setback after the Court of Appeals granted the temporary restraining order (TRO) sought by PLDT to stop the transaction.

The Pasig City regional trial court has approved the master restructuring agreement (MRA) between Globe and Bayantel. Under the transaction, Globe would acquire a 56.6 percent stake in Bayantel through the conversion of 69 percent of Bayantel’s total debt. In return, the outstanding principal debt of Bayantel would be reduced by 69 percent to $131.3 million from $423.3 million.

Globe is also exploring the possibility of expanding its operations within the Association of Southeast Asian Nations (ASEAN) region particularly in Myanmar to complement relatively strong economic growth within the region.

“We will look for white space within Asean and Asia on where to leverage the skills we’ve developed overtime and we do think we’ve developed a decent telco business here in the Philippines. We have a great team and we’re thinking of ways to leverage that further in emerging economies,” Cu said.

source:  Philippine Star

$85B set as exports target for this year

Philippines is targeting to hit $85 billion in exports revenue by this year, Export Development Council (EDC) Executive Director Senen Perlada said.

Perlada, who is also the director of the Department of Trade and Industry’s Export Marketing Bureau, said the bullish expansion of services exports, pushed by strong software-development services and healthcare information management, will back the growth of the exports industry.

Perlada said initiatives by the government and the business community to address the port congestion in Manila will also boost the performance of exporters.

He added that better exchange rate will also support the exports sector in meeting its target earnings for 2015.

The EDC official also said local exporters will expand their markets by exploring opportunities in other offshore markets.

“Hopefully, we can extend a bit our markets, maybe to more of the Gulf Cooperation Council [GCC] Plus [countries]; and, I think, maybe Turkey; hopefully, a bit of Brazil and Asean—the CLMV [Cambodia, Lao PDR, Myanmar, Vietnam] countries,” he said.

GCC countries include the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait.

“The outlook is good. We will, at least, hit our export target, if not exceed it a little bit….Our target next year is $85 billion, this year [it is] around $79 billion,” Perlada stressed.

The Bangko Sentral ng Pilipinas’s balance of payments data showed that in January to September 2014, exports of goods and services grew by 11 percent to $55.2 billion, from the same period in 2013 at $49.7 billion.

The Aquino administration, under the original Export Development Plan, initially targeted to increase export revenues to $120 billion by 2016, double the amount in 2010.

However, due to domestic and global developments that affected the competitiveness of Philippine exporters, the government decided to revise the 2016 projection.

The EDC, a public-private organization that oversees the crafting and implementation of the growth blueprint for the exports sector, is now seeking to increase export revenues to close to $100 billion in 2016.

source:  Business Mirror

Crossing the threshold

As we cross over the threshold of 2014 to 2015, our thoughts turn Janus-like to the year coming to an end and to the year about to come.

It hasn’t been, as the Facebook album posts insist, a “wonderful year” for many of us, facing personal, communal, national and even international challenges. We live in a world still buffeted by war, disaster, environmental catastrophe and viral threats that conjure apocalyptic horrors. In our own country, communities face the terrible consequences of global warming: powerful typhoons and floods of biblical proportions on one hand, and drought, drying water tables and deforestation on the other.

Couple these with humanmade disasters: traffic congestion, chaos in our airports and ports, corruption in places high and low, criminality that seems to be tolerated by officialdom, and the usual menu of murder, mayhem and miscreance.

But in a narrower, more personal sphere, each of us has had to deal, too, with loss and grief, disappointment, disillusionment. Although, in equal measure, we have also had our share of adventure, joy, celebration, accomplishment and optimism.

At a time when most everybody is doing a summing up—the year’s best and worst, winners and losers, triumphs and tragedies—we, too, are called to tote up the sums and losses, the victories and defeats and the meaning of a year just past. It is a summing up calculated in personal, familial and communal terms, in a national reckoning of what we are as a nation, and what we can do to make 2015 a better year, or one less harsh in its judgments.

We also have a little over a year before we are to, once more, decide the fate of our nation. I reckon that in the coming months, more so than it has been in the recent past, men and women of various political persuasions will project themselves on the national stage, create an image that will burn itself into our consciousness.

The theme of the coming year, then, is one of discernment, of the use of all our faculties to judge the personal and individual worth of those who will seek our votes, asking for the favor of our approval so that they end up in high office.

On this last day of 2014, the call is for us to open our eyes, ears and hearts, to begin the process of deciding where our country will go, under whose auspices, and for what purpose.

* * *

There’s a brighter future, one filled with greater possibilities, for our “new heroes,” the army of overseas Filipino workers (OFWs) toiling around the globe in search of a better life for them and their families.

With the signing of the Open Distance Learning (ODL) Law (Republic Act No. 10650), migrant workers, among others, can now obtain a bachelor’s degree from any Philippine university, regardless of where they are based. Or, as Pasig City Rep. Roman Romulo puts it, “while you are employed as a service crew of McDonald’s in Kuwait, a domestic helper in Riyadh, or a hotel bellhop in Abu Dhabi.”

Romulo, chairman of the House committee on higher and technical education, said the ODL was crafted “to help every Filipino, especially OFWs, working students and persons with disabilities, realize their hopes and dreams of acquiring higher education.” This is regardless of whether the degree sought is a bachelor’s degree, a master’s degree, or a doctorate.

Records of the Philippine Overseas Employment Administration (POEA) show that more than 5,000 Filipinos leave the country every day for contract jobs abroad. Many of them are high school graduates, holders of post-secondary certificate courses, or college undergraduates.

* * *

Romulo says no less than the United Nations Educational, Scientific and Cultural Organization (Unesco) has been batting for the ODL to help developing countries achieve their education system-wide goals.

“As a force contributing to social and economic development, ODL has become an indispensable part of the mainstream of global educational systems,” Unesco has said.

Under the new law, every learner enrolled in an ODL program shall enjoy the same privileges and benefits as a student in the usual classroom, including access to scholarships, grants-in-aid and loans from government-administered funding sources.

The new law mandates the Commission on Higher Education (CHEd) and the Technical Education and Skills Development Authority (Tesda) to prescribe and enforce the necessary policies, standards and regulations for the effective implementation of the ODL in the country.

The law also tasks the University of the Philippines Open University to assist and provide expertise to the CHEd and the Tesda in developing ODL programs.

* * *

According to Chinese traditional belief, 2015 is the “Year of the Goat.” Although the Year of the Goat doesn’t officially start until the Chinese New Year, the Philippine Postal Corp., also known as PhilPost, has already issued special stamps in honor of this zodiac celebration.

There are two designs available: a colorful rendition of a goat’s head sold at P10 each, and the image of the whole animal worth P30 each. The stamps have been available in post offices across the country since November.

The P10 New Year stamps come with a greeting, “Manigong Bagong Taon,” while the P30 stamps bear the English translation “Happy New Year.” At the bottom of the stamps are Chinese characters bearing the words “2015 Year of the Goat.”

According to the Chinese zodiac, 2015 is the year of the green wooden goat. The goat or sheep is the eighth animal to heed Buddha’s call and it is believed that those born in a goat year are creative, intelligent, dependable and calm. Have a happy goat year!

source:  Philippine Daily Inquirer's Column of Rina Jimenez David

Year of …

Did you know that there are 39 “small island nations” in the world, and that one of them is among the world’s most prosperous countries?

Or that 56 percent of the world’s agricultural lands are small family farms, with a crucial role for the world’s food security?

I didn’t, until I had to research on the United Nations’ designation of certain themes for the year 2014. The UN likes to declare International Year of this or that, hoping to raise public awareness about particular issues, but even with the declarations, and all kinds of activities, they, as well as the world’s governments, have a long way to go to use these international-year designations.

I titled today’s column “Year of …” because the efforts around these commemorations tend to trail off, and awareness of the issues still tends to be limited to people already working on the particular issue. With 2014 ending, I thought I should at least try to catch up with more information on the year’s international assignments. Given that I have to talk about the four themes in one column, my discussion will have to be superficial. Do check the Internet if you want more information on particular themes.

Can you guess now what international years were designated by the UN for 2014?

There were four very different themes, all of them important, and relevant to the average Filipino. Yet, I do not recall reading or hearing about these themes: “Family Farming,” “Small Island Developing States,” “Solidarity with the Palestinian People,” and “Crystallography.”

Family farms

It was around November when I accidentally found that 2014 is the International Year of Family Farming. This was when I was talking with a Thai professor about how a number of Thailand’s agricultural experts actually studied in the Philippines back in the 1960s. Now, we have been left behind.

Almost as if to console me, the professor said that at least for agriculture, the differences in development happened because Thailand had given more attention to small family farms. He mentioned the International Year of Family Farming, and how Thailand’s universities had organized symposiums on and conducted research into small family-managed farms as a key to long-term food security.

We got to talking about the other issue related to small farms: agrarian reform. Neighboring Taiwan’s agriculture has developed much more rapidly than those of the Philippines and Thailand, and there, agrarian reform makes a difference. In the 1950s, the government of Taiwan redistributed lands to many small farmers who still form the backbone of that country’s agriculture.

The UN has all kinds of statistics highlighting the role of small farming which, it emphasizes, is not just in terms of agriculture but also of fisheries, forestry and pastoral or livestock production. In many countries, the Philippines included, it’s families who use lands that are difficult to farm—those that are upland, for example. It is also these family farms that still plant traditional food varieties, once dismissed as backward but now recognized as sturdier, better adapted to local conditions.

Island states

“Small is beautiful” could as well have been an overarching theme for the year because another 2014 UN theme is “Small Island Developing States,” 39 of them with 63 million people.

We tend to think of small island states as those scattered in the Pacific, places like Fiji and Palau. (You’ll find many overseas Filipino workers in many of these Pacific island states.) There’s the sad state of Nauru, the world’s second smallest sovereign state after the Vatican. In the 1960s and 1970s Nauru had the world’s highest per capita income because of its rich phosphate deposits. But these have now been depleted, plunging Nauru into a deep crisis.

There are many other island states scattered throughout the world. There are the Caribbean countries like Jamaica, Dominica, and feisty Cuba, which dared talk back to the United States for decades. In the Indian Ocean there are Seychelles and Mauritius, popular tourist destinations.

And the rich island nation I asked about at the beginning of the article?

That’s Singapore, which has no significant agriculture of its own but which has managed to provide for its population of 5 million through careful state planning.

The UN’s concern with the island nations came about more because of climate change, which has made these nations more vulnerable to storm surges and rises in the sea level.

Does that sound familiar? The UN may as well have included the Philippines among the small island nations, considering that we have so many of those islands, many of which are almost like feudal kingdoms controlled by powerful warlord-politicians. The concerns with small island nations should apply as well to our many islands.

Palestine, crystals

Regarding “Solidarity with the Palestinian People,” many tend to think of Palestine mainly as “Arab” and “Muslim” and forget that it was the birth place of Judaism and Christianity. (“Arab” is not a religious label—there are also Christian Arabs.)

The “Palestine question” dates back many decades, when the world’s imperial powers carved up the Middle East. The creation of Israel in 1947 displaced the Palestinians, and the war that followed is still referred to as “el-Nakbah,” the catastrophe or cataclysm. Over the years, Palestinians were able to restore a state of Palestine, which is now recognized by 135 of the UN’s 193 member-states. The Philippines is not among the 135. Last May, Pope Francis made an explicit reference in a speech to the “state of Palestine.”

Finally, “Crystallography.” The year 2014 marks the centenary of modern crystallography, or why scientists have been able to figure out biological and chemical structures. It was crystallography that led to the discovery of DNA, the basic genetic building block for all living organisms. Crystallography has allowed us to create chips and computer memories, to discover new drugs. It’s also crystallography that has inspired art forms, and new architectural structures.

Mention crystals and nonscientists still think of magical quartz stones with all kinds of claims for healing. Maybe schools can still catch up in 2015 to use the centenary of modern crystallography to highlight the far more important roles of crystals in our lives.

* * *

E-mail: mtan@inquirer.com.ph

source:  Philippine Daily Inquirer

The unemployment rate is a decent 6%. Where are the braggarts of boom?

As the unemployment rate dropped to six percent in October, a celebratory mood should have been the national reaction. While a five percent unemployment figure would have been more ideal, a six percent rate is definitely not a small feat, given the double-digit unemployment rates in more mature, more developed economies. So, why was there no chest beating from the usual suspects who tout every minor economic spout as the equivalent of the second coming?

With a six percent unemployment rate and a near to seven percent growth rate, there are, theoretically, so many things to boast about. A country that endowed, given the gloomy international jobs environment, has earned its bragging rights. And ours is a country that has not run short of these hyperventilating braggarts of boom. Where, indeed, are the marching bands that are supposed to trumpet the improving job picture?

The answer? It is a fragile figure with dark underpinnings. Once you break down the employment rate to see where the bright spots are, you will be terribly disappointed.

The first giveaway in that six percent figure is not a cause for rejoicing: According to the news reports, 84 percent of the employed are in the services sector (53.7 %) and in the agricultural sector (30.8%).

So many things are clear with a job environment that lists services and agriculture as the primary employers.

One is that the majority in that 84 percent are underpaid. A significant portion, this is a certainty, are paid slave wages, anywhere from P250 a day to a few pesos short of the minimum wage in the regions of employment. There are sectors that pay well—the BPOs for one. But the BPO jobs are the exceptions rather than the rule.

Second. Among those classified as gainfully employed by the government statisticians are the contractual workers. These work on a tenure of less than six months, are cut-off, then renewed again. Or, sent out into to pound the streets for new contractual, dead-end jobs. Contractual work is evil but that is the refuge of the majority of the jobless youth. It is better than nothing but for those without options, contractual jobs are lifelines.

We are all aware of the young holding dead-end jobs and the hopelessness of their conditions. At the pay counters of the department stores, they are the baggage boys, dressed in gnarled polyester pants and t-shirts, their take-home pay barely enough for food and transport fare. At the fast-food chains, they brandish their work tools— mops and detergents—which they wield and spray with intensity or else the customers would complain about stubborn grime and grits.

Even at the high-end stores, even with their cheap black pants and ties, one can distinctively see the marks of low wages and poverty. The service and retail industry in the country is generally staffed with low-wage and underpaid workers on whose backs the fortunes of the country’s few dollar billionaires are built.

These are not the desired high-skill and middle-skill jobs whose existence in the labor market guarantees the presence in a particular society of a strong and viable middle class. The de factor middle class is elsewhere, in the overseas diasporas. The OFWs, in the absence of a viable center, are the de facto center. But their significant stake in the country has been propping it up economically. And the consumption-fueled growth is fed by the spending power of their families back home.

As the middle-skill jobs disappeared, so did the trade unions. The number of organized workers with collective bargaining agreements (including those signed by the yellow unions) is at a single digit, down from the 15 per cent level a few decades ago. Is it a high single digit or a low single digit? That, we do not know. But it is a fact that more than 90 percent of the Filipino workers do not have the right to collectively bargain.

The evisceration of the trade unions started as contractual workers came in full bloom and manufacturing plants disappeared. The industrial foundry of the nation crumbled at the time the malls and the fast-food chains ascended. Jobs in rubber, steel and chemicals gave way to dead-end jobs at the malls and the fast-food chains.

The architecture of the economy favors service and retail jobs, which means dead-end jobs with slave wages.

What is the underemployment figure, the realistic one, and not the understated 18 plus percent? What is the labor force participation rate? What is the total number of able-bodied Filipinos of work age who altogether have permanently dropped out of the labor force.

We don’t want accurate answers to the two questions or else the phoniness of the whole “6 % “ unemployment rate will be exposed.

The country is an ideal laboratory for the study of income inequality, in which growth of income from labor has been flat or marginal and the growth of income from capital has been extraordinarily high. I think that it is worse than the income gain profile of the US between 2009 and 2012. During that period, 95 percent of US income gains was sucked up by the top 1 per cent, but within this primarily by the top 0.01 percent.

The dark underpinnings of the 6% unemployment rates are probably the reasons why the braggarts of boom have refused to beat their chests reveling in that figure. It was a figure built on the mirage of dead-end jobs and slave wages.

mvronq@yahoo.com

source:  Manila Times

The birth of the conversation economy

(Conclusion)

In my previous column, I featured University of Asia and the Pacific (UA&P) professor Christian Vallez’s insights on the transition from an Information Economy to an Attention Economy. Aside from heading UA&P’s information technology department, Mr. Vallez is also the founder and CEO of Overmind, a narrative design consulting firm. Here is the conclusion of his story:

Once upon a time, we thirsted for knowledge. Then we wanted too much too fast. Then we wanted to share, to reach out, and to connect. We wanted to establish real relationships.

Marketers and businesses are now realizing the need to keep their customers engaged. They have realized the need to keep them still, to stop them from switching too quickly, to control their continuously shortening attention spans. In the noisy marketplace, the salesman needs the buyer to stay in his stall before his voice is drowned by the drone of the myriad of voices flooding the market. He needs to strike up a conversation.

We are now entering the next logical step in this economy that is evolving faster than light. In the Information Economy, those who had control of the information ruled the world. In the Attention Economy, those who could grab your attention had the advantage. In this new economy, those who can get you to stay will be the most successful. We are now entering a new age. Welcome to the Conversation Economy.

Technology plays a big part in this next phase of development. With the rise of the online giants, a new platform for meaningful connections and relationships has emerged. Facebook, Twitter, Instagram and other social media platforms provide individuals, businesses, and organizations the venue to make their audiences stay through meaningful conversations. Technology has democratized the information one requires to make business decisions, purchases, even up to the type of shoes to wear for a party. Consequently, consumers have grown weary of people who tell them what to do, what to buy, where to go. This change in behavior has antagonized for the consumer those who hard-sell to them, those advertising efforts that only talk to them and not listen.

In a marketplace overwhelmed with a million voices, the only way to make someone stay is to start a conversation. This is true not just for companies in their social media marketing efforts but also for individuals who are starting to see themselves as personal brands that need to create conversations in order to ride the wave of this new era.

Before, one had to be online to exist. Later, one had to have a loud voice to exist. Today one needs to be able to hold a conversation to exist, and not just any casual conversation because the aim is to keep the person still and engaged. Therefore we need to tap into an art we have known since we became aware of our existence -- storytelling -- the fundamental social skill we have created to enable us to share our inner lives to someone else.

This sharing is in fact a form of marketing, of asking for affirmation, of selling or even buying. An exchange of stories is a social transaction ensuring the link first established between two parties will stay. The strength of the bond created between the two is a function of the power of the stories exchanged.

Although there are many types of conversations, an exchange of stories is most powerful in the establishments of bonds. Here we cannot differentiate personal bonds from those made between clients and service providers, businesses and suppliers, corporations and organizations. In the Conversation Economy, organizations and collectives become personal brands requiring personal relationships with their target audiences.

Storytelling has been with us since the beginning of time and the existing technologies have put storytelling on steroids. It is now up to us to harness the power of this “hyper storytelling” to secure our existence in the minds of consumers. The stories we tell must be able to adjust and evolve based on the stories we receive from them, since it cannot be a conversation unless both parties have exchanged stories.

We are now at the doorstep of the Conversation Economy, where no one has the monopoly of stories. But it is in storytelling that meaningful and fruitful relationships are created. Therefore those who can tell the best stories will rule. Those who can transform themselves into “conversation architects” with stories empowering their blueprints will control the economy.

“Let me tell you a story” are the six most powerful words in this Conversation Economy. We should harness these six words so we can take control, build meaningful relationships, and prosper in this challenging and exciting age which requires us to go back to our past, tap into the forgotten magic of storytelling, and go to the future, harnessing the technologies to make the stories we share more meaningful, powerful, and beautiful.

J. ALBERT GAMBOA is the CFO of Asian Center for Legal Excellence and Senior Advisor of KSearch Asia Consulting Inc.

source:  Businessworld

Insignificant trends for 2015

NOW AND THEN the Fence Sitter sits in his garden and thinks of trends that will continue for the year. These are by no means forecasts or predictions which at this time the women in turbans will spout on TV (“One movie star will die in a road accident”). They are incipient movements that those who have better things to do will miss out because these are trivial and mostly nugatory (look it up):

Offices and party organizers will no longer prescribe a dress code
So, we will see sportier outfits from people who come to work on a bike or just finished their weights at the gym. There is no attempt to shower or change to fresher clothes so the “leave-me-alone” look will be more noticeable. Best to keep your distance too.

Billboard ads will dispense celebrity endorsers (now called brand ambassadors) who don’t use their products anyway
Advertisers will go back to using professional (but anonymous) models plucked from modeling agencies, who also do bar tours. The selection criteria will be more product-centric. So, if the product is a skin whitener, any slim and dazzlingly fair-complexioned model in a swimsuit will do. The generic trend for medicines will extend to product advertising.

Political pairings will dominate the coming year
Opposites will dominate -- watch out for black and white, tall and short, fat and thin, smart and not so, famous and known-to-a-small-circle. It’s a challenge for their PR handlers.

Convenience stores open 24/7 will get market share from the fast food chains
Ready-to-eat or ready-to-heat meals are cheaper without the need for waiting at a table featuring a bent metal standee with a number. The convenience stores have cheaper meals and allow smoking outside.

Does eating out for solo dwellers mean that the kitchen is passé? Who still buys meat and then chops onions and cooks a burger for one? Eating out will be on the rise and sales of grocery items will take a hit.

Surveys of approval ratings by at least two companies will be headline stuff
Those with plunging numbers will hit back at paid demolition squads, including columnists. To emphasize the positive, the refrain will be the same: “I’m still No. 1.” This is like somebody falling off a building, and after passing the 21st floor on the way down declares, “So far, so good.”

New graduates will be joining companies with less than 30 employees (including the owner and his son)
Perks like paid vacation, car loan, and health coverage will be less important as come-ons, relying more on cash compensation with tax shields and a share in the IPO. These new employees are treated as losers by uncles who have just retired from large corporations with provincial branches.

TV news will be hosted by much younger non-celebrities
The emphasis will be on field reports where the wind is blowing the hair of the reporter as she clutches her microphone more tightly -- “The typhoon has just made landfall as you can see behind me.”

Blogging will be more widespread as the practitioners introduce themselves to strangers less shyly as journalists
By July 2015 (this is a prediction now), blogging will be considered as just a hobby like orchid growing and not a real job that requires a calling card. Hi, I’m a blogger. Have you seen my site that reviews the quality of macaroons?

Online shopping will really take off
The use of cash on delivery or e-loads as payment schemes rather than credit cards (5% penetration) has evolved as the gold standard for e-commerce. An online retailer has as a slogan: “Why go to the mall, when the mall can go to you?” This logic is compelling when it takes two hours to traverse half a kilometer by car during rush hour.

ATMs will spout new bills with an occasional substituted denomination (a hundred for a thousand) in the withdrawn pack
The amount is too small to complain about -- that’s the point.

There will be fewer desk calendars and umbrellas as corporate giveaways
The smart phone has the former already and is working on the latter. After the flashlight, it’s a matter of time for other features (or apps) to kick in. The smart phone is the new Swiss knife.

TV stations will continuously be reprogramming and re-launching their brands
The slogans will keep evolving until they become really needy: “Why not us, please?”

Trends are supposed to be helpful as they allow us to plan. This particular set is not meant to achieve that purpose.

A.R. Samson is chair and CEO of Touch DDB.

ar.samson@yahoo.com

source:  Businessworld

SSS profits up 14%

The Social Security System (SSS) reported profits for the first 10 months of the year reached P37.3 billion, up 14 percent.

SSS President and Chief Executive Officer Emilio de Quiros Jr. said higher profits resulted from the P100 billion or 17 percent increase in members’ contributions.

Contributions which make up 77.5 percent of total revenues rose, de Quiros said after the SSS implemented the new contribution rate and increased the monthly salary credit.

Benefits paid to members reached P85.6 billion, up 13.7 percent from P75.3 billion of the same period of 2013.

More than half of the amount or P46.5 billion was paid for retirement claims, and about one-third or P28.1 billion was disbursed to survivors of deceased members.

“The increase in benefit payments resulted from the 5 percent across-the-board increase for 1.8 million SSS pensioners that took effect this June 2014,” de Quiros said.

Employers remitted about P86.9 billion in employees’ contributions, followed by voluntary paying members at P8.6 billion, and self-employed at P4.5 billion.

The double-digit growth in collections was also achieved through the SSS AlkanSSSya program, which has covered 106,824 members from 1,061 informal sector groups and associations; intensified marketing campaigns for OFWs; and partnerships with 18 microfinance institutions, cooperatives and organized groups, de Quiros said.

The agency’s total revenue stood at P129 billion, representing an increase of 13.2 percent or P15 billion compared to the same period in 2013.

Investment and other income, which comprised 22.5 percent of total revenues had a modest increase of 1.9 percent to P29 billion despite lower interest rates in the market.
“Profits slightly moved up with revenues posting an increment of 13.2 percent vis-a-vis expenditures of 13 percent. Significantly, we were able to keep our operations costs down while outperforming our target by 46 percent,” de Quiros said.      Also part of the reason for the increase, he added, was the pensions we advanced to 3,931 pensioners including those affected by Zamboanga siege, Bohol and Cebu earthquake, typhoons Labuyo and
Santi and to 17,394 pensioners affected by supertyphoon Yolanda.

Meanwhile, SSS operating expenses remained below its allowed charter limit at only P6.1 billion or 47.6 percent of the limit.

The financial position of the agency also continued to show solid performance with total resources reaching P436.6 billion, which was 13.5 percent higher than 2013 yearend level of P384.6 billion.

source:  Manila Times

On the economics of gift-giving

Christmas is only days away, and many of us are likely to have wrapped up their shopping, not to mention wrapped up the gifts themselves. Some laggards, however, will continue to brave the stores despite crowds and long checkout lines. So strong is the gift-giving impulse that many will subject themselves to inconvenience, just to have a full lineup of presents under their trees.

But could this impulse possibly be misguided? Some economists, after all, believe gift-giving is inefficient. It’s an academic argument that goes back to at least the last century, when economist Joel Waldfogel of the Wharton School at the University of Pennsylvania wrote the influential paper “The Deadweight Loss of Christmas” in 1993. The technical arguments in the paper were later elaborated on in a 2009 book aimed at a broader audience: "Scroogenomics: Why You Shouldn't Buy Presents for the Holidays.” 
 
Deadweight loss
 
In a normal transaction, one party loses and another gains. Mr. Waldfogel argues that this is not the case with gift-giving, where the loss absorbed by one person “is not offset by gains to someone else.” In economics, this is referred to as “deadweight loss.”
 
Remrick E. Patagan, research director of the Institute for Development and Econometric Analysis (IDEA), a think tank based at the University of the Philippines School of Economics, explains this concept: "The deadweight loss from gift-giving is premised on the condition that there is a discrepancy between the giver's knowledge about the recipient's preferences and the recipient's knowledge of her own preferences. Thus, the value of the gift can either be diminished or increased depending on this condition."
 
Edson Joseph C. Guido, a consultant at the World Bank’s Governance Global Practice, illustrates the concept in cash terms: “[T]he utility derived from receiving a gift worth, say, a hundred pesos may be less than the utility one gets from spending a hundred pesos to buy what one really wants. This is because the 100-peso value of the gift may not be worth 100 pesos to the recipient because of (a mismatch in) preferences.”
 
For his 1993 paper, Mr. Waldfogel surveyed Yale University students. They were asked how much they were willing to pay for the gifts had they bought these themselves barring "sentimental value." The responses were then used to calculate the deadweight loss by getting the difference between the gifts’ price and the students' valuation of the gifts.

The results showed that the students valued the gifts less than the price the giver paid for them. The difference was much bigger among givers who did not really know the recipients.
 
"What’s distinctive about all of this spending is that... the choices are not made by the ultimate consumers. For the rest of the year, the people who will ultimately use the stuff choose what they buy. As a result, buyers normally choose things they correctly expect to enjoy using," Mr. Waldfogel wrote in "Scroogenomics."
 
"But not at Christmas. As a result, the massive holiday spending has the potential to do a terrible job matching products with users."
 
With the waste being created in the gift-giving process, Mr. Waldfogel proposed giving gift cards instead. With gift cards, recipients have the discretion of choosing the products they want and can spend up to the card’s value. This, Mr. Waldfogel claimed, is popular enough among consumers to be an alternative and at the same time, avoids the “ickiness” of giving cash, which is considered an efficient but a “socially awkward” gift.
 
IDEA’s Mr. Patagan noted an inconsistency in the study’s methodology but said he did not "necessarily disagree" with Mr. Waldfogel's findings. "From the perspective of orthodox microeconomics and consumer choice theory, the reasoning behind the arguments is sound and the conclusions are, at the very least, tenable," he said.
 
Boost to relationships
 
As sound as Mr. Waldfogel's arguments might be, his ideas have not been met with wide acceptance among fellow economists.
 
A poll of 46 economists conducted by the Initiative on Global Markets at the University of Chicago Booth School of Business last year showed that only 15% "agree" with the assertion that gift giving is a wasteful activity, with just 2% who "strongly agree." On the other hand, 39% "disagree" and 15% "strongly disagree" while 22% are "uncertain."
 
Those who disagreed pointed out that the benefits of gift giving are not measured by monetary gains or efficiency but by the boost this gives to interpersonal relationships.
 
University of the Philippines economist Agustin L. Arcenas, for his part, said: "You can think of gift giving as having an expected benefit… as it could also be seen as an investment in one’s social capital. ‘Holiday cheer’ is a good that you buy through gifts. From that perspective, it is not wasteful."
 
The World Bank’s Mr. Guido was of the same opinion. “Even if we don’t equate the monetary value of gifts to our actual valuation of these, there is still a ‘value-added’ in receiving gifts. We take into account the thought from our friends, as well as the effort put into buying gifts for us…”
 
Regardless of one’s view of Mr. Waldfogel’s ideas, there is one thing economists are likely to agree with as far as theory is concerned.
 
"One take-away lesson from this is that for as long as the giver is well-informed of the recipient's preferences, then there is a higher likelihood of the giver choosing a gift that will be valued by the recipient at or above its cost," IDEA’s Mr. Patagan said.
 
"To put it simply, it's okay to give gifts to a person you happen to know very well as the values both of you attach to the gift will be, more or less, the same."