IDC: PHL telco industry to grow 4.7% this year

Research company International Data Corp. (IDC) said the Philippine telecommunications industry will likely grow by 4.7 percent in 2015, as smartphone penetration continues to rise in one of the fastest-growing economies in Asia.

“One of the key drivers is the growth in smartphone ownership, buoyed by declining prices and the continuing growth of local players,” IDC Research Manager Jubert Daniel Alberto said.

IDC Analyst and Devices Re- search Head Jerome Dominguez added  that the Philippine smartphone market remains “bullish, as local vendors continue to drive smartphone-volume growth by further tapping into the large market of budget-conscious Filipino consumers.”

“The smartphone market already has several players at the moment, and the competition grows tougher quarter after quarter. There is now a greater need to differentiate one’s branding and offerings from the pack in order to gain a competitive edge,” he said. Mobile operators, Alberto noted, are no more focused on upgrading and modernizing their networks and services.

“Moreover, the telco space in the Philippines is bolstered by the evolving role of telcos from being a pure connectivity provider to becoming a total ICT [information and communication technology] provider. The ‘one to majority’ marketplace allows for telcos in the Philippines to be the services provider that can service various marketplaces,” he noted. The two rival telcos in the Philippines are expected to allocate an aggregate capital expenditures of P60 billion this year to rapidly increase their data services.

Philippine Long Distance Telephone Co. (PLDT) will likely spend P36 billion in capital investments this year. Globe Telecom Inc., on the other hand, has earmarked P29 billion as its annual budget for 2015.

As a whole, the ICT industry in the Philippines is projected to be in a continued upswing in 2015, as the sector will continue to ride with the growth momentum of the country’s economy, which is expected to grow by 6.3 percent this year.

“Based on IDC’s Annual Continuum Survey, a huge majority of Philippine companies are looking to increase ICT budget and spending in 2015. This indicates a healthy sign for the country in the bigger scheme of things. ICT, [information and communications technology] spending is expected to be heavily impacted by the ‘3rd Platform,’ and the usage of its technologies is being driven by the needs of companies seeking for new and effective ways of engagement,” Alberto said.

He added that the adoption of disruptive technologies in the 3rd Platform, such as cloud, mobility, social business and big data
analytics are bringing about innovations in business models and consumption patterns.

“There may be inhibiting factors, such as natural disasters and port congestion, but the effects of these will be limited in the short-term period only. IDC believes that the country’s optimistic economic outlook,
growing ICT demand from the consumer and small- and medium-sized enterprise [SME] sectors, and the increasing requirement for the 3rd Platform technologies will shore up the Philippine ICT industry in 2015,” he noted. Hence,  information technology (IT) spending in the Philippines is expected to be a “bright spot” in the Asean region.

“The ‘changing of the guards’ in the political front has deeply transformed IT spending habits that will drive a stronger demand for mobility, devices, services and applications across the country. The increasing ICT demand from SMEs and continued strong performance of the business-process outsourcing industry will also push ICT spending in 2015,” Alberto said. He added:

“The sustained IT spending growth of 10.1 percent will push the country to be in a bright spot in the Association of Southeast Asian Nations.”

source:  Business Mirror

COA uncovers P100-B illegal gov’t transactions in 2013

Government transactions worth P100.83 billion in 2013 were found to be illegal, irregular, excessive and doubtful, a report of the Commission on Audit (COA) showed.

In a nine-page summary of Significant Accomplishments of the Commission on Audit for 2013, state auditors said the P100.83-billion government transactions were covered by 38,110 notices of disallowance (ND), notices of charge (NC) and notices of suspension (NS) in 2013.

NDs are issued for government expenditures or uses of government funds and properties that are deemed “illegal, irregular, unnecessary, excessive, extravagant or unconscionable.”

NCs are issued for transactions with under-appraisal, under-assessment or under-collection by revenue and regulatory agencies or those that dispose of government assets.

An NS, which can mature into an ND, is issued for a transaction that is of “doubtful legality, validity or propriety accompanied by a directive for accountable officials to submit clarifications or additional documentation.”

State auditors said 15,648 NDs for fund releases and expenditures amounting to P26.12 billion were issued, of which only P96 million were settled.

State auditors also noted that 202 NCs were issued for transactions worth P53.38 billion, with national government agencies accounting for P53.17 billion. There were 22,260 NSs covering fund releases in the amount of P21.33 billion in 2013.

The COA released the figures without identifying specific government agencies or offices, which include local government units, government-owned or controlled corporations, state-owned universities and colleges and water districts.

Under audit rules, NDs and NCs “shall be considered as audit decisions” which are enforceable, requiring those who are found liable to return the amount involved.

source:  Philippine Star

Richest 1% to own more than everyone else by 2016

PARIS, France – Wealth accumulated by the richest 1% will exceed that of the other 99% in 2016, the Oxfam charity said Monday, January 19, ahead of the annual meeting of the world's most powerful at Davos, Switzerland.

"The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast," Oxfam executive director Winnie Byanyima said.

The richest one percent's share of global wealth increased from 44% in 2009 to 48% in 2014, the British charity said in a report, adding that it will be more that 50% in 2016.

The average wealth per adult in this group is $2.7 million (2.3 million euros), Oxfam said.

Of the remaining 52%, almost all – 46% – is owned by the rest of the richest fifth of the world's population, leaving the other 80% to share just 5.5% with an average wealth of $3,851 (3,330 euros) per adult, the report says.

Byanyima, who is to co-chair at the Davos World Economic Forum taking place Wednesday through Friday (January 21-23) urged leaders to take on "vested interests that stand in the way of a fairer and more prosperous world."

Oxfam called upon states to tackle tax evasion, improve public services, tax capital rather than labor, and introduce living minimum wages, among other measures, in a bid to ensure a more equitable distribution of wealth.

The 45th World Economic Forum that runs from Wednesday to Saturday will draw a record number of participants this year with more than 300 heads of state and government attending.

Rising inequality will be competing with other global crises including terrorist threats in Europe, the worst post-Cold War stand-off between Russia and the West and renewed fears of financial turmoil.

France's Francois Hollande, Germany's Angela Merkel and China's Li Keqiang will be among world leaders seeking to chart a path away from fundamentalism towards solidarity.

Italian Prime Minister Matteo Renzi and US Secretary of State John Kerry are also expected.

Beyond geopolitical crises, hot-button issues like the Ebola epidemic, the challenges posed by plunging oil prices and the future of technology will also be addressed at the posh Swiss ski resort. – Rappler.com

Nearly 5,000 Filipinos left the Philippines daily from 2010-2013

ALMOST 5,000 Filipinos left their homes every day between 2010 and 2013 to seek work overseas, government data show, most hoping to provide an education for their children and to meet the most basic needs of their families.

That startling statistic helped make the Philippines one of the world’s largest labor suppliers, mainly to other countries in Asia and the Middle East, and the fourth largest recipient of remittances worldwide.

However, the strain of decades of labor migration has come with a significant social cost in Asia’s largest Catholic community and likely will be addressed by Pope Francis during his first visit to the Philippines which started later on Thursday.

Francis will meet ordinary Filipinos on Friday, including a migrant worker’s family. About half of the country’s 100 million people have been affected by labor migration.

It is a timely meeting for Francis, who has made defense of vulnerable migrants and workers a central issue of his papacy. At an October synod on the family, he urged bishops to find solutions to the challenges faced daily by families.

“We acknowledge the economic benefits that it brings,” said George Campos, head of Couples for Christ, the largest Catholic family movement in the Philippines. “But it would not compensate (for) the loss of the parent from the children and the stability of the relationship within the family.”

Between 10 million and 12 million Filipinos live and work overseas. With the average Philippine family comprising five members, that means at least half the population could depend on a relative working overseas sending money home to feed, clothe and educate their families.

Their remittances, which proved resilient during global economic crises, continue setting yearly records and account for about 9% of Philippine gross domestic product (GDP).

However, the social costs of such large-scale labor migration include the alienation of parents from their children and the breakdown of families.

Infidelity and marriage annulment cases have risen over the years -- there is no divorce in the Philippines -- although there are no official figures.

“From experience, the number one problem of couples is infidelity,” said Father Resty Ogsimer, executive secretary of the Catholic Church-based migrant welfare group ECMI.

Cases of workers being duped into human trafficking and prostitution also appear to be on the rise. Father Ogsimer said Filipinos often fell victim to human trafficking after leaving through unofficial channels via southwestern Zamboanga province on the way to Malaysia and elsewhere.

That is borne out by the case of a 29-year-old mother of two who left in June 2012 after a Filipino recruiter and family friend promised her work with a theater group in Singapore.

The woman, who asked not to be identified, said she was sold as a prostitute in the Johor Bahru region of Malaysia.

She returned to the Philippines a month later, battered and bruised and with an injured knee after she escaped from a walled compound where she was held by her recruiters.

A few months after her return, she separated from her husband, who she said took their youngest child and never returned.

There are more unexpected problems, authorities say, with families becoming accustomed to spending money they would not normally have and workers getting into debt to maintain new-found lifestyles.

The Church acknowledges the problems and ECMI has sought to create ministries helping migrants’ families in Catholic dioceses around the Philippines over the past five years, Father Ogsimer said.

Cardinal Luis Antonio Tagle said the Church must help children and spouses left behind to keep their families intact.

“It is a pastoral concern,” Cardinal Tagle said last week. -- Reuters

Study says Philippines leads in philanthropy

THE PHILIPPINES was cited as a Southeast Asian leader in modern-day philanthropy but questions have been raised about its sustainability since its local institutional donations remain insufficient to arrest foreign donor support, a study in Singapore said.

The Philippines’ “philanthropic sector... is... among the most diverse and structured in Southeast Asia, with the largest number of locally established philanthropic institutions,” the Lien Center for Social Innovation of the Singapore Management University said in a study. The study also noted that the Philippines was able to forge ahead of its neighbors even if overseas development assistance and foreign donations declined steadily over the past decade in several Southeast Asian countries.

“While these illustrate a fairly mature philanthropic sector in the Philippines as compared to other countries in Southeast Asia, nonprofit professionals interviewed for this study indicate that domestic institutional philanthropy has not been sufficient to fill the void created by declining foreign donor support,” the study said.

Despite the country’s commendable success in developing sustainable funding mechanisms and experimenting with new forms of philanthropy to mobilize local resources and domestic philanthropy, “current levels are insufficient to meet the needs of the country’s nonprofit sector,” the study said.

“Growing domestic philanthropy is imperative to supporting NPOs [nonprofit organizations] to tackle persistent social challenges... civil society’s effectiveness and ability to engage constructively in national development is being threatened by limited sustainable sources of funds,” it said.

“Sustainability remains the biggest challenge facing nonprofit organizations in the country. In many cases, the lack of funds has impacted the ability of NPOs to sustain their work and attract and retain personnel,” the research added, noting these despite the country’s “tremendous wealth creation in recent years as its economy grew steadily over the past decade -- with an average growth rate of 4.5% in the past five years, even outpacing the rate of growth of economies in India and China in the past quarter -- and is expected to be among the fastest growing economies in Southeast Asia for the next few years.

“Mobilizing additional local resources is essential to sustain the efforts of the nonprofit sector in tackling pressing social problems and to ensure that philanthropy in the Philippines keeps pace with existing and emerging social needs,” it added.

Meanwhile, the Lien Center enumerated the features of the country’s institutional philanthropic sector as characterized by “a mix of private and publicly supported organizations; the largest funders are three publicly endowed foundations: the Foundation for the Philippine Environment, the Foundation for a Sustainable Society, and the Peace and Equity Foundation; corporate donations in the country are an increasingly important source of income for NPOs; government support for the nonprofit sector is primarily in the form of fees for services and contracts; there is a growing movement for community philanthropy in underdeveloped areas of the country; and international philanthropic resources have been declining steadily, making it more urgent for the Philippines to mobilize and expand domestic philanthropy.”

The research entitled, “Levers for Change-Philanthropy in select Southeast Asian countries” -- which is part of the Social Insight Research Series, closely examined philanthropic activities in the Philippines, Singapore, Indonesia, and Thailand.

source:  Businessworld

5M arrivals in 2014 amid travel bottlenecks

VISITOR arrivals in 2014 totaled about 5 million, according to a preliminary government estimate, well short of the target and calling into question some of the more ambitious goals set for “Visit the Philippines Year” in 2015 and beyond.

Nevertheless, Domingo Ramon C. Enerio III, Chief Operating Officer of the Tourism Promotions Board, said visitor targets will be maintained at aggressive levels because potential demand for visits to the Philippines is increasing, though actual travel is hampered by “access problems” relating to airports, infrastructure and internal travel.

Speaking at a news conference to launch the Philippine Travel Agencies Association’s (PTAA) 22nd Travel Tour Expo on Tuesday, Mr. Enerio said the 10 million-visitor target for 2016 would be “difficult to achieve” but will not be lowered “to inspire us to work for that particular target.”

“Point-blank, it will be difficult for us to hit that [number] unless we double our numbers (from 2014),” he said. For Visit the Philippines Year in 2015 the target is 8.6 million visitors.

The 2014 visitor total estimate missed the Department of Tourism (DoT) target of 6.5 million. The official visitor numbers will be released in February.

Arrivals are one of only three key metrics being tracked by the Department, Mr. Enerio said. “One is the arrivals in which we are lagging behind and the other one is in terms of revenue of which we are able to generate in excess of some $4.7 billion last year [which] is above target [$4.6 billion] and the third is job generation” related to tourism, which he said was above target, though he provided no details.

The tourism receipts target for 2015 is $5.7 billion.

South Korea remains the Philippines’ biggest visitor market with an estimated 1.1 million arrivals in 2014 followed by the United States with about 700,000 and China (which has overtaken Japan) with between 450,000 and 500,000 thousand, exceeding Japan’s total, according to Mr. Enerio.

Mr. Enerio said that in terms of potential demand, those interested in a visit to the Philippines are “in excess of 10 million already” based on DoT research.

“People would really love to come to the Philippines but they are really unable to come to the country because of the issue... of access,” he said.

He said the problems with access and entry points such as the country’s airports are “temporary setbacks” and in a few years’ time the Philippines will have the “best airport in the region.”

He cited the P1.64-billion structural rehabilitation and retrofitting of Ninoy Aquino International Airport (NAIA) Terminal 1 which started January 2014 is set to be completed by the first quarter of 2015 in time for the Asia-Pacific Economic Cooperation (APEC) summit to be hosted by the Philippines in November.

During the APEC events the government expects 25,000 dignitaries as well as leaders from APEC member economies, he said.

Other ongoing travel-related construction projects are the Skyway Stage 3, due for completion by April 2017; the North Luzon Expressway-South Luzon Expressway connector road project to finish late 2017 or early 2018; and 8,000 hotel rooms being built in Metro Manila between now and 2016, he said.

Mr. Enerio said that airport development in Cebu, Davao, and Subic, among others will generate new opportunities.

“We have to promote and we have to be aggressive. I think this government has been able to establish the importance of marketing ourselves like our neighbors are doing,” he said.

“We have done it before but this is the time when the government has pooled its resources as a result of the Tourism Act enacted in 2009... more and more resources have been given to support tourism promotions both locally and internationally,” Mr. Enerio added.

In conjunction with Visit the Philippines Year, PTAA announced that this year’s Travel Tour Expo which will be held from Feb. 13-15 at the SMX Convention Center will be the biggest yet. The association projected more than 300 exhibitors occupying 16,230 square meters of floor space.

The expo promises “unprecedented deals and treats” from airlines, hotels, national tourism organizations, domestic tour operators, travel agencies and other stakeholders, the PTAA said.

source:  Businessworld

Pinoys to reach 101.4 M this year

“Right now our population is 100.7 million or 100.8 million. But by mid-2015, it will be around 101.4 million. So the big efforts of the DOH and PopCom will be on the implementation of the Responsible Parenthood and Reproductive Health (RPRH) law this year and part of 2016,” PopCom executive director Juan Antonio Perez III told The STAR yesterday.

Dependency ratio pertains to the number of working people and their dependents.

Perez said the goal is to decrease the country’s total fertility rate from the current three percent, or three children per woman, to 2.1 percent, or two kids per woman.

“We are still the highest in Southeast Asia… (Our aim is that) each woman will have around two children. That is the replacement rate. And at that rate, the dependency ratio will improve in the next few years,” he explained.

He noted that while the country’s population growth rate of 1.9 percent is going down, it is declining at a very slow pace.

Perez said that part of the campaign is to include “subdermal implants” in the family planning program.

A subdermal implant is a flexible plastic rod about the size of a matchstick that releases the hormone progestin into the body.

The subdermal implant is inserted into a woman’s upper arm to suppress ovulation for three years. If a woman wants to get pregnant, the implant will simply be removed.

The implants will be included in the list of contraceptives being supplied and supported by the DOH and PoPCom, namely injectables, pills and condoms.

Perez said the DOH and PoPCom would also scale up the promotion of tubal ligation, vasectomy methods and three natural scientific family planning methods: lactational amenorrhea based on breast milk production, standard days method, and the Billings ovulation method.

The agencies do not promote calendar and withdrawal methods and “people who are on those methods will be encouraged to move to scientific methods.”

Due to the rising trend in teenage pregnancy, a campaign on comprehensive sexuality education will also be strengthened among the youth.

This will be done with Department of Education, Department of Social Welfare and Development and with other government agencies and civil society groups, Perez said.

source:  Philippine Star

Government spending and the economy

First of two parts

IN the wake of the lower-than-expected economic growth in the third quarter of 2014, the contribution of government spending to the economy has become the focus for analysts and policymakers. Retracting 2.9 percent year-on-year in the third quarter, government spending, or rather the lack of it, was blamed for slowing growth, a problem that seems to have continued in the fourth quarter.

As has been pointed out in several reports, the slowdown in GDP growth in the latter half of 2014 certainly appears to have been much broader than can attributed to shrinking government expenditures, but government spending does have an impact on the economy. “Government spending is about 10 percent of the entire economy’s output,” Dr. Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies (PIDS) pointed out, “So increased government spending will certainly have an effect.”

Optimistic estimates
Dr. Albert, who is probably one of the country’s foremost experts in handling socioeconomic statistics, suggested that the real impact of increasing government spending could only be reliably estimated after a deeper analysis of economic inputs and outputs. The implied uncertainty, however, has not stopped some analysts from making optimistic estimates of the growth dividend of “improved” spending.

In a report released just before the end of the year, Citi Research estimated that increased spending for the Typhoon Yolanda reconstruction program would increase economic output by 2.2 percent over the next three years. In a mid-year report, the Center for Business and Economic Research at the University of Nevada at Las Vegas took an even rosier view, pegging 2015 growth at 8.4 percent. Moody’s Analytics, on the other hand, took a glass-half-empty perspective in its year end assessment of the Philippine economy; having earlier forecast a moderate 6.5 percent annual growth rate in 2015, in its latest credit outlook the agency warned “the government’s real GDP growth target of 7 percent to 8 percent for 2015 will be difficult to achieve if budget release and use are not improved.”

The general impression is that the Aquino Administration’s handling of the budget, which is assumed must improve in 2015, will add something between half a percent and 2 percent to the GDP growth rate this year due to increased spending. A cursory analysis of the available data, however, suggests that not only is a significant increase in spending unlikely, any increase is likely to have far less of an impact on the overall economy than anticipated.

Inconsistent historical performance
Since 1999, the proportion of GDP attributable to government spending has fallen within a relatively narrow range, from a high of just over 12 percent to a low of 9.3 percent. The long-term average over the past 15 years has been 10.26 percent; spending by the Aquino Administration has been just slightly higher than that at 10.3 percent. The biggest increase in spending so far during the second Aquino era, a 15-percent acceleration which occurred in 2012, budged the proportion of government consumption to total GDP by less than one percent, from 9.85 percent in 2011 to 10.65 percent in 2012 (chart 1).

The year-to-year change in government spending has been erratic although it has generally trended upward (chart 2). Changes in spending, however, do not always correspond with a similar movement in GDP. In 2003 for example, the Arroyo Administration increased the growth of spending by nearly 7.5 percent, and the GDP growth rate accelerated as well, from 3.65 percent in 2002 to nearly 5 percent in 2003. The next year, by contrast, the rate of spending growth slowed again, but GDP growth soared to 6.7 percent.

The same somewhat contradictory pattern was repeated between 2005 and 2007, and in 2009, the year the most serious effects of the global financial crisis were felt here, a sharp increase in spending failed to stimulate the economy; the economy still grew, but only at 1.15 percent, three percent slower than in 2008. Likewise, in 2013 the growth of government spending slowed sharply from 15.5 percent to 7.7 percent as political scandals erupted, but the overall economy moderately increased its growth pace from 6.8 percent to 7.2 percent.

Missing data
How government spending affects the entire economy can be simulated by analyzing the economic input-output tables, according to PIDS’ Albert; that was the methodology used by Citi Research in developing its recent estimate of the expected impact of Yolanda reconstruction spending.

Analyzing an input-output table – which is a form of “what-if” analysis – is relatively straightforward. The problem is that the most recent data available is nearly ten years old; the last time an input-output table was created was in 2006. That is because collecting the data to build an input-output table is a herculean task; the ‘current’ I-O table for the Philippine economy comprises 240 separate economic sectors, for each of which accurate data on consumption and production must be gathered.

Appreciation of the difficulties in producing an I-O table notwithstanding, any forecasts based on ‘dated’ data will have some degree of uncertainty. The economy has undoubtedly changed since 2006, but to determine in what ways and by how much would require a new I-O table; otherwise, the best any analysis can provide is an educated guess. For example, Citi Research based its calculations on a multiplier of 1.65; in other words, each peso of government spending would result in P1.65 of total economic output. According to the 2006 I-O table, the multiplier of government spending across the entire economy at that time was 1.56, of which 1.09 was secondary government spending (meaning that every peso of spending in one part of the government requires P1.09 in output from the rest of the government).

That suggests that a realistic multiplier might be closer to 0.49 – the difference between “government” and “rest of the economy” inputs to meet government spending demand, plus a small margin of about five percent to account for growth since 2006. In that case, the P57 billion in extra reconstruction spending each year that Citi Research forecast to result in P94.3 billion in additional income would instead produce a more modest P27.9 billion, adding just 0.22 percent to GDP growth annually, or about 0.66 percent over the three-year window studied by Citi.

Just as the assumption that government spending boosts the overall economy seems to be based on less than compelling evidence, the opposing view is likewise very debatable, as we will discover in part two of this special report on Tuesday.

source:  Manila Times