Costs of services trade, investment barriers remain high – OECD

The costs of services trade and investment barriers remain high, largely exceeding the average tariff on traded goods.

An OECD report noted that consumers and business pay for these restrictions. In sectors such as transport, logistics and construction, the cost of services are estimated to be about 20% higher on average than they would be in the absence of restrictions, and in some countries are nearly 80% higher than otherwise, imposing substantial additional burdens on manufacturing enterprises and eventually on final customers.

Red tape across services markets also creates additional costs for exporters seeking to enter multiple markets – the ad valorem tariff equivalent of regulatory differences is estimated at about 40%.

Small and medium-sized enterprises (SMEs) would benefit from more open and better regulated services markets. SMEs often find that identifying the regulatory requirements of each country and documenting compliance is beyond their capacity.

Reducing the costs of market entry would help improve the inclusiveness of services trade by allowing more SMEs to take up global opportunities.

“Open and well-regulated services markets are the gateway to global value chains,” said OECD Secretary-General Angel Gurría.  “Services trade policy reform can boost SMEs, reduce trade costs, strengthen the digital economy and help make globalisation work for all.”

The report recommends that countries pursue co-ordinated services trade policy and regulatory reforms by scaling back restrictions on foreign entry and barriers to the movement of professionals that discriminate against foreign services providers.

Countries should adopt strategic reforms across a spectrum of trade, investment and competition policies to facilitate trade in services, targeting bottlenecks in transportation and logistics services to reduce trade costs.

ICTSI is one of Philippines’ best investor relations companies

ICTSI best investor relations company

Treasury Director and Head of Investor Relations Arthur R. Tabuena was named the Philippines’ Best Investor Relations Professional, receiving the citation from Corporate Governance Asia founder & publisher Aldrin Monsod.

Manila-based ICTSI has been named as one of the Best Investor Relations Company in the Philippines and its chairman and president Enrique Razon, Jr. was hailed as Asia’s Best CEO (Investor Relations) by Corporate Governance Asia during the recent 9th Asian Excellence Awards.

On the other hand, Rafael D. Consing Jr., ICTSI Senior Vice President and Chief Financial Officer, was named Asia’s Best CFO (Investor Relations) while Arthur R. Tabuena, ICTSI Treasury Director and Head of Investor Relations, was recognized as the Philippines’ Best Investor Relations Professional.

Now on its 9th year, the Asian Excellence Awards recognizes companies for their achievements and superiority in management acumen, financial performance, corporate social responsibility, environmental practices and investor relations. Winners were selected from several countries across the region, including China, Hong Kong, India, Japan, Korea, Indonesia, Malaysia, Singapore, Taiwan, Thailand, Vietnam, and the Philippines.

Adding to the long list of awards recognizing ICTSI for its governance excellence is Alpha Southeast Asia that cited the Company as one of the best managed companies in the Philippines – clinching five awards in the 9th Annual Institutional Investor Awards.

ICTSI led publicly-listed companies in the country as having the Strongest Adherence to Corporate Governance and Most Organized Investor Relations Company; whilst second best in having the Best Senior Management IR Support and Most Consistent Dividend Policy.

In the same awards, Mr. Consing was also named as the Philippines’ Best CFO. This is Mr. Consing’s second time to receive the coveted award from Alpha Southeast Asia, bagging the recognition for the first time in 2017.

As the only poll focused on Southeast Asia, the Institutional Investor Awards gauges performance in financial management, adherence to corporate governance, integrated reporting/CSR & IR. The awards presentation for Philippine winners will be held in Singapore on September 17.

Still in recognition of the Company’s commitment towards responsible stewardship, the Institute of Corporate Directors (ICD) rated ICTSI for being one of the high-ranking PLCs in the Philippines based on the Asean Corporate Governance Scorecard (ACGS).

Lauded for its 2018 results, the Company maintains commendable compliance with the best practices in the following areas: Board responsibilities, disclosure and transparency, rights of shareholders, equitable treatment of shareholders; and role of stakeholders.

Benchmarked against international best practices, the ACGS’ rigorous methodology provides foreign investors and external fund managers with comparable information from which to base their investment decision-making process.

Mr. Consing, who also serves as the Company’s Compliance Officer, welcomed these citations for ICTSI and its key officers: “Amidst an ever-evolving regulatory environment, these recognitions affirm that we are at the right track in ensuring ICTSI’s Group-wide commitment to sound, prudent and effective management – the bedrock of business sustainability. Our continuing adherence to good corporate governance, in turn, fulfills our vision to build long-term stakeholder and shareholder value.”

As a key player in the global supply chain, ICTSI has expanded the scope of its impact management, part of its efforts of guaranteeing good corporate governance. In 2018, ICTSI adopted new supply chain measures aligned with its sustainability objectives – including screening of new suppliers, using environmental criteria; measurement of spending on local suppliers; and assessing suppliers’ environmental impact.

On top of key governance frameworks in place, ICTSI has made various efforts over the previous year to promote transparency and fairness in the Company’s dealings and relationships with stakeholders – including the appointment of a third independent director within ICTSI’s board; and the adoption of a Conflict of Interest Policy and an Anti-Bribery Policy in 2018.

EU extends 100,000 Euros in humanitation aid to Philippine communities

EU downloadThe European Union has provided €100,000 EUR in humanitarian aid funding to assist the most affected Philippine communities. The aid has benefited 300,000 people in some of the hardest hit areas in the regions of Calabarzon, Central Luzon, Central Visayas, Metropolitan Manila, and Western Visayas.

This EU-funding supports the Philippine Red Cross (PRC) in delivering crucial assistance through the strengthening of public health services, such as the establishment of dengue emergency medical units or hospital extension wards at local government hospitals, and the provision of nursing staff to respond to overwhelming dengue cases.

In addition, water sources, which can be mosquito breeding grounds, will be cleaned and treated with a biological control agent to eliminate mosquito larvae. The funding also focuses on enhancing public awareness through health promotion activities and information dissemination to prevent and reduce new cases.

The funding is part of the EU’s overall contribution to the Disaster Relief Emergency Fund (DREF) of the International Federation of Red Cross and Red Crescent Societies (IFRC).

Since the beginning of 2019, the Philippines has seen a drastic increase in the number of dengue cases nationwide. According to the latest data from the government, close to 116 000 cases, including 491 deaths, have been reported during the first six months. This marks an increase of 86 per cent compared to the same period last year, when 57 564 cases were reported.

So far, the central Western Visayas region has been the worst hit area where nearly 16 000 cases have been registered. Following the sharp surge, the Philippine Department of Health declared a national dengue alert on 15 July in an effort to step up its surveillance and response to the mosquito-borne disease. As the archipelago island now experiences its annual monsoon season, when peak transmission typically occurs, the European Union’s humanitarian experts continue to closely monitor the situation.

The European Union is the world’s leading donor of humanitarian aid. Relief assistance is an expression of European solidarity towards people in need around the world. It aims to save lives, prevent and alleviate human suffering, and safeguard the integrity and human dignity of populations affected by natural disasters and man-made crises.

Through its European Civil Protection and Humanitarian Aid Operations (ECHO), the European Union helps over 120 million victims of conflicts and disasters every year. For more information, please visit ECHO’s website.

The European Commission has signed a €3 million humanitarian contribution agreement with the International Federation of Red Cross and Red Crescent Societies (IFRC) to support the Federation’s Disaster Relief Emergency Fund (DREF). Funds from the DREF are mainly allocated to “small-scale” disasters – those that do not give rise to a formal international appeal.

The Disaster Relief Emergency Fund was established in 1985 and is supported by contributions from donors. Each time a National Red Cross or Red Crescent Society needs immediate financial support to respond to a disaster, it can request funds from the DREF. For small-scale disasters, the IFRC allocates grants from the Fund, which can then be replenished by the donors. The contribution agreement between the IFRC and ECHO enables the latter to replenish the DREF for agreed operations (that fit in with its humanitarian mandate) up to a total of €3 million.

Philippine inflation rate to remain at 2 to 4% in 2019

The National Economic and Development Authority expects Philippine inflation rate to remain within the government’s target of 2 to 4 percent by the end of 2019.

The country’s headline inflation eased to 2.4 percent in July 2019, bringing the year-to-date inflation to 3.3 percent.

NEDA attributed the low inflation rate to slower price increases in food and non-alcoholic beverages and housing, water, electricity, gas and other fuels in July 2019. This was the slowest inflation recorded since December 2016’s 2.2 percent and was the same rate for July 2017.

Rice deflation also was observed for the third consecutive month, reaching -2.9 percent in July 2019.

“We welcome this decelerating trend in prices but we remain on guard against possible upside risks such as adverse weather conditions, possible entry of the African swine fever, and uncertainty in the global oil market, among others,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

Secretary Pernia says government agencies such as Department of Agriculture, Department of Trade and Industry, and the National Food Authority should ensure sufficient supply of basic food commodities, in view of the expected tropical cyclones

As part the government’s continued efforts to prevent the entry of African swine fever (ASF) into the country, the Food and Drug Administration temporarily banned the importation of pork meat products from Hong Kong, North Korea, and Germany, alongside 17 other ASF-infected areas.

“The concerned authorities should intensify its market surveillance to ensure the compliance of importers and retailers with the government’s directive. The government should also ensure that there is sufficient production of pork and other meat products locally as the threat of the epidemic is seen to continue in the near term,” Pernia added.

Philippine manufacturing sector on the downtrend

Philippine manufacturing activities continued to decline over the last six months as indicated by the 10.5% drop in volume of production index and 9.6% fall in the value of production index.

“We need to instill a sense of urgency in government to implement economic reforms,” says Socioeconomic Planning Secretary Ernesto M. Pernia.

“Manufacturing output will likely remain muted in the near term as business and consumer outlook for the third quarter of 2019 turned less upbeat,” Pernia said.

Secretary Pernia warned that production could be stifled as the seasonal slack in domestic demand and business activities during the rainy season limits overall manufacturing growth.

“Moving forward, domestic demand expansion is needed to support the growth of manufacturing, especially given the slowdown in global demand” he added.

“The now markedly slower inflation rate, which is back to government’s target range, bodes well for producers of manufactured goods,” said Pernia.

Lower prices of food staples such as rice, the anticipated downward adjustment in electricity rates, and the recent peso appreciation tempered inflation pressure in July.

Pernia added that the significant reduction in the intensity of El Niño will also soften the risk to the supply of raw materials for the food manufacturing subsector.  As of end-July 2019, only nine provinces are expected to experience drought compared to 32 provinces as of end-June 2019.

“The government has been working to strengthen the transport and logistics sector as it is crucial to prop up manufacturing growth,” the Cabinet official stressed.

A joint administrative order among various relevant agencies has been proposed, which aims to reduce shipping costs and port congestion.

“The passage of the amendment to the Public Service Act is expected to encourage competition in the air, maritime and road transport, as well as logistics services, and enhance the productivity and efficiency of service delivery,” Pernia added.

Secretary Pernia expects the issuance of the Implementing Rules and Regulations of the Ease of Doing Business and Efficient Government Service Delivery Act would boost cooperation among agencies, as well as encourage the alignment of efforts to address bureaucratic concerns.

“We need to also accelerate public works spending during the second semester of 2019 which will contribute to increases in employment and disposable incomes, thus raising the demand for consumer goods,” Secretary Pernia added.

Philippine trade down 5.8% in June 2019

The National Economic and Development Authority has urged the Philippine government to exert all efforts in boosting domestic demand and exports’ competitiveness to improve the country’s trade performance with global growth likely to remain sluggish for the remainder of 2019.

According to the Philippine Statistics Authority (PSA), the country’s total merchandise trade contracted by 5.8 percent in June 2019 as the decrease in merchandise imports (-10.4%) outstripped the growth of exports (1.5%).

Imports continued its downward trend for three consecutive months now, with raw material and intermediate good, and consumer goods posting the biggest decline at -16.5 percent and -12.8 percent, respectively.

The moderate recovery of exports, on the other hand, continued for the third consecutive month. Increased sales of agro-based products, minerals, and manufactures compensated for the decline in outward shipments of petroleum products and other agro-based products.

Socioeconomic Planning Secretary Ernesto M. Pernia attributed the external trade slowdown in part to the ongoing trade disputes, Brexit-related uncertainties, and rising geopolitical tensions.

“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” he said.

In terms of exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies – China, India, Indonesia, Malaysia, Philippines, Singapore, Thailand.

“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” says Secretary Pernia.

“However, considering the less optimistic global trade prospects, it is necessary to diversify markets and boost domestic demand to compensate for the weakness of external trade,” Pernia said.

Secretart Pernia reiterated NEDA’s call to diversify products and markets by establishing new trade relations and improving existing ones with strategic partners.

“In light of the current trade spat between Korea and Japan, we need to complete the negotiations for the free trade agreement with South Korea and review the decade-old Philippines-Japan Economic Partnership Agreement to further expand the country’s exports in both markets,” said Pernia.

“Importantly, the government has been fast-tracking the implementation of infrastructure projects under the Build, Build, Build program to enhance trade facilitation and provide logistical support to manufacturers and exporters,” said Pernia.

Pernia urged the government to also be ready with counter-measures against disruptions to construction activities that may occur from likely unfavorable weather conditions.

ADB cuts growth forecast for Southeast Asia to 4.9% in 2020

ADBThe Asian Development Bank (ADB) has downgraded the economic outlook for Southeast Asia to 4.9% in 2020 due to the trade impasse and a slowdown in the electronics cycle.

ADB sees a robust economic outlook for South Asia, with growth projected at 6.7% in 2020, albeit lower than forecast in April.

In Central Asia, the growth outlook for 2019 has been revised up to 4.3% on account of an improved outlook for Kazakhstan. Central Asia’s growth outlook of 4.2% for 2020 is unchanged from April. The growth outlook in the Pacific—3.5% in 2019 and 3.2% in 2020—is unchanged as the subregion continues to rebound from the effects of Cyclone Gita and an earthquake in Papua New Guinea, the subregion’s largest economy.

Developing Asia’s inflation projections were revised up from 2.5% to 2.6% for both 2019 and 2020, reflecting higher oil prices and various domestic factors, such as the continuing outbreak of African swine fever in several Asian economies, which is expected to drive up pork prices in China.

ADB expects Asia to maintain strong but moderating growth over 2019 and 2020, as supportive domestic demand counteracts an environment of global trade tensions, according to a new Asian Development Bank (ADB) report released today.

In its Asian Development Outlook (ADO), ADB maintains growth forecasts for developing Asia at 5.7% in 2019 and 5.6% in 2020—unchanged from its April forecast. These growth rates are slightly down from developing Asia’s 5.9% growth in 2018. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, the regional growth outlook has been revised down from 6.2% to 6.1% in 2019 and maintained at that rate in 2020.

Deepening trade tension between the People’s Republic of China (PRC) and the United States (US) remains the largest downside risk to this outlook, despite an apparent truce in late June that could allow trade negotiations between the two countries to resume.

“Even as the trade conflict continues, the region is set to maintain strong but moderating growth,” said ADB Chief Economist Mr. Yasuyuki Sawada. “However, until the world’s two largest economies reach agreement, uncertainty will continue to weigh on the regional outlook.”

WEF’s Young Scientists of 2019

The World Economic Forum (WEF) has recognized 21 brilliant researchers at the cutting edge of discovery with the announcement of its Class of 2019 Young Scientists.

The scientists have been selected for their contribution to advancing the frontiers of science in the areas of health, sustainability, inclusiveness and equity. Collectively, their research covers a diverse spectrum from ecology to quantum technology, physics and materials science to biology and bio-medicine, and universe sciences.

This year’s global spread includes 10 in Asia, seven in Europe and a further four based in the Americas. Seoul National University in the Republic of Korea is the single institution with the highest representation of three Young Scientists, and 13 of the 21 scientists are women.

The World Economic Forum’s Young Scientists of 2019:

From Asia

Christine Cheung (Nanyang Technological University, Singapore, Singaporean): Cheung is using stem cell technology to study blood vessels in ways that could lead to treatments for diabetes and strokes 

  • Huang Rongqin (Fudan University, People’s Republic of China, Chinese): Rongqin’s research focuses on developing nano-materials for use in the early detection and treatment of cancer
  • Kim Sung-Yon (Seoul National University, Republic of Korea, South Korean): Sung-Yon’s research into the connection between stress and eating behaviour has significant implications for the fight against obesity
  • Kim Young-Min (Seoul National University, Republic of Korea, South Korean): Young-Min makes 3D models to create the illusion of tele-presence in augmented reality apps to help robots interact with humans
  • Liu Ying (Peking University, People’s Republic of China, Chinese): Ying’s work on decoding how cells respond to stress and nutrient levels is leading to the development of therapies for neuro-degenerative diseases and cancer
  • Loh Huanqian (National University of Singapore, Singaporean): by using quantum building blocks like Lego, Huanqian is designing a new generation of solar cells and superconductors to meet the world’s growing energy and computing needs
  • Nripan Mathews (Nanyang Technological University, Singapore, Indian): the perovskite solar cells that Mathews has developed are five times cheaper and more powerful than conventional silicon-based cells
  • Shin Yongdae (Seoul National University, Republic of Korea, South Korean): Yongdae combines biology, physics and engineering expertise to develop new technologies to understand and engineer living cells
  • Benjamin C.K. Tee (National University of Singapore, Singaporean): Tee’s skin-like sensor systems help the brain interact with prosthetic limbs, giving robots the sense of touch and enabling them to repair themselves
  • Wang Yihua (Fudan University, People’s Republic of China, Chinese): Yihua is researching how the quantum physical properties of materials can be harnessed for the next generation of computing

From Europe

  • Camilla Colombo (Politecnico di Milano, Italy, Italian): Colombo is changing the nature of space travel by designing ways for spacecraft to reach orbit by “surfing” through space
  • Olga Fink (ETH Zurich, Switzerland, German): Fink’s AI algorithms for monitoring industrial assets such as trains, planes and generators reduce costs and improve performance, safety and availability
  • Thomas Hermans (University of Strasbourg, France, Belgian): Hermans designs self-healing, self-replicating living systems and materials
  • Ashley King (The Natural History Museum, United Kingdom, British): King analyses extraterrestrial materials to learn more about the origins of the Earth and our solar system
  • Ruth Morgan (University College London, United Kingdom, British): Morgan has established the world’s first interdisciplinary forensic science research unit to minimize unsafe rulings in criminal justice systems
  • Adriana De Palma (The Natural History Museum, United Kingdom, British): De Palma’s analysis of huge ecological datasets and the study of bees is helping us to understand the impact of humans on biodiversity
  • Gaëlle Offranc Piret (Inserm, France, French): Offranc Piret is developing flexible, thin and nanostructured brain implants for therapeutic applications that could restore function for disabled people

From the Americas

  • Ilana Brito (Cornell University, USA, American): Brito’s contribution to our understanding of the human microbiome has significant implications on how we fight infectious diseases
  • Denise Morais da Fonseca (University of Sao Paulo, Brazil, Brazilian): Morais da Fonseca’s work centres on how the immune system is able to recover from infectious diseases, especially in low- to middle-income countries
  • Nicholas Pyenson (Smithsonian Institution, USA, American): Pyenson’s study of the evolution of whales and other marine mammals is helping us understand their origin and develop strategies for their survival
  • Sabrina Sholts (Smithsonian Institution, USA, American): Sholts’ study of collections of specimens is enhancing our understanding of the Anthropocene’s impact on humans, animals and the environment

Filipino millennials expect improving Philippine economy

Almost half of Filipino millennials expect the Philippine economy to improve in the next 12 months, significantly down from 78 percent last year.

The 2019 Deloitte Millenial Survey revealed that fewer Filipino millennials are optimistic about the country’s political outlook at 41 percent down from last year’s 68 percent.

Just the same, Filipino millennials remain more optimistic than the rest of their peers: globally, less than a third of millennials expect their respective economies and social and political situations to improve in the next few months.

Filipino millennials are showing growing disillusionment with the traditional institutions, skepticism of business’ motives, and pessimism about economic and social progress.

Respondents were asked if they think traditional institutions — political leaders, religious/faith leaders, social media platforms, business leaders, traditional media journalists, and leaders of NGOs – are having a positive impact on them and the world around them, and if they trust these same institutions as reliable sources of information.

The group that received the most favorable view is NGO leaders: 58 percent of Filipino millennials believe they have a positive impact, yet only 28 percent of millennials say this same group is a reliable source of information.

In fact, millennials have little trust for traditional institutions across the board, with political leaders faring the worst: only 16 percent of millennials trust this group as an accurate source of information; 36 percent believe politicians have a positive impact.

Interestingly, traditional media and social media landed at about the same spot along the trust axis – 22 percent of Filipino millennials trust traditional media, and 21 percent trust social media as sources of reliable information.

But social media fared slightly better on the impact axis: 48 percent of Filipino millennials believe social media has a positive impact, while 38 percent say the same about traditional media.

“It’s a cause for concern when we see young people reporting that they have little trust for the organizations and institutions they’re supposed to look up to as leaders,” says Eric Landicho, Deloitte Philippines Managing Partner & CEO. “For our part as business leaders, we have the responsibility to understand what is fueling this distrust or wariness, and then to take appropriate steps to mitigate or address it.”

The survey also noted a growing gap between businesses and Filipino millennials. Asked what impact they think businesses around the world are having on wider society, 76 percent of Filipino millennials said the impact is positive, down from 93 percent last year.

Globally, 55 percent of millennials believe businesses have a positive impact on society. And this demographic is letting its wallet do the talking: 44 percent of Filipino millennials said that as a consumer, they have stopped their relationship with a business because its products or services negatively impact the environment or society. Globally, 38 percent of millennials did the same.

The generation that grew up with social media seems to have a conflicted relationship with the platform. Eighty-one percent of Filipino millennials say they are physically healthier and 73 percent believe they would be happier if they reduced the time they spend on social media, compared to 64 percent physically healthier and 60 percent happier globally.

Yet 52 percent of Filipino millennials admit they would be anxious if they could not check their social media accounts or had to give it up for a day or two, compared to 44 percent globally. Not surprisingly, 61 percent of Filipino millennials believe that social media does more harm than good, compared to 55 percent globally.

“You could say that this conflicted attitude towards social media is a reflection of the conflicting impact the platform has on the lives of its users,” says Landicho.

“On one hand, it allows people to connect more easily with others across geographical and societal divides, but it also exposes users to so many serious risks such as fraud and even cyber-bullying.”

Ninety percent of Filipino millennials worry about being the victim of online fraud, with 78 percent admitting that they feel they have no control over who has their personal data and how it is used. Thirty-five percent of Filipino millennials admit they would like to completely stop using social media, compared to 41 percent globally.




US remains the Philippines’ biggest export market

The United States remains the biggest market of Philippine products as it posted the highest export value of $906.98 million or 6.5 percent to the total exports in April 2019.

The Philippine Statistics Authority (PSA) says exports to the US increased by 10.6 percent from $819.91 million in April 2018.

The other major export trading partners of the Philippines are China ($804.39 million), Japan,  $780.99 million; Hong Kong,  $704.82 million; and Singapore, $275.33 million.

China was the country’s biggest supplier of imported goods with 23.9 percent share to total imports in April 2019.  Import payments from China reached $2.15 billion, from $1.83 billion in April 2018.  Other major import trading partners were Japan, $827.73 million;  Republic of Korea, $710.41 million;  the US, $663.95 million; and Singapore, $555.89 million.

By economic bloc, majority of the country’s merchandise exports in April 2019, which comprised 49.7 percent of total exports or $2.74 billion, went to countries in East Asia, up by 1.8 percent.

East Asia was the biggest supplier of Philippine imports in April 2019, amounting to $4.35 billion or 48.3 percent of the total imports, down by 3.8 percent, from $4.52 billion in April 2018.

Total exports to the Asean-member countries dropped by 5.1 percent to $855.89 million or a share of 15.5 percent to total export value.

Commodities imported from Asean countries rose slightly by 0.6 percent to $2.30 billion or a share of 25.5 percent of the total import value.