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Download accounting that helpsaccounting that helpsaccounting that helpsaccounting that helps and more Lecture notes Accounting in PDF only on Docsity! AMCHAM PHILIPPINES JANUARY 2018 VOL93 NOO1 The American Chamber of Commerce of the Philippines, Inc. the Philippines, Inc. | " U l a a Published by The American Chamber of Commerce of the Philippines, Inc. www.amchamphilippines.com SOCIAL PROTECTION POINT 9: ECONOMIC REVIEW IN THE INFORMAL SOCIAL PROTECTION | OF 2017 AND PROJECTION ECONOMY PROGRAMS FOR 2018 i val s Looking Back and Looking Forward acini Zuellig Pharma Your Premiere Partner for Distribution of Healthcare Products a = z - - we 7 i 3 = * = i - = A benchmark company providing quality World class logistics systems and processes fully warehousing and distribution of pharmaceutical certified to international cGWP standards. and healthcare products. ISO accredited. Fast order to delivery nationwide through an integrated network of regional distribution centers Cold Chain capability following Customer requirements are supported by a global standards. customer call center and 22 sales service offices. Fully automated sales force call planning and High numeric account distribution, consistent order-taking systems. Customers can also order call plan coverage and professional customer anytime via on-line ordering systems. relationship-based management, ZUELLIG PHARMA Connect. Healtheare, Aga. KM 14 West Service Road South Superhighway cor. Edison Ave. Brgy. Sun Valley Paranaque City 1700 908-2222 / 789-3444/ 1-800-10-9835544 www.zuelligpharma.com Advertise with AMCHAM The American Chamber of Commerce of the Philippines, Inc. in 5 easy steps We do not want You to miss the opportunity to be heard. Our mailing list comprises ntin their respective organizations. Thes in theirca and enriching their horizons through constant kere ge. They independent thinkers in buildin areness on your 7 Step 1 ao . ann! a an Fill up the form, which may be nae —_o requested from the Advertising Head at advtg@amchamphilippines.com ~ or 818-7911 loc. 208 Do not forget te sign the contract a once the terms and conditions — have been finalized between your =! company and AmCham. AMCHAM STANDING COMMITTEES The American Chamber of Commerce of the Philippines, Inc. First AmCham in Asia OFFICERS AND DIRECTORS 2018 H.E. SUNG Y. KIM U.S. Ambassador to the Philippines Honorary Chairman BRUCE WINTON President RICK SANTOS 1** Vice President ROBERTO BATUNGBACAL 2"? Vice President HENRY T. PELAEZ Treasurer JOSE VICTOR EMMANUEL DE DIOS MARK LWIN PHILIP SOLIVEN VARINIA ELERO-TINGA SHANKAR VISWANATHAN JAMES WILKINS MARIFE ZAMORA Directors GEORGE M. DRYSDALE DON FELBAUM ROBERT M. SEARS Directors, Ex-Officios EBB HINCHLIFFE Executive Director ATTY. AILEEN TOLOSA-LERMA Corporate Secretary DEMETRIO P. SALIPSIP, JR. Chairman, AmCham Retirement Fund AMCHAM COMMITTEES Agribusiness Energy & Power Energy Efficiency Environment and Urban Development Extractive Industries Financial Services and Taxes & Tariff Healthcare and Wellness Human Capital & Resources Information & Communications Technology (ICT) Infrastructure & Logistics Intellectual Property Rights Legislative Manufacturing Phamaceutical Professional Women of AmCham Security Disaster Resource Group / OSAC Tourism & Hospitality Trade & Investment ers isin) PHILIP G. SOLIVEN VARINIA ELERO-TINGA FRANK THIEL JOSE VICTOR EMMANUEL DE DIOS SAFDAR QURAESHI JUN PALAFOX / JAMES DONOVAN HENRY T. PELAEZ Atty. JULES RIEGO DONALD R. FELBAUM ERNIE CECILIA GRACE SORONGON DONALD R. FELBAUM FRANK HOLZ JAIME FAUSTINO. JOHN PETERSON Atty. DIVINA P.V. ILAS-PANGANIBAN, LL.M. Atty. PRINCESS ASCALON JOHN D. FORBES. ROBERTO BATUNGBACAL SHANKAR VISWANATHAN BRENT DENNING Atty. MELANIE LAGERA VARINIA ELERO-TINGA SIMOUN UNG / PETE TROILO ROBERT BLUME / FARID SCHOUCAIR MARIO BISCOCHO COORDINAT! KV Rojas Bea Baldonado Rafael Quilala Bea Baldonado Yves Aguilos KV Rojas Bea Baldonado Yves Aguilos Rafael Quilala Rafael Quilala KV Rojas Yves Aguilos Bea Baldonado KV Rojas Bea Baldondo Rafael Quilala Rafael Quilala Yves Aguilos Nee Membership * Kapihan + Welcome Breakfast * Networking Provincial Chapters * Central Luzon * Visayas * Mindanao Young Professionals Publications and Communications Corporate Partners ROLAND DELA CRUZ CHRISTINE STEVENS EBB HINCHLIFFE LESLIE ANN MURRAY EBB HINCHLIFFE JOHN ANGELO TAN ERNIE CECILIA MANUEL R. GUILLERMO EBB HINCHLIFFE Pauline Santos Pauline Santos Pauline Santos KV Rojas Pauline Santos Joan Sabroso Brenda Lisen Annie Quitay Bea Baldonado Leslie Ann Murray Mikhail Banzon Eya Martinez Chet Guevara Christina Winton ACTIVITIES / ADVOCACY / AFFILIATE AmCham Foundation AmDesk at the BO! Business Leadership Program (BLP) Filipino-American Memorial Endowment (FAME) The Arangkada Philippines Project (TAPP) Washington Relations / APCAC EDWIN D. FEIST / JUN SALIPSIP EBB HINCHLIFFE JUN SALIPSIP / DAVID CALDWELL Lt. Col. ART MATIBAG LESLIE ANN MURRAY JOHN D. FORBES. RICK SANTOS / GEORGE DRYSDALE Yves Aguilos Pinky Jamil KV Rojas Yes Aguilos Divina Combes 4 AMCHAM BUSINESS JOURNAL 2018 AMCHAM CHAPTERS AMCHAM PHILIPPINES Gc The American Chamber of Commerce of the Philippines, Inc. THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. (Founded 1902 - Incorporated 1920) 2" Floor, Corinthian Plaza Building, Paseo de Roxas, Legaspi Village, Makati City 1229 Tels.: (632) 818 7911 to 13 * Fax: (632) 811 3081 E-mail: amcham@amchamphilippines.com Website: www.amchamphilippines.com Bruce inton, President Ebb Hinchliffe, Executive Director THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. (Central Luzon Chapter-2015) Building 7294, C.M. Recto Avenue, Clark Freeport Zone, Pampanga, 2023 Telefax: (632) 811 3081; Mobile: 0927 912 3248 E-mail: joan@amchamphilippines.com Dennis Wright, President Joan-Eleanor Sabroso, Chapter Office Manager THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. (Mindanao Chapter-1988) 24 Floor, Door 207-208, Don Cesareo, Villa-Abrille Building, Jacinto corner Juan Luna Streets, Davao City 8000 Mobile: 0916 876 7729 E-mail: amchamdvo@gmail.com annie@amchamphilippines.com Atty. Leoncio P. Villa-Abrille, President Annie Quitay, Membership Coordinator FILIPINO-AMERICAN MEMORIAL ENDOWMENT, INC. (Founded 1986) c/o The American Chamber of Commerce of the Philippines, Inc. 2™ Floor, Corinthian Plaza Building, Paseo de Roxas Legaspi Village, Makati City 1229 C.P.O. Box 2562, Makati City 1265 Tels.: (632) 818 7911 to 13 * Fax: (632) 811 3081 E-mail: fame@amchamphilippines.com Website: www.filipino-americanmemorials.org Lt. Col. Artemio Matibag, President Leslie Ann Murray, Trustee THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. (Visayas Chapter-1987) 18" Floor, The Link, Cebu IT Park, Apas, Cebu City 6000 Tels.: (032) 238 8922; 316 1093 « Fax: (032) 232 2373 Mobile: 0917 323 1972 E-mails: cebuamcham@yahoo.com; brenda@amchamphilippines.com Jeff Minnick, President Brenda D. Lisen, Chapter Office Manager THE AMERICAN CHAMBER FOUNDATION PHILIPPINES, INC. (Founded 1985) Leonard Benjamin Development Center, 4554 Casino corner Olivarez Street Palanan, Makati City Tels.: (632) 834 0184; 551 8060 ¢ Tel/Fax: (632) 834 1192 E-mail: amchamfdn@amchamphilippines.com Website: www.amchamfoundation.com Edwin D. Feist, President Demetrio P. Salipsip, Jr., Executive Director AMERICAN DESK AT THE BOARD OF INVESTMENTS (Established 1992) 385 Sen. Gil Puyat Avenue, Makati City Tels.: (632) 895 8851; 895 3918 « Fax: (632) 896 2315 E-mails: ywes@amchamphilippines.com; amdesk@amchamphilippines.com Ebb Hinchliffe - Director, American Chamber Yves Aguilos - American Desk Specialist THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. 5 ADVOCACY POVERTY ALLEVIATION AND SOCIAL PROTECTION PROGRAM As we continue AmCham's support and advocacy of President Duterte's 10-Point Socioeconomic Development Agenda, we address Point #9 -"Social Protection Programs - Improve social protection programs, including the government's Conditional Cash Transfer program, to protect the poor against instability and economic shocks." SO CIALPRO TEC TION IN THE INFO RMALECONOMY BY ERNIE CECILIA, DPM tis sad to note that whenever social protection is talked about in the Philippines, we often refer to those workers in the formal sector. Of the 101.5 Filipinos, more than 70 million are of working age and, according to the Philippine Statistics Authority (PSA), the labor force consists of 42.5 million, of which 40.7 million are supposedly employed. Of the 40.7 million employed, only 7.7 million are in the formal sector, while 33 million are in the informal sector. The informal sector The informal economy is the "diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state." The concept originally applied to self-employment in small and unregistered enterprises, or unpaid work in family enterprises. It has been expanded to include wage employment in unprotected jobs. If the PSA statistics are accurate, the informal sector (or commonly known as the “underground economy") employs 81.1 percent of all workers in the Philippines. The registered micro, small and medium enterprises (MSMEs) hire 11.7 percent, and the large multinationals. (and employers with more than 200 workers each) hire only 7.2 percent of all employed workers. It was in the early 1970s when economists all over the world started to debate on the role of the informal sector in economic development. At that time, big business was the recognized engine of the economy. The importance of the informal economy has since then became a serious matter, particularly in developing countries where the sector comprises at least three quarters of the non-agricultural labor force. As we write, the informal economy continues to expand in many contexts and in new places and new guises. If properly given ample support, the "IF ONLY YOU CARED" PHOTO BY: MIGUEL LUIZ GUILLERMO PHOTO SOURCE: WWW.FLICKR.COM informal economy could help reduce poverty, unemployment, and inequality. Unbeknownst to many legislators and policy makers, the labor, financial and economic policies they formulate tend to favor only the workers in the formal sector, excepting the unexpected adverse consequences of these policies. One of the unintended consequences of several policies is the growing informality, as employers (particularly the MSMEs) in the formal sector are pushed into the underground economy. The minimum wage and social protection apply only to the formal sector. The workers in the informal economy do not get the same treatment, as the underground economy does not offer the same "cushion" to workers, especially during economic crisis. Framework | personally believe that informal workers should have access to social protection to mitigate risks to their income and to help them cope with the vagaries of the market and the economy in general. Since the early 1970's, government has had in its radar this sector, but informal workers today continue to suffer from lack of access to social protection. A long term, structural mechanism is much needed. Across the world, provision of social protection to workers in the informal economy is being seen as an investment, rather than as “wasteful" welfare spending. Economists believe that we need "a system-wide approach to social protection for all strata of the population and workforce," as short-term social assistance schemes are not enough to serve the needs of the vulnerable workers. In some parts of the world, social protection systems are designed to reach as many workers. as possible, and are supported by a range of 8 AMCHAM BUSINESS JOURNAL 2018 POVERTY ALLEVIATION AND SOCIAL PROTECTION PROGRAM "... The lack of coverage of informal sector workers persists. There is a continuing threat to sustainability because contributions and benefits are not strongly linked, particularly for the SSS. The funds are also subjected to continuous political pressure to finance social progranis that are of doubtful return and which may not be in line with the long-term nature of the fund's obligations...." financing mechanisms that include both public and private funds. The idea is for social protection to be “able to adapt to a wide range of contingencies, such as economic crises, collapse of particular industries, and changing climates and disasters" that put at risk workers' incomes and lives. Women are perhaps the most vulnerable workers in the informal economy. In some countries, they lack social status and are often excluded from social protection mechanisms. The women often have lower earnings, longer working hours, and poor working conditions. Three pillars A global US-based NGO, called the WIEGO Network (Women in Employment: Globalizing and Organizing), leverages the strength of membership-based organizations (such as trade unions), researchers and statisticians, and practitioners from development agencies around the world, to advocate policy reforms to address the lack of social protection for informal workers. Its work is based on three pillars, namely workers' health, childcare, and income security for workers. WIEGO's rationale for the pillars is both simple and straightforward. Its workers’ health program provides a central point for information, research and network building to promote better health and better access to health services for informal workers. If women are to secure their income and improve their own wellbeing, and that of their children, there must be ample state-supported child care provision that can help improve economic outcomes for poor working women in the informal economy. The pillar on income security is the newest in WIEGO, which finds a need for more institutional mapping and policy scoping. Social protection in the Philippines In a 2010 study by Dr. Aniceto C. Orbeta, Jr. of the Philippine Institute of Development Studies (PIDS), the author cited five pillars of social protection in the Philippines: social assistance and poverty- targeted programs (DSWD, DOH, DOLE); mandated public pension and defined benefit plans (SSS, GSIS, ECC, Philhealth, RSBS); mandated occupational and personal pension plans and defined benefit plans (PAG-IBIG, GSIS, OWWA); voluntary occupational or personal pension plans (company- based provident or retirement funds); and voluntary, informal support and social programs, etc. (private pension, insurance, and pre-need plans). Dr. Orbeta observes, "... The lack of coverage of informal sector workers persists. There is a continuing threat to sustainability because contributions and benefits ADVOCACY are not strongly linked, particularly for the SSS. The funds are also subjected to continuous political pressure to finance social programs that are of doubtful return and which may not be in line with the long-term nature of the fund's obligations..." Barking up the wrong tree Some legislators and policy- makers often bark up the wrong tree. Their consuming desires lately seem to be twofold — 1) the abolition of legitimate job contracting, in the guise of strengthening workers' right to security of tenure, by making all jobs practically regular, and 2) increasing the wages of those who already have jobs in the formal sector. As policies for doing business become more stringent, the tendency for the 99.4 percent of registered establishments (the MSMEs) is to go underground. Sadly, this growing informality does not augur well for the Filipino workers. In the end, the policies aimed at protecting labor will eventually disadvantage the sector they intend to protect. Truly, the road to hell is paved with good intentions! @ About the Author: Ernie Cecilia, DPM, is a regular contributor to the AmCham Business Joumal. Mr. Cecilia is the Chair of the AmCham Human Capital Committee and also Chair of the AmCham Publications Committee. Please see page 42 where his monthly "Business of Business" article appears. THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. 9 FEATURE JANUS — Looking Back and Looking Forward BY LESLIE ANN MURRAY, AMCHAM PUBLICATIONS elcome to 2018! - Our January cover features a depiction of Janus, the oldest of the gods in the Roman pantheon; represented as having two faces, one looking forward and the other backward; hence January — the first month of the year - a time in which we look toward the New Year and recall events and lessons of the past year(s). Janus was first the god of all doorways: of public gates through which roads passed, and of private doors. His insignia were thus the key which opens and closes the door, and the stick (virga) which porters employed to drive away those who had no right to cross the threshold. His two faces (Janus bifrons) allowed him to observe both the exterior and interior of the house, and the entrance and exit of public buildings. Being god of the gates, he was naturally the god of departure, and return and, by extension, the god of all means of communication. Under the name of Portunus, he was god of the harbors. Source of Janus info: Google Janus was also the god of "beginnings". As a solar god, he presided over day break and was considered the promoter of all initiative. So - there is much symbolism in the selection of Janus for our AmCham Business Journal cover for January 2018: a) This is a particularly significant for time for AmCham - as we leave our milestone 115-year Chamber anniversary behind and move into spectacular, new renovated offices, the new year and new growth in provincial chapters and membership. b) Janus was also "the God of all means of communication" - and that is the major role of AmCham — to communicate between members, the community and the governments of our two countries. "JANUS" ARTWORK BY: SAM MARTINEZ, BSN, RN E-MAIL: SAMARTINEZ.NYC@GMAIL.COM INSTAGRAM @SUNNYBTS ENHANCED BY: EYA MARTINEZ, LAYOUT EDITOR AMCHAM PHILIPPINES The god of "beginnings". We look back with thanks to all our members for their participation in our activities of 2017 - and to our premium sponsors, and all our many program, committees, event, and activities sponsors for their invaluable support. We look forward to welcoming all members to our new offices — and for their continued — and increased — participation in all our AmCham activities. This is your chamber - we exist for you and hope you will make the most of the year ahead in terms of your membership! @ FILIPINO-AMERICAN MEMORIAL ENDOWMENT VT a a ela eer saa mee NVA Ga al ala laa ae DEDICATED TO THE PRESERVATION OF WWII HISTORY eA eNO 1 0 AMCHAM BUSINESS JOURNAL 2018 Fe a6 cs Leora oN ADVOCACY POVERTY ALLEVIATION AND SOCIAL PROTECTION PROGRAM Continuation of Point 9: Social Protection Programs According to the Philippine Statistics Authority, farmers and fishermen are among the poorest in the country: "Among the nine basic sectors, farmers, fishermen and children belonging to families with income below the official poverty threshold or poor families posted the highest poverty incidences in 2015 at 34.3%, 34.0% and 31.4%, respectively. These sectors consistently registered as the three sectors with the highest poverty incidence in 2006, 2009 and 2012. Also, 5 of the 9 basic sectors consisting of farmers, fishermen, children, self-employed and unpaid family workers, and women, belonging to poor families, had higher poverty incidence than the general population estimated at 21.6% in 2015." This is illustrated in Figure 64 below. FIGURE 64. POVERTY INCIDENCE FOR BASIC SECTORS, 2006, 2009, 2012 AND 2015 SOURCE: PHILIPPINE STATISTICS AUTHORITY FIGURE 65. DEGREE OF SELF-RATED HUNGER IN HOUSEHOLDS, 1998-2016 25% ——Total —— Moderate 56% ——Severe 15% 10% 5% 0% FESS ML F FFE SPF Pg gg? gr gg SOURCE: SWS The poor are often hungry. Their diet is inadequate. Their children are frequently malnourished and stunted. The Social Weather Stations (SWS) measures self-rated moderate and severe hunger by asking respondents if they have had nothing to eat. The September 2010 poll counted 16% of households - equivalent to some three million families - claiming to have had nothing to eat at least once in the past three months, down from 21% in the June 2010 survey (see Figure 65). While this seems to be progress, it is still considerably higher than the rate 15 years before. The Global Hunger Index rated the Philippines in 2015 as “serious," in the same category as Indonesia and Cambodia but lower than the "moderate" rankings of Malaysia, Thailand, and Vietnam. Among the ASEAN-6, the Philippines holds the highest slum population as a percentage of urban population compared to other populous Asian economies (see Figure 66). The Aquino Administration greatly expanded the Conditional Cash Transfer (CCT) program or the Pantawid Pamilyang Pilipino Program (4Ps) initiated by President Macapagal-Arroyo in 2007. CCT now assists 4.4 million households totaling 20 million Filipinos. The transfers are provided directly to recipients on the condition that their children are inoculated and participate in school feeding programs to combat childhood diseases and malnutrition. Total funding increased from Php 10 billion in 2010 to Php79 billion in the 2017 budget. Read more on page 16 1 4 AMCHAM BUSINESS JOURNAL 2018 Fast, Efficient and ere Visa Processing in the Philippines Visa Types: A 9g (Work) KITTELSON 47A (PEZA) Tourist Extension » CARPO™ NrdnaVan (teuildclanlor als) CONSULTING 13a (Marriage) aay ae oto) info@kittelsoncarpo.com ECONOMIC UPDATE ECONOMEC REVIEW OF 2017 AND PROJECTION FO R2018 BY EMMANUEL T. SANTOS, PH.D "Overheating occurs when the economy grows at an unsustainable rate, as productive capacity cannot keep up with robust demand." 017 was a good year for the Philippines as it maintained its record as the second fastest growing economy in Asia against Vietnam's 7.5% GDP, but ahead of China's 6.8% GDP. as of the 3° quarter of 2017 - and second to China by end of the year. The momentum has created expectations of a higher level of growth in 2018. In the last quarter of 2017 business confidence was high at 43.3% as shown in the Business Expectation Survey (BES) conducted by Bangko Sentral ng Pilipinas (BSP) from October 2 to November 20, 2017 on 1,473 companies throughout the Philippines. The exporters posted the highest confidence index of 50%, with importers and domestic- oriented firms following services (particularly hotels and restaurants) posting the highest confidence index of 73 percent. Wholesale and retail also exuded an optimistic business outlook. Business people attributed their high overall confidence index to: 1) expectation of increased orders and consumer purchases during the 2017 Christmas season; 2) expansion of existing businesses and increasing number of new businesses; 3) higher disbursements for the government's infrastructure and other development projects; 4) favourable macro- economic conditions in the country, specially manageable inflation, and low interest rates; 5) stronger demand for Philippine products and expansion of export markets. International Monetary Fund (IMF) threw a dampener in the conclusion of its Executive Board's Article IV Consultation with the Philippine Government on October 26, 2017. The IMF warned that the Philippine economy may overheat because of strong credit growth, suggesting weak absorbing capacity of the economy which sounded funny on the ground. The IMF stressed that risks to the outlook were tilted to the downside and - stem mainly from external sources. The IMF insisted that the combination of high credit growth, buoyant private investment and fiscal expansion without tax reform could lead to the overheating of the economy. This conclusion is deemed outdated since the Senate has now passed the tax reform program. And the obedient super-majority in the lower house is expected to approve it. It is said that by definition "overheating occurs when the economy grows at an unsustainable rate, as productive capacity cannot keep up with robust demand." Reminiscent of the Asian financial crisis triggered by huge construction and real estate credit in Bangkok, the IMF stressed that high credit growth (especially in the real estate and household sectors) merits continued monitoring. In addition, it observed that some conglomerates and real estate developers have leveraged significantly, while shadow-banking activities have expanded. The IMF raised fears about conglomerate structure and data gaps generating challenges to measure concentration, while advising capital market development. This could help reduce bank loan concentration by diversifying the source of funding for large conglomerates. The IMF failed to note the practice of condominium developers to raise capital through pre-selling of their condo units. To counter possible unintended consequences of the IMF conclusions and advise, Finance Secretary Carlos Dominguez said that the administration is retaining a seven-percent growth target for 2017, on the back of higher investment spurred by the "Build Build Build" Program. He also expressed optimism this growth rate could be sustained over the medium term. "The 6.5 percent growth for the first semester makes the Philippines the second fastest growing economy in Asia after China. We retain the seven percent growth rate target for the year, spurred by the investment 1 8 AMCHAM BUSINESS JOURNAL 2017 spending in the infrastructure program. We believe this growth rate is sustainable well into the medium term," Dominguez said. Actually, the third quarter of 2017 posted 6.9 per cent GDP, two percentage points above the 6.7 per cent of the second quarter. The average GDP of the first three quarters is 6.7 per cent. The fourth quarter saw higher infrastructure investments and greater fiscal stimulus with improvement in govemment absorptive capacity, higher household consumption due to the Christmas season, higher manufacturing production due to strong domestic demand and higher exports as reported by Nikkei Philippine Manufacturing Purchasing Managers’ Index (PMI). 2017 would most likely end up close to seven per cent, well within the revised goverment target of 6.5 to 7.5 for the year in spite of the political noise, the Marawi crisis, and collapse of peace negotiation between the Duterte government and the CPP-NDF-NPA, ending up in the declaration of NPA as a terrorist organization. The objectives of these investments are: 1) to raise to higher level the country's infrastructure, to match that of our most progressive neighbors; 2) to modernize the infrastructure to address congestion in the ports, airports and roads; 3) to invest in infrastructure to produce the "highest multiplier effect" on the economy, as it creates; (3.1) construction jobs in the short term and manufacturing jobs in the long term; (3.2) improves land prices; (3.3) enhances agricultural productivity, and (3.4) encourages expansion of industries into the regional areas. The Duterte government believes the Philippines can no longer postpone infrastructure modemization, as well as human capital development, given the changing economic landscape of the ASEAN region toward ECONOMIC UPDATE regionalization. "The timetable set by the ASEAN Free Trade Area (AFTA) means we can no longer postpone modernization of our infrastructure and postpone the training of our young to be functional ina globalized economy. We can no longer have a deficient bureaucracy and substandard governance," Dominguez said. The Duterte administration has planned to embark on a massive infrastructure program, which will initially be funded by official development assistance, and later by budgetary outlays and various forms of public-private partnerships. "We are looking to invest over P8.4 trillion in six years in new infrastructure to include better irrigation networks and more farm- to-market roads. We trust the private sector will bring in the investments in agribusiness and manufacturing to make the modern logistics system worthwhile," Dominguez said. The strategy is for the Tax Reform for Acceleration and Inclusion (TRAIN) Act to provide a steady revenue stream for its priority programs. The TRAIN Act, the first package of the Comprehensive Tax Reform Program, would bring in an additional P134 billion in revenue in the first year of its implementation. With such a development program, the Gross Domestic Product may be expected to rise to the higher level of 8 to 10 per cent in 2018. © About the Author: Lawyer-educator, political economist Emmanuel Tiu Santos is Chairman-CEO of the Makati-based International Academy of Management and Economics (IAME), Makati Medical Center College (MMCC), and Institute of Strategic and International Studies (ISIS). THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. 1 9 Ut) sited ace Cid Lei bers) a VS PRU egal Attaché ommander, US as FBI and OSI Embassy, Manila Ce ee | Corporate Investigations + Due Diligence « Litigation Support + Asset Tracing + Background Investigations + Criminal Record Checks Security Consulting with Special Emphasis on Energy Agricultural and Mining Sectors in Mindanao + Political/Security Risk Assesments + Counterinsurgency Collections + Crisis Management & Security Surveys SI ORION SUPPORT INCORPORATED (OSI) LTA Building, 7/F 118 Perea Street Makati City 1229, Metro Manila Philippines Tel: (63-2) 890-3090 Fox: (63-2) 552-7507 Email: orion@osi.com.ph AMCHAM, ASIS, INTELLENET and Cll ECONOMIC UPDATE The following statistics from World Bank data has been contributed by Mr. Alexander E. Dacanay of SGV in response to our request for data to support our traditional inclusion of a year-end Economic Review and Forecast for our readers. (This information was all that was available prior to our printing deadline. - Editor) ATA GIANCE- WORID BANK MONTHLY UPDATE 2017 — AN: EXPEC TA TIO NS FOR 2018 BY ALEXANDER E. DACANAY, SGV November e Amidst a volatile foreign exchange market, the Philippine peso dropped to an 11-year low in October. ¢ Both export and import growth slowed in September. e Manufacturing activities contracted again in September, following a temporary recovery in August. * The Philippine Stock Exchange index (PSEi) surged to a new record high in October as it tracked the strong performance of global financial markets. e Rising energy prices pushed headline inflation to its highest level in three years. e In September, government revenues increased sharply while expenditures contracted. e Inthe World Bank 2018 Doing Business report, the Philippines ranks 113" out of 190 economies in the ease of doing business. October * The World Bank projects that the Philippine economy will grow at 6.6 percent in 2017, and 6.7 percent in 2018 and 2019. « In September, the Philippine Stock Exchange index (PSEi) x reached anew record high while the peso stabilized. « Manufacturing activities rebounded in August and reversed their July contraction. « Export growth slightly slowed in August, while imports increased sharply. « In September, inflation increased back to April peak levels. « In August, government spending continued to grow in the double- digits for the fourth consecutive month, while revenues expanded at a slower pace. * The Philippine banking sector remains stable, while domestic liquidity continued to expand. September ° The Philippines Stock Exchange index (PSEi) slightly weakened in August. ° The Philippine peso rebounded in early September after a volatile performance in August. ° The strong export recovery continued in July while imports contracted for the second consecutive month. e Manufacturing activities contracted in July for the first time in two years. e Higher food and energy prices pushed inflation back up to 3.1 percent in August. ° Credit growth expanded in July with double-digit growth for both business and household loans. * The government fiscal deficit moderated in July compared to June because revenue growth accelerated. e In July, the unemployment rate increased marginally, while underemployment improved amidst a decline in laborforce participation. August © The Philippine Stock Exchange index (PSEi) posted solid gains in July, yet net foreign buying weakened. ° The Philippine peso traded for most of July around the Php/US$50 level and reached its weakest level in over ten years. e In June, Philippine external trade slowed, with export growth moderating significantly and imports contracting. « Manufacturing activities continued to expand at a slower pace in June and average capacity utilization remained elevated. «Inflation picked up slightly to 2.8 percent in July. ° Credit expansion remained uninterruptedly high, in line with growth in domestic liquidity. ° The government's fiscal balance widened in the first six months of 2017 as expenditure growth picked up in the second quarter of the year. * The government submitted its proposed 2018 national budget to Congress, with expenditure priorities broadly inline with the previous year's budget. July * The World Bank projects continued strong growth for the Philippines and expects the economy to expand at 6.8 percent in 2017. e After a brief rally in early June, the Philippine stock exchange index (PSEi) flattened out by the end of the month. * The Philippine peso weakened in June and once again crossed the Php/ US$50.00 mark ° During the first five months of the year exports registered double-digit growth. e Manufacturing activities expanded at a weaker pace in May. e After peaking in April, headline and core inflation further slowed during June. e In May, the government's fiscal balance swung into deficit as spending for infrastructure and operation and maintenance accelerated. ¢ In the first quarter of 2017, the balance of payments deficit increased significantly, fueled by a widening merchandise trade deficit and persistent capital outflows. June * While the Philippine peso traded in May in a relatively stable foreign exchange market, it continues to depreciate on an annual basis. 20 AMCHAM BUSINESS JOURNAL 2017 Read more on page 22 @® KMC SOLUTIONS ~Y “Companies should bear the responsibility of promoting health education and providing wellness programs inside the office, which results to an engaged and healthy workforce.” Gregory Kittelson, Chairman and Co-Founder of KMC Solutions ae FLEXIBLE WORK SPACES FOR YOU AND YOUR TEAM elms tam Zo erst Ta TEs Re acon cur eelg =) (Nears each 10) Visit us at T /kmcsolutionsph or www.kmesolutions "HO LYWO OD HEYDA YS" — 30° AmCham Annual Charity Thanksgiving Event BY CANDY GABRIEL, AMCHAM FOUNDATION ike fine wine, the AmCham Foundation's traditional Annual Thanksgiving Event continues to get better each year. For many years it was a very formal, "long gown and black tie", evening. Then for a few years it was a fun filled "Night at the Races" where guests "bet" on the outcome of formerly run iconic horse races — Kentucky Derby, Belmont, etc. - which were projected on the ballroom screen, and everyone screaming for their favorite to win! This year the event returned to a more traditional evening - but with a glamorous twist..."Hollywood" and its stars of its "heydays" was the theme. Recently held at the Ballroom of New World Makati Hotel, this year's festivity, which celebrated one of the most traditional of American holidays, attracted more than 200 AmCham members, supporters, and special guests. All of these companies and individuals have - again - greatly benefited the Filipino community through the AmCham Foundation, just by being a part in this annual affair. The foyer of the New World Ballroom was filled to capacity as the guests streamed in to register, then moved on to either having a photo on the red carpet, or heading over to check out the array of offerings for the Silent Auction, and/or the Art Exhibit — an additional fund-raiser for the evening. As this was going on, everyone was also enjoying the scene as candies were given out by look-alikes of the fabulous and famous Michael Jackson, Elvis Presley, Madonna and Lara Croft! And - in addition to the candies - the guests enjoyed excellent wines donated by Forth and Tay. The evening's program opened with the traditional playing of the Philippine and US national anthems. Once seated, guests were welcomed by Mr. Edwin Feist, President of the American Chamber Foundation of the Philippines, who also acknowledge the many generous sponsors of the event. The Ambassador of the Embassy of the United States, H.E. Sung Kim, was called upon to deliver the traditional U.S. President's "Thanksgiving Message". However, since the event was held well in advance of Thanksgiving Day, Ambassador Kim instead acknowledged and thanked all the donors and partners of the Foundation who continue to support the Foundation programs. After the short speeches, guests were welcomed in song — powerfully rendered by Ms. Janice Javier of "The Voice Philippines, Season 1". Guests were delighted as the waiters paraded the 24 AMCHAM BUSINESS JOURNAL 2018 Read more on page 26 Vehicle specifications may vary form actual units. Brora pritippines Starts. at P:1,399,000 Experience Ford Everest with SYNC™3 hands-free calls and: entertainment alongside its Terrain Management System, preparing you for any surface, on-road or off. Visit Ford Dealers nationwide. Go Further WHAT AMCHAM WHITE CHRISTMAS PARTY NETWORKING NIGHT © AMCHAM NETWORKING NIGHT WHERE MAKATI DIAMOND HOTEL, MAKATI CITY WHEN DECEMBER 6, 2017 | 06:00 PM - 09:00 PM PLATINUM SPONSOR ZMG Ward Howell EXECUTIVE SEARCH GOLD SPONSOR UNIONSANK MAJOR DONOR UNITED AIRLINES RAFFLE DONORS a MANILA easton /i/. [kyarit Momielix WINE SPONSOR 28 AMCHAM BUSINESS JOURNAL 2017 More photos on page 30 fl ee, PR Knight a i oe Frank GLOBAL REAL ESTATE SERVICES Occupier Services and Commercial Agency Residential Sales & Leasing Investment & Capital Markets Research & Consultancy Valuations Facilities Management Project Management Property Management Tenancy Management Technical Services Inquiry@Santos.KnightFrank.ph Santos.KnightFrank.ph Continuation of AmCham White Christmas Party Networking Night WHAT INFORMATION AND COMMUNICATIONS TECHNOLOGY COMMITTEE'S ANNUAL CHRISTMAS PARTY INFORMATION AND e COMMUNICATIONS TECHNOLOGY COMMITTEE WHERE TOWER CLUB, MAKATI CITY WHEN DECEMBER 4, 2017 30 AMCHAM BUSINESS JOURNAL 2017 FROM CHOCOLATE HILLS TO PINOY GREEN TEA ICE CREAM, F i FIND THEM ALL IN THE PHILIPPINES. y - . » = Gaming for \ (, f RIGHT ACROSS FROM Ni NOT AQUI a 21 YEARS OLD RWM MOBILE APP CA . 7 NAL AIRPO! INE bial ubiaea Orie rwmanila.com a wi) DOWNLOAD FOR FREE \ : MANILA np iano WHAT PWOA CHRISTMAS COCKTAILS, e PROFESSIONAL WOMEN OF AMCHAM WHERE NEW WORLD MAKATI HOTEL, MAKATI CITY WHEN DECEMBER 19, 2017 | 06:00 PM - 08:00 PM SPECIAL GUEST AMBASSADOR SUNG Y. KIM ATTENDEES INCLUDED ATTY. JOCOT DE DIOS, RICHARD MCGONEGAL, JOHN FORBES, TRINITY GATUZ, BELINDA RACELA RAFFLE SPONSORS i ee Ray MICROTEL BY WYNDHAM CALENERGY Deepen mena SPECIAL THANKS TO Bank of America @ CALENERGY imal PHIL PERATIONS 34 AMCHAM BUSINESS JOURNAL 2017 Enriching Lives, Investing for Good Capital One Philippines aims to improve the lives of Filipino youth by honing their talents through the Contact Center Readiness Program. The nine-month program equips students, not only with education and training, but also with a chance to provide for their families and fulfill their dreams. - MUA RUL SUN CCAL Se MAILAMO Lec Aan NAL SAAMM eLAL Tee ALUN UN e-Celie-tece len y Tele lol-a successful in the field or if | would be hired after the course. But ! believe that everything is possible and that you should never give up on your dreams. Now, my family gets to eat three times a day. | was able to pay all our debts and | don’t have to worry anymore if there will be food for my family the next day.” Mary Jane Verdadero Graduate, Contact Center Readiness Program i. CapitalQnec FEATURE AJR SEA RESC UE BY JOYCE HUFTON he 505" Search and Rescue Group is the primary search and rescue unit of Philippine Air Force is dynamic, well-equipped and responsive. It is a unit of which the Filipino people can be proud - and on which they can depend at all times. Since its activation on December 12, 1956 as the 505th Air Rescue Squadron - under the 205" Tactical Operation Wing - until its expansion into a sole unit, the 505" Search and Rescue Group has been a part of Philippine Air Force that has remained true to its commitment as savior for the Filipino people. en On the 15‘ February 1996, the 505th Air Rescue Squadron was upgraded into 505" Search and Rescue Group. It was placed under the Commanding General, Philippine Air Force as a response team of the Department of National Defense due to the increasing disasters; incidents of strong typhoons, volcanic eruptions, rampaging lahar mudflows, and other maritime and aerial disasters. Today the 505" Search and Rescue Group is the foremost unit of the Philippine Air Force and Armed Forces of the Philippines that deals mainly with Humanitarian Assistance and Disaster Response (HADR). The Group is capable of performing the following search and rescue operations: a. Air Search and Rescue. Aircrew and Para-rescuers are trained to develop their skills and competence on the principles and techniques of air search and rescue (SAR) missions. These operations demand precision and safe execution during SAR in a high-risk environment using hoist operations as well as insertion/ extrication devices such as jungle penetrators, rescue baskets and stoke litters, rope and ladders, sling operations, etc.; b. Pararescue Operations. Using specially trained pararescue jumper (PJ) personnel and their equipment that enables them to perform rescue missions whether on air, land, and water; Aero Medical Evacuation. Having air assets as its primary SAR equipment, the Group is also capable of providing platforms for Aero Medical Evacuation. The Emergency Medical Technicians, together with EMS aircrew or the members of Aero Medical Team from PAFGH (or any accredited Armed Forces Philippines (AFP) Hospital), the Unit’s air ambulance picks up patients in remote places throughout the country and ferries them to the appropriate, nearest medical facility or hospital; Disaster/Relief Operations. In times of natural or man-made disasters, the Group performs disaster relief operations such as high-angle extrication and limited collapsed-structure victim extrication using special SAR equipment. To prepare the pararescuers for these tasks, they will undergo rigorous training on SAR Disaster Management Emergency Assistance. Also, with the use of air assets, the unit is capable of transporting relief goods to remote areas; Maritime Patrol. \n charge of patrolling and safeguarding the Malampaya Natural Gas to Power Project (MNGPP) - from its plant in El Nido and along its pipeline Read more on page 40 38 AMCHAM BUSINESS JOURNAL 2018 a aT ye Whirlpool — a ea a ¥. Pee ee fast to proserve their texture Beni ta Cee a Oe ae Re ee Naturally maintains the fret eee Re te eee We know what matters. sense eM RR UM lade eel) ic ees URNA rece SCM cm saa 10 reece saree ac na ean Cer ue nage a at matters most to you Pere atl MANILA, BACOLOD EXATEC www.whirlpool.com.ph FEATURE Continuation of The 505** Search and Rescue Group that stretches out to San Jose, Mindoro - the Group uses a PZL W-3A Sokol Helicopter under the operational control of the Joint Task Force Malampaya; f. Limited Fire Fighting. Employing a helicopter bucket (Bambi Bucket) suspended from arescue helicopter during firefighting operations, and usually in inaccessible places such as forest fires and other conflagrations in remote areas. The unit accomplishments have earned recognition and gratitude from the country. At the forefront of its mission, there are four Squadrons that operate strategically in Luzon as well as Advance Command Posts in specifically in North Luzon, Palawan, Visayas and Mindanao. Its responsibilities are to safely carry out air search and rescue missions to support AFP and civilian agencies. This includes making all the necessary preparations for the rescue mission; whether from a ground responder or aeronautical point of view. The scope of a mission is to transport victims from incident areas to inter-hospitals. It hurdles different scenarios that demand rescues, to which 505"" SRG responds promptly; using different air assets, like HADR Helicopter or the PZL W-3A Sokol Helicopter, SAR Heli - known as Hueyll/Super Huey Helicopter, and a S-76 Air Ambulance Sikorsky. The mission is to let our fellow Filipinos feel peace and to ease worries as 505" SRG fulfills their duties as responders in times of emergencies, natural calamities, providing pre- emptive approach to the undesirable occurrence in time. The 505"" SRG Personnel are inculcated with skills which gives them the capabilities to perform the mission duties. Such missions include Collapsed Structure Search and Rescue, Mountain Search and Rescue, High Angle Rescue, Water Search and Rescue, Urban Search and Rescue, Aero Medical Evacuation, Disaster Relief Operation, Aerial Reconnaissance, transport of personnel, troops insertion and extrication through the use of rescue hoist, and Limited Aerial Firefighting. With training in all these areas, the 505" SRG perform, locate, penetrate, recover and sustain people in distress. 4 The 505" Search and Rescue Group save lives... whenever, and wherever. It is what they believe in, and all these things they do so that others may live. @ MEMBERSHIP NEWS NATIONAL CAPITAL REGION CENTRAL LUZON NEW AMCHAM MEMBERS s 3 < 40 AMCHAM BUSINESS JOURNAL 2018 breed unhappy customers. Privacy vs. trust These days, privacy is a major concern and laws protect customers' privacy. But firms need more information about customers in order for them to serve the latter. Kelly's advice is simple, "Firms should view privacy not as some inconvenient obsession of customers that must be snuck around, but more as a way to cultivate a genuine relationship." The more your customers tell you, the better you can serve them. A person will not be comfortable divulging his inner secrets unless there is trust. For trust to bloom, customers must know who knows about them and the full details of what they know. They must have equal knowledge of the "knower", as much as the “knower" knows them. Meaningless productivity During the first Industrial Revolution, the overpowering imperative was to increase productivity. Machines, organizational structures, reporting relationships, and personnel policies were tailored to ensure efficiency and productivity. In today's economy characterized by VUCA + D, productivity is "nearly meaningless." Every aspect of the modern, networked firm - people, hardware, software, distribution network — has. been designed to increase economic relationships in quantity and quality. Kelly observes that in the past, in the absence of plentiful information, the best way to construct PUM tea CLL OTT TaN YD a ULL Tt TR SCAT a complex organization was to build a hierarchy. At that time, most information comes to and from the top of the hierarchy. He says, "When information is plentiful, peers take over." When reliable information is plentiful and accessible by most anybody, almost nothing can prevent peers from taking over. The most significant of this so-called peerage is between customer and the firm. Relationships between and among firms, and between and among customers are the more interesting relationships;more than the boss-subordinate relationship. Customer or employee When you line up behind the ATM machine to withdraw your money, are you an evolved bank customer or a non-paid bank teller? When you pump your own gas, are you working for yourself or for the gas station? When you take a pregnancy test at home, are youa believer in self-help or working for the HMO to reduce its operating costs? In the age of disruption, sometimes it's difficult to tell which side you are on. Kelly wants to know. As technology evolves, the plot thickens. There's no telling now what more ambiguities and ironies you'll experience over the years. In 1973, | watched with much interest and awe Soylent Green, a post-apocalyptic science fiction thriller based on the 1966 novel Make Room! Make Room! by Harry Harrison. Scenes set in 2022 ROS eryone e tab) and no fee = just a voluntary minimal Php200 eee BUSINESS OF BUSINESS New York City were about the greenhouse effect, overpopulation, poverty, and euthanasia which made the movie remarkable. It was the 101st and last movie of Edward G. Robinson, who played the character of Sol Roth, an aging police analyst and friend of detective Frank Thorn (Charlton Heston). | clearly remember the scene where Roth agrees to die a peaceful death via euthanasia. As he comfortably lies in his deathbed, a visual and musical montage of his choice, enabled by technology, flashes before his eyes. Truly, there's no telling what good and bad things will happen in the age of disruption. @ About the Author: Ernie Cecilia is the 2013 Executive Director and 1999 President of the People Management Association of the Philippines (PMAP); Chair of the AMCHAM's Human Capital Committee, Publications Committee; and Co- Chair of ECOP's TWG on Labor and Social Policy Issues. He is President and CEO of EC Business Solutions and Career Center. Contact him at erniececilia@yahoo.com THE AMERICAN CHAMBER OF COMMERCE OF THE PHILIPPINES, INC. 43 aU As NCR a Neale ay reas ae ane Ua at iaamisle ke} omeep Naas EUSEBIO TAN ere a se eee ey LUTGARDO MENDOZA MARIA BERNARDITA ALBA DYN Oho oil isin d ae) nO aO ROCs} BENITO CHUA KIONG KAREN BATUNGBACAL ea Say ANDREW ONG ee aN i=/=0 aaa fos me}, em CESAR GINETE Os ssOle naam ain Octane Daa: MILLET ESCASINAS a ees ara TRINITY GATUZ Ve eae) RAISSA ROMINA BAUTIST/ ea ne B) alg Bo) MICHAEL GEL INA GERARD ZORILLA RENER ILAGAN ON Re ani@ aN ANTONIO OSTREA lela pam Soira ae SIMEON CUYSON CENTRAL LUZON EVANGELINE TEJADA VISAYAS Ae malay JASON REARDON JEFFREY ALAN BOUGHER: Sta henaia lal Beet ah Cael) EMMYLOU O. LOZADA NILO NIMIS MINDANAO MA. LUISA SIAN AmCham.Philippines RE ons The American Chamber of Commerce of the Philippines, Inc. 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Zuellig Pharma ... @amchamPH 44 AMCHAM BUSINESS JOURNAL 2018 “(IWd) JOUOOULE}U] SLOW) AIIYd JO @fOI|YJO UD “OU) DL4Wd JO WUD Afi|iqisUOdsdl |OIDOS S}OJOGIOD auj s| BDDIquU