As the global economy reels from the slowdown due to the corona virus disease and other factors, the Philippines and other smaller economies may take a hit from ongoing rationalization plans of companies.
“If you look at the world, we are a small player, a small country compared to the global world demand. So you can expect a lot of this rationalization when global headquarters start studying the (allocation of their) resources. One factor (in the rationalization) is if the operation of a company is in a major… or big in a country… that market must be important for that (company),” said Ramon Lopez, secretary of the Department of Trade and Industry.
Lopez said demand in the world market slowed initially due to the US-China trade war and now, COVID-19.
“We don’t know how long (this slowdown) will last,” he told reporters in Makati City on Monday.
Lopez said in rationalizing their operations, companies look at how competitive they are in a certain country.
“They may not be competitive in the Philippines… but it has something to do with the competitiveness structure of the industry where they are in,” said Lopez.
He cited the case of Honda Motor of Japan which has expanded its motorcycle production in the Philippines where business is thriving but closed down its assembly of cars due to cost concerns.
“That’s the reality. They choose the business where they are (successful) . That’s a business decision globally,” he said.
But Lopez is hopeful that once the overall global economy bounced back, companies will be open to expansion and in diversifying their production sources,” Lopez added.
Telco, RE projects delayed
The scheduled rollout of third telecommunication firm, DITO Telecommunity Corp. will likely be delayed due to lack of materials needed to the build towers and fiber network in the country.
DITO said the lockdown of Hubei, the manufacturing hub of China and the center of the outbreak, has stalled the production of steel or tower components and fiber optic cables.
Rodolfo Santiago, DITO chief technology officer told reporters suppliers’ subsidiaries with manufacturing plants in other countries would be tapped to ensure delivery of these materials.
DITO has built 600 base stations out of the 1,600 it committed by end of July this year.
Secretary Gregorio Honasan II of the Department of Information and Communications Technology (DICT) warned DITO’s certificate of public convenience and necessity and radio frequencies may be revoked if the telco fails to meet their commitments and their performance bond of P25.7 billion may also be forfeited in favor of the government.
Adel Tamano, DITO chief administration officer, said the company will not be penalized for the delay because “something like corona virus… can be considered force majeure.”
Honasan led the inspection of DITO’s cellular tower in San Francisco del Monte, Quezon City to check whether or not it is on track in rolling out the infrastructure needed to fulfill its first year commitments by July 2020.
Meralco PowerGen Corp. (MGen) said its renewable energy (RE) projects set for the year might face delay as solar panels from China have yet to be delivered.
Rogelio Singson, MGen president and chief executive officer, said the Tarlac project which requires solar panels with a combined capacity of 135 megawatts (MW) will be pushed back from its original commissioning of mid 2020.
Singson said another project in Bulacan is facing the same hurdle.
Slow business
Ride hailing firm Grab Philippines has seen a decline in demand in due to the COVID-19, and much earlier, he coronavirus outbreak.
Brian Cu, Grab Philippine president said the decrease in demand balanced the supply particularly in January when Grab was able to allocate rides to 75 percent of the people that book.
That is up from 60 percent in the previous months.
But Cu said this could go down to 60 percent by March and April as the company loses around 1,000 drivers a month.
To address the anticipated shortage of driver supply, Grab urged Land Transportation Franchising and Regulatory Board to maximize the 65,000 transport network vehicle services (TNVS) slots in order to replace the thousands of drivers who churned out and service the estimated 5.2 million ride-hailing passenger bookings forecasted to happen starting March 2020.
As of February 2020, Grab Philippines has determined to have at most 33,000 active drivers in its platform — a 2,000 reduction from its 35,000 active driver scount last December 2019. (I. Isip, M. Iglesias and J. Macapagal)
