June 2026 Articles - Suits the C-Suite

29 June 2026

Marie Stephanie C. Tan-Hamed

Rethinking productivity in the age of artificial intelligence

In brief:Advances in AI and shifts in the global economy are redefining productivity, shifting focus from output volume to outcomes, adaptability, and effectiveness.Human judgment and collaboration with AI are becoming essential, requiring organizations to rethink workflows, roles, and measures of value creation. Real-world examples highlight that productivity gains increasingly stem from improved decision quality rather than increased output, raising new measurement and equity challenges. “Productivity is not about simply doing more with less, but about doing better with new combinations of human and technological resources."Productivity has long been a cornerstone of economic and business thinking, typically defined as the output produced per unit of input. However, the rise of artificial intelligence (AI) and the sweeping changes in the global economy are forcing a reevaluation of what productivity means and how it is measured in the 21st century. C-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected — where multiple disruptive forces are shaping the global operating environment, including climate change, technological innovation, demographic shifts, and the rising influence of non-state actors. These intersections between primary forces create megatrends, identified as global, cross-sector scenarios that shape how organizations operate, compete and create value.The EY Megatrends 2026 report explores eight megatrends at the global macro level and highlights how each one can evolve in different sectors. Previous megatrends articles discussed how the superfluid enterprise eliminates operational friction, and how the human-machine hybrid expands capabilities. This third article on the productivity reset explores how to measure value when traditional metrics no longer apply, suggesting that productivity is moving away from a narrow focus on volume and toward a more nuanced understanding centered on outcomes, judgment, and adaptability. From efficiency to effectivenessFor much of the 20th century, productivity gains were closely tied to industrialization. Advances in machinery, process standardization, and labor specialization allowed companies to increase output while reducing resource use. Measurement was straightforward: output could be counted, and inputs could be quantified in terms of labor hours or capital invested.Today, the economy is dominated by services and digital platforms, where outputs can be intangible and difficult to quantify. AI accelerates this trend by generating content, analysis, and decisions at minimal cost. In this context, high output volume does not always translate to meaningful value. The focus is shifting from sheer output to effectiveness and how well outputs achieved intended objectives. Metrics now include accuracy, relevance, and the ability to drive action, not just quantity.The human factor in an AI worldAI’s growing capabilities do not diminish the importance of human input. Instead, they change its nature. While machines handle routine and repetitive tasks, humans are increasingly responsible for interpretation, oversight, and strategic decision-making. The emerging human-machine hybrid economy places a premium on judgment, context, and ethical considerations. At the same time, task redistribution between humans and machines isn’t neutral. Roles centered on routine, repetitive, or even some creative functions are being reshaped or displaced, often faster than workers can reskill or transition.In this case, productivity is not about simply doing more with less, but about doing better with new combinations of human and technological resources. Organizations that embrace this shift, viewing AI as a way to enhance and not merely automate, are more likely to unlock the technology’s full potential. However, this also requires acknowledging that not all workers will experience these changes in the same way, and that productivity gains may come with real human costs if transitions are not actively managed.Organization transformationThese shifts have significant implications for how organizations are structured and managed. Traditional hierarchies and rigid roles may be less effective in environments where information flows rapidly, and decisions must be made in real time. The concept of the superfluid enterprise, that is, an organization that adapts quickly and integrates AI into its core operations, reflects this new reality.Achieving this requires more than investing heavily in technology because it demands rethinking workflows, redefining roles, and establishing new forms of coordination between people and machines. It is important to emphasize that high-quality data is also essential. Without it, AI systems cannot deliver their promised productivity gains. Equally important is investing in people — not only in upskilling and reskilling programs, but also in transition pathways. Without deliberate effort, organizational transformation risks creating a divide between those who can work alongside AI and those who are left behind.The Philippine experienceRecent developments in the Philippines illustrate how these trends are beginning to take shape through emerging human-machine partnerships. In the public sector, the Department of Science and Technology has used data analytics and AI to improve disaster risk management, through initiatives such as Project NOAH and the Cordillera DREAM (Disaster Risk Evaluation, Analytics, and Management) Project, moving the focus from activity volume to decision quality and reducing the costs of natural hazards.As AI systems increasingly complement human judgment, their impact is becoming particularly visible in the creative economy and among small and medium enterprises (SMEs). By lowering barriers to content creation, design, and digital production, AI-enabled tools allow smaller players to scale output, personalize offerings, and participate more competitively in global markets. At the same time, SMEs can leverage AI to improve decision-making, optimize operations, and access new digital platforms, helping shift productivity gains from volume to value. These developments align with broader regional efforts, including initiatives led by the ASEAN Business Advisory Council (ASEAN BAC) to advance digitalization and AI adoption, particularly among MSMEs and creative industries.On the national scale, the Philippine Development Plan 2023-2028 highlights the importance of digital transformation and data-driven decision-making, particularly in infrastructure, transport, and logistics. These initiatives show that AI-driven productivity gains often come from better outcomes, beyond increased input, and that institutional capacity is crucial[MT2.1] to realizing these benefits. For example, AI-enabled systems can enhance transport planning through better traffic flow analysis and real-time coordination, improving commuter experience and system reliability. In healthcare, the integration of data and AI can support earlier diagnosis, more efficient service delivery, and improved patient outcomes. More broadly, intelligent systems can help shift infrastructure management from reactive to predictive, enabling faster, better-informed decisions across planning, delivery, and operations. While adoption currently remains at a very early stage, these developments underscore how human-machine collaboration can unlock more inclusive and outcome-driven productivity gains across sectors.Nevertheless, these gains will need to be matched with inclusive policies and workforce support systems to ensure that improvements in efficiency do not come at the expense of job quality or long-term employment stability.Measuring productivity in a digital eraAs productivity evolves, so do the challenges of measuring it. Traditional metrics like GDP and labor productivity were designed for economies where tangible goods and market transactions dominated. Today, valuable digital services fall outside these frameworks, and AI can decouple output from labor input. According to a 2024 OECD report, AI advances enable individuals to accomplish tasks that previously required a team, posing new challenges for measuring economic performance and productivity across different sectors as well as countries. Although new ways to measure the impact of AI and related technologies are being developed, there is no widely accepted approach to capturing their full value. The World Economic Forum stated that these challenges are particularly relevant in Southeast Asia, where a youthful workforce, rapid digital adoption, and growing economic diversity present significant opportunities and risks. Yet disparities in infrastructure, education, and institutional readiness risk leaving some behind. Without targeted investment, productivity gains from AI could deepen existing inequalities.The digital road aheadProductivity is being redefined by AI and changing economic structures. The emphasis is shifting from output to outcomes, effectiveness, and the interplay between human and machine capabilities. For organizations and policymakers, this means rethinking how work is organized, how performance is assessed, and where investments are directed. Ultimately, the “productivity reset” is not a one-time event but a continuous process, depending on how societies balance technology with human judgment and innovation with inclusion.Marie Stephanie C. Tan-Hamed is the Strategy, Economic Research, and Government and Infrastructure Leader of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

19 June 2026

Warren R. Bituin

Emerging Technologies: The Philippine workforce in the human-machine hybrid economy

In brief:The Philippines must strategically adopt AI, robotics, and emerging technologies to close labor gaps and boost productivity in sectors such as healthcare, BPO, and agriculture.Human-machine collaboration will transform workforce dynamics, lengthening careers and demanding continuous reskilling. Strong governance, ethical safeguards, and ongoing investment in digital infrastructure are vital for inclusive growth and regional competitiveness. “The success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets."Emerging technologies are rapidly transforming the global economy, from artificial intelligence (AI) to brain-computer interfaces (BCIs) to longevity research. These advances are redefining the very nature of work beyond simply enhancing human capabilities. C-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected — where multiple disruptive forces are shaping the global operating environment, including climate change, technological innovation, demographic shifts, and the rising influence of non-state actors. These intersections between primary forces create megatrends, identified as global, cross-sector scenarios that shape how organizations operate, compete and create value.The EY Megatrends 2026 report explores eight megatrends at the global macro level and highlights how each one can evolve in different sectors. The superfluid enterprise infrastructure explored in the previous article discusses how autonomous systems create the foundation for human-machine collaboration at scale. While superfluid enterprises eliminate organizational friction, the human-machine hybrid discussed in this article explores how new technologies will enable humans to expand their capabilities. Augmenting human potentialRecent policy directions from the Department of Information and Communications Technology (DICT) and National Economic and Development Authority (NEDA) between 2025 and 2026 highlight a growing recognition that digital transformation is no longer optional but foundational. AI is already streamlining data analysis, predictive modeling, and complex decision-making across industries. In the banking sector, major banks have expanded AI-driven fraud detection systems, significantly reducing transaction risks while improving customer trusts.Early-stage BCIs, though still largely experimental, are being explored in academic settings like the University of the Philippines for neurorehabilitation research. These initiatives suggest a future where Filipino workers may interact with machines through neural interfaces, particularly in healthcare and assistive technologies.Simultaneously, AI-driven longevity research is reshaping expectations about working life. According to a 2026 study by the Philippine Institute for Development Studies (PIDS), life expectancy improvements combined with better health technologies could extend productive working years by up to a decade. This creates both opportunities and tensions in labor market planning.The Philippine labor paradoxThe Philippines faces a demographic paradox: a young workforce grappling with underemployment alongside an aging population needing extended productivity. As of 2025, youth underemployment remained above 14%, while demand for high-skill roles surged, as reported by the Philippine Statistics Authority.This mismatch is particularly evident in the IT-BMP sector, where companies report shortages in AI specialists and data engineers despite a surplus of graduates. Human augmentation technologies can help bridge this divide. For instance, AI-assisted coding platforms are enabling entry-level programmers to perform advanced tasks, effectively compressing the skills gap.Opportunities here and thereHealthcare stands to benefit enormously from hybrid technologies. AI-powered diagnostic tools are being piloted in rural clinics where access to specialists are limited. These systems assist doctors in identifying conditions such as tuberculosis and diabetic retinopathy with higher accuracy according to the Department of Health pilot programs (2025). Robotic-assisted surgery, though still concentrated in urban centers like Metro Manila, is improving surgical precision and reducing recovery times.In the business process outsourcing (BPO) industry, AI is both a disruptor and an enabler. BPO companies are integrating generative AI into customer service workflows, allowing agents to handle more complex queries while automating routine interactions. According to the IT & Business Process Association of the Philippines (IBPAP) 2026 outlook, hybrid human-AI teams could increase productivity by up to 30%.Agriculture, traditionally slower to adopt to technology, is also evolving. Precision farming tools using technology such as drones and satellite data are being deployed in rice-producing regions such as Nueva Ecija and Ilocos Norte. These tools help farmers optimize irrigation, predict yields, and reduce input costs.Workforce transformation and longevityLonger working lives demand a fundamental shift in career development models. Filipinos may increasingly engage in multi-stage careers, transitioning across industries as technology evolves. Government programs like DICT’s “Digital Workforce 2025” initiative are expanding reskilling efforts, focused on AI literacy, cybersecurity, and data analytics.Longevity also impacts social protection systems. In September 2025, the Social Security System (SSS) implemented a landmark Pension Reform Program (PRP) designed to support Filipino retirees amidst increasing life expectancy and rising living costs. Aiming to maintain the purchasing power of elderly citizens, the PRP provides guaranteed, multi-year pension hikes across three tranches.Sustainability and technologyHuman augmentation technologies can also support sustainability goals. AI-driven energy management systems are being implemented in manufacturing hubs to reduce electricity consumption, aligning with the Philippines’ commitments under international climate agreements. In healthcare, optimized resource allocation through AI reduces waste and improves service delivery.Regionally, competition is intensifying. Countries like Singapore and Vietnam are investing heavily in AI and robotics. Singapore’s National AI Strategy 2.0 (updated 2025) and Vietnam’s aggressive digital workforce programs highlight the urgency for the Philippines to accelerate its own investments or risk losing competitiveness in key sectors like BPO and manufacturing.Regulatory and ethical challengesThe adaptation of human-machine hybrid systems introduces complex regulatory and ethical issues. Data privacy remains a central concern, particularly with sensitive data such as neural signals in BCI application. The National Privacy Commission has begun drafting updated guidelines for AI governance (2026), emphasizing transparency, accountability, and user consent. Another challenge is equitable access. Without targeted policies, advanced technologies could widen inequality between urban and rural areas. Infrastructure gaps, particularly in broadband connectivity, must be addressed to ensure inclusive adoption. On the other hand, liability in hybrid systems also requires clarity. If an AI-assisted medical diagnosis leads to an error, determining responsibility between human practitioners and machine systems is legally complex. Policymakers must establish clear frameworks to address such scenarios.Partnerships will be crucial when drafting policy frameworks and other regulations. Collaboration between academia, government, and private sector stakeholders can accelerate innovation. Equally important are workforce policies. Voluntary enhancement frameworks, that is, ensuring that workers are not coerced into adopting augmentation technologies, will build trust as a starting point. Continuous training programs must be institutionalized, not treated as one-off interventions.A defining opportunityThe success of the human-machine hybrid economy will depend on coordinated action across government, industries, and labor markets. If managed effectively, the hybrid economy can deliver higher productivity, safer workspaces, and more resilient growth, ensuring that technological progress benefits all Filipinos rather than a select few.The next article in this Megatrends series will discuss the concept of the productivity reset, which redefines value when traditional metrics no longer apply.Warren R. Bituin is the Technology Consulting Partner of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

11 June 2026

Marie Stephanie C. Tan-Hamed

The Superfluid Enterprise: How AI can propel Philippine businesses into the future

In brief:Philippine businesses must overcome inefficiencies to stay competitive in a fast-digitizing economyAI-powered, “superfluid” enterprises enable seamless operations and rapid decision-making. Success depends on the execution of digital transformation, strong data foundations, and supportive leadership“The move to a superfluid enterprise is a strategic transformation, not just a technological upgrade."Philippine companies are cautious, and the speed of execution towards certain goals remains a persistent challenge. Across industries such as logistics and banking, familiar constraints endure such as delayed approvals, siloed data, fragmented supply chains, and decision-making structures unable to keep pace with market shifts. As regional competitors digitize rapidly, these inefficiencies become a structural disadvantage.C-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected — where multiple disruptive forces are shaping the global operating environment, including climate change, technological innovation, demographic shifts, and the rising influence of non-state actors. Recent geopolitical tensions, particularly the ongoing conflict in the Middle East, illustrate how such disruptions are no longer contained within regions but cascade across supply chains, energy markets, and investment flows, amplifying uncertainty for businesses worldwide.Insights from the Philippine edition of the 2026 CEO Outlook Pulse Survey, gathered from CEOs across the country’s major sectors, further reinforce this reality. Philippine CEOs are navigating a landscape defined by global uncertainty, geopolitical tensions, and rapid technological change, recalibrating strategies and investments to sustain growth and resilience. In today’s NAVI world, these intersecting forces create megatrends — global, cross-sector scenarios that reshape how organizations operate, compete, and create value. The EY Megatrends 2026 report explores eight megatrends at the global macro level and highlights how each one can evolve in different sectors. This first article discusses the first megatrend, superfluid enterprise, which envisions what happens when technology expands human capability. Why superfluidity mattersAccording to EY, a superfluid enterprise is characterized by the elimination of operational friction, enabling data, talent, and capital to move efficiently across former organizational silos. Building on the superfluid enterprise framework from the EY Megatrends series, this adapts global insights for the Philippine context by examining how artificial intelligence (AI), automation, and integrated digital systems can enable smoother operations for sectors such as logistics, banking, and manufacturing. Information flows seamlessly, decisions are made in real time, and intelligent systems handle routine coordination. The result is a company that acts as a dynamic, adaptive network rather than a rigid hierarchy. This model addresses critical structural weaknesses. The World Bank’s Philippines Economic Update (2025) notes that productivity growth still lags behind regional peers due to inefficiencies in business processes and infrastructure. The Asian Development Bank similarly identifies supply chain fragmentation and regulatory complexity as barriers to competitiveness, which is precisely the frictions superfluid enterprises aim to eliminate.Logistics and the Philippine economyThe logistics sector is vital to the Philippines’ digital economy. However, this growth exposes operational inefficiencies: delivery delays, poor route optimization, and weak coordination erode margins.AI-driven logistics systems offer practical remedies, optimizing routes in real time based on traffic, weather, and demand. Regional competitors have deployed such systems at scale, achieving measurable efficiency gains. For Philippines companies, adopting similar capabilities is now essential to remain competitive.Transitioning to a superfluid enterprise starts with data. According to the Philippine Statistics Authority, the data gathered for the 2025 Quarterly Survey of Philippine Business and Industry to assess business operations and industry practices may help clarify the extent of manual processes and fragmented systems among Philippine companies. Without integrated, reliable data, even advanced AI systems cannot delivery meaningful results.Sectoral models On the other hand, some sectors are showing progress, one of which is that the digital adoption in banking has accelerated. The Bangko Sentral ng Pilipinas reported in 2025 that digital payments now account for over 60% of retail transactions. This shift required banks to modernize their infrastructure to support real-time fraud detection, automated compliance, and AI-assisted customer interactions. These are the early stages of superfluidity, and the next step is to embed intelligence into operational workflows.In manufacturing, predictive maintenance systems anticipate equipment failures, reducing unplanned downtime. The Department of Trade and Industry supports such technologies under its Industry 4.0 program. Digital twins and systems optimizationDigital twins, or virtual models of physical assets or systems, allow companies to simulate scenarios and optimize performance in real time. The Department of Energy’s Philippine Energy Plan (2025-2040) emphasizes this approach to modernize the grid and integrate renewable energy sources.Redefining human capitalThe superfluid enterprise is not about automation alone; it is also about redefining human roles. As AI handles routine tasks, employees can focus on strategy, innovation, and oversight. In the BPO sector, companies are upskilling workers for roles managing and augmenting AI systems rather than performing repetitive tasks.As AI tools become widespread, traditional barriers like scale and cost efficiency diminish. Insights from EY’s CEO Outlook Survey indicate that business leaders increasingly see AI not as a substitute for talent, but as a catalyst for reshaping roles, requiring reskilling and enabling employees to operate with greater productivity and strategic impact.Leadership and the role of government and policyThe challenge for Philippine businesses is to integrate new technologies into a coherent operating model. This requires leadership commitment, cultural change, sustained investment, and a willingness to rethink organizational structures.Government policy is always a critical point. The Philippine Development Plan 2023-2028 identifies digital transformation as a key economic driver, with priorities including expanded connectivity, the promotion of innovation, and the development of digital skills. However, infrastructure and implementation gaps remain, particularly outside urban centers. Fluidity as strategyThe move to a superfluid enterprise is a strategic transformation, not just a technological upgrade. Companies that succeed will eliminate friction, accelerate decision-making, and adapt continuously. In a world defined by speed and complexity, fluidity is the new standard of competition.The next article in this Megatrends series will discuss the concept of the human-machine hybrid, which envisions what happens when technology expands human capability.Marie Stephanie C. Tan-Hamed is the Strategy, Economic Research, and Government and Infrastructure Leader of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

08 June 2026

Lucil Q. Vicerra

What customs modernization means for Philippine businesses

In brief:The Bureau of Customs is undergoing a major transformation centered on digitalization, data-driven systems, and policy reforms to improve trade efficiency, transparency, and governance.Early results show tangible gains, including faster cargo processing, lower compliance costs for businesses, strong revenue collection, and intensified anti-smuggling efforts.These reforms signal the need for business leaders to enhance digital readiness, strengthen compliance practices, and proactively engage with regulators to stay competitive in a modernized trade environment.“Customs modernization will reshape the business landscape, but the more relevant question is how organizations will respond, and whether they view these reforms as compliance obligations to be managed, or as opportunities to enhance competitiveness."The Bureau of Customs (BOC) is undergoing a significant period of transformation, marked by a strong push toward digitalization, operational efficiency, and institutional integrity. Recent public statements, performance reports, and reform announcements point to a coordinated effort to reposition the agency not merely as a regulatory body, but as an enabler of trade and economic growth. For business leaders, this evolution carries meaningful implications in terms of both opportunity and responsibility.At the center of this transformation is a clear modernization agenda. The BOC has outlined reforms anchored on digital transformation, transparency, and efficiency, with the goal of creating a more responsive and business-friendly customs environment. As articulated in recent engagements with the private sector, the agency’s leadership has emphasized that customs operations must evolve from being perceived as procedural bottlenecks into reliable partners in facilitating trade. These were discussed at an exclusive roundtable discussion titled “Updates on the Bureau of Customs Priorities,” hosted by the American Chamber of Commerce of the Philippines (AmCham) at the SGV Makati Office on 14 May 2026. The session brought together industry leaders, stakeholders, and government representatives for an insightful exchange on trade and customs developments. It featured Commissioner of the BOC, Ariel F. Nepomuceno, as the distinguished speaker who shared key updates on the Bureau’s current priorities, ongoing reforms, and modernization initiatives. This shift is supported by the rollout of key systems and structural initiatives designed to streamline processes and reduce friction in cross-border trade. Among the most notable is the development of the Integrated Customs Processing System (CPS), an AI-enabled platform that aims to replace legacy systems with fully automated, end-to-end processing. The CPS is expected to cover imports, exports, risk assessment, and payments, ultimately enabling a paperless and more transparent customs environment. In parallel, the BOC is establishing a centralized data infrastructure that consolidates trade information into a “data lake,” allowing for real-time analytics and stronger coordination with other government agencies. This approach reflects a broader global trend toward data-driven governance, where better information leads to faster decision-making and more effective enforcement. For businesses, this translates into improved predictability, reduced delays, and clearer compliance pathways.Advantages to Philippine stakeholdersThe benefits of these reforms are already becoming evident. Reports on the BOC’s 2025 modernization initiatives indicate measurable gains for both importers and exporters. Digital tools such as the Online Tax Estimator enable stakeholders to calculate duties and taxes even before filing declarations, providing early visibility into costs — a crucial factor in supply chain planning. Similarly, the introduction of the Origin Management System has automated processes required for export documentation under free trade agreements, significantly reducing processing time and administrative burden. Regional integration has also progressed through the ASEAN Electronic Document Exchange, allowing for faster cross-border verification of trade documents and supporting more seamless trade flows within the region. Beyond digital tools, policy reforms have complemented operational improvements. The extension of importer accreditation validity from one year to three years and the standardization of certain logistics-related charges are practical steps that enhance predictability and reduce compliance costs. These reforms indicate an understanding that streamlined trade facilitation helps creates a consistent and stable regulatory environment.From a performance standpoint, the early results of 2026 suggest that these reforms are contributing to stronger outcomes. System improvements encouraged importers to have more accurate declarations, leading to higher duty and tax collection. In January 2026 alone, the BOC collected more than PHP 80 billion in revenues, exceeding its target and achieving a collection efficiency rate of over 100%. At the same time, enforcement efforts remained robust, with seizures of smuggled goods valued at approximately PHP 886.8 million across multiple operations. This dual achievement, improving revenue collection while strengthening enforcement, highlights a key principle of modern customs administration: facilitation and control must advance together. Efficient trade systems reduce opportunities for evasion, while effective enforcement protects legitimate businesses and ensures fair competition.C-Suite considerations For executives, these developments raise an important question: what does a modernized customs environment require from the private sector?First, there is a growing need for digital readiness. As customs processes become increasingly automated and data-driven, stakeholders must ensure that their own systems and internal controls can integrate with government platforms. This includes not only technical capability, but also data accuracy and governance. Inaccurate or incomplete declarations are likely to be flagged more quickly in a data-driven system, increasing the importance of compliance discipline.Second, businesses must adapt to a more transparent operating environment. Digitalization inherently reduces discretion and increases traceability, which is positive for governance but requires organizations to maintain consistent documentation and audit trails. Stakeholders that invest in robust compliance frameworks are likely to benefit from faster clearance and fewer disruptions.Third, there is an opportunity to engage more proactively with regulators. The BOC’s emphasis on stakeholder collaboration suggests a willingness to incorporate industry feedback into reform initiatives. Organizations that participate in consultations and public-private dialogues can help shape policies while also gaining early insights into upcoming changes.At a broader level, the modernization of customs administration reflects the Philippines’ ongoing efforts to enhance its competitiveness as a trading nation. Efficient border processes are a critical component of global supply chains, and delays, unpredictability, and high compliance costs can deter investment and limit export potential. Conversely, a reliable and transparent customs system can serve as a catalyst for economic growth by enabling businesses to operate more efficiently and access international markets with greater confidence.However, as with any large-scale reform effort, the transition is not without challenges. The implementation of new systems, the integration of data platforms, and the alignment of processes across agencies require sustained coordination and continuous improvement. It will be important for both the public and private sectors to maintain a constructive approach—recognizing progress while remaining attentive to areas that can be further enhanced.Reforms as opportunitiesThe BOC’s reform agenda, anchored on integrity, accountability, and modernization, provides a coherent framework for navigating these changes. For business leaders, the implications are clear: customs is no longer a peripheral function that can be managed reactively. It has become a strategic area that influences cost efficiency, supply chain resilience, and regulatory risk. Organizations that understand this shift and align their operations accordingly are better positioned to capture the benefits of a modernized trade environment.Customs modernization will reshape the business landscape, but the more relevant question is how organizations will respond, and whether they view these reforms as compliance obligations to be managed, or as opportunities to enhance competitiveness.In an environment where speed, transparency, and reliability are increasingly valued, the answer may well determine who leads in the next phase of the Philippines’ economic development.Lucil Q. Vicerra is the Indirect Tax Services and Global Trade and Customs Leader and a Tax Principal of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

01 June 2026

Roderick M. Vega and Rhaniel Robert T. Sy

From compliance to competitive advantage

In brief:Organizations must shift from reactive risk management to proactive, forward-looking strategies.Embedding compliance and integrity into core business decisions drives resilience and long-term value.Strengthening cybersecurity, third-party governance, and speak-up culture enhances risk visibility and mitigation.“In an environment defined by rapid change and uncertainty, organizations must take a more integrated and forward-looking approach to risk management."In today’s non-linear, accelerated, volatile and interconnected business landscape, risk is no longer just a threat — it can also serve as a driver for growth. Leading organizations are capable of actively identifying risk through in-depth risk assessment frameworks, implementing effective countermeasures, and making risks more manageable when they occur. However, this is only one side of the coin. There are also unseen risks that organizations are unable to anticipate and prepare for, such as the recent US-Iran conflict, which resulted in disruptions of global supply chains, economic instability, and oil shortages. Another example of an unexpected risk is the COVID-19 pandemic, which reshaped working conditions and forced organizations to rapidly adapt. These risks were discussed in the recent SGV thought leadership forum, “Transforming Risk into Strategic Advantage,” held on 6 May 2026, where industry leaders discussed how businesses can convert emerging risks into drivers of long-term value.The modern Philippine risk landscape In June 2025, Ernst & Young (EY) conducted a survey across 300 executives (mostly with Compliance and Risk Management roles) across different industries and identified ten key areas that pose a major risk to the current business landscape. It identified data privacy and cyber security breaches (41%), sanction risk (38%) and AI governance (34%) as the top three threats to organizational compliance and integrity. Over 70% of respondents identified data privacy and cybersecurity as critical risks due to the increasing data privacy concerns brought by technological disruption and the growing sophistication of cyberattacks. This is followed by risks posed by regulatory non-compliance (50%), stemming from the increasing complexity of regulatory requirements and potential penalties. Lastly, emerging regulatory requirements related to sustainable operations and environmental, social, and governance (ESG) factors (35%) are affecting operating models and organizational reputation. Surprisingly, corruption risk was ranked tenth in the survey at (15%), the lowest among the ten key risk areas.Compliance as a business enablerTo keep up with the current changes in the regulatory landscape, some organizations have chosen to take a transformative approach. Transformative organizations link compliance efforts with core business functions to drive growth from identified risks. This enables better aligned business outcomes, where risk insights guide decision-making, improving responsiveness to emerging threats and the ability to turn compliance from a cost center to a value-generating function. Modernization is a key factor in keeping up with the regulatory landscape, with organizations actively investing in artificial intelligence (AI) to aid compliance functions. This enables the automation of routine compliance tasks, risk detection through complex pattern recognition, and the automation of due diligence and background checks. Organizations can also leverage AI for more complex functionalities, such as the generation of cross service insights that can be used to make informed strategic decisions and promote growth.Organizations can assess the potential impact of risk and implement controls and response actions to mitigate negative effects through effective risk management strategies. However, they must shift from a reactive to a proactive approach by establishing controls that detect risks early and enable timely intervention. Cybersecurity: Detection of lurking security threatsA critical example of this necessary shift to a proactive approach is the risk area of cybersecurity. A threat actor only needs to find a weakness in any system to breach an organization’s defense, such as an unpatched vulnerability or a payload disguised as a friendly email. In addition, modern and more sophisticated cyber threats often infiltrate systems quietly and remain undetected for months. These attackers study an organization’s security before launching a more devastating attack, making it critical to invest in detection and response as much as deterrence. Cyber compromise detection is one such proactive approach for the organization to identify threats. Investigators using specialized tools collect telemetry data from the organizations system to identify indicators of compromise that may signify the presence or a lurking threat. Through this continuous monitoring, organizations can detect, contain and respond to threats early, minimizing damage and in turn strengthen cyber resilience.Managing third-party risk: A critical blind spotThird-party entities play a major role in the day-to-day business operations. They allow organizations to allocate more resources to develop core competencies by outsourcing expertise, staff training, specialized assets, and even allowing risk transference. Engaging with third parties can increase quality of service while reducing costs.These advantages, however, come with additional risks. Corporate integrity may be compromised when engaging third parties with poor conduct. Organizations may suffer reputational damage, while a compromised third party may exploit policy loopholes, engage in acts of bribery and give kickbacks to gain better deals. This can lead to loss of consumer trust, financial loss, regulatory penalties, and diminished investor confidence. Organizations must therefore conduct due diligence on third party vendors to mitigate both short- and long-term risks. This includes rigorously investigating adverse media reports, litigation records, financial stability, sanctions exposure, and compliance history. Extensive due diligence can also uncover potential areas of concern, such as undisclosed shareholders, falsified information, accounting irregularities, and process irregularities. A layered approach combining public data, stakeholder feedback, and on-site reviews helps ensure that partners align with organizational values and compliance expectations.Building a speak-up cultureA strong speak-up culture detects risk early while strengthening trust and accountability. Whistleblowing platforms are a major contributor to uncovering misconduct and unethical behavior by allowing employees to report them when observed. According to the latest survey by the Association of Certified Fraud Examiners, 43% of fraud cases are detected through whistleblowing. However, the ineffective implementation of whistleblowing frameworks can expose the whistleblower to retaliation from peers and senior management. A failure to quickly respond to whistleblower reports can make employees feel unheard and neglected, while an indifference to upholding integrity by upper management may increase hesitation to speak up. This can lead to employees losing faith in the system and make the unfortunate decision of turning a blind eye to unethical behavior. Employee trust cannot effectively be built when there is a clear gap between what the leaders say and do. General counsel officers (GCOs), Chief Compliance Officers (CCOs), and other members of senior management must set the tone for promoting and demonstrating integrity with ethical leadership. This fosters a culture of trust, transparent communication, and psychological safety for employees. Organizations should also raise awareness and clearly communicate the importance of integrity and compliance. Though conventional training methods may not be enough, role-specific training can better cover how policies directly apply to certain job roles. In addition, AI has proven to be a useful tool that helps employees navigate an overwhelming volume of policies. These technological innovations improve the overall awareness and understanding of employees and support ethical decision-making.The path forward: From risk to valueLeaders today face a fundamental shift: the question is no longer whether risks exist, but whether they are ready for those they cannot yet see and anticipate. In an environment defined by rapid change and uncertainty, organizations must take a more integrated and forward-looking approach to risk management. This means embedding compliance into the heart of strategic decision-making, enabling faster and more effective responses to emerging threats. It also requires investing beyond traditional cybersecurity defenses — building robust detection and response capabilities that allow for proactive mitigation of incidents. At the same time, stronger oversight of third parties through rigorous monitoring, screening, and governance has become essential. Above all, organizations must cultivate a culture of integrity, where leaders set the tone from the top and consistently align words with actions, closing the gap between what is said and what is done.Roderick M. Vega is the Forensic and Integrity Services Leader, and Rhaniel Robert T. Sy is a Forensics Manager, both of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.