Suits the C-Suite

27 April 2026

Noel Andro D. Bico

How tax and incentives policy responded to the energy shock

In brief:The government responded to the 2026 energy shock by suspending excise taxes on selected fuel products and extending tax filing deadlines to ease cost pressures and support cash flows. Flexible tax and incentives policies, including temporary work-from-home allowances for registered businesses, helped balance economic relief with regulatory accountability during the crisis.“Taken together, the coordinated actions of the BIR, FIRB, and related agencies reflect a pragmatic and measured response to a period of economic stress."In early 2026, the Philippines found itself at the sharp end of a global energy shock. Geopolitical conflict in the Middle East and the temporary closure of the Strait of Hormuz disrupted the global oil trade, sharply raising energy prices across global markets. For a country heavily dependent on imported fuel, the effects were immediately tangible: rising pump prices, increased transport costs, and a growing strain on energy intensive industries. In response, President Ferdinand “Bongbong” R. Marcos, Jr. declared a state of national energy emergency, enabling a coordinated government response under existing legal frameworks to manage risks arising from global energy supply disruptions.This article examines the various issuances and policy actions undertaken by key government agencies, including the Bureau of Internal Revenue (BIR) and the Fiscal Incentives Review Board (FIRB), to stabilize economic activity amid ongoing global energy market disruptions.Excise Tax Suspension as Fiscal InterventionA central element of the government’s fiscal response to high global oil prices was the temporary suspension of excise taxes on select petroleum products, implemented under a framework authorized by Republic Act (RA) No. 12316. The law empowers the President to suspend or reduce excise taxes on petroleum products when prescribed market conditions are present, allowing fiscal policy to respond quickly to extraordinary price shocks without needing new legislation.Pursuant to this authority, Executive Order (EO) No. 114, series of 2026, signed on 16 April 2026 and circularized by the BIR under Revenue Memorandum Circular (RMC) No. 031-2026 on 17 April 2026, temporarily suspended the imposition of excise taxes on liquefied petroleum gas (LPG) and kerosene, subject to specific exclusions, for a period of three months from its effectivity. LPG remains taxable when used as a petrochemical input or for motive power, while kerosene remains taxable when used as aviation fuel.This measure directly reduced retail fuel costs for households, small transport operators, and industries reliant on LPG and kerosene.To operationalize the EO, the BIR issued Revenue Regulations (RR) No. 3-2026, which prescribe the implementing rules, compliance guidelines, and administrative safeguards governing the excise tax suspension. RR No. 3-2026 expressly provides that the temporary excise tax suspension applies only to qualified petroleum products removed from the place of production or customs custody beginning 17 April 2026. This suspension is also subject to reinstatement upon the occurrence of certain conditions.To ensure proper implementation, RR No. 3-2026 imposes specific inventory submission and reportorial requirements. Concerned manufacturers, importers, and lessees of storage depots are required to submit duly notarized inventories of all covered petroleum products as of 16 April 2026. Withdrawal Certificates must likewise bear the annotation: “STOCKS COVERED BY EO NO. 114, SERIES OF 2026.”These requirements help protect government revenues, prevent the misuse or diversion of tax exempt fuel, and ensure that excise tax relief is applied only within the allowed scope and duration of the suspension. Overall, the excise tax suspension showed a careful and lawful use of fiscal flexibility. With clear rules under RR No. 3-2026, it provided targeted and time bound relief for LPG and kerosene during a period of elevated energy costs, while maintaining the integrity and enforceability of the excise tax system.Deadline extension as administrative reliefComplementing this fiscal intervention were administrative relief measures implemented by the BIR to ease taxpayer compliance. Consistent with its long standing practice during periods of disruption, the BIR issued RMC No. 030-2026 on 14 April 2026, extending the deadline for the filing and payment of 2025 annual income tax and the submission of the required attachments from 15 April 2026 to 15 May 2026, without the imposition of surcharges, interest, or penalties. Taxpayers were likewise allowed to file electronically and settle liabilities through both digital payment channels and Authorized Agent Banks (AAB), regardless of their Revenue District Office (RDO).This extension assisted businesses in preserving cash flows while operating and energy costs were rising. For many, particularly small and medium enterprises, the one-month deferral provided short-term breathing space to meet payroll and supplier obligations. Facilitation of fuel importation and logistics supportThe BIR also played a critical role in safeguarding fuel supply by facilitating the expedited importation of petroleum products, particularly in support of procurement activities undertaken by the Philippine National Oil Company–Exploration Corporation (PNOC EC). In March 2026, the BIR, through its Large Taxpayers Service (LTS), issued special permits to PNOC EC to fast track the emergency importation of petroleum products, effectively streamlining documentary and procedural requirements. The BIR worked closely with PNOC EC to ensure the timely processing of reportorial requirements to help speed up clearance for fuel imports. By supporting PNOC EC’s fuel procurement and import logistics, the BIR helped stabilize fuel availability, highlighting its role not only as a revenue collecting agency but also as an operational partner in broader economic stabilization efforts. This role is often overlooked but proved critical during the energy disruption.Temporary work from home arrangements for registered business enterprises (RBEs)Alongside the BIR’s measures, the FIRB adopted a complementary policy aimed at sustaining business operations under constrained conditions.This policy was set out in FIRB Resolution No. 005-26, effective 24 March 2026, which allowed RBEs in economic zones and freeports to temporarily adopt work from home (WFH) arrangements without losing their fiscal and non fiscal incentives. Under the Resolution, RBEs may adopt WFH arrangements for up to 90% of their workforce directly engaged in the registered project or activity. Investment Promotion Agencies (IPAs) may set a lower threshold where business operations require on site presence, provided that the percentage does not fall below 50%.A notable exception applies to RBEs in the Information Technology–Business Process Management (IT‑BPM) sector that maintain concurrent registration with the Board of Investments (BOI). These enterprises are not subject to the same on-site workforce limitations following the 2022 precedent under FIRB Resolution No. 026‑22 that allowed them to transfer their registration from an economic zone or freeport IPA to the BOI until 31 December 2022. This transition enabled them to adopt up to 100% WFH arrangements without compromising their fiscal incentives. Accordingly, RBEs with concurrent BOI registration may continue implementing full WFH arrangements, subject to BOI-specific terms and conditions.However, safeguards are built into the framework. RBEs that exceed the WFH threshold imposed by their concerned IPA are subject to regular income tax on the excess portion, computed by averaging all excesses made by the RBE in the month of non-compliance. Strict monitoring and compliance requirements also apply. RBEs must notify their respective IPAs, submit verified inventories of equipment used for WFH, and comply with controls governing the movement of assets outside economic zones. Notably, imported assets may be temporarily transferred only with prior approval and the posting of a surety bond equivalent to 150% of applicable duties and taxes. This ensures that fiscal incentives are not abused and that government revenues remain protected.The way forwardTaken together, the coordinated actions of the BIR, FIRB, and related agencies reflect a pragmatic and measured response to a period of economic stress. More broadly, these measures illustrate the evolving role of tax and incentives policy. Beyond revenue generation and regulation, these tools can serve as instruments of stabilization capable of responding quickly, within legal bounds, and in proportion to emerging challenges.As global disruptions become more frequent, the ability to deploy responsive yet accountable policy measures will be increasingly critical. The experience of 2026 offers a compelling case for adaptive tax and incentives governance — one that balances relief with responsibility, and agility with oversight – to foster resilience, sustain business confidence and support economic stability.Noel Andro D. Bico is a Senior Director from the Global Compliance & Reporting Sub-Service Line 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.

20 April 2026

Samantha Joy U. Cinco

Familiar banking risks return through new channels

In brief:Banking risk management is being shaped by interconnected risks driven by innovation, technological change, geopolitical instability, and the expanding role of private capital and non-bank finance. These forces blur the distinction between financial and non-financial risks and heighten vulnerability to shocks. As a backdrop to this, regulation is becoming increasingly fragmented and localized, adding to the overall complexity of the risk management landscape. Divergent interpretations of global standards for prudential, digital, AI, and sustainability regulations raise compliance costs, complicate risk measurements and aggregation, and constrain strategic planning. To manage risks, banks are shifting from a sole focus on capital strength toward a broader focus on resilience and capability building. “The banks that will be able to navigate these risks will not be the ones that control every risk, but those that build capabilities to anticipate change, identify transmission channels, and embed resilience in strategy, operations, and resources."Banking risk management is being shaped by threats that are non-linear, continually accelerated by technology and innovation, intensified by volatility, and tightly interconnected across markets, institutions, and jurisdictions. The recently published 15th annual EY/IFF Global Bank Risk Management Survey highlights this shift, which is influencing the agenda of chief risk officers (CROs) worldwide. The survey notes that traditional risks are making a comeback and the ways in which they emerge and transmit through banks have changed. Geopolitical tensions, technology and innovation, and the growth of private capital are also driving opportunities and exposures. At the same time, regulation is becoming more localized, increasing compliance and operational costs for banks. Together, these forces are reshaping the capabilities, resources, and strategies of banks as they navigate this landscape. This is the third article of the SGV Financial Regulatory Outlook series, which builds on insights from the SGV Knowledge Institute event titled “Global Shifts, Local Impact: Navigating the Next Wave of Banking Regulation.”Re-emerging top risks driven by innovation and macroeconomic forcesWith the promise of improved productivity, artificial intelligence (AI) is increasingly being deployed. Digitization has also allowed for better access to financial services, furthering financial inclusion for sectors of the economy that need it most. With this comes heightened concerns about cybersecurity, digital fraud, and financial crime, all reported in the survey as top risks for the world’s CROs. Additionally, geopolitical instability is seen as a powerful external force shaping risk management strategies. It moves through banks in interconnected chains. It first affects market sentiment, raising uncertainty and leading to changes in investor confidence. It then affects formal economic channels, whether through consequent trade or financial restrictions, or physical disruption. This leads to possible supply chain disruptions, rising levels of sovereign debt, a decline in aggregate demand, and an overall increase in prices that deter growth and trade. These risks then make their way into the balance sheet, affecting credit, liquidity, funding, and market risks – ultimately translating into pressure on capital adequacy. However, their impact extends beyond financial risks, also affecting overall operations and governance. In the Philippines, the recent geopolitical shock coming from the Middle East is already making waves through supply chain disruptions, placing upward pressure on the price of fuel. As a primary input, higher fuel prices will in turn increase the prices of necessities, leading to a budget squeeze and a fall in overall disposable income. Tighter budgets mean weaker debt-servicing capacity and overall credit demand. Over time, this materializes in the bank’s purview due to implications in asset quality, credit growth, and liquidity conditions. Lastly, credit risk is also making a comeback as a top concern through a combination of traditional financial concerns, rising defaults linked to geopolitical instability and market developments, and the rise of private credit. Private credit or non-bank financial institutions (NBFIs) have taken a more prominent role in the industry, raising concerns about the unregulated “shadow banking” system. In the Philippines, this is especially relevant given the rise of fintechs which, while expanding access beyond traditional financing, also expands the entities covered under non-bank finance to include startups that enable peer-to-peer lending, pool savings, and profit credit. The local environment is made even more complicated given the distinction between NBFIs with quasi-banking license (e.g. investment houses and trust companies) and those without (e.g. pawnshops and remittance companies). Regulatory fragmentation as a risk multiplierActing as an overlay to these top risks is the fragmented regulatory landscape. Global standards are being localized, leading to differing interpretations and implications. This is not only in prudential regulation, but also in the areas of AI, sustainable finance, digital assets, and payments. The shifting regulations highlight shifting priorities for localities while increasing complexities for multinational entities. According to the survey, regulatory fragmentation is seen to increase compliance and operational costs, exacerbate challenges in data management reporting, and lead to difficulties in risk aggregation and measurement. Banks will not only deal with the inherent risk of operations but also consider the costs and opportunities of doing business in specific countries or regions owing to diverging regulations. This confluence of changing top risks and regulation is pushing banks beyond balance sheet defense. Shifting strategies from strong capital to resilience and capabilitiesToday’s top risks are increasingly non-financial while also driving financial risks. Strong capital planning is indeed still necessary, but it is no longer sufficient on its own.The survey emphasizes increased resilience as a top strategy to manage geopolitical risks and diverging regulations. In the Philippines, the recent BSP Circular 1203 on Operational Resilience espouses a move beyond continuity planning, stressing the identification of critical operations and systems, mapping of dependences, definition of tolerances, scenario testing, and overall recovery capabilities. Moreover, managing this new complex risk landscape requires an emphasis on skills around new technologies as well as different team structures. According to the survey, top skillsets for risk management include digital acumen, adaptability to a changing risk environment, understanding the enabling role of risk management, having a deeper specialization in at least one domain, and critical soft skills such as leadership, communication, and collaboration. From risk awareness to risk strategiesThe risk landscape is being shaped not by a single shock, but by a convergence of multiple external shocks materializing through new and traditional risks. This is happening against a backdrop of increased regulatory fragmentation. As countries continue to prioritize localization, banks are managing compliance not as a set of global standards, but as a portfolio of specific local and regional regulations. Managing this complex environment requires a change in mindset. The banks that will be able to navigate these risks will not be the ones that control every risk, but those that build capabilities to anticipate change, identify transmission channels, and embed resilience in strategy, operations, and resources. This time is different. Resilience is not just about stability; it’s about sustained adaptability. Samantha Joy U. Cinco is a Financial Services Consulting Senior Director of SGV & Co. This article is for general informationonly and is not a substitute for professional advice where the facts andcircumstances warrant. The views and opinions expressed above are those of theauthor and do not necessarily represent the views of SGV & Co.

13 April 2026

Charisse Rossielin Y. Cruz and Eleonor L. Camot

Balancing growth, innovation, and trust in Philippine banking

In brief:Philippine and Asia‑Pacific banks are prioritizing growth and upside risk management while adapting to rapid digital transformation amid rising regulatory, technological, and competitive pressuresBanks must balance innovation with trust by strengthening governance, cybersecurity, operational resilience, and legacy systems, while adopting technologies such as AI and blockchain.Long‑term success depends on future‑ready skills, adaptive leadership, and a mindset that embraces continuous change while maintaining confidence among customers, regulators, and stakeholders.“By adopting adaptive operating models, innovation friendly risk frameworks, and a mindset that treats change as constant, banks can unlock upside opportunities while reinforcing long term trust from stakeholders."Asia Pacific (APAC) and Philippine narratives continue to be about growth and dealing with upside or growth risks, as opposed to downside risks that would correctly describe economies that went through crises. Banks continue to update their decision-support, compliance, and risk management models in parallel with their transformation and innovation initiatives while meeting heightened expectations from regulators, customers, and investors. To navigate this complexity effectively, a focused and balanced portfolio will enable banks to drive synergies across the organization and unlock value from upside risk opportunities. This requires a shift from merely mitigating risks to actively embracing upside potential, grounded in a strong foundation of trust. This is the second article of the Financial Regulatory Outlook series, which builds on insights from the SGV Knowledge Institute event titled “Global Shifts, Local Impact: Navigating the Next Wave of Banking Regulation.”The previous article presented insights from the EY Global Regulatory Outlook, which was issued against a backdrop of increasingly rapid technological innovation and a changing competitive landscape that is becoming more ecosystem-based and ‘friendlier’ to non-traditional players. This environment presents new risks for banks, particularly in relation to the digital world, with big tech companies and nimbler entrants threatening profitability and making the regulatory direction less clear. This underscores the need to create both regulatory and management frameworks that strike a balance between allowing for change and innovation while ensuring financial sector stability and protecting customers and the public. However, innovation in banking is inherently challenging. Banks operate within complex business models, rely heavily on legacy core systems, and are subject to intense regulatory scrutiny. These challenges can be understood through recurring paradoxes that banks must continuously manage. The resulting tensions drive the need for banks to have more adaptive and resilient models. Managing technology risk in a digital‑first environmentDigital transformation efforts will accelerate on multiple fronts during the next five years as banks continue to embrace widespread transformation programs to meet shifting customer needs, stay ahead of new competitors and achieve operational excellence. These efforts are closely aligned with the BSP’s overarching digital transformation strategy, which encourages financial institutions to shift toward digital-first banking to improve convenience, inclusion, and efficiency. At present, major banking institutions are actively integrating artificial intelligence (AI) for fraud detection and credit scoring, as well as blockchain payment rails to streamline operations and expand access to financial services. Despite the significant opportunities presented by digital innovation, cybersecurity and technology risks – including risks associated with the design, development, and deployment of digital systems and infrastructure – remain a top priority for banks. Bank leaders continue to be confronted with the risk-vs.-opportunity paradox, particularly around AI adoption: assessing whether AI will introduce new and complex risks or strengthen the bank’s ability to identify, manage, and mitigate risk more effectively.Recognizing both the promise and the risks of innovation, regulators have introduced measures such as the Financial Services Cyber Resilience Plan (2024–2029) to promote industry-wide coordination, enhance defenses against evolving cyber threats, and safeguard stakeholder trust.Balancing innovation and growth with trust, resilience, and regulatory compliance is critical to long-term success. Achieving this balance requires banks to design and adopt innovation-friendly governance frameworks, with clearly defined risk limits, accountabilities, and decision rights embedded directly into business-as-usual operations.Dual‑track technology transformation Robust and reliable technology is essential to enable successful banking transformation and sustain continuous innovation and growth. However, while the adoption of new technologies is critical, core banking system disruptions are unacceptable, given the “always on, always available” nature of banking services and the sector’s reliance on uninterrupted operations to maintain customer trust, financial stability, and regulatory compliance.Banks operate within highly complex and interconnected environments, often reinforced by legacy core banking systems that are deeply embedded in critical business processes. Beyond managing vast volumes of sensitive customer and transaction data, important business services depend on legacy platforms, layered architectures, and extensive policy frameworks. These interdependencies heighten the risk that system changes, upgrades, or migrations may disrupt critical services, making transformation initiatives particularly challenging.Philippine banks are increasingly adopting a dual-track approach to technology transformation, balancing the need to protect mission‑critical legacy systems while simultaneously deploying new digital capabilities. Under this model, banks deploy new digital tools to enhance existing systems through familiar channels and interfaces, minimizing disruptions to day-to-day operations and reducing change risks for both customers and employees. Similarly, legacy technology can be “wrapped” with new features, functionality, and AI-based user experiences without exposing the institution to the operational and regulatory risks of full system replacement — a key consideration in the Philippine regulatory environment.Building future‑ready talent As technologies continue to evolve at pace, banks must ensure their talent keeps up to sustain transformation momentum. People are at the core of successful transformation; hence, banks need to continuously upskill their workforce to adopt emerging technologies. According to the Global Bank Risk Management Survey 2024, the APAC region faces the most significant challenges in attracting and retaining cybersecurity talent. Digital growth across the region is accelerating faster than talent development, resulting in a widening skills gap. In the Philippines and other emerging markets, there is a strong foundation of technical talent, but capability gaps remain due to limited exposure to advanced cybersecurity roles, enterprise-scale environments, and governance, risk, and regulatory frameworks. Over the next five years, risk professionals anticipate the need for more specialized skill sets across both the first and second lines of defense to address increasingly complex and fast-evolving risks. Bank leaders must therefore proactively define the skills required for the future and implement a deliberate strategy to develop and acquire these capabilities while continuing to retain and strengthen expert talent in core areas.Workforce shifts are inevitable. As AI tools increasingly meet basic analytical needs and automate routine tasks associated with traditional risks, teams are expected to move from today’s pyramid (with more workers in junior roles) to tomorrow’s diamond shapes (with more senior-level specialists with stronger judgment, domain expertise, and decision-making capabilities). As this transition accelerates, leaders must also address widespread concerns about AI’s potential to replace jobs. Successfully navigating this shift will require clear communication, targeted upskilling, and a strong focus on redeploying talent toward higher-value activities.Driving organizational adaptability While technology enables transformation, its success in financial institutions ultimately depends on people and effective leadership. While investments in digital platforms, cybersecurity tools, AI, and data analytics are critical, their impact will remain limited unless organizational culture, leadership behaviors, and ways of working evolve in parallel. Transformation success ultimately lies in how people think, act, and collaborate.As Philippine regulations increasingly focus on technology risk, cyber resilience, data governance, ESG, and AI, the ability of banks to adapt is being tested beyond traditional compliance capabilities. Meeting these demands requires not only new tools and frameworks, but also greater agility, judgment, and cross functional collaboration across the organization.To succeed, leaders must enable people to work adaptively, experiment creatively and think differently. People and teams may need convincing that continuous improvement is a requirement for long-term success and that while change is difficult, its long term benefits far outweigh the short term disruption it creates.Sustainable growth through trusted innovationAs banks continue to pursue growth through rapid digital innovation, maintaining trust and resilience is more critical than ever. The industry’s path forward will be shaped by how effectively it manages the inherent paradoxes of innovation: adopting new technologies while protecting mission-critical systems, building future ready skills while retaining core expertise, and driving continuous change without eroding confidence among customers, regulators, and stakeholders. By adopting adaptive operating models, innovation-friendly risk frameworks, and a mindset that treats change as constant, banks can unlock upside opportunities while reinforcing long-term trust from stakeholders. Charisse Rossielin Y. Cruz is a Business Consulting Partner and the Insurance Sector Deputy Leader, and Eleonor L. Camot is a Financial Services Consulting Senior Director, 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.

06 April 2026

Ruben D. Simon, Jr.

Navigating the new global norm in financial regulation

In brief:Regulatory divergence is accelerating globally, with the US easing supervisory transitions to support competitiveness and innovation while the EU and UK maintain a stability focused approach, creating operational complexities for multinational financial institutions.Asia-Pacific regulators are pursuing market specific, stability oriented strategies and domestic market development rather than mirroring Western regulatory shifts.Technology, operational resilience, consumer protection, and emerging systemic risks are reshaping oversight, as regulators strengthen frameworks around AI governance, digital assets, fraud prevention, financial crime compliance, and the growing interconnectedness of non bank financial institutions. “At this global crossroads, regulation is no longer merely a compliance exercise. It is now a strategic determinant of an institution’s competitiveness."The global financial system is entering a period of intense structural change driven by competing political priorities, technological disruption, and diverging regulatory philosophies. If past cycles of reform were characterized by coordination and standards-setting, the current environment reflects a more fragmented, multi polar world. This is evidenced by diverging perspectives on competitiveness and innovation between the United States, United Kingdom and the European Union, underpinned by recent geopolitical and trade policies. In the Asia Pacific region, regulators gravitate towards a more cautious stance to develop their respective markets. While this is the case, there has been a common theme emerging from the current shakeup caused by the conflict in the Middle East that has caused direct impacts to energy security across the globe. Regulators are imploring financial institutions to tighten their respective scenario stress testing exercises to make sure their capital buffers are resilient enough, and calling for increased vigilance on energy shock-induced inflation, supply chain disruptions and their impact on their respective portfolios. In this situation, institutions operating cross-border transactions and those that have operations in different jurisdictions must now navigate a landscape where rules are increasingly diverging. The EY 2026 Global Financial Services Regulatory Outlook highlights this shift, along with the implications for supervision, risk management, and long-term competitiveness of financial institutions. This is the first article of the Financial Regulatory Outlook series, which will discuss insights from the SGV Knowledge Institute event titled “Global Shifts, Local Impact: Navigating the Next Wave of Banking Regulation.”Regulatory fragmentation widens as US and EU pursue divergent agendasGlobal financial regulation is becoming increasingly fragmented as major economies adopt contrasting approaches to competitiveness, innovation, and systemic oversight. The US is moving towards easing supervisory oversight focusing on capital rules, supervisory methodology, decreasing barriers to innovation, and an increased openness towards mergers and consolidation among major US Banks. This supervisory shift signals that the US is prioritizing economic expansion and domestic competitiveness over multilateral alignments that were emphasized after the Global Financial Crisis. Meanwhile, the EU and the UK are pursuing growth agendas of their own, but one anchored in maintaining stability within the existing regulatory architecture. The bloc’s decision to delay the Fundamental Review of the Trading Book (FRTB) to 2027 reflects its cautious stance, prioritizing prudential safeguards despite market and geopolitical pressures. This divergence in regulatory direction creates operational challenges for multinational banks, wherein institutions operating across the US and EU face significant asymmetries in capital requirements, reporting timelines, and supervisory expectations. As global standard setters avoid intervening in these geopolitical drivers, firms must adapt to a regulatory landscape where policy alignment is no longer guaranteed. This regulatory fragmentation appears to be the new norm rather than a transitory cycle while institutions wait for the current geopolitical uncertainties to subside.Asia-Pacific adopts market-focused, stability-oriented regulatory strategies In the Asia-Pacific, regulators are pushing for a more independent trajectory, guided by the US push for lesser stringent regulatory supervision and more by domestic priorities in innovation, regional competitiveness, and financial stability. Hong Kong and Singapore continue to lead in digital assets and sustainability standards, reflecting their continuous push for regional financial regulatory leadership. Their regulatory stance pairs innovation with strong safeguards that heavily focuses on risk assessment, operational resilience, and capturing cross border flows. Meanwhile, India is pursuing rapid financial sector development, implementing measures to boost domestic capacity and build a modern regulatory foundation suited to its expanding economy. On the other hand, Japan is emphasizing trust and system security while strengthening regional financial functions, signaling a preference for stability and predictability. Australia stands as a cautious outlier, closely tracking artificial intelligence (AI) governance and digital asset developments abroad as it evaluates potential reforms domestically. Despite their varied approaches, APAC regulators share a common orientation: to maintain resilience amid geopolitical uncertainty. Many jurisdictions are tightening cyber and operational standards, as seen in the EU aligned Digital Operational Resilience Act (DORA) efforts and new oversight regimes for critical third party service providers. This regional focus on digital resilience and local market strengthening underscores a broader shift where the Asia-Pacific is not reacting to Western recalibrations, but designing frameworks tailored to its own structural needs and competitive aspirations.Emerging risks: Technology, digital assets, and operational resilience redefine oversight Across global markets, regulators are increasingly concerned about risks arising from fast-moving technological adoption, the expansion of digital assets, and growing dependence on third party service providers. AI remains a focal point of regulatory inconsistency, with more than 40 jurisdictions issuing guidance or conducting supervisory exercises while applying different expectations around transparency and model governance. Firms now must manage dual risks in this area as well as risks arising from AI used in operations and from AI deployed in compliance functions. Digital assets, particularly stablecoins, are prompting varied responses worldwide. The US Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act introduces a federal framework emphasizing reserve backing and redemption rights, while Hong Kong, Japan, the EU and UK advance licensing and supervisory regimes customized for their markets. These diverging views are expected to accelerate jurisdictional regulatory arbitrage and reshape business models for digital native firms. Operational resilience has also become a supervisory priority. The EU’s DORA regime, the UK’s Critical Third Parties (CTP) framework, and Canada’s operational resilience deadlines all reflect rising concerns about the systemic risks tied to digital infrastructure. Regulators are increasing scrutiny of critical third party technology providers and intensifying scenario testing. As geopolitical uncertainty heightens vulnerability exposures, firms must build robust, technology driven controls to withstand disruptions and safeguard business continuity.Focus on consumer protection, risk governance, and NBFIsRegulators worldwide are strengthening oversight aimed at protecting consumers, enhancing governance, and monitoring emerging threats from non-bank financial institutions (NBFIs). The increasing occurrence of fraud, particularly through digital channels, has led to tougher monitoring, expanded liability expectations, and new obligations for platforms and payment service providers. The UK Financial Conduct Authority’s Consumer Duty continues to influence global standards, with Singapore, Japan, and New Zealand introducing parallel regimes emphasizing fair treatment, transparency, and enhanced complaint handling. At the same time, supervisors are devoting attention to NBFIs, whose increasing interconnectedness with the regulated banking system raises systemic concerns. The UK’s System-Wide Exploratory Scenario and France’s stress testing exercises reflect efforts to map vulnerabilities in markets where leverage or liquidity mismatches could spill over into traditional finance infrastructure.The current geopolitical situation has seen a rise of sanctions and asset freezes, and financial crime regulations are expected to continuously evolve. This gives rise to inconsistent reportorial requirements in different jurisdictions. While the EU’s Anti-Money Laundering Authority (AMLA) is expanding direct supervision and the Monetary Authority of Singapore (MAS) requires stricter reporting standards, the US Financial Crimes Enforcement Network (FinCEN) has amended its rule on beneficial ownership: foreign entities registered to do business in the US are required to report but are exempt from reporting US citizens as beneficial owners. These are just some of the differing levels of AML compliance that multinational financial institutions operating in different jurisdictions must contend with, and they should have institutional agility to comply.The road aheadThe regulatory landscape entering 2026 is unlike any in recent memory. It is no longer defined by synchronized reforms, and it is increasingly shaped by national priorities, global geopolitical tensions, and rapid technological change. For financial institutions, success will depend on how agile these institutions are in building robust compliance frameworks, strengthening risk governance, and anticipating divergent rules before they materialize.At this global crossroads, regulation is no longer merely a compliance exercise. It is now a strategic determinant of an institution’s competitiveness. Firms that understand this shift and adapt accordingly will be best placed to navigate this new global norm in financial regulation. In the next part of this Financial Regulatory Outlook series, we will be discussing local insights and how Philippine financial institutions will be affected. Ruben D. Simon Jr. is a Financial Services Consulting Senior Director 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.

30 March 2026

Rossana A. Fajardo

The SGV journey toward inclusive leadership and empowerment

In brief:SGV & Co. advances women leaders through a strong meritocratic culture, resulting in a leadership bench where women have actively helped shape the Firm’s direction.The Firm’s efforts highlight that inclusiveness is vital for a thriving future, demonstrated through impactful initiatives empowering women and girls in historically underrepresented areas.Equally vital to the ongoing journey towards equity are the male allies and supporters whose shared goals and mutual respect strengthen and amplify these efforts.“For the women leaders who have risen through the Firm’s ranks, and for those who will follow, the message is clear: capability remains the currency of advancement."In an industry where leadership development and career pathing have traditionally been narrow, SGV & Co. has built something more enduring and increasingly relevant. The Firm has long treated meritocracy as an operating principle. The result is a leadership bench where women have advanced and actively help shape its direction.This International Women’s Month, we celebrate the women honored as leaders and changemakers, exemplifying power that nurtures, uplifts, and transforms lives with grace and purpose. Their leadership guards legacies and guides future generations with courage and compassion, built on a foundation of meritocracy that SGV has always upheld.Women setting the paceSGV’s record on women leadership was built over decades by individuals who navigated, and often remodeled, the structural barriers of their time. Erlinda T. Villanueva’s appointment as SGV’s first female partner in 1961 signaled a shift that would resonate for decades. It demonstrated that advancement within the firm was anchored in performance, not precedent. The rise of Gloria L. Tan-Climaco to become the firm’s first woman Chair and Managing Partner marked a defining moment. Her recognition as both a Young Lady Achiever in Public Accounting and an Outstanding CPA in Public Accounting from the Philippine Institute of Certified Public Accountants reflected a career grounded in technical excellence and credibility. Her subsequent role advising former President Gloria Macapagal Arroyo on strategic initiatives underscored the broader influence SGV leaders would wield. SGV Senior Consultant Delia Domingo Albert followed a similarly expansive path. As former Secretary of Foreign Affairs and Philippine Ambassador, she brought institutional discipline to the global stage. Her tenure included serving as chair of the United Nations Security Council in 2004, where she championed the role of women in peacebuilding. Her career has since become a template for leadership that crosses sectors while consistently advocating gender equity. These women leaders did more than succeed individually. They embodied the values of integrity and excellence that the Firm’s founder, Washington SyCip, built the firm upon. Today, women make up the majority of SGV’s workforce and more than half of its Partners and Principals. Meritocracy by designAt SGV, meritocracy is part of the organizational infrastructure. From recruitment to promotion, the firm has relied on performance metrics, technical proficiency, and leadership potential as its primary filters. Advancement is neither automatic nor arbitrary.This philosophy is reinforced through deliberate investments in mentorship and professional development. Programs ensure that high-potential employees, regardless of gender, gain access to sponsors, stretch assignments, and leadership exposure. Over time, this has produced a steady influx of women leaders who are not only qualified but also well-suited for the positions.The result is an organizational culture that is both competitive and collaborative. Individuals are encouraged to excel and contribute to the firm’s collective strength. For women professionals steering through a historically male-dominated industry, this environment has been significantly influential.Impactful initiatives to empower and upliftThe Firm takes pride in the progress it has made in its ongoing journey toward equity. Its efforts serve to underscore that inclusiveness is essential to shaping a future where everyone can thrive. These efforts include a range of impactful initiatives designed to empower and uplift women and girls, particularly in areas where they have been historically underrepresented.One such initiative is the EY STEM Program, which equips girls aged 13 to 18 with future-ready STEM skills through a free, gamified app. This innovative approach builds confidence and curiosity in science and technology, engaging 600 students during its first local launch at one high school. The program has inspired many young Filipinas to explore STEM fields and is set to expand its reach in 2026 through a new memorandum of agreement with the school’s LGU. This expansion aims to bring STEM opportunities to more public schools, empowering even more young women to pursue careers in science and technology.Complementing this is the EY Women in Tech (WiT) program, which SGV participates in as a member firm of EY. This global initiative was established by EY in 2020 to empower girls and women to enter, remain, and lead in the technology sector. Serving as an umbrella network of over 40 regional and competency-based WiT communities across the EY network, the program connects members, shares best practices, and fosters a strong sense of community. Open to everyone regardless of gender, rank, or professional background, WiT encourages participation in both global and local events that promote learning, inclusiveness, and career growth within the technology space.Further strengthening SGV’s commitment to gender equality is the Gender Equality Assessment, Results, and Strategies (GEARS) Program. Building on the Firm’s distinction as the first professional services firm in the Philippines and Southeast Asia to receive the EDGE Assess-level certification, GEARS enables the Firm to measure its progress and continuously enhance gender equality in the workplace. This program reflects the Firm’s dedication to creating an equitable environment where all employees can thrive.Together, these initiatives highlight the Firm’s holistic approach to inclusiveness, ensuring that equity is not just an aspiration but a lived reality for women and girls across all levels and sectors.A pragmatic blueprint for leadersThe SGV model offers a pragmatic blueprint for business leaders. While essential, meritocracy is not sufficient on its own. Without conscious efforts to eliminate systemic barriers, organizations risk underutilizing significant portions of their talent pool.Embedding inclusiveness into leadership training is a critical first step. Bias, often subtle and unintentional, can accumulate into structural disadvantage if unchecked. Equally important is cultivating mentorship and sponsorship networks. At SGV, these have been instrumental in bridging the gap between potential and opportunity, especially for younger professionals. Transparency plays a pivotal role as well. Setting clear diversity targets and holding leadership accountable ensures that progress is visible and sustained.Finally, flexibility should be viewed as part of the policy, and not just a perk. In a global talent market, accommodating diverse needs can be a decisive differentiator.Collaboration across all gendersAs SGV celebrates its 80th anniversary, it is important to see the bigger picture: SGV’s story is ultimately one of continuity. The firm’s early commitment to meritocracy laid the foundation for a leadership culture that could evolve without losing its identity. Today, SGV is extending that legacy into a more complex and demanding era, shaping it in its own image. For the women leaders who have risen through the Firm’s ranks, and for those who will follow, the message is clear: capability remains the currency of advancement. In a system that increasingly values inclusiveness, that currency now circulates more freely. In celebrating International Women's Month, it is important to recognize that true progress toward equity and empowerment is achieved through collaboration across all genders. Equally vital to this journey are the male allies and supporters whose shared goals and mutual respect strengthen and amplify these efforts. Together, women and men stand united, building a brighter, more inclusive future. This collective commitment ensures that the impact made today will inspire lasting positive change for generations to come.Rossana A. Fajardo is the Chairman and Country Managing 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.

23 March 2026

Noel P. Rabaja and Christine Rose L. Lapada

The Next Move: Reshaping strategy through AI

In brief:Philippine CEOs are advancing transformation agendas to sustain growth and competitiveness in a rapidly digitalizing market.AI and digital technologies are becoming central to strategic decision‑making as leaders recalibrate investments amid global shiftsGovernance, capability building, and strategic transactions are emerging as critical levers for CEOs preparing for the next phase of enterprise reinvention.“As AI becomes increasingly central to strategy, one message is clear: the next phase of growth will belong to companies that embed AI at the core of their business, enabling not only operational efficiency but enterprise‑wide reinvention."Philippine CEOs are entering the next phase of transformation with a clearer mandate: to convert measured optimism into decisive, capability‑building action. As digital acceleration and geopolitical shifts redefine the competitive landscape, leaders are anchoring their strategies on modernization, strengthened governance, organizational resilience, and AI‑driven reinvention. At the same time, they are leveraging strategic transactions to reshape portfolios, reinforce competitive positioning, and unlock new avenues for sustainable growth.The first part of this article discussed how Philippine CEOs face a complex economic and technological landscape marked by measured optimism amid global uncertainty, with AI readiness emerging as a critical priority for competitive advantage and growth.The second part of this article will discuss how Philippine CEOs are advancing transformation agendas focused on modernization, AI integration, governance, and strategic transactions to sustain growth and competitiveness amid a rapidly digitalizing and geopolitically shifting market.Transformation intensifies as CEOs pursue growthPhilippine CEOs are accelerating their transformation agendas in 2026 as they work to sustain growth in an increasingly digitalized market. Revenue growth remains their top priority, with 65% placing top‑line acceleration at the core of their strategic agenda.At the same time, CEOs maintain a balanced mix of ambition and measured optimism, showing strong confidence in their competitive positioning as they invest in digital tools, deepen customer engagement, and strengthen workforce capabilities. This momentum carries into their operational focus. Although operational optimization ranks as the second‑highest priority at 53%, only one‑third of CEOs are very confident in fully achieving this goal — underscoring the inherent complexity of transforming processes, improving efficiency, and integrating new technologies at scale.This more cautious sentiment around operational transformation contrasts with the stronger confidence CEOs express in people‑ and customer‑centric outcomes. A notable 75% are very confident in improving employee engagement and retention, while 66% report the same level of confidence in strengthening customer engagement. These perspectives reinforce a consistent theme: people and customer experience remain foundational to long‑term competitiveness, even as organizations push forward with broader enterprise transformation.As organizations lean more heavily on technology to enable these ambitions, the growing role of AI introduces both new possibilities and new pressures. Yet despite AI’s rising strategic importance, execution challenges continue to temper expectations. A net 46% of CEOs currently view AI outcomes unfavorably, reflecting a persistent gap between ambition and realized value. Additionally, 28% cite the rapid pace of technological change as a key barrier to effective integration and long‑term sustainability. Still, momentum is building. Despite the implementation hurdles many CEOs face, the survey shows that leaders continue to view AI as a critical driver of business success in the years ahead. Nearly half of CEOs have already implemented significant transformation initiatives, and their expectations for AI’s impact further reinforce this momentum: 12% anticipate AI to be truly transformative, and 42% expect it to deliver significant improvements across their organizations. As AI becomes increasingly central to strategy, one message is clear: the next phase of growth will belong to companies that embed AI at the core of their business, enabling not only operational efficiency but enterprise‑wide reinvention. This growing momentum reflects the measured optimism taking shape in Philippine boardrooms—confidence grounded not in assumption, but in deliberate, forward‑looking action.CEOs recalibrate investment amid geopolitical shiftsGeopolitical and trade policy developments have prompted Philippine CEOs to recalibrate their investment strategies. Over the past year, many leaders adjusted their plans — 42% accelerated a planned investment in response to global shifts, while others delayed or halted initiatives as part of a disciplined reassessment. Rather than pull back, CEOs repositioned by relocating operational assets, shifting suppliers, entering new markets, or exiting unviable ones, underscoring a deliberate effort to reinforce resilience while protecting growth momentum.CEOs are now prioritizing levers they can directly influence, with 32% identifying AI and digital technologies as their most important strategic response — well ahead of supply‑chain diversification or market realignment. By contrast, engaging policymakers registered a –16% net importance, signaling a preference for internally driven, high‑impact actions.Governance strengthens as AI adoption acceleratesAs AI adoption deepens, governance is becoming a central priority for Philippine CEOs. As much as 68% now report clear C‑suite or board‑level accountability for AI outcomes, signaling a shift toward stronger oversight, clearer ethical guardrails, and enterprise‑wide alignment. Leaders increasingly recognize that AI is not simply a technological upgrade; it is a strategic capability requiring transparency, responsible design, and disciplined execution.Expectations for AI’s impact vary, but momentum is evident. 54% of CEOs anticipate that AI will drive major improvements and become a key determinant of business success, while 22% expect benefits limited to specific functions and another 22% foresee only incremental gains. These differing views highlight a leadership climate that is optimistic but pragmatic — pursuing AI’s potential while carefully managing capability readiness, risk, and pace of change.Philippine CEOs use strategic transactions to strengthen positioningStrategic transactions are gaining importance as CEOs reshape portfolios and pursue new pathways for value creation. More than half at 54% plan to actively pursue deals in the next year, with 34% specifically considering mergers, acquisitions, or strategic partnerships. Leaders are placing strong emphasis on operational optimization within their acquisition and divestment strategies, underscoring a disciplined approach to strengthening enterprise performance.Among CEOs actively evaluating opportunities, 65% expect acquisition activity to accelerate revenue growth, reflecting the role of M&A in reinforcing growth and productivity. Cost optimization remains a dominant theme, with 70% identifying cost reduction as essential to competitiveness. Confidence in the domestic market is also firm, as 72% of CEOs plan to invest capital in the Philippines — reinforcing the cautiously optimistic sentiment shaping strategic decisions across the business community.AI at the center of enterprise strategyAs CEOs look to 2026, their strategies reflect a renewed sense of purpose grounded in the same measured optimism shaping the broader Philippine business landscape. Leaders are sharpening priorities, accelerating modernization, and elevating governance as they navigate a rapidly evolving environment. AI and digital capabilities have shifted from promising enablers to core strategic drivers — reshaping how organizations invest, compete, and grow.The next move for Philippine CEOs is unmistakable: modernize systems, build future‑ready talent, and embed AI at the center of enterprise strategy. Those who act decisively today will not only chart the next phase of their organization’s growth — they will help define the direction and competitive strength of Philippine enterprise in the years ahead.Noel P. Rabaja is the Deputy Managing Partner, Strategy and Transactions Leader, and Markets Leader, and Christine Rose L. Lapada is a Strategy and Transactions Associate Director, 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

16 March 2026

Noel P. Rabaja and Christine Rose L. Lapada

The Next Move: Reshaping strategy through AI

In brief:Measured optimism defines 2026 as CEOs balance domestic confidence with global uncertainty and rising cost pressures.AI readiness becomes the decisive priority, with national assessments highlighting both urgency and opportunity for Philippine enterprises.The advantage goes to the prepared enterprises that upgrade systems, invest in skills, and build digital strength to lead the next wave of growth.“AI readiness is no longer optional — it is the defining advantage for Philippine enterprises in 2026, and it is rapidly becoming the differentiator that sets industry leaders apart."With 2026 reshaping competitive realities at unprecedented speed, Philippine CEOs face a strategic landscape where decisions carry amplified impact. Insights from the Philippine edition of the 2026 CEO Outlook Pulse Survey, gathered from CEOs across the country’s major sectors, reveal how enterprises are rebalancing portfolios, accelerating AI integration, and strengthening resilience amid ongoing uncertainty. In today’s NAVI world, where change is nonlinear, accelerated, volatile and interconnected, these insights offer Philippine business leaders a sharp lens into how organizations are adapting to rapid and interconnected change. AI readiness is no longer optional — it is the defining advantage for Philippine enterprises in 2026, and it is rapidly becoming the differentiator that sets industry leaders apart.Economic pressures reshaping CEO prioritiesPhilippine CEOs enter 2026 facing economic pressures that mirror those of the previous year, now intensified by geopolitical dynamics and accelerating technological change. The World Uncertainty Index indicates that global uncertainty remains elevated due to persistent geopolitical tensions and volatile trade policies—conditions that continue to affect cost structures, capital allocation, and long‑term planning. Domestically, concerns around fiscal governance persist, weighing on investor confidence and contributing to a more cautious business outlook.These combined forces have shaped the country’s recent economic performance. Philippine GDP slowed from 5.7% in 2024 to 4.4% in 2025, falling short of the government’s minimum target of 5.5%, as noted in the Development Budget Coordination Committee’s review of medium‑term macroeconomic assumptions. Meanwhile, the Bangko Sentral ng Pilipinas, in its February 2026 briefing, projected a modest recovery to 4.6% in 2026 and 5.9% in 2027 — projections that hinge on strengthened governance and renewed investor trust.While the macroeconomic environment remains constrained, the technology landscape is advancing at a pace that demands CEO‑level attention. Global competition is accelerating investment in artificial intelligence (AI), creating meaningful openings for economies that modernize quickly — and exposing vulnerabilities in those that lag.AI readiness and structural gapsThe 2025 UNESCO AI Readiness Assessment Report notes that the Philippines has made real progress in building responsible, ethics‑driven AI governance. Yet the same assessment underscores structural gaps that now carry strategic consequences: weaknesses in digital infrastructure, limited R&D investment, siloed policymaking, inconsistent public–private collaboration, and shortages in critical technology skills. As AI becomes a core driver of competitiveness, these gaps must be addressed with urgency.Reinforcing this, the 2025 Government AI Readiness Index by Oxford Insights ranks the Philippines 43rd among 195 economies, reflecting improved policy direction, governance, and public‑sector readiness. For enterprise leaders, this signals that government has largely set the foundation; the real challenge now lies in execution, specifically, scaling AI with speed, discipline, and measurable business outcomes.One of the speakers at the 2026 Philippine CEO Outlook event from the Asian Development Bank underscored the scale of the country’s AI opportunity. Citing Public First’s Turbocharging Growth: The Philippines’ AI Opportunity, they highlighted that today’s AI technologies could significantly augment roughly 37% of Filipino workers, driving substantial productivity gains and enabling higher incomes. The message to CEOs is direct: AI is no longer merely an operational enhancement — it is a national productivity catalyst.Global insights further reinforce the urgency of enterprise‑level action. The World Economic Forum’s Future of Jobs Report 2025 identifies AI and information technologies as the strongest forces reshaping business models worldwide, while Microsoft’s Work Trend Index 2025 notes that although awareness of AI is rising, many organizations remain underprepared for transformation at scale.This readiness gap is even more pronounced in the Philippines. The Philippine Institute for Development Studies (PIDS), in its 2024 study Readiness for AI Adoption of Philippine Business and Industry, found that only 14.9% of local firms are currently using AI, with adoption concentrated among digitally mature ICT and BPO organizations. PIDS emphasized that industry‑wide AI uptake continues to be limited by infrastructure gaps, low levels of awareness, constrained investment capacity, and widespread shortages in critical digital skills. The study also cited the Salesforce Asia Pacific AI Readiness Index, where the Philippines scored 25.4 out of 100 in Business AI Readiness — ranking 10th out of 12 economies, well behind regional leaders such as Singapore, China, and South Korea.This signals a substantial opportunity for Philippine enterprises to accelerate AI capability and strengthen their competitive position in the region. As highlighted by the Global Consulting Markets Leader at Ernst & Young during the 2026 Philippine CEO Outlook event, AI offers a genuine productivity leapfrog opportunity for companies that act decisively. He underscored that realizing this potential will depend on CEOs modernizing legacy systems and rethinking enterprise capabilities to overcome entrenched barriers that hinder transformation.Philippine CEOs enter 2026 with measured optimismThe CEO Outlook Pulse Survey shows that Philippine business leaders enter 2026 with measured optimism. While 48% express net optimism about business prospects, sentiment remains nuanced. Leaders retain confidence in domestic and sector‑specific performance yet remain cautious about global conditions and persistent cost pressures. The 2026 CEO Confidence Index registered a score of 59, down from 74 the previous year — a reflection of sourcing challenges, rising operational costs, and continuing uncertainty. Even with this softer sentiment, CEOs still anticipate improvements across key metrics: 64% expect revenue growth, 54% foresee stronger profitability, and 64% project productivity gains, with 26% pointing to meaningful efficiency improvements.Executives remain confident but deliberate in capital deployment. Net optimism of 46% for revenue, 42% for competitiveness, and 36% for investment in existing operations signals a clear emphasis on strengthening core capabilities. Expansion plans, technology investments, and R&D spending are being paced with greater discipline, shaped by pressures around input costs, limited cost‑through mechanisms, and tighter cash flow.Cost pressures continue to loom large, with 42% of CEOs expecting operating expenses to rise due to supply‑chain disruptions, higher input prices, and labor market tightening. Leaders are accelerating efficiency, digital adoption, and reskilling to manage cost pressures and reinforce organizational resilience.Clear-sighted and transformative leadershipThis direction aligns with the International Monetary Fund’s view in Gen‑AI: Artificial Intelligence and the Future of Work, which notes that economies with strong digital foundations and adaptable labor markets are best positioned to benefit from AI while managing disruption. The Philippines’ ASEAN Chairmanship in 2026 further amplifies this opportunity, positioning the country to help shape regional digital priorities that will define the operating environment for CEOs in the years ahead.As Philippine CEOs move through 2026, the realities of a NAVI world demand leadership that is clear-sighted and transformative. This moment is both a signal and mandate: business leaders who modernize core systems, build future-ready talent, and strengthen digital foundations will be best positioned to turn uncertainty into advantage — driving growth while advancing the country’s competitiveness in a rapidly shifting region. The second part of this article will discuss how Philippine CEOs in 2026 are advancing transformation agendas focused on modernization, AI integration, governance, and strategic transactions to sustain growth and competitiveness amid a rapidly digitalizing and geopolitically shifting market.Noel P. Rabaja is the Deputy Managing Partner, Strategy and Transactions Leader, and Markets Leader, and Christine Rose L. Lapada is a Strategy and Transactions Associate Director, 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

09 March 2026

Aris C. Malantic and Dwayne Justin G. Ignacio

PFRS 18 in focus: Confidently navigating changes in financial reporting

In brief:PFRS 18 emphasizes Management-Defined Performance Measures (MPMs), which are specific subtotals reflecting management's view of financial performance, and requires detailed disclosures to enhance transparency and accountability.The standard enhances the guidance on aggregating and disaggregating financial information, which is expected to reinforce more disciplined financial reporting.Companies must prepare for the implementation of PFRS 18 by aligning their financial reporting processes, assessing data management systems, and engaging with stakeholders to ensure a smooth transition and capitalize on the opportunity for modernization in financial reporting.“PFRS 18 represents a significant shift in financial reporting standards that will enhance the clarity, comparability, and transparency of financial statements."Entities often provide certain information about their financial performance beyond typical PFRS totals, such as certain additional performance metrics to guide decision-making and communicate results. These data and metrics are generally communicated outside the financial statements and included in management’s press releases, strategic reports, management discussion and analysis. Users of financial statements find these to be useful; however, there are concerns about the lack of transparency on how these measures or metrics are calculated.In the first part of this article, we discussed the upcoming IFRS 18 standard, its significant changes to financial statement presentations, and the implications for clarity, comparability, and compliance in financial reporting starting from January 2027. In this second part, we discuss how under PFRS 18, certain performance measures, known as Management-Defined Performance Measures (MPMs), will move to the financial statements, along with the enhanced guidance on disclosures of financial information and implications for companies as they prepare for its implementation.Spotlight on MPMsPFRS 18 places a significant emphasis on MPMs, which are specific subtotals of income and expenses that reflect management's view of the entity’s financial performance as a whole and are used in public communications outside of financial statements. The introduction of MPMs is a strategically significant change that directly impacts how an entity communicates its performance. However, the narrow definition of MPMs means that not all performance measures used in an entity’s communications will qualify as MPMs. An adjusted profit figure, which modifies a total or subtotal required by PFRS Accounting Standards, can qualify as an MPM. However, non-financial performance measures such as market share, store surface and customer satisfaction score will not meet the definition of an MPM. In addition, certain financial performance measures, such as free cash flows, net debt and adjusted revenues will also not qualify as MPMs since they do not represent subtotals of income and expenses. PFRS 18 also provides that certain subtotals of income and expense, such as those already required or specified by a PFRS Accounting Standard (like operating profit) or are specifically excluded (like gross profit or loss), are not MPMs. Lastly, while financial ratios such as return on equity are not MPMs, a subtotal that is a numerator or a denominator in a financial ratio could qualify as an MPM.Disclosure requirements for MPMsPFRS 18 requires entities to include all necessary information about MPMs in a single note to the financial statements, which includes how the measure is calculated, why it is useful, and a reconciliation to the most comparable PFRS subtotal.This requirement ensures that users have access to relevant information about MPMs, enhancing transparency and accountability.Implications for financial reporting processesMany entities currently use alternative performance measures (APMs) when explaining financial performance, but information about these measures is generally communicated outside the financial statements, which has led to some concerns about the quality of such information. As a result of PFRS 18’s guidance on MPMs, companies must ensure that their current financial reporting process can capture all the required information about MPMs. Entities that use APMs will also need to assess whether any of such APMs meets the definition of an MPM, which will then require additional disclosures that they may not be preparing currently, such as the reconciliation to the most comparable PFRS subtotal. The financial reporting process should also be able to monitor any changes to public communications, as these can affect which measures qualify, or cease to qualify, as MPMs. Additionally, since MPMs are required to be disclosed in a single note to the financial statements, they will face increased scrutiny from regulators and investors.Aggregation and disaggregation guidancePFRS 18 improves the general requirements for aggregating and disaggregating information in financial statements. It provides guidance on how entities should aggregate items based on shared characteristics and disaggregate them based on dissimilar characteristics.Importance of clearer line item presentationIn financial reporting, clarity is paramount. Users should not be left guessing about the nature of line items. PFRS 18 emphasizes that entities must avoid using vague labels like "other" unless absolutely necessary. If an entity cannot find a more informative label, it may use "other," but this should be the exception rather than the rule.Planning for PFRS 18 implementationPFRS 18 will be effective for periods beginning on or after 1 January 2027. Entities are required to apply the standard retrospectively for comparative periods in both interim and annual financial statements. PFRS 18 also introduces consequential amendments to other PFRS Accounting Standards that entities must apply when adopting PFRS 18.Given the requirement to retrospectively restate comparative periods and disclose certain reconciliations, companies need to plan ahead and start determining the impact of PFRS 18 as early as possible. For example, the annual financial statements in the year of adoption for an entity that adopts PFRS 18 beginning 1 January 2027 will require information from 2025 onwards if the entity presents more than one comparative period in its statement of profit or loss. For companies that prepare quarterly financial statements in accordance with PAS 34 Interim Financial Reporting, the impact of adopting PFRS 18 will already be reflected in their first quarterly report during the year of adoption by presenting the headings and subtotals and disclosing the reconciliations required by PFRS 18. Key considerations for companiesCompanies preparing for the implementation of PFRS 18 should consider the following key areas:Compliance: Ensure that financial reporting processes align with the new requirements and that the impacts on contracts and debt covenants which currently use subtotals from the statement of profit or loss as inputs have been considered.Processes: Evaluate existing processes and identify areas that may require modification.Data and Systems: Assess whether current data management systems can accommodate the changes introduced by PFRS 18.Internal reporting: Assess any potential changes to the current structure and contents of internal management reports and explore any opportunities for alignment with the new categories and subtotals required by PFRS 18.Performance measurement: Revisit how management incentive structures are currently designed and how key performance indicators are measured, particularly those that are tied to certain subtotals in the statement of profit or loss.Investor Relations: Communicate with investors, analysts, regulators and creditors about the changes and how they will impact financial reporting.Strategy and People: Engage relevant stakeholders across the organization to ensure a smooth transition.Driving modernization in financial reporting processesThe countdown to PFRS 18 has begun, and as companies inch closer to the initial application of the new standard, it is essential that management understands the potential impact on their reporting. While the changes may seem daunting, they also present an opportunity for organizations to modernize their financial reporting processes.PFRS 18 can serve as a catalyst for improving transparency and encouraging stronger cross-department collaboration in financial reporting. By redefining conversations about financial performance and performance measures, companies can rethink how they tell their story and shape how they are understood by stakeholders.PFRS 18 represents a significant shift in financial reporting standards that will enhance the clarity, comparability, and transparency of financial statements. As companies prepare for the implementation of this new standard, they must embrace the opportunity to improve their reporting processes and engage with stakeholders effectively. By doing so, they can navigate the changes with confidence and position themselves for success in a rapidly evolving financial landscape.Aris C. Malantic is the Assurance Growth Areas Leader and Financial Accounting Advisory Services (FAAS) Leader of SGV & Co, and Dwayne G. Ignacio is a FAAS Senior Manager from 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.

02 March 2026

Aris C. Malantic and Dwayne Justin G. Ignacio

PFRS 18 in focus: Confidently navigating changes in financial reporting

In brief:The new IFRS 18 standard, effective 1 January 2027, will transform financial statement presentations by mandating a structured approach to income and expenses, enhancing clarity and comparability for users.Key changes include defined categories for income and expenses, the introduction of new subtotals like operating profit or loss, and stricter presentation and disclosure requirements to improve transparency in financial reporting.Companies will need to adapt their reporting systems and engage with stakeholders to ensure compliance and effectively communicate their financial performance under the new standard.“These changes mean companies must ensure that existing policies, processes and governance structures can accommodate the new requirements and deliver the enhanced transparency that the new standard requires."In 2027, users of financial statements will encounter a transformative shift in how companies present their financial performance. The new standard, IFRS 18 Presentation and Disclosure in Financial Statements, issued by the International Accounting Standards Board (IASB) in April 2024, is set to replace the existing IAS 1 Presentation of Financial Statements. In the Philippines, this standard was adopted as PFRS 18, which will be effective for periods beginning on or after 1 January 2027. This change is not merely a compliance exercise; it represents a fundamental rethinking of how financial performance is communicated to stakeholders.Financial reporting standards provide a framework that helps organizations present their financial performance in a manner that is understandable to users, including investors, regulators, and analysts. The introduction of PFRS 18 aims to enhance these qualities, addressing existing challenges and improving the overall quality of financial reporting.Key changes under PFRS 18PFRS 18 introduces several significant changes that will reshape the structure of the statement of profit or loss. These changes are designed to enhance clarity and comparability across entities, making it easier for users to assess financial performance.New structure for statement of profit or loss and defined categories: At its core, the statement of profit or loss provides a window into how an entity has translated its strategy into financial results. However, the existing practice for preparing the statement of profit or loss allows for significant variability in how amounts are reported. To improve the structure of the statement of profit or loss, PFRS 18 requires companies to classify income and expenses into one of five distinct categories: operating, investing, financing, income taxes, and discontinued operations. This classification aims to provide users with a clearer understanding of the sources of income and expenses.Introduction of new subtotals: The standard introduces two new subtotals — operating profit or loss and profit or loss before financing and income taxes — which means that certain subtotals will soon become more visible and comparable across companies. Together with the new categories, these new subtotals will create a more structured narrative, allowing users to better understand operating results, evaluate investment impacts and see the cost of financing.Management-defined performance measures (MPMs): PFRS 18 requires entities to disclose MPMs within their financial statements, providing insight into how management views the financial performance of the entity.Enhanced disclosure requirements: The standard imposes stricter disclosure requirements, ensuring that descriptions and labels used in financial statements faithfully represent the characteristics of items presented and disclosed. This ensures that users have access to relevant information about the measures used to assess performance.Addressing current gaps in financial reportingThe existing standard, PAS 1, requires the presentation of profit or loss but does not require any specific subtotals, leading to inconsistencies and a lack of comparability. For instance, the commonly used term operating profit lacks a standardized definition across different entities. This results in varying interpretations and calculations, making it challenging for users to compare financial information between companies, even those operating within the same industry.To address these issues, PFRS 18 mandates that companies classify income and expenses into one of five categories:Operating: Includes income and expenses arising from the entity’s main business activities, such as the revenue from the sale of products and services, and all items not required to be classified in any of the other categories.Investing: Typically includes income and expenses from cash and cash equivalents and income from rental properties and dividends from financial instrument investments that are not part of the entity’s main business activities. It also includes the share of earnings and losses from equity-accounted investments.Financing: Covers income and expenses related to liabilities arising from transactions involving only the raising of finance, such as bank loans, and interest expenses like interest expense on lease liabilities.Income Taxes: Includes all income tax-related expenses and income recognized in profit or loss.Discontinued Operations: Includes income and expenses from operations that have been discontinued.Together, these five defined categories do not just reorganize line items on the statement of profit or loss. Instead, they also introduce greater discipline into how financial performance is framed and presented by sharpening the distinction between the main business activities of the entity and its ancillary activities.Clarifying specified main business activitiesThere have been concerns that when applying the general requirements for classifying income and expenses, certain entities need to classify the income and expenses from their main business activities in categories other than the operating category. In response, PFRS 18 introduces the concept of specified main business activities. Under PFRS 18, entities need to assess if they have a specified main business activity of investing in assets (e.g., investment property companies) and/or providing financing to customers (e.g., banks). Consider a bank, XYZ Bank, which invests in financial assets like bonds and shares. Under PFRS 18, if XYZ Bank determines that investing in such financial assets is a main business activity, it can classify the interest and dividend income that they generate in the operating category, providing a clearer picture of its financial performance. Similarly, consider a real estate entity, ABC Company, which invests in non-financial assets like land and buildings that are classified as investment properties. Under the new standard, ABC Company can classify rental income from those properties and certain expenses like depreciation expense in the operating category if it assesses that investing in such assets is a specified main business activity. This classification helps users easily identify the core business activities of the entity. With PFRS 18 now anchoring the classification requirements to an entity’s specified main business activities, what will qualify as “operating” will no longer simply be a matter of preference, but of whether an item of income or expense arises from what an entity is really doing at its core. Improving comparability through defined subtotalsIn order to improve comparability across financial statements, PFRS 18 introduces two new defined subtotals:Operating Profit or Loss: This comprises all income and expenses classified in the operating category, providing a clear view of the profitability of the core business operations.Profit or Loss Before Financing and Income Taxes: This includes operating profit or loss along with all income and expenses classified in the investing category. It offers insight into the overall profitability, allowing users to analyze and compare performance before considering financing costs and tax implications. It will also provide an opportunity for analysts and investors to compare the results of operations of entities independent of how they finance their operations.The introduction of these defined subtotals enhances the ability of users to compare financial performance across different entities. For instance, investors can more easily assess the operating performance of companies within the same industry, leading to more informed investment decisions. Given the potential changes to how subtotals are calculated under PFRS 18 compared to their legacy definitions, entities also need to consider the impact on how key performance indicators are currently measured and evaluated. There may also be potential impact on the terms and provisions of contracts, management incentive structures and covenants that are currently tied to those subtotals.Compliance beyond numbersWhile the changes introduced by PFRS 18 focus on improving the presentation of financial statements, they also require companies to evaluate their reporting systems. This may involve redesigning charts of accounts, recategorizing certain items, and modifying existing controls. The shake-up in financial reporting that PFRS 18 brings may also change the way entities currently tell their story. This means that companies should consider engaging early with analysts, investors, creditors, regulators and other stakeholders to discuss how the new standard will affect their financial reporting. These changes mean companies must ensure that existing policies, processes and governance structures can accommodate the new requirements and deliver the enhanced transparency that the new standard requires. In the second part of this article, we will discuss how, under PFRS 18, Management-Defined Performance Measures (MPMs) will soon move to the financial statements, along with the enhanced guidance on disclosures of financial information and the implications for companies as they prepare for its implementation.Aris C. Malantic is the Financial Accounting Advisory Services (FAAS) Leader of SGV & Co, and Dwayne G. Ignacio is a FAAS Senior Manager from 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.

23 February 2026

Noel Andro D. Bico

A pivotal point: Reflections on the tax audit suspension and its resumption

In brief:The Bureau of Internal Revenue (BIR) suspended tax audits to address systemic weaknesses and improve the integrity of audit operations.The suspension was lifted with new guidelines that emphasize a single-instance audit framework, consolidation of pending audits, and a more objective selection process to enhance transparency and accountability.Taxpayers now must adapt to a more structured audit environment that prioritizes compliance, documentation, and preparedness, fostering a fairer tax landscape that benefits both the government and taxpayers.“As the BIR implements these reforms, the emphasis on transparency, accountability, and fairness in the audit process is expected to foster a more equitable tax environment."The suspension of tax audits by the Bureau of Internal Revenue (BIR) was not simply an operational interruption. It was an institutional acknowledgment that something deeper needed attention. For taxpayers and practitioners alike, it validated the long‑held view that tax enforcement is only effective when grounded in a fair, consistent and well‑controlled audit process. As the BIR seeks to modernize and enhance the integrity of its audit operations, both taxpayers and practitioners are left to navigate the implications of these changes.This article explores the basis for the suspension, the resumption of audit activities, and the new framework that will govern tax audits moving forward.The basis for the suspensionThe suspension was first imposed through Revenue Memorandum Circular (RMC) No. 107-2025 on 24 November 2025, following numerous concerns raised by taxpayers, stakeholders and internal units about irregular audit practices and inconsistencies across audit execution.Through RMC No. 109‑2025, issued on 12 December 2025, the BIR clarified that the purpose of the suspension was to address systemic weaknesses in the audit process, protect taxpayer rights, and improve the integrity of audit operations. The BIR acknowledged the need to correct operational issues and develop a more transparent, standardized and modernized audit system. Resumption of audit activitiesThe suspension was formally lifted through RMC No. 8‑2026 dated 27 January 2026, restoring all tax audit and field operations previously suspended under RMC Nos. 107‑2025 and 109‑2025. This included the resumption of: Issuance of Electronic Letters of Authority (eLAs), Mission Orders (MOs), and Tax Verification Notices (TVNs)Continuation of previously suspended audit casesEnforcement, verification, assessment, and collection activities requiring field auditsAll other actions which are necessary to protect revenue or enforce compliance.All tax audit and related field operations are mandated to comply with the new guidelines provided under Revenue Memorandum Order (RMO) No. 1-2026, also dated 27 January 2026.The new audit environmentRMO No. 1‑2026 introduced a refreshed audit framework centered on consistency, control, and accountability. Among its key reforms are:Single‑instance audit framework. Taxpayers will now be subject to only one eLA per taxable year covering all internal revenue tax types, including value-added tax (VAT), subject to limited exceptions such as fraud cases, one‑time transactions, tax clearance requests and business closure cases. This framework addresses the long-standing issue of overlapping or redundant audits. Consolidation of pending eLAs. Beginning 4 March 2026, all pending eLAs for the same taxpayer and taxable year will be automatically consolidated into a single eLA unless the taxpayer opts out through a written request.System-assisted and anonymized selection and assignment process. New eLAs will now be issued through a system‑assisted, anonymized selection and assignment process that relies on automated risk parameters. This reduces discretion, minimizes potential manipulation, and supports a more objective audit selection process.Removal of VAT audit sections and audit task forces. The BIR abolished the VAT Audit Sections and other audit task forces, confining audit authority to the Large Taxpayers Service and regional offices to ensure clearer oversight.Proper audit and assessment procedures. The RMO mandates the use of standardized audit checklists, complete documentation of audit activities, and signed minutes of discussions by both the taxpayer and the Revenue Officer. It also prohibits the issuance of unreasonable assessments. Assessment notices must address only the issues that remain unresolved after the discrepancy discussion and must clearly present their factual and legal bases, in compliance with due process requirements.What this means for taxpayersThe resumption of audits under this revised framework marks a shift not only in policy but in tax audit culture. What began as a temporary stop has become a pivotal point, reshaping expectations for both the BIR and the taxpayers it oversees.Moving forward, taxpayers can expect:More structured and transparent auditsCloser scrutiny of both factual findings and legal basesGreater emphasis on documentation and record-keepingStronger accountability and oversight from revenue officersWith RMC No. 8‑2026 lifting the audit suspension and RMO No. 1‑2026 reshaping the audit system into one that is more data‑driven, risk‑based, and accountable, taxpayers now operate in a more rigorous landscape. Working towards a more efficient and fair tax landscapeIn this environment, preparedness is more than a defensive measure. It is a strategic practice that safeguards business continuity, supports compliance, and strengthens trust in the tax system. A tax audit may begin with the BIR, but the advantage always belongs to the taxpayer who is ready.As the BIR implements these reforms, the emphasis on transparency, accountability, and fairness in the audit process is expected to foster a more equitable tax environment. Taxpayers must adapt to this new framework by enhancing their compliance practices and ensuring that they are well-prepared for audits. The changes signal a commitment to a more robust and trustworthy tax system that benefits both the government and the taxpayers it serves. By embracing these developments, stakeholders can work collaboratively towards a more efficient and fair tax landscape in the Philippines.Noel Andro D. Bico is a Senior Director from the Global Compliance & Reporting Sub-Service Line 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.

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