Sociocultural Technological Economic Ecological/ Political-Legal

Environment

 Partnership  Technological  Water Crisis  Climate  Standards of

with Local efforts on Change DOH
Communities projects  Energy Policy
Resources  Greenhouse
 Capacity  Resiliency  Water Gas Protocol
Building Improvement  Energy Efficiency
Projects Alternatives  DENR –
 Growth Rate of  Watershed accredited
Population  Water  Inflation Rate Protection
Development Policy  ISO Certified
 Deployment of Projects  Wage Controls
Supply to  Pollution  Level of
Regions that  Construction Impacts Acceptance
suffered and Equipment of
Calamity & Replacement  Corporate Technology
Loss Program Responsibilit in the
ies Culture Society
 Education  Cost of
Level in Production and
Society Trends

STEEP ANALYSIS
 SOCIOCULTURAL
Sociocultural factors such as demography trends, power structure in the society, level of
education and etc. have immense impact over not only the country's economy but also on
workforce talent availability and level of consumer demand. The following are the sociocultural
factors that impact Manila Water Company.
1. Partnership with Local Communities
Since 2006, Manila Water has been organizing the Lakbayan tour, whose objective is to
provide an opportunity for members of the public to experience the water trail and foster an in-
depth understanding of the value of water conservation and managing water after it is used.
Lakbayan takes visitors to a water source, a water treatment plants and finally a wastewater
treatment plant. Since the program’s inception, 102, 753 individuals from various sectors have
benefitted from the Lakbayan experience. The Toka Toka Movement is Manila Water’s
advocacy program that aims to inform and educate people on the need for wastewater
management in communities, the value of personal commitment and the collective impact of
individual actions for the environment such as having septic tanks desludged, connecting houses
to sewer lines where available, segregating solid waste and spreading the gospel of
environmental sustainability among one’s family and friends. This multi-stakeholder effort banks
on the strategy of cooperative volunteerism from program partners such as local government
units, national government agencies, businesses, media, the academe and the non-profit sector
(Manila Water, 2020).
Importance: Engaging the company to the local communities enable the Manila Water to provide
benefits and knowledge with regards to the proper management of resources and also to help the
communities to have a better and clean source of water. Manila Water continues to maintain
strong partnerships with local communities, especially through the customer kasanggas who act
as force multipliers that help in communications and advocacies. Fostering public-private
partnerships with foreign and local governments, regulators, non-government organizations, and
economic zone development authorities to ensure continuous provision of water and wastewater
services to customers and communities (Manila Water, 2020).
Toka Toka Partners
24 Local Government Unit
7 National Government Agencies
5 Corporations and other agencies

Sub-Category:
Bawat Patak, Tumatak. Goes to School is a sub-program of the Bawat Patak Tumatatak
(“everydropmakesamark”) employee engagement program, which gives volunteer employees an
opportunity to communicate the importance of proper environmental practices such as water
conservation, proper solid waste management, sanitation and waste water management to
elementary school students. Activities involve story reading; puppet shows and games which
incorporate messages on personal responsibility and environmental sustainability. Since 2015,
the program has partnered with36 elementary schools, reached 3,658 grade school students and
tapped the assistance of 398 Manila Water volunteer employees.
2. Capacity Building / Emergency Preparedness and Response Groups
Manila Water has established a group of personnel intended to support business
continuity operations of the company. These are the 503rd (ManilaWater) Water Service
Batallion and Sagip Buhay. The 503rd Batallion is one of the affiliated reserve batallions of the
Armed Forces of the Philippines, which is organic to the AFP Reserve Command Affiliate
Reserve Group of the AFP Reserve Command. It is a Combat Service Support & Service unit
specializing in water treatment, water distribution, and sewage management with sub specialties
in urban search and rescue, disaster relief and rehabilitation, civil-military operations and co-
operations.
The primary duty of the 503rd Batallion is to secure the water facilities. It is also part of
the corporate responsibility arm of ManilaWater. On the other hand, Sagip Buhay is a group of
employees trained to respond to basic first aid procedures during emergencies. Both groups
underwent rigorous trainings and up skilling. Among the said groups involvement are Mass
Blood Donation (in partnership with Red Cross), tree planting, an dother civic military
operations. Existing members of Sagip Buhay and 503rd Batallion will undergo refresher courses
and retraining. The groups will also recruit more employees to be co memembers of the group.
The MWPV Busines sunits have also created their fire brigade, fire volunteers, organization
search and rescue group, first aider to respond to emergencies in their companies. These groups
were equipped with the necessary capacity building and trainings such as Basic First Aid and
Life Support and Flood Incident Response Safety Training, Emergency Response, and Mobile
Treatment Plant Operation and Maintenance.
3. Growth Rate of Population
The concession area covers 1,400 square kilometers encompassing 23 cities and
municipalities with a population of close to 7.2 million comprising a broad range of residential,
semi-business, commercial and industrial customers. The East Zone Concession plays a critical
role in nation building with an established commitment to national development in 1997 by
taking on the mandate of rehabilitating and expanding the MWSS water and wastewater system.
During that time they have covered a population around 2 million. In which the growth in
population increases in the area as time passes by. The concession has undertaken significant
investments in expanding service coverage, improving operational efficiencies, reducing system
losses, and developing additional water sources to meet the needs of the growing population
(Manila Water, 2019).
Importance: As the population increases there are opportunities as well as threats that may
impact the company. Opportunities, for the possibility of growth and profitability of the
consumer aspiring for the product. Threat also, if the company cannot sustain and delivered
efficiently and effectively it’s services to society.
4. Deployment of Supply to Regions that suffered Calamity & Loss
The produces about 3,000 liters of drinking water per hour and can operate optimally up
to 12 hours a day. MTPs were deployed in different areas in the Philippines to respond to the
potable water needs during and after calamities. Some of the deployments are in Bohol (7.2
magnitude earthquake, 2013), Bantayan, Cebu (Typhoon Yolanda, 2013), Districts of Albay
(Mt.Mayon volcanic eruption, 2018), Davao del Sur (6.9 magnitude earthquake, 2019), and in
the province of Batangas (Taal Volcano eruption, 2020). Through its CS Rarm, Manila Water
Foundation, the company also provided potable water to calamity-stricken areas.
5. Education Level in Society
Consumer education provides the public with the information it needs on products and
services so it can make well-informed decisions on what it is purchasing and from whom it
purchases. It helps consumers understand their rights and become active participants in the
buying process. Education level of the society impacts both the quality of jobs and level of
income. High level of education often results in better jobs, higher income and higher spending
on complex and aspirational products (Executive MBA Pro, 2021).
Importance: That’s why company should consider this to merge plans and apply strategies that
help achieve the desire result for the company. As people aspire for better and trusted quality
resources, they also allotted or budget something to that part. With better and higher education in
the society, the company can provide or increase it’s growth.
6. Housing Preferences in the Philippines
Developers have likewise turned to houses and lots from the high-volume condominiums.
The change in market preference is evident in the BSP's Residential Real Estate Price Index for
the first quarter of 2021, which showed a decline in demand for condominiums in the NCR, and
a corresponding increase in demand for townhouses and single-detached or attached houses in
subdivisions. The prices of duplexes and condominium units also declined year-on-year in the
first quarter of 2021 by 20.7 percent and 10.7 percent, respectively due to lackluster demand for
condominiums in the NCR. Meanwhile, prices of townhouses and single-detached and attached
houses increased by 8.3 percent and 0.2 percent, respectively. (The Manila Times, 2021). A
direct result of the changing family size and dynamics have spurred developments in multifamily
housing. The housing types will continue and there is a result of growth not only in the urban but
also in the rural areas.

Importance: There is a sudden change in the preference of housing in the Philippines. People
prefer now to stay at home. With the preference in the single-detached houses in subdivisions,
there would be increase in consumption. While water consumption would still continue to
increase as a result of population growth in the NCR. The company should think and plan a
strategy in order to maximize the opportunity available in the market. Because the lesser the
consumption per household, the smaller its tariff would be. Greater percentage of revenues
would be coming from billed volume rather than from tariff. This is a downside for the company
as cost of operations would also increase. Maximizes the increase in population and offering
services that greatly compatible to the demand of consumer, especially to the rural areas or
provinces that preferred to have a comfortable living including the quality water received.
 TECHNOLOGICAL
One of the greatest benefits of technology is convenience. Businesses can reach potential
customers around the globe, no matter how big or small their operation is. Technology is fast
disrupting business models across various industries. Some of the technology trends that are
impacting the macro environment are – developments in artificial intelligence, use of machine
learning and big data analytics to predict consumer behavior, growing importance of platforms
over service providers etc. Many aspects of a business are made easier with every technological
advancement. This also means that there are upgrades, software, training, and other expenses
attached (Wilson, 2018).
1.Technological efforts
The difficult challenges Manila Water faced in 2019 during the raw water supply
shortage helped prepare for the challenges brought about by the pandemic. The lessons learned
during the crisis resulted in a more agile and responsive water network that enables to maintain a
reliable and even more efficient water distribution system. These intricate and real time network
adjustments are now executed and monitored centrally via on newly enhanced Operations
Management Center, using state-of-the-art technologies across the network. This more “techy”
operating environment is the big reason why we were successful in maintaining 24/7 water
service even during the strict lockdowns (Manila Water, 2020).
The Tunnel Boring Machine (TBM) that was used to construct the Novaliches-Balara
Aqueduct 4 (NBAQ4) has completed its work as it emerges at the La Mesa Reservoir this
August. Launched at the Balara Treatment Plant 2 on January 28, 2020, the TBM “Dalisay” laid
a 7.3-kilometer long, 3.1-meter diameter pipe underneath Commonwealth Avenue without
inconvenience to traffic. This project is the first to use this technology in Metro Manila. The
Metropolitan Waterworks and Sewerage System (MWSS) used a similar machine for
constructing Tunnel 4 of the Angat Water Tunnel Improvement Project (AWTIP) in Norzagaray,
Bulacan. In a ceremony held to celebrate this milestone, guests onsite and those that attended
through Zoom witnessed the exposure of Dalisay’s cutter head from the soft concrete at the exit
shaft at the La Mesa Reservoir (Manila Water, 2021).
Importance: Having a room for improvements and exerting efforts to improve the operation and
services of the company through technology, provide opportunities to the company. But also
faces challenges as time passes by, it may on the cost of it’s maintenance and other prospect
technology that the company aspire with.
2. Resiliency Improvement Projects
Manila Water has conducted structural retrofitting / reinforcements works, seismic joint
installation, and emergency on-line reservoirs for different facilities such as La Mesa, Balara,
and San Juanas part of flood resiliency. For other facilities, consideration on the design, height
and materials are being regarded to make it a flood-freefacility. Adjustments were made after
Typhoon Ondoy at the Olandes Sewage Treatment Plant, which is located beside the Marikina
River. Manila Water implemented the following key climate-related asset improvement projects
from 2015 to2020:
•Balara Treatment Plant 1 and 2 Sedimentation Basin Retro fitting and Upgrade
•San Juan Reservoir rehabilitation
•Construction of Emergency Reservoirs
Balara Treatment Plant 1 and 2 are being upgraded and retrofitted to improve the
structural stability of the facilities. Manila Water constructed emergency reservoirs to augment
the current static tanks, watertankers, and mobile treatment plants used in emergency response in
the provision of potable water. The emergency reservoirs, which are interconnected to existing
lines will be used for flood, typhoon and earthquake contingency. They have capacities of 50
cubicmeters (m3) and 100m3 that can serve 5,000 and 10,000 evacuees for threedays,
respectively.
3. Water Development Projects
To address the deficit, ManilaWater rehabilitated 48 stand-by deep wells andcurrently
constructing 23 new wells to provide a target of 100 MLD of potable water by end of 2020.
Foreseeing the potential tapping of ground water to augment water supply, Manila Water
commissioned GHD in 2016 to conduct a ground water assessment to determine the ground
water availability and sustainability in the East Zone concession area. The different scenarios
considered in the model simulation include existing conditions, increased demand of existing
groundwaterwells, future demands and re-simulation of the three scenarios with 2050 climate
change projections. Ingeneral, ground water simulation results show no significant change in
ground waterheads over the 40 years simulation period, even with the impacts of climate change
sincere charge takes years or decades to be affected. Thus, ground water levels are sufficient
until 2055 with the extraction rates approved by the National Water Regulatory Board (NWRB).
4. Construction and Equipment Replacement Program
In 2017, the company rehabilitated Bulabog outfall, the pipe of treated waste water, with
a full replacement of 800 meters submarine pipeline with a stronger HDPE pipe to make it
withstand strong current and waves.This is key to the continuous operation of Balabag Sewage
Treatment Plant (STP) for the discharge of Class SB treated waste water. Structural repair of
deteriorated concrete and leaks at Primary Settling Tanks, Grit Chamber, Aeration Tanks, Final
Clarifier,and Disinfection Tank of Balabag STP was also started in 2019 to strengthen the
structures to enable them to withstand strong earthquakes and typhoons. The Manoc Manoc
SewageTreatment Plant, these condwaste water facility of Boracay Water, is designed to be
climate and earthquake resilient. Boracay Water will also construct a pipe bridge at Napaan and
Putol Bridge to replace the cross under pipe damaged by heavy flooding and strong current
during Typhoon Urduja.The pipe bridge will provide a stable 24/7 water supply in Boracay
Island despite strong typhoons and heavy flooding in the main land. It is targeted to be
completed in 2021.
5. Electronic Platform
When community quarantine restrictions were eased, Manila Water immediately focused
on customer concerns regarding billing and payment. Furthermore, customers were provided
concessions on bill payments by way of extended payment periods and installment plans when
applicable. Equally important, the company pushed for the development and adoption of various
electronic/online platforms to promote added convenience and safety for customers in their
settlement of bills. Manila Water launched our one-stop customer portal, my.manilawater.app.
This new platform provides customers not only with a more convenient alternative to view and
pay for their water bills online, but an easier, and more effective way to interact with Manila
Water (Manila Water, 2020).
Importance : Due to the challenges the past few years, there was changes and improvements
that company applied with. In order to catered the needs and concern of the consumer, the
company uses digital platforms to continue the transaction and communication at a safe level.
The usage of electronic platform greatly affect the company, which in turn should continue to
evaluate its efficiency and effectivity to the success of the company’s operation.
6. Cost of Production and Trends
Group net income decreased 16% to P5,496 million for the period ending December 31,
2019, with business performance dampened by the impact of the MWSS penalty, voluntary one-
time Bill Waiver Program and additional expenses in relation to the water shortage in the Manila
Concession during the first half of the year. These challenges were coupled with the continued
management of the constrained raw water supply and additional expenses for potential
exposures. In the midst of the challenges faced during the year, the Manila Concession continued
to work towards operating efficiency. The Manila Concession reconfigured its distribution
network operations so it can provide reliable service to customers (Manila Water, 2019). With
increasing demand and assurance from the market and with challenges occur, still there is
innovation that the company pursue and it also add to the cost of doing production.
Importance: Manila Water should assess - What are the cost of production trends in the
economy and level of automatization. In order to maintain the stability and efficiency of
business, they should consider creating projects to enhance it, but then the company should also
consider what are the cost of production of such project and other trends in the industry that
might interest the company in.
7. Re-use Water Technology

Many right now are using water treatment. If you scan through the list of water treatment
companies in Philippines a good amount of companies are now using water treatment process. In
this system, wastewater is added to a single “batch” reactor, treated to remove undesirable
components, and then discharged. Equalization, aeration, and clarification can all be achieved
using a single batch reactor. To optimize the performance of the system, two or more batch
reactors are used in a predetermined sequence of operations. SBR systems have been
successfully used to treat both municipal and industrial wastewater. They are uniquely suited for
wastewater treatment applications characterized by low or intermittent flow conditions (Avlon
2021). ABS-CBN and GMA have also taken the same measures for their environmental and
sustainability program and more importantly, as an OPEX reduction strategy. As a result, the
water consumption of these companies are reduced by 30%-50%.

Importance: With the technology advancement and great innovations, many company who
wanted to minimize cost in their daily operations wanted to enhance available technologies. The
re-use water technology is one technological factor that impact the Manila Water Company in
terms of span of consumer. There could be lesser water consumption in the area and could affect
the revenue and growth of the company. Planning strategy to create gap and advantage. But, the
cost of such technology is also costly and require an amount of investment. Right there were
only few companies who uses it. One company can consider it a threat, but can also a way for
taking what opportunities a company can make out of it.
ECOLOGICAL/ ENVIRONMENTAL
1. Climate Change Policy
In order to adapt to and mitigate climate change, the Philippines passed the Climate
Change Act in 2009, requiring local governments to develop a local climate change action plan,
or LCCAP. However, only 160 of 1,700 LGUs had LCCAPs in place as of July 2016. Climate
change policy must address the country’s present reliance on fossil fuels to generate power and
run machinery for transportation and manufacturing, and champion sustainability and sustainable
development in the Philippines. The Philippines continues to rely largely on thermal power
generation: particularly gas-fired, oil-fired and coal-fired plants (Future Learn, 2021).
Importance: In 2007, Manila Water became the first company in the Philippines to have a
formal, Board-ratified Climate Change Policy. The company’s Climate Change Policy predates
the national climate change policy, including the Philippine Climate Change Act, the National
Framework Strategy on Climate Change and the National Climate Change Action Plan, which
were approved in July 2009, April 2010 and August 2011, respectively. To better align its
Climate Change Policy with the government’s anchor strategy of adaptation, Manila Water
revised its policy in 2013 to prioritize initiatives in enhancing climate resilience of assets and
operations rather than minimizing carbon footprint due to the country’s vulnerability to climate
change patterns. The Policy was revised in 2019 to reflect commitments on the proactive water
source development and expand climate change mitigation programs to include initiatives other
than energy efficiency and renewable energy (Manila Water, 2020). With this policy it open up
to many opportunities that does not only provide benefits to environment but to also to attain the
business sustainability.
2. Water Efficiency
Nearly 5 million people in the Philippines rely on unsafe and unsustainable water sources
and 9 million lack access to improved sanitation. Despite its growing economy, the Philippines
faces significant challenges in terms of water and sanitation access. The country is rapidly
urbanizing, and its growing cities struggle to provide new residents with adequate water and
sanitation services. In the Philippines and around the world, people are navigating the COVID-
19 pandemic, and millions are striving to endure this crisis with an added challenge. They lack
access to life’s most critical resource – water. Now more than ever access to safe water is critical
to the health of families in the Philippines. There is significant demand for household
connections to existing water infrastructure (Water.org, 2021).

Importance: Operation efficiency is key to Manila Water’s business, primarily to ensure

affordability of its services and with environmental benefits as a corollary outcome.
Opportunities to reduce negative environmental impacts and provide continuous services
includes optimizing water efficiency, reducing wastes and emissions, and educating the
consumers. These efforts further improve the company’s environmental performance (Manila
Water, 2019).
3. Watershed Protection Policy
Manila Water provides funding to implement water shed protection and management of
Ipo and La Mesa water sheds. The management of Ipo water shed is under the joint
administration of MWSS and DENR. The intensified forest protections cheme is implemented
through 24/7 foot patrolling by 170 Bantay Gubat, composed of Dumagats, the indigenous
people in the watershed, apprehension of violators, and establishment of firebreaks. MWSS and
DENR have partnered with World Wide Fund for the rehabilitation of 600 hectares. On the
otherhand, the La Mesa Water shed Reservation Multi-Sectoral Management Council and its
Technical Working Group(composed of MWSS, DENR, the Quezon City local government,
Manila Water, Maynilad, and ABS-CBN Lingkod Kapamilya Foundation Inc. - Bantay
Kalikasan) oversee the management of the La Mesa Watershed Reservation. Manila Water
rehabilitated 250 hectares including 10 kilometers along the riverbank within the La Mesa Water
shed from 2018 to 2020 equivalent to 100,000 native forest and fruit tree species and 7,000
bamboo species in support of the Annual Million Tree Challenge Project of MWSS.
Maintenance and development of the previously enriched areas are also being undertaken for a
maximum of three (3)years upon planting. For the year 2020, a total of 471 hectares planted from
2017 to 2019 are being maintained to ensure survival. Manila Water engaged the ALKFI-BK as
its interim partner in managing the protection of the La Mesa Watershed.

4. Pollution impacts
Due to water pollution in the Philippines, the country is likely to face a shortage of
water for sanitation, drinking, agriculture and industrial purposes in the next ten years. Water
conservation efforts in the Philippines by many local and international companies have protected
the water supplies for future use (Khalid, 2018).
Not to be outdone is the Toka Toka Program, a joint project being undertaken in
collaboration with Asian Development Bank and ABS-CBN Foundation that encourages proper
management of wastewater in every household in order to revive rivers and waterways.By
involving the households, they are given the opportunity to help combat pollution in the rivers
and waterways.  As stakeholders, households are encouraged to practice solid waste management
and segregation; to desludge household septic tanks every five years; and to connect to proper
sewer lines.
Importance: The changes in the atmosphere create a diverse impact on the operation of the
company. Because the Manila Water’s business rests on water, and the company remains at the
vanguard of protecting the environment that sustains this resource. The company also continues
to implement watershed management initiatives to improve raw water quality drawn from water
bodies, the results of which have amounted to over 9,000 hectares of watersheds being protected
in the Philippines (Manila Water, 2019). The pollution is already there and actions will not be
taken immediately there could be worse threat in the future as a water services company. Use
every opportunity to attain a sustainable and healthy environment through taking action what is
best and for the benefit of all.
5. Corporate Social Responsibilities Culture
Among Manila Water noble flagship CSR programs is the Tubig Para Sa Barangay
(TPSB), or Water for the Community, that aims to provide affordable water and deliver 24/7
potable water to low-income communities. Another notable Manila Water CSR project is
Lakbayan, or Water Trail, and the Greening the Supply Chain programs that showcase the entire
water cycle – starting from raw water source, to the treatment process, distribution until the used
water treatment process.  Its objective is to bring awareness to the importance of water, the
necessity of using water wisely and the proper management of used water.  Greening the supply
chain involves encouraging the company’s business partners to adopt sustainability in their
respective company policies.The program also involves provision for training and technical
assistance on cleaner production, energy efficiency, solid waste management, hazardous waste
management, environmental laws and other environmental topics (Phillipine News Agency,
2017).
Importance: Are Manila Water present CSR efforts applicable in the new market or does it needs
to have new initiative to cater to the prospective market. Changing environment, society and
economic circumstances, the sustainability of the company should also be fitted enough to
support and protect it. Continuous improvement is a great way for the company to enable attain
its goal.

6. Effects of Reduced Water Supply from El Nino

The years 2018 and 2019 were marked by a mild El Nino which caused very little rainfall
to replenish Angat, Ipo and La Mesa reservoirs. In fact, 2019 began with the water level in La
Mesa at 74.87 meters above sea level, lower by 4.44 meters compared to average end-of year
levels in the past decade. The stored water in La Mesa reservoir was rapidly being depleted and
in the first week of March 2019, the water level reached an all time low, below the bottom gate
of the intakes. As the El Niño condition continued with less than normal rainfall, Angat’s water
levels went down at a faster pace compared to previous years, attaining historical lowest levels.
NWRB decided to reduce the allocation to MWSS by 20 percent, from 46 CMS to 40 CMS,
further complicating the raw water supply problem not just in the East Zone but in the West
Zone as well. The water crisis that started in 2019 was an eye opener for Manila Water and its
stakeholders. While water supply had been repeatedly identified as a top risk, the company’s
efforts towards improving operational resilience has been inadequate to prevent the onset of an
incident which caught everybody off guard, propelling action at the national and local levels.
There is an imperative to do better.
Importance: Manila Water has to improve on comprehensive risk assessment on water supply
as a company top risk, and better processes in identifying and addressing black swans, anchored
on precautionary principle/approach. Manila Water needs to improve on better relationship
management and more aggressive coordination with government agencies to ensure full support
and co-ownership of execution plans especially on water security and water conservation. Manila
Water needs to improve on project implementation, focusing on execution risks, particularly on
technical solutions and stakeholder management.
Manila Water needs to work at strengthening inter-stakeholder operational protocols,
address institutional bottlenecks and ensure focused decision making. Manila Water needs to
strengthen crisis management protocols with extra focus on comprehensive communication plans
for all stakeholders before, during and after incidents Manila Water needs an improved
organizational design that focuses on clarity of core responsibilities, enhanced interdependencies
and shared accountabilities, and a retooling of the workforce to enhance competencies and
clarify deliverables to internal and external customers. Manila Water needs to adopt leaner but
comprehensive business processes that ensure fast decision making and better coordination.
Manila Water needs to develop and strengthen water conservation, not just water efficiency, as a
discipline and advocacy (Manila Water, 2019).
ECONOMIC
1. Demand and Supply of Power
The Philippines has a limited supply of power which affects price. The Philippines is
facing a mounting energy crisis as the Malampaya gas fields deplete, supplying 30% of Luzon`s
energy consumption, are expected to be depleted by 2024. An ever increasing population, an
Administration-mandated infrastructure boom, and some of the highest electricity costs in S.E.
Asia all combine to present formidable challenges (International Trade Administration, 2020).
Importance: Manila Water’s water utility operations consume significant quantities of energy,
especially when topography dictates the need for lifting water from lower elevations. After
manpower, electricity is the second biggest operating expense of the company, requiring Manila
Water to work in achieving a high level of energy efficiency, promote renewable energy
generation and responsibly utilize transportation to help minimize the impact of tariff and
contribute to minimizing greenhouse gas emissions. It is used not only in day to day office
operations but also in actual water distribution especially in areas that are pumped fed. Although
pumping stations already have backup generators during instances of power outages, there are
still occurrences of electricity tripping that leads to low pressure to no water in the company’s
pump fed areas. If this will thing will continue, it will lead to opportunity loss.
2. Inflation Rate
The inflation rate unexpectedly increases. The annual inflation rate in the Philippines
unexpectedly edged down to 4.8 percent in September 2021 from August's 32-month high of 4.9
percent and compared with market consensus of 5.1 percent. The headline inflation at the
national level jumped to 4.9 percent in August 2021, from 4.0 percent in July 2021. This is the
highest inflation recorded since January 2019. The latest reading stayed beyond the central
bank's target of 2 to 4 percent. On a monthly basis, consumer prices were flat after gaining 0.6
percent in August (Trading Economics, 2021).
Importance: The inflation rate can impact the demand of Manila Water products. Higher
inflation may require Manila Water to continuously increase prices in line of inflation which
could lead to lower levels brand loyalty and constant endeavors to manage costs. Cost Based
Pricing could be a bad strategy under such conditions (MBA Pro Resources, 2019). A
significant increase in inflation could increase Manila Water’s costs.
3. Wage Controls
Minimum wages across ASEAN countries are gradually increasing to match the rise in
the cost of living. Despite rising salaries, minimum wages in the majority of ASEAN countries
remain significantly lower than those in the developed economies of the world. Businesses must
take note that the minimum wages in most countries vary regionally and as per the industry and
job specifications. They may also be subject to periodic – national as well as local – regulatory
changes (Medina, 2021).

Importance: As the demand of living increases, people who work also aiming to earn more. One
of the reports in 2021 presented by Manila Water regarding their stake holder is that the
employees raise a concern regarding compensation and benefits which the company also
addresses through Annual performance-based salary adjustments. The Manila Water Company
should evaluate how to control the implementation in terms of wages among employees. There
are possibilities that the employees may demand a reasonable income that might affect
company’s performance into different areas including financial and operational.

4. Currency Exchange Rate

The peso is expected to trade within a wide range this and next year given the pandemic-
related developments, as policy responses impact on investors’ confidence on the economy in
general. The local currency is projected to average at PHP40.20 to a greenback this year, and at
PHP51 next year. These are weaker than the research firm’s earlier forecast of PHP48.10 average
for the peso this year and PHP49.00 average for 2022. The report said its forecast range for the
local currency was based on the continued uncertainty on government measures against the
coronavirus disease 2019 (Covid-19), the loose monetary policy stance, and the weakening
fundamentals, with the latter due to the pandemic.  Meanwhile, the report said that for the next
six to 24 months, the peso is “fairly valued relative to its long-term average” based on the real
effective exchange rate standpoint (Villanueva, 2021).
 Importance: The FCDA is a quarterly-reviewed tariff mechanism formulated to account for
foreign exchange losses and/or gains arising from the payment of Manila Water of foreign
currency-denominated borrowings of MWSS, as well as of Manila Water, for service expansion
and improvement of services (Manila Water, 2020). The FCDA is only a pass-through device
and has no impact on the projected net income of the company but there is no assurance that the
company will be obtain a great impact on adjustments on the tariff rates where the significant
decrease of the peso may occur. Even there is tariff reduction, there could be no assurance in the
next quarterly-reviewed.

5. Manufacturing Sector

The country’s manufacturing industry remains to be upbeat and is still an integral

contributor to the GDP. GDP From Manufacturing in Philippines increased to 882846 PHP
Million in the second quarter of 2021 from 882649 PHP Million in the first quarter of 202.
Manufacturing production in the Philippines surged 528.1% year-on-year in July 2021, after an
upwardly revised 444.6% growth in June. This was the fourth straight month of increase in
manufacturing output and the strongest pace in the 2018-based data series, amid a low base
effect from last year due to the impact of COVID-19 (Trading Economies, 2021).  The
government’s aggressive stance in luring more investments in the manufacturing sector will
make economic growth more inclusive in the years to come.

The manufacturing sector’s performance was second best in Southeast Asia during the
month, after Indonesia’s 53.5 reading. The Philippines and Indonesia were the only two
Southeast Asian economies that saw expansion in June. Weak domestic demand also pulled
down new orders, although it was a slight decline and the softest in three months. Firms reported
higher input costs last month because of costlier transportation and raw materials, forcing some
manufacturers to raise the selling prices of their products. Meanwhile, manufacturers were still
optimistic that production will improve in the year ahead on expectations of a rebound in
demand (Laforga, 2021).

Importance: Manufacturing sector performance enable the company to bring and attract more
investors to support the projects especially the with the output of coke and refined petroleum
products soaring as well as construction and infrastructure sector. It is said that If there is a
continuing stability happening from these, there is growth and could increase productivity and
opportunities that the company should take advantage with.

POLITICAL-LEGAL
1. Standards of DOH
The Department of Health (DOH) today presented the Philippine National Standards for
Drinking Water (PNSDW) of 2017 to various stakeholders. The said policy is embodied in the
DOH Administrative Order No. 10 series of 2017, which prescribes the standards and procedures
on drinking-water quality aiming to protect the public and consumer’s health. To ensure the
safety of drinking water, there are seven guidelines that must be followed. These include:
measuring the quality; water sampling and examination; other modes of distribution of drinking-
water; evaluation of results; classification of quality parameters; quality assurance/quality control
for water laboratories; and water safety plan (WSP) and quality surveillance (Department of
Health [DOH], 2017).
Consistent with its sustainability commitment of safeguarding health and safety, Manila
Water puts a premium on the potability and compliance of drinking water with standards of the
Department of Health. To help ensure the customers can trust the quality of water at the tap, the
production process uses non-renewable chemicals such as alum, blended phosphate, chlorine,
lime, polyaluminum chloride (PAC), polymer, and sodium hydroxide. In wastewater treatment,
the main treatment mode is biological but the solids management and disinfection processes use
polymer, PAC and chlorine. Chemical inputs are consistenly among the top three costs (along
with manpower and electricity) for both water supply and wastewater operations (Manila Water.
2019).
Importance: It is really important to assess and follow the standards and guidelines of
Department of Health. With the possibilities of risk in the production process, company should
continue maintain it’s premium compliance in the DOH to ensure building trust from the
consumer. Using non-renewable materials should also continue it’s effectivity.
2. Climate Change Policy
In April 2020, the Philippine central bank approved the Sustainable Finance Framework
to safeguard the financial system from evolving transition risks, and to increase the value of low-
carbon opportunities. The framework complements mandatory environmental, social and
governance reporting guidelines for publicly listed companies There is an opportunity to re-train
power sector workers and upgrade skills for future employment opportunities. Adaptation actions
are urgently needed particularly in highly vulnerable sectors such as food, agriculture, water,
marine resources, biodiversity, human health. Huge increases are seen in the energy and
industrial processes sectors, 192% and 203% respectively (1990-2017). Under current policies,
recent projections show emissions will continue to increase to 2030, rather than decline to meet
the conditional national mitigation target. The Philippines needs to implement additional policies
to reach its target (Philippine Climate Transparency, 2020) .
Importance: The company’s Climate Change Policy, while putting more emphasis on adaptation
measures and resiliency, makes a commitment to help mitigate carbon emissions primarily
through energy efficiency efforts. The 1,166,786 trees planted and nurtured in watersheds and
surrounding areas offset some carbon emissions. The total organic pollution removed in
wastewater treatment in 2019 translates to 79,085 tons of carbon dioxide equivalent of avoided
methane formation, using the latest updated factors generated by the Intergovernmental Panel on
Climate Change (Manila Water, 2019). Putting efforts on adapting actions to preserve the
environment through setting policy can help the company achieve it’s mission.
3. DENR - accredited
While wastewater pollutes the environment and causes health problems, it can be
beneficial if properly treated and reused. Treated wastewater helps clean our environment and re-
using them conserves our water supply. They also offer economic advantages. Wastewater fits
well into the primary objective of the DENR under the new administration, that is, to provide
social justice for the people. In light of reports that the Philippines is among the countries most
threatened by water scarcity
Importance: The main solid wastes of the Company are grits and screenings, and biosolids
generated from treatment facilities. The company ensures that these waste streams are fully
accounted for, disposed of in accordance with regulations, and wherever possible, find a suitable
use that extends their economic value. Biosolids from the Manila Concession and operations in
Boracay are sent to a compost processing facility in Tarlac that uses dried sludge with high
nutrient content from various industries. The resulting soil conditioner is applied to sugarcane
fields in lahar-affected (volcanic ash) areas in Central Luzon. Grits and screenings not regularly
collected by the local governments’ solid waste services are hauled by service providers and are
disposed in DENR-accredited sanitary landfills. Hazardous wastes generated by the company are
spent chemicals, used lead acid batteries, used oil, and e-wastes. The Manila Concession donates
its used oil and used-lead acid batteries to ABS-CBN Foundation’s Bantay Langis and Bantay
Baterya programs in exchange for tax credits, while other hazardous wastes are properly
transported, treated, and disposed of by DENR-accredited hazardous waste service providers. In
2019, a total of 47.85 tons of hazardous wastes were properly transported, treated, and safely
disposed (Manila Water, 2019).
4. ISO Certified
Enterprise Risk Management and Governance Framework (ISO Certified 31000:2009)
Manila Water operates in a regulated and dynamic business environment where uncertainties,
both detrimental andsuitable to the company, abound. The company is accountable to its
regulators, shareholders, employees, and customers, among others. Profitability, sustainable
development, and corporate social responsibility of the company are expected to be continuously
enhanced. To achieve its corporate objectives, Manila Water recognized the need for the active
management of risks inherent to its business, which involves the entire organization. Manila
Water continues to implement its Enterprise Risk Management (ERM) Program based on a
globally accepted approach, the ISO 31000:2009. The ERM Program is rolled-outto
ManilaWaterEnterprise,whichincludes subsidiaries and affiliates in ManilaWater Philippine
Ventures, Inc. (MWPV), and Manila Water AsiaPacific Pte.Ltd (MWAP) to ensure the
attainment of its objectives. Currently, the Enterprise Risk and Sustainability units of the
enterprises are regulated.
5. Regulatory Setup
In 2016, water and sanitation were promoted to a full-fledged goal as the Sustainable
Development Goal No. 6, to “Ensure availability and sustainable management of water and
sanitation for all.” The Philippine Development Plan 2017-2022 identifies water supply and
sanitation (WSS) as essential to "accelerate strategic infrastructure development”. Further
highlighting this in NEDA’s Philippine Water Supply and Sanitation Master Plan 2019-2030.
Finally, though these priorities are global and national, the attainment of 100% access to potable
water lies heavily on local government delivery of the devolved water service (Velasco et. al.,
2020).
Public private partnerships in the water sector is growing and yet the approach
towards its regulation is still not sufficient, thus leading into complexities and problems.
For the Metro Manila concessionaires, MWSI and MWCI, regulation of water is under
the MWSS regulatory office. Regulation of the water districts, LGU-run utilities, other
private water works and small water cooperatives should be under the NWRB but it appears that
they do not have the capability and capacity to take on this responsibility as the agency remains
to be too small (service (Velasco et. al., 2020).
.

Importance: The company should make careful legal decisions and steps to mitigate this risks. It
should also explore more options in its unregulated businesses. The company is still highly
affected by it as it is prone to even the slightest changes in its administration. The regulatory set-
up in the country is the primary reason why tariffs for the East and West concession vary with.

References:
Manila Water 2016. Manila Water 2015 Annual and Sustainability Report.
ManilaWater.EnvironmentalPerformanceIndices,ManilaWater2018IntegratedReport.
Availableathttps://reports.manilawater.com/2018/downloads/environmental-performance-
indices.pdf
Manila Water2017. Manila Water 2016 Integrated Annual and SustainabilityReport.
Manila Water.2018. Manila Water 2017 Integrated Report.
Manila Water.2019. Manila Water 2018 Ingrated Report.
Manila Water.2020. Manila Water 2019 Integrated Report.
Manila Water.2020. Social and Environmental PerformanceIndices, Manila Water 2019
Integrated Report. https://reports.manilawater.com/2019/sustainability-at-manila-water/social-
and-environmental-performance