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PBB gets Aa minus rating from local debt watcher

PHILIPPINE Business Bank (PBB) bagged a high corporate rating from a Manila-based debt watcher on the back of the bank’s core business expansion and asset quality.
The Yao-led lender secured a PRS Aa minus (corp.) rating from the Philippine Rating Services Corp. (PhilRatings), a notch below the highest corporate credit grade on the firm’s scale. This means that the bank has a “strong” capacity to meet its financial commitments compared with other Philippine corporates.
“The ‘minus’ is included to further quality the rating,” the credit rater said in a statement on Tuesday.
The issuer rating for PBB takes into account the bank’s expanding core lending business supportive of revenue growth, above satisfactory asset quality, as well as a funding portfolio leaning towards high-cost deposits.
The bank’s net interest income has consistently posted growth from 2013-2017, accounting for the bulk of total revenues, PhilRatings said.
The growth in PBB’s interest income on loans and receivables, which rose 33.4% to P3.7 billion in 2017 from a year ago, is expected to continue going forward.
“Revenues are forecast to grow much faster than historical performance, as combined increases in loan volume and rates lead to interest earnings growth,” PhilRatings said.
Meanwhile, asset quality remains “more than satisfactory,” with non-performing loans maintained below three percent and investment properties continued its decline since 2015 due to disposals.
Meanwhile, credit to individual borrowers was unconcentrated as the top 10 creditors are only equivalent to 20.1% of total loans as of end-June 2018.
Deposits have consistently expanded within the five-year period ending 2017, although time deposits comprised the bulk of PBB’s deposit liabilities, PhilRatings said.
PhilRatings noted that small and medium enterprises are the thrift bank’s target market, as it comprises nearly all of the total business establishments in the country.
However, the domestic debt watcher said small businesses in the country face “a host of growth challenges” such as the lack of access to finance as well as high collateral requirements.
PBB shares closed unchanged at P12.50 apiece on Tuesday. — KANV

How PSEi member stocks performed — December 18, 2018

Here’s a quick glance at how PSEi stocks fared on Tuesday, December 18, 2018.
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Philippine Stock Exchange’s most active stocks by value turnover — December 18, 2018
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DA sees 3.5% growth in farm output in 2019

THE Department of Agriculture (DA) set a 3.5% target for production growth next year, Agriculture Secretary Emmanuel F. Piñol said Tuesday.
Mr. Piñol said the department has been advised by economic managers to maintain 2% annual growth to keep pace with 1.7% population growth, but the department hopes to hit 2.5% growth this year and 3.5% in 2019.
The Philippine Statistics Authority (PSA) said agricultural output grew by 0.15% in the first nine months of the year.
“The economic managers asked DA to maintain a growth of 2%. It has to keep up with the population growth of 1.7%. I think 2% is doable. We are confident that we can hit it,” Mr. Piñol told reporters at a news conference in Quezon City, noting that he hopes to exceed the minimum set for the department.
A decline was seen in the crops and fisheries sub-sectors due to typhoons while gains were reported in the livestock and poultry sub-sectors. Mr. Piñol said the department has been stepping up its efforts to increase access to loans by farmers and fishermen to increase output.
Mr. Piñol said that starting next year, the Philippines will be able to replace with domestic production most of the fish it currently imports.
“Middle of this year, I called all the regional directors of BFAR and directed to rehabilitate all the existing hatcheries nationwide… We are expecting to produce two billion fingerlings by next year,” Mr. Piñol said.
He also said the rice sector is expected to post productivity gains upon implementation of the rice tariffication bill which was approved in the Senate. He said the DA is embarking on a so-called “Southern Wing” program to develop Samar, Leyte, Bohol, Palawan, Mindoro, and Central Mindanao specifically the Autonomous Region in Muslim Mindanao.
“Samar has a lot of resources. It has a lot of fertile soil and big river systems. Over the next two years we will be able to develop 100,000 hectares in Samar alone, at (a yield of) 6 metric tons (MT) per hectare per harvest,” Mr. Piñol said.
“We are focusing on Lanao del Sur. We have sent 20 tractors to Lanao del Sur to cultivate rice fields,” he added.
Mr. Piñol added that upon implementation of the rice tariffication law, the National Food Authority (NFA) may no longer sell rice at P27 per kilo.
“We would like to be clearly guided who will supply DSWD (Department of Social Welfare and Development) with rice in case of calamities… We used to supply DSWD using our imported rice. Now that we’re not allowed to import, the role of NFA has been largely relegated to buffer stocking,” Mr. Piñol said.
“We would like to know what will happen to the government subsidized rice in the market which is sold at P27. Obviously if we procure locally, we cannot sell at 27 because we will be losing a lot of money. This early, the recommendation of the technical working group (TWG) of the NFA is that if we buy locally, we would have to sell at P36 per kilo so that we will not lose money,” Mr. Piñol added.
He said that options include imposing a suggested retail price (SRP) or subsidies by the national government.
“Even without the regulatory powers of NFA, we still have the Price Act where the DA can play the lead role,” Mr. Piñol said.
He said, however, that rice production will be improved through the Rice Competitiveness Enhancement Fund (RCEF), a feature of the tariffication bill. More efficient rice farmers are expected to ultimately decrease the price of rice.
“We will be giving out good quality seed, and production will increase while cost of production will be lowered,” Mr. Piñol said.
The DA will need to come up with Implementing Rules and Regulations (IRR) within 45 days after the bill is signed. — Reicelene Joy N. Ignacio

Electronics exports rise 5.2% in first 10 months to $31.71 billion

THE value of electronics exports in the first 10 months of the year rose 5.20% to $31.71 billion, with the industry maintaining its place as the Philippines’ biggest source of merchandise exports.
According to the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI), the 10-month exports reflected gains by six of the nine product categories.
Of the nine electronic product categories, six posted gains during the period, led by consumer electronics which rose 91.08% to $514.87 million.
Other categories that posted gains during the period were office equipment (34.02%); automotive electronics (23.07%), controls and instrumentation (13.24%); electronic data processing (8.19%); and components/devices or semiconductors (3.61%).
Posting declines were the communication/radar, medical/industrial instrumentation and telecommunications categories, which fell 17.76%, 13.24% and 10.42% respectively.
The industry accounted for 53.17% of the $6.11 billion of total Philippine exports in October.
Electronics shipments during the month rose 0.62% from a year earlier.
However, electronics exports declined 2.76% compared with September, with five of the nine product categories posting declines.
Hong Kong was the biggest market for Philippine electronics in October, accounting for 20.29% of exports. This was followed by the United States (14.26%) and China (13.40%).
The growth rate in the 10 months lags the 6% SEIPI target for export revenue growth for 2018.
The group has expressed confidence it will hit this year’s goal, citing positive spillover effects deriving from the trade tensions between China and the United States, two of its top markets.
According to the Philippine Statistics Authority, exports of electronics products in 2017 rose 11% to $32.7 billion, accounting for slightly more than half of total merchandise export sales.
Under its five-year road map, SEIPI hopes to boost electronics exports to $40 billion in 2025 and $50 billion in 2030. — Janina C. Lim

Phase 1 of CAVITEx enhancements open

THE FIRST PHASE of upgrades to the Manila-Cavite Expressway (CAVITEx) is now open to the public, with greater usage expected to help reduce road congestion in Parañaque City.
The Department of Public Works and Highways (DPWH) and Metro Pacific Tollways Corp. (MPTC) led the inauguration of the road developments on Tuesday, together with MPTC unit and CAVITEx private concession holder Cavitex Infrastructure Corp. (CIC).
“The project is intended to solve the congestion and improve the travel experience of our customers in CAVITEx,” MPTC President Rodrigo E. Franco said during the program.
MPTC, through CIC, is investing a total of P1.1 billion for the enhancement work on CAVITEx. Phase 1 takes up P800 million of the budget, which covers the road widening and the construction of the Marina flyover leading to D. Macapagal Avenue. The remaining P300 million is for Phase 2 of the enhancements, which are targeted to begin next year.
“The enhancement project will have its Phase 2, which we hope to start by next year. It will involve the widening of bridges namely the Parañaque bridge, the Wawa bridge and the Las Piñas bridge. At the end of all these enhancements, we anticipate we will have 14 kilometers of widened and more direct expressway in CAVITEx,” Mr. Franco added.
DPWH Secretary Mark A. Villar said Phase 2 is targeted to finish by the fourth quarter of 2019, helping improve the thoroughfare which is used by an average of 140,000 vehicles daily.
The improvements at CAVITEx is part of the Metro Pacific group’s “big goals” for its southern expressways, Mr. Franco said, which include the 7.7-kilometer C5 South Link Expressway and the 45-kilometer Cavite-Laguna Expressway.
MPTC is the tollways unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

SMC named original proponent for TPLEx extension

THE Department of Public Works and Highways (DPWH) said it granted original proponent status (OPS) to San Miguel Corp. (SMC) following its unsolicited proposal to extend the Tarlac-Pangasinan-La Union Expressway (TPLEx).
DPWH Secretary Mark A. Villar told reporters in a chance interview on Tuesday the department approved the company’s proposal to add almost 60 kilometers to the toll road up to San Juan, La Union.
“At this point it’s the original proponent for the TPLEx extension,” he said.
DPWH Public-Private Partnership (PPP) Director Alex G. Bote then confirmed in a text message the OPS was given to SMC first week of December.
SMC submitted its P23.948-billion unsolicited proposal to the DPWH in February to extend TPLEx from Rosario, La Union to San Juan, La Union.
The 59.4-kilometer extension includes three segments: 18 kilometers from Rosario to Tubao, 23 kilometers from Tubao to Naguilian, and 18.4 kilometers from Naguilian to San Juan.
SMC is also in charge of the original 89.31-kilometer alignment of the TPLEx, which runs from Tarlac City to Rosario, La Union.
The awarding of OPS for the TPLEx extension is the second unsolicited proposal so recognized by the DPWH under the Duterte administration.
In July, MPCALA Holdings, Inc. was granted OPS for its Cavite-Tagaytay-Batangas Expressway (CTBEx) project. — Denise A. Valdez

ADB warns of barriers to waste-to-energy investment

THE DEVELOPMENT of waste-to-energy (WTE) facilities in the Philippines through public-private partnerships (PPPs) may be plagued by uncertainty due to an inadequate legal framework, the Asian Development Bank (ADB) said.
“Municipal solid waste (MSW) processing and disposal remains a challenge in Bangladesh, India, and the Philippines. The uptake of WTE as a proven MSW treatment solution has not been realized in Bangladesh and the Philippines,” the ADB said in a working paper.
According to the ADB, the three countries are among the most populated, due to rapid urbanization. They are also the top MSW generators in Asia and in the world, and remain underdeveloped in terms of MSW processing and disposal. They are also net energy importers, and have not realized 100% electrification.
“Despite a well-established PPP regulatory framework and a mature PPP market for municipal infrastructure and public services, potential business opportunities in WTE in the three countries have not attracted private sector investors and financial institutions due to numerous barriers, and thus remain largely unexplored,” the ADB said.
“Ambiguity and inconsistency that leads to an open interpretation of WTE’s role needs to be avoided. The ban on incineration in the Philippines is an example,” it added.
This is because the Clean Air Act, Ecological Solid Waste Management Act, and the Renewable Energy Act bans municipal solid waste incineration can be interpreted in various ways.
“It could mean either a totally unconditional ban on incineration regardless of technology specifications and emission standards, or a conditional ban that applies only to incineration that emits poisonous and toxic fumes exceeding the stipulated limits,” the ADB said.
The PPP Center is currently bidding out the P22-billion Quezon City Waste-to-Energy facility project that is expected to be implemented by early 2019. The facility will have the capacity to convert up to 3,000 metric tons a day from Quezon City’s municipal waste to 42 megawatts, which can power around 60,000 to 90,000 homes.
The PPP Center earlier described WTEs as the “next wave” of PPPs, due to strong local government and investor interest. Cebu is also considering setting up its own WTE facilities.
According to the working paper, the Philippines’ 45.2 million urban population produces 30,000 tons of municipal solid waste per day, mostly from Metro Manila. This compares with China’s 520,000 tons per day, 707,000 tons in the US, 188,500 tons in India, and 61,400 tons in Bangladesh.
It noted that the Philippines only collects 40-85% of the generated waste, meaning the 15-60% is improperly disposed of.
The Philippines has one WTE facility, the Payatas Controlled Waste Disposal Facility in Quezon City, which opened in 2008. Electricity generated from the facility is sold to the Manila Electric Company to supply nearby communities. — Elijah Joseph C. Tubayan

Duterte sees Mindanao economy boosted by barter

PRESIDENT Rodrigo R. Duterte said Monday that the revival of the barter system in Mindanao is expected to boost its economy and improve peace and security in the area.
The President made the remarks during the 40th birthday celebration of boxer and Senator Emmanuel D. Pacquiao in General Santos City Monday night.
“I have ordered also the reopening of the barter trade for a start and maybe if we can agree, a similar setup,” adding that the issue is complex because it touches on aspects of the Bangsamoro Basic Law, the President said.
Before the General Santos event, Mr. Duterte was in Jolo, Sulu to lead the activation of the 11th Infantry Division there.
Mr. Duterte also deployed at least 840 personnel and aircraft from the Philippine Air Force (PAF) to Jolo.
On the revival of barter trade, the President reiterated that the issue is “hard to navigate” at this time but once he sees it implemented he will evaluate which elements need to be added.
The President said people can expect “some movement” in Mindanao because his administration is “in a hurry” to achieve peace in the area. — Arjay L. Balinbin

PCSO questioned by congress on consulting deal for NOLS

HOUSE COMMITTEES on Tuesday proposed that the Philippine Charity Sweepstakes Office (PCSO) employ local service providers to help operate the Nationwide Online Lottery System (NOLS).
“The thrust of these two committees is this — we want you to localize and not allow the precious peso to fly out of the country every year,” Minority Leader Danilo E. Suarez of the 3rd district of Quezon, chair of the Committee on Public Accounts said.
The committee, in a joint meeting with the House Committee on Games and Amusement, discussed the P10.9-billion NOLS project and the P46-billion allocation for consulting.
PCSO Assistant General Manager Lauro A. Patiag, a lawyer, said the consultant will be hired to assist the agency in the procurement of NOLS.
“The consultant will assist the PCSO in conducting the procurement for NOLS,” Mr. Patiag told the committees.
PCSO Chairman Anselmo Simeon P. Pinili said the decision to hire a consultant is in compliance with a circular issued by the Commission on Audit (CoA).
He also said that to address this, the PCSO is planning to establish an “academy” that will accredit consultants.
“The problem is, no one is accrediting an expert that will validate the NOLS,” Mr. Pinili said.
“We are planning on having an academy, so that if CoA will ask,” he said, adding that at present, the PCSO cannot address CoA’s concerns because “no one can answer because they only have experience, but no credentials.” — Charmaine A. Tadalan

China’s Xi pledges ‘unswerving’ reforms, but on own terms

BEIJING — Chinese President Xi Jinping called on Tuesday for the unswerving implementation of reforms on Beijing’s terms, saying no one could boss it around, but offered no new measures in a speech marking 40 years of market liberalization.
In remarks lasting nearly an hour-and-a-half, Mr. Xi called for support for the state economy and development of the private sector, and said China would expand efforts at opening up and ensure the implementation of major reforms.
China’s substantial support of its sprawling state sector is a point of contention with the United States.
Mr. Xi was speaking amid mounting pressure to accelerate reforms and improve market access for foreign companies as a trade war with the United States weighs on the economy.
But he said China had to make its own decisions.
“There is no text book that can provide a golden rule, and there is no instructor who can boss around the Chinese people,” Mr. Xi said at Beijing’s Great Hall of the People.
Mr. Xi was speaking on the day China has marked as the 40th anniversary of the start of late leader Deng Xiaoping’s campaign of “reform and opening up”, which led to explosive industrial growth that made China’s economy the world’s second-largest.
“We must, unswervingly, reinforce the development of the state economy while, unswervingly, encouraging, supporting and guiding the development of the non-state economy,” he said.
Mr. Xi reaffirmed the ruling Communist Party’s leadership in all aspects of society and said reforms should be in line with the overall goal of improving the socialist system with Chinese characteristics.
“Opening brings progress while closure leads to backwardness,” Mr. Xi said.
“Every step of reform and opening up is not easy. In future, we will be inevitably faced with all sorts of risks and challenges, and even unimaginable tempestuous storms,” said Mr. Xi, stressing the role of the Communist Party.
But his remarks failed to excite investors. The Shanghai Composite index ended down 0.8 %, while the blue-chip CSI300 index lost 1 % , tracking broadly lower Asian shares.
“Despite promises of the importance of the speech, very little new was announced, particularly given its similarity to parts of Mr. Xi’s speech at the Politburo meeting a few days prior,” said Jonas Short, head of the Beijing office of brokerage Everbright Sun Hung Kai.
Mr. Short said attention would now focus on the Central Economic Work Conference expected later this week for clues on policy direction.
The trade war with the United States has spurred some entrepreneurs, government advisers and think-tanks to call for faster reforms and the freeing up of a private sector stifled by state controls and struggling to gain access to credit.
Mr. Xi and U.S. President Donald Trump agreed early this month to a 90-day truce in the trade dispute, which halted the threatened escalation of punitive tariffs while the two sides negotiate.
William Zarit, chairman of the American Chamber of Commerce in China, said there would be plenty of other opportunities for China to offer greater substance for a foreign audience.
“We know that China doesn’t want a trade war, so we are optimistic that real opening up can still take place before the 90-day window closes on March 1,” Mr. Zarit said in a statement.
In his speech, Mr. Xi enumerated the accomplishments of China’s development since it moved away from a planned economy, when basic goods were rationed and often scarce.
“Grain coupons, cloth coupons, meat coupons, fish coupons, oil coupons, tofu coupons, food ticket books, product coupons and other documents people once could not be without have now been consigned to the museum of history,” he said.
“The torments of hunger, lack of food and clothing, and the hardships which have plagued our people for thousands of years have generally gone and won’t come back.”
Numerous luminaries in attendance were cited for their contributions to economic reforms including the heads of online giants Alibaba, Tencent Holdings and Baidu and carmaker Geely Automobile Holdings, a nod to the role of the private sector.
Mr. Xi’s emphasis on the need for “top-level design” suggested he is not willing to significantly reduce the state’s role in the economy, Beijing-based political commentator Zhang Lifan said, noting that the trade war had already hurt the economy.
“He is talking about the need for a strong government, big and powerful state-owned enterprises and large-scale investment. It seems his thinking on this has not changed,” Mr. Zhang said. — Reuters

Road Board abolition might need the court

THE SENATE is all for the abolition of the Road Board and the President is ready to sign the law abolishing the controversial agency, but a copy of the bill approved by both chambers of Congress never made it to Malacañang.
Presidential Spokesperson Salvador S. Panelo, in a press briefing on Tuesday morning, Dec. 18, said President Rodrigo R. Duterte will sign the bill into law as soon as it reaches his table.
“As soon as it is given to him,” Mr. Panelo said when asked if the President will sign the bill and how soon.
“We want that the fund be returned to the Treasury, and then let Congress appropriate again for specific purpose,” he added.
The Senate passed Senate Bill 1620, which seeks the abolition of the Road Board, last February. The House of Representatives approved the counterpart House Bill 7436 last May.
The Senate adopted the House version last Sept. 12, but later on the same day, the House of Representatives rescinded the bill’s approval.
Senate President Vicente C. Sotto III has vowed to file another bill removing the agency in the 18th Congress if the House remains adamant on retaining it.
“When July 1 comes, we will file a new abolition bill if they don’t want to believe that it is abolished. Let’s abolish it again. In July 1, we will pass a bill,” Mr. Sotto told reporters on Tuesday.
Mr. Sotto also said that if the House will stand by its earlier move of rescinding its approval, the matter should be brought before the judiciary.
“If they will still push for it, perhaps somebody should bring it to the proper venue, if courts are needed, in order to resolve this. Let it be,” he said.
In the meantime, the senate leader said that he intends to immediately transmit a copy of the supposedly jointly approved bill to Malacañang.
Senate Minority Leader Franklin M. Drilon, in a press release last Monday, also said that the “bill should be sent immediately to the President’s desk for his action. We should let the President decide. It is a political decision.”
The Road Board, under Republic Act No. 8794, is tasked to manage the funds collected from the Motor Vehicle User’s Charge (MVUC), which is used for road maintenance and drainage, installation of traffic lights and road safety devices, and for air pollution control.
However, the agency has been hounded by corruption allegations.
The Commission on Audit (CoA), in its 2019 report, pointed out that the agency failed to efficiently implement the projects identified for the MVUC collections from 2013 to 2016.
Under House Bill No. 7436, which the Senate adopted, the MVUC collections will be remitted directly to the National Treasury and will be appropriated for projects of the Department of Public Works and Highways (DPWH), Department of Environment and Natural Resources (DENR), and the Department of Transportation (DoTr).
Meanwhile, House Minority Leader Danilo E. Suarez of the 3rd district of Quezon denied corruption allegations against the House of Representatives for withdrawing its decision in the abolition of the Road Board.
“Congressman cannot dip their fingers into the Road Board,” Mr. Suarez said in a briefing on Tuesday.
“If there is any allegation of corruption in the Road Board, look at the composition of the Road Board,” he said, noting that the Board does not include any member from Congress.
Mr. Suarez made the statement amid allegations against congressmen since they rescinded their approval under the leadership of Speaker Gloria Macapagal-Arroyo.
Mr. Suarez said the House is unlikely to undo its withdrawal of the approval because there is no time to legislate another abolition bill.
“I don’t think we have the material time to legislate the abolition of the Board,” he said. — Camille A. Aguinaldo, Arjay L. Balinbin and Charmaine A. Tadalan

Jesuit-run Ateneo presidents slam House draft federal charter

THE PASSAGE of the draft federal constitution at the House of Representatives “hijacked” the democratic and transparent process, said the presidents of the five Jesuit-run Ateneo universities in the country.
“We call on our legislators to stop fast-tracking the charter change process, and to take the proper steps to consult all sectors in order to re-establish credibility and trust in the process,” the school heads said in a joint statement issued on Monday and posted on the Ateneo official social media accounts.
The statement was signed by Jesuit priests Karel S. San Juan (Ateneo de Zamboanga), Joel E. Tabora (Ateneo de Davao), Jose Ramon T. Villarin (Ateneo de Manila), Roberto Exequiel N. Rivera (Ateneo de Naga), and Roberto C. Yap (Xavier University-Ateneo de Cagayan).
They cited three “troubling” key provisions of Resolution of Both Houses No. 15, specifically the omission of provisions against political dynasties, term limits for members of Congress, and the entire article on “Social Justice and Human Rights.”
Both the anti-dynasty provision and term limits are enshrined in the 1987 Constitution, and their removal, according to the Ateneo presidents, threatens to “concentrate powers in the hands of very few political clans.”
Further, Ateneo also warned against the deletion of Article 13 of the 1987 Constitution, which carries the government’s commitment to protect public interest in terms of labor, urban land reform and housing, agrarian and natural resources reform, among others.
“These features of RBH 15 alone, combined with the unreasonable pace and non-inclusive process, are likely to exacerbate further the trust deficit that presently characterizes the federalism discussions,” the Jesuit priests said.
They appealed to the administration to hold a genuine dialogue across the country to allow Filipinos to decide on the revision of the Constitution.
RBH No. 15 was approved by a majority of House solons last Dec. 12.
Another charter draft, dubbed the Bayanihan Federalism, was previously prepared by the Consultative Committee (ConCom) led by retired Chief Justice Reynato S. Puno. The ConCom was ordered established by President Rodrigo R. Duterte. — Charmaine A. Tadalan