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BoI investments top P1 trillion as of Oct.

THE BOARD of Investments (BoI) has breached its P1-trillion 2019 investment target as of October, ranking Trade department (DTI) officials announced on Wednesday.

Trade Secretary Ramon M. Lopez, who is chairman of the BoI board, said at a press conference that the biggest investment approved by BoI in October was that of the Dennis Uy-led Dito Telecommunity Corp., the country’s third major telecommunication service provider. The China Telecommunications Corp.-backed Filipino telco said in November that it targets to corner a third of the Philippine market in two to three years.

Investments in energy, telecommunications and manufacturing fueled the increase in BoI-approved investments to some P1.1 trillion, said Mr. Lopez.

Last year, total investments approved by BoI reached P914.96 billion, accounting for the biggest chunk (57.4%) of the P1.084 trillion worth of investments approved by all seven major investment promotion agencies tracked by the Philippine Statistics Authority (besides BoI, they are the Authority of the Freeport Area of Bataan, BoI-Autonomous Region in Muslim Mindanao, Clark Development Corp., Cagayan Economic Zone Authority, Philippine Economic Zone Authority and Subic Bay Metropolitan Authority).

DTI Undersecretary Ceferino S. Rodolfo, BoI managing head, said in the same briefing that he looks forward to bills designed to attract particularly more foreign direct investments (FDI).

Committed FDIs approved by BoI grew nearly fivefold to P68.871 billion last semester from P14.49 billion a year ago, accounting for more than a fifth of the agency’s P304.433-billion total haul in the same six months.

In the same press conference, Senator Ma. Imelda Josefa R. Marcos, who heads the Senate Economic Affairs committee, zeroed in on proposed amendments to Republic Act No. 7042, or the Foreign Investment Act of 1991.

Among others, the proposal reduced the minimum domestic employment requirement for small- and medium-sized domestic enterprises with paid-in capital of at least $100,000 to 15 from 50 direct hires. The provision is also present in the version of the House of Representatives. “I guess the most contentious provision would be the reduction of the capital requirement to a mere $100,000 and the reduction also of the minimum number of employees from 50 to a mere 15,” Ms. Marcos said. “Malaking bagay ’yan kasi maraming makakapag-invest (That’s a big deal because a lot more can invest). This will probably impact on our tourist infrastructure and the digital space where the startups are really very small.”

And while she said this means more small businesses will face foreign competition, “studies indicate that (those that will be affected are) a mere 11% (of small and medium scale enterprises),” hence, most “will not be directly threatened and, perhaps, will level up in fact.”

Mr. Lopez said BoI’s target for 2020 has been set at P1.5 trillion. — JPI

PHL lags in global education survey

FILIPINO STUDENTS fared poorly in a survey that ranks 79 participating economies according to their performance in reading, science and math.

Latest results of the Program for International Student Assessment (PISA) conducted by the Organization for Economic Cooperation and Development (OECD) showed the Philippines having the lowest mean score in reading comprehension at 340 points, below the survey average of 487 points.

Similarly, the Philippines came out second-lowest in science and math as it posted mean scores of 357 and 353, respectively, compared to the survey average of 489 points in both subjects.

In a statement, the Department of Education (DepEd) said that the PISA results, along with the results from the locally conducted National Achievement Test, reflect the “urgency” to address gaps in improving the quality of basic education in the country.

DepEd also noted its Sulong Edukalidad initiative, wherein it will implement “aggressive reforms” in the review and updating of the K-to-12 program, the improvement of learning facilities, the upskilling and reskilling of teachers and school heads, as well as the engagement of stakeholders for support and collaboration.

In a statement, the Philippine Business for Education (PBEd) said that the latest PISA result is an “opportunity for all sectors to come together to take a hard look at the quality of Philippine education, and to develop a collective action plan to improve the standards for teaching and learning.”

“We fully support the Philippines’ continued participation in international assessments, as these offer reliable and comparative metrics on how we can prepare our children to have a chance to succeed in an increasingly competitive world,” PBEd said.

In another statement, the Makati Business Club said: “We will answer its (PBEd’s) call for the private sector, civil society, and academia to work with the government on transformative solutions.”

PISA, which is administered worldwide to 15-year-old students, is designed to evaluate “the quality, equity and efficiency of school systems.”

This was the first time the Philippines joined the PISA since it was initiated in 2000. — Marissa Mae M. Ramos

PISA 2018 results

PISA 2018 results

FILIPINO STUDENTS fared poorly in a survey that ranks 79 participating economies according to their performance in reading, science and math. Read the full story.

PISA 2018 results

MPIC, Manila Water, ABS-CBN reel from Duterte’s rant

By Victor V. Saulon
Sub-Editor

PRESIDENT Rodrigo R. Duterte’s threat against Metro Manila’s water concessionaires sent shares of their owners stumbling at the stock market on Wednesday, along with those of the biggest local entertainment network that was also at the receiving end of the Philippine leader’s ire a day earlier.

“I would say it has to be a major factor. Investors are staying away from the stock for now as there is a lot of uncertainty regarding the concession of the two utility firms,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.

On Tuesday, Mr. Duterte railed against water concessionaires Manila Water Co., Inc. and Maynilad Water Services, Inc. for allegedly onerous provisions in their contracts with the government.

He also vowed to make sure that ABS-CBN Corp.’s franchise will not be renewed when it expires at the end of March next year.

Metro Pacific Investments Corp. (MPIC), the controlling shareholder of west zone concessionaire Maynilad, was yesterday’s second top market loser as it gave up 10.71% of it share price. DMCI Holdings, Inc., which also has a stake in the water firm, fell by 3.85%. Shares in Ayala-led Manila Water fell by 4.79% while those of ABS-CBN slipped by 2.64%.

Mr. Duterte’s threat came after Manila Water on Friday disclosed to the stock market that the Permanent Court of Arbitration, an internationally recognized inter-governmental organization, ruled in the company’s favor in a case against the Philippine government. The tribunal ruled that Manila Water has a right to be paid for losses it suffered because of the Philippines breach of its obligation. It ordered the government to indemnify Manila Water the amount of P7.39 billion, among others.

“President Duterte gave a strong-worded speech last night (Tuesday) on going after the water companies about a lopsided contract with the government,” said Christopher Mangun, head of research at AAA Southeast Equities, Inc.

“Investors feel that the government can pressure these companies into submission, which could result in more losses for these companies.”

Japhet Louis O. Tantiango, research associate at Philstocks Financial, Inc. said investors reacted negatively “worrying that the water concessionaires’ operations could face hurdles from the current administration moving forward.”

CHARGES
On Wednesday, Manila Water said in a statement that its senior officials have met with Finance Secretary Carlos G. Dominguez III to seek guidance before the ruling of the arbitral tribunal became public.

“When Manila Water received the information about the award, our chairman together with a few other senior officers of the company sought guidance and met with Secretary Dominguez before it became public,” the company said. “We informed him that we are willing to come up with a mutually acceptable manner of implementation of the arbitral award considering that this case was filed due to a violation incurred not during this administration. Secretary Dominguez acknowledged our proposal to work very closely with his office to find a mutually acceptable scheme to address the award.”

Manila Water also said that it had diligently discharged its obligations as concessionaire of state-led Metropolitan Waterworks and Sewerage System, spending more than P166 billion to improve water and wastewater services.

“We have installed over 5,500 kilometers of pipes and built 2 new filter plants, 32 new reservoirs, 113 pumping and booster stations, 40 additional wastewater treatment facilities and five times more sewer network capacity to improve the MWSS facilities in the East Zone,” it added.

Malacañang issued a statement on Wednesday on contracts with the water firms, saying that “the President has… directed the filing of the appropriate criminal, civil and administrative charges against all those involved in the said agreements, including the latter’s owners and legal counsels, as well as agents and lawyers of the government for economic sabotage.”

“The use and delivery of water is impressed with public interest hence it is but a privilege and therefore must not be abused. Our water concessionaires in Metro Manila, Rizal and Cavite, however, have not only abused the arrangement of delivering and distributing the state-owned water to citizens but have treated the same as a commodity and a money making venture, instead of considering it as a public service,” Malacañang said through Salvador S. Panelo, chief presidential legal counsel and presidential spokesman.

He said a review of the agreements with the Manila Water and Maynilad show that they are contrary to public policy and public interest, “the same being onerous and disadvantageous to the people, relative the terms or periods, government non-interference, as well as concessionaire indemnification for losses.”

He said Mr. Duterte directed the Department of Justice and the Office of the Solicitor General to draft and prepare new contracts favorable to the state.

CLOCK TICKS FOR ABS-CBN
On ABS-CBN, Mr. Limlingan said lawmakers’ Dec. 21, 2019- Jan. 19, 2020 break “shortens their window” to act on bills renewing the franchise.

There are seven proposals to renew the legislative franchise of ABS-CBN, namely: House Bills 676, 3064, 3521, 3713, 3947, 4305 and 5608. All bills now await hearings at the Committee on Legislative Franchises.

Rep. Abraham N. Tolentino of Cavite’s 8th District, senior vice-chairman of the House of Representatives Committee on Legislative Franchises, said the committee will schedule public hearings on the bills. “Meron ’yan (There will be hearings on ABS-CBN’s renewal of franchise) definitely,” Mr. Tolentino said in an interview.

House Speaker Alan Peter S. Cayetano told reporters that there will be “more than enough time to tackle it in January (and) February.”

“Mare-renew kaya sila by that time? Depende sa kalalabasan ng hearing (Will the franchise be renewed by March 30, 2020? It depends on the hearings). I cannot preempt the committee or the issues that will be taken” Mr. Cayetano said.

On Mr. Duterte’s opposition to the franchise renewal, Mr. Cayetano said: “As you know he’s the president at meron siyang stand sa mga issues so nirerespeto natin ’yan (and he had a stand on issues, so we respect that).”

“Having said that, nirerespeto rin ng ating pangulo ’yung proseso, so hintayin na lang natin ’yung proseso na ’yun (the President respects the legislative process, so let us just let it take its course). But even the president admits that there has to be a fair process.” — with Genshen L. Espedido

PSE proposes more conditions for firm’s voluntary delisting

THE Philippine Stock Exchange, Inc. (PSE) on Wednesday released proposed amendments to its voluntary delisting rules, as it seeks to protect minority shareholders.

“PSE revisited the voluntary delisting rules, following receipt of complaints from the market that minority stockholders are essentially forced to accept a company’s decision to delist and the tender offer price offered by the listed company or delisting proponent, under the threat of being left with shares that have no secondary market,” the bourse operator said in a consultation paper on the proposed amendments posted on its website.

The proposed amendments covered the required approvals for delisting, and the tender offer price.

The PSE is looking increase the participation of minority stockholders in the delisting decision-making process of a company.

For instance, the PSE proposed three more conditions for voluntary delisting — it must be approved by all independent directors of the company; approved by stockholders owning at least 75% of the total outstanding and listed shares of the company (either through a meeting or a written agreement); and the number of votes cast against delisting should not be more than 10% of the total outstanding and listed shares.

The PSE also proposed to set a floor price to ensure the tender offer price will not be lower than the highest of the following:

1. highest value based on the fairness opinion or valuation report prepared by an independent valuation provider;

2. highest closing price in the six months immediately preceding the date of the notice to stockholders of the proposed delisting; and

3. the volume weighted average price (VWAP) for one year immediately preceding the date of the notice of stockholders of the proposed delisting.

These proposed amendments were benchmarked to eight other exchanges, namely the Australian Securities Exchange, Bursa Malaysia, Bombay Stock Exchange (India), Stock Exchange of Hong Kong, Indonesia Stock Exchange, Stock Exchange of Thailand, Singapore Exchange, and Taiwan Stock Exchange.

In its analysis, PSE discovered some notable differences in its delisting rules compared to other exchanges.

For instance, the other exchanges require the approval of stockholders for delisting depending on how much they own. At the PSE, only approval from the board of directors is needed, while shareholders are merely given notice.

Other exchanges also have guidelines in determining the tender offer price, while the PSE allows the delisting firm to set any price with the submission of a fairness opinion to prove that set price is fair “from the financial point of view of the valuation provider”.

The PSE’s review of its delisting rules comes in the wake of the delisting of Travellers International Hotel Group, Inc. this year and Melco Resorts & Entertainment (Philippines) Corp. last year. Analysts had noted then that some small shareholders felt disenfranchised in these firms’ exit, as the tender offer price was significantly lower than expected.

The PSE is seeking comments on the proposed amendments to voluntary delisting rules until Dec. 10. — Vincent Mariel P. Galang

DoE asks Meralco how it will address rising demand

MANILA ELECTRIC Co. is facing increasing power demand within its franchise area. — BW FILE PHOTO

THE Department of Energy (DoE) has asked Manila Electric Co. (Meralco) on how the country’s largest electricity distribution company plans to cope the rise in power demand within its franchise area, the secretary said.

“I have written Meralco. I’m asking them on what are their measures to make sure they can cope up with the increase in demand, and that there is an assurance of supply,” DoE Secretary Alfonso G. Cusi told reporters.

“I asked them how will they cover for the increased demand in their franchise area,” he said, adding that the measures should also cover the coming years.

Mr. Cusi said he also asked electric cooperatives as well as distribution utilities how they will address the increasing demand.

He said the rising power demand could mean “good and bad.”

“Good, because it means the economy is improving, more activities. Bad, dahil kailangan paspasan ang pag-build ng (they have to work to build up) capacity, and it’s not that easy,” he said.

Asked whether he would approve the terms of reference (TOR) for the competitive bidding of Meralco’s energy requirements for the coming years, he said: “We have given our recommended TOR which is we would like to promote open, transparent, competitive selection process (CSP).”

“I hope they will listen to our recommendation,” he added.

Mr. Cusi renewed his call for private companies to build more merchant plants, or those without a forged power supply agreement (PSA) and sell their energy output in the spot market.

“We want to promote early construction of power plants, you know that. We have been promoting for merchant plants,” he said.

“We want those constructed ahead as merchants to be able to participate in the CSP. We don’t like to limit it (CSP) only to the power plants to be built,” he added. — Victor V. Saulon

Green buildings represent $24.7-trillion investment opportunity — IFC report

By Cathy Rose A. Garcia, Associate Editor

GREEN BUILDINGS offer a $24.7-trillion investment opportunity in emerging markets, including the Philippines, according to a report by the International Finance Corp. (IFC).

“The estimated $24.7-trillion investment potential in green buildings between 2018 and 2030 in emerging market cities is due to the sharp increase in building construction expected over the next few decades and the opportunity to ensure these are built green. This amount reflects the investment opportunity created by fully achieving explicit and implicit urban green buildings-related policies and targets set by local and national governments in emerging markets until 2030,” IFC said in its report titled “Green Buildings: A Finance and Policy Blueprint for Emerging Markets.”

For East Asia Pacific region, IFC said the investment potential in green buildings is estimated at $16 trillion.

The biggest investment opportunity in emerging markets is in residential buildings, estimated at $15.7 trillion until 2030, followed by commercial buildings at $9 trillion.

“The investment opportunity in the green residential sector is driven by the growing demand for housing, governments’ concerted efforts to meet housing demand for its citizens, and underinvestment in energy efficiency measures in the sector,” the report said.

IFC noted that residential buildings currently account for nearly 75% of energy use by buildings, but get just half of energy efficiency investment.

Demand for commercial green buildings is expected to continue to rise, fueled by increased competition for tenants and stricter regulations.

According to the IFC, green buildings are those: “certified as green under one of the internationally recognized certification standards or an approved national standard; and at least 20% more energy efficient than a baseline building without energy-efficient design.” The buildings should also be able to report impact metrics, such as energy and water savings.

“Studies and evidence across several markets suggest that to build green could range from savings of 0.5-12% in additional costs. Green buildings are more efficient than traditional buildings and can lower operating costs, increase revenues, and reduce exposure to the physical and transition risks presented by climate change. These factors can increase the valuation of green buildings, making them stronger credit assets and better collateral,” IFC said.

Developers can also command higher sale premiums up to 31% more for green buildings, IFC said. Green buildings also have higher occupancy rates and can generate higher rental income, while operational costs are up to 37% lower than traditional buildings.

However, IFC cited several challenges to the growth of green construction, such as low technical capacity and difficulty in implementing consistent standards and requirements.

But despite this, the sister organization of the World Bank said established financing models and readily available, cost-efficient building technology will help drive the growth of the green construction sector.

“With rapid urbanization, a growing population, and rising income, Asia needs a more sustainable building solution to address the region’s pressing infrastructure requirements and climate change challenges. This report is timely and shows how green buildings can play a pivotal role in spurring low-carbon economic growth,” Nena Stoiljkovic, vice-president for Asia and the Pacific at IFC, said.

“In this context, governments — national, subnational, and local — can create the right conditions for the growth of the green buildings market and provide clarity and policy certainty to the private sector through regulations.”

In the Philippines, Arthaland Corp. this year became the first company to get an EDGE (Excellence in Design for Greater Efficiencies) Zero Carbon certification for its flagship project in Bonifacio Global City, Taguig. This made the ArthaLand Century Pacific Tower (ACPT) triple certified, as it also has LEED Platinum and BERDE 5-star certifications.

EDGE is IFC’s own green building certification system for emerging markets. Zero Carbon status is given to projects that have “offset 100% of their operational emissions and have reached at least 40% energy savings onsite compared to a base case building.”

IFC, a member of the World Bank Group, has invested $5.5 billion in green buildings in nearly a decade.

Perfection in a salmon sashimi

FROM SUSHI delivered by train, we now have sushi crafted by hand.

From the same people who brought train-delivered Genki Sushi to the Philippines, we now have Sen-ryo, a more upscale sushi restaurant located in The Podium in Ortigas. It shares its origins in Japan with its sister, Genki Sushi, having been founded by the same person, Fumio Saito (also behind the idea for conveyor-belt sushi). Sen-ryo has a presence in Hong Kong, Shanghai, and, of course, its home city, Tokyo, and now Manila.

“Our partners really loved Sen-ryo in Hong Kong and Japan. They really wanted to bring it here. We do think the Philippine market is ready for premium Japanese food. They expect so much quality,” said Mia Teng, Marketing Officer for Baby Spice Food Corp. Sen-ryo is operated in the Philippines on a franchise basis by the same people behind, as mentioned, Genki Sushi, but also Mango Tree. Under this same umbrella are homegrown brands Cucina Peruvia and Kureji.

Everyone has a definite idea of what sushi is, and what it is not. Traditionally, it is a roll of rice with seafood in it, once used as a way of preserving it. Of course, cultural dialogue between the East and West has brought forth many different kinds, one being the Cheese Shrimp Cutlet Roll that BusinessWorld tasted during a dinner at Sen-ryo late last month. Filling and substantial, but not exactly what we were looking for. Cultural exchanges, however, hit a home run with a dish we favored, the Sen-ryo salad with leafy greens and a wasabi dressing — and mounds of seafood tucked under the vegetables. Raw slices of sashimi, plump slices of scallop, and many other delicious invertebrates found their way in there. That was quite something, with the lightness of the actual taste providing a perfect blend with the actual weight of the salad.

Speaking of sashimi, they served a Salmon Belly Sashimi, which was perfect. It was firm, never limp; therefore proud of its freshness. The slices were thin enough to still be called sashimi, but were of enough weight to leave one not constantly running after a taste. Despite its substance, it was light and silky and gave the sensation of melting in your mouth, staying whole only at your wish. For this alone, I would come back.

Well, there’s another reason: the Ohmi. Ohmi are slices of wagyu, a cousin to better-known Kobe and Matsusaka, but apparently, Ohmi is a much more senior cousin, its origins dating back to the 1500s. You cook it on an attractive ceramic contraption heated underneath by a lump of (what I assume to be) paraffin or some other fuel, and you cook the slices in a tiny dollop of butter, along with a few mushrooms. The secret is never overcooking the beef so you can taste the cattle in all its glory — and don’t worry, the restaurant knows that. The fuel that heats up the plate is carefully measured and runs out at the time when the slices are cooked to perfection. BusinessWorld was having too much fun to actually measure this time, but all the same, the result was tasty, and, yes, it had a perfect texture.

The recipes have been prepared by Japanese chefs straight from Japan, who are currently training the local chefs.

“It’s authentic, [but] modern Japanese,” said Ms. Teng, which might explain the salads and the cheese in the menu.

There are, however, loads, and I mean loads, of Japanese restaurants which can lay claim to some level of superiority, but why should one choose to go here?

“Everyone says they are premium,” said Ms. Teng. “It’s a very easy thing to say. But our items are specially picked just for Sen-ryo. We have our own suppliers and communications from Japan. We ship directly from there.” — Joseph L. Garcia

Angkas working on more payment options for users

MOTORCYCLE ride-hailing platform Angkas (DBDOYC, Inc.) said it is currently in talks with local banks to provide more payment options to its users.

“Yes. When it comes to financial institutions, we’re weighing our options right now,” Angkas Chief Executive Officer Angeline Tham told reporters in Makati City on Wednesday when asked if the company is in talks with banks on adding more payment options in its platform.

She said Angkas is looking to add credit cards as one of the payment options on the motorcycle taxi app.

The three-year old Angkas is gaining popularity as commuters seek a faster and cheaper way of getting around Metro Manila.

However, Ms. Tham said the company has not made a profit, noting “that’s the price you pay for keeping safety standards.”

Asked when she expects the business to be profitable, she said: “We’re working on it right now. This industry, it has become more of an advocacy. It would take a lot of time. We want to do it. Profitability is in the horizon, hopefully more sooner than later.”

The six-month pilot run of motorcycle taxis in Metro Manila and Metro Cebu is set to end on Dec. 26.

George I. Royeca, Angkas head of regulatory and public affairs, told reporters separately that “the findings are positive.”

“I’m happy to say that this is something that we are able to maintain. We are working with DoTr (Department of Transportation) to maintain our service,” he added.

“Ayaw namin pangunahan. We are just hoping for positive comments from their end. Service for the bayan,” he added.

The pilot test of motorcycle taxis in Metro Manila and Metro Cebu is being conducted upon the recommendation of the DoTr’s technical working group (TWG), which set guidelines on fares, speed limit and safety gear.

The Land Transportation and Traffic Code, or Republic Act No. 4136, does not recognize single motorcycles to operate for public transport. The DoTr formed the TWG in December last year to address recommendations to include the two-wheeled vehicle as a legal transportation mode. — Arjay L. Balinbin

Raising the alarm: the dangers of e-cigarettes

By Susan Claire Agbayani

CRÈME BRÛLÉE, custard, honey, Yakult, banana, mango, M&M, Gummy Bears, cappuccino, mint, root beer float, Coke, Sprite. Name it, they have it. From a survey of online sites alone, to date, there are over 15,500 flavorings to choose from among e-cigarettes the world over.

This was reported by Dr. Ulysses Dorotheo, Executive Director of Southeast Asia Tobacco Control Alliance (SEATCA), in his presentation to media practitioners from all over the Philippines at the forum Nagbabagang Kuwento: Reporting on E-Cigarettes and Novel Products, organized by the Probe Media Foundation, Inc. and held at the Novotel hotel last month.

Apart from this, the device usually referred to as “vape” is hip, trendy, and one can do tricks with it. Popular ABS-CBN show Pilipinas Got Talent even featured a contestant who had “vaping” as a “talent” (puffing, making circles and shapes withthe vapor, changing colors and styling bubbles) projecting “vaping and e-cigarettes (as) hip and stylish,” noted Benedict Nisperos, a legal consultant of HealthJustice Philippines, a non-government organization. As of press time, the YouTube video of the performance had garnered 38.7 million views.

MARKETING CIGARETTES, E-CIGS
Dr. Dorotheo said that e-cigarettes are being marketed the way conventional cigarettes were marketed decades ago: associating them with attractiveness, success, fun, or sex appeal, like cigarette companies used the image of a rugged man astride a horse, or a macho man surrounded by many women in a disco.

The difference is the use of social influencers to help push the products today. Media organization Reuters got wind of this, and exposed it, forcing Phillip Morris to suspend its social influencer campaign.

Although already banned in 43 countries — including very recently, India — e-cigarettes have definitely been targeted to the youth as a trendy product, with e-cig brands going around “campuses sponsoring sports events, prom nights, and introducing these products to these kids’ events,” noted Mr. Nisperos.

Until recently there were 107 pro-smoking apps available on smartphones. But just a few weeks ago, Apple removed the vaping apps according to CNBC, thanks to the current spate of lung illness in the US which has been linked to vaping. (https://www.cnbc.com/2019/11/15/apple-removes-vaping-related-apps-from-app-store-amid-lung-illness-crisis.html)

“[A] survey of teenagers in the US, (found out that) 12-13 % thought that they were just vaping flavours,” said Dr. Dorotheo. “Hindi nila alam na may nicotine (they did not know that it had nicotine). By the time they found out, they were already addicted to it. That’s a big problem. Time magazine covered it — how [the most popular e-cigarette brand] hooked kids — and ignited a public health crisis. (It is the) new American addiction,” he said. (https://www.nbcnews.com/health/health-news/more-teens-are-vaping-many-think-it-s-nicotine-free-n948251)

In an informal survey, Dr. Riz Gonzalez, who regularly conducts in public for a especially among young people, said she found out that what lures young people to “vaping” are, in this order, flavorings, media, and friends.

Dr. Gonzalez is the chair of the Tobacco Control Advocacy Group of the Philippine Pediatric Society. Fresh from a trip to the US where she attended the 2019 American Academy of Pediatrics (AAP) National Conference (she is a member of the Section of Tobacco Control of AAP), she was one of the resource speakers at the Probe forum. Her segment was titled “Are E-cigarettes Really SafeR?”

Dr. Gonzalez is one of those who try to spread awareness regarding e-cigarettes so that this “impending epidemic among children will not happen like what is happening in the United States.”

According to updated figures from the Centers for Disease and Control Prevention as of Nov. 20, 2,290 cases of e-cigarette or vape-associated lung injury (EVALI) have been reported in 49 states — including 47 deaths in 25 states — in the United States. (https://www.cdc.gov/tobacco/basic_information/e-cigarettes/severe-lung-disease.html?fbclid=IwAR3X4Hvhaa30MiqDZGIFmweDTh0u91ge_ALuqQrLuKijYzNYwt82fxypct8)

AEROSOL, NOT VAPOR
The CDC website notes that electronic cigarettes (or e-cigarettes) “are also called vapes, e-hookahs, vape pens, tank systems, mods, and electronic nicotine delivery systems (ENDS)” and that using an e-cigarette product is commonly called “vaping.” The site added that e-cigarettes work “by heating a liquid to produce an aerosol that users inhale into their lungs.

And this aerosol does not contain what users think it does. “E-cigarettes create an aerosol by using a battery to heat the e-liquid. Users inhale this aerosol into their lungs. When you heat it — the humectants, flavoring, nicotine, interact with nickel, lead, and tin from the coils adding up metallic nano-particles from this device,” Dr. Gonzalez said.

She added that “We should never call it a vapor; that’s actually a misnomer, because vapor is plain water produced after heating; aerosol is the proper term.”

Mr. Gonzalez said that second-hand aerosol (SHA) “might be less [dangerous] than that of second-hand smoke (SHS), but it still contains those particles which can impair lung function and development in the young.”

“No amount of scrubbing” will remove third-hand aerosol (THA) said Dr. Gonzalez. “Chemicals stick to bathroom tiles being hygroscopic or water loving.” She added that it also reacts upon exposure to air, and when oxidized turns into potential carcinogen (nitric oxide).

THE EVOLUTION OF THE E-CIG
An American national named Helbert Gilbert designed the first e-cigarette way back in 1963. It never prospered though.

Forty years later, a 52-year-old pharmacist from Beijing, China, Hon Lik, invented the modern e-cigarette. It had to “mimic the stick, mimic the cloud, and this hand-to-mouth habit,” said Dr. Gonzalez. The e-cigarette was finally launched to the public in 2006.

While only a “teenager” by today’s standards (at 13 years old), e-cigarettes have evolved: from the first-generation cig-alike in 2007, to the tank system with more e-liquid in 2009, and from mods that looked like cell phones (and could explode, by the way) in 2012, to the pod system of today. The nicotine content of one pod is equivalent to at least one pack of cigarettes, although flavors like crème brûlée could contain nicotine equal two packs.

The most popular e-cigarette brand in the US is Juul (after “jewel”) which has captured 70% of the market (thus, the new verb, “juuling”). It launched in the Philippines in June this year and its local competitor is Relx.

This e-cig has a “discreet aerosol (not a large cloud), doesn’t smell like cigarettes, is easy to hide because it resembles a flash drive, has assorted flavours that come in pre-packaged pods, and could be charged like a USB stick,” Dr. Dorotheo said.

How the pods look should raise alarm bells among parents. They are so small they could be concealed as USBs, under sleeves, in smart watches, and in “strings” of hoodies. That is according to Dr. Dorotheo’s presentation (Google “Vape wearables”). And it doesn’t help at all that pods are sometimes displayed prominently without warnings in convenience stores — right beside the candies — and the age of the buyer is not thoroughly examined by store crew.

“Consuming tobacco products is like falling from the 20th floor of a building, while using e-cigs is like falling from the 10th floor. Either way, it harms you,” Ira Camarao, Project Manager of the Strategy, Economics and Results Group of the Department of Finance (DOF), said during the forum, as stated by the WHO representative in one of the Senate hearings last September.

BANNING CIGARETTES AND VAPES
It is also alarming that in the Philippines, one in five users of e-cigarettes or vapes is below the age of 20, according to the Food and Nutrition and Research Institute (FNRI).

Dr. Riz Gonzalez says that adolescence is a time of “risk taking, when you want something pleasurable, you’re mighty in the family, [you] don’t want to listen to parents, but listen more to your peers.” Dr. Gonzalez is the chair of the Tobacco Control Advocacy Group of the Philippine Pediatric Society.

Because adolescents are the way they are, they are particularly susceptible to the e-liquids or e-juices, which contain humectants, flavorings and nicotine. Flavors play a role in nicotine addiction by young people, whose brain chemistry is malleable and still maturing, said Dr. Gonzalez.

She added, “The developing brain matures by age 25, not 18, based on recent findings.”

Nicotine, she said, “is the number three (most) highly addictive substance in the world. If you can manipulate the humectants (propylene glycol and vegetable glycerin) you can also manipulate the dose of nicotine from zero to 36 mg. The normal (nicotine content in) cigarette is 20 milligrams [per pack]. See? So para kang nagpunta ng café (it is as if you went to a café where) you can ask for more cream and sugar.”

Exposure to nicotine during adolescence has “long-standing effects in the brain, including cell damage that leads to both immediate and persistent behavior changes,” said Dr. Gonzalez. “Nicotine from smoking/vaping changes the brain chemistry. Nicotine uses the dopamine reward pathway.”

So when young people start smoking cigarettes or e-cigarettes when they’re 18 (or any age under 25), it’s harder for them to quit because the brain has been rewired for nicotine addiction.

These effects, she added, “are not found with nicotine exposure to the adult, supporting the idea that the adolescent brain is uniquely susceptible to nicotine addiction.”

Dr. Gonzalez mentioned that “Like a CEO, the pre-frontal cortex is responsible for executive function. It controls your mood, your attention span, your behavior, cognition, impulse, emotions and higher learning.” It also has “jurisdiction” over organization, planning, self-control, and judgment.”

The long-term effects of nicotine exposure during adolescence include diminished cognitive function as adults, reduced attention span, enhanced mood alterations such as anxiety or depression.

Among the other health risks for vapers are: lung cancer, cardiovascular diseases, and myocardial infarction.

While decades ago, smokers had problems or died in their 50s or 60s, she noted that the patients are getting “younger and younger.”

“Dapat, ang emphysema pang 60-years old lang (emphysema should just be a problem for 60 year olds). For chronic vapers, emphysematous change could happen in the young because of that heated aerosol that they are taking in. We will not be surprised if in two to five years, we’ll be seeing children vapers having a heart attack because of all this exposure,” said Dr. Gonzalez.

And while pneumonia used to be the No. 1 killer in the country, a host of patterns of lung injury have been reported with vaping-associated pulmonary illness (VAPI) such as acute eosinophilic pneumonia, lipoid pneumonia, acute lung injury, acute and subacute hypersensitivity pneumonitis, diffused alveolar haemorrhage, and respiratory bronchiolitis-associated pneumonitis, among others.

In the local scene, “The Department of Health (DOH), in line with the WHO’s ICD-10 reporting of diseases, announced last Oct. 17 to report EVALI (e-cigarette or vape-associated lung injuries) as a reportable disease,” said Dr. Dorotheo.

He added that they are now receiving reports from doctors who are saying that some of their vaper-patients have coughs, and respiratory and heart problems. And doctors are starting to see “it” (meaning the diseases associated with vaping). It won’t take long till the Philippines will come up with its own figures.

Benedict Nisperos, a legal consultant of the NGO HealthJustice Philippines, said, “We are very interested in the US (because what is happening there) can happen in the Philippines. At this juncture, we can work together and propose policies that would prevent this epidemic from happening in the Philippines.”

“We have young people being fed this misinformation, that e-cigarettes are OK; they’re not bad at all. It’s an alternative [to cigarettes]; it’s safer,” said Dr. Dorotheo. “Given what we already know about its health effects, it’s as if we’re dooming our next generation to being sick, disabled, and dying early. In the case of the US, those who are being hospitalized and (are) dying early are in their teens, 30s, 40s, very productive; and the oldest in their 60s or 70s.”

TDF yields up on bets of rising inflation

YIELDS ON term deposits went up amid fewer bids, with the market factoring in an uptick in inflation after two months of slowdown.

Tenders for the central bank’s term deposit facility (TDF) amounted to P175.528 billion, going beyond the P170 billion placed on the auction block, data from the Bangko Sentral ng Pilipinas (BSP) showed.

However, this week’s tenders fell compared to the P180.328 billion in bids the BSP received last week for the P180 billion on offer.

Banks’ tenders for the seven-day term deposits amounted to P56.572 billion, lower than the P60 billion the BSP auctioned off and also falling from the P62.442 billion in bids seen on Nov. 27 for the P70 billion on offer.

Yields for the tenor were seen from 4.125% to 4.45%, a slimmer range compared to last week’s 4.07-4.45% band. This resulted in an average rate of 4.2834%, an increase of 3.26 basis points (bps) from last week’s 4.2508%.

Meanwhile, the 14-day papers attracted tenders worth P67.388 billion, surpassing the P60 billion on offer and also beating the P53.975 billion in tenders seen last week against the P50 billion on the auction block.

Lenders asked for returns ranging from 4.235% to 4.4188%, a narrower band compared to the 4.14-4.4566% range last week. The average rate for the two-week tenor was at 4.331%, down 1.14 bps from the 4.3424% logged on Nov. 27.

For the 29-day deposits, tenders amounted to P51.568 billion, slightly higher than the P50 billion offered by the BSP but failing to beat the P63.911 billion in tenders garnered last week for the P60 billion auctioned off by the central bank.

Rates for the one-month papers ranged from 3.5% to 4.4948%, a wider band versus the previous auction’s 4.19-4.5%. This caused the one-month paper’s rate to average at 4.3522%, higher by 1.98 bps from last week’s 4.3324%.

The TDF is the BSP’s main tool to shore up excess liquidity in the financial system and to better guide market interest rates.

Economists attributed the TDF auction results to the market expectations of an increase in inflation in November.

“The lower tender this week compared to last week’s auction may have indicated the market’s anticipation of higher price levels and that inflation’s base effect from last year is expected to recede. The market may now be looking at longer positions as inflation normalizes further,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

This was echoed by Rizal Commercial Banking Corp. chief economist Michael L. Ricafort.

“The latest BSP TDF auction yields were mostly higher by two to three basis points week on week, largely amid expectations of some pick up in inflation rate. Local interest rate benchmarks are fundamentally correlated with the direction/trend in local inflation rate,” Mr. Ricafort said.

BusinessWorld’s poll of 16 economists last week yielded a median estimate of 1.2% for the November inflation. This is at the lower end of the 0.9-1.7% forecast range given by the BSP Department of Economic Research last week.

In October, inflation slowed to 0.8% from the three-year low of 0.9% logged in September. Both figures came on the back of base effects from last year’s 6.7% overall increase in commodity prices in September and October 2018.

The Philippine Statistics Authority will report November inflation data today. — Luz Wendy T. Noble

SMFB’s planned P15-B bonds gets top rating

SAN MIGUEL Food and Beverage, Inc.’s (SMFB) planned fixed-rate bonds worth up to P15 billion received the top credit rating from Philippine Rating Services Corp. (PhilRatings).

In a statement, PhilRatings said it assigned the bonds its highest issue credit rating of PRS Aaa with a stable outlook.

A PRS Aaa credit rating means these obligations are “of the highest quality with minimal credit risk.” A stable outlook means it is likely to be maintained within the next 12 months.

SMFB will be using the proceeds to redeem P15-billion worth of its Series 2 Preferred Shares in March 2020.

In assigning the credit rating, PhilRatings said it considered the company’s “strong brand equity and leading market position of SMFB’s core businesses.” It also cited the positive outlook for the Philippine economy, which will boost the food and beverage industry.

PhilRatings also noted SMFB’s “conservative financial position considering the capital intensive nature of its businesses; and its strong profitability performance and healthy cash flow generation.”

San Miguel Corp. (SMC) had consolidated its food and beverage businesses under SMFB in 2018. This includes San Miguel Pure Foods Company, Inc., San Miguel Brewery Inc. (SMB) and Ginebra San Miguel, Inc. (GSMI).

“As an SMC-owned company, SMFB realizes synergies from its relationship with the broader San Miguel Group. The size and scale of the broader San Miguel Group likewise provide the Company with significant leverage and bargaining power with suppliers,” PhilRatings said.

“Furthermore, the consolidation of SMC’s food and beverage business under SMFB resulted in economies of scale in infrastructure and unlocked greater shareholder value by creating a sizeable consumer vertical market under one company,” it added.

For the first nine months of 2019, SMFB reported its net income attributable to the parent dropped 8% to P12.65 billion, while consolidated sales jumped 10% to P226.36 billion.

In a regulatory filing, the company said it saw higher sales volume across all segments, but this was weighed down by the rising cost of raw materials and increased operating expenses due to expansion activities.

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