SEA Games organizers say contingency plans in place in the face of incoming typhoon

November 29, 2019 | 4:21 pm

By Michael Angelo S. Murillo, Senior Reporter

With the entry in the country of typhoon “Tisoy” coinciding with the early goings of the 30^th Southeast Asian Games, organizers have said contingency plans are already in place to assure that the staging of the biennial regional sporting meet will have as little disruption as possible.

Tisoy, which has an international name of “Kammuyri,” is set to enter the Philippine area of responsibility on Saturday just in time for the opening ceremonies of the SEA Games at the Philippine Arena in Bocaue, Bulacan.

The typhoon is expected to hit the Bicol Region, Metro Manila, Central Luzon, Calabarzon, Mindoro, Marinduque, Romblon and Samar from Tuesday to Wednesday. Dec. 3 to 4.

Metro Manila, Central Luzon and Calabarzon are hosting a number of the 56 sports involving 530 events slated for the 2019 SEA Games.

In a media briefing on Friday, Philippine Southeast Asian Games Organizing Committee (PHISGOC) chief operating officer Ramon Suzara shared that competition managers have already put up contingency plans in preparation for the incoming typhoon.

“All competition managers for all sports have prepared contingency plans even without a typhoon. So everything is in place especially for the outdoor sports,” assured Mr. Suzara.

“We have been monitoring the typhoon and hopefully the Games would not be affected hard. But we are ready for this storm,” he added.

Among the moves being readied is the possible transfer of events indoors of outdoor events and changing the format of the events but in accordance with the guidelines of international federations of the concerned sports.

Isko Moreno, MultiSys and Bayad Center Gears Up to Make Manila a Smart City

November 29, 2019 | 11:00 am

Manila City Mayor Francisco “Isko Moreno” Domagoso seals a tripartite agreement with Multisys Technologies Corporation (MultiSys) and CIS Bayad Center, Inc. (Bayad Center) to provide payment automation for its residents.

Part of Isko Moreno’s ongoing efforts to implement the Ease Of Doing Business in the City of Manila are to expedite its processes via online portals with e-payment services such as real property taxes and business permits and soon: motorized operator’s permit, civil registry, public market, public hospitals, and disbursement of senior citizen benefits.

Through MultiSys’ Smart City and Smart Government platform including Bayad Center’s bills payment, the City of Manila will be launching projects to simplify transactions for various bills payments and other local government services.

“Using technology in governance gives ease in doing business , convenience to our constituents and will limit human discretion and naturally will eradicate corruption”, Mayor Isko Moreno explains.

In addition to this, the PLDT-backed leading software solutions company, MultiSys, will be behind the development of Go Manila! App, a one-stop mobile application to provide more means to ease the lifestyle of every Manilenos.

The CEO and founder of MultiSys, David Almirol Jr. said, “With our Smart City and Smart Government platforms, MultiSys is committed to contribute technology advancements to local government units, expedite their processes, centralize their collections, and automate their systems”. Pointing out one of many ways how the Go Manila! App can lift the burdens off of its current residents.

KPMG R.G. Manabat & Co.: A reliable partner in adapting to digitization

November 29, 2019 | 9:10 am

By Adrian Paul B. Conoza, Special Features Writer

Digital innovation has been changing a lot of processes, from how people perform daily routines to how businesses execute tasks. Just like other industries, the audit profession is following the fast pace of digitization as Sharon G. Dayoan, chairman and chief executive officer of KPMG R.G. Manabat & Co., observed.

For Ms. Dayoan, auditors have started taking advantage of the latest technological advances such as data & analytics (D&A), blockchain, artificial intelligence (AI), cognitive technologies, and robotics to expand the capacities of auditing firms and so improve the services they offer.

“For instance, the adoption of smart automation and AI in the field of accounting led to overall improvement in the accounting process which allowed accountants and audit professionals to simplify and lighten their workload by automating time-consuming tasks while ensuring accurate results,” Ms. Dayoan told BusinessWorld in an e-mail.

Audit professionals, she added, are also utilizing the capabilities of data analytics software to help with their audit processes by identifying outliers and analyzing these for audit risk factors.

With such advancements digitization has provided to make auditing faster, easier, and more reliable, KPMG has followed suit by making investments in both technology and workforce development to ensure that they have the right makeup and skills, thus equipped to provide its clients with the best services.

A very important investment the professional services firm has undertaken is the KPMG Clara, an integrated smart audit platform that brings out its Audit D&A capabilities, new technologies, client collaboration functionality, and audit workflow.

Poised to be “the beginning of a new era for audit,” Ms. Dayoan said that this new offering by KPMG provides a new and richer experience to both clients and audit professionals.

“KPMG Clara allows our people to work smarter, driving enhanced audit quality through expanded analytics capabilities,” she explained. “For clients, KPMG Clara becomes their digital connection to KPMG, providing one coherent, interconnected ecosystem. It provides a collaborative and interactive environment in which two-way and interactive communication between clients and KPMG audit teams is extremely enhanced.”

This smart audit platform, the senior officer added, gives clients greater visibility into KPMG’s audit as well as access to deeper levels of information.

Moreover, KPMG Clara is set to be placed on Microsoft Azure, a comprehensive cloud-based platform, as announced by KPMG and Microsoft. This makes the firm the first among the Big Four professional services firms to conduct external financial statement audits using Microsoft’s computing platform.

“KPMG Clara brings more automation to the audit, and reduces the burden on clients around data delivery,” Ms. Dayoan continued. “Through KPMG Clara, the judgment and professional skepticism of KPMG’s audit professionals are now further empowered by intelligent automation and innovative analytics capabilities. Along with higher audit quality, clients will receive greater and more actionable insights as the audit progresses. We are able to have more focused and targeted conversations with clients about specific issues or exceptions — deepening the value of the audit you receive.”

While shifting to digitization brings great benefits, issues and challenges may still be encountered during the process. Adapting to changes in the business process is in itself a challenge, while the threat of technological risks might catch firms off guard.

KPMG, nonetheless, does not overlook these imminent conflicts and so are prepared to assist clients. “We help our clients embrace a culture of change by helping them to better understand and manage technology, cyber and information risks,” Ms. Dayoan said. “We also help align our clients’ capabilities with their strategic and tactical objectives to give them the means to meet their current and future needs relating to governance, risk, and control over IT resources.”

As it recognizes digitization as a driving force in the transformation of businesses, KPMG is geared up to better help its clients make the most out of it.

“Our industry solutions in financial services, consumer markets, technology, media and telecommunications, among others, can help our clients achieve the optimal value from their digital transformation process,” Ms. Dayoan said.

She added, “KPMG is gearing towards innovation in the audit process by applying digital technology in our businesses and audit processes which include audit of new technologies like robots and artificial machines. Through this, we are able to keep up the quality of the audit and the requirement of clients to receive value for money.”

Ramon F. Garcia & Company, CPAs: Offering unmatched expertise and integrity

November 29, 2019 | 9:05 am

By Mark Louis F. Ferrolino, Special Features Writer

Ramon F. Garcia & Company, CPAs (RFGCO) has come a long way since its establishment in 1981. From a firm founded by Ramon F. Garcia as a solo practice, RFGCO flourished into one of the country’s most prominent accountancy and consultancy firms of today. Although it already enjoys high credibility and reputation, it continues to challenge itself to be better, providing the best results for its clients across the business community.

As a member of distinguished global accounting network Crowe Global, RFGCO holds a worldwide reputation in quality and service. It has an unmatched expertise in various areas of accounting and finance services, namely audit, tax, advisory, risk, and outsource.

“Our firm’s mission is to help and assist our clients’ business growth by applying Christian values and principles. We firmly believe that since God is an all-knowing God, the principles He laid down for the businesses to adopt will always work and will eventually result in sustainable growth. As such, we try to influence our clients by suggesting or recommending management principles that are biblically based without directly saying that such principles came from the bible,” RFGCO’s Managing Partner Ramon F. Garcia told BusinessWorld in an e-mail.

For almost four decades now, RFGCO has become instrumental to the success of many of its clients by contributing to the attainment of their business goals, maintaining the good relationship with their partners, and widening their market reach.

“In general, entities are concerned about their financial status and whether they are religiously complying with the various tax and other governmental compliances. Top management relies heavily on financial reports in their decision-making process. Thus, financial statements certified by an independent accountant becomes more credible and reliable and gives them more assurance that their basis of decision is accurate,” Mr. Garcia said.

“The higher the accuracy of the basis (facts and figures), the higher the probability that certain decisions are correct. Correct decisions result in consistent and sustainable growth,” he added, noting that this could not only avoid the high cost of non-compliance but also the penalties associated with erroneous payments as well as the costs of overpayments.

In many of its non-statutory engagements, RFGCO assists management in reviewing the results of clients’ operations and financial position. With the help of its skilled professional staff, it was able to pinpoint areas of improvements for its clients, such as what expenses can be reduced in relation to their operations and which products to be promoted given the product characteristics and contribution margin.

In most cases, RFGCO’s clients who listen to its suggestions showed tremendous improvements in their bottom line and product profitability. These clients were also able to save on unnecessary taxes and tax exposures through careful tax planning and proper review of this operations in relation to the applicable tax laws.

In terms of corporate rehabilitation, RFGCO also boasts a proven track record, wherein companies are able to turn around and be rehabilitated.

“Guided by the principle of integrity, professionalism, and excellence, we make the ordinary extraordinary in meeting clients’ expectations and in the submission of our deliverables,” Mr. Garcia said.

Meanwhile, RFGCO ensures that its professional staff remains updated in most — if not all — of the latest trends in accounting, audit, taxation, information technology, and digital economy, among others. Through various technical trainings and annual development programs, the knowledge, skills, and camaraderie of RFGCO’s staff are always being enhanced.

“In this way, we are able to share with our clients the various current developments which makes aware of those developments provided in order to develop competent and excellent professional staff and this gives them options to apply or consider these. This makes them dynamic and flexible in adjusting to the political, economic, business, and technological environment,” Mr. Garcia explained.

To further enhance the delivery of its services to its clients, RFGCO continues to fuel innovation within its operations. The company combines its industry specialization with data science, software developers, research, and marketing expertise to develop innovative technology that help clients streamline and effectively address complex processes.

“With the digital economy at hand, it is imperative that professional organization like ours be at the forefront to better deliver quality service to our clients,” Mr. Garcia said.

On top of these, RFGCO also conducts surveys among its clients to find out what needs to improve in its services. It has been actively attending to the needs of its clients not only locally but also internationally.

Japan Desk Relaunch

The firm has just relaunched its Japan Desk with a new Japanese Accounting Consultancy Firm partner, AGS Consulting Co., Ltd., to facilitate cross-border investments and deals making between Japanese and local companies.

How technological disruption is changing the field of auditing

November 29, 2019 | 9:00 am

By Bjorn Biel M. Beltran, Special Features Writer

For many businesses, technology in the digital age is the great leveler. Across all industries, disruptors from digital natives and tech-savvy entrepreneurs are changing the landscape of how business is done. Many companies have found incredible growth seizing opportunities that have come up in the commotion, and the auditing industry in the Philippines is no different.

As the Philippine development story continues to unfold, the rising tide brought in by investments has created a dynamic environment for local auditors. Sharon G. Dayoan, chairman and chief executive officer of KPMG R.G. Manabat & Co., told BusinessWorld in an e-mail that with digital innovation speeding ahead, the prospects of the entire industry looks bright.

“Technology plays a vital role in today’s audit profession. Like other countries in Asia, the auditing industry in the Philippines is constantly innovating to stay competitive and better serve the capital markets and the society,” Ms. Dayoan said.

She added, “Technology has constantly been transforming the way we do business. Any successful transformation starts with a clear strategy grounded in an understanding of emerging trends. At KPMG, we track these changes and analyze their potential impact — both to help our clients and guide our own innovation investment strategy. Among the trends that shape the industry are digital transformation, talent and work force development, customer experience, Data and Analytics (D&A), Robotics Process Automation (RPA), Artificial Intelligence (AI) and the productivity landscape, Blockchain, Fifth Generation (5G) and Quantum computing.”

The potentials of data

Technology has expanded the frontiers of what is possible. Cognitive technology, otherwise known as AI, for instance, can scan through vast stores of data and perform digital analysis of this data in a way that is humanly impossible. AI uses algorithms that enable software to absorb relevant information, reason, and come up with conclusion that is useable by humans.

Data, as they say, is the new gold, and with the proper implementation of cognitive technology and the process known as machine learning, computers can course correct and try new strategies as they encounter obstacles or changes in variables in their work.

In the field of auditing, where data is abundant, computers can expedite processes and find the best courses of action more effectively and more efficiently than any human can. This would allow auditors to use technology to conduct analyses of structured and unstructured data from non-traditional sources such as social media or the Internet in ways not possible just a few years ago.

“Auditors can then use this analysis to deliver high-quality audits that dig deeper into the data and reveal more about a company, its risks, its financial reporting controls and its operating environment,” Brian Foster, KPMG’s U.S. Emerging Audit Solutions Leader, said in a Forbes Insights/KPMG report “Audit 2025” published in 2018.

“The bottom line is that cognitive technology will empower and enable our professionals to make key judgments and deliver high-quality audits in a world of exploding data and ubiquitous information, and provide our auditors with access to richer, more detailed audit evidence and valuable insight that we can use to differentiate our service proposition,” Mr. Foster said.

In addition to streamlining and restructuring financial data, technology is also providing new ways to make informed predictions about the future. Predictive analytics involves using advanced data analysis techniques to make predictions — based on probabilities — about the future and may involve advanced technologies such as artificial intelligence and machine learning to refine those predictions.

According to the report, in the context of high-quality audit, auditors can employ digital tools to extract information from an organization’s systems, and then use predictive analytics for the purpose of identifying patterns that either align or don’t align with anticipated outcomes and trends. Such a strategy is especially useful in gaining deeper insight into a client’s business and the financial risks it takes during the course of a year.

More specifically, client data in combination with locally-gathered industry or market data can provide auditors a deeper and more robust understanding of the state of the business and any risks. For instance, external auditors working with a client can use predictive analytics to assess whether the client’s financial or other data conform to the expected norms for comparable historical data from both within the company as well as from companies in comparable circumstances. As this capability comes into wider use, auditors will have a powerful tool to grasp the accuracy of reported information and promote audit quality — with comparative data as a benchmark.

“Advances in technology and an explosion of data have changed the game. Digital disruption offers the potential to reinvent how we do our audit. With the latest innovations in audit technology, automation and data analysis have been leveraged to make better decisions, provide greater insights, and enhance audit quality through the analysis of greater quantities of data. Auditors, in turn, provide more robust audit opinions and actionable insights delivered seamlessly through an integrated platform,” Ms. Dayoan said.

Opportunities of tomorrow

For the Philippines, this presents both a challenge and an opportunity. Companies at the cutting edge of innovation can leverage on these emerging technologies to improve audit quality. Ms. Dayoan said it aims to do this by staying ahead of the curve on evolving technology, changing regulatory environment, and shaping people to become the Workforce of The Future.

For others, however, the changing landscape is a continuous struggle to catch up with leading trends to maintain relevance in a digital world.

“Accounting firms need to connect with the current theme such as big data, and drive that same elevated interest. Accounting needs to be seen as more forward-looking, futuristic and high-tech to capture the interest and imagination of young people,” Ms. Dayoan said.

She added, “The local market should embrace technology as a driver of growth and ensure that their people are equipped with the skills needed to deal with this new technological reality. Most organizations are still struggling to deploy AI at scale. But over time, AI could reshape the productivity landscape, which has been characterized by slow growth across many developed economies.”

A paradigm shift is in the process, and many businesses stand to lose everything should they fail to adapt and overcome the myriad challenges brought about by technology. At a time when the Philippines is slowly making its mark on the world stage in terms of economic development, there has never been a more critical time.

“We have entered a new era where we talk about digital and data, an era where collective thinking, technology-based function and fast-paced learning are prevalent. We need to be agile enough to keep up with the changes to increase efficiency and continue to deliver excellent service to our clients,” Ms. Dayoan said.

She added, “We see the industry embracing data science and investing in emerging technologies like D&A and AI but above all, investing in the workforce to build and enhance the professionals’ capabilities. These changes stand to reason that our audit technology and our capabilities need to continuously evolve.”

Fitch Ratings tempers growth forecast

November 29, 2019 | 12:33 am

By Luz Wendy T. Noble

GLOBAL DEBT WATCHER Fitch Ratings, Inc. has cut its economic growth projection for the Philippines this year, making it one of the last outfits to do so in the wake of disappointing gross domestic product (GDP) performance in the past quarters.

“We expect private consumption and government spending to remain key drivers of growth and for 2019, we expect growth of six percent,” Sagarika Chandra, associate director for Asia Pacific sovereigns at Fitch Ratings, said in an e-mail late last Tuesday.

Fitch had slashed its Philippine GDP growth forecast for 2019 to 6.1% at the end of May after the government reported 5.6% first-quarter expansion on May 8. Before that, Fitch had cut its 2019 projection for the country to 6.2% on April 24 from the 6.6% it gave in December last year, citing late enactment of the 2018 national budget on April 15 that deprived new infrastructure projects of funds.

A ban on new public works 45 days ahead of the May 13 midterm elections left planned new infrastructure projects idle in the first half, resulting in a 5.5% second-quarter GDP growth reported on Aug. 7.

First- and second-quarter growth rates compared to the past year’s respective 6.5% and 6.2%.

On Nov. 6, the Philippines Statistics Authority reported that GDP growth picked up to 6.2% in the third quarter as the government started to catch up with its spending program.

State spending contributed about 11.757% to GDP in the first three quarters, compared to 67.3% for household consumption.

The first three quarters saw GDP grow 5.8%, compared to the year-ago 6.2% and the government’s 6-7% target for 2019.

But even with its reduced GDP growth projection, Ms. Chandra noted in her e-mail that the “Philippines is among the region’s fastest-growing economies.”

Fitch’s latest Philippine GDP growth projection for 2019 compares to the International Monetary Fund’s 5.7%; 5.8% of the World Bank and Moody’s Investors Service; as well as the six percent of the Asian Development Bank, the ASEAN+3 Macroeconomic Research Office, S&P Global Ratings and Fitch Solutions, sister company of Fitch Ratings.

Last January, the United Nations Department of Economic and Social Affairs, the UN Conference on Trade and Development and the five UN regional commissions gave a 6.5% projection for this year, while the Organization for Economic Cooperation and Development in November 2018 cut its forecast for this year to 6.5% from the 6.7% outlook it gave in July 2018.

In the Fitch Ratings 2020 Outlook: Asia-Pacific Sovereigns report e-mailed to journalists on Nov. 25, the debt rater noted that economies it has been tracking “have seen a slowdown in growth in 2019, and many will see a further decline in 2020 under our baseline.”

“This typically reflects the impact of US-China trade tensions and slower global demand,” Fitch said.

“The region nevertheless is proving economically resilient,” it added, particularly noting that “Southeast Asian economies benefit from robust consumption and favorable demographics, while a few have gained from trade and investment diversion.”

“Overall growth, while slowing, remains somewhat resilient, allowing APAC to maintain its position as the world’s fastest-growing region. The reasons for the resilience vary across economies, with some benefitting from robust consumption trends and favorable demographics — especially in Southeast Asian economies such as Indonesia, Malaysia and the Philippines — and others from a pivot toward growth-supportive policies.”

Ms. Chandra said that further monetary easing remains on the table for 2020 after the 75-basis-point cumulative reduction in benchmark interest rates this year that partially unraveled increases totaling 175 bps in 2018. Benchmark policy rates now stand at 3.5% for overnight deposit, four percent for overnight reverse repurchase and 4.5% for overnight lending.

Monetary authorities have also reduced banks’ reserve requirement ratio by a total of 400 bps after 2018’s 200-bp cut. By December, the RRR will be 14% for big lenders and nonbank financial institutions with quasi-banking functions, as well as four percent for thrift banks, while rural banks’ RRR will be kept at three percent.

“We think there is still room for further monetary easing as inflationary pressures are subdued. Further reserve requirement cuts are likely as part of the central bank’s announced financial sector reform agenda to promote a more efficient financial system,” Ms. Chandra said.

Last May 30, Fitch affirmed the Philippines’ long-term foreign-currency issuer default rating at “BBB” — still a notch above minimum investment grade — with a “stable” outlook, meaning the rating is likely to be sustained in up to two years.

Chamber pitches solutions to traffic

November 29, 2019 | 12:32 am

THE MANAGEMENT ASSOCIATION of the Philippines (MAP) has recommended readily available solutions to worsening traffic to the Metro Manila Development Authority (MMDA).

MAP in a statement on Thursday said that the association “begs the authorities to do something about the horrendous daily traffic in the metropolis.”

“The MAP is directly affected because the employees of its members [are] crying for a solution.”

The group said that the recommendations are its response to MMDA’s call for suggestions from the public.

MAP recommends improved enforcement of regulations and fines to compel private and public motorists to comply.

The association also posed several recommendations to improve the use of public utility vehicles (PUV). It urged authorities to maximize the use of PUVs to move commuters faster “in the absence of an efficient mass transport system.”

It wants authorities to designate stops for PUVs to quickly load and unload passengers and to declog bus lanes. It said PUVs should be allocated more lanes and be spared of number coding restriction during rush hours.

MAP also said that provincial buses should be given leeway to transport more commuters in less time.

Between rush hours, MAP said private vehicles should be allowed use of all lanes.

“Limit the number of PUVs on the road through a suggested, modified coding system in order to provide more space (and less congestion) to private vehicles during non-rush hours,” MAP said in the statement.

It also urged authorities to form a mobile task force to unclog choke points on critical routes.

“[People manning the] Central traffic control center must put to good use their CCTV system to closely monitor these problem areas and alert flying task force or assigned traffic personnel to quickly untangle them before traffic backup,” MAP said.

MAP estimated the cost of traffic congestion at about P3.4 billion for 13.4 million trips in 2019, translating to P250 per person per day — or 40% of the P600 daily minimum wage in Metro Manila.

In response to these recommendations, MMDA traffic operations chief Edison “Bong” Nebrija said that MMDA has been trying to isolate PUVs to move traffic quicker, but motorists have not been following the rules.

“Sana ni-recommend nila magkadisiplina mga bus drivers (They should’ve recommended that bus drivers have more discipline). We know the plight of the commuters,” he said.

He said that he appreciates MAP’s recommendations, but added that the problem should be looked at more holistically. “‘Di lang empleyado nila nale-late (it’s not just their employees who become late) — that’s everyone’s concern anyway.”

Mr. Nebrija said that MAP should directly propose recommendations to MMDA and other agencies like the Department of Transportation.

“They recommend but do they have the numbers? How extensively did they study this to recommend this? Yes, we understand the plight of their employees and their business but recommendations need to be sound and holistic. We need to simulate it,” he said.

“Why don’t they sit down with us — set an appointment. They should write us a letter and make this formal.” — Jenina P. Ibañez

Counting SEA Games’ risks and benefits

November 29, 2019 | 12:31 am

By Michael Angelo S. Murillo
Senior Reporter

LOGISTICAL glitches and allegations of corruption threaten to mar the Philippines’ hosting of the biennial Southeast Asian Games this year, which the country is doing for the fourth time in history.

Unlike previous hostings in 1981, 1991 and 2005, this year’s 30^th SEA Games has generated much buzz, going beyond talk of medal projections.

Organizers see the Nov. 30-Dec. 11 games — touted as the “biggest and best” — as an opportunity to showcase the Philippines while reaping the potential windfall.

About 9,000 athletes and officials from 11 nations in the region will participate in 530 events in 56 sports, besides 9,000 volunteers.

The 2019 SEA Games, which was supposed to be hosted by Brunei until it backed out for “organizational reasons,” has a budget of at least P7.5 billion.

Critics have questioned the propriety of the budget and the way it has been used. Opposition Senator Franklin M. Drilon argued the sport event could have been hosted at a lower cost, citing the SEA Games “cauldron” tower that cost P55 million to build. He said it was unacceptable to spend so much on a structure that would likely be used just once.

Mr. Drilon, who wants a congressional probe for possible misuse of funds, has also asked why the government had to spend P9.5 billion to build the New Clark City sports facilities instead of just upgrading the Rizal Memorial Sports Complex in Manila.

He also questioned the necessity of having the Philippine Southeast Asian Games Organizing Committee supervise the event when agencies such as the Philippine Sports Commission and Philippine Olympic Committee could have done the job.

Speaker Alan Peter S. Cayetano, who heads the committee, has described the “cauldron” as a “work of art” designed to showcase Filipino ingenuity, while newly built sports facilities, including a stadium and an aquatic center, were worth the price tag.

In the days leading to the start of the games, some people sought a ceasefire to allow organizers to focus on their hosting duties.

But logistics woes — including the transportation and hotel accommodation of athletes, media accreditation and incomplete facilities — came up this week.

A stop to the bickering was supposed to prevent the athletes, particularly the Philippine team, from getting distracted.

But the question remains — Is there a need for the Philippines to host events such as the SEA Games?

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said hosting the games is worth the effort and the cost. “It is a good thing because we get to fulfill our obligations as part of the Association of Southeast Asian Nations,” he said in an interview. “We also get to show the nature of Filipinos as gracious hosts.”

The SEA Games, he said, is an investment that would bear results. “Disregarding the appropriate accountability measures at this point, I still see this as a great investment in national sports development, sports tourism and consequently putting the New Clark City project on the map,” Mr. Asuncion said.

The property sector and sports tourism should benefit from the hosting, he added.

The main benefit — and risk — hosting such an event is the country’s reputation, said Robert Dan J. Roces, chief economist at Security Bank Corp., citing the potential waste of unused buildings after the games.

“But we do not see this happening to our new venues because the government — logistical snags aside — strove to develop world-class facilities,” Mr. Roces said.

“We do not see much risk that the country will fall into a Brazil-type slump where hosting the Olympics actually did more harm than good to their economy,” he added.

Margielyn Didal, an Asian Games skateboard gold medalist, said hosting the SEA Games would allow Filipino athletes to gauge “where we are in our game.”

Skateboarding will debut in the games this year. The country barely has facilities for skateboarders such as skate parks “but through the SEA Games, facilities were built in Tagaytay and hopefully it’s the start of more parks to be built,” she added.

Still, UnionBank’s Mr. Asuncion said organizers should answer allegations against them.

“Transparency can help allay fears and concerns,” he said.

“If there was nothing to hide, the organizers should continue to engage and be open to scrutiny and further accountability.”

Top 1000 firms on a roll in 2018 despite inflation spoiler

November 29, 2019 | 12:30 am

By Leo J. G. Uy Research Head
and Lourdes O. Pilar Researcher

PHILIPPINE COMPANIES continued to record double-digit earnings in 2018 despite last year’s challenges that included the almost runaway inflation that contributed to deceleration of the domestic economy and external risks.

Now on its 33^rd year, BusinessWorld’s Top 1000 Corporations in the Philippines ranks private and public stock entities according to gross revenue using the latest available full-year audited financial statements, which for most companies on the list pertain to their performance in 2018.

The Top 1000 roster is based on parent-only financial statements, in which parent firms record equitized earnings of their subsidiaries and associates.

This is different from a separate list ranking the country’s top conglomerates where consolidated financial statements are used. This was expanded to 100 firms in the latest edition from 50 in previous years.

Parent companies that made the cut earned a cumulative P12.92 trillion in gross revenue and P1.56 trillion in net income in 2018, 12% and 17.2% more than in the preceding year. These compare with the top-line and bottom-line growth rates of 11.7% and 6.4% posted in the previous ranking.

Top 1000 firms’ performance in 2018 also compares to that of the overall economy’s 10.2% growth in 2018 based on current prices. To recall, the Philippine economy expanded by 6.2% based on constant 2000 prices, which fell short of the low end of the government’s 6.5-6.9% target range for 2018.

Last year also saw inflation accelerating for nine straight months, peaking at a nine-year-high 6.7% in September and October. This brought the full-year 2018 average to a decade-high 5.2% against the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target range for 2018. That prompted the BSP to raise benchmark interest rates by a total of 175 basis points that year.

For this year’s edition of the Top 1000, the gross revenue cutoff increased to P2.218 billion from the previous edition’s P2.023 billion, considering the financial statements that were collected.

San Miguel Corp. (SMC) grabbed the top spot on this year’s list. SMC earned P384.11 billion in gross revenue last year, twenty-four times more than P15.82 billion in 2017. The increase was caused largely by SMC’s share-swap transaction with San Miguel Food and Beverage, Inc. (SMFB). A look at SMC’s financial statements showed the company recognizing a gain of P328.27 billion as part of its “Gain on sale of investments, property and equipment and others” from the exchange of shares.

Second on the list is SMC subsidiary Petron Corp., which recorded P360.81 billion in gross earnings (up 31.5%) and P351.38 billion in net sales (29.6%). Its net income, however, was down 29.2% to P6.34 billion.

In third spot was power distributor Manila Electric Co. (Meralco), which made P297.97 billion in gross revenue and P291.80 billion in net sales, higher respectively by 8.2% and 7.3% from 2017. Its net income was also up by 19.9% to P24.25 billion. Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Rounding up companies in the fourth to 10^th places were: Pilipinas Shell Petroleum Corp., P219.82 billion; TI (Philippines), Inc., P163.04 billion; Philippine Airlines, Inc., P159.07 billion; BDO Unibank, Inc., P158.44 billion; Toyota Motor Philippines Corp., P151.31 billion; PMFTC, Inc., P146.98 billion; and Mercury Drug Corp., P144.67 billion.

There is also a separate table ranking the country’s top conglomerates. In the consolidated ranking, a parent company and its subsidiaries are treated as though they are a single entity. This year’s roster expanded to 100 firms from 50 in previous years.

The list of the top 100 conglomerates shows SMC and subsidiaries leading with P1.060 trillion in gross revenue in 2018, 24% more than in 2017. Top Frontier Investment Holdings, Inc. — San Miguel’s top shareholder — and its subsidiaries, as well as Petron Corp. and its business units, occupied the second and third rungs with gross revenues of P1.058 trillion and P562.72 billion, respectively, up by 24.1% and 28.9%.

In fourth to 10^th placers were: SM Investments Corp. and subsidiaries, P454.06 billion; Ayala Corp. and subsidiaries, P325.38 billion; Meralco and subsidiaries, P309.32 billion; JG Summit Holdings, Inc. and subsidiaries, P293.92 billion; SMFB and subsidiaries; P287.78 billion; GT Capital Holdings, Inc. and subsidiaries, P215.83 billion; as well as Aboitiz Equity Ventures, Inc. and subsidiaries, P200.14 billion.

All sectors posted gross revenue growth, with 12 out of the 17 showing double-digit increases. Gross revenues of manufacturers, which made up 35.4% of the 2018 total, grew by 8.3%, while those in the financial and insurance activities (15.1% share) as well as wholesale and retail trade (20.5% share), grew by 38% and 11.1%, respectively.

Multinational companies included on this year’s list made P4.58 trillion, 9.3% more than in the previous year and accounting for 35.5% of the Top 1000.

Exporting firms included in the Top 1000 recorded P2.15 trillion in revenues, 2.3% more than in the previous year.

BusinessWorld’s Top 1000 Corporations in the Philippines can be purchased at select branches of National Book Store, Powerbooks, Fully Booked, Office Warehouse and Rustan’s Supermarket. You may also purchase a copy by calling BusinessWorld’s Circulation Department at (+632) 8535-9940. For the soft copy version (pdf), please visit bworldonline.com/bwdigitized.

Top 1000 Corporations in the Philippines: Comparison of sectoral performance in 2018

November 29, 2019 | 12:30 am

With Jagged Little Pill, Alanis Morissette gambles on new anguish

November 29, 2019 | 12:08 am

THOSE HIT SONGS with their raw, roiling emotions — from “Ironic” to “You Learn” to “Hand in My Pocket” — still carry some of the spirit of Alanis Morissette in the new Broadway musical Jagged Little Pill.

You oughta know, however, that the story isn’t hers.

Unlike shows in a steady stream of Broadway biomusicals woven with tunes pulled from pop goddesses’ catalogs — think, Carole King (Beautiful), Donna Summer (Summer), Cher (The Cher Show), which have come and gone, and Tina Turner (Tina), which just opened — the latest arrival on New York’s main stage isn’t exactly a perfect fit in this songbook sorority.

It’s not that kind of jukebox. Morissette, now 45 with three kids, insisted on that.

“When I was brought to this project, we didn’t have a book or a show or anything,” says fiftysomething director Diane Paulus, whose credits include Waitress, Hair, and Pippin, for which she won a Tony. “The one thing I was told is that this is not going to be an Alanis Morissette bio. Her one request was that it not be about her. And as much as we’re all channeling our inner Alanis, this is not her biography.”

Instead, characters, themes, and jagged emotional terrain covered in the 1995 Grammy-winning album by the Canadian singer-songwriter have been transformed into the story of a seemingly idyllic Connecticut family who, upon closer scrutiny, isn’t so picture-perfect. At all.

Race, addiction, rape, and sexuality are among the weighty issues they’re facing, thanks to book writer Diablo Cody, who, like Morissette, makes her Broadway debut with this musical seen last year at the American Repertory Theatre in Cambridge, Mass. For the cast of characters onstage, if something can go wrong, it will.

“The album is really an emotional journey,” says Cody, 41. “It was almost begging for a theatrical adaptation, because the songs are so story-driven. I could just see this story building with this family, this very image-conscious mother, and an oppressive community — the fictional town of Greenport, a wealthy, leafy hamlet. And there’s this daughter, who’s saying, ‘Everybody, wake up. Open your eyes.’ That’s where it all came from.”

Actually, not quite all.

“I also drew from my own personal life a little bit,” adds Cody, who grew up near Chicago and first made a splash with her 2007 teen pregnancy indie comedy, Juno. “I love my family, but when I was growing up, there was a lot of emphasis on how we presented ourselves. I was a suburban teenaged girl when the album came out, so I was right in the sweet spot of being able to appreciate it, and I did. I just always felt something strong for that material.”

She’s not alone. Since 1995, Jagged Little Pill has sold 33 million copies around the world, about half of that haul in the US.

“Alanis was super-prescient. The album spoke to a kind of rage I think we hadn’t experienced. It spoke to me personally,” says Paulus, who adds that her teenage daughter has now gotten hooked on the album.

Having legions of fans of the music — from teens to boomers — can’t hurt at the box office at the Broadhurst Theater, where the show earned $1.1 million in its first full week of previews in advance of its official Dec. 5 opening. And industry stats from trade group the Broadway League seem to be in the show’s favor: 66% of Broadway’s audience is female, and the average age is 40.6 years.

Still, all that doesn’t guarantee attendance. Broadway tickets are much pricier than an album, and retrofitting lyrics and putting them into the mouths of characters is always tricky business. For her production, Paulus has combined a live rock band that drifts on and off the stage and a set of gender-fluid, multiracial young dancers that pulsate in and out of the action.

Yes, Mamma Mia!, which stitched a wispy story around ABBA tunes, made a mint, raking in $624 million during its 14-year Broadway run. But, cue the sad trombone, Green Day’s American Idiot — a show that more closely resembles the Jagged Little Pill transformation of songs primarily from a single album along with some fresh material into a musical — didn’t see so much green. Despite winning two design Tonys, the 2004-concept-album-turned-2010-musical ran for about a year.

Paulus believes that timing is on her team’s side. The themes and inherent anger have a topical resonance that will strike a chord. Songs feel like “they were written yesterday for today,” Paulus says. “That’s how this music feels. That’s how the lyrics feel.”

In a one-on-one with Cody in Interview, Morissette said as much herself.

“The only song I’m not sure I stand by is ‘Not the Doctor,’ where I basically say, ‘Your s— is your s—, and my s— is my s—, and let’s just keep it church and state.’ As I get older, and after almost 10 years of marriage, I realized that in a relationship, I can participate in someone else’s pain, or histories, and not feel like I’m being dysfunctional or resistant to it. But the rest of the songs, shockingly, I can stand by.”

As Morissette stands by, time will tell if Broadway audiences step up and, even better, fall head over feet. — Bloomberg

Fruitas store network hits 1,000

November 29, 2019 | 12:07 am

By Vincent Mariel P. Galang, Reporter

FRUITAS Holdings, Inc. said its store network now exceeds 1,000, as the food and beverage kiosk operator is set to list on the stock exchange on Friday.

In a statement on Thursday, Fruitas said it has 1,036 stores around the country as of Nov. 26, after opening new kiosks in Metro Manila, Cavite, Laguna, Rizal, Bulacan, Tarlac, Zambales, Cebu, Iloilo, Aklan, Davao, and Cagayan de Oro.

The company has embarked on an aggressive nationwide expansion, opening 106 new kiosks so far this year. It had ended 2018 with 930 stores.

Fruitas will debut on the stock exchange today (Nov. 29) under the ticker FRUIT. It is the fourth and last company to conduct an initial public offering (IPO) this year, following Kepwealth Property Phils, Inc. in August, and Axelum Resources Corp. and AllHome Corp. in October.

“We are happy with the results of the offering of Fruitas. The broker tranche was more than 2.5 times oversubscribed, while the local small investor tranche was a record amount for a Philippine IPO. The exceptional performance and positive response from the market prove that the public believes in Fruitas’ strong fundamentals and aggressive expansion plans in the country,” First Metro Investment Corp. (FMIC) Executive Vice-President Daniel D. Camacho was quoted as saying in a Fruitas press statement.

FMIC and BDO Capital are the joint issue managers, bookrunners, and lead underwriters for the Fruitas IPO.

The company targeted to raise up to P1.2 billion from the offering of 533.66 million shares with an over-allotment option up to 68.34 million shares. The IPO share price stood at P1.68 apiece. If overallotment option is maximized, the company’s public float will be 28.2%.

Proceeds from the offering will be used to finance Fruitas’ store openings and upgrade of existing ones, as well as introduction of new brands, repayment of debts, commissary expansion and expansion of food parks.

Philstocks Financial, Inc. research Associate Claire T. Alviar said Fruitas has good prospects, given its lower IPO price and the familiarity of its brands to investors.

“Lastly, slowdown of inflation as well is favorable for Fruitas due to higher consumer spending,” she said in a text message.

As for PNB Securities, Inc. President Manuel Antonio G. Lisbona noted that demand from the brokerage company’s clients “was around 13 times what was allocated to each PSE trading participants.”

In a research note for Fruitas, PNB Securities sees “bright prospects amidst a competitive environment” for the company, given its good record of introducing and developing brands.

PNB Securities said Fruitas’ plan to establish 200 news stores annually from 2020 to 2022 is possible due to new malls being built at the same period, with an average of 20 per year from SM Prime Holdings, Inc. (SMPH), Robinsons Land Corp. (RLC), and Ayala Land, Inc. (ALI), among others.

“The IPO proceeds strengthen Fruitas’ balance sheet and enables it to expand, replace old vehicles and pay debt. With the jump in cash, net working capital becomes positive, and accounts payables and lease liabilities are seen to remain as Fruitas’ biggest liabilities with debt paid,” PNB Securities said.

In 2002, Fruitas started with a single kiosk in SM Manila, until it became a market leader in its four business segments, which include fruit shakes — Fruitas, coconut beverages — Buko ni Fruitas, meat-filled pastries — De Original Jamaican Pattie, and lemonade beverage — Johnn Lemon.

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