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Analysts see slower Nov. inflation

By Melissa Luz T. Lopez
Senior Reporter
INFLATION is widely expected to have slowed in November from a nine-year peak, as oil prices plunged and as food supply improved, analysts said in a BusinessWorld poll, noting this could allow the central bank to pause its policy tightening when it meets for the last time this year on Dec. 13.
A poll among 14 economists yielded a 6.3% median estimate for the month, with all market watchers certain that the rate will ease from October and September’s 6.7%.
At the same time, this will still be faster than the three percent pace logged in November 2017.
The estimate also falls within the 5.8-6.6% range given by the Bangko Sentral ng Pilipinas (BSP) last week, and would be the first decline in the rate since the year opened.
Analysts’ November Inflation Rate Estimates
The Philippine Statistics Authority (PSA) will report the latest inflation data on Wednesday.
“The global oil price collapse from mid-October through mid-November was the key trigger to the sharp drop in November CPI (consumer price index),” said Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands.
Fuel companies announced price rollbacks for diesel and gasoline last month, reflecting declines in the benchmark Dubai crude by around 20% from October’s four-year highs.
In turn, the substantial drop in pump prices is broadly seen to offset higher jeepney and bus fares that took effect in November, which was the response of the Land Transportation Franchising and Regulatory Board to petitions filed by operators back when oil prices were at multi-year highs.
Nicholas Antonio T. Mapa, senior economist at ING Bank NV Manila, added that food prices have “substantially” gone down as supply has normalized, particularly for rice and vegetables.
The PSA has said that inflation has been “food-driven” in recent months.
Analysts noted that non-monetary interventions by the Executive, together with rice imports and local harvests have since boosted market supply and tempered price pressures.
“Also, mild weather conditions prevailed, allowing for better transport of goods and the continuing fall of oil prices,” added Alvin P. Ang, economics professor at the Ateneo de Manila University.
Monetary Board Member V. Bruce J. Tolentino said on Wednesday that price pressures have “subsided for now,” even as he cited the need to remove restrictions on imported rice to ensure low, stable prices for the staple.
The latest forecasts affirm the government’s view that inflation has already peaked, which observers took as a sign for policy makers to finally pause monetary tightening.
“Easing inflation will definitely decrease pressure to increase rate,” said Masyita Crystallin, economist at DBS Bank.
The central bank’s Monetary Board has raised rates by 175 basis points (bp) so far since May, with a “proactive” 25bp increase announced earlier this month despite signs that inflation is on a month-on-month downtrend going into 2019. Rates now range from 4.25 to 5.25%, with the 4.75% key rate the highest since 2009.
This comes after inflation steadied at the nine-year-high 6.7% in October from the previous month.
Inflation has averaged 5.1% year-to-date, still below the upgraded 5.3% full-year forecast of the central bank but well above the original 2-4% target range for 2018.
Ildemarc C. Bautista, head of research at the Metropolitan Bank & Trust Co., said the central bank may find room to cap its five straight hikes amid slower commodity price increases and a stronger peso that has lately been trading at the P52 level versus the dollar.

DoF presses for easing bank secrecy

By Elijah Joseph C. Tubayan
Reporter
THE DEPARTMENT of Finance (DoF) is pressing Congress to reinsert in a proposed tax amnesty bill a provision that authorizes the government to look into bank accounts and exchange tax information with foreign counterparts.
Lawmakers had removed this provision from the bills concerned, which are now up for deliberation in a bicameral conference committee before both chambers ratify these measures, arguing — together with tax experts — that this provision violates the Constitution.
Section 26 of the 1987 Constitution states that: “Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof.”
“It’s not a rider provision. It was part of that law, it was really part of that measure. It’s not a rider. I don’t know what people are waiting for. It was already there. We put it in and they will take it out, then they’re gonna wait for us? Just put it back in,” Finance Secretary Carlos G. Dominguez III told reporters last week when asked if his department will draft another bill.
House of Representatives Ways and Means committee chairperson Estrellita B. Suansing of Nueva Ecija’s first district had said that lawmakers will file another bill to relax restrictions on depositors’ information and provide for automatic exchange of tax-related information as soon as the DoF submits its draft.
But that means the two deleted measures will have to start from first base.
The 17th Congress is scheduled to go on a Dec. 15-Jan. 13 break. And while it will convene on Jan. 14-Feb. 8 and finally on May 20-June 7, it is widely believed that lawmakers can focus on legislation only this year, as campaigning for the May 2019 mid-term elections will take up much of their attention starting January.
Sought for comment on Sunday, Ms. Suansing said: “The reason why we deleted that provision is it violates the one-subject rule.”
“We will insist on our version without the bank secrecy and AEOI (automatic exchange of information). The Speaker (Gloria M. Arroyo) was present in the TWG (Technical Working Group that decided on this matter).”
Senate Ways and Means committee chairman Senator Juan Edgardo M. Angara said in a separate mobile phone message yesterday: “Some Senators wanted it removed.
“We can discuss any possible return.”
Finance Undersecretary Antonette C. Tionko, a lawyer, said in an interview on Wednesday that the measures are not rider provisions.
“It’s related to the tax amnesty because in the tax code, there are provisions on bank secrecy included in the powers of the Commissioner to examine under certain circumstances. So it’s really related,” she explained.
“Honestly, if you want to have an effective tax amnesty, then you’ll need it because otherwise, it’s just like allowing anyone to just pay whatever and then they can get away with it,” she added.
“It’s almost like money laundering. We’re hopeful that the provisions will be included.”
Mr. Dominguez had said that “[t]he problem with the bicam[eral conference committee] is the fact that our original proposal is not completely adopted and it is very necessary for us.”
“We believe that the law on bank secrecy be relaxed in cases where there is a suspicion. As I mentioned, this is not being requested frivolously. If there’s a law for us to collect a tax and then you don’t give us the tools to do it, then it will be very difficult for us to do it,” the Finance chief said.
“If there was no such limitation on [checking] the bank accounts, the Mighty (Corp.) case might have been solved earlier. And you know that is $600 million or about P30 billion. So we do not know how much is out there. For all you know that is really small in comparison to what is being hidden. So that’s why it’s very necessary,” Mr. Dominguez explained, referring to the local cigarette firm whose assets were acquired by Japan Tobacco, Inc. late last year after the former settled its tax liabilities.
The Finance chief noted that the Philippines and Lebanon are countries with the strictest bank secrecy laws.
Asked whether the DoF will implement the amnesty program even without the tools that will enable it to verify information supplied by applicants, Mr. Dominguez replied: “We will see what the final version is going to be, but honestly, we really need that partner measure.”
The bills — which bagged final-reading approval in the House and Senate on Nov. 19 and 20, respectively — imposes an amnesty charge equivalent to a portion of taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties for delinquency.
The bills offer amnesty on unpaid estate taxes and general taxes up to 2017.
The tax amnesty program was initially intended to complement Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act, and be implemented at the same time this year as both measures seek to raise revenues and expand the tax base.
The DoF expects the tax amnesty to yield up to P26 billion in additional revenue but said the main objective is to grow the tax base.
The government has offered tax amnesty 18 times since 1972, with the last offer in 2008 raising P4.91 billion, according to DoF’s National Tax Research Center.

ECoP President Donald Dee passes away, 72

BUSINESS LEADER Donald G. Dee, president of the Employers Confederation of the Philippines (ECoP) as well as honorary chairman and chief operating officer of the Philippine Chamber of Commerce and Industry (PCCI), died on Saturday at the age of 72, according to notices both chambers posted on their social media sites.
His wake will be held at the Capilla del Señor of the Santuario de San Antonio in Makati City starting Sunday, Dec. 2, with daily Mass at 7 p.m., until inurnment in the morning of Wednesday, Dec. 5.
He is survived by his wife, Ophelia M. Dee, his children and grandchildren.
“The business community lost a passionate champion and leader, a stalwart in the industry, and a staunch advocate of and for employers,” ECoP said in a Facebook post over the weekend, while PCCI separately described him in a separate FB notice as “[a] well respected leader, stalwart and champion of the business community.”
“The Federation of Free Workers extends its deepest condolences to his family and the members of the Employers’ Confederation of the Philippines,” Sonny G. Matula, president of the Federation of Free Workers, said in an e-mail to journalists.
“Donald was a passionate leader of the employers but at the same time with a kind heart for the worker,” he added.
“Donald was a colleague… at the Social Security Commission [where] I was representing the workers’ group and he was representing the employers.”
Mr. Dee served as Commissioner of the Social Security System in 2001-2010.
He was also founding trustee of the Philippine Business for Education and was also a former member of the ASEAN Business Advisory Council-Philippines.
He served as Special Envoy for Trade Negotiations from 2004 to 2010 under the administration of former president and now House Speaker Gloria M. Arroyo.
Mr. Dee was the chairman and chief executive officer of PCCI affiliate think-tank Universal Access to Competitiveness and Trade.
He was also president of Phoenix Resource and Management Corp. and of Pan Pacific Airways; director of the Manila Exposition Complex, Inc. and a Southeast Asia Beachhead advisor of the New Zealand Trade & Enterprise.
He had also served as chairman of the Confederation of Garments Exporters of the Philippines, Inc.; vice-chairman of the Philippine Exporters Confederation; member of the Export Development Council executive committee; and as co-champion for Education and Human Resource at the National Competitiveness Council. — Janina C. Lim

US, China agree to trade war ceasefire

BUENOS AIRES — China and the United States agreed to a ceasefire in their bitter trade war on Saturday after high-stakes talks in Argentina between US President Donald Trump and Chinese President Xi Jinping, including no escalated tariffs on Jan. 1.
Mr. Trump will leave tariffs on $200 billion worth of Chinese imports at 10% at the beginning of the new year, agreeing to not raise them to 25% “at this time,” the White House said in a statement.
“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” it said. “China has agreed to start purchasing agricultural product from our farmers immediately.”
The two leaders also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, the White House said.
Both countries agreed they will try to have this “transaction” completed within the next 90 days, but if this does not happen then the 10% tariffs will be raised to 25%, it added.
The Chinese government’s top diplomat, State Councillor Wang Yi, said the negotiations were conducted in a “friendly and candid atmosphere.”
“The two presidents agreed that the two sides can and must get bilateral relations right,” Mr. Wang told reporters, adding they agreed to further exchanges at appropriate times.
“Discussion on economic and trade issues was very positive and constructive. The two heads of state reached consensus to halt the mutual increase of new tariffs,” Mr. Wang said.
“China is willing to increase imports in accordance with the needs of its domestic market and the people’s needs, including marketable products from the United States, to gradually ease the imbalance in two-way trade,” he added.
“The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States’ legitimate concerns can be progressively resolved.”
The two sides would “step up negotiations” toward full elimination of all additional tariffs, Mr. Wang said.
The announcements came after Mr. Trump and Mr. Xi sat down with their aides for a working dinner at the end of a two-day gathering of world leaders in Buenos Aires, their dispute having unnerved global financial markets and weighed on the world economy.
After the two-and-a-half hour meeting, White House chief economist Larry Kudlow told reporters the talks went “very well,” but offered no specifics as he boarded Air Force One headed home to Washington with Mr. Trump.
China’s goal was to persuade Mr. Trump to abandon plans to raise tariffs on $200 billion of Chinese goods to 25% in January, from 10% at present. Mr. Trump had threatened to do that, and possibly add tariffs on $267 billion of imports, if there was no progress in the talks.
With the United States and China clashing over commerce, financial markets will take their lead from the results of the talks, widely seen as the most important meeting of US and Chinese leaders in years.
The encounter came shortly after the Group of 20 industrialized nations backed an overhaul of the World Trade Organization (WTO), which regulates international trade disputes, marking a victory for Mr. Trump, a sharp critic of the organization.
Mr. Trump told Mr. Xi at the start of their meeting he hoped they would achieve “something great” on trade for both countries. He struck a positive note as he sat across from Mr. Xi, despite the US president’s earlier threats to impose new tariffs on Chinese imports as early as the next year.
He suggested that the “incredible relationship” he and Mr. Xi had established would be “the very primary reason” they could make progress on trade.
Mr. Xi told Mr. Trump that only through cooperation could the United States and China serve the interest of peace and prosperity. Washington and Beijing have also increasingly been at odds over security in the Asia-Pacific region.
At the same time, Mr. Trump again raised with Mr. Xi his concern about the synthetic opioid fentanyl being sent from China to the United States, urging the Chinese leader to place it in a “restricted category” of drugs that would criminalize it.
The White House said Mr. Xi, “in a wonderful humanitarian gesture,” had agreed to designate fentanyl a controlled substance.
Mr. Xi also said that he was open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him, the White House added.
“This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Mr. Xi,” Mr. Trump said in the statement.
WTO REFORMS
Earlier on Saturday, the leaders of the world’s top economies called for WTO reform in their final summit statement.
Officials expressed relief that agreement on the communique was reached after negotiators worked through the night to overcome differences over language on climate change.
The final text recognized trade as an important engine of global growth but made only a passing reference to “the current trade issues” after the US delegation won a battle to keep any mention of protectionism out of the statement.
Mr. Trump has long railed against China’s trade surplus with the United States, and Washington accuses Beijing of not playing fairly on trade. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.
The two countries are also at odds over China’s extensive claims in the South China Sea and US warship movements through the highly sensitive Taiwan Strait.
In addition to tariffs on Chinese goods, Mr. Trump has imposed tariffs on steel and aluminum imports into the United States this year. Numerous countries have filed litigation at the WTO to contest the levies.
The United States is unhappy with what it says is the WTO’s failure to hold China to account for not opening up its economy as envisioned when China joined the body in 2001. The European Union is also pushing for sweeping changes to how the WTO operates.
G20 delegates said negotiations on the summit statement proceeded more smoothly than at a meeting of Asia-Pacific leaders two weeks ago, where disagreement on protectionism and unfair trading practices prevented a consensus.
European officials said a reference to refugees and migration — a sensitive issue for Mr. Trump’s administration — was excised to ensure consensus.
On climate change, the United States once again marked its differences with the rest of the G20 by reiterating in the statement its decision to withdraw from the Paris Agreement and its commitment to using all kinds of energy sources.
The other members of the group reaffirmed their commitment to implement the Paris deal and tackle climate change.
International Monetary Fund (IMF) Managing Director Christine Lagarde said high levels of debt accumulated by emerging market nations was a pressing concern.
US officials said a call by G20 leaders for the IMF and World Bank to improve monitoring debt levels was aimed at ensuring that developing economies did not become to heavily indebted to China in return for infrastructure projects.
US officials have warned about China’s increasing influence across swaths of the developing world, including Latin America. G20 summit host Argentina is expected to sign a series of deals with China on Sunday during a one-day state visit by Mr. Xi.
Apart from trade and climate change, Russia’s seizure of Ukrainian vessels drew condemnation from other G20 members, while the presence of Crown Prince Mohammed bin Salman at the summit raised an awkward dilemma for leaders.
Saudi Arabia’s de facto ruler arrived amid controversy over the killing of Saudi journalist Jamal Khashoggi, though Saudi officials have said the prince had no prior knowledge of the murder.
The leader of the OPEC heavyweight had a series of bilateral meetings at the summit, including a closely watched encounter with Russian President Vladimir Putin. — Reuters

Analysts’ November Inflation Rate Estimates

INFLATION is widely expected to have slowed in November from a nine-year peak, as oil prices plunged and as food supply improved, analysts said in a BusinessWorld poll, noting this could allow the central bank to pause its policy tightening when it meets for the last time this year on Dec. 13.
Read the full story
Analysts’ November Inflation Rate Estimates

D&L allocates P8 billion to construct new plants

By Arra B. Francia
Reporter
D&L Industries, Inc. (DNL) is pouring in about P8 billion to build new plants and storage tanks in Batangas to triple its current capacity, as the company targets to grow its export business in the following years.
DNL President and Chief Executive Officer Alvin D. Lao said the expansion will include the construction of two plants inside a 26-hectare property in First Industrial Township — Special Economic Zone in Tanauan, Batangas. One plant will be used by its food ingredients segment, while the other will be for the oleochemicals and downstream packaging division.
The expansion will further include over 50 new storage tanks that can carry up to 2,000 cubic meters each, or more than 100,000 cubic meters for the entire program.
“The P8 billion will be spent on machinery and equipment, as well as buildings, plant-related buildings specific to the manufacturing, and all other type of capex related to manufacturing. It doesn’t include the cost of the land, because that is leased,” Mr. Lao told reporters in a press briefing in Taguig City last week.
Mr. Lao answered in the affirmative when asked whether this will triple DNL’s capacity, adding that “compared to what we have now, it’s more than double. It’s for all kinds of oils and chemicals, so food and non-food.”
DNL’s existing plants in Quezon City are currently running at about 70% utilization rate.
With this expansion, Mr. Lao said the company’s capacity will be enough for the next 10 years.
The listed firm looks to complete the project by 2020. About 70% of the capex will be financed through debt, while the 30% balance will be taken from internally generated cash.
The company also noted its low level of debt, with net gearing at about eight percent by the end of the third quarter. The borrowings to be incurred for the expansion is expected to bring net gearing up to 16%.
“We don’t anticipate gearing to go up very high, it’s likely go up 16%. That’s the maximum, so we’re not heavily geared yet,” Mr. Lao said.
The expansion is in line with the company’s goal to ramp up its export business by 2025.
“We’re hoping more from exports. That’s why the expansion is being done on a PEZA (Philippine Economic Zone Authority) zone so that we can really cater to the growing export markets for our products,” Mr. Lao said.
DNL’s exports accounted for 23% of its total revenues by end-September. The company earlier said its export business should generate half of its revenues by 2025.
Mr. Lao said the company is working on formulations and talking to customers in new markets in Asia, mostly in the Southeast Asian region.
DNL’s net income attributable to the parent climbed 13% to P2.40 billion in the first nine months of 2018, while revenues inched up by a percent to P20.17 billion for the period.

PLDT eyes higher capex for 2019

By Denise A. Valdez
Reporter
PLDT, Inc. is looking to increase its capital expenditure (capex) for 2019, a significant amount of which will be used to fund its wireless business and its fifth generation (5G) network rollout.
PLDT Chairman, CEO and President Manuel V. Pangilinan told reporters on Wednesday the PLDT board is set to discuss this coming Tuesday their plans for next year, and is targeting a bigger capex than this year’s P58 billion.
“We’re just focusing on our numbers. Capex elevated, higher again next year,” he said.
Mr. Pangilinan refused to give details, but said it will be bigger than rival Globe Telecom, Inc.’s capex.
Globe has not officially announced its targeted capex for 2019 yet, but Mr. Pangilinan said he knows it to be “a billion US dollars,” and PLDT’s would be “much bigger.”
“Wireless is still a significant portion, especially now that we’re going to spend. So we’re expanding some 3G, a lot of 4G sites and then beginning to build out the 5G,” he said of the allocation for next year’s budget.
The PLDT chief also said he expects the performance next year to be “quite good.”
“I think the wireless looks… the numbers are good. Definitely Home, the numbers are very good. Enterprise is also good,” he said, referring to its Home and Enterprise business segments.
Fitch Ratings said last month PLDT and Globe are expected to take a hit in revenues and raise their capex in 2019 as they brace for a new entrant in the telco industry: the winner from the government’s new major player auction, Mislatel Consortium.
The Mislatel group is formed by China Telecommunications Corp., Dennis A. Uy’s Udenna Corp. and its subsidiary Chelsea Logistics Holdings Corp., with franchise-holder Mindanao Islamic Telephone Company, Inc. It has committed a capex of P150 billion in its first year of operations, which is expected to start mid-2019.
Globe President Ernest L. Cu previously told reporters while the company hasn’t finalized its capex yet, the figure is likely to remain close to its budget this year, which was at $950 million (about P49.8 billion).
Should there be increases in Globe’s capex, Mr. Cu said it will not be due to pressure from the new player, but rather from the rising demand for its services.
“We keep increasing our capex because our demand is increasing,” Mr. Cu said in a Nov. 13 interview.
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.

Carrageenan industry exploring new industrial applications

THE Seaweed Industry Association of the Philippines (SIAP) said new carrageenan applications have improved the industry’s prospects after a safety scare.
“We are always developing new carrageenan applications especially in industrials, pharmaceuticals, and food,” Maximo A. Ricohermoso, chairman of SIAP, said in a mobile message.
Mr. Ricohermoso said that industry stakeholders are looking into seaweed applications in paper and organic plastic for packaging. Seaweed can also be processed to serve as a binder for syrups and capsules.
Carrageenan is a food additive extracted from red seaweed, and its use in some edible applications has raised safety concerns, particularly over the risk of cancer.
The US National Organic Standards Board (NOSB) voted in 2016 to drop carrageenan from the list of approved organic products after it found that other ingredients can be suitable substitutes, such as gellan gum, xanthan gum, and guar gum.
In April, the US Department of Agriculture (USDA) announced that it will keep carrageenan on the list of approved products, saying that the product meets the standards of the Organic Foods Production Act of 1990 (OFPA).
“Carrageenan has specific uses in an array of agricultural products and public comment (solicited during the USDA proceedings) reported that potential substitutes do not adequately replicate the functions of carrageenan across the broad scope of use,” the USDA said in its 2018 Notification of Sunset Review.
Mr. Ricohermoso said that “there is not much movement in the seaweed industry so far,” but noted that “it seems stable with good future prospects of stability and hopefully growing modestly every year.”
The Department of Science and Technology (DOST) — Philippine Council for Agriculture, Aquatic and Natural Resources Research and Development (PCAANRRD) said in October that it has conducted experiments in Regions II, III, VII and IX for the use of Carrageenan Plant Growth Promoter (PGP) in mung bean and peanut.
The Carrageenan PGP is registered with the Fertilizer and Pesticide Authority (FPA) as an inorganic fertilizer for rice.
Carrageenan PGP inventor Lucille V. Abad said third-party industries to mass-produce carrageenan PGP are still needed. — Reicelene Joy N. Ignacio

LRMC counts cost of delay in gov’t approval of LRT-1 fare increase

LIGHT RAIL Manila Corp. (LRMC), the private operator of the Light Rail Transit Line 1 (LRT-1), said it has incurred a “fare deficit” of about P100 million for the three quarters of 2018 due to the government’s delay in granting its fare hike petition.
“Our agreement calls for compensation of the… If the fares are at a certain level and it’s not raised, it’s in our agreement, what we call a ‘fare deficit’… (For 2018), there’s a P100 million difference in the revenue that we should have been getting with the increased fares versus what we got,” LRMC President and Chief Executive Officer Juan F. Alfonso told reporters on Friday.
LRMC applied for a P5 to P7 increase in LRT-1 fares last March — the second time it did since the company was awarded the contract to operate the train line in 2014. The Department of Transportation (DoTr) has yet to approve the petition.
The consortium of Ayala Corp., Metro Pacific Light Rail Corp., Metro Pacific Investments Corp. (MPIC) and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd. started operating LRT-1 in September 2015, after it signed the P65 billion, 32-year concession agreement with the government in Oct. 2014. Based on the terms, LRMC is allowed to raise LRT-1 fares every two years.
The DoTr said in August LRMC’s petition was still under discussion, and would require a public hearing, before being approved.
Mr. Alfonso said even with the delays, the government has not paid for the fare deficits from the past years.
“We haven’t been compensated for fare deficits,” he said. “The mechanism in the agreement is for fare deficit or for fare increase. For fare increase, it is paid per user. So if I live in Manila, Makati or Pasay and I use the system, I pay for it. For fare deficit, then it’s taken… from DoTr (budget),” he explained.
Despite this, Mr. Alfonso noted LRMC is still making “a little bit of money,” but just enough to keep the system running.
LRMC allocated a capital expenditure of P7.5 billion for the rehabilitation of the train system, structural rectification and an extension of the line to Cavite.
Mr. Alfonso said they have already spent about P12 billion as of end-November. The capex budget is expected to shift starting next year to focus on the Cavite extension.
He said construction of the LRT-1 Cavite extension is expected to commence by first half of 2019, as substantial right of way was already granted for the first of three segments of the extension.
The 11.7-kilometer extension that will build eight new stations from Baclaran to Bacoor, Cavite is seen completed by late 2021 or early 2022. Mr. Alfonso said the difficulty in relocating posts of Manila Electric Company (Meralco) was the cause of delay.
“We’re still assuming the same costs… Later on, if some of these things have delays and increased costs, then there’s a mechanism in our agreement to deal with it… There’s going to be escalations in costs,” he added.
MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Denise A. Valdez

Fiber industry regulator to distribute free abaca planting material

THE Philippine Fiber Industry Development Authority (PhilFIDA) expects to distribute for free to abaca farmers planting materials that can produce up to 54.4 million abaca plants.
In a statement, PhilFIDA Executive Director Kennedy T. Costales said that the distribution of planting materials will help address the Philippines’ deficit of 25,000 metric tons (MT) of raw abaca fiber.
The planting materials will come from PhilFIDA’ 17-hectare plantation.
“As mentioned before, the preparation and planting of the 17 hectares tissue cultured abaca seed-derived plantation with 1,600 hills per hectare is ongoing and it will all be fully planted by the end of the this year,” Mr. Costales said.
“By December 2020, PhilFIDA projects to harvest/produce 54,400,000 true-to-type abaca planting materials valued at P408 million to be given all to legitimate abaca farmers nationwide for free,” Mr. Costales added.
Mr. Costales also said PhilFIDA seeks to help the Southern Philippines Agro-Industries Reconstruction and Islamic Development Corporation (SPAIRID) in intercropping abaca with coconut trees, wood trees, and other fruit-bearing trees on a 2,500 hectare site in Lanao del Sur and another 2,500 hectares in Lanao del Norte.
“We told them that what we can do for the meantime is provide them with the true-to-type abaca planting materials of about 5,000,000 (worth P37.5 million) all for free or at no cost to them in about two years’ time. We can also provide technical training and the ATBSP (Abaca Tuxy Buying Special Project) business module,” Mr. Costales said.
“The latter will surely bring down the level of poverty with a profound impact in the communities of the two provinces,” he added.
The Philippines is the top producer of abaca in the world, growing its crop mostly in Mindanao and the Visayas, with annual average export earnings of P4.7 billion, according to PhilFIDA data.
Meanwhile, Mr. Costales said that PhilFIDA’s signing of a silk purchasing agreement (Memorandum of Agreement) with Japan’s Organization for Industrial Spiritual and Cultural Advancement (OISCA) did not proceed.
OISCA was to buy silk produce from Philippine farmers at P200 per kilo.
OISCA was represented by Mr. Yukihiro Ishibashi in its meeting with PhilFIDA.
“We informed (OISCA representative Yukihiro) Ishibashi that in good conscience, we cannot sign the agreement as it will not economically benefit our sericulture farmers,” Mr. Costales said.
It said the purchase price works out to over P68.492 per day per farmer, which Mr. Costales said is not competitive compared with other crops. — Reicelene Joy N. Ignacio

T-bills, bonds rates likely mixed

YIELDS ON Treasury bonds (T-bond) on offer on Tuesday are expected to decline, with Treasury bill (T-bill) rates seen to move sideways, ahead of the release of November inflation data.
The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills today, broken down into P4 billion, P5 billion and P6 billion for the three-month, six-month and one-year debt papers, respectively.
The government will also offer P15 billion in reissued 10-year bonds tomorrow with a remaining life of nine years and three months. The papers carry a 6.25% coupon rate.
A bond trader said rates of the T-bills on offer today will likely move sideways, while another said rates will likely be steady given market liquidity.
Last week, the BTr partially awarded the T-bills on auction, borrowing P11 billion out of the planned P15-billion, as it rejected all bids on the shortest tenor amid lukewarm demand. Rates of six-month and one-year papers moved sideways and were at 6.294% and 6.55%, respectively.
Meanwhile, traders expect the yield on the 10-year bonds to decline, with one saying the papers will fetch a rate between 7% and 7.2%.
The Treasury fully awarded the reissued 10-year papers when they were last offered on Nov. 6, borrowing P15 billion as planned versus total bids totalling P28.306 billion. It fetched an average rate of 8.035%, higher than the 6.35% yield in May.
“For the [bonds], most likely it will be around 7% to 7.1%. But it may change depending on the [inflation] data,” another trader said in a text message.
Inflation likely slowed in November from a nine-year peak driven by cheaper oil and improved food supply, analysts said in a BusinessWorld poll.
The survey among 14 economists yielded a 6.3% median forecast for the month, slower than the actual 6.7% figure in September and October. The median also falls within the 5.8-6.6% estimate range of the Bangko Sentral ng Pilipinas.
November inflation data will be released by the Philippine Statistics Authority on Wednesday.
“The inflation forecasts are [slower], [with the] central bank’s November forecast was at 5.8-6.6% based on oil being lower,” the first trader said, adding that the market will also price in the “dovish” remarks of US Federal Reserve Chair Jerome Powell last week, wherein he said interest rates are now closer towards a neutral rate. — Karl Angelo N. Vidal

Cathay Land pours P1B into 2 condo projects

CATHAY LAND, INC. is allocating P1 billion to develop two new residential condominium projects in South Forbes Golf City, citing the robust demand for projects in the south of Metro Manila.
In a statement, Cathay Land said it will spend P1 billion for Stanford Suites 3 and Fullerton Suites, which are located within its 500-hectare township project.
“Industrial and residential activity is on the uptrend in the south, particularly in the Metro Sta. Rosa-Silang-Tagaytay area. This makes it an opportune time to launch two of our new low-rise condominium projects both for the investor and end-user communities,” Jeffrey T. Ng, president of Cathay Land, was quoted as saying.
Located near Westborough Town Center, Stanford Suites 3 targets young families, retirees, and investors. Westborough already has a Coffee Bean and Tea Leaf and Marketplace by Rustan’s as anchor tenants.
Fullerton Suites, located near the Chiang Kai Shek College which will open in school year 2020-2021, is hoping to attract young families, teachers, and businessmen.
It also situated near the Silang East interchange of the Cavite-Laguna Expressway (CALAX), which will be completed by 2020.
“Given that our completed condominium projects have significantly appreciated in value over the past few years and enjoy high lease rates among the local expatriate and education community, both projects will surely get a warm reception from the market,” Mr. Ng said.
Both Stanford Suites 3 and Fullerton Suites will have studio and one-bedroom units. Stanford Suites 3 will have 331 units, while the first tower of Fullerton Suites will have 280 units.
Cathay Land said the unit prices for the two condominiums will start at P1.5 million for a studio unit. Turnover is scheduled for 2021.
The property developer broke ground for Stanford Suites 3 and Fullerton Suites in August and September, respectively.
South Forbes Golf City can be found within the Metro Sta. Rosa-Tagaytay corridor. It currently houses Standford Suites 1 and 2, Scandia Suites 1 and 2, and the Golf View Terraces, as well as boutique communities, Bali Mansions, Nirwana Bali, Phuket Mansions, Racha Mansions, Tokyo Mansions, Chateaux de Paris, and Miami.
Cathay Land is also behind the country’s first designer outlet mall, Acienda Designer Outlet, in Silang, Cavite as well. — Vincent Mariel P. Galang