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DoF says health education best way to curb salt consumption

DEPARTMENT OF Finance (DoF) officials expressed skepticism about the government’s ability to curb salt consumption via taxation, and said the problem might be better addressed via health education.

“We are studying it but it seems that the best way to do it is through regulation. Promotion of the health aspects, and not from taxation,” Undersecretary Karl Kendrick T. Chua said in a media seminar on tax reform in Tagaytay City Friday.

The government is studying a Department of Health (DoH) proposal to discourage excessive salt consumption, possibly with a tax regime that adds to the cost of buying salty food, an approach that has been applied to sweetened beverages.

“We have a technical working group to study this idea further,” he added. The TWG has representatives from the DoF, the DoH and the Department of Trade and Industry (DTI).

Finance Assistant Secretary Antonio Joselito G. Lambino II said the TWG was created shortly after the release of a World Health Organization finding that Filipinos consume more than double the daily recommended intake of about five grams.

Products made with salt are more difficult to regulate at factory level than sweetened beverages, whose exact formulations are registared with the government. Many salty products are also made by small businesses. Salty foods like dried fish are also widely consumed by poor families, making such a tax politically sensitive.

The DoF has been keen to find funding sources to back Universal Health Care (UHC), which comes into force next year, and also to minimize the costs to the health care system from treating chronic diseases. So far the DoF has gone after sugary drinks, tobacco and e-cigarettes.

“What is our objective here — you know we have Universal Health Care but we don’t want to waste it treating preventable diseases?” Mr. Chua said.

The DoH proposal is not part of the administration’s comprehensive tax reform program, but Mr. Chua said that in 2016, the DoF originally included unhealthy products in its tax plans.

“Our original proposal (in 2016 included) a health package, which covers unhealthy food and variants, like tobacco, alcohol, sugar beverages and, as we mentioned, junk food.”

The Tax Reform for Acceleration and Inclusion (TRAIN) Law, or Republic Act No. 10963, introduced excise tax on sugar-sweetened beverages.

The government also passed RA 11346, which increased the excise tax on tobacco products and introduced levies on electronic cigarettes.

The 18th Congress is currently tackling measure which will further increase rates on tobacco products, e-cigarettes and other vapor products as well as alcohol products. — Charmaine A. Tadalan

TIEZA to offer Bohol resort, Intramuros golf club to JV partners

THE Public-Private Partnership (PPP) Center on Friday said the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) Board has identified two assets in Bohol and Manila which will be developed and managed by the private sector.

In a statement emailed by the PPP to reporters on Friday, the TIEZA Board identified Balicasag Island Dive Resort in Bohol and the Club Intramuros Golf Course in Manila “to be developed and managed by a private sector partner (PSP) through a Joint Venture (JV).”

TIEZA approved joint-venture guidelines for private sector partnerships on Aug. 29.

The PPP said Balicasag Island Dive Resort, in Panglao, Bohol, has an estimated area of 1.5 hectares while the Club Intramuros Golf Course covers approximately 23 hectares.

TIEZA will be selecting the two projects’ private sector partners “through competitive selection,” the PPP Center said.

The PPP Center said it is now assisting TIEZA in preparing the selection and tender documents for the publication of the said projects.

Asked regarding the value of the projects, the bidding schedule, and the possible interested parties, PPP Center Director Jomel Anthony V. Gutierrez said via email Friday: “As of now, the details are not yet available because these are still under development.”

TIEZA JV guidelines stipulate that joint venture partners will be chosen via competitive selection, with investors responding to a solicited proposal from the agency.

They can also be chosen through a negotiated competitive challenge, whereby investors may propose a project for TIEZA-owned or controlled properties that will, in turn, be open to challenge by other parties.

The guidelines note that “the party that submitted the unsolicited proposal is accorded the right to outbid any superior offer given by a comparative private sector participant.”

TIEZA will form a Joint Venture Selection Committee to select and evaluate proposals. — Arjay L. Balinbin

DENR campaign touts ‘development’ opportunities from mining

THE Department of Environment and Natural Resources (DENR) said it has launched a responsible mining information campaign which it hopes will promote “pro-people” business practices while clearing up the public’s “misconceptions” about the industry.

“Our goal is to harness this mineral wealth for progress and development and the key to that is responsible mining,” Environment Secretary Roy A. Cimatu said in a statement.

“It will have a contributory effect siguro (maybe) but ang the key really is for the mining companies to be able to show that they are capable to undertake responsible mining… It’s really to come up with a more positive or balanced perspective of what mining is,” Analiza R. Teh, undersecretary for climate change and mining concerns at the DENR, said in a chance interview during the launch of the campaign in Quezon City Friday.

She was asked whether the campaign would lead to the resolution of the current moratorium on approving new permits and the ban on open-pit mining.

“This is part of the campaign because there are still a lot of hurdles… we hope that by communicating to the general public and especially the decision-makers… (to support the) mining industry… because it is a contributor to the economic development of any country,” Mines and Geosciences Bureau (MGB) Director Wilfredo G. Moncano said in a news conference after the launch.

The mining and quarrying industry contacted 4.9% in the third quarter, widening the year-earlier contraction of 1.3%, due to the 18.4% decline in nickel mining.

The #MineResponsibility campaign seeks to create a clearer and more factual image of the mining industry, the DENR said, and hopes to reverse misconceptions about the industry.

“Increasing awareness on the dynamics about our policies, the reforms that we are undertaking, the contribution of the sector, and (mining companies’) efforts to be compliant,” Ms. Teh said. — Vincent Mariel P. Galang

Fitch sees telcos turning to debt to fund capex, 5G prospects still limited

THE Philippine telecommunications sector is expected to spend more than it can generate internally over the next 18 months, with telcos turning more to debt to fund their future capital expenditures, Fitch Ratings said.

In a statement Thursday, Fitch said: “We forecast average capex intensity for the sector to stabilise at 35%-37% in 2020, resulting in negative free cash flow (FCF) which we expect to be debt-funded.”

Also, over the next 18 months, capex for 5G technology is likely to be limited due to “lack of applications and the absence of a robust ecosystem of customer devices,” it added.

Philippine telcos are expected to be still dependent in the next three years on existing 4G technologies amid growing demand for data.

Fitch noted that both PLDT, Inc. and Globe Telecom, Inc. are positioned to increase their financial flexibility to raise more debt to fund future capex.

It also said it expects “intensified” competition with the entry of China-backed DITO Telecommunity Corp., which hopes to corner nearly a third of the market in two to three years.

“However, the newcomer’s pledge to provide coverage for 37% of the population by July 2020 (with 27Mbps minimum broadband speed) and up to 84% by 2024, suggests limited coverage in the short term,” Fitch added.

Fitch said PLDT, which it rates at BBB with a stable outlook, had a “stronger recovery” in the third quarter as it entered into its “third consecutive quarter of growth in wireless revenue, underscoring a firmer recovery for the sector.”

It noted that PLDT’s quarterly wireless revenue increased 12% year-on-year, which is higher than the 9% posted Globe Telecom, Inc. (BBB-/Stable), adding that network quality and coverage have substantially improved for both telcos because of their capex over several years prior to the entry of Dennis A. Uy’s DITO.

Globe posted an attributable net income of P5.63 billion in the three months to September, up 17% from a year earlier, driven by strong growth in all its data-related products and services.

Meanwhile, PLDT’s attributable profit fell 16% in the third quarter, as higher revenue from wireless was offset by lower earnings from its fixed-line and other businesses. It posted a net income attributable to the parent of P3.79 billion, as revenue slipped 5% to P42.45 billion. Data and broadband account for 66% of PLDT’s total service revenue, growing 20% to P76.7 billion in the first nine months. — Arjay L. Balinbin

Nickel Asia profit falls 43% in first 9 months on weak prices

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NICKEL Asia Corp. said net profit fell 43% in the nine months to September due to weak nickel prices as well as a stronger peso and investments in loss-making processing plants.

In a disclosure Friday, the miner said it booked a P1.917 billion in its preferred form of reporting profit — net income attributable to equity holders — against P3.366 billion a year earlier.

It said earnings before interest, tax, depreciation, and amortization (EBITDA) declined 24% to P4.60 billion.

“The drop in the company’s earnings is mainly due to a combination of a weaker average nickel ore price, a stronger peso and the company’s share of losses from its investment in both the Coral Bay and Taganito processing plants,” Nickel Asia said.

It owns 10% of the two processing plants and its total share of losses amounted to P85 million, after recognizing P617 million worth of earnings a year earlier. The plants reported losses after the price of cobalt fell to $16.46 per pound from $39.05 a year earlier. Cobalt is a by-product of both plants.

The company sold 15.29 million wet metric tons (WMT) of nickel ore in the first nine months, down from 15.55 million a year earlier.

Of the total ore shipments, 7.47 million WMT was saprolite ore, down 12% year-on-year, and 7.82 million WMT was limonite ore up 11%, which included 6.34 million WMT delivered to both Coral Bay and Taganito plants, which was up 9%, year-on-year.

“The company was not able to fully benefit from the effect of higher prices during the period under review as the run-up in ore prices only started in the latter part of the third quarter,” Nickel Asia President Martin Antonio G. Zamora said.

The appreciation of peso to dollar also led to foreign exchange losses of P105 million from gains of P647 million reported in the same period last year. Realized peso to dollar exchange rate for ore sales was P51.89 from P52.89, year-on-year.

It realized an average price of $5.96 per pound of payable nickel ore shipments to both processing plants in the period, according to London Metal Exchange (LME) reference prices. A year earlier, the average price was $6.21.

In terms of exports, the company realized a higher average price of $21.49 per WMT from $20.79 a year earlier. The average price generated from the sale of saprolite and limonite ores fell 6% to $15.84 per WMT.

“The company expects a strong performance for the remainder of the year due to the higher prices contracted on its remaining shipments coupled with the anticipated return to profitability for the two processing plants,” Mr. Zamora said.

Nickel Asia fell 1.53% to close at P3.86 on Friday. — Vincent Mariel P. Galang

Shakey’s net profit up 27.3% on new-store openings

Shakey’s Pizza Asia Ventures Inc. said third-quarter net profit rose 27.3% to P176.38 million as revenue grew in the double digits, in part after the opening of new stores.

Revenue — including net sales, royalty and franchise fees — rose 13.3% to P2.04 billion, according to results submitted to the stock exchange Friday.

In the nine months to September, Shakey’s reported an 11% increase in net profit to P594 million as the full-service restaurant group opened new stores and folded in another restaurant brand.

“We are pleased with the results of our initiatives to trim down unnecessary expenses and run a leaner, tighter ship. Year-to-date, raw materials have also moved in our favour adding extra upside to our margins. Nonetheless, we are bracing ourselves for a more challenging year-end with some of our main input costs on an upward trend,” Vicente L. Gregorio, Shakey’s president and chief executive officer, said in a statement.

The group earned improved margins from various efficiencies and lower costs. It said sales were boosted by the consolidation of Peri-Peri Charcoal Chicken beginning June 1.

Systemwide sales, which covers both company-owned and franchised stores — grew 9% in the nine months to P7.4 billion due to store openings in second-tier cities.

Same-store sales growth (SSSG), however, remained flat with Shakey’s not raising prices. The company said competition, particularly in delivery, has also heated up.

“Same-store sales remain challenged by promotion-heavy programs of various industry players. We are also lacking this year the positive SSSG impact of price increases, which had contributed close to half of same-store sales growth in previous years. Nonetheless, we believe this is a short-term phenomenon and remain optimistic about the long-term prospects of food service in the Philippines,” Mr. Gregorio said.

“We will continue to open new stores, especially in second tier cities where we are still seeing many opportunities. For Peri, we are quite encouraged by the market’s reception and will be more aggressive in opening stores to meet unserved demand,” he added.

On Friday, Shakey’s rose 0.85%, closing at P11.92. — Victor V. Saulon

PRC invests in two gaming subsidiaries

PHILIPPINE Racing Club, Inc. (PRC) said its board approved this week investments in two firms to bolster its gaming operations.

The racetrack operator told the stock exchange Friday: “Fulcrum Computer Services Inc. will be incorporated to engage in computer rental business and for organizing events for computer and video games,” it said about one of the new subsidiaries.

Fulcrum Computer Services will have authorized capital of P10 million and will be 75%-owned by PRC, and 25% owned by Ronald Allan A. Caluste and Christian F. Peña. The initial subscription of PRC will be 18,750 shares at a par value of P100.

Meanwhile, Santa Ana Racing Park, Inc. will be incorporated to engage in various gaming businesses. It will have an authorized capital of P100 million and will be wholly owned by PRC, which will initially subscribe to P25 million shares at P1 par value.

PRC has a franchise to operate a race track and manage betting stations.

It is also in the property business, including leisure and recreational developments and memorial parks.

The decision to invest in the two subsidiaries was approved by PRC’s board on Nov. 7. — Victor V. Saulon

There’s room for another BSP rate cut in 2020: MUFG

THE Philippine central bank might further cut benchmark interest rates next year as the economy continues to pick up amid global conditions, according to Leong Sook Mei, Association of Southeast Asian Nations head of Global Markets Research at MItsubishi UFJ Financial Corp.

“There are still expectations that possibly you may get one more rate cut, but I think we need to see how the trade war pens up,” she said at a briefing on Friday.

Ms. Leong said the central bank has been very transparent about its direction, citing Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno’s recent remarks.

She noted that Mr. Diokno had said that they were done with rate cuts this year. The BSP chief has told ABS-CBN News Channel and Bloomberg that it would pause monetary easing this year because it has “done enough” for the economy.

Ms. Leong said she expects a barrage of cuts in the reserve requirement ratio next year since the Philippine level is still higher than in other countries.

“It’s very clear as well that next year, there will be more reserve requirement cuts,” she said, possibly by 300 basis points.

The BSP aims to cut the reserve level to a single digit “because14% is still very, very high,” she said.

The BSP’s Monetary Board cut benchmark interest rates by 25 basis points (bps) for the third time in September, in the face of continued easing of price pressures and given the need to spur the economy.

Policy rate cuts this year have totaled 75 bps, lower than the 175 bps tightening done last year amid a high inflation environment.

The latest monetary policy move slashed rates for the overnight reverse repurchase facility, as well as overnight deposit and lending to 4%, 3.5% and 4.5% respectively.

Meanwhile, the latest reserve requirement announcement in late October will cut banks’ reserve requirement by the first week of December to 14% for commercial banks and 4% for thrift banks. The level for rural banks was unchanged at 3%. — Luz Wendy T. Noble

Peso barely moves as market waited for US-China deal

THE peso slightly weakened against the dollar on Friday as markets waited for details of a trade tariff deal between the US and China.

It closed at P50.49 a dollar, 0.9 centavo weaker than a day earlier, according to data from the Bankers’ Association of the Philippines (BAP).

Week on week, the peso strengthened by 25 centavos from its P50.74 close on Oct. 31.

The peso opened at P50.52 and weakened to as much as P50.56. It strengthened to as much as P50.45. Dollars traded slipped to $789.65 million from $1.15 billion a day earlier.

“The peso weakened on some market uncertainty about the details of the mutual rollback of trade tariffs between the US and China,” a trader said in an email.

UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion traced the peso’s sideway movement to the absence of economic data drivers.

The US and China have agreed to roll back tariffs on each others’ goods as part of the first phase of a trade deal, officials from both sides said.

The Chinese Commerce Ministry, without laying out a timetable, said the two countries had agreed to cancel the tariffs in phases.

White House spokeswoman Stephanie Grisham told Fox News Channel the United States was “very, very optimistic” about completing a deal that would defuse a 16-month trade war between the world’s two largest economies. — Luz Wendy T. Noble

Central bank shuts down another rural bank

THE Philippine central bank has ordered for the closure of AMA Rural Bank of Mandaluyong, Inc. and ordered the Philippine Deposit Insurance Corp. (PDIC) to take over its liquidation.

Bangko Sentral ng Pilipinas issued the order on Nov. 7. The state deposit insurer took over the bank on Nov. 8, it said in a statement.

The AMA Rural Bank of Mandaluyong had 8,434 deposit accounts with total deposit liabilities of P1.4 billion. Data showed P1.3 billion of deposits were insured.

“PDIC assured depositors that all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of P500,000,” PDIC said.

“Individual account holders of valid deposits with balances of P100,000 and below do not need to file deposit insurance claims, provided they have no outstanding obligations or have not acted as co-makers of obligations with AMA Rural Bank of Mandaluyong,” it added. — Luz Wendy T. Noble

PSBank Q3 net income jumps 20% on fees

PHILIPPINE Savings Bank (PS Bank) posted a 20% increase in profits to P813 million in the third quarter from a year earlier, boosted by interest and fee-based income, according to a stock exchange filing on Friday.

This brought the nine-month net income to P2.2 billion, 8.4% higher than a year earlier.

Core revenue rose 9.3% year on year, composed of interest and fee-based income. Return on assets was at 1.2%, the thrift lender said. Net interest income rose 3.9% to P2.922 billion.

Total loans grew 6.4% from a year earlier to P162.1 billion, buoyed by auto and mortgage loans.

“The encouraging results we’ve reaped are underscored by a bank-wide mindset built on purposeful innovations, enhanced operational efficiencies, and firm decisions backed by data analytics and better understanding of our customers,” PSBank President Jose Vicente L. Alde said in a statement.

“As we enter the homestretch of 2019, we are even more motivated by these positive developments, and continue to be inspired by our achievements and recognitions,” he added.

PSBank shares closed 10 centavos lower at P57.90 apiece on Friday. — Luz Wendy T. Noble

SSS wants to cover more informal sector workers

THE state-run Social Security System (SSS) wants to include workers in the informal sector in its pension coverage as part of a plan to improve the system.

There were only 108,779 members from the informal sector as of end-September, according to SSS data. Meanwhile, 44,093 members were registered through the Cooperative Accreditation Program and 230,069 members were covered as job order personnel of government offices, the pension fund said in a staement on Thursday.

“For many years now, we have been reaching out to them, strongly encouraging them to pay their SSS which is the cheapest and most accessible retirement savings today,” SSS President and Chief Executive Officer Aurora C. Ignacio said in a statement.

But their varied work arrangements and intermittent income have prevent them from regularly paying SSS premiums, she added.

“A challenge for us now is to create a special pension fund program for informal sector workers like farmers, fisherfolks, among other groups, considering their income spread,” Ms. Ignacio said. — Beatrice M. Laforga

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