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Mislatel consortium finishes on step towards operation

antenna tower

NEW telecommunications player Mislatel consortium — made up of Chelsea Logistics and Infrastructure Holdings Corp., China Telecommunications Corp., and Udenna Corp. — said it completed the signing of the share-purchase agreement with franchise holder Mindanao Islamic Telephone Company, Inc. (Mislatel), as it moves forward in securing government requirements to receive its permit to operate and frequencies.

In a disclosure to the stock exchange Friday, Chelsea Logistics said the Mislatel consortium finalized the share-purchase agreement on Thursday.

“The deal was signed by Udenna Chairman Dennis A. Uy, Chelsea President and Chief Executive Officer Chryss Alfonsus V. Damuy, and China Telecom Deputy Managing Director Xiao Wei,” it said.

The deal was among the government’s bidding requirements when it held the auction for a third telecommunications player last year, where it said the winner needs to have a paid capital of at least P10 billion.

“The shares reflect the binding bidding agreement shares of 35% Udenna, 25% Chelsea, and 40% Chinatel. This is in compliance with our required equity infusion of P10 billion under the terms of reference,” Mislatel Spokesperson Adel A. Tamano said in a mobile message.

Mislatel is currently in the process of securing the requirements to be given its certificate of public convenience and necessity (CPCN) which is the permit to operate, and the frequency bands of 700 megahertz (MHz), 2100 MHz, 2000 MHz, 2.5 gigahertz (GHz), 3.3 GHz and 3.5 GHz.

The Department of Information and Communications Technology (DICT) said it is ready to award the permit and frequencies to Mislatel once it gets the go signal from the Securities and Exchange Commission (SEC).

Mislatel is required by the bid’s terms of reference to get an SEC clearance confirming the consortium follows the 40% limit on foreign equity ownership of telecommunications companies.

“We’re really hoping to get everything fixed by July. The signing of the agreements is a vivid manifestation of the fulfillment of our goal to provide Filipinos with faster and reliable internet connection,” Chelsea’s Mr. Damuy was quoted as saying.

Mislatel is targeting to start its commercial operations by the second quarter of next year. It committed to render an average broadband speed of 27 Megabits per second (Mbps) and cover 37.03% of the national population within its first year of operation. — Denise A. Valdez

Resorts World to reopen casino’s 2nd floor two years after deadly fire

TRAVELLERS International Hotel Group, Inc. (TIHGI), the owner and operator of Resorts World Manila (RWM), expects double-digit growth in gross gaming revenues (GGR) as reopens the second floor of its casino area in July, two years after a gunman shot up the casino and started a fire that killed 36 people.

TIHGI President and Chief Executive Officer Kingson U. Sian said the second floor of the casino will take up 7,000 square meters (sq.m.) and will have 100 gaming tables and about 600 slot machines.

“That will be an entire new floor of gaming space, so as we expand the gaming space, we are attracting not only locals but also foreign players to come, and we can develop new junket relationships cause we can provide new space,” Mr. Sian told reporters after the company’s annual shareholders meeting on Friday.

With the opening of the second floor, Mr. Sian said they will have a total of 165 tables and about 1,000 slot machines in RWM’s Grand Wing. This is in addition to more than 200 tables and 1,300 slot machines in the Garden Wing.

The company expects average daily foot traffic to improve to 40,000 to 50,000 by next year because of this expansion, compared to its 2018 average foot traffic of 28,500.

Mr. Sian noted that once they open the second floor of the casino, TIHGI will have more gaming space than it had prior to the gunman’s attack.

With this, TIHGI expects double-digit growth when it comes to gross gaming revenues.

“We’re coming from a low base, and we’re coming up with new spaces so we’re expanding the gaming revenue. The plan is to sustain it. We’re working hard to complete the new facilities,” Mr. Sian said.

Apart from the gaming area, the company is also adding more hotel rooms at the RWM complex with the opening of Hotel Okura Manila by the end of the year. This follows the opening of the Hilton Manila in October 2018 and the Sheraton Manila Hotel last January, for a total of 940 additional rooms.

The company will end the year with 3,555 rooms in the RWM complex.

The other hotels in the complex include the Marriott Hotel Manila, Maxims Hotel, and Holiday Inn Express Manila Newport City.

TIHGI booked a net income attributable to the parent worth P244.44 million in the first quarter of 2019, 45% lower year-on-year. This came amid a 55% jump in gross revenues to P8.49 billion in the same period.

Meanwhile, GGR climbed 53.8% to P6.89 billion, driven by both its VIP and mass gaming segments. — Arra B. Francia

Belmonte says IRR for QC gambling ordinance to be made in her term

QUEZON City Mayor-elect and outgoing Vice-Mayor Maria Josefina G. Belmonte said the city ordinance which will regulate gaming firms and require city residents to pay entrance fees to casinos may be implemented in her term as mayor.

“I think what we have to do is write the implementing rules and regulations and that is the task of the executive department. And the executive hasn’t written the implementing rules and regulations yet, so tingin ko ako na siguro, panahon ko na siguro yan mas ma-i-implement (I thinks it’s on me, it will be implemented during my term),” Ms. Belmonte said in phone interview.

The Quezon City Council on Oct. 1, 2018 approved Ordinance No. SP-2773, S-2018 which was in turn approved by Mayor Herbert M. Bautista. The ordinance, which was modeled after Singapore’s restrictions on gambling by residents, was aimed to protect Quezon City locals from developing gambling addictions.

The ordinance establishes the Gambling Regulatory Advisory Council which shall recommend the approval of permits, monitor gambling operations, and enforce the provisions of the ordinance with the help of the Quezon City Police District, Philippine Amusement and Gaming Corp. (PAGCOR), and other operators of games of chance. It will also implement a 24-hour gambling helpline.

It will also require Quezon City residents to pay P1,500 if they want to play at a casino; P500 at e-games outlets; and P100 at e-bingo for every consecutive 24-hour period. Residents will have to pay P30,000 if the gambling establishment offers annual memberships.

According to the data from the city, there are 54 Betting/Off-Track Stations, four Betting/On-Line Bingo, 11 lotto outlets, and 13 online casinos (e-games) operating within the city in 2019.

PAGCOR expressed opposition to the city ordinance last March, asserting that it has the sole authority to regulate gambling operations, citing, among others, Presidential Decree No. 771 which revokes the authority of the local governments to issue licenses and permits for gambling operations.

Ms. Belmonte said the Quezon City government believes the enactment of the Local Government Code of 1991 has “devolved some of the regulatory functions for people’s welfare to the local government” while the PAGCOR charter was authored much earlier.

“I believe it includes regulating gambling because I believe it is a vice, and I believe it is something that can affect the welfare of our constituents,” she said.

Ms. Belmonte said they have appealed to the PAGCOR to work together to curb problems in gambling and consider the “welfare aspect” of the ordinance more rather than the loss of revenue.

“Pero (But) having said that, they still register their opposition and they said that they will TRO (temporary restraining order) the measure,” she said, adding that she does not know when the TRO might be filed.

The mayor-elect said if PAGCOR deems filing a TRO as the appropriate act, the city government will “welcome” the move and whatever the decision of the Supreme Court is.

“Kung (if) the Supreme Court rules in favor of the local government, then that is a victory for all local governments because that means all local governments can now regulate in their respective jurisdictions. If the Supreme Court rules in favor of PAGCOR, we will respect the ruling of the Supreme Court,” she said.

Listed Bloomberry Resorts Corp. secured a 1.57 hectare site at the Ayala Vertis North Complex in Quezon City and is set to build another branch of the Solaire Casino on the land.

Ms. Belmonte said the QC government is not afraid of losing investments due to the ordinance, saying that there were appropriate public consultations during the proposal and all stakeholders were represented.

“All stakeholders were duly invited to and participated in our public consultations and they were able to submit their positions papers,” she said. “While there was opposition on the part of some gambling establishments, many also understood the need to protect the welfare of people, especially those who cannot afford to gamble.”

The ordinance was proposed by Councilors Franz S. Pumaren, Ivy Xenia L. Lagman, Alexis R. Herrera, Raquel S. Malañgen, Marvin C. Rillo, and Godofredo T. Liban II.

Ms. Belmonte is set to assume her post on June 30. — Vann Marlo M. Villegas

Central bank calls on financial institutions to sign up on cybersecurity sharing platform

By Reicelene Joy N. Ignacio, Reporter

TO HELP strengthen the banking industry’s resilience to cyber attacks, the Bangko Sentral ng Pilipinas (BSP) has ordered BSP-supervised financial institutions (BSFIs) to participate in a cybersecurity sharing platform hosted by the Bankers Association of the Philippines (BAP).

“In order to further strengthen the industry’s cyber-resilience amidst growing threats, the BSP reiterates the need for BSFIs to have a collective, coordinated and strategic cyber response through information sharing and collaboration,” according to BSP Memorandum No. M-2019-016 issued on June 11 and published last June 13 as signed by Sector-in-Charge Restituto C. Cruz of the Financial Supervision Sector.

“As cyber-attacks can be launched even against BSFI’s with simple IT (information technology) profiles, the BSP enjoins all BSFIs to participate in the BAP Cybersecurity Incident Database (BAPCID)…,” the memorandum further read.

BAPCID is a platform hosted by BAP used for sharing industry-wide and cyber threat and best practices.

The memorandum further stated that through the database, BSFIs can raise “the level of situational awareness” as the latest tactics, techniques, and procedures of cyber threat actors that target financial institutions, including those in the dark web, will be shared.

“The BSP, as an advisory member of the BAPCID, shall also use the BAPCID platform in the issuance of specific cyberthreat advisories and memoranda,” read the memorandum.

In March, BSP Governor Benjamin E. Diokno said that he would strengthen the central bank’s capacity to respond to cyberthreats, which he called the “number one threat to any financial system.”

The BSP started to become stricter in its rules in 2016 after unidentified hackers transferred an amount of $81 million from Bangladesh Bank’s account at the New York Federal Reserve to a Makati branch of Rizal Commercial Banking Corp.

For one, the BSP requires all supervised financial firms to report any cyber-attacks or data breach cases within two hours upon discovery, followed by a more detailed report the next day.

Peso declines on US-Iran tensions

By Kimani Eros S. Franco

THE PESO declined against the dollar on Friday, dragged by geopolitical tensions between the United States and Iran.

The local currency closes the session yesterday at P52.02 versus the greenback, sixteen centavos weaker than the P51.865 finish on Thursday.

The peso opened the session stronger at P51.9 against the dollar. Its peak for the day stood at P51.845 while its intraday trough settled at P52.025.

Trading volume thinned to $870.39 million from the $919.84 million that changed hands the previous session.

“The peso weakened today due to dollar safe-haven demand amid further heightening of geopolitical tensions abroad,” a trader said.

In particular, the trader referred to the renewed conflicts between the United States and Iran following a bombing on two oil tankers in the Gulf of Oman.

This comes as the US blames Iran for the attacks on two oil tankers in the Gulf of Oman on Thursday, according to a report by Reuters. It was not immediately clear what befell the two oil tankers, which both experienced explosions and forcing the crews to abandon ship. Iran has denied these allegations.

Oil prices rose as much as four percent following this incident, raising concerns on a military confrontation between Tehran and Washington.

For Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort, yesterday’s P52.02 close was “still better” than the P52.04 close last week and is “still among the best levels in a month and… in a year.”

“Despite geopolitical risks in the Middle East involving attacks on two tanker ships at the Gulf of Oman… global oil prices remained among four-month lows and [that] the ten-year US government bond yields eased to 21-month lows at 2.06%,” Mr. Ricafort said in an e-mail.

“Lower oil and US government bond yields are offsetting factors that support the peso,” he added.

PSEi falls amid geopolitical tensions

By Janina C. Lim, Reporter

LOCAL equities finished Friday in negative territory as investors took caution over the geopolitical tensions at home and abroad, particularly the continued worries over the US-China trade tensions and the attack on two oil tankers in the Middle East that was seen as a cause for the increase in oil prices.

The bellwether Philippine Stock Exchange index fell 0.77% or 61.56 points to close at 7,990.20 yesterday. Meanwhile, the broader all-shares index slid 0.59% or 29.21 points to 4,884.91.

Summit Securities, Inc. President Harry G. Liu said in a phone interview that the explosions on oil tankers in the Gulf of Oman caused “sudden pressure” in the market over fears that the price of crude oil will go up.

News reports said the United States, citing a report from its Intelligence unit, linked Iran to the attack, stoking fears of a conflict furthering between the two countries.

Regina Capital Development Corp. Managing Director Luis A. Limlingan also noted in a mobile phone message that oil futures surged after reports about the attack.

Overall, Mr. Limlingan noted that local stocks closed in the red this week “with geopolitical tensions headlining the fall.”

For one, Mr. Limlingan noted the US’s and United Kingdom’s separate pronouncements of implementing punishing measures against Hong Kong over possible extradition to China, including freezing US assets for those that force individuals into China.

In addition, investors also turned to the US-China trade spat amid the lack of other market catalysts.

“With little in the way of market-moving news, investors were searching for narratives and again weighing the potential impact of the U.S.-China trade war on policy and markets,” said Mr. Limlingan.

Nevertheless, Summit Securities’ Mr. Liu sees the index breaching the 8,100 “medium-term” resistance once positive developments make way between the US and China’s trade negotiations.

“If we break 8,100, we broke the resistance of the medium term where you can predict that the market can rise to up to 8,200,” Mr. Liu said.

Mr. Liu said that the collision between the Chinese and Philippine vessels at the West Philippine Sea may have also raised a concern.

On June 12, it was reported that a Filipino vessel, which was anchored at Recto Bank in the West Philippine Sea, sank after it collided with a Chinese vessel on the evening of June 9.

The incident was reported by Filipino fishermen in the vicinity, who said the Chinese vessel abandoned the submerged Philippine-flagged F/B GIMVER 1 that had 22 people on board.

Friday closed with more subsectors in the red. Holding firms plunged 1.41% or 107.96 points to 7,542.51; property slumped 0.85% or 37.06 points to 4,332.57; industrial went down 0.55% or 64.75 points to 11,731.32; and services inched down 0.15% or 2.60 points to 1,694.87.

On the other hand, mining and oil grew 0.74% or 52.44 points to 7,152.78 while financials rose 0.44% or 7.56 points to 1,742.79.

Decliners trumped advancers, 112 to 74, while 54 were unchanged.

Friday’s turnover was valued at P7.68 billion, down from the previous session’s P9.10 billion.

Foreign investors turned sellers, with net outflows at P388.12 million, reversing net purchases on Thursday at P318.98 million.

Arthaland leading the way in sustainable office developments

ArthaLand is making its mark as the Philippines’ foremost developer of green office buildings. It all started last year with the opening of the 31-storey ArthaLand Century Pacific Tower (ACPT) in Bonifacio Global City. ACPT is a multi-award winning Premium Grade office development recognized both locally and internationally. Among others, it was the 5-Star winner for Best Office Architectural Design in Asia at the 2017 Asia Property Awards and the winner for Best Green Development and Best Office Architectural Design at the 2017 Philippines Property Awards. It has received both the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Platinum rating and the Philippine Green Building Council’s Building for Ecologically Responsive Design Excellence (BERDE) 5-Star certification, the highest and most prestigious categories in both green building rating standards.

Expanding their Footprint with a Signature Office in Cebu

Following the success of ACPT, ArthaLand is currently in the midst of constructing the Cebu Exchange, a landmark business ecosystem at the gateway of the Cebu I.T. Park. Recognized as the Best Office Development in the Philippines by the 2018 Property Guru Asia Property Awards, the Cebu Exchange is envisioned to be the best and biggest single tower green office development in the country with approximately 11-hectares of floor space. On-track for its 2021 turnover, it holds the distinction of being the largest green high-rise in the Visayas and Mindanao region to be on target to achieve dual building certification from both LEED and BERDE.

Artist’s perspective of the Cebu Exchange retail area (Salinas Drive, Cebu City)

A New Capital Address for Business and Commerce in Taguig City

 Launched within the first quarter of 2019, construction is also already underway for the Savya Financial Center – a Grade A mid-rise office development with a fully integrated retail component. Situated in the highly connected new business district of ARCA South in Taguig City, both the North and South Towers of Savya are designed and built with modern, smart, and sustainable building features, qualifying it for dual certification in both LEED and BERDE, much the same way as all the other ArthaLand offices.

Artist’s Perspective of the Savya Financial Center (ARCA South, Taguig City)

The Value of Sustainability

“When we decided to dedicate ourselves to developing sustainable properties, obviously we were thinking of how the market would receive it being a publicly-listed company. But, it was also a commitment by the major shareholders to attend to the concern for the environment,” said Jaime C. González, Vice Chairman and President & CEO of ArthaLand.

‘Artha’ is a Sanskrit word connoting purpose, knowledge, significance, and wealth. Not just wealth in material terms but, more importantly, in the enduring intangibles such as comfort, health, and happiness. These concepts characterize ArthaLand’s commitment to sustainability.

“That defines our philosophy. It is not just about making money. We want to take care of the environment. We want to leave a lasting legacy behind,” said González.

And being green is paying-off for the Company as there is a rising demand for LEED and BERDE-certified sustainable office buildings, especially among multinational companies, due to their positive impact in saving the environment. Not only that, green buildings also allow businesses and organizations to maximize their operational efficiency, lower day-to-day costs, and provide a healthier, more comfortable, and more productive work environment.

“We are expanding our development space fivefold over the next few years, and each development will be sustainable,” says González. “We are extremely gratified to be known for sustainable, world-class developments, where each project is carefully developed, designed, and constructed to the highest standards in the country.”

ArthaLand is on-track to grow its development portfolio by five times. With several projects in the pipeline, the Company is expected to reach 550,000 sq.m. of gross floor area.

Dutchman wins Stage 1 of Le Tour de Filipinas; Carino, Oranza bomb out

TAGAYTAY CITY — Flying Dutch Jeroen Meijers of Taiyuan Miogee Team bested all comers including top locals El Joshua Carino and Ronald Oranza in claiming Stage One victory on Friday in the 10th Le Tour de Filipinas that started and finished at the Praying Hands Monument here.

Mr. Meijers, 26, was incredible in the ascent as he methodically negotiated the steep Sampaloc Road in Talisay, Batangas, that propelled him straight to the solo general classification lead with a clocking of three hours, six minutes and 59 seconds.

It was the second podium finish for Mr. Meijers after he wound up third in Stage One of the Toir of Taiyuan in China on his way to finish third overall in that race two weeks ago.

“I was here six days and I knew the climb was going to be steep so I just took my time at the beginning before I stepped on it late,” said Mr. Meijers, who took up the sport when he was only six years old.

Checking in at second was Angus Lyons of Oliver’s Real Food Racing of Australia, who clocked 3:08:38, while 7Eleven Cliqq-Air21 by Roadbike Philippines’ Daniel Habtemichael of Eritria ended up at third in 3:09:06.

Marcelo Felipe, who skippers 7Eleven Cliqq-Air21 Roadbike Philippines, prevented an all-foreigner top 10 and finished at 10th in 3:09:25.

PGN Road Cycling Team of Indonesia’s Sandy Nur Hasan (3:09:14) and Aiman Cahyadi (3:09:21), Team Ukyo of Japan’s Kohei Yokotuka (3:09:21) and Naoya Yoshioka (3:09:23), Team Sapura Cycling of Malaysia’s Muhsin Al Redha (3:09:25) and Taiyuan Mogee’s Li Shuai (3:95:25) came in at fourth to ninth place, respectively.

Messrs. Carino and Oranza, in contrast, faltered under tremendous pressure. They both suffered cramps and failed to make the cutoff that led to their elimination.

Mr. Carino claimed he missed training in full regimen in the past four days while Mr. Oranza rued dehydration as the culprit.

“Cramps,” said a frustrated Carino.

For Mr. Oranza, the diarrhea that hit him in a race last week zapped the energy out of him.

“I haven’t fully recovered,” Oranza said in the vernacular.

The absence of Messrs. Carino and Oranza left the national team, all from the heralded Navy-Standard Insurance squad, with just three riders in the fold — Junrey Navarra, Jhon Mark Camingao and Jan Paul Morales.

Mr. Navarra, a dark horse to win in this stage being the many-time King of the Mountain winner in local races, was at 20th in 3:12:21 while Messrs. Camingao and Morales were at 24th and 25th with times of 3:15:15 and 3:15:25.

The race will resume today with the 194.9-km Stage Two, which will start in Pagbilao, Quezon, and end in Daet, Camarines Norte, with Mr. Meijers wearing the purple jersey symbolic of the general classification lead.

PHL banks maintain bullish outlook

BANK EXECUTIVES expect the industry to remain stable over the next two years due to strong economic growth prospects, with most lenders saying they will use financial technology to boost their operations.

Results of the Banking Sector Outlook Survey (BSOS) of the Bangko Sentral ng Pilipinas (BSP) for the second semester of 2018 — whose respondents include presidents, chief executive officers or country managers of 120 banks in the country — showed that 70.2% of respondents see the banking system remaining stable over the next two years on the back of their bullish economic outlook versus 66.7% the previous semester. Meanwhile, 28.6% of the industry leaders project stronger banks.

The survey’s respondents came from 45 universal and commercial banks (including 25 foreign lenders), 55 thrift banks, and 20 rural and cooperative banks, the BSP said in the report published Thursday, versus the 114 lenders in the previous survey.

The overall response rate for the second semester survey however declined to 69% from 96.6% in the first half of 2018. The banks that responded accounted for 91.4% of the total assets of the banking system.

According to the survey, 86.1% of respondents see the economy growing from 6-7% percent within the next two years, compared to 80.8% in the previous semester.

“Despite global uncertainties and market volatilities, banks maintain their optimism on the country’s economic prospects…,” the report read.

The projected economic growth and stability of the banking system influenced 73.8% of respondents to forecast double-digit growth in assets. However, this is lower than the 80% who expected the same in the first semester of 2018.

“The growth in assets is expected to be driven by credit expansion as 81% of the banks project a double-digit growth in their loan portfolio during the BSOS for the second semester of 2018,” the report read.

In particular, 84.4% of universal and commercial bank respondents see double-digit loan growth. Meanwhile, 41.2% of thrift banks loan growth at more than 20%, which the BSP said was “the most optimistic” outlook among lenders.

Deposits are also expected to fuel asset expansion as 72.2% of respondents also project double-digit deposit growth. More than three quarters of the smaller banks are aiming for double-digit growth in their deposit liabilities, with only two-thirds of the universal and commercial lenders targeting the same.

About 92.4% of respondents also forecast double-digit net income growth in the next two years, higher than the 83.3% who had this outlook in the first semester of 2018.

Thrift banks were the most optimistic with 97% of them projecting double-digit net income growth, while 36.4% of universal and commercial banks expect their profit to expand between 10% and 15%, and 30.3% see their earnings rising more than 30%.

“The universal and commercial banks’ net income projections are significantly influenced by new foreign bank entrants that are still setting the foundation for their strong domestic presence,” the BSP said.

FINTECH, CONSUMER LOANS
Meanwhile, in terms of products or services, majority of the heads of banks said corporate and retail banking “will remain as their top most priority,” the central bank said.

The results showed 68.8% of the respondents from domestic universal and commercial banks said consumer loans will be their “primary focus” for the next to years, while 70% of large foreign banks said they prefer to lend to the manufacturing sector.

Both subsidiary and stand-alone thrift banks also said in the second semester survey that consumer loans will have the biggest share in their lending portfolios in the next two years, while wholesale and retail trade and consumer are projected to be the top two credit markets for rural and cooperative banks.

“Based on latest available data, banks’ lending activities are mainly channeled to real estate activities, wholesale and retail trade and manufacturing sector. Added focus on consumer lending indicates banks’ objective to further diversify their loan portfolio,” the BSP said.

On the other hand, according to the BSOS, the top three strategic priorities of the banks surveyed are to “grow the bank, optimize the available technology, and protect the bank.”

“Majority of the respondents believe that there is a need to grow the bank by expanding client base, by deepening customer relationships, and by developing new products. In line with the emerging market trends and evolving client needs, the rapid pace of digital technology is considerably reshaping the financial services landscape,” the central bank said.

The report said 44 out of 83 survey respondents said they will prioritize the optimization of available technology through digital operations and customer service and will leverage on financial technology (fintech) in the next two years.

Seven out of 13 or 53.8% of respondents from local universal and commercial banks that have plans to use technology said more than 10% to 25% of their banking transactions will be conducted through the use of digital technology in the next two years, while six out of 12 respondents from foreign universal and commercial lenders said more than 50% of their transactions will utilize digital means.

“Lastly, respondents underscore the need to protect the bank as one of their strategic priorities by managing reputational and operational risks, enhancing data and cybersecurity, upholding consumer protection, as well as boosting capital and liquidity ratios.”

Respondent banks also cited four risks to their operations: institutional risk, financial market risk, macroeconomic risk and technology risk. Local universal, commercial, and thrift banks said geopolitical risks can also adversely affect their business.

The top reforms cited by banks as necessary to weathering external shocks are enhancing the risk management system, strengthening client relationships, upgrading of personnel capabilities, keeping a high level of liquid assets, and increasing capitalization.

For its part, the BSP said it expects that banks will remain stable and resilient amid rapid credit growth on the back of their strong liquidity positions.

“The expanding lending operations of banks will also drive the improvements in their profits. Nonetheless, operating costs may continue to rise as banks use additional resources to expand customer base, implement system upgrades, and pursue product innovations. Adoption of technology is expected to provide a more efficient operations of banks,” the central bank said. — RJNI

DoTr says airlines agree to transfer turboprop flights to Sangley Airport

By Denise A. Valdez
Reporter

THE Department of Transportation (DoTr) said local airlines have agreed to operate flights that utilize turboprop planes at the Danilo Atienza (Sangley) Air Base, as the government prepares to open the airport for more flights before the year ends.

“During the meeting, airlines agreed to use Sangley Airport for general aviation, freight turboprop operations, and commercial turboprop operations as soon as the infrastructure is in place,” the DoTr said in a statement after a meeting with aviation stakeholders on Thursday.

“Additionally, general aviation users will be notified to fully relocate in a year’s time to Clark International Airport (CRK) in Pampanga and Sangley Airport to help decongest the Ninoy Aquino International Airport (NAIA),” it added.

Cebu Pacific told BusinessWorld it had earlier this year expressed interest in using the air base in Sangley Point when it starts operating its freight turboprops.

“We formally wrote to the DoTr as early as March or April 2019 to operate cargo freighters out of Sangley,” Cebu Pacific Director for Corporate Communications Charo L. Lagamon said.

The Gokongwei-led carrier announced last year it is converting two of its ATR 72-500 passenger turboprops into freighter aircraft.

Philippines Airlines (PAL) was not able to immediately reply to questions on moving its turboprop operations to Sangley.

But in a phone call Wednesday, Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo said the DoTr earlier received proposals from both Cebu Pacific and PAL regarding operating in Sangley.

“They are proposing — proposing pa lang and studying — possibility of moving some turboprop flights. Kasi right now Cebu Pacific and PAL, they operate out of Clark yung turboprop aircraft natin. They want to move some of their operations to Sangley, which will be closer to Manila,” he told BusinessWorld.

“Maybe turboprop flights for PAL Express, maybe they can move a number… I was made to understand Cebgo wants to move freighter operations, yung mga cargo nila, to Sangley. That is their proposal so far. And these are all proposals that we are studying,” he added.

But he noted the facility in Sangley could only handle some turboprop aircraft as it is still limited by the size of its runway, which is 2,300 x 45 meters.

“We keep accepting proposals like that, and we allow them to make their studies for commercial viability and feasibility study of the operations. We allow that, (for them to) come and visit to find out what can be done there,” Mr. Tamayo said.

Last Monday, President Rodrigo R. Duterte ordered the DoTr to immediately start operating the Sangley gateway for general aviation, or non-commercial flights, to help decongest NAIA.

The DoTr started 24/7 works in the gateway yesterday to expedite its completion.

Transportation Secretary Arthur P. Tugade had ordered the hiring of additional manpower and acquisition of additional equipment to hasten works on the Sangley airport.

“Whatever it takes, we need to make sure that the directive of the President is delivered. Hire more manpower to work 24/7. Kailangan matapos ‘yan [It needs to be completed] on or before the timeline set by President Duterte,” Mr. Tugade was quoted in the statement as saying on Wednesday.

Gov’t to issue Marawi bonds for large-scale infrastructure projects

THE GOVERNMENT is looking to issue its planned Marawi bonds to help fund large-scale infrastructure projects covered by the second phase of the rehabilitation plan for the city, the Finance department said in a statement on Thursday.

Finance Secretary Carlos G. Dominguez III said the government will issue the bonds during the next phase of the Bangon Marawi Comprehensive Rehabilitation and Recovery Program (BMCRRP), which will involve large, “cash-intensive” infrastructure projects.

“When we start getting into the bigger expenditures, then we will be issuing the Marawi bonds,” Mr. Dominguez said was quoted as saying at a recent press briefing in the statement.

“But there has been a lot of work, especially in providing housing and water and sewage disposal facilities for the residents in that area already. So fortunately, we’ve been able to fund it from the GAA (General Appropriations Act), and when we get to the real big construction projects, that’s when we will be issuing the bonds,” Mr. Dominguez added.

National Treasurer Rosalia V. de Leon said the government still needs to “calibrate” the size of the Marawi bond issue based on the financing requirements for the implementation of the rehabilitation program.

Ms. De Leon added that the government is eyeing several features to make the bond issuance attractive to investors, including making the papers eligible as lenders’ alternative compliance to Republic Act (RA) No. 10000 or the Agri-Agra Reform Credit Act.

“In preparation for that, we’ve also been doing some features, including the Agri-Agra eligibility that we have secured to make the bonds more attractive. In fact, there are also some structures that we are also considering to make it more attractive to retail investors,” Ms. De Leon said.

RA 10000 requires banks to set aside at least 25% of their loan portfolio to the sector, split into 10% of agrarian reform beneficiaries and 15% for farmers and fisherfolk. However, lenders have said they find it difficult to meet this credit quota and would rather pay penalties than take on the greater credit risk often attached to lending to members of these sectors.

Last year, the Department of Finance (DoF) said the Marawi bond offer may total P40-60 billion in a span of five years.

Marawi City was devastated after a five-month battle between government forces and Islamic State-inspired militants that ended in October 2017.

In November, the DoF said multilateral funding agencies and foreign governments pledged P35.1 billion in assistance for the rehabilitation of the war-torn city, covering almost half of the estimated P72.58 billion needed for the overall recovery program. The balance will be sourced locally, Mr. Dominguez earlier said.

Those that made pledges were the Asian Development Bank, World Bank, International Fund for Agricultural Development, and the governments of China, Japan and Spain. Of the total pledges, P32.7 billion will be in the form of concessional loans, while P2.4 billion will be in grants.

The United Nations and the governments of the United States, Australia, China, Germany, Japan, South Korea and Spain also extended technical assistance and preparatory support for the implementation of the BMCRRP.

The P72.58-billion estimated budget, which will be spent up to 2022, includes P47.2 billion for the overall BMCRRP; P17.20 billion for the rehabilitation of the approximately 250-hectare area that was most affected; P1.25 billion for livelihood assistance projects; and some P6.9 billion in humanitarian assistance required in the early stages of the recovery program. — KESF

Oil demand growth falls as economy weakens

SINGAPORE/HOUSTON — World oil markets have undergone a U-turn, switching from supply-side risks like OPEC’s production cuts or US sanctions against producers Iran and Venezuela, analysts said, to concerns of slowing consumption amid fears of a global recession.

As a result, crude oil prices have turned a 45% price rally in the first four months of the year into a slump of more than 15% since late April.

US investment bank Goldman Sachs said on Wednesday that weakening economic growth and lower oil demand expectations were “the largest driver of the move lower over the past month” in crude oil prices.

And with the outlook dim amid trade disputes — especially the one that has led to an expanding exchange of tariffs between China and the United States — analysts have revised down their oil demand growth forecasts.

Fereidun Fesharaki, chairman of energy consultancy FGE, said the demand slowdown came amid a “general fear of an economic downturn,” and warning that if the US-China trade dispute continues, “real signs of economic recession will be seen.”

Due to the economic jitters, FGE this week revised down its global oil demand growth forecast to 1 million barrels per day (bpd) from 1.3 million bpd, in line with other recent downward corrections.

Barclays bank said this week it had revised down its economic growth outlooks for the United States, China, India and Brazil, countries that account for more than three-quarters of global oil demand growth.

The British bank also cut its oil demand growth forecast by 300,000 bpd to 1 million bpd.

“There is potential for further downside to demand, which means this will likely be the worst year for oil demand growth since 2011,” it said.

Bank of America Merrill Lynch said “global oil demand growth is running at the weakest rate since 2012,” although it still estimates growth to be around 1.2 million bpd for 2019.

Analysts participating in a May Reuters oil survey had their most optimistic growth forecasts at around 1.4 million bpd, as against 1.7 million bpd in a January poll.

POTENTIAL RECESSION
The heart of the stuttering demand is an economic slowdown.

Research firm TS Lombard said this week “export dependent economies in the Pacific Rim and Europe are badly hit and close to recession,” with the United States also “heading towards slower growth.”

TS Lombard warned an unresolved Sino-American trade war “has the potential to trigger a recession in 2020, if not before.”

The trade war between the United States and China, the world’s two biggest economies, has already hit global trade volumes and is starting to show in slowing fuel consumption.

China’s May crude oil imports fell by 8% from April to 40.23 million tonnes (9.47 million bpd), a chunk bitten out by the economic slowdown and US sanctions against Iran, one of China’s main oil suppliers.

China’s car sales fell in May to 1.91 million, down 16.4% from a year earlier, the China Association of Automobile Manufacturers said on Wednesday, marking an 11th consecutive month of decline in the world’s largest vehicle market.

Slower demand growth is colliding with surging production from the United States, which the US Energy Information Administration expects to average 13.5 million bpd by the end of next year.

The United States is already the world’s biggest oil producer at 12.4 million bpd, ahead of Russia and Saudi Arabia.

NOT ALL DOOM & GLOOM
Not all analysts subscribe to a doomsday scenario.

“The ‘death of demand growth’ is greatly exaggerated, despite the challenges in the global economy,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Measures by central banks to stimulate growth, coupled with the recent slide in oil prices, could all trigger a rebound in demand, he said.

“While economic activity has recently come in below our economists’ expectations, it remains resilient, and they (the economists) don’t expect that a sharp further deceleration is likely,” said Goldman Sachs. — Reuters

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