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New telco player partners with SkyCable, Chavit Singson-led firm

Dito Telecommunity

NEW major telecommunications player Dito Telecommunity Corp. has forged deals with businessman Luis “Chavit” C. Singson’s LCS Holdings, Inc. and ABS-CBN Corp.’s Sky Cable Corp. covering the use of the two companies’ infrastructure assets.

In a statement yesterday, the China-backed firm said it has signed a memorandum of agreement (MoA) with LCS for the rollout of shareable telecommunications towers in key areas around the country.

LCS and Dito (formerly Mislatel) had both joined the government’s bidding for a new major telco player last year. Mr. Singson said despite losing to Dito, the company is “still very passionate in fulfilling its commitment to the public in improving the quality of telecommunication services.”

“Together with our partners, we will go full blast on manufacturing and rolling out common towers and other telecommunication infrastructure in the country,” the LCS chairman was quoted as saying in the statement.

For its partnership with SkyCable, Dito is seeking to use the company’s unused fiber optic cables located in Metro Manila. While fiber optic cables are used by television networks to transmit cable television signals, telcos may use the same asset to transmit phone signals and internet.

“These two deals allow Dito to tap reliable local partners and their existing telecommunication infrastructure assets to support our network rollout, without having to build everything from scratch,” Dito Chief Administrative Officer Adel A. Tamano said in the statement.

Dito is scheduled to launch its services in the second quarter of 2020, with a government commitment to deliver a minimum broadband speed of 27 Megabits per second (Mbps) to 37.03% of the national population by July.

“We are serious in our commitment and will be breaking ground within the next few days for the first of many cellular sites for Dito Telecommunications in cooperation with the LCS Group,” Mr. Tamano said.

Dito is owned and controlled by Dennis A. Uy’s Udenna Corp. and Chelsea Logistics and Infrastructure Holdings Corp., and China Telecommunications Corp.

The government is hoping the entry of Dito will bring faster and cheaper telecommunications services for consumers. — Denise A. Valdez

Meet the ex-banker tackling world’s worst traffic with motorcycle taxi app

Angkas logo

A FORMER Singaporean banker’s motorcycle taxi app is emerging as a key rival to Grab — and a test case for Manila’s resolve in unclogging the world’s most congested streets.

Founder Angeline Tham’s Angkas — the Filipino word for “hitching a ride” — has in three years become one of the Philippines’ most popular ride-hailing services with 3 million downloads and 27,000 registered drivers. That’s despite getting shut down twice since its inception because of a five-decade-old law against the use of motorcycles for public transport, a ban intended to enhance road safety. The 37-year-old chief executive’s app is now operating on a temporary license but hopes to secure full legality when regulators review the prohibition in December.

Ms. Tham founded Angkas in 2016 after experiencing the world’s worst traffic first-hand, spending six hours in one day just traveling across Manila. She argues that the view of motorbikes being deadly is outmoded and has in past months enacted a number of measures to try and increase safety, including setting up two training centers offering free driving courses and campaigning for proper helmet use.

“We’ve been able to maintain our safety record at 99.997%,” Ms. Tham, previously a JPMorgan Chase & Co. associate and vice-president at a Softbank Group Corp. venture capital fund, said in an interview. “We’re even safer than condoms.”

Angkas is challenging Southeast Asian ride-hailing giant Grab by promising faster commutes starting at P50 ($1) a trip. But it’s currently operating in a gray area, impeding efforts to secure funding. After Angkas’ closures provoked a strong public outcry, regulators in June allowed Angkas to operate over a six-month trial period. If Manila decides to green-light the service, that could open the door to a clutch of new competitors to Grab, including potentially Indonesia’s Gojek.

For the pilot run, Ms. Tham is focusing on the main concern of policy makers and first-time users: crashes. More than half of vehicular deaths in the Philippines involve motorbikes, she said. But her start-up imposes some of the region’s strictest safety standards for motorcycle taxis, she said. Only one in four drivers pass a written exam and driving course that Angkas mandates on top of the usual government requirements for a professional license.

Ms. Tham, who in August drew condemnation for a marketing promo that likened the app’s services to sex, is confident her start-up has performed well enough to rally both public and political support to amend the Philippines’ transport law. She said Angkas could expand to more cities given strong interest from regional VC funds to invest in myriad solutions for Southeast Asia’s clogged cities.

“The goal is to give time and power back to the people,” she said. “So much of our life is chained to traffic.” — Bloomberg

CIMB, CredoLab partner for ‘instant’ credit scores

CIMB BANK Philippines, Inc. (CIMB Philippines) has partnered with Singapore-based fintech player CredoLab to streamline loan applications for “instant” credit scoring of applicants.

In a statement on Thursday, the all-digital bank said it now uses CredoApp, CredoLab’s mobile application, to provide artificial intelligence-based credit scoring facilities for a more accurate and efficient assessment of loan applicants’ creditworthiness and repayment behavior.

The bank said CredoApp’s bank-grade algorithm analysis of 500,000 features from opt-in and permissioned smartphone metadata allows it to detect predictive behavioral patterns which will be converted to credit scores instantly.

“With CredoLab, we are now focusing on making our application and underwriting process more efficient so that we can extend credit to a broader market without compromising on our cost of risk. In this way, we can further drive financial inclusion by enabling more Filipinos access to formal credit lending facilities efficiently,” Vijay Manoharan, CEO of CIMB Philippines, was quoted as saying in the statement.

The partnership also helps the bank become more inclusive since it can “instantly score” applicants, even those that do not have enough traditional credit bureau data, CIMB Philippines said.

The bank said customers can apply for a credit loan up to P1 million and receive “in-principle” approvals on personal loans in ten minutes through the CIMB App.

Two weeks since the partnership’s launch, the bank said its has already scored over 1,000 clients within 10 minutes each using only minimal traditional data requirements, with CIMB Philippines looking to grow this number at an “exponential rate” in the coming weeks as it continues to roll out the service.

Last March, CIMB Philippines launched GSave, where clients can open digital savings account through the mobile wallet GCash application. The savings product requires no maintaining balance and offers an interest rate of 2.3% per annum.

Funds in the GSave account are insured by the Philippine Deposit Insurance Corp.

The Philippine unit of Malaysia-based financial giant CIMB Bank started operating in the country last January, a year after receiving the central bank’s approval.

Meanwhile, Singapore-based CredoLab uses smartphone metadata and develops bank-grade scorecards for banks, consumer finance companies, auto lenders, online and mobile lenders, insurers, and retailers. — BML

MCWM awaits gov’t decision on proposed waste-to-energy facility

METRO CLARK Waste Management Corp. (MCWM) is still waiting for the government’s decision on its unsolicited proposal to build a $210-million waste-to-energy facility in New Clark City.

“Waste to energy is not a power plant solution, in the first place it’s a waste management facility to reduce waste to try to utilize the most energy out of waste because there is no better way to get the energy out than generating energy out of it,” MCWM Founder Holger Holst said in a briefing on Thursday in Quezon City.

“I don’t know what’s after 2050, but imagine, at the moment the Philippines has 100 million people, in 30 years it will be double, and that is the challenge for the future,” he told reporters after the briefing.

MCWM is partly owned by German conglomerates BN Ingenieure GmbH and Heers & Brockstedt Umwelttechnik GmBH. It has a 100-hectare landfill site in Sitio Kalangitan in Brgy. Cutcut II, Capas, Tarlac, which is part of the Sub Zone D of the Clark Economic Zone.

MCWM President and Chief Executive Officer Rufo B. Colayco said the company has submitted its unsolicited proposal to the Bases Conversion and Development Authority (BCDA) last February.

Mr. Colayco said the BCDA asked for more information only a week ago. The company has to submit the additional information within a month.

Sought for comment, BCDA has yet respond to BusinessWorld as of press time.

The waste-to-energy facility is targeted to be completed in three years. Given the current situation and the long process that would involve a Swiss challenge, Mr. Colayco said that the company hopes to start construction of the facility by the middle of or late 2020.

With the growing population, the company projects by 2025 there will be 77,765 tons of garbage collected every day, coming only from cities.

Once completed, MCWM’s proposed waste-to-energy facility can process 2,000 tons which could generate 35 megawatts of electrical renewable energy for New Clark City. Currently, the landfill facility is receiving an average of 2,500 tons of waste from areas in Central Luzon. It is expecting higher waste collection this year versus about 700,000 tons it collected last year.

This will also reduce amount of residual waste disposed at the landfill by 70%, which can extend the lifespan of the solid waste management (SWM) system.

“… There are NGOs [nongovernment organizations] who will oppose anything, but as far as the government… they are all aware of this technology. It’s not an issue for them,” Mr. Colayco explained.

“We can only show what the problem is. Waste management will be a big problem in the future… It was not so in the minds of people, especially in countries like Indonesia, the Philippines, very high populations. It’s getting bigger every day,” Mr. Holst said. — Vincent Mariel P. Galang

More Filipinos prefer cash transfers over mobile wallets: Nielsen study

By Zsarlene B. Chua
Reporter

OUT OF THE 49 million Filipinos who do some form of money transfer — traditional or cashless — 4.9 million have used GCash, according to a GCash-commissioned Nielsen study.

“There are 39.7 million [Filipinos] who are still into exclusive cash-to-cash transfer and who have not tried a cashless solution. There are 2.9 million non-mobile wallet cashless remitters as well. These present a lot of potential for mobile wallets to expand and capture large, untapped segments,” said Anthony Thomas, Mynt President and CEO, said in a statement.

Mynt (Globe Fintech Innovations Inc.) is the fintech arm of Globe Telecom and operates GCash.

Part of the results of the commissioned study was presented in a press conference on Thursday at the Milky Way Cafe in Makati City, though reporters were not given copies of the study.

The study was commissioned in January and included qualitative interviews within the Nielsen Philippines office and qualitative interviews with “around 500” participants “in specific target areas” GCash specified, Krisia Cruz, head of P2P (Send Money) of GCash, told BusinessWorld during the press conference.

Some of the cities included in the survey were cities in Metro Manila, Cebu and Iloilo.

The study showed only 6.4 million Filipinos have used or are using mobile wallets for fund transfers among the estimated 49 million who have transferred funds.

Much of the fund transfers are for allowances, comprising 59% of transactions followed by remittances at 27% and 14% for payments.

With this huge untapped market, GCash is pushing for “simple entry points” in order to encourage more users to use e-wallets for fund transfers.

“[Going cashless requires] an ecosystem. You need simple entry points. For users, you need maybe a lighter version of the app (for devices that can’t handle too many apps and for slower internet connections)…you need financial literacy,” said Frederick Levy, Mynt chief commercial officer for transfers, explaining that despite barriers, he is seeing “a massive increase in the initiative in order to crack this market.”

He added that a National ID system will greatly help the cashless ecosystem as it will make for easier verification of users.

“[A National ID system] will help definitely [to make for easier] KYC (know your customer) processes,” he said.

Mr. Levy added that a simple yet thorough KYC process also makes it easier for banks to verify their users.

The Philippine Statistics Authority (PSA) has started piloting the National ID system last month in Metro Manila with a goal of enrolling the entire population in the system by 2022.

“We are now working with some banks on what we call KYC reliance. That means because you’re [verified] with us, they accept our KYC as their KYC,” Mr. Levy said.

He said next year, they are working on features which include allowing existing users see which of their contacts or friends are on GCash.

Two years on, Hollywood reflects on #MeToo changes

LOS ANGELES — This week marks two years since the New York Times and the New Yorker published accounts by multiple women accusing film producer Harvey Weinstein of sexual misconduct, fueling the #MeToo movement against sexual harassment and a drive to empower women who work behind and in front of the camera.

Weinstein is due to stand trial in January on charges of rape and predatory assault of two women. He denies any non-consensual sex.

Reuters asked actors, directors and producers how much Hollywood has changed since October 2017. Below are their replies, edited for length and clarity.

JULIA LOUIS-DREYFUS
“I’d like to say that I feel like men might be beginning to behave themselves a little bit better, and I say maybe. I’m not saying they have definitively, but there is a new way of communicating, or a slightly new awareness, an awareness shift that’s happened. It’s in process. This job is not done. It will never be done, but I think there’s a way of communicating that has improved, hopefully.”

PATRICIA ARQUETTE
“The #MeToo movement — my sister was one of the first people to come out — and I think it’s had a ripple effect all across the world, beyond Hollywood. Luckily there is more representation of women and women of color on television than there was before, but it’s still not really equal yet… Activists and people have been trying to get this work done for a long, long time, but the more we have this conversation, the more we ask for it, the more we talk about the need for it, the better. You have movies like Wonder Woman and Black Panther busting box office records and then suddenly, all of a sudden, the world is like ‘Oh, right, they could be successful.’ The business is sometimes the last one to learn.”

BRAD PITT
“We seem to work as a pendulum. We swing too far one way, then we find that sweet spot, and then we go too far back and we keep on this swing. But what is going on, which is positive, is that we’re recalibrating our relationships, behaviors and workplace. It’s long overdue and needed, and it’s a good thing.”

MICHELLE WILLIAMS
“I’ve seen so many changes within my industry, but not just within my industry… I see it at my daughter’s school. I see it in my friends’ places of employment. I see it really everywhere, and it gives me great faith that the world that these girls are growing up in is going to be different than the one that you and I grew up in.”

ANGELINA JOLIE
“I think we have very far to go. I think even in Hollywood there should have been an independent inquiry… There’s a lot of focus about what they say women want and I would say it’s not what we want. It’s what we’d like not to be done to us. Do not limit us to have an education, do not harm us whether it be at war or in our own homes, do not oppress us or try to control us, do not limit our possibilities as human beings and just let us be.”

KRISTEN STEWART
“There’s this solidarity that is providing women with a chance to start finally telling their own stories and not being used as sort of tools to tell their stories through other people… There are so many untapped resources and ways in which we can inhabit our own stories and repossess our narrative. (It) is fully doable right now and for the first time, like ever, so it is an exciting time for women in film, like, enormously.”

CARA DELEVINGNE
“I think the #MeToo movement has changed a lot, but like a lot of hashtag movements, the problem is that when you do a hashtag or something, people think it’s fixed. But it’s not. It hasn’t really changed anything, because it’s still happening.”

ELISABETH MOSS
“For me (on movie The Kitchen,) we had (director) Andrea (Berloff), three female leads, we also had (the) first female (director of photography), and it’s almost one of those things now that’s become natural because these women are the best at what they do, and that’s why they were there and not because they’re women… It’s just becoming more normalized, which I think is the best part of it.”

NICOLE KIDMAN
“Charlize (Theron), Margot (Robbie) and I just did a film — Bombshell — which is about instigating change in terms of sexual harassment… We hope that constantly talking about it changes it for the generations to come.”

JULIANNE MOORE
“Because of Time’s Up, (New York) Governor (Andrew) Cuomo has adopted the Time’s Up safety agenda, which is really, really significant for every woman in New York state. New York is a much less progressive state than California, so when Time’s Up New York got together we thought, ‘What do we address here in our home state?’ And we’ve really been able to make changes (including) extend the statute of limitations on assault.”

MICHELLE PFEIFFER
“I think there’s been such a seismic shift in awareness in just a year. I think there’s a long way to go but I do think quite a bit has happened already. Already all the conversations I’ve had with women, we just didn’t have those conversations before.”

MELISSA MCCARTHY
“I think we’re at the beginning of a movement, and I think we have to keep pushing. You can talk a good game, but you have to wait until it changes, so we’re not there yet. We will be. You’ve got to root for it. I’m a hopeful person. I have two daughters; I have to be. I’ll fight. I’ll fight until I can’t fight anymore.”

ELLE FANNING
“For me, being a young woman in the industry and hearing actresses tell their story and being able to hear those voices and know that it’s OK to speak your truth on things and stand up for what’s right and say no — it’s a great community that has really formed because of this.”

KIRSTIE ALLEY
“When we did Cheers,… if someone was in the bathroom, someone would kick open the door and we would take pictures, but the intent was in fun. And if the intent is to hold you hostage or not give you a job without sexual favors, you know the difference. But I think that the pendulum swung and now it needs to swing and balance out because people are not all ill-intentioned.”

JULIETTE BINOCHE
“I have been quite free, always, in my choices in life. I didn’t need #MeToo to do that, but I think #MeToo’s movement was very important for some people, for some women to speak out.”

RUTH NEGGA
“You really shouldn’t be able to get away with inequality anymore. The thing is that you’ve got to keep vocal about it; you’ve got to be vigilant. It’s not something that can ever be really done and dusted until there is equality and everybody’s voice is heard.”

RICHARD LINKLATER
“It’s just good everybody’s aware. I mean, out with the old, right? The old status quo can’t hold. There has to be these evolutionary leaps in what is acceptable.” — Reuters

CA affirms indictment of 8 Calata shareholders

THE Court of Appeals (CA) affirmed the indictment of Calata Corp.’s eight shareholders for their manipulation of the company’s shares on the stock exchange which led to artificially inflated prices.

The Securities and Exchange Commission (SEC) said Thursday that it has received the decision of the Special Sixth Division of the CA dated Sept. 10, regarding its appeal to nullify the Department of Justice (DoJ)’s resolutions dismissing market manipulation charges against the Calata shareholders.

“At bench, there is no dispute that CAL (Calata’s ticker symbol) shares’ valuation and price had increased exponentially during the subject period or that the increase was brought about by the buy and sell transactions done by respondents, who most of the time used the same checkbook for the transactions,” according to the CA decision.

“In contrast, respondents provided no adequate reasons for their actuations except bare denials. These circumstances create a well-founded belief that a violation of the SRC was committed and the respondents may be guilty thereof.”

The shareholders were identified as Michael Ilustre Angeles, Carmelo Dela Cruz Bunag, Arnold Ryan Daquis Dellosa, Richie Ramille Isip, Arnold Daquiz Martin, Dennis Philippe Valencia Vistan, Zandro Jose Sigfrido Laki Zulueta, and Gary Lincoln Calixtro Taboso, in the case filed by the SEC and the DoJ-Task Force on Securities and Business Scam on Nov. 26, 2012.

The SEC found the eight shareholders to have engaged in high-frequency, high-volume buying and selling transactions and stock transfers from one broker to another, artificially raising the price of Calata shares, thereby generating profits in the process.

This is a violation of Section 24 of the Securities Regulation Code (SRC), which outlines the manipulation of security prices, devices, and practices.

The commission noted that the shareholders used manipulative devices such as “painting the tape” and “hype-and-dump” immediately after the agribusiness firm went public on May 23, 2012. This more than tripled Calata share prices to P23.95 by June 4, 2012, from its IPO price of P7.50. The shares, however, would drop only four days after to P12.40 each.

It was later found that the shareholders accounted for 32.95% of the shares bought and 38.47% of the shares sold during the relevant trading period, transferring their shares as they owned accounts from several brokers.

Since its initial public offering in 2012, Calata has been involved in issues about its violation of trading and disclosure rules. This led to its delisting from the Philippine Stock Exchange in 2018. — Arra B. Francia

St Luke’s partners with recruiter to prepare nurses for UK work

ST. LUKE’S Medical Center (SLMC) has signed an agreement with a recruiting firm to provide its nurses an opportunity to work in the UK.

SLMC President and CEO Arturo S. De la Peña told reporters Thursday that the partnership with Resource Finder Recruitment Ltd. will provide an avenue for training SLMC nurses looking to work in the UK.

“They’re looking for qualified nurses and our nurses are qualified so to manage their migration also, we might as well enter (into an agreement with Resource Finder)… It’s a career pathway for our nurses and yet we assure their placement in the UK,” he said.

The “Nurse Migration Program” is a two-year guided program that will prepare qualified SLMC nurses for work in the UK. Eligible nurses are regular SLMC employees who have worked one year as a nurse.

Nurses selected for the program will need to sign a Service Retention Bond Agreement for two years and maintain a minimum Performance Appraisal Rating of “meets expectations.”

Mr. De la Peña said SLMC has a 20% attrition rate for nurses, with an average of 20 leaving monthly for overseas work.

SLMC employs nearly 2,000 nurses in its Taguig and Quezon City hospitals.

According Mr. De la Peña, the UK is currently facing a shortage of health workers, with demand for about 20,000 nurses.

Resource Finder Managing Director Robert Fuller said during the partnership signing on Thursday that Filipino nurses in particular are in demand. He said “There is something different about the nurses in the Philippines. There is that passion.” — Gillian M. Cortez

IGR and Carmageddon

By Michael Henry Ll. Yusingco

TRAFFIC gridlock in Metro Manila is so bad that for many Filipinos the daily commute is “hell on earth.”

The Japan International Cooperation Agency estimates that Carmageddon is costing the Philippine economy about P3.5 billion pesos a day in potential income lost. Needless to say, the mental and emotional toll on citizens is utterly beyond measure.

Recent Senate hearings have been occasions for political grandstanding and, so far, they have not led to actual solutions. Even Malacañang is about to throw in the towel, willing to condemn a third of the Philippine population to just suffer and endure Metro Manila traffic everyday.

But there is an absolute abundance of proposed solutions out there. Some are conventional such as constructing more roads, decreasing the number of private cars on our streets, stricter enforcement of traffic rules, incentivizing carpooling, and fast-tracking current public works projects.

Others are bolder, such as overhauling the bus system, building a comprehensive railway network, massive reconfiguration of work schedules, and de-populating Metro Manila.

Carmageddon is a tragedy that cripples everyone in Metro Manila. Hence, the business sector has consistently expressed its willingness to cooperate with government. Even civil society has not manifested any disdain to do its part to address this catastrophe.

So, what is the problem really?

Metro Manila resident and regular commentator on the traffic mayhem, Michael Brown, articulates the answer to this question very well, to wit:

“Metro Manila traffic is congested and chaotic, not because it’s unmanageable, but rather because it is unmanaged.”

Brown points here to the absence of coherence in efforts to address Carmageddon. Ostensibly, this horrible problem will not be solved if our political leaders are more interested in badmouthing each other.

The reality is that the chaos in our roads can only be remedied by a meeting of rational minds. And the administration can achieve this by resorting to the principle of Intergovernmental Relations or IGR.

IGR is explained in academic literature as fundamentally the coming together of different orders of governments within a political system, through formal or informal processes, to work towards the achievement of common goals.

IGR mechanisms are utilized to facilitate cooperation and collaboration in both the policymaking process and in the delivery of public services. Thus avoiding redundancies, duplication, unreasonable fragmentation and ineffective amalgamation. For this reason, IGR is now considered an integral component of good governance.

The concept of IGR is traditionally associated with federal systems. IGR processes have been described as the “lifeblood of federalism in practice.” But many scholars maintain that IGR mechanisms can and do play a key function in unitary systems with embedded decentralization arrangements such as the Philippines.

Notably, for an IGR mechanism to work, the following elements must be present:

1. There should be mutual respect between the different levels of government. There must be an unequivocal recognition of each side’s authority and accountability.

2. There must be an ethos of interdependence. Each side must see the need to cooperate and collaborate to achieve the intended goal.

3. The IGR mechanism must be a platform for civic participation. Hence, there must be space for civil society organizations to engage in the policy-making process as well as in the implementation phase of any development program.

Pertinently, these are governance prescriptions that exemplify coherence in an approach to solve Metro Manila’s traffic calamity. Indeed, rational thinking dictates that the driving force behind the effort can only be the need for collective action. Pining for a singular savior to dictate on the community is clearly misplaced.

The fact is the growing complexity of public mandates means that different levels of government are now mutually dependent in many regards. And as the demands of modern governance intensify, having a deeper understanding of the fundamentals of IGR has become extremely important for a state with a multilevel system of government.

Such a caveat is particularly urgent for the Philippines because cooperation and collaboration by and between the central government and local government have yet to be instinctively and consistently practiced — as evidenced by how the traffic situation in Metro Manila regressed to such a horrific level under the noses of different political leaders.

The task ahead requires a new way of defining “managing” traffic, or, more precisely, mobility in Metro Manila. A willingness to dialogue instead of debating and criticizing one another is the first step.

Local chief executives in Metro Manila, pertinent members of the Cabinet, business groups and civil society organizations can then get together to deliberate and devise a comprehensive action plan as well as find alignment and cohesion in implementing that plan.

This is exactly the moment where common goals can be agreed upon, a timeline with milestones can be set, respective commitments can be pencilled in, and sacrifices for the greater good can be equitably shared.

Illusions of needing a powerful hero to save us all will have to be set aside. And there should be no tolerance for credit-grabbing and blame-shifting. It will just be the coming together of citizens primed for honest-to-goodness collective action in the tradition of bayanihan.

Carmageddon is one of the most difficult disasters our nation has ever faced. The need of the hour are political leaders who can inspire and mobilize Filipinos. So far, only the petty, vindictive and indifferent ones are making the headlines.

Hopefully, this administration gives IGR serious consideration. For an approach anchored on consensus-building will not only provide some immediate relief for commuters, but it can also significantly increase the chances of resolving this huge problem for good.

 

Michael Henry Ll. Yusingco, LL.M is a non-resident research fellow at the Ateneo Policy Center of the Ateneo School of Government.

Slumping US economic data may force Powell to move to third cut

FEDERAL RESERVE Chairman Jerome Powell, who’s noncommittal about further interest rate cuts, is facing new pressure to make a third-straight reduction in response to weakening data, volatile markets and a continued bashing from President Donald Trump.

Markets placed about a 75% chance of a quarter-point rate reduction at the Oct. 29-30 meeting, up from 40% on Monday, after manufacturing and employment figures slumped this week. US stocks tumbled to the lowest since August as fears of a recession increased.

“The flow of the data has increased the case for a rate cut in October notably and markets are pricing it in that way,” said Joseph Song, senior US economist at Bank of America Corp. “If the data continue to come in weak, that could get moderates and hawks to come on board to provide some sort of buffer for the economy.”

Chicago Federal Reserve chief Charles Evans said Thursday the latest data haven’t yet convinced him to cut rates again. In a Bloomberg interview in Madrid, the often dovish policy maker said he’s open minded about the decision.

Powell told reporters after the central bank’s meeting Sept. 18 that the Federal Open Market Committee would decide rates “meeting-by-meeting,” and further cuts would depend on incoming reports. At that time, just seven of 17 policy makers projected any more cuts this year. Powell described the reduction as insurance against a 10-year-old expansion falling into recession.

But the outlook has somewhat darkened since then, and particularly this week.

On Tuesday, a key factory index fell to a 10-year low as businesses hold back investments amid tariffs and the US-China trade war.

And the ADP Research Institute on Wednesday showed hiring at US companies cooling. Quarterly sales reports from General Motors Co. and Ford Motor Co. also added to concern, sending those stocks lower.

TREASURIES FALL
The two-year US Treasury yield fell to 1.48% Wednesday from 1.55%, reflecting expectations of lower Fed interest rates. The 10-year Treasury yield fell for a fifth straight day as it pushed below 1.6%.

“The tightening in financial conditions the past few days is putting more pressure on the Fed to ease again,” said Sarah House, senior economist with Wells Fargo & Co.

Trump again blamed Powell after the manufacturing data showed declines even though economists attribute the slowdown in large part to the trade wars.

The president tweeted Tuesday that the “pathetic” Fed has kept rates too high, leading to a rising dollar that hurts American manufacturers.

“They are their own worst enemies, they don’t have a clue,” he said.

While Fed officials say they are not moved by criticism from the president or other officials, they are attuned to changes in the data.

New York Fed President John Williams said the outlook was for “slower US growth,” which he attributed to “the effects of the trade tensions and other geopolitical tensions.”

Richmond Fed President Thomas Barkin said he’s watching to see if weak confidence in the outlook “which we know has hit businesses now is starting to hit consumers.”

“Fed officials for the most part are trying to communicate that they want to be in a wait-and-see mode, but markets aren’t interested in that message,” said Stephen Stanley, Amherst Pierpont’s chief economist. “Remains to be seen whether Fed officials will change their tunes.”

While this week’s reports have disappointed, most recent data outside of manufacturing have been mixed and growth during the third quarter is tracking about 1.8%, according to the Atlanta Fed’s estimate.

On Friday, the Labor Department will report payrolls and the unemployment rate for September, which could be key to the Fed in evaluating the outlook, said Northern Trust economist Carl Tannenbaum.

“The Fed might want to put the cuts in place in quick sequence — not much to gain from waiting,” said Roberto Perli, a partner at Cornerstone Macro LLC.

“Recent data and the drop in stock prices probably help in bringing around some of the skeptical committee members. The leadership might use the shift in market expectations to push for a cut this month as well.” — Bloomberg

The race is on to be this holiday’s hottest doll

HOLIDAY BARBIE has some fierce competition this coming shopping season, and more than playtime is at stake.

As the critical fourth quarter approaches, a toy war is brewing in the US, with billions of dollars up for grabs between the country’s three biggest dollmakers: Mattel Inc., Hasbro Inc. and MGA Entertainment Inc.

Mattel’s Barbie is the reigning champ in the massive US doll market, which NPD Group estimates was worth about $3.4 billion in 2018, up 45% over five years. But now Barbie faces its two biggest threats in recent years: the return of Olaf and Elsa dolls for Frozen 2, the sequel to Walt Disney Co.’s 2013 Oscar-winning blockbuster film, and a new release of MGA’s collectible L.O.L. Surprise! dolls that first blew onto the scene three years ago just as the “unboxing” craze began to explode.

Rival dollmakers all have their sights set on segment leader Barbie, which last year returned to a $1 billion brand after four weaker years. The 60-year-old doll that’s Mattel’s biggest property has logged seven consecutive quarters of rising sales, and with a Hollywood film starring Margot Robbie in the works and nostalgic millennials becoming parents themselves, Barbie’s continued success is key to Mattel’s growth. But her emerging challengers could make a dent: Jefferies analyst Stephanie Wissink estimates Barbie sales will remain about flat in 2019 versus 2018 at nearly $1.1 billion, with L.O.L. Surprise! and Hasbro’s Frozen 2 dolls targeted to bring in around $500 million apiece. That would mark a major holiday turnout for Frozen dolls, which won’t even hit shelves until Oct. 4.

“The consumer is going to veer whatever way the consumer wants to veer, and unfortunately in some cases Mattel can’t react to that,” Wissink said. “They’ve done everything they can and done it remarkably well to get Barbie to a healthy position to at least stand up to the fight, but we don’t know which way the consumer is going to go.”

The last time a feature-length Frozen film was in theaters, Mattel held the license to Disney Princess toys. That means when the animated movie about two royal sisters in an icy world became an unexpected hit, the El Segundo, California-based toymaker reaped the equally unexpected half a billion-dollar windfall from toy sales, according to Wissink. Before the film’s release, Monster High dolls were about a $600 million brand, which was halved overnight due to the surprise success of Frozen. Fortunately for Mattel, it owned both brands.

But Mattel lost the license with Disney several years ago, despite having worked with the media company since 1955, when it became the first sponsor for the Mickey Mouse Club. Mattel had been Disney’s go-to dollmaker since 1996, and winning the princess line may have been the “greatest coup that Hasbro has had in the last three decades,” Gene Del Vecchio, a former Ogilvy & Mather executive who has worked with Mattel and Disney in the past, said at the time.

The question now is whether Hasbro will be able to bring in a half billion dollars with the doll rights to the Frozen sequel, or whether kids’ Anna and Kristoff toys from the first go-around are still in working order. Jim Silver, the editor in chief of TTPM, a consumer-facing review site for toys and other products, said historically merchandising sales of dolls drop 20% or more during the second installation of an animated film franchise.

For example, Transformers merchandise sales dropped about 20% from the first movie to the second, while Toy Story fell about 25% for Toy Story 2, Silver said. That means there’s a chance Barbie gets through the rest of 2019 largely unscathed, especially since traditionally toy sales from movie premieres don’t pick up speed until the film goes to home release.

“Everybody expects Frozen to do well, but I don’t expect it merchandise-wise to do as well as the initial movie,” Silver said in an interview. “Whenever you have something as big as Frozen 1, it’s really hard to replicate the numbers.”

The bigger tell will be whether Frozen 2 is a major success in China. Already a massive consumer of everything from steel to iPhones to Hollywood movies, China is ramping up as a leading toy consumer, and if the film takes off there, that could give Hasbro a huge global boost. Barbie is an internationally recognized brand that Mattel has been selling into the booming Chinese market for years, largely without a major competitor. That means a giant success for Frozen and other competitors could hit Barbie’s sales globally by as much as 50%, Wissink said.

Mattel says it isn’t worried. “With Frozen, when they have a movie year, the heat is really on,” said Michelle Chidoni, a Mattel spokeswoman. “But Mattel leadership has always been in dolls” and Barbie tends to do well whether or not there’s a wider doll war raging, she said.

Of course, Hasbro isn’t the only encroaching rival that Barbie will need to fend off this holiday. MGA Entertainment, the closely held company that makes Bratz dolls and Little Tikes, jolted awake the competition three years ago when it rolled out its L.O.L. Surprise! line of collectible toys made famous for the several layers of packaging that children like to unwrap, videos of which they’ll sometimes even upload to YouTube. They were a top product again last Christmas season, according to Adobe Analytics, alongside Fingerlings, the Nintendo Switch, and the always popular laptop computer.

The company’s L.O.L. Surprise! O.M.G. Fashion Dolls are on Toy Insider’s Hot 20 list, an industry publication’s best guess at which items will be the most coveted this season; Barbie and Frozen dolls are not.

Isaac Larian, chief executive of MGA, says the detail element his company puts into the dolls is why customers will reach for L.O.L. OMG this holiday season instead.

“Since Bratz, no other company has ever made a real fashion doll. Barbie cost-reduced the product and fashions to a point that fashion is spray painted on the doll body. That’s not what the consumers want,” he said. “We’ll be No. 1 — L.O.L. OMG will be sold out worldwide before Christmas.” — Bloomberg

A Brown eyes possible acquisition of Vires Energy

A BROWN Co., Inc. said on Thursday that it had signed a deal to possibly acquire control of a company proposing to develop a liquefied natural gas (LNG) floating storage and regasification terminal with a floating power plant in Batangas City.

In a disclosure to the stock exchange, the Cagayan de Oro City-based company said it had signed a memorandum of agreement (MoA) with Argo Group Pte. Ltd. “for the possible acquisition” of approximately 99.995% of the outstanding capital of Vires Energy Corp.

The listed company said the MoA entered into “is a preliminary agreement and the prospective acquisition will be concluded after the completion of the customary due diligence period of a maximum period of 180 days.”

A Brown said Vires, which is owned by Argo Group, is the proponent of an integrated floating LNG storage and regasification terminal and a 506-megawatt (MW) natural gas-fired power plant.

The facility is located in Barangay Simlong, Batangas City. Vires has already secured registration with the Board of Investments.

Based on data from the Department of Energy (DoE), Vires had been cleared as early as 2016 to undergo a study that will assess its power plant project’s impact on the grid, or the country’s network of interconnected power transmission lines and substations.

Sought to confirm a pending application for a floating storage and a regasification terminal, the DoE’s Ma. Laura L. Saguin said in a text message: “As of now, we did not receive any application from Vires.” Ms. Saguin is chief science research specialist at the DoE’s natural gas management division.

Aside from its real estate business, A Brown is also into oil palm nursery and seedlings distribution, palm oil milling, operation of hotels, real estate brokerage, power generation, and investment in gold mining assets.

In 2014, it put up Peakpower Bukidnon, Inc., which has a 15-year build-operate-maintain-and transfer agreement with the Bukidnon II Electric Cooperative, Inc. The two have a power purchase and transfer agreement for a 10.40-MW diesel/bunker-fired power plant in Manolo Fortich, Bukidnon.

A Brown’s disclosure comes after the DoE on Sept. 20, issued a “notice to proceed” (NTP) to US-based firm, Excelerate Energy L.P. to develop an LNG floating storage and regasification unit (FSRU) facility in Batangas province.

The NTP requires Excelerate to comply within six months with construction permitting requirements, including the submission of permits from various government agencies and endorsements from local government units. The company is also required to submit proof of financial closing to the DoE.

In March, the DoE announced the signing of an NTP for First Gen Corp., which in December last year signed a joint development agreement with Tokyo Gas Co., Ltd. to develop an LNG facility. The Lopez-led company said last month that its immediate focus is to complete a detailed study on modifications on its existing jetty in Batangas to allow bringing in an FSRU. — Victor V. Saulon

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