Home Blog Page 10436

Investors lose 98.1% in German-rate bets

SOUTH KOREAN investors in a derivative product tied to German sovereign bonds lost 98.1% of their principal, highlighting the danger of super-risky assets sold to individuals that regulators are now probing.

The product, whose value was linked to the German 10-year government note yield, caused such big losses because the yield on the benchmark fell sharply to around minus 0.6%, according to Woori Bank, which sold it. About 8 billion won ($6.7 million) of the four-month securities matured on Thursday. There was 127 billion won of such securities tied to German rates that were outstanding as of Aug. 7, according to the Financial Supervisory Service.

A Woori Bank spokesperson contacted by Bloomberg referred to a Sept. 23 statement, saying the firm will actively seek ways to protect their customers in dispute reconciliation.

The FSS is investigating whether enough information was provided to investors when such products tied to overseas rates were sold, and whether they had design flaws. Individual investors seeking higher returns as interest rates fell in Korea were the predominant buyers of those securities: they made up 89.1% of the about 822 billion won of overseas rate-linked products outstanding as of Aug. 7, the financial regulator said last month.

While the products have different terms, a typical one tied to German rates offer a return of 2% on six-month securities if the 10-year yield is minus 0.25% or higher, but if it falls below that level, investors lose 2.5% of their principal every time the yield drops one basis point, according to the FSS. — Bloomberg

Smith & Wesson parent fails to win support for CEO pay raise

SMITH & WESSON parent American Outdoor Brands Corp on Tuesday failed to win majority support for its rising executive pay, according to a transcript of the gunmaker’s annual meeting.

American Outdoor’s proxy statement shows pay raises for top executives including Chief Executive Officer P. James Debney during the fiscal year ended April 30 this year. For that period Debney received total pay of $3.8 million, up from $2.2 million in the same period a year earlier.

Proxy advisory firms Glass Lewis & Co and Institutional Shareholder Services Inc (ISS) recommended that shareholders vote “against” the executive pay raises.

In a report seen by Reuters, ISS said the performance targets under the annual incentive were set lower than last year, resulting in “above-target awards.”

Last year only about 2% of companies the size of American Outdoors failed to win majority support for the advisory measures on the pay of top leaders, according to consulting firm Semler Brossy.

Shares of American Outdoor closed down 2% at $5.96, and have fallen more than 50% this year.

The company’s profit fell 8.5% to $18.4 million in fiscal 2019, its second consecutive drop in annual profit.

A spokeswoman for the Springfield, Massachusetts, company did not respond to requests for comment.

The meeting transcript also showed that a proposal calling for the company to adopt a human rights policy was not approved.

The company and rivals including Sturm Ruger & Co have been under pressure amid a series of mass shootings at US schools, colleges and houses of worship such as an attack in West Texas on Aug. 31 that killed seven and wounded 22 others, including a toddler. — Reuters

Tanduay enters Singapore market

TANDUAY Distillers, Inc. (TDI) is expanding its international footprint as it enters Singapore through a partnership with an alcoholic and non-alcoholic beverage distributor.

In a statement yesterday, the Lucio C. Tan-led rum manufacturer said it has sealed a deal with Singapore’s Octopus Distribution Networks Pte Ltd. to bring its products to the country.

“We are glad to finally make our products available to our kababayans in Singapore and at the same time introduce them to the Singaporeans,” Tanduay President and Chief Operating Officer Lucio K. Tan, Jr. was quoted as saying in the statement.

“Partnering with the Octopus Group is part of our effort to bring Tanduay to the global market,” he added.

TDI’s international network currently covers United States of America, Germany, China, United Arab Emirates, Guam and Australia. In 2018, the company said it wanted to expand its rum exports in the near term.

Since 2017, TDI said its export business has been recording a two-year compound annual growth rate of 86.25%.

The company had been aggressive in marketing its international presence by partnering with National Basketball Association (NBA) teams Golden State Warriors and Brooklyn Nets. It also sponsors the annual American television awards show Emmy Awards.

In the first half of 2019, TDI recorded a net income of P380 million, 13% lower from a year ago due to higher operating expenses. — Denise A. Valdez

Your Weekend Guide (September 27, 2019)

CitySky exhibit

CITYSKY 2 by Christian Tamondong, part of CitySky’s Super Sampler exhibit.

CITYSKY REALTY is incorporating urban art in its upcoming open house event — the exhibit dubbed Super Sampler which will gather under one roof the latest works from a pool of Filipino contemporary visual artists, some of whom are already being recognized in the international art scene. The exhibit will coincide with the open house of the real estate services company which gives buyers and investors a look at the latest real estate offerings of Alveo Land. To be featured are the artworks by Christian Tamondong, Janelle Tang, Mark Arcamo, Distort Monsters, Quiccs, JJ Zamoranos, Trip63, JP Pining, Egg Fiasco, and Mark Bardinas. The Super Sampler exhibit and open house will be held at the Alveo Corporate Center in Bonifacio Global City, Taguig, from Sept. 28 to 29, from 9 a.m. to 6 p.m.

Fundraising exhibit

A BRASS sculpture by Dominic Rubio is one of the pieces in the Zonta Club exhibit.

A SPECIAL art exhibit titled La Femme Futura will be held at the North Court of the Power Plant Mall on Sept. 26-29, as celebration of the Zonta Club’s centennial year, with special pieces by Juvenal Sanso, Dominic Rubio, Ramon Orlina, Carlo Magno, Migs Villanueva, Marge Organo, Francis Nacion, Benjie Mallari, Aileen Lanuza, Caress Banson, Gabby Prado, Aljo Pingol, Averil Paras, Ann Baldemor, Katrina Cuenca, and Nap Limaten on view. The project, consisting of women-inspired artworks, is meant to raise funds for the scholarship fund of Zonta Club of Makati and environs. For inquiries, contact Galerie Joaquin at info@galeriejoaquin.com, or 0917-453-2924.

SlimeFest Asia

NIKELODEON holds its first-ever SlimeFest in Asia on Sept. 28, 4 p.m., at the SM Mall of Asia Concert Grounds. Visitors can play Nickelodeon games and meet their favorite characters from SpongeBob SquarePants, Paw Patrol, Rise of the Teenage Mutant Ninja Turtles, and Dora the Explorer. At 6 p.m. will be The Best Music Fest of All Slime with performances by Thai-German singer Jannine Weigel and American pop singer Carlie Hanson, IV of Spades, tween rapper Alex Bruce and hip-hop dance troupe Philippine Allstars.

The Quest for the Adarna

REPERTORY Philippines’s Theater for Young Audiences presents a musical retelling of the Philippine folk tale Ibong Adarna. The Quest for the Adarna has performances until Jan. 26, 2020 at Onstage Theater, Greenbelt 1, in Makati. In the kingdom of Berbania, the happy life of king, queen, and their three sons is shattered when the king falls mysteriously ill. He can only be healed by the song of the mythical bird, Adarna, which can be found in its mountain home. The three brothers take turns attempting the dangerous journey to help their father. Tickets are available through TicketWorld (www.ticketworld.com.ph, 891-9999).

Himala: Isang Musikal

BASED from the 1982 film directed by Ismael Bernal, Himala: Isang Musikal centers on Elsa, a young woman who is looked upon as a desperate town’s savior. The show runs until Oct. 20 at the PowerMac Center Spotlight, Circuit Lane, Circuit Makati, Makati City. For tickets, visit TicketWorld (www.ticketworld.com.ph, 891-9999).

Passion

THE PHILIPPINE Opera Company opens its 20th season with Stephen Sondheim and James Lapine’s 1994 Tony and Drama Desk Award-winning musical, Passion, at the Carlos P. Romulo Auditorium, RCBC Plaza in Makati City until Sept. 29. Set in Italy in 1863, Passion tells a story of a love affair between a young soldier, a beautiful married woman, and a sickly spinster. Directed by Robbie Guevara, it stars Jasmin Fitzgerald, Vien King, and Shiela Valderrama-Martinez. Tickets are available through TicketWorld (www.ticketworld.com.ph, 891-9999).

Rak of Aegis

THE hit Pinoy jukebox musical Rak of Aegis has ongoing performances until Sept. 29. The show uses the songs of the Aegis band to tell the tale of a perennially flooded barangay. This latest production features a mix of original cast members and new. Tickets are available through TicketWorld (www.ticketworld.com.ph, 891-9999)

What to see this week

6 films to see on the week of September 27 — October 3, 2019

The Goldfinch

BASED on the novel by Donna Tartt, the story follows Theodore “Theo” Decker who is grieving after his mother is killed in a bombing at the Metropolitan Museum of Art. He clings to a tiny piece of hope from that day — a painting of a goldfinch. Directed by John Crowley, the film stars Ansel Elgort, Nicole Kidman, and Aneurin Barnard. TIME magazine’s Stephanie Zacharek writes, “From its casting to its structure to its layering of visual textures, you can almost see how every good intention and carefully considered judgment call has somehow gone wrong. It’s an object lesson in what not to do in an adaptation, yet it’s occasionally effective enough that you can see a much more successful movie buried within it.” Rotten Tomatoes gives it a 27% rating.

MTRCB Rating: R-16

Hustlers

BASED ON a New York magazine article by Jessica Pressler, former strip club employees team up to turn the tables on their Wall Street clients. Directed by Loren Scafaria, the film stars Constance Wu, Jennifer Lopez, Julia Stiles, Keke Palmer, Cardi B, and Lily Reinhart. Christie Lemire of www.rogerebert.com writes, “Scafaria doesn’t seem terribly interested in examining the morality of the women’s crimes. She suggests that these guys have it coming to them by virtue of their chosen profession; they’re crooks and scam artists themselves, albeit of the white-collar variety. They’re also obnoxious, awful human beings for the most part, which seems to justify the women’s actions, as well. Rather, we’re meant to root for these hard-working ladies to bask in the glory of their much-deserved riches. It may seem shallow, but Scafaria makes a persuasive argument in amassing such a likable ensemble.”

MTRCB Rating: R-16

Haunt

A GROUP of friends look for thrills as they enter a haunted house that brings one’s darkest fears to life. Written and directed by Scott Beck and Bryan Woods, the film stars Katie Stevens, Will Brittain, Andrew Caldwell, Shazi Raja, Lauryn Alisa McClain, and Schuyler Helford. The Hollywood Reporter’s Justin Lowe writes, “Leaving behind the more refined styling of a big-budget horror feature, the filmmakers strive for an indie aesthetic that’s more visceral than intellectual, emphasizing sheer survival instincts in their tribute to B-movie horror classics. With a simultaneous theatrical and digital release, Haunt’s pedigree, underlined by Eli Roth’s participation as producer, should prove a draw for both devoted horror fans and the simply curious.”

MTRCB Rating: R-13

Downton Abbey

A FILM still from the movie Downton Abbey

BASED ON the television series of the same title, the film follows the Crawleys and their staff as they prepare for a royal visit from the King and Queen of England. Directed by Michael Engler, the film stars Hugh Bonneville, Laura Carmichael, Jim Carter, Bendan Coyle, Michelle Dockery, and Kevin Doyle. The Atlantic’s Sophie Gilbert writes, “The new Downton Abbey movie is a drug, a delight, a palliative for the pain of being, a balm for battered emotions, a cure for cynicism.”

MTRCB Rating: PG

Kiko En Lala

A CARNIVAL owner adopts infant conjoined twins. As they grow up and yearn to do things on their own, they undergo surgery to separate their bodies. Directed by Adolfo Alix, Jr., the film stars Super Tekla, Devine Tetay, Derrick Monasterio, Kim Domingo, Kiray Celis, Jo Berry, and Ai-Ai de las Alas.

MTRCB Rating: PG

#Jowable

THE FILM follows 30-year-old Elsa, a desirable woman who desperately wants to be in a relationship. Written and directed by Darryl Yap, the movie stars Kim Molina, Cai Cortez, and Kakai Bautista.

MTRCB Rating: R-13

Travellers International completes tender offer

SHAREHOLDERS of Travellers International Hotel Group, Inc. (TIHGI) have tendered about 1.32 billion common shares, as the company prepares to delist from the stock exchange.

In a disclosure posted Thursday, the owner and operator of Resorts World Manila said a total of 1.321 billion common shares were tendered during the offer period, out of its target to repurchase up to 1.582 billion common shares.

TIHGI’s public float will drop to less than two percent after the shares are crossed on Sept. 30.

The company earlier set a tender offer price of P5.50 per share. This is higher than its close of P5.42 each on Thursday.

The shares will then be held by non-public shareholders, including Alliance Global Group, Inc. (AGI), Megaworld Corp., First Centro, Inc., Adams Properties, Inc., Star Cruises Philippines Holdings B.V., Asian Travellers, Ltd., Premium Travellers, Ltd., and the members of the board of directors.

TIHGI said voluntarily delisting from the main board of the Philippine Stock Exchange will help it improve its business strategy against competition.

The company is a joint venture of tycoon Andrew L. Tan’s AGI and Genting Hong Kong Ltd.

It is currently expanding the Resorts World Manila complex with the completion of its Grand Wing facility by the latter half of the year. This will include two levels dedicated to gaming, entertainment, and retail spaces.

The expansion further includes Hilton Manila and Sheraton Manila, which have already started operations, as well as Hotel Okura Manila, which will be launched in the first quarter of 2020. This is in addition to its existing hotels Marriott Hotel Manila, Maxims Hotel, and Holiday Inn Express Manila Newport City.

TIHGI booked a net income attributable to the parent of P844.71 million in the first half of 2019, 50% lower than the P1.69 billion it posted in the same period a year ago. This came amid a 50% increase in gross revenues to P16.57 billion. — Arra B. Francia

When HR becomes the workers’ enemy

We’d like to know your opinion about the style of our human resource department in dealing with workers. It is excessively pro-management does not sufficiently look after the interests of workers. As an example, new employees are required to spend a total of nine months before they assume regular employment status. The first three months are spent for supposed training, in addition to six months of probationary employment. Rather than attend formal classroom training, the employees are required to study on their own, pass a written examination and submit a progress report to HR. How do we manage this kind of work environment that appears to be against the workers’ interests? — White Lily.

The earliest recorded rant by people against HR was in 2005 when an article, “Why We Hate HR,” was published by Fast Company: “After close to 20 years of hopeful rhetoric about becoming ‘strategic partners’ with a ‘seat at the table’ where business decisions that matter are made, most human-resources professionals aren’t nearly there. They have no seat, and the table is locked inside a conference room to which they have no key. HR people are, for most practical purposes, neither strategic nor leaders,” according to the article written by a team of Fast Company’s researchers and writers.

The article continues to ask a lot of intriguing questions: “Why are annual performance appraisals so time-consuming — and so routinely useless? Why is HR so often a henchman for the chief financial officer, finding ever-more ingenious ways to cut benefits and hack at payroll? Why do its communications — when we can understand them at all — so often flout reality?

“Why are so many people processes duplicative and wasteful, creating a forest of paperwork for every minor transaction? And why does HR insist on sameness as a proxy for equity?”

The article is based on a survey conducted by the Hay Group and also includes a quote from an unnamed management professor who says: “The best and the brightest don’t go to HR.” Ouch! But, of course, anyone can always argue that the article is based on the American context. OK, fine, whatever.

Judge for yourself. If you want to discover the state of HR in the Philippines, you only have to check the Facebook page of many HR groups. It can give you a whole lot of ideas how today’s Filipino HR managers are showing their worst side in managing their workers, ranging from absurdity to insanity. It’s an unfair generalization as it does not represent the majority of HR professionals. And so, how do you manage HR when it becomes the tool of management oppression? Take the time to explore the following strategies:

One, establish rapport with HR even if you hate. It’s difficult to feign friendship with people you don’t like, but that’s the only way to go if only to understand their emotional and mental processes. Sun Tzu in “The Art of War” said you “must know yourself and know the enemy” as well. With that, you can remain confident that in due time, your “enemy” will have sheathed his sword to accommodate you in some way.

Two, remove your prejudice against HR. Don’t perpetuate the idea that they’re difficult people. Sure, there are many HR people who are troublesome. Just the same, try to understand where they are coming from. Listen for what’s not being said. They too are reasonable human beings who have no option but to follow top management direction even if illogical, immoral, and at times recklessly illegal.

Three, exercise patience when listening to HR’s position. Show interest by establishing eye contact and use non-verbal signals such as nodding and smiling to test HR’s sincerity. It’s true that probationary employment is limited only to six months. However, it can be extended subject to the consent of the workers and management. Note also that a training program is not limited to a classroom set-up but includes on-the-job training.

Last, report the company’s illegal activities to the labor department. Do this only as a matter of last resort and you’re not satisfied with the action taken by HR. You can file an anonymous complaint with authorities who can send labor inspectors to validate your company’s malpractice. When you do this, don’t use the facilities of the organization like email or telephone in reporting the matter. Better if you can request someone outside of the organization to do the reporting.

Ideally, HR must wear several hats as suggested by HR guru David Ulrich, depending on the situation: As a business partner, administrative champion, change agent and employee champion, not necessarily in that order. However, in most cases, HR can easily become the unwilling tool of corrupt management. HR people allow themselves to be used because their bread and butter is on the line.

Once again, don’t generalize. Just like everyone, HR people desire to work to the best of their abilities. If you have an issue against a certain management policy, discuss your position in a professional, intellectual manner. Don’t be emotional. I know it’s difficult. But that’s the only way if only to come out with a logical position.

ELBONOMICS: You can win a difficult battle without using swords and spears.

 

Send anonymous questions to elbonomics@gmail.com or via https://reyelbo.consulting

Purpose Driven Chemistry

THE Academe-Industry-Government (IAG) triangle has been touted and proven to be a very good model for progress especially in research. Academe has the intellectual power, industry produces, while government provides policies and funds.

This is validated and imminent in the rise of the German and American chemical industry. In the past, this model was promoted in the Philippines but resulted to limited success due to various reasons, which includes distrust between academe and industry as well as government red tape. This was until an independent scientific institute was formed based on this collaboration. The Philippine Institute of Pure and Applied Chemistry (PIPAC) was organized to be a center that will conduct chemical research, analysis and training to industry, government and the general public.

This cause began in 1960 where there was a serious lack of scientists and other technical people in the Philippines. At that time, the Department Chemistry of the Ateneo was approached by industry for chemical analysis and other needs. The idea of setting up a research institute was a subject discussed in corridor meetings to which one of the proponents, Dr. Modesto T. Chua, highlighted his eight-year experience in Germany and Europe regarding the benefits of close university-industry collaboration. The advantage from alliance and joint venture is the central truism that inspired PIPAC.

The idea was accepted and obstacles were recognized including fund sourcing the proposal for “Installation of the Institute for Chemical Analysis, Applied Research and Technical Training,” which was approved by the Alexander Von Humboldt Foundation. This grant started the establishment of this non-profit scientific foundation. In 1974, Dr. Chua submitted a proposal to JICA requesting for a grant to put up a building and acquire needed scientific equipment for PIPAC. After three failed attempts, the project was finally approved in 1981, signaled by the arrival of Japanese team with architect and engineers to start architectural plans and others.

At present, PIPAC is known by its high standards of chemical analysis even before the advent of ISO 17025 (good practice world standard for chemical laboratories). PIPAC acts as a third-party laboratory to validate tests made by companies or government agencies, especially if there are conflicting results. These tests are guided by rules of confidentiality which PIPAC upholds faithfully.

PIPAC ensures that products in the market are safe and that they truly contain the correct accepted amounts of ingredients as claimed in the product. They issue a certificate of analysis as a proof that its product passed the test and can be sold. Hence, this organization serves a vast number of industries which includes: pharmaceutical, agriculture, fisheries, consumer, manufacturing, waterworks, food, electronics, and construction.

Aside from product testing, PIPAC, through its training and workshop program offerings, helps companies retain technical staff. It strengthens the chemical industry and university/school personnel. Through research and development, they also assist the government in conducting product testing. Examples of past research are determining the Quinine content of cinchona trees in treating malaria, and the development of herbal drugs lagundi and sambong, both of which are now circulated in the markets. PIPAC thus helps companies launch new innovations and develop additional functionalities.

Some faculty members of the Ateneo de Manila Department of Chemistry are intimately involved in the PIPAC operations through management, chemical & microbiological analysis, R&D and training which deepens and widens the experience of the faculty members in the chemical and biological sciences. These enrich the instruction of the teachers by giving concrete industry examples without divulging confidential matters. The students of these faculty members in turn are better prepared to join the workforce.

Through its internationally recognized chemical testing and R&D facility, PIPAC serves the chemical and scientific needs of public and private institutions. It supports the development and application of chemical science in the Philippines, a sector critical to the further enablement and progress of the country.

The dream of IAG collaboration proven effective in other countries is a Philippines’ reality through PIPAC. It increases the engagement of the different sectors of society. It can now be considered as a formula for success to those nations who want to be technologically autonomous.

I am indebted to Dr. Armand Guidote Jr., Institute Director, for the invaluable inputs and insights for this article. Today, PIPAC is ably steered by a Board helmed by chairman Bert Manlapit. One of its pioneers, the respected Fr. Antonio Samson, S.J. continues to serve the Board, as well as other academic and industry stalwarts.

Like the famous Blake Shelton said, “There’s one thing you can’t fake and that’s chemistry.”

 

Benel D. Lagua is executive vice president at the Development Bank of the Philippines. He is an active FINEX member and a long time advocate of risk-based lending for SMEs. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.

How PSEi member stocks performed — September 26, 2019

Here’s a quick glance at how PSEi stocks fared on Thursday, September 26, 2019.

 

Metro Manila most congested developing Asian city — ADB

METRO MANILA was ranked the most congested major city in developing Asia by the Asian Development Bank (ADB), which noted in a report that such problems are generally due to “lack of efficient and affordable public transportation.”

In the bank’s Asian Development Outlook 2019 update released Wednesday, ADB said Metro Manila topped the list of most congested cities with a population of at least five million in developing Asia.

“The big cities… with populations of 5 million or more, tend to have congestion, peak travel times relative to off-peak travel times, (and are higher (in the congestion rankings) than average,” ADB Macroeconomic Research Division Director Abdul Abiad said in a media briefing.

Rounding out the list of congested cities are Kuala Lumpur, Yangon, Dhaka, Bengaluru, India and Hanoi.

ADB studied 278 “natural cities” in the region — those that built up over time — using Google Maps and other tools to estimate travel time by car, train or bus.

Across 278 cities, ADB reported that on average, “24% more time is needed to travel in peak hours than in off-peak hours.”

“They calculated average travel time using Google Maps, comparing peak travel times with off peak travel time and… how this ratio of peak to off peak travel time is different across cities,” Mr. Abiad said.

The study also used nighttime city images from the National Oceanic and Atmospheric Administration, grid population data from LandScan Datasets of the Oak Ridge National Laboratory and trip routes from Google Maps.

“A lack of efficient and affordable public transportation is often considered a cause of urban congestion,” it reported.

ADB said commuters in many Asian cities rely on public transportation, including informal transport services, and “lack of efficient and affordable public transportation is often considered a cause of urban congestion.”

“One is you need to have good land use planning and regulations which then enables things like multimodal transport systems which help people go around,” Mr. Abiad added.

ADB reported that buses have an advantage of lower investment costs and less complex implementation while mass transit by rail has a larger carrying capacity while being insulated from road traffic, though it requires higher capital investment.

“As the opening of mass public transit services often drives up land value, the public capture of land appreciation is a promising option for funding urban infrastructure,” it added. — Beatrice M. Laforga

Fuel marking system being tested ahead of January implementation

A FUEL marking system intended to deter smuggling is now being tested in the facilities of large oil firms in preparation for full implementation next year, the Finance department said Wednesday.

Finance Undersecretary Antonette C. Tionko said the department is marking fuel manually while a team is currently working on automating the system to handle larger volumes at the refinery and tank farm level.

“The team is in the process of working with the big refineries for installation of the automatic injection of the marker. In the meantime, the marking is being done manually. For the big refineries, (the marker) will have to go through their equipment and it (needs to be) automatically injected because of the volumes,” Ms. Tionko said during a Senate hearing on the Department of Finance (DoF) budget for 2020.

Fuel marking is intended to indicate that tax has been paid on a particular batch of fuel products. The absence of the dye can be taken as prima facie evidence that a particular shipment is not tax-compliant.

Ms. Tionko said full implementation is scheduled for January pending the outcome of the tests.

The government is estimated to lose about P40 billion a year from fuel smuggling, while the marking system could generate an additional P20 billion in revenue in the first year of implementation.

“We’re hoping to collect at least, by next year, P20 billion, which is half of the estimated amount of revenue lost to smuggling,” she said.

The marking costs around P0.69 per liter will be borne by the government during the first year of implementation while beyond that period oil firms will have to absorb the cost or pass it to consumers, Customs Assistant Commissioner Vincent Philip Maronilla said in an interview early this month.

Fuel marking was authorized by the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Finance Secretary Carlos G. Dominguez III reported during the budget hearing that revenue from TRAIN measures grew by 9.8% in the first half of 2019 to P55.6 billion, up 65% from a year earlier.

Mr. Dominguez said the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) have exceeded their TRAIN targets by P1.8 billion and P1.7 billion, respectively.

Republic Act No. 10963, or the TRAIN Law took effect in January 2018 as the first package of the Comprehensive Tax Reform Program (CTRP). This lowered personal income tax but increased taxes on oil, automobile and tobacco products, among others.

Mr. Dominguez also said tax collections in the first eight months of the year rose 9.8%.

The BIR’s collections grew by 10.6% during the period, while revenue generated by the BoC rose 7.2%.

“We are confident this growth will be sustained in the coming period through continuing administrative reforms and the completion of the comprehensive tax reform program that will make our tax system simpler, fairer and more efficient,” he said.

“In both revenue agencies, we are automating processes and strengthening control measures against slippages,” he added. — Beatrice M. Laforga

DoE releases circular on energy storage systems

THE Department of Energy (DoE) has issued a circular that provides a framework for energy storage systems (ESS) to address the growing adoption of renewable energy systems with intermittent supply.

In issuing the circular, the agency said it “recognizes the applications and the benefits of ESS as an emerging technology in the improvement of the electric power system in accordance to the objective of ensuring the quality, reliability, security and affordability of the supply of electric power.”

Some forms of renewable energy such as wind or solar would be more effective when paired with a storage component because such a system could store power generated when there is no demand for it, and then release it when required or when wind and solar plants cannot operate because of weather conditions or during nighttime.

The DoE said in other jurisdictions, technologies involving energy storage systems are applied to serve a variety of functions in the generation, transmission and distribution of electricity, including energy generation, peak shaving and ancillary services.

Ahead of the circular’s issuance, the DoE said it conducted a review of all relevant policies and guidelines, and existing practices in other jurisdictions to ensure the optimal use of energy storage systems in the Philippines.

The DoE said energy storage systems are to operate within the framework of generation companies whose facilities supply electricity to the grid or the power distribution system. The power grid is the high-voltage backbone system of interconnected transmission lines, substations and related facilities in Luzon, Visayas and Mindanao.

The system operator will provide central dispatch to grid-connected and embedded energy storage systems with material impact to the grid. This is in the interest of achieving economic operation and maintenance of quality, stability, reliability and security of the transmission system.

Energy storage systems will also follow limitations relating to market share and bilateral contracts under Section 45 of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

Under the circular, ESS technologies include battery energy storage systems that are capable of storing electric energy electrochemically from which they are able to charge or discharge electric energy.

The other covered energy storage technologies are compressed air, flywheel and pumped-storage hydropower.

Compressed air energy storage uses electric energy to inject high-pressure air containers. When electricity is required, the pressurized air is heated and expanded in an expansion turbine driving a generator or power production.

Flywheel energy storage uses electric energy to accelerate a rotating mass, called a “rotor,” to store kinetic energy. Electricity is extracted from the system by drawing down the kinetic energy from the rotor.

Pumped-storage hydropower uses electric energy to pump water from a lower-elevation reservoir to one at a higher elevation. When required, the water flows back from the upper to the lower reservoir, powering a turbine with a generator to produce electric energy.

The DoE said proponents may apply and register their energy storage systems for a number of purposes: provision of ancillary services; provision of energy through bilateral supply contracts or trading in the wholesale electricity spot market; and to manage the penetration of renewable energy.

They may also register their facilities as auxiliary load management for generation companies; transmission/distribution facility upgrades deferment; transmission congestion relief; end-user demand management; distribution utility demand management; and distribution utility power quality management.

The DoE has called on the Energy Regulatory Commission (ERC) to assist in the implementation of the circular, which will take effect immediately after its publication in two newspapers of general circulation. The circular was published on Sept. 18, 2019. — Victor V. Saulon

ADVERTISEMENT
ADVERTISEMENT