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Enter the Dragons

Reporting
Bjorn Biel Beltran

Video
Nina M. Diaz
Paolo L. Lopez

Illustration
Fortunato V. Dañas

Editor
Sam L. Marcelo

[vc_custom_heading text=”Meet the part-time professional esports team competing in The Nationals.” font_container=”tag:h2|text_align:center”]

Only one of them plays full-time. In fact, two of their players are still in school. Yet despite the circumstances, the Sterling Global Dragons (SG Dragons) professional esports team for Mobile Legends: Bang Bang made it big in the second season of the game’s official Philippine professional league this January.

From placing eighth prior to the finals of the second season of the Mobile Legends: Bang Bang Professional League (MPL) Philippines, the team came from behind to secure the first runner-up spot against big-name rivals like Execration, Aether Main, and  ArkAngel.

They might not have taken home the trophy — and the $25,000 cash prize — but it sparked enough to whet their appetites for the next tourney. Particularly, the Mobile Legends segment of The Nationals later in the year, the country’s first franchise-based electronic sports league, in which SG Dragons will be competing as PLDT-Smart Omega.

The win also gave them the hope that, despite their unusual situation, they have yet to unlock the full potential of their players.

“Out of the teams that competed at the finals of MPL Season 2, we were the only ones who play part-time,” Jules Carmann Marcelo, who plays as “Dragons Lex,” said in the vernacular in an interview. “Of course, that came with advantages and disadvantages.”

[vc_video link=”https://www.youtube.com/watch?v=64GS17JFYIg” align=”center”]

“The disadvantage was the other teams can practice all day, when we cannot. The advantage, however, is whenever we practice we have the eagerness to play. When you play full time, you tend to take time for granted. There’s this attitude that comes with playing full-time that might make you mismanage your time.”

He pointed out that full-timers are more likely to be “tilted,” the gaming or gambling term for an unbalanced state of mind usually caused by a big loss. As in games like poker, tilted players play below their usual ability, making riskier and more aggressive decisions in an effort to quickly recover their losses.

“For us, our advantage is whenever we do get to practice, we take that practice seriously because we’re all eager to play,” he said.

Differing backgrounds, same goal

Quality matters over quantity, especially if the team only really gets to practice for two to three hours a day, when its members have come home from school, or have otherwise finished with their daily responsibilities. Mr. Marcelo, for one, is a director at the U.S.-based multi-level marketing company USANA Health Sciences, which has allowed him to be financially secure while giving him the time and freedom he needs to practice.

At 33, he is the eldest professional esports player in the Philippines, if not the world. Mr. Marcelo proves to be an exception in an industry where discrimination based on age is a major issue.

Rather than proving a hindrance to him, however, his age provides him with the maturity and stability that put him above many of his peers. He even admits that, if he were a few years younger, he probably would not have decided to go pro.

“I’m very lucky that although I’m 33 years old, the timing was just right for me to be here. If it wasn’t, if for example competitive Mobile Legends took off before I was stable, most likely I’d choose my responsibilities over the game,” he said in Filipino.

“It just so happens that the timing worked out, and I have my responsibilities settled. I can pursue my dreams now.”

In contrast, Karl Gabriel Nepomuceno, who plays for the team as “Dragons Karl,” and who at 14 years old is the youngest pro player in the country, is still figuring things out. Still finishing up middle school, he is juggling the day-to-day pressures of schoolwork as an honor student with the rigors of competitive gaming. Of the skills in his disposal, time management, he said, is the most essential.

“When I get home from school, I make sure to do my schoolwork first because I’m an honor student. I do that first and afterward I can play any time,” he said in Filipino.

Mr. Nepomuceno is hoping his time management skills can get him through college, because despite all the successes they have achieved, and the ways they have yet to go, he still dreams of finishing his education.

“If they want me to go full-time, homeschooling is an option. But if it were up to me, I don’t want to stop school. I want to do both,” he said.

Given his young age, his parents disapproved of his gaming at first, going as far as to turn off their internet to make sure he got enough sleep. Only when he started competing– and winning– at tournaments did he convince them to his side.

Likewise, for Steven Dale P. Vitug, 22, playing as “Dragons Dale,” it was a challenge to get support from his loved ones when he was starting out.

[vc_video link=”https://www.youtube.com/watch?v=wnkzVNiKzyM” align=”center”]

As a relatively new industry, professional gaming has yet to overcome conventional barriers regarding public acceptance. Many still view video games as a childish hobby, a far cry from the esteem generally given to professional athletes.

Growing up, Mr. Vitug had to contend with the criticisms of his parents and relatives about his gaming habits, telling him to give it up, that he won’t get anywhere just playing games. When he eventually had his own family, he realized he had to take their advice.

“I had no choice then. I needed to abandon my love of games,” he said in Filipino.

“When you have a family, you can’t do what you did as a teenager, going to computer shops all the time. What if you need to wash bottles, feed the baby? You can’t do that anymore. You’re not a teenager anymore. You have responsibilities.”

Mr. Vitug was working as a clerk at a convenience store when he got introduced to Mobile Legends, which then served as a fun pastime during work breaks and before bed. He got good at it, and when the opportunity came for him to play competitively, he found that he was at a crossroads.

“Because of my responsibilities to my family, I couldn’t just leave them to play full-time. It got to a point when I was questioning whether I can feed my family from esports.”

“I asked my partner to be patient, to give me one last chance. If it didn’t click, then I would quit trying to become a pro player. I’ll stop,” he said.

Inasmuch as Mobile Legends caused friction between their relationship, the game also sparked life into another.

Earvin John Esperanza, 23, who plays as “Dragons Boo,” never planned to enter the competitive gaming scene as a career. Like his teammate, Mr. Esperanza only found out about the game through a colleague, and it started out as a pleasant enough hobby that reminded him of his teenage years playing Defense of the Ancients, or Dota.

But becoming skilled enough at Mobile Legends allowed Mr. Esperanza to rub shoulders with some of the country’s best players, and the small connections he made playing the game changed his life far more than he expected.

“At first, I really didn’t take it seriously. It was just a game,” he said in Filipino.

“But it was through the game that I met the love of my life.”

Although Mr. Esperanza could not pursue professional gaming full-time due to health issues, finding a kindred soul lit a fire in him that served as his inspiration to take the career more seriously.

“I told myself I wanted to make her proud of me because we’re both gamers. It’s a joy to have someone who supports me,” he said. He added that once he gets well enough, it’s full throttle from there. “It’ll be hard, but I can manage.”

For the love of the game

As the team captain, 18-year-old Rico Jatico Esto, who plays as “Dragons Levi,” is the one who bears the responsibility of making this team of part-time professional gamers work. But there is, perhaps, no one better qualified. Though still a senior high-school student himself, Mr. Esto has been following competitive video games for years, since esports celebrities like Lee “Faker” Sang-hyeok began making their names in games like League of Legends.

As League of Legendsnwas one of — if not the most — popular game at the time, with around 67 million active monthly players at its peak, Mr. Esto found it difficult to compete at a high level on his own.

“I thought at the time that maybe the game just wasn’t for me, because it really was hard to find good teammates. I was always on solo queue,” he said in Filipino.

When he saw his sister’s boyfriend, who was also an esports player, playing Mobile Legends, he found that the it ticked all the boxes that he was looking for in a game to replace his obsession with League. With it being a mobile game, it was also much easier to find like-minded people to team up with.

SG Dragons as a team started out this way, with small, local tournaments being their first foray into the competitive scene. Though their journey has not gone without its trials, the fact that the team has managed to come so far in only a matter of months speaks to the passion and dedication the players have for gaming.

“Sometimes I wondered if what this was the right thing to do. But I realized that this really was my passion. Ever since I was a kid, I dreamed of making it as a pro player. So even if it’s hard, even if I don’t get to have the time to do other things like going out with friends, I’ll keep doing it,” Mr. Esto said.

“My idols from League of Legends, this is what they had felt when they were on the stage. I’m feeling what they were feeling when they compete with other teams with people watching. I know now how amazing it is to feel the support of so many people.”

After he graduates, he plans on focusing his attention on esports full-time. His team will be right there with him. Bonded through a shared love of gaming, the players of SG Dragons are looking ahead, aiming to go higher than any Filipino sports team has gone before. Their first goal: to become back to back to back national champions, and work upwards from there.

“As long as we’re enjoying what we play, we’ll continue playing,” Mr. Esto said.

Steadily expanding over time

The Philippine insurance industry remains upbeat in recent years, going hand in hand with the country’s evolving economy. While all sectors of the industry — life insurance, non-life insurance and mutual benefits organizations (MBAs) — continue to register a positive growth, common growth bottlenecks remain.

The Insurance Commission reported in December last year that the industry’s total premiums as of the end of third quarter of 2018 rose by 18% to P218.91 billion from the P185.51 billion recorded in the same period of 2017.

The life insurance sector stays as the industry’s growth driver, booking P174.15 billion in total premiums which accounted for 79.55% of the premiums collected by the industry. The sector, in particular, collected P130.14 billion in premiums from variable life insurance products and P44.02 billion from traditional life insurance products.

Insurance Commissioner Dennis B. Funa said a significant increase in all types of variable life insurance products were observed, with first year, single and renewal premiums posting double-digit growth of 20.72%, 21.27% and 29.52%, respectively.

The net premiums written by the non-life insurance sector, at the same time, increased by 7.34% to P36.83 billion as of end September 2018 from P34.31 billion in the same period the prior year.

Consistent with the trend in the past reporting periods, the motor car insurance business comprised more than half of the total net premiums written with 51.39%. This is followed by fire insurance business with 13% share and accident insurance business with 9.87%.

Meanwhile, the contributions or premiums posted by MBAs also increased by 21.2% to P7.93 billion from P6.54 billion.

Overall, the total assets of the insurance industry in the first nine months of 2018 further increased to P1.55 trillion from the P1.54 trillion tallied in the same period in the previous year. Insurance density, which is the ratio of premiums to the total population, rose by 16.12% to P2,053.58 from P1,768.49; while insurance penetration, the ratio of premiums to the country’s gross domestic product, grew from 1.64% to 1.76%.

The latest ranking of life insurance companies in the country released by the Insurance Commission last November showed that Sun Life of Canada (Philippines), lnc. has retained its market leadership in terms of premium income collected for 2017. The firm collected a total premium of P32.11 billion.

Philippine AXA Life lnsurance Corp. ranked second with P26.18 billion, followed by BPI-Philam Life Assurance Corp., Inc. with P20.33 billion.

For the non-life insurance companies, Prudential Guarantee & Assurance, Inc. emerged on top in terms of net premiums written for the year 2017, after recording P4.81 billion premium income. It is followed by Charter Ping An with a premium income of P4.08 billion.

Malayan lnsurance Company, lnc., who took the top spot in 2016, ranked third with P4.07 billion in net premiums. In terms of recorded total assets, the firm took the top spot in 2017 with P38.81 billion, climbing from second place in the previous year.

Meanwhile, the growing statistics of individuals covered by microinsurance, together with the sector’s improving premium production, also mirrors how the local insurance industry is steadily expanding.

Earlier this month, the Insurance Commission reported that the number of individuals covered by some form of microinsurance protection as of end of 2018 increased by 18.77% to 38.89 million from 2017’s 32.74 million.

The MBA sector covered a total of 22.75 million individuals, up by 17.67% from 19.33 million. The life insurance sector posted the highest increase in the number of lives covered, recording a 30.23% growth to 11.85 million from 9.1 million.

The non-life insurance sector, on the other hand, saw a slight decrease of 0.54% in individuals covered with only 4.29 million, compared to 4.31 million in 2017.

In terms of premiums produced last year, the Insurance Commission said the microinsurance sector’s total premium production rose by 14.45% year-on-year to P8.14 billion from P7.11 billion.

The MBA sector continued to be the frontrunner in terms of production in 2018, recording contributions amounted to P4.56 billion or an increase of 16.8% from the P3.9 billion recorded the previous year.

Meanwhile, the life insurance sector produced microinsurance premiums worth P2.58 billion, growing 6.94% from 2017’s P2.42 billion. The non-life sector, on the other hand, booked P998.97 million, a 25.78% increase from P794.19 million.

“Based on the statistical data as of end 2018, we saw that the non-life and life insurance sectors showed significant increases in terms of premium production and number of lives covered. This only proves that microinsurance in our country continues to grow and is an effective and affordable financial product for the protection of the properties and lives of our countrymen,” Mr. Funa was quoted as saying in a statement. 

Global credit rating agency Moody’s Investors Service said that strong socioeconomic fundamentals — urbanization, a growing middle class, low insurance penetration, and the lack of a sufficiently funded welfare system — will continue to support the growth of the insurance sector in Southeast Asia, including the Philippines.

“However, the pace and quality of such growth will vary to reflect differences in market maturity, financial depth, demographics and policies, and the insurance industry in these countries are finding different ways to overcome common growth bottlenecks,” Moody’s Assistant Vice-President and Analyst Frank Yuen was quoted as saying in a statement.

The bottlenecks include difficulties in expanding and enhancing distribution capabilities, low protection content in mainstream products, shallow bond markets that limit investment options, and an increasing need to improve the capacity of industries to withstand shocks and support growth through tightening risk-based capital regimes. — Mark Louis F. Ferrolino

Better service through technology

With many industries being transformed through technology, the insurance sector is following suit as well. The insurance industry is going beyond the traditional means of doing business by employing technologies that will improve its services.

Finance Secretary Carlos Dominguez III, in a report on the Department of Finance’s Web site last year, urged the insurance sector to brace for digital revolution, noting that “the insurance industry should be at the forefront and center of technological changes driving our economies.”

Several technologies under the term insurtech have disrupted insurance, changing how it serves consumers and keeps their trust in several ways.

First, the technology available for the sector further helps secure information insurers hold. Blockchain, in particular, has the capacity to do this.

Also known as distributed ledger technology, blockchain is a security method by which digital information (the “block”) stored in a public database (the “chain”) is secured against other data in the system, keeping it safe from hackers.

An article by software development outsourcing company Ignite Outsourcing illustrated blockchain’s application to insurance.

“Policies, medical records, and all the other information that goes into an insurance business can be locked up on the chain. If there is an attempt to tamper with or steal it, its owner will instantly know,” it said.

Technology also enables insurers to address consumer demands fast.

Ignite Outsourcing noted that with millennials gradually dominating the consumer market, millennials are spending more money than any other demographic and are more confident with new technology.

This is where certain technologies come in to meet the current needs of the consumers. Chatbots, for instance, “are useful at handling a large number of similar queries and are popular for home and motor insurance, especially amongst young professionals who use instant messaging applications for everyday communication,” Marketing Manager Anna Kurmanbaeva wrote in a post in Medium.com.

Insurance has also gone ‘on-demand’, giving consumers access to insurance coverage and customization of products anytime and anywhere.

Furthermore, technology aids the sector in getting consumer insights. Through devices and wearables like Fitbit, insurers can learn more about the behavior of their clients.

Telematics, which uses various technologies to gather and provide information to the driver of a vehicle at a distance, monitors the driving habits of customers for more accurate risk profiles and pricing.

In addition, the Internet of Things, where devices and sensors can be connected to the Internet and communicate with each other, assists insurers in monitoring their customers’ lifestyles, providing health insurance quotes, and validating claims based on gathered data.

Lastly, technology makes the insurance processes faster. By eliminating human error, artificial intelligence and automation can speed up the entire claims process.

Also, according to a report of the Institute of International Finance in 2016, AI “could help insurers enhance automation, reduce risk and expense, increase productivity, and facilitate better and faster decision-making.”

Big data analysis, with a capacity that exceeds that of actuaries and claims adjusters, can also automate tasks within the claims process and make risk calculation more accurate. — Adrian Paul B. Conoza

TUCP eyes fresh Metro Manila wage hike

By Gillian M. Cortez
Reporter

THE COUNTRY’s biggest labor group plans to ask for an additional raise for Metro Manila’s private sector minimum wage earners, a little more than five months since the last increase took effect, citing “rising costs of food and services” that have rendered the current floor pay “insufficient,” according to an announcement to media on Sunday.

The Trade Union Congress of the Philippines (TUCP) said it will file a petition for an additional P710 in daily minimum wage at the National Capital Region Regional Tripartite Wages and Productivity Board in Malate, Manila at 9 a.m. Monday morning.

That will be on top of the current P500-537 minimum wage rate in the country’s capital that resulted from the P25 increase which took effect on Nov. 22 last year.

The law sets a moratorium of a year from the last minimum wage hike before a new petition is filed and acted on, unless there is a supervening condition that warrants another adjustment.

“Government standards announced by the Philippine Statistics Authority and the National Economic and Development Authority two weeks ago set the minimum amount of P349 a day or P10,481 a month for a family of five to be considered out of poverty,” TUCP said in its announcement, adding “that workers in the highly urbanized region should already be receiving a minimum of P1,247 salary [daily] in order for ordinary workers and their families to live normal and decent lives.”

“The current P537 wage for minimum wage earners in Metro Manila is highly insufficient in the light of rising costs food and services caused by taxes and inadequate government services and social protection assistance to poor Filipinos.”

Sought for comment, Employers Confederation of the Philippines (ECoP) President Sergio R. Ortiz-Luis, Jr. said such a raise would be “definitely inflationary” and force especially small businesses — which make up about 99% of the country’s business sector — to lay off workers.

“… [W]hat employers will do is they will raise their prices or, if the market can’t handle it, they will lessen people,” he said in a telephone interview on Sunday. “It (new minimum wage hike) won’t create jobs; we’ll be losing jobs.”

“You can file for a petition if there is a supervening event like extraordinary inflation,” Mr. Ortiz-Luis added. “But the inflation is getting lower.”

Latest data from the Philippine Statistics Authority show headline inflation easing for the fifth straight month from the nine-year-high 6.7% in September and October last year to clock in at a 15-month-low 3.3% in March, well within the Bangko Sentral ng Pilipinas’ 2-4% target range for 2019 for the second straight month — after 11 straight months of breaching it — though still above the central bank’s flat three-percent forecast average for the year. Headline inflation averaged an on-target 3.8% last quarter.

Taking out volatile prices of food and energy, however, leaves a 3.9% year-to-date core inflation that signals significant inflation pressures persisting across the broader economy.

De La Salle University School of Economics Dean Marites M. Tiongco said in a mobile phone message that “Under the assumption of P710 increase in NCR minimum wage… demand for labor will decrease,” while Rizal Commercial Banking Corp. economist Michael L. Ricafort said in a separate text that “Actual wage hikes affect overall inflation, as well as inflation expectations, also in terms of the effects on prices of affected goods and services in the economy.”

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said via text that the TUCP petition is “understandable” because “[i]nflation impacts salaries; higher prices put upward pressure on wages.”

At the same time, Mr. Asuncion said, “Any upward adjustment on wages has potential impact on price levels in general.”

Close coordination, clearer signals from the top said needed for timely budget

By Charmaine A. Tadalan
Reporter

CLOSER COORDINATION between government branches and among agencies, as well as clearer signals from Malacañang about its priorities will be needed to ensure that the delay in enactment that hounded this year’s national budget will not visit 2020’s P4.1-trillion spending plan, a top Budget official and economists said in separate recent interviews.

“We strongly urge all heads of departments, agencies, bureaus, offices, commissions, state universities and colleges, other instrumentalities of the National Government and all others concerned to strictly comply with the deadlines prescribed in the budget preparation calendar under the budget call,” Janet B. Abuel, officer-in-charge of the Department of Budget and Management (DBM), said in an e-mailed response to queries on Tuesday.

The DBM issued on Feb. 26 National Budget Memorandum (NBM) No. 131, or the National Budget Call for FY 2020, formally kicking off the process for next year’s spending plan. NBM 131 requires state offices to submit their proposed 2020 budgets on May 3. The DBM targets to submit the new consolidated state spending plan for approval by President Rodrigo R. Duterte and his Cabinet on June 17. Mr. Duterte will then submit the 2020 budget to lawmakers after his 4th State of the Nation Address on July 22, the day the 18th Congress opens its first regular session.

“The DBM will closely coordinate with the Office of the President and the rest of the Cabinet, and will continue to aim for the early submission of the FY 2020 National Expenditure Program to Congress in accordance with Section 22, Article VII of the 1987 Constitution,” Ms. Abuel said.

President Duterte signed on April 15 the 2019 national budget as Republic Act No. 11260, four months late, after a row between economic managers and leaders of the House of Representatives, and later on between leaders of the House and the Senate. He vetoed some P95.3 billion in appropriations that were deemed not in accordance with his administration’s priorities, slashing the total amount to P3.662 trillion.

University of Asia and the Pacific School of Law professor Natividad Cristina J. Gruet said Mr. Duterte could have been more emphatic in pressing his priorities on Congress.

“… [W]hat President Duterte could have done in hindsight really was to be more firm as regards to the kind of budget he preferred, which he did when he talked about vetoing the pork,” Ms. Gruet said in a telephone interview on Tuesday.

“But that [statement in early April that he would veto any appropriation deemed irregular] was a little too late in so many ways; it could have been done faster,” she added.

“But, honestly for me, it was clearly a power struggle in the upper and lower house and there was very little I think the President could have done at this point.”

Ms. Gruet added that Mr. Duterte could have talked more about reforms he wanted, instead of largely focusing on his anti-drug campaign.

“I think there should have been a lot more focus. President Duterte could provide more public speeches that would really set a strong signal to Congress about the priority of these reforms,” she said.

“At this point, of course, we are already familiar with how he gives his speeches. It’s still very much focus on the anti-drug campaign and very little attention to the reforms, fiscal reforms that are necessary for his ‘Build, Build, Build.”

Foundation for Economic Freedom President Calixto V. Chikiamco, said in a separate phone message, Wednesday, that the Legislative-Executive Development Advisory Council should “conduct regular meetings” to improve coordination between Malacañang and lawmakers

Sought for comment, Senate President Vicente C. Sotto III said budget legislation would have progressed better with transparency in the deliberations.

“More transparent budget deliberations and amendments and early submission of the House to the Senate will improve budget proceedings,” Mr. Sotto said in a phone message, Sunday.

For his part, Rizal Commercial Banking Corp. economist Michael L. Ricafort said even with the delay in the 2019 national budget, the 17th Congress performed well in passing fiscal reforms compared to its predecessors.

“Despite the delay in the 2019 national budget (that may otherwise signal greater prudence in terms of curbing/cracking down undue leakages), Congress has passed relatively bigger number of fiscal reform measures/legislative reform measures in recent months compared to previous years,” Mr. Ricafort said in an e-mail, Tuesday, citing laws that replaced quantitative restrictions on rice with regular tariffs in order to bring down prices of the staple, that further strengthened the central bank, and which slashed personal income tax rates but increased or added taxes on various products and services, among others.

“This sends a strong signal on the determination to pass more fiscal/legislative reform measures, especially those that structurally improve the government’s fiscal management in terms of increasing recurring tax revenues/other recurring revenue sources, as well as greater prudence in structurally curbing expenditures/leakages that may have been deemed unnecessary or inconsistent with the law/Constitution.”

For ING Bank N.V. senior economist Nicholas Antonio T. Mapa, Mr. Duterte “will likely retain control of both houses and this will be key yet again in furthering reforms and push his drive for ‘Build Build Build’ as the Philippines pushes on to attain a higher and more inclusive growth momentum.”

Nomura had said in an April 11 Global Markets Research note that Mr. Duterte will likely have enough allies in Congress to push for remaining tax reforms, citing his consistently “high” net satisfaction rating.

Global tightening cycle over — poll

BENGALURU — Major central banks are done tightening policy, according to a majority of economists polled by Reuters, with the growth outlook wilting across developed and emerging economies along with scant prospects for a surge in inflation.

While that is largely reflected in bond markets, with major sovereign bond yields falling this year, global equities have rallied, and the S&P 500 index is near record highs after its best start this year in more than three decades.

One striking conclusion from the latest surveys of over 500 economists from around the world, covering more than 40 economies, was not just a toning down of the economic outlook, but a clear shift away from long-held optimistic views.

Although economists who answered an additional question were split on whether a deeper global economic downturn was more likely than a synchronised rebound, this year’s growth outlook was downgraded or left unchanged for 38 of the countries polled.

“The recent weakness of global growth will persist for much longer than is commonly assumed. A dovish turn by central banks and stimulus in China will not be enough to boost world GDP growth from its current slow pace,” noted Jennifer McKeown, head of global economics at Capital Economics.

“Disappointing economic performance will leave inflation very low and cause monetary policy to be loosened almost across the board. But we do not see this prompting any meaningful recovery until 2021.”

Global growth was forecast to average 3.4% this year, the lowest since polling began for 2019 almost two years ago. The most optimistic prediction was also more modest than at the start of the year. The 2020 forecast held at 3.4%, the joint lowest since Reuters began polling on it.

However, the 2019 consensus was a touch higher than the International Monetary Fund’s latest view of 3.3%.

The risk of an escalation of the US-China trade war and prospects of Britain exiting the European Union without a deal — two of the more prominent threats that initially drove the current slowdown — have eased.

Yet most major central banks have been hinting at a move away from hiking rates, and nearly 60% of more than 200 economists who answered a separate question said they were confident the global tightening cycle was over.

On Thursday, the Bank of Japan dispelled any doubt about its commitment to ultra-loose policies and Sweden’s central bank said a forecast interest rate hike would come slightly later than it had planned.

The US Federal Reserve is done raising rates until at least the end of next year, with about a third of economists polled predicting at least one rate cut by then.

With euro zone economic growth and inflation prospects dimming, the European Central Bank (ECB) may have missed its opportunity to raise rates before the next downturn.

“The ECB blames the euro zone weakness on a slowdown in China and concerns about the trade war. The Fed, meanwhile, pointed the finger to Europe and China as the main drags on US growth. But with everyone looking across the border for a scapegoat, someone must inevitably be watching the wrong space,” noted Elwin de Groot, head of macro strategy at Rabobank.

“One could speculate that the central banks are pointing the finger just because they have little confidence that their actions are effective.”

Growth forecasts for developed economies — including Germany, France, Italy, Spain, Britain, Japan, Australia, the United States and Canada — for this year and next weakened.

It was not very different for emerging market economies, despite efforts from policy makers to boost sluggish growth.

Economic growth in major economies from Asia to Africa to Latin America was predicted to lose more momentum.

Although India is still expected to be the fastest-growing major economy, growth predictions were lowered compared with the previous poll.

“Looser fiscal and monetary policy should help to cushion the impact of weaker export demand on growth in emerging Asia. Nevertheless, regional growth this year is still likely to slow to its weakest rate in a decade,” added Capital Economics’ Ms. McKeown. — Reuters

Domestic market capitalization of select stock exchanges in Asia Pacific

Domestic market capitalization of select stock exchanges in Asia Pacific

Filinvest sets P39-billion spending plan

FILINVEST Development Corp. (FDC) has programmed P38.9 billion for its spending plan this year as it accelerates its expansion in Clark, Pampanga.

In a statement issued over the weekend, the Gotianun-led conglomerate said bulk of its 2019 capital expenditure (capex) will be used for Clark projects such as the Clark International Airport, Filinvest Mimosa+ Leisure City, and the first phase of its logistics park in New Clark City.

“Capital expenditure in 2019 is roughly equally allocated between the trading segment of the real estate business and the investment segment, which includes office, retail, hotel, and logistics park developments,” FDC President Josephine G. Yap said was quoted as saying in a statement.

Filinvest Land, Inc. will get bulk of the spending as it starts the construction of Phase 1 of New Clark City spanning 64 hectares. The listed property developer has scheduled to break ground for the logistics, industrial park, and mixed-use project this May, with target completion by 2020.

The company expects locators to start setting up their facilities in the area by early 2020.

For Filinvest Mimosa+, FLI has lined up two office buildings, a lifestyle mall, four residential towers, a retail strip, and a high-end residential project for this year.

FDC’s investments in Clark also include the Clark International Airport, as it is part of the consortium that will handle its operations and maintenance alongside JG Summit Holdings, Inc., Philippine Airport Ground Support Solutions, and Changi Airport Philippines Pte. Ltd.

The planned spending will further support FDC’s target of having 5,000 keys under its hospitality business by 2023. The listed firm has 10 new hotels and expansions in the pipeline, equivalent to about 2,600 additional keys.

FDC currently operates six hotels with around 1,800 keys under the brands Crimson — located in Mactan, Alabang, and Boracay — and Quest Hotel, with locations in Cebu, Clark, and Tagaytay. The company also has two golf courses under its hospitality arm.

Aside from its property and hospitality projects, FDC also has interests in power, banking, and sugar.

Its main asset for the power business is a 405-megawatt clean coal power plant in Misamis Oriental. It has also partnered with French utility firm Engie for three solar rooftop projects that will provide 5 MW.

The banking business through East West Banking Corp. is focusing on consumer loans, with its consumer portfolio rising by 16% in the previous year.

Meanwhile, the company said it milled 900,000 metric tons of cane in 2018, resulting to P2.5 billion in revenues.

FDC booked a net income attributable to the parent of P9.8 billion in 2018, 48% higher year on year. Consolidated revenues also went up by eight percent to P73.3 billion. — Arra B. Francia

Ayala formalizes entry into Vietnam with launch of solar power plant

By Victor V. Saulon
Sub-Editor

VIETNAM — Ayala-led AC Energy, Inc. launched on Saturday a 330-megawatt (MW) solar power plant in Vietnam in partnership with a local company, marking its maiden project in the regional neighbor that seeks to build its renewable energy capacity by offering favorable power rates to investors.

“AC Energy has an aggressive long-term aspiration to building meaningful portfolio in renewable energy and has identified Vietnam as one of its priority projects,” Fernando Zobel de Ayala, president and chief operating officer of Ayala Corp., said during the inauguration in Ninh Thuan province.

The launch of the $294-million project comes ahead of the June 2019 deadline for solar energy investors to avail of a feed-in tariff of 9.35 US cents for 20 years. Vietnam has yet to issue regulation on whether the scheme will be extended.

“The team’s been looking at where the opportunities are and it’s really about the position of the different governments in the region and what we’re finding is that different governments, Vietnam in particular, have been very aggressive in terms of attracting investment for solar and wind,” Mr. Zobel told reporters during the event.

Ayala Corp. unit AC Energy teamed up with Vietnam’s BIM Group for the project, which started in January 2018. The partners took 14 months and employed around 2,000 workers throughout the construction phase. Rizal Commercial Banking Corp. was the sole lender and provided a non-recourse project financing of $232 million.

“We would like to focus on renewables, both solar and wind. And for now, the policy of the government is to support solar and wind with feed-in tariff so therefore we will invest behind the feed-in tariff program of the government, at least until 2021 where the government has given a feed-in-tariff for wind,” Eric T. Francia, AC Energy president and chief executive officer, told reporters.

The solar farm is the first project under BIM\AC Renewables, the renewable energy development platform of AC Energy and the BIM Group. It sits on more than 300 hectares of land. The power plant is made up of three facilities with installed capacities of 30 MW, 250 MW, and 50 MW, respectively.

The project, which is equipped with the latest technology to ensure efficient operations, is expected to generate 545 million kilowatt-hours of renewable energy yearly and generate income and jobs for the province of Ninh Thuan.

Doan Quoc Huy, BIM Group chief executive officer and vice-chairman, described the project as “very challenging” for the company. His family is into the production of salt, and in real estate.

“We had a very short timeline and the project size was the biggest ever in Vietnam or even in Southeast Asia,” he told reporters.

“It was a pioneering industry and to do that we needed a partner who had a problem-solving mindset, who could approach this single problem with us in trying to find solutions in mind, and AC Energy was great. We couldn’t have asked for more in a partner,” he added.

The commissioning of the solar farm marks a milestone in AC Energy’s regional expansion as it aims to reach its target of 5 gigawatts of renewable energy capacity by 2025, with renewables accounting for at least 50% of total energy output.

“We’re discussing further projects in Vietnam in the energy sector with AC Energy right now in the renewable space,” Mr. Huy said, adding that his group had been “very happy” with the partnership with the Ayala company.

“We’re looking at wind right now. We’re still discussing it. It’s a range right now because we have a couple of constraints that we need to work with. It’s still going to be in the Ninh Thuan area, actually on the same site,” he added.

Mr. Francia said the BIM Group has an aspiration of building 1,000 MW on the site where the solar farm was built.

“We’ve done the first 330 [MW] with them. We’re hopeful that we can partner with them to get to that 1,000 [MW] and they also announced over 300 MW of wind as part of that 1,000 [MW]. So while we don’t have any firm agreement, of course, being good partners we’ll be discussing to what extent we can continue our collaboration,” he said.

Mr. Zobel said doing business in Vietnam was made easier by having a local partner.

“There’s no way that a foreign group, I think, could come into an area like this and tackle the kind of challenges that you have and that you face without a local partner,” he said.

Higher profits provide a boost to BDO stock

THE Sy-led BDO Unibank, Inc. was one of the most actively traded stocks last week as market players reacted to its first-quarter earnings report.

A total of 10.038 million BDO shares worth P1.341 billion exchanged hands on the trading floor from April 22 to April 26, data from the Philippine Stock Exchange showed.

On a week-on-week basis, its share price was up by 1.52% to P134 last Friday from its April 17 closing price of P132 apiece. Year to date, the bank’s share price was up 5.51%.

“The market is obviously recognizing the potential of BDO going forward as easing inflation posits sustained consumer spending is propped even more by election-related spending. Growth is evidenced by its [first-quarter] result,” Philstocks Financial, Inc. Research Head Justino B. Calaycay, Jr. said in an e-mail.

Mr. Calaycay added that as Bangko Sentral ng Pilipinas (BSP) is marking its commitment to a reduction of reserve requirements “as merely a question of time,” the bank’s leverage presents the foundation for robust and sustained margins.

Unicapital Securities, Inc. Certified Securities Representative Cristopher Adrian T. San Pedro noted first-quarter earnings result was “better than market expectations” and that it was a “buy on news” scenario.

“[BDO] also capped another milestone as the first Philippine bank to surpass the P3-trillion mark in total assets,” Mr. San Pedro said.

BSP Governor Benjamin E. Diokno earlier said a cut in benchmark interest rates, currently at the 4.25-5.25% range, will be considered at the May 9 policy review of the Monetary Board. He also floated the possibility of a reduction in big banks’ reserve requirement ratio, which is currently at 18%.

As of the first quarter this year, BDO’s assets were at P3.014 trillion, 8% higher than P2.797 trillion in last year’s comparable three months.

Further, its net income attributable to parent grew by 66% to P9.8 billion from P5.9 billion in the same period last year.

This puts BDO on track to hit its full-year profit guidance of P38.5 billion, which if realized would be 17.7% higher than the actual P32.7-billion net income it booked in 2018.

In a press conference on April 22, BDO President and Chief Executive Officer Nestor V. Tan attributed the bank’s first-quarter income growth to the continued expansion of its core banking operations, recovery of trading gains, and strong non-interest income.

Unicapital’s Mr. San Pedro expects BDO’s growth this year to be driven by its net interest income, fee income, and the “sustained normalization” of its trading and foreign exchange gains.

“We have a conservative target of at least P37.5-billion net income for BDO this year. We expect BDO to remain resilient despite the uncertainties challenging the market environment,” Mr. San Pedro said.

He expects the BDO stock to consolidate between the support and resistance levels of P130 and P136.4, respectively, with the possibility of testing between P138 and P140 “if it holds above P134 in the short term.”

For Philstocks’ Mr. Calaycay: “Strong support is P127 with an immediate upside potential ranging from a low of P137 to as much as P145-P150 over the medium- to long-term.” — MAM

ALI plans to develop country’s first Sino-PHL industrial park

By Arra B. Francia
Senior Reporter

AYALA LAND, Inc. (ALI) is riding on the influx of Chinese firms coming to the Philippines as it plans to acquire up to 200 hectares of land in Central Luzon for the development of the first Sino-Philippine industrial park in the country.

ALI President and Chief Executive Officer Bernard Vincent O. Dy said they are in advanced talks with several land owners for the land acquisition, while also speaking with Chinese manufacturing firms to locate in their industrial parks.

“We’re now starting to look, fairly close, in securing a much larger parcel to be able to do, as our chairman mentioned, the first Sino-Philippine joint venture for an industrial park to be able to attract more Chinese locators into the Philippines,” Mr. Dy said in a press briefing organized by its parent Ayala Corp. (AC) in Makati last Friday.

Prior to this industrial park venture, the listed property developer has already been working with one of China’s largest tile manufacturers to locate in one of its existing estates.

Mr. Dy said the Chinese firm has taken up 1.7 hectares in its Alviera Industrial Park in Porac, Pampanga. The estate is recognized as a special economic zone by the Philippine Economic Zone Authority.

“The initial manufacturing plant is now under way, it is going to be in the industrial park in Porac. In about a few months, they should start manufacturing high-end engineered stone in Pampanga, both for domestic consumption as well as for export,” Mr. Dy explained.

AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala noted how the conglomerate also pioneered the development of the first industrial park in the country in partnership with Japanese firm Mitsubishi Corp. in Laguna.

He added that several Ayala units have been partnering with Chinese firms in previous years.

“If you look at the way the Ayala group has engaged with China, it is, I think, probably among the largest in the country,” Mr. Zobel said in the same media briefing.

Mr. Zobel cited Globe Telecom, Inc.’s decade-long partnership with telco giant Huawei, which he said significantly contributed to their telco business’ success.

“Part of the success, I’d like to think, that we have had in the telecommunications business is driven by the relationship we had with Huawei and what they enabled us to do from a competitive point of view.”

Mr. Zobel also said AC Energy, Inc. has used Chinese technology in the rollout of infrastructure in the energy generating space, while AC Industrial Technology Holdings, Inc. has a number of operating facilities in China.

AC reported a net income of P31.8 billion in 2018, five percent higher year on year, after consolidated revenues also grew by 13% to P274.88 billion.

Honda launches all-new Brio

Words and photos by Manny N. de los Reyes

“BRIO” is Spanish for “spirit,” “vigor,” or “vivacity.”

It’s also the name of Honda’s smallest car. We’ve driven the first-gen Brio and, true enough, it brims with spirit, vigor, and vivacity. That first Brio was widely perceived as the best in its class, saddled only by a price tag that was a fair jump higher than its rivals.

Now Honda is avoiding that pitfall by releasing an all-new Brio that’s not only much better looking and substantially more spacious, but actually starts at a lower price than its predecessor.

The new Brio was developed based on Honda’s grand concept “Proud Over Class,” which stems from the intention to improve aspects of the vehicle that its users need. With this, the new Brio was developed to be one class above its segment with significant improvements, specifically in interior space and overall refinement.

The new Brio now gets an additional 60mm of extended wheelbase and 90mm of extended cargo area compared to its predecessor. This results in greater rear seat legroom and cargo area — an impressive feat considering that the overall length of the car hardly changed.

There is now 258 liters of cargo space with the rear seats up and an impressive 710 liters with the rear seats folded down.

The Brio boasts a dynamic yet upscale exterior styling aligned with the “Proud Over Class” concept. This aims to provide a sleek and sporty profile emphasizing low center of gravity and wide stance — unique in this segment.

The new Brio sports a confident front fascia featuring a honeycomb grille and multi-reflector halogen headlamps with LED park lights, which combine to create an aggressive, hunkered down look.

At the rear, the Brio features a new tailgate — a departure from the large glass panel found in its predecessor. This gives the new Brio improved body rigidity, which helps improve stiffness of the body structure while providing safety for passengers — while still retaining that vaunted Honda all-around visibility.

The large external red lenses of the taillamps extend to the edge of the vehicle, emphasizing the Brio’s wide stance. The car sits on 14-inch alloy wheels.

Inside, the new Brio boasts high-quality materials that provide a sporty yet comfortable feel. For added convenience, the Brio now features air-conditioning with a digital display. Two audio head unit options are available: a 7-inch touchscreen for the 1.2 V CVT, and a 1-DIN head unit for the 1.2 S MT. Both systems allow passengers to connect their devices via Bluetooth or USB.

BRIO RS
With its popularity as a sport compact car in the Southeast Asian Market, the RS variant — based on the Small RS Concept previewed at the Philippine International Motor Show (PIMS) last year — was developed to express Honda’s sporting heritage.

The Brio RS features an aggressive sporty exterior design with its RS Design piano-black grille, one-inch-bigger RS Design 15-inch alloy wheels, RS Design side skirts, rear bumper garnish, and tailgate spoiler.

The interior of the Brio RS reflects the sporty exterior. The variant’s RS Design cabin with orange accents is highly emphasized on both dashboard and door trims. Paired with black fabric seats with orange accents, this gives the driver and passenger a sportier and upscale appearance.

The Brio RS also has the 7-inch touchscreen audio system but features a 6-speaker setup inclusive of two additional tweeters.

Completing the sporty image of the new Brio RS, a 2-tone black top RS variant featuring the RS exclusive Phoenix Orange Pearl color found in other Honda RS models, will be available together with other colors for the 1.2 RS Black Top CVT variant.

Powering the Brio is a new 1.2-liter 4-cylinder SOHC i-VTEC engine that produces 90ps at 6,000 rpm and 11.2 kg-m of torque at 4,800 rpm. This is mated to a Continuously Variable Transmission (CVT) developed on Honda’s Earth Dreams Technology. A 5-speed stickshift is available in the entry-level 1.2 S MT variant.

In terms of safety, the Brio boasts a Four Star ASEAN NCAP safety rating as it comes equipped with the essential active and passive vehicle safety features. Honda’s G-CON technology enhances impact absorption for the added protection of passengers in a collision. All variants of the Brio get dual front air bags and ABS as standard.

The new Brio comes in five colors: Phoenix Orange (new color; exclusive for 1.2 RS Black Top CVT); Carnival Yellow (new color; 1.2 RS Black Top CVT and 1.2 V CVT only); Rallye Red (1.2 V CVT and 1.2 S MT only); Modern Steel Metallic (1.2 RS CVT, 1.2 V CVT and 1.2 S MT); and Taffeta White.

Price-wise, Honda will be offering the new Brio at the following introductory prices until June: the Brio 1.2 S MT at P585,000, the Brio 1.2 V CVT at P646,000, the Brio 1.2 RS Navi CVT at P727,000, and the top-of-the-line 1.2 RS Black Top Navi CVT at P732,000.

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