Nation at a Glance — (04/09/19)

April 8, 2019 | 8:18 pm

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

On Gen Zers and bridging generation gap in the workplace

April 8, 2019 | 11:16 am

A shift in workplace dynamics is underway as more and more members of Generation Z enter the workforce. These youngsters, born roughly between the late 1990s and the early 2010s, have values and attitudes that can be vastly different from and surprisingly similar to those of the cohorts that came before them — the millennials, Gen Xers, and baby boomers.

In the third leg of Spark Series 2019, held last March 14, the Gen-Z students of San Beda University in Manila gathered at Pamanang Bedista Heritage Center where three industry experts dished out important insights into their generation’s characteristics and nuggets of advice on navigating the world of work and dealing with older folks.

Starting off the talks was Bianca Eleisse Eyales, associate consultant at Acumen Strategy Consultants, who presented fascinating findings of her firm’s study of Gen Zers. According to that 2018 study, the world of Gen Zers is ultra connected, operates at hyper-speed, and is big and expansive.

Members of Generation Z use the Internet for hours to access information and socialize, and they want everything instant and fast, including feedback. They get bored easily when they’re offline and think they express themselves better online than in person. They also have a thirst for learning.

The study also discovered their emerging mindset. Gen Zers have a mature, hyper-empowered mindset, enjoying life responsibly and preferring experience to material possessions. They’re champions of change, who believe they have the power to shape the future. They filter what they see and believe. They pursue purpose and meaning, and value authenticity.

“One thing that Gen Zers themselves should do as they enter the workforce is to be self-aware of how your generation is different in your approaches and your mindset,” Ms. Eyales said.

But they must also be mindful of the fraught gap between generations in the workplace. “There’s always a tension inside the office especially when you deal with people from different generations, different backgrounds, and with different beliefs,” Ken Lerona, head of marketing and corporate communications at Entrego, a logistics solutions provider, said.

“We have to open our minds… To me, it’s our closed minds that keep us from understanding each other and making our lives more harmonious,” he said. Some of the questions he suggested that people should ask to understand those around them include deceptively simple ones like “What makes you happy or sad?” and “What are your dreams and fears?”

Learning to understand and respect one another is a key to bridging the gap, according to Mr. Lerona. “No generation is better than the other. We’re not better than the generation ahead of us. Neither is the generation ahead of us better than us. Let us learn to make the most from our generations’ strengths and weaknesses,” he told the audience.

Meanwhile, Miguel de Vera, head of strategic initiatives at Energy Development Corp., the largest producer of geothermal energy in the country, gave the audience the lowdown on the destructive effects of climate change — which every inhabitant of this planet must concern himself or herself with — and how renewable energy sources will help make the future sustainable for their generation.

“We can all help energize our future by being part of a workforce the upholds sustainability at all times, by adopting a low-carbon lifestyle and by using your voice to make a stand against practices that harm our planet and our future,” he said.

The third leg of Spark Series 2019 at San Beda University was presented by BusinessWorld SparkUp and Energy Development Corporation, together with Acumen Strategy Consultants and J. Legaspi Computer Graphics (JLCG), in partnership with San Beda University, with media partners Philippine Star and ONE News, and organization partner Management and Entrepreneurship Society.

The growing trend of co-living in the Metro

April 8, 2019 | 9:10 am

By Mark Louis F. Ferrolino, Special Features Writer

Whether a solution to rapid urbanization and lack of affordable housing, or an answer to the shifting lifestyle of the younger generations, the co-living or ‘dormitel’ concept is gaining traction as an alternative option to traditional residential accommodations. This new and booming market segment is expected to grow further and is envisioned to shape the way of life in the future.

Professional real estate services firm Jones Lang LaSalle Incorporated (JLL) defines co-living as a form of housing where residents with similar interests and values share living space. While it is relatively a new concept in the country, this living trend is now becoming a norm in United States, Europe, and in some parts of Asia.

Similar to how co-working space grew in importance, the demand for co-living spaces is driven by the younger generations who look for flexibility, openness, and collaboration.

In the Philippines, the growth of co-living trend is not limited to such factor. Other reasons, according to MyTown, the first professional rental housing provider in Metro Manila and a homegrown brand under the Philippines Urban Living Solutions, Inc. (PULS), include the growing gap in affordable housing and the worsening traffic in the Metro.

“McKinsey & Company completed an affordable housing study in October 2014 that estimated the affordable housing gap at over $3 billion, and in 2016, the Philippine Housing Finance Conference determined a housing backlog of about 5.7 million housing units,” MyTown shared in an e-mail to BusinessWorld, noting that young professionals bear the brunt of this housing shortage, given that their wages are still too low for them to apply for a mortgage to buy a house or rent in expensive business districts.

Moreover, given the lack of accessible public transportation options and despite the government’s efforts to address traffic congestion through its “Build, Build, Build” program, commuting in Metro Manila remains worse.

After a survey to 1,200 respondents, MyTown learned that many young professionals spend a considerable part of their disposable income and an aggregate of three to nine full days per month on their daily commute, simply to get to work.

MyTown’s value proposition is for less than the cost of your commute, you can live in MyTown, walk to work, and play, learn, and meet new friend.

In addition to providing a solution to every individuals’ struggle in commuting, co-living space, according to MyTown, also benefits firms and organizations located in the metro in some ways.

“Employers are faced with increasing staff attrition, high rates of tardiness, and competition with other employers to hire talent. Moreover, according to Willis Towers Watson (a global advisory, broking and solutions company), HR benefits are the second most and an employee’s commute is the fifth most important reason for signing with a new employer,” MyTown said.

Mark Arellano Kooijman, chief executive officer of PULS, noted that corporate staff housing solutions in co-living buildings such as MyTown solve both the employers’ concerns on attrition and hiring, and the employees’ demand on living close to work and having a community to come home to.

Aside from the obvious benefits of staying in shared spaces, such as cutting commute cost and living closer to work, co-living tenants also enjoy more time that gives them the opportunity to do something productive.

“With the time gained by not having to commute two to four hours every day, co-living tenants have the power and time to develop hobbies, learn a new language, work overtime for extra income, or meet up with their group of friends. Life becomes more than just sleep, commute, work, commute, sleep — repeat,” MyTown said.

Moreover, with the in-house amenities in co-living buildings, such as gym, pool, spa room, cafeterias and other common spaces, tenants have more chance to achieve a balance between work and leisure.

In the case of MyTown, it said that their gyms, roof deck infinity pool, dedicated karaoke rooms, boxing rings with trainers, and a mini movie theater are the facilities mostly enjoyed by tenants in their buildings. To give them a more exciting after-work life, it also organizes various programs that encourage health, fun, and personal and professional development.

“Young professionals don’t simply seek for a place to sleep — they work hard in order to live a lifestyle they enjoy, and have a home away from home. From developing top of the line amenities, to providing convenient retail options and an engaging tenant activity program, MyTown is the young professional’s partner when you want to thrive in the city,” Jelmer David Ikink, group director of PULS, said.

At present, more property developers are starting to enter the co-living market segment by developing their own co-living brands and by establishing similar developments in the fringe areas of Makati and Bonifacio Global City central business districts.

According to Nauriz Zornosa, assistant research manager at JLL in the Philippines, in addition to property developers, the rise in the demand for co-living spaces has also drawn interest from real estate investors.

“Real estate investors are keen in this emerging property investment as it brings in stable recurring income, supported by lower land value for acquisition in the fringe areas, low construction cost, and low operational cost, among others,” Ms. Zornosa wrote in a report titled “Co-living on the rise in Makati and BGC” posted in JLL’s Web site.

In the years to come, industry players and experts believe that demand for this new market segment will continue to grow, especially in Metro Manila.

“We expect co-living spaces in Makati to triple in the next two to three years, serving as a middle ground for an untapped market looking for more comfort and amenities over the traditional dormitory and at a cost more affordable than a residential condominium,” Alvin Fernandez, senior director of Investment and Capital Markets at real estate consultancy Santos Knight Frank, said.

Given the growing affordable housing gap and infrastructure concerns in the country, MyTown believes that co-living is expected to increasingly become the best solution for the hardworking young professionals.

“We don’t see this as a trend, but a way of life that will become the norm in the future,” Mr. Ikink said.

Meanwhile, Ms. Zornosa said that young professionals are observed to penetrate the new segment, with property investors capturing the underserved market and expand their business.

The continued expansion of the offshoring and outsourcing firms and multinational corporations is likely to fuel the demand for co-living spaces as it provide affordable yet convenient housing options right in the heart of Metro Manila, she added.

A worthy consideration

April 8, 2019 | 9:05 am

Co-living, a budding mode of shared housing, is beginning to change the way people — especially the current generation of young professionals — live out their daily routines. Co-living spaces are usually located near the tenants’ workplaces, giving them an alternative to commuting to work. As the problem of traffic burdens commuters and the cost of rent continues to rise, considering to reside in co-living spaces provide many benefits.

Local real estate marketplace Lamudi, in a recent post on its Web site, pointed out that traffic has gone “so bad that it has also become a major consideration for the working class. And with jobs heavily concentrated in Metro Manila, this problem is just one you don’t simply tiptoe around.”

“True enough, it can be a lose-lose situation: you either spend more on a place that is close to your work, or live in a more affordable area with some distance from work, requiring you to spend more on transportation,” it added.

Co-living spaces in the Metro primarily address this problem, giving a convenient solution to young professionals who are getting tired of commuting. Instead of beating the traffic for long hours just to get to work on time, they can just walk from their homes to offices with ease.

Affordability is another thing to note in co-living, since the rent is split to its tenants. “In this economy, it is simply too expensive to live on your own,” Lamudi wrote. “A large chunk of the expenses goes to lodging — and there are not many affordable options near business districts.”

Thankfully, co-living comes in time with the advantage of dividing the typical cost for one unit into 2-4 persons. Since the person is sharing the bill with either friends, officemates, or new people, he can “get the benefits of living in a condo, with a fraction of the cost.”

Likewise, co-living is more cost-worthy as it spares one from the cost of transportation that piles up every commute.

A survey conducted by Philippine co-living and dormitories brand MyTown found out that “a huge amount of young professionals’ income goes to transportation. On top of the costs, they spend between three to nine full days per month on their daily commute, simply to get to work and earn an income.”

With this reality among young professionals, co-living does not only remove the burden of tiresome commutes, but it also cuts off the big cost taken by it.

Also a very important benefit of co-living is the community it creates. As American co-living startup OpenDoor defines it, “co-living is a modern form of housing where residents share living space and a set of interests, values, and/or intentions.” Community is in the essence of co-living.

Allowing residents to cross paths and eventually build connections, co-living closely knits residents together in very profound ways.

On co-living with other residents, OpenDoor co-founder Jay Standish noted in an interview with Business Insider: “We don’t just ignore each other and go about our day when we’re stressed out… I’ll actually drop in and be, like, ‘What’s going on in your life?… It’s a way to start the day that’s actually honoring my humanity.”

In another interview by the Web site, Arram Sabeti, a CEO who shares a house in San Francisco with nine roomates, said “that creating this communal living space has cured his loneliness — and that it was one of the best decisions he ever made.”

Co-living spaces do not merely put people of different backgrounds to share rooms, but they also get them engaged through programs, activities, and workshops.

Among all these benefits, the best advantage of co-living accommodations is the work-life balance they bring. With the convenience it provides and the community it forms, co-living enables professionals to strike a balance between their careers and personal lives. Through co-living, residents live beyond their 9 to 5 work routine and get the chance to make the most out of their schedules.

Co-living spaces “are more likely to positively influence life by helping you achieve a balance between your time for recreation, rest, and work,” Lamudi noted.

“It would actually allow you to rest on your days off, and you would be able to accomplish more on your work-from-home days,” it added. “By drastically reducing your commute time, your expenditures, and your stress, co-living spaces could actually be the solution to the anxieties that come with adulting.”

Co-living, for all its benefits, helps one to work to live instead of living to work, as the saying goes. — Adrian Paul B. Conoza

Facilitators of growth and development

April 8, 2019 | 9:00 am

By Bjorn Biel M. Beltran, Special Features Writer

Since its foundation in 1974, the nonstock, nonprofit Investment House Association of the Philippines (IHAP) has been working behind the scenes to further develop the country’s capital market. Specifically, its member investment houses provide a range of financial and advisory services such as issue management and underwriting of public offering of debt and equity securities, loan syndication and financial packaging and advisory for corporate mergers, acquisitions, and restructuring. However, one would be hard-pressed to find any headlines about the organization, despite its significance in the Philippine financial sector.

This was part of the reasons why last year, after inducting its new roster of officers in March, IHAP pursued a campaign to increase its involvement and relevance in the public eye, in a bid to promote the understanding of the role and function of investment houses towards the development of the Philippines’ capital market.

For 2019, Hans B. Sicat, managing director and country manager of ING Bank and current IHAP president, aims to stay on that course, with the vision of encouraging economic growth and developing a robust capital market in the country.

“The main goal right now is really to continue what we’ve been doing in terms of helping develop and deepen the capital market in the Philippines, primarily from the activities that we do,” he told BusinessWorld in an interview.

Mainly, IHAP wants to continue facilitating dialogues between investment houses, government regulators, and stakeholders in the Philippine financial ecosystem. Through such dialogues, the organization seeks to give voice to concerns regarding financial policy making, market feedback, and raise issues that may hinder the growth of the financial sector.

Building engagement with stakeholders like the Securities and Exchange Commission, Philippine Stock Exchange, and the Bangko Sentral ng Pilipinas, Mr. Sicat said, will do much to draft financial policy that is aligned with the needs of the market and hence foster further growth. Moreover, such discussions can push the development of new financial instruments, such as the long-discussed real estate investment trust (REIT), which can “send the right signals in terms of policy-making and the development of the capital market.”

“Part of it is coordination. Part of it is helping design and get to the appropriate policies while also ensuring that hopefully there is overall less regulation so that you actually have a more robust market,” Mr. Sicat said.

Among the other objectives that IHAP has for the year is the continued drive for more involvement among its members. Being an association mostly run by volunteers, it is often challenging to solicit participation among its members.

“I think the main challenge of being part of an association is getting enough time, the volunteers putting in that extra hour, that extra day, that extra project to assist in the with the association,” Mr. Sicat said.

“This is obviously easier said than done. I think once you have a very engaged board and membership, then it eases up some challenges. Because the challenges are actually much greater when you talk about policy-making and trying to improve and do our part for the marketplace,” he added.

Mr. Sicat leads the new roster of officers taking charge of IHAP’s duties this year. Jose Luis F. Gomez, president and CEO of RCBC Capital Corp, takes the role of IHAP EVP and head of external affairs, while Marilou C. Cristobal, president of Multinational Investment Bancorporation, becomes IHAP’s EVP and head of internal affairs.

Reginaldo Anthony B. Cariaso, president of BPI Capital Corp., serves as IHAP vice-president and head of product development. William M. Valtos, Jr., chief executive of Investment & Capital Corp. of the Philippines, serves as IHAP vice-president and head of membership. Jose Ma. A. De Leon, executive vice-president of Penta Capital & Investment Corporation, serves as IHAP’s vice-president and head of debt capital markets, while Gabriel U. Lim, senior vice-president of BDO Capital & Investment Corporation is IHAP’s vice-president and head of equity capital markets. Gerry B. Valenciano, president and CEO of PNB Capital & Investment Corporation, serves as the organization’s treasurer.

Asian banks assured of state support

April 8, 2019 | 12:33 am

BIG BANKS in the Philippines and other major Asia-Pacific economies can be assured of “extraordinary” state support like bailouts in times of distress, faring better than peers elsewhere, S&P Global Ratings said in an April 5 report.

The global debt watcher said that economies in Asia and the Pacific are more likely to provide “extraordinary government support” for big banks during crisis.

“In our view, Asia-Pacific governments remain supportive for private sector systemically important banks in a majority of jurisdictions. What’s more, we consider Asia-Pacific governments to be more supportive toward systemically important banks than governments in other regions,” the credit rater said in a report released last week.

S&P’s country risk assessments show 14 of 20 jurisdictions in Asia and the Pacific tend to be “highly supportive” for too-big-to-fail banks in their respective economies: the Philippines, Vietnam, Thailand, Malaysia, Indonesia, Taiwan and Brunei in Southeast Asia, as well as larger economies China, South Korea, Japan, India, Singapore, Indonesia and Australia.

Overall, 65% of Asia-Pacific governments declared themselves “highly supportive,” five percent were identified as “supportive” of bailouts, while 30% said they were uncertain.

“For most ASEAN systems, governments have a track record of interventionism, including providing timely support during times of exceptional stress,” S&P said in its report, even as it noted that “[w]hile Singapore and Indonesia have made some progress, Malaysia, Thailand, Philippines and other countries in the Association of Southeast Asian Nations (ASEAN) are yet to initiate tangible changes on the resolution front.”

In contrast, the same level of white-knight intervention cannot be expected from governments in Western Europe and in North America, where only eight percent said they were “supportive” towards systemically important banks. About 92% of respondents in these two regions said they were “uncertain” about providing a bailout.

Instead, governments there are seen relying heavily on the additional loss-absorbing capacity of the lenders to weather episodes of funding crunch.

In February, S&P upgraded the Philippines’ banking industry country risk assessment (BICRA) score one notch higher to group 5, citing a stronger institutional framework following the signing of a law that boosts the powers of the central bank.

Republic Act No. 11211, signed into law on Feb. 14, provides full indemnity to central bank officials and employees as they carry out their mandate in inspecting and penalizing banks and other supervised financial firms. That law also restores the BSP’s authority to float debt papers, adds P150 billion to the central bank’s working capital, and broadens supervisory powers to include payment system operators and even money service firms. These measures were designed to better arm the BSP to “address potential risks” in the financial system. — Melissa Luz T. Lopez

WESM in Mindanao targeted by 4th quarter

April 8, 2019 | 12:32 am

DAVAO CITY — The wholesale electricity spot market (WESM) in Mindanao is being targeted for launch in the fourth quarter of the year, but it will still depend on results of a third-party evaluation.

Department of Energy (DoE) Assistant Secretary Redentor E. Delola said in an interview here that the Independent Electricity Market Operator of the Philippines, Inc. (IEMOP), which took over WESM operations last year, has hired a third-party consultant to evaluate Mindanao’s readiness to transition to the spot market.

“It is taking three months for the consultant to complete the evaluation, so we hope that by September everything is complete,” said Mr. Delola on the sidelines of last week’s Mindanao Energy Investment Forum held in Davao City.

Stakeholders will meet on April 11 in Cagayan de Oro City for updates on WESM’s launch.

Mr. Delola said the department is also still waiting for the price determination methodology (PDM) from the Energy Regulatory Commission.

“We hope that when the PDM is released, every stakeholder is ready for the market operations,” he said.

The WESM in Mindanao was put on a trial run in mid-2017 under the Philippine Electricity Market Corp. (PEMC) and was planned for commercial launch by June 2018.

It did not push through as IEMOP took over the operations of WESM from PEMC in September last year.

Under the original plan, WESM Mindanao would start with 85 trading participants composed of 12 grid generation companies, 26 embedded generation firms, 28 electric cooperatives, four private distribution utilities, and 15 end-users.

The DoE official said the WESM will help distribution utilities in Mindanao, including electric cooperatives, manage their electricity needs.

“They can either source their peak needs from the market, or they can sell their surplus to the market,” he added, noting that some electricity distributors have over-contracted in terms of supply volume.

WESM will also allow Mindanao to sell its surplus to the national grid or buy if demand becomes higher when the interconnection infrastructure is completed.

In November last year, the National Grid Corp. of the Philippines started its P52-billion Mindanao-Visayas interconnection project, with the link between Dapitan City and Santander, Cebu.

That link is expected to be completed by next year.

“We will eventually not be isolated,” said Assistant Secretary Romeo M. Montenegro of the Mindanao Development Authority. — Carmelito Q. Francisco

Slower-than-expected March inflation seen making case for cut in policy interest rates

April 8, 2019 | 12:31 am

THE slower-than-expected March inflation rate bolsters the case for cuts in policy interest rates this year, bank economists said in separate analyses, with the adjustments expected as early as next month.

March inflation eased further to 3.3%, a sharper slowdown than what market players expected. This is the slowest pace since January 2018, and marks the fifth straight month of decline since November.

On Friday last week, the Philippine Statistics Authority attributed the inflation rate decline to a slower increase in the food and drinks index, which eased to 3.4% from 4.7% the previous month as supply improved.

The National Economic and Development Authority also said that the shift to a tariff system for rice imports from the previous quantitative restrictions helped bring down prices of the staple.

At the same time, officials of the Bangko Sentral ng Pilipinas (BSP) on Friday cautioned against swift plans to cut policy rates, saying that they need to be watchful about the El Niño episode as well as rising global oil prices which could affect price dynamics.

BSP Governor Benjamin E. Diokno said the slower-than-expected 3.3% inflation rate last month is “certainly good news,” even as he noted the need to keep a close watch on price developments.

Deputy Governor Diwa C. Guinigundo said that monetary authorities first need to see a “clear disinflationary trend” before touching key interest rates.

March inflation pulled the three-month average to 3.8%, well within the central bank’s 2-4% target band for 2019 and on track to hit its full-year forecast of three percent.

Bank economists are taking the latest inflation print as a green light for interest rate cuts.

“[T]he central bank’s repeated lowering of its 2019 inflation forecast suggests to us that monetary policy is likely to make a U-turn this year. In our view, another benign inflation print in April should allow the BSP to cut its overnight reverse repurchase rate by 25bps at its May meeting,” ANZ Research said in a market commentary released late Friday, adding that it expects an even lower 2019 average rate at 2.9%, from last year’s 5.2%.

“Assuming that the inflationary impact of the El Niño is mild, we see headline inflation around the mid-point of the BSP’s target in the coming months.”

The bank is holding on to its forecast of a total of 75bp cuts to benchmark rates this year, which will undo part of the cumulative 175bp rate increases which the central bank fired off in 2018.

For Michael L. Ricafort, Rizal Commercial Banking Corp. economist, inflation’s steady decline “may already prompt an easing in local monetary policy” as early as the May 9 monetary policy review — the third for 2019. He said such a move will remain prudent and will mirror trends abroad amid a muted global growth outlook.

Another economist cited the need to also reduce banks’ 18% reserve requirement ratio (RRR).

“With the delayed passage of the national budget plus tapering inflation, consumer spending will be the main driver of the economy for the first half,” said Robert Dan J. Roces, chief economist at Security Bank Corp.

“However, domestic liquidity is still a challenge, thus an RRR cut will need to happen soon — BSP will consider timing the cuts once inflation is fully settled within its target range.”

Mr. Diokno has said that he sees room to ease policy rates and to reduce the RRR, but clarified that monetary authorities will need more data to get the timing right for these moves.

In 2018, the BSP slashed the reserve standard in two moves of 100bps each, but had to pause to focus on surging commodity prices. — Melissa Luz T. Lopez

Headline Inflation Rates in the Philippines

April 8, 2019 | 12:30 am

IIF sees flows to emerging markets recovering in 2019, 2020

April 8, 2019 | 12:30 am

LONDON — The flow of fresh funds to emerging markets should recover this year and next after a flood of money over the past decade, fuelled by loose monetary policy in the United States, Europe and Japan, the Institute of International Finance (IIF) said on Friday.

The IIF — a global association of the financial industry with close to 450 members from 70 economies including commercial and investment banks, asset managers, insurance firms, sovereign wealth funds, hedge funds, central banks and development banks — predicted non-resident capital flows of $1.26 billion in 2019, up from $1.14 billion in 2018, and another modest recovery next year.

“Global growth is looking more positive, but the world is a more difficult place for emerging markets that depend on foreign capital inflows,” the report said.

Quantitative easing by G3 nations in recent years helped funnel funds to emerging markets, in search of yield. That led to a “positioning overhang,” with investors overloaded on emerging-market assets, the IIF said.

Flows to China accounted for much of the recovery in the first quarter, it said. Excluding China from previous quarters showed successive recoveries were weaker.

“Despite a positive growth backdrop, capital flows to non-China emerging markets will recover modestly in 2019 and 2020, while remaining short of the levels observed in 2017,” the report said.

Total net capital flows to China are projected to reach $50 billion in 2019 and $110 billion in 2020, the IIF said.

Non-resident capital inflows to Turkey should start to increase in the second half of 2019, assuming credible structural reforms helped to improve sentiment. But net inflows of non-resident capital are likely to moderate further in 2019, in step with the projected fall in output, the IIF said. Turkey’s lira has come under renewed pressure in recent weeks, after shedding nearly 30 percent against the dollar last year. That led to local banks halting lending to their overseas counterparts last week, a move that spooked foreign investors. — Reuters

PCC files case vs developer over condo’s ‘exclusive’ internet setup

April 8, 2019 | 12:09 am

THE Philippine Competition Commission (PCC) recently filed a case against a property company for “abuse of dominance” over its exclusive deal with an internet service provider (ISP) covering a low-cost residential condominium project in Manila.

Citing a Statement of Objections filed on March 27, the PCC Enforcement Office charged 8990 Holdings, Inc. and its unit Urban Deca Homes Manila Condominium Corp. “for abuse of dominance by imposing a sole ISP on its residents and tenants, preventing them from availing alternative fixed-line ISPs.”

“The exclusive deal between Urban Deca Homes Manila and Itech Rar Solutions, Inc. as ISP marks the first abuse of market dominance case filed before the PCC in violation of Section 15 of the Philippine Competition Act which prohibits abuses of dominant position,” the antitrust body said.

A low-cost condominium, Urban Deca Homes Manila is developed by Euson Realty and Development Corp. and Tondo Holdings Corp, which are subsidiaries of 8990 Housing Development Corp., which, in turn, is owned by 8990 Holdings. The project has 13 mid-rise buildings with a total of 13,212 condominium units for the affordable market.

“This is a fair warning to businesses that resort to exclusive partnerships to corner profit and hinder the entry of other competitors in exercise of its market power. This act of abuse of dominance limits the choices made available to residents and is a violation of the competition law,” Enforcement Office Director Orlando P. Polinar was quoted in the statement as saying.

BusinessWorld sought comment from 8990 Holdings, but has yet to receive a reply as of press time.

The PCC said the investigation was triggered by several complaints filed by unit owners and tenants, who claimed that they were prevented from getting other ISPs when the “Fiber to Deca Homes” service was “slow, expensive and unreliable.”

In its probe, the Enforcement Office found that the company’s exclusive partnership with Itech Rar Solutions had prevented other ISPs from installing fixed-line internet at Urban Deca Homes Manila units. Other ISPs were also blocked from marketing their services to residents.

The PCC said residents complained that the “Fiber to Deca Homes” service costs P1,249 for a speed of 2 megabytes per second (Mbps), which is the same price as a 5Mbps plan under other ISPs. Also, the 5Mbps monthly plan costs P2,599 for Urban Deca Manila Homes residents, while a similar plan costs P1,299 under other providers. The 6Mbps service costs P2,949 which is equivalent to 50Mbps from one ISP; while its 100Mbps is almost of the same price as another ISP.

“Through this case, the PCC Enforcement Office intends to stop the property manager and developer from limiting the market for fixed-line internet so third-party providers may enter such market under reasonable terms and offer choices to the residents,” Mr. Polinar said.

An entity found to have abused its dominance in the market could face a fine of up to P100 million. — Janina C. Lim

Megaworld earnings jump 17% in 2018

April 8, 2019 | 12:08 am

MEGAWORLD Corp. grew its attributable profit by 17% in 2018, lifted by the double-digit expansion of its residential, office, mall, and hotel businesses.

The property company of tycoon Andrew L. Tan reported a net income attributable to the parent of P15.2 billion last year, higher than the P13 billion it posted in 2017. This came on the back of a 15% uptick in revenues to P57.4 billion, excluding a one-time gain of P113 million.

The residential segment contributed bulk of Megaworld’s revenues at P38 billion, 11.5% higher year on year. This was supported by the launch of 25 projects valued at about P106 billion, while also recording P135 billion in sales reservations for the period.

“For our residential properties, we continue to see strong take-up especially in our mature townships, and there is already a consistently growing interest in our newly-launched townships,” Megaworld Senior Vice-President and Chief Strategy Officer Kevin Andrew L. Tan said in a statement.

Megaworld’s rental business, composed of office and commercial leasing, improved its contribution to revenues by 21% to P14.3 billion. This accounted for 25% of the company’s topline.

The listed firm has been aggressively expanding its commercial projects, with the opening of the Festive Walk Mall in Iloilo Business Park, as well as the 25-storey Philippine Global Service Center. The latter is being developed for JPMorgan Chase Bank, which signed a long-term lease on the 70,000-square meter office.

“We have already secured multiple pre-lease deals for our office buildings as well that are in the pipeline until next year. Same goes to our mall and commercial spaces that are set to open in our various townships,” Mr. Tan said.

For the hotel business, revenues climbed 14% to P1.5 billion. It ended the year with seven hotels, following the opening of the 684-room Savoy Hotel Manila in Pasay City and the 126-room Twin Lakes Hotel in Batangas.

Megaworld recently launched its 24^th township in the country called Highland City in Cainta, Rizal, which it will develop alongside subsidiary Empire East Land Holdings, Inc. The company will be spending P20 billion over the next 10 years for the township.

“Perhaps, as we build these townships, people saw the advantage of living where they work, and living where everything is just within reach. This model makes every aspect of our business viable and expandable, and we continue to spot for opportunities where we can further grow and innovate our offerings,” Mr. Tan said.

Megaworld is part of Alliance Global Group, Inc., whose core interests also include gaming, liquor, quick service restaurants, and infrastructure development. — Arra B. Francia

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