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The spirit of going global

Over the past years, Emperador Inc. has successfully strengthened its position in the liquor industry. It is able to sustain its leadership in the Philippine market, and has made bold steps to explore global routes through acquisition of major foreign brands. Every year, the company always meets the challenges brought by the extremely competitive spirits industry, which deserves a good toast.
Emperador is off to a good start this 2018 as it recorded a positive growth from its international operations – Scotch whisky and Spanish brandy – in the first quarter. The single malt whisky business, in particular, continues to enjoy greater demand globally. Similarly, the brandy business continues to geographically expand its reach on the back of greater distribution, visibility, and availability.
In the first three months of the year, the company’s net income went up 6% to P1.58 billion, and its revenue likewise increased 8.5% to P9.7 billion, compared from the figures it recorded in the same period in 2017.
Emperador is a holding company that operates an integrated business of manufacturing, bottling and distributing distilled spirits and other alcoholic beverages from the Philippines and Europe. It owns Emperador Distillers, Inc. (EDI), Scotch whisky maker Whyte and Mackay Group, and Bodegas Fundador in Spain.
The company’s consolidated product portfolio is comprised of domestic and foreign brands led by Emperador Light, Emperador Deluxe, Andy Player Whisky, Smirnoff Mule, The Bar, The Dalmore and Jura Scotch single malt whiskies, and Fundador, among others.
Through EDI, which is the Philippines’ largest liquor company and the world’s largest brandy producer, Emperador has established its identity in the Philippine alcoholic beverages business. Aside from sustaining its dominance, Emperador is expanding its brand footprint in the global market.
It was in early 2013 when the company first established its roots outside the country when it found ground in Spain with the acquisition of Bodega San Bruno, and an investment in Bodega Las Copas in the following year.
From Spain, it has reached United Kingdom when it acquired Whyte and Mackay in October 2014. This move has given the company the chance to enter the global Scotch whisky business.
The company returned its sight in Spain with the acquisition of brandy and sherry business under Bodegas Fundador in 2016 as well as the acquisition of Domecq brandy, and wine brand portfolio and related assets in 2017.
The company’s efforts to acquire new assets not only allowed Emperador to grow its portfolio outside the country, they also provided platform for domestic premiumization, which the company says is a “key to long-term growth.”
“While there’s a need to solidify and future-proof dominance in local liquor, there’s also a great potential in higher price points, and that’s where other brands like Tres Cepas and Fundador come in, for instance,” Emperador said. “Premiumization is unique to Emperador in general, since local competitors don’t have a broad array of products that capture various price points.”
Within its premiumization focus, it has successfully launched Fundador Supremo 12YO, 15YO, and 18YO in the Asian markets through the Duty Free channel.
Fundador Supremo 18YO, which was named “Brandy of the Year” at the 2017 China Wines and Spirits Awards, spearheaded a new Super Premium category within the brandy segment that targets new consumers of the single malt and cognac segments.

IMF expects wider current account gap

THE International Monetary Fund (IMF) expects the Philippines’ external position to log a bigger deficit this year, although the central bank chief said the level will remain manageable and supportive of further economic growth.
The IMF’s annual health check on the Philippines showed the multilateral lender saw the current account deficit settling at 1.5% of gross domestic product (GDP) this year, which if realized would exceed the 0.9% of GDP forecast of the Bangko Sentral ng Pilipinas (BSP). It will likewise widen from the gap posted in 2017 at 0.8% of GDP at about $2.518 billion.
The current account measures fund flows in goods and services trading. A deficit means more funds left the country compared to what went in.
The IMF said a wider current account deficit reflects “increased imports of capital goods and raw materials” that will be matched by a “more than adequate” stash of dollar reserves amounting to $77.525 billion as of end-June.
‘THERE’S NOTHING WRONG’
BSP Governor Nestor A. Espenilla, Jr. sought to allay any concern, saying that the expected bigger gap is not all bad for the Philippines.
“I think the way to usefully look at it is not just look at the US dollar level of it. Talagang lalaki ‘yun (It will really grow) but the economy is also growing. From a policy standpoint, we are looking at that in terms of deficit size to GDP — that’s the defining element of manageability,” Mr. Espenilla told reporters last week when sought for comment.
“There’s nothing wrong with a deficit if there is still financing for it in a voluntary way,” the BSP chief added, noting that increased imports are often accompanied by increased foreign direct investments that fuel greater demand for raw materials and capital goods.
The BSP expects the current account to balloon to a $3.1-billion deficit this year, assuming 11% growth in imports versus a 10% increase in export of goods.
The current account settled at $208-million deficit in the first quarter, narrower than the $860-million deficit logged in last year’s first three months.
Several analysts have blamed the country’s current account deficit for the persistent weakness of the peso, which has lately been trading at P53 to the dollar.
However, central bank officials said the “modest” deficit should not be taken negatively, as the increased imports will support productive activities, spur business expansions and support infrastructure development. — Melissa Luz T. Lopez

State mining body to review audit findings

THE MINING Industry Coordinating Council (MICC) will convene on Wednesday to discuss the final report of a technical review team on the mines ordered closed or suspended last year by the Department of Environment and Natural Resources (DENR).
“They will discuss it on Aug. 1,” Finance Undersecretary Bayani H. Agabin said in a mobile phone message on Sunday when asked when the MICC will meet to review the final report.
This was after the MICC met on June 21 on results of the initial review that cleared 23 of the 27 mines checked for compliance with regulations.
“We hope the reports are approved,” said Mr. Agabin.
However, the Finance official said earlier that the number of those who failed or pass since the initial review may change.
Mr. Agabin said that after the MICC approves the report, it will recommend the document to the DENR and the Office of the President for implementation.
Former Environment Secretary Regina Paz L. Lopez in February last year ordered to either close or suspend 27 of the country’s 41 metal mines due to various violations of environment regulations, especially for being located in watersheds.
It was only in March that an independent review team of mining experts formed by the MICC began a three-month review.
The mines were assessed on various criteria such as whether the mining firms involved had secured necessary permits to operate a mine, their required rehabilitation efforts, social development programs, whether they have enough capitalization, and their contribution of total mining operations to the host community.
The MICC said it will subject all other mines in the country to a similar review.
President Rodrigo R. Duterte in his third State of the Nation Address on July 23 reiterated his strong stance against irresponsible mining, warning of “restrictive policies” like the ongoing open-pit mining ban despite the MICC’s recommendation to lift the order.
The country’s mining sector has been reeling from an unfriendly policy environment since former president Benigno S.C. Aquino III issued Executive Order No. 79 in July 2012 that imposed a moratorium on new mining projects until a new mine revenue sharing scheme is enacted. — Elijah Joseph C. Tubayan

Cavite government’s Sangley airport plan gets green light from Transportation dep’t

THE DEPARTMENT of Transportation (DoTr) has given the green light to the Cavite provincial government’s plan to build an airport at the former US naval facility at Sangley Point, Cavite.
“We conveyed to them that we have no objections to their proposal, under the condition that they have to coordinate with the Manila International Airport Authority (MIAA) and the Civil Aviation Authority of the Philippines on the utilization of the air space,” Transportation Undersecretary for Planning Ruben S. Reinoso, Jr. said in a telephone interview on Sunday, adding that the project should not require a sovereign guarantee.
“Because it’s a transport project for an international airport, they need the endorsement of the DoTr. They cannot proceed on their own… It’s a go, so they now have to comply with the requirements for approval.”
The P552.018-billion project has two phases, according to the document Cavite’s provincial government submitted to the DoTr, with the first segment estimated to cost some P208.487 billion and the second, P343.531 billion.
With no objection from the department, Mr. Reinoso said the next step is for the provincial government to secure endorsement of the Philippine Reclamation Authority for the planned reclamation work and secure final approval of the National Economic and Development Authority (NEDA) Board that is led by President Rodrigo R. Duterte.
PRIORITY
On the separate $12-billion unsolicited proposal from private group Sangley Airport Infrastructure Group, Inc. — a consortium formed by Solar Group’s Wilson Y. Tieng and tycoon Henry T. Sy, Sr. — Transportation Secretary Arthur P. Tugade told reporters in Clark Freeport on July 17: “Under the rules, kung merong dalawang ‘yan, our priority is government to government (Under the rules, if there are two proposals, our priority is government to government).”
The Cavite government submitted its proposal for a Sangley international airport to the DoTr in February.
The planned airport is one of the ways the government is considering to decongest Ninoy Aquino International Airport (NAIA), which itself will be rehabilitated and upgraded in order to handle more passengers and more flights.
The proposal of the consortium of seven major companies to rehabilitate and upgrade NAIA is now up for approval by the MIAA board, which will then endorse it to the NEDA board for final green light. It will then undergo a Swiss challenge, opening it to competing proposals from other groups. The seven companies that comprise the NAIA consortium are Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; JG Summit Holdings, Inc. and Metro Pacific Investments Corp.
Aside from Sangley, the government also plans to redirect more passengers to Clark International Airport in Pampanga whose operation and maintenance contract is targeted for award in August.
San Miguel Corp. has also submitted a proposal to build, operate and maintain an international airport in Bulacan at an estimated cost of about P735 billion.
The current government has embarked on a more aggressive infrastructure development drive in a bid to fuel overall economic growth to a faster 7-8% pace till 2022, when Mr. Duterte ends his six-year term, compared to a 6.3% average in 2010-2016 under former president Benigno S. C. Aquino III. — Denise A. Valdez

Poland may take Filipino workers — minister

WARSAW — Poland, whose right-wing government opposes taking in migrants, may have to look to Filipino workers to cover a growing labor shortage hurting the economy, a senior official said Saturday.
“We are on course to conclude an agreement. I hope that in the autumn we will be able to at least sign a preliminary accord” with the Philippine authorities, Deputy Labor Minister Stanislaw Szwed said according to a PAP news agency report.
Mr. Szwed noted that Poland and the Philippines were both Roman Catholic countries and so shared many cultural values.
Poland was in particular looking to attract qualified workers, in the information technology, medical and construction sectors, he added.
According to analyst forecasts, Poland by 2030 will be short of four million workers, partly the result of continued emigration of its own workforce to other EU countries and partly due to a low birth rate.
Up to now, Poland has relied on neighboring Ukraine to fill the gap, with a million Ukrainians in the country already and up to another 300,000 expected in the next few years.
The Philippines is a major exporter of workers, with millions employed abroad in every line of work and sending home billions of dollars crucial to the economy. — AFP

SMC to ‘invest heavily’ in renewable energy

DIVERSIFIED conglomerate San Miguel Corp. (SMC) plans to build up to 10,000 megawatts (MW) of renewable energy facilities in the next 10 years, adding to its existing installed capacity coming mostly from traditional coal and gas power plants.
“San Miguel is going to invest heavily on renewable energy,” Ramon S. Ang, SMC president and chief operating officer, told reporters.
Among renewable energy resources, he identified hydropower, wind, ocean tide and battery storage as the company’s possible investment ventures. He declined to disclose details on which of these will corner the biggest share, saying competitors might beat him in the projects.
“We predict to invest up to 10,000 megawatts in the next 10 years,” Mr. Ang said.
He said the required investment in renewable energy would be substantial as these remain costlier to build than a coal-fired power plant, except for solar energy. He brushed off solar energy, saying its availability is limited as experienced by other countries that had to resort to other sources to maintain the delivery of the required power capacity.
“The idea is to put up as many as possible,” Mr. Ang said, adding that each of the target projects has a good potential even the small ones.
“Sana (Hopefully), each hydro can produce 1,000 MW,” he said.
Mr. Ang said initial studies have shown good “wind profile” in an area in Luzon, which the company is considering to build a wind farm. He said a wide area within the country’s main island remains viable for a wind energy project.
“We have a report already — a very good wind profile, a very big capacity can be installed. And the land for that project is already owned by San Miguel,” he said.
SMC, through its energy subsidiaries, has an installed capacity of around 4,000 MW after the addition of the 630-MW Masinloc coal-fired power plant, which it bought for $1.9 billion in December last year from the equity holders of the plant’s owner Masin-AES Pte. Ltd.
In the same media briefing, Mr. Ang gave an update on the case between SMC unit Petron Corp. and state-led National Oil Co. (PNOC).
In October last year, Petron Corp. filed a case against PNOC for breach of a binding and compulsory sale-leaseback contract, which the listed company said threatens to hurt its operations, its shareholders and the Philippine economy.
Petron had asked the Mandaluyong Regional Trial Court for the issuance of a temporary restraining order to “stop PNOC from performing acts aimed at ousting Petron of its leased properties.” The company sought the court’s help over PNOC’s “threats, breach of sale and leaseback agreement.”
Petron said it had offered to negotiate the agreement with PNOC as early as 2016, but it had been constrained to seek judicial intervention after the government company said earlier last year that it would terminate the lease.
Mr. Ang said depending on the outcome of the case, he might elevate the legal dispute for international arbitration.
The case stemmed from a notice from PNOC directing Petron to abandon and clean up the contested sites on or before expiration of the lease, which is in August this year. Petron said PNOC had offered the properties covered by the leases to interested new independent oil companies, “in total disregard of the rights of Petron.”
Petron has existing lease agreements with PNOC for the sites of its $3-billion refinery in Bataan, 24 bulk plants and 67 gasoline stations. The company supplies more than a third of the country’s petroleum requirements.
Mr. Ang said Petron’s leased properties are originally owned by it and acquired over several years to be used for its refinery, distribution and sales operations. Petron, however, was compelled to give up its land to PNOC in 1993 to comply with the requirements of its privatization.
“To secure foreign and local investments in Petron and ensure stability of its operations, the transfer of the properties was enabled through a deed of conveyance and lease agreements that guaranteed its long-term and continuous use by Petron,” the company previously said. — Victor V. Saulon

State bank eyes bigger stake in fixed-income bourse

LAND BANK of the Philippines expects to buy more shares in the fixed-income bourse once the two have signed a share purchase agreement (SPA) in the coming weeks.
Alex V. Buenaventura, the state-run bank’s president and chief executive officer, said the signing of the SPA with the Philippine Dealing System Holdings Corp. (PDSHC) had been pushed bank because of “internal procedures.”
“Hindi pa (Not yet). We have procedures in finalizing it,” he said in an interview during a reception hosted by the Bangko Sentral ng Pilipinas on Friday.
Earlier this month, Mr. Buenaventura said shareholders representing 43% of PDSHC had accepted the bank’s offer to buy the bourse’s shares, with the SPA expected to be signed around that time.
He said that the lender had not received additional sellers who wish to sell their shares in PDSHC.
“Wala pang (There are no) additional sellers on top of the 43% that we got three weeks ago,” he said.
He noted that shareholders had signed nondisclosure agreements to proceed with further negotiations before the SPA for shares in the PDSHC is finalized.
The bank’s chief executive added that he expects the SPA to be signed within the next two weeks as the sellers are getting weary.
“I don’t want to give a deadline but for me, my deadline is within the next few weeks because the sellers are getting apprehensive,” Mr. Buenaventura said.
“I personally hope that we can do this within the next two weeks.”
In June, the bank said the Philippine Stock Exchange (PSE), which had earlier planned to take over the PDSHC, has indicated interest in selling its shares.
The bank offered to buy the shares in the fixed-income market at P360 per share, higher than the PSE’s P320 apiece offer in its previous SPAs that already lapsed.
However, only one shareholder has accepted the bank’s offer in April. Mr. Buenaventura said that once PSE agrees to the terms, others may follow.
The government wants to take at least a majority stake in the fixed income bourse through the bank to expedite the development of the capital markets and to improve the bank’s finances to deliver more robust credit for farmers and small enterprises.
The state lender currently owns 1.56% of PDS through the Bankers Association of the Philippines, which holds a cumulative 13.26% share for itself and its member banks.
The planned PSE-PDS merger had dragged on due to the PSE’s failure to secure exemptive relief from the Securities Exchange Commission on the 20% single-industry ownership limit. — Karl Angelo N. Vidal

RFM counts on flour mill upgrade to remain competitive as costs rise

RFM Corp. is banking on the upgrade of its flour mills to help it stay competitive in the market, as it continues to see rising prices of raw materials due to the weakening peso.
RFM Chief Financial Officer Enrique Oliver I. Rey-Matias said the capacity upgrade would improve competitiveness against other players, especially at a time when input costs are rising due to the weaker peso.
The listed ice cream and flour manufacturer earlier said it was investing P240 million to enhance the quality of flour it produces. RFM imports the wheat it uses to make flour from the United States, Australia, and Canada, among others.
“So essentially may (there are) ups and down sa (in the) price of raw material. Despite the ups and downs, price of flour is steady. Bottomline, there’s more supply to meet the growing demand. In that respect, you see more competition,” Mr. Rey-Matias told reporters after the company’s annual shareholders’ meeting in Mandaluyong last week.
“Kaya kami nag-upgrade ng flour (We upgraded our flour) so we can maintain our price and increase our volumes,” Mr. Matias said.
RFM’s share in the local market for flour is currently below 10%.
To offset the weaker performance of its flour business, RFM is focusing on strengthening its ice cream business, citing the potential to tap markets in the country, a large part of which remain underserved, Mr. Rey-Matias said.
“There’s a lot of people wanting to eat ice cream during a lot of occasions. What we’re doing is putting the ice cream freezer closer to the consumer,” he said.
RFM is one of the companies behind the Selecta ice cream brand, which was created through a joint venture partnership with global consumer goods giant Unilever.
Mr. Rey-Matias said RFM is deploying more ice cream freezers in sari-sari stores and local groceries to bring the Selecta brand closer to more Filipinos. In addition, it is also investing P1.1 billion to expand its current capacity for ice cream.
“Based on our estimation, this is enough to support the growth of our fast growing ice cream business over the next four years,” he said, noting that the demand for ice cream has been steadily growing in previous years, leading to the full utilization of most of its production lines.
Sales of Selecta ice cream jumped by 11% during the second quarter of 2018, which in turn supported a double-digit increase in the company’s revenues.
RFM recorded a 3% increase in net income attributable to equity holders of the parent to P525 million during the first six months of 2018, driven by an 11.6% jump in revenues to P6.31 billion.
For full year 2018, the company expects to sustain a double-digit growth in revenues and high-single digit increase in net income. — Arra B. Francia

Jewelry for millennials


IN THE hands of Manila’s mahjongeras lies the past and present of the jewelry trade. Huge stones and statement pieces sit on the hands and necks of maturing women, leaving a huge gap on the fingers of minimalist millenials.
Most millennials, said to be the world’s poorest generation, will have to forego the luxury of owning fine jewelry. But that does not mean they have to forgo jewelry altogether.
Enter Suki, a jewelry brand by husband and wife team Aaron and Sharlynne Cabigas. It pushes itself as a jewelry brand ready, willing, and able to sell to millenials through solid gold and gemstone pieces that are minimalist, tapping into the millennial aesthetic, and, which are, more importantly, quite affordable. Pieces by Suki can range in price from P3,000 to P50,000.
According to Ms. Cabigas, her partner and husband Aaron comes from a family of jewelers and the couple noticed that their peers couldn’t relate to the designs being made by Mr. Cabigas’ family. They were too intricate, too fancy, and probably much too expensive. Thus, Mr. Cabigas began to design simpler pieces, which BusinessWorld saw in Makati late last week.
There were simple rose gold pieces studded with small diamond baguettes forming the shape of a feather, and very simple thin rings with a single diamond dot which are designed to be stacked together. As for earrings, standing out among many other designs was a thin hoop surrounded a cluster of gemstones, forming a halo.
The designs create the impression that they are worn by you, instead of the other way around.
“The main inspiration is the modern individual,” said Ms. Cabigas. Note that she didn’t allude to any sex or gender when expressing this: the pieces are so simple that anyone of any stripe could wear them.
Discussing the sale of jewelry to a generation reluctant to shell out money for baubles, Ms. Cabigas said, “It’s a very daunting task…, to introduce solid-gold pieces to millennials.”
According to her, millennial reluctance to shell out money for jewelry (aside from the obvious fact that many are quite broke) is due to their not being ready to do so, to having a sense of intimidation over making the investment, and in some cases, they may just not like jewelry (when trips to Bali are well within reach). “I feel like, there’s a lack of knowledge and education, that really, solid gold can actually be accessible.”
While older women hold the cards in the jewelry game, their progeny might be lucky enough to inherit a few pieces, but few of these younger people actually own pieces that are wholly theirs, with their own style splashed across it instead of the memory of lola firmly encrusted in a pair of earrings.
“Traditionally, we wait for someone to buy a piece for us,” said Ms. Cabigas. “We want you to have that freedom…, that access. We want you to buy jewelry for yourself.”
That’s sort of the reason for the name.
Suki in Filipino means a trusted source, and implies a strong customer-client relationship. On the other hand, according to Ms. Cabigas, “suki” in Japanese means “to like, or to love.”
“We want you to buy jewelry for your special loved ones, or, really, for yourself. That’s who you are, your own special loved one.” — Joseph L. Garcia

LRWC’s Boracay resort on track for 2021 opening

LEISURE & RESORTS World Corp. (LRWC) said it remains on track to open its $550-million integrated resort in Boracay by 2021, denying that the project has been delayed due to the island’s six-month closure since April.
LRWC Vice-President and Compliance Officer Katrina L. Nepumoceno explained that the timeline for the project construction remains, given that the company has already secured the property in November 2017, long before the island was closed for rehabilitation three months ago.
“We were able to finish what we needed to do prior to closing. The focus now is to participate in all stakeholders’ forum, the Boracay Task Force, so we can listen in to the plans, and make sure that our plans will be compliant with all environmental requirements,” Ms. Nepumoceno told reporters after the company’s annual shareholders’ meeting in Pasay City last Friday.
Once construction starts, it will take two years to finish the project, she said.
The 23-hectare project has drawn flak over the previous months for its inclusion of a casino. The company is partnering with Macau-based casino giant Galaxy Entertainment Group for the casino component, which it clarified will only cover a total of 7.5% of the project’s total floor area.
Despite opposition from President Rodrigo R. Duterte himself on building a casino on one of the country’s top tourist destinations, Galaxy Entertainment said it had already been issued a provisional license by the Philippine Amusement and Gaming Corp.
Ms. Nepumoceno said she was confident that the project will push through, given that the “president has also said that he wants to maintain Boracay as a primary tourist destination.”
The Department of Environment and Natural Resources has set the official reopening of Boracay island for Oct. 26, noting that a soft opening could be held in September so long as vital requirements — including the improvement of water quality in the island and its surrounding areas — have been addressed.
On the other hand, LRWC said it is investing P200 million to expand its operations this year, citing the improving environment for gaming in the country.
For its electronic Bingo (e-Bingo) operations, LRWC President Eng Hun Chuah said the plan is to expand 30 out of its 145 existing outlets to fast-track its growth, while also constructing 10 new outlets.
“We’re gonna expand our existing outlets, say we have 100 square meters, we’ll expand that to 200 (sq.m.). We have 145 e-Bingo outlets . . . This strategy will help us to expand faster,” Mr. Chuah said, noting that building an outlet from scratch usually takes one to one and a half years. In contrast, expanding their existing one will take four to five months.
The listed firm is also actively on the lookout for more slot machine outlets.
“We have actively been looking for places we can acquire . . . we’re looking for acquisitions of existing operations. We’re talking to some people,” Mr. Chuah said.
Asked on how big the market for slot machine operators is, he said he was counting around 19 to 20 players in Metro Manila.
LRWC’s net profit fell by 70% in the first quarter of 2018 to P82.42 million, with gross revenues also slowing down by 2% to P3.86 billion. — Arra B. Francia

LGUs reluctant to propose irrigation projects — PRDP

DAVAO CITY — Many farm areas around the country stand to benefit from an irrigation system, but proposals from local government units (LGUs) are thin on the ground, an official of the Philippine Rural Development Project (PRDP) said.
Danilo T. Alesna, PRDP-Mindanao deputy project director and an engineer, said one reason is that LGUs are not confident of having the technical capacity to put forward an irrigation project for funding under the PRDP.
“(They) are afraid they will not be able to pass the validation,” Mr. Alesna said in an interview.
He added that local officials seem intimidated by what they perceive to be very stringent standards set by the World Bank (WB), the main funding source of the PRDP.
Another reason, he added, is that LGUs are expecting the National Irrigation Administration to build the facilities for them, in the belief that the government agency has the funds.
“Irrigation facilities are among their lowest priority projects among the infrastructure projects that they propose to the PRDP,” he said, referring to LGUs.
Mr. Alesna, however, noted that one success story might encourage local officials.
Under the Mindanao Rural Development Program (MRDP), the predecessor of the PRDP, then Davao Oriental governor and now 1st District Rep. Corazon N. Malanyaon proposed an irrigation system for the town of Cateel as a means of improving production.
“(Former) Gov. Malanyaon did not think twice even when at that time, there was huge counterpart (funding) being demanded from LGUs,” Mr. Alesna said, although the LGU portion of the financing was eventually shouldered by the Department of Agriculture.
When the PRDP was being finalized in 2014, Carolina Figueroa-Geron, then leader of the WB team overseeing the project, said the Cateel irrigation facility can serve as a model for future projects under the PRDP.
“The project will serve as an example for people hit by (super typhoon Haiyan) because this project was also hit, not just once, but repeatedly by disasters,” Ms. Geron said then.
During the construction stage, the southern part of Mindanao was hit by typhoon Pablo (international name: Bopha) in December 2012, with the provinces of Davao Oriental and Compostela Valley among the most devastated.
The contractor abandoned the project due to the challenges in continuing with the works following the devastation in the area, particularly in Cateel.
This prompted Ms. Malanyaon to mobilize local resources and ordered the provincial government to take the lead in finding a way to complete it.
And they did, not far off from the original deadline set.
Ms. Geron said the irrigation facility, completed at a cost of P281 million, has proven to be resilient to climate change because the provincial government followed “the rules of implementation even with the challenges that they encountered.”
It has since benefited 13 farm villages covering 2,200 hectares in Cateel and has allowed farmers to go into three planting seasons annually, instead of just two. — Carmelito Q. Francisco

Treasury bills, 20-year T-bonds expected to fetch higher rates

By Karl Angelo N. Vidal, Reporter
GOVERNMENT SECURITIES on offer this week will likely fetch higher rates, with the Bureau of the Treasury (BTr) expected to reject all bids for the 20-year papers, as investors continue to wait for the local central bank to raise interest rates anew.
The Treasury is offering P15 billion worth of Treasury bills (T-bills) today. Broken down, the government plans to raise P4 billion and P5 billion through the three- and six-month papers, respectively, and another P6 billion in one-year T-bills.
The government will also offer on Tuesday P10 billion in reissued 20-year Treasury bonds (T-bonds) with a remaining life of 19 years and six months.
Traders interviewed last week said the T-bills on offer today will likely fetch higher rates, with one saying yields will go up by five to 10 basis points across all tenors from the previous auction.
Last week, the Treasury opted for a full award of the T-bills, borrowing P15 billion as planned, with total tenders amounting to P32.9 billion.
Rates of the three-month paper slid to 3.219%, while the average yields on the six-month and one-year noted climbed to 4.235% and 4.809%, respectively.
The trader added that the 20-year bond auction on Tuesday could fetch higher yields to near 7.25%.
The BTr partially awarded the reissued 20-year T-bonds it offered on June 19, raising just P4.12 billion out of the planned P10-billion borrowing.
The bonds fetched an average rate of 6.979%, higher than the 6.85% average previously fetched as well as the 6.5% coupon rate.
However, another bond trader said the 20-year papers could be met with higher bids due to lack of interest from investors.
“I’m not hearing any interest for the 20-year bond,” the trader said in a text message. “Most likely, it will be just a repeat of previous auctions wherein bids are much higher.”
The government decided to reject all bids on the seven-year bonds it offered two weeks ago. Had the BTr decided to accept all bids, the papers would have fetched an average rate of 6.621%, 64.5 basis points higher than the 5.976% tallied in the previous auction.
“Most likely, the bids will be rejected…especially now that the market is anticipating another rate hike,” the bond trader added.
The Bangko Sentral ng Pilipinas (BSP) has been hinting of another rate hike during its next monetary policy meeting in August to quell inflation expectations.
In a speech at a reception for the banking community last Friday, BSP Governor Nestor A. Espenilla, Jr. said the monetary authority is “ready”to follow through the two rate hikes it has implemented.
“In the face of rising threats to inflation, we hiked policy rates last May and June. We are ready to follow through to secure our inflation target,” Mr. Espenilla said, adding that the central bank remains firmly committed to its primary mandate of price stability.
The government reported earlier this month that inflation accelerated to a fresh five-year high of 5.2% in June.
Last month’s inflation print surged from May’s 4.6% figure and beyond the 4.3-5.1% estimate range by the BSP and the 4.9% estimate of the Department of Finance.
The BSP’s policy rates currently stand within a 3-4% range.
Meanwhile, the first trader added that investors will likely factor in inflation expectations as well as the weak peso in their bids.

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