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How a $139-billion fund is trading the trade war

AN AUSTRALIAN investment manager is using 30-year US Treasuries to hedge. — REUTERS

IN A BID to beat the trade war, a $139- billion Australian investment manager is using 30-year Treasuries as its weapon of choice.
The ultra-long bonds are seen as a hedge to protect the portfolios of AMP Capital Investors Ltd. against the risks stemming from the US-China trade frictions and less-synchronized global growth, according to Ilan Dekell, the head of macro for global fixed income at the asset manager.
“Six weeks ago, we started increasing our duration in the 30-year part of the curve,” Sydney-based Dekell said in an interview in Sydney. “It gives us a bit of protection. I can’t forecast the trade war.”
AMP Capital is also betting on a long dollar position against a basket of emerging-market currencies that have been sold off amid tightening liquidity in the greenback, he said.
The strategy means AMP Capital join the ranks of fund managers such as Goldman Sachs Asset Management and QIC Ltd. that are looking for protection as the trade war between the world’s two largest economies escalates. Pacific Investment Management Co. sees value in safe haven Treasuries “if things get worse,” while Morgan Stanley has called a peak in the 10-year US yield as trade concerns and a stronger dollar curb its advance.
The yield on US government bonds maturing in 30 years was at 2.93F Friday, down from 3.26% mid-May, which was the highest level since September 2014. The S&P 30-Year US Treasury Bond Futures Total Return Index has risen about 4% in the period.
“The best is probably behind us,” Dekell said Thursday, alluding to the environment of rising global growth and benign inflation seen earlier this year. “The trade war adds to our concerns — our book overall is very conservative.”
Signs of growth peaking were underscored by China’s economic data on Monday. The world’s second-biggest economy saw its gross domestic product gain 6.7% in the latest quarter, compared with 6.8% in the previous three months. Industrial output in June missed estimates.
At the other end of the maturity spectrum, AMP Capital has been shorting two-year government notes as it sees the Federal Reserve raising interest rates two more times this year and thrice in 2019.
“We held our shorts in the two-year part of the curve” because of the rate hikes, said Dekell. “We’ve become more concerned and conservative about tightening conditions,” and “we think the policy bias is higher,” he said.
Elsewhere, Dekell sees further weakness in emerging-market assets, particularly in countries with current-account deficits such as Indonesia and India. Closer to home, he favors shorter-dated Australian government debt as he expects the Reserve Bank of Australia to keep rates on hold until 2020.
Dekell, who predicted in February that the Australian dollar will fall to 73 US cents before the end of the year, says the currency is currently trading at “fair value.” The Aussie has declined almost 5% against the dollar in 2018, and was at 74.37 cents at 3:51 p.m. in Sydney.
“If you go down the route of trade wars and people getting concerned about China growth, then that would put downward pressure on the Aussie,” he said. — Bloomberg

ERC OKs Kepco bid to separate businesses

PHOTO BY VICTOR V. SAULON

THE Energy Regulatory Commission (ERC) has approved the application of Kepco SPC Power Corp. (KSPC) to “unbundle” or separate its different business segments.
“After due consideration of all evidence, as well as the technical evaluation of the instant application, the Commission, on 21 June 2018, deliberated and resolved to APPROVE KSPC’s BSUP (business separation and unbundling plan) subject to certain conditions and full compliance with the requirements of the BSG (business separation guidelines), as Amended,” the ERC said.
The decision, which was docketed last week, ordered KSPC to submit documents, including its accounting separation statements, management responsibility statement, and an auditor’s report on the separation statements.
KSPC, a joint venture of Kepco Philippines Holdings, Inc. and SPC Power Corp., has two business segments: generation of electricity and provision of ancillary services; and retail electricity supply services.
The joint venture in June 2005 started the construction of a 200-megawatt circulation fluidized bed combustion power plant in the City of Naga, Cebu. It undertook the whole construction, operation and maintenance of the plant, including fuel supply, among others without any government guarantees.
The company’s power generation covers the production of electricity while its ancillary service segment is needed to facilitate the orderly trading of electricity and ensuring that the supplied power is of an acceptable quality.
KSPC holds a retail electricity supplier (RES) license as approved by the ERC on Oct. 18, 2016. The license allows the company to sell electricity to the contestable market, or those whose consumption reached the set threshold. The RES business also includes energy trading in relation to the sale of electricity.
The issue for the commission’s resolution was whether KSPC’s proposed business separation and unbundling plan, and accounting and cost allocation manual meet the requirements of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 and its implementing rules and regulations (IRR), and business separation guidelines issued by the ERC.
Section 36 of R.A. 9136 and Rule 10, Section 3(b) of the IRR require electric power industry participants to structurally and functionally unbundle their business activities, namely: power generation, transmission, distribution and supply. — Victor V. Saulon

K-pop’s Holland releases new single ‘I’m Not Afraid’

SOUTH KOREA’s first openly gay singer Holland has released his new single, “I’m Not Afraid.” This autobiographical track is the first volume of his new twin single album: Holland Twin Single Project. Through the track, Holland unfolds the story of the journey in trying to find his own identity as an artist. Musically, this retro-pop styled EDM song fuses a bass and synth-driven sound, creating refreshing melodies. In it the 22-year-old singer whispers that he is no longer afraid to show the world who he truly is. After making a debut in January as the first Korean singer to begin his career while openly addressing sexuality, Holland has quickly caught the attention of K-pop fans around the world, gaining a sizable followers on social media.

How PSEi member stocks performed — July 16, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, July 16, 2018.

PEZA registered investments plunge on TRAIN 2 uncertainty

THE PHILIPPINE Economic Zone Authority (PEZA) said investment pledges in the first half fell over 55% due to uncertainty created by package 2 of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
In a news conference on Monday in Taguig City, the investment promotion agency said the value of registered investment projects in the six months to June totaled P53.067 billion, down 55.86% from a year earlier.
Projects during the period totalled 258, down 14% from the comparable period last year. Projects accepted for investment incentives declined across all industries.
Investment in ecozone development, which made up the bulk of the projects, declined 65.15% year on year to P26.295 billion.
Manufacturing, the second biggest area of investment, fell 9.29% to P19.552 billion. Information technology fell 13.66% to P6.984 billion, from the P8.089 billion last year.
Other industries accounted for a total of P234.5 million, well below the P15.124 billion registered a year earlier.
PEZA Director-General Charito B. Plaza attributed the weaker performance to “uncertainties” hanging over the final form of the second package of TRAIN, which seeks in part to rationalize investment incentives.
“Although the objective of TRAIN 2 is meaningful, it is subject to various interpretations especially when it touches on incentives,” she said. Investors are also worried because in their interpretation of TRAIN 2, PEZA and other investment promotion agencies will be effectively sidelined in setting policy on incentives.
Some PEZA-registered locators have expressed their intention to shut down operations should TRAIN 2 alter the incentive system currently enjoyed 4,202 entities.
“They were already given authority by their principal offices to start considering looking at possible countries to transfer to,” Ms. Plaza said.
She declined to name the companies that have threatened to exit. However, Elmer H. San Pascual, manager of PEZA’s Promotions and Public Relations Group, noted that most of the companies considering pulling out are in the manufacturing and information technology (IT) industries, alongside a number of electronics exporting firms.
Mr. Pascual added that expansion plans of existing locators are not as aggressive as they used to be due to TRAIN 2.
“We were hoping that somehow, we will be able to rebound this year particularly for electronics and IT. We were anticipating a positive growth rate, But now its still negative 55,” Mr. San Pascual said.
PEZA is pinning its hopes for the rest of the year on the $3.5-billion integrated steel mill facility being considered by China’s Panhua Group.
“That’s how we intend to recover and the steel mill will attract more investment in the manufacturing industries,” Ms. Plaza said, adding that Panhua’s entry is expected soon.
Panhua is expected to produce 10 types of steel products in sufficient volume to service domestic demand of about 70 million tons a year. The steel import rate is about 90%.
Since 2006, Panhua has been shipping steel coil to at least 50 countries including the US, UK, Germany, Italy, Spain, Belgium, France, Poland, and Greece, among others. — Janina C. Lim

ADB sees TRAIN law as ‘critical’ to reforming tax system

THE ASIAN Development Bank (ADB) said reforming the corporate tax system is a matter of urgency, with successful reforms expected to bolster economic growth and reduce poverty.
“TRAIN 2 and the broader tax package are critical to strengthening the Philippines’ tax system. Passage of this important legislation will demonstrate the commitment of Congress, and the country more broadly, to the reforms that are needed to spur growth, reduce poverty and inequality, and achieve upper middle-income status,” ADB Chief Economist Yasuyuki Sawada said in a statement, referring to the second package of the Tax Reform for Acceleration and Inclusion law.
Mr. Sawada said that a “good tax system” has about seven dimensions outside revenue-raising capacities. These include equity, efficiency, competitiveness, stability and predictability, ease of administration and compliance, and the need to ground policies in evidence.
The second package of the tax reform seeks to lower the corporate income tax (CIT) rate to between 20-25%, aligning rates with the regional norm, while streamlining fiscal incentives. The Department of Finance (DoF), meanwhile, wants to raise revenue equivalent to 0.15% of gross domestic product (GDP) first before cutting one percentage point of the CIT rate.
“If we look at the current system, the incentives that some firms get but others don’t work against horizontal equity. Firms that manage to get tax incentives face much lower effective tax rates of 6-14. TRAIN 2 aims to improve horizontal equity by rationalizing fiscal incentives for businesses,” Mr. Sawada said.
“One of the principles in public finance is that distortions, or the decline in society’s well-being due to a tax, rise disproportionately with the tax rate. For this reason, it is more efficient to have a broader tax base and a lower rate, and that is what TRAIN 2 is trying to do for corporate taxation. A lower corporate tax rate will make the Philippines’ tax system more competitive, as it currently has the highest corporate tax rates in ASEAN (Association of Southeast Asian Nations),” Mr. Sawada said.
The DoF said that the Philippines had the lowest revenue productivity — or the ratio of tax revenue as a share of GDP divided by the tax rate — among the 10 member-states at 12% despite having the highest tax rate. Thailand, meanwhile, had 31% revenue productivity at a CIT rate of 20%.
Although lower tax rates are welcome, businesses have argued that the reforms will disrupt the business climate by taking away predictability, which they rely on in their planning.
“One cannot and should not keep a tax system fixed — especially a flawed one — simply for the sake of ‘stability.’ The Philippines’ tax system is in dire need of fixing, and this is the first major tax reform in the Philippines in two decades. If we allow it to be done right, and done quickly, the Philippines will not need another tax reform for another two decades,” he said.
The government also proposes to replace the 5% gross income earned tax incentive with a 15% tax on net income, repeal some “redundant” incentives, and retain those consistent with the government’s medium-term Strategic Investment Priority Plan (SIPP) to be administered by the Fiscal Incentives Review Board (FIRB); cap perks for five years; disallow the use of value-added tax as an investment incentive; and expand the coverage of the Tax Incentives Management and Transparency Act.
“One lesson from history is that the government should not be in the business of ‘picking winners’ — the track record of countries around the world in doing this is not good, and it often stimulates lobbying for personal gain. Rather, incentives should be based on firms’ documented ability to deliver, whether it be creating more jobs, raising incomes, or increasing exports,” Mr. Sawada said.
The second package of the tax reform law is currently with the House committee on ways and means, filed as House Bill No. 7458.
The government hopes to have the measure approved by both chambers of Congress before year’s end, for implementation starting 2019.
The government projects GDP growth at 7-8% from 2018-2022, and bring down the poverty rate to 14% from 21.5% in 2015. — Elijah Joseph C. Tubayan

Sugar industry considers SRP scheme to be unworkable

SUGAR MILLERS said a suggested retail price scheme for their products is expected to be unworkable and may depress the price at which traders buy sugar from them.
Philippine Sugar Millers Association, Inc. (PSMA) president and executive director Francisco D. Varua told BusinessWorld on Monday that the government’s efforts to intervene in the past have not been effective.
“The way I see it, it’s easy to monitor supermarkets and grocery chains, but it would be difficult to implement it in wet markets and sari-sari stores,” he said.
“Since we operate in an atmosphere of free enterprise, this is not necessary,” he added
Mr. Varua said on the wholesale side of the business, millers will be able to command lower prices because traders will seek to buy low to ensure they can earn a profit even with price caps.
The Sugar Regulatory Administration (SRA) said it wants the Department of Agriculture (DA) to impose an SRP system on sugar after the SRA discovered instances of grocery chains charging higher than prevailing prices.
SRA monitors grocery chains and supermarkets three times a week to note the price movements of raw, unwashed and refined sugar. The Philippine Statistics Authority likewise monitors sugar prices three times a week in wet markets.
The DA in June imposed SRPs on eight farm goods to counter profiteering in wet markets, claiming that the system has helped stabilize prices.
Mr. Varua added that the industry’s biggest concern is proposals for the mandatory labeling of sugar-sweetened goods as harmful to the health.
Through the Federation of Philippine Industries (FPI), the group in a statement last week said the government is putting sugar in a bad light due to the tax reform law’s imposition of excise taxes on sugar-sweetened beverages (SSBs), while the Department of Trade and Industry (DTI) has also proposed warning labels for sweetened beverages. — Anna Gabriela A. Mogato

Co-ops emerging as key players for electric-powered Mindanao Railway System

DAVAO CITY — The Mindanao Development Authority (MinDA) is ready to take on the lead role for coordinating power supply for the planned Mindanao Railway System (MRS), which will have electric trains.
MinDA Assistant Secretary Romeo M. Montenegro, in an interview with the media last week, said a mechanism needs to be put in place involving the National Transmission Corp., electric cooperatives, and private distribution companies.
“The question is how many municipalities will the train traverse, how many electric co-ops, from whom will the electricity be sourced? That particular issue alone is something that cannot be resolved by itself or by a team of construction people. It will go beyond that, and that is why MinDA comes in to make sure all these broader issues are addressed at the top level,” he said.
ON SCHEDULE
Meanwhile, Mr. Montenegro said the 102-kilometer MRS phase 1 spanning the cities of Tagum, Davao, and Digos remains on schedule despite the necessary revisions for the two-track, electric train system.
The two-track electric system was contained in the original proposal, but the government initially approved a one-track system with diesel trains. In June, however, the Department of Transportation (DoTr) agreed to revert to the original proposal.
Mr. Montenegro said the DoTr and the National Economic and Development Authority are set to address soon the budget requirement for the revision.
“The original endorsement submitted by the region to the national government is a two-track electrified railway system with a budget of P85 billion,” Mr. Montenegro said.
A P36-billion budget was approved for phase 1’s one-track system, with P9 billion already allocated in this year’s national budget.
“Whether it is a one or two-track locomotive, it will still have to pass through the initial stages of detailed engineering and ROW (right-of-way) negotiations, so the project is on track and the timeline still the same,” Mr. Montenegro said.
MRS construction is scheduled to start late this year.
“The major challenge in starting the project now is in negotiating the road right-of-way as it will traverse privately-owned areas,” he said.
Mr. Montenegro said the DoTr is conducting on-site and drone inspections of the areas that will be traversed by the project. — Carmencita A. Carillo and Maya M. Padillo
Mindanao rail system

5,000 MW capacity projected for Mindanao grid by 2030

By Maya M. Padillo and Carmelito Q. Francisco
Correspondents
DAVAO CITY — An additional power supply of about 3,000 megawatts (MW) is projected to be required by the Mindanao grid by 2030, according to Mindanao Development Authority (MinDA) Assistant Secretary Romeo M. Montenegro.
Mr. Montenegro, who also heads the technical working group of the Mindanao Power Monitoring Committee, said this projection covering all sectors is based on the Department of Energy’s (DoE) outlook using a 7% to 8% growth rate in demand.
“(It is) based on forecast of 7% to 8% annual growth demand by DoE. For instance, Mindanao’s peak demand in 2012 was around 1,210 MW, but as of November 2017, new highest peak demand was recorded at 1,760 MW. Hence, total capacity for Mindanao, with additional 3,000 MW shall be around 5,000 MW by 2030, which will also cover the required reserve margin such as regulating, contingency and dispatchable reserves,” Mr. Montenegro told BusinessWorld in an interview.
The Mindanao grid, based on data from the National Grid Corp. of the Philippines, currently has a system capacity of more than 2,200 MW.
Mr. Montenegro said while MinDA continues to push for more renewable energy projects to achieve a 50-50 mix with fossil fuels, the more readily available sources are existing diesel-fired plants that are prepared for expansion.
“For now, there are no new investors in power as Mindanao still has a surplus, but the big players in Mindanao have power plants that are capable of expansion and scaling up.”
Among these are Aboitiz Power Corp. subsidiary Therma South, Inc. (TSI)’s plant in Davao and SMC Global Power Holdings’ Malita plant in Davao del Sur.
Mr. Montenegro said it would be easier now to attract new investment in the power sector with the expected completion of the Visayas-Mindanao grid interconnection by 2020.
“When that happens, we will be already under one grid — the Luzon, Visayas, and Mindanao — so that even if you have a power plant in Mindanao you can sell it all the way to Luzon. It’s the same case happening now when Singapore buys cheaper hydro(power) from as far as Laos that has massive power plants,” he said.
COOPERATIVES
Meanwhile, a Davao City business leader said the government must now revisit the policy on electric cooperatives (ECs) to make them more responsive in their franchise areas, particularly the emerging urban centers.
Arturo M. Milan, president of the Davao City Chamber of Commerce and Industry, Inc., told BusinessWorld that the law on ECs should be revised to allow them to build up financial capability, which could then be used to improve services.
“The ECs in urban centers must not only be able to expand their services through rural electrification, but must also be able to immediately respond to the needs of their customers. At present, they cannot do it because they have no financial capability,” Mr. Milan, who was a former top executive of Davao Light and Power Co. before his appointment as advisor of Aboitiz Equity Ventures.
Under Presidential Decree 269 of 1973, which established the National Electrification Administration (NEA), ECs are non-stock, nonprofit entities that are intended to serve as power distributors.
Unlike other cooperatives, ECs do not adhere to voluntary membership as their consumers automatically become the members, and they are under NEA supervision, including the designation of the management team.
Under this present setup, said Mr. Milan, ECs have no autonomy to immediately act on key issues such as providing more power supply to their customers.
Expanding membership participation would also strengthen accountability, he added.
“The members can demand for better service, unlike now when they will only be allowed to participate in the general assembly (to choose their board of directors),” he said.
Energy Assistant Secretary Redentor E. Delola, in a separate interview, agreed that the status of ECs needs to be reassessed to allow them to meet growing demand, including those from prospective business ventures.
“Personally, I believe that, especially those in the growing areas, ECs must be capable enough to answer the needs of the consumers by becoming financially stable,” Mr. Delola said.
“It is very hard for ECs to immediately respond because they do not have that flexibility as they need to apply for capital expenditures, which takes time to approve,” he added.
On the other hand, NEA Administrator Edgardo B. Masongsong said ECs must not be allowed to shift as for-profit entities unless they have been able to meet their main purpose, which is to serve all “lifeline consumers.”
Based on NEA data, about 30% of the country’s 12.18 million household consumers are still under a “lifeline” level, meaning consumption is only up to about 50 kilowatt hours a month.
“But we are open to converting ECs… in a case-to-case basis,” Mr. Masongsong said, noting that there are several that have been performing efficiently.

Withdrawing from the bank account of a deceased person

Matters relating to death are usually not a good topic to discuss. However, what is worse is not knowing what to do when one is faced with death-related situations, such as when the family of the deceased needs to pay the hospital bills or funeral expenses, or when funds are needed to transport or repatriate the deceased.
Unpleasant as the topic may be, I am sharing with you the clarifications issued by the Bureau of Internal Revenue (BIR) on the requirements for withdrawing from the bank account of a deceased depositor.
Most of us are already aware that the Tax Reform for Acceleration and Inclusion (TRAIN) Law has opened a window where the estate tax return will not be a prerequisite to withdraw funds from the bank account of a deceased. The old law required estate taxes to be first settled and a BIR clearance secured prior to the release of the funds. There were many instances in the past when families of the deceased were in deep debt or begging for help to pay for their expenses, while the bank account of the deceased remained frozen pending the settlement of the estate tax.
Now, the TRAIN Law only requires that the 6% estate tax is paid on the amount withdrawn. Families of the deceased need not wait for the estate tax to be processed before getting funds from the bank account. Based on the BIR clarifications, though, the heirs cannot just go to the bank and demand the release of the funds. The BIR clarifications issued under Revenue Memorandum Circular (RMC) No. 62-2018 are as follows:
1. A TIN FOR THE ESTATE
RMC No. 62-2018 mandates the bank to require the executor, administrator, or any of the legal heirs applying for the withdrawal to present a copy of the Tax Identification Number (TIN) of the estate of the decedent and BIR Form No. 1904 of the estate duly stamped received by the concerned Revenue District Office (RDO) of the BIR in accordance with the existing guidelines on the issuance of TIN. The copy of the TIN, at this point, could simply refer to the appropriate BIR form for applying for registration, which the BIR would stamp as received and where the BIR would write the assigned TIN. BIR Form 1904 is the application for registration for one-time taxpayer and person registering under EO 98 (securing a TIN to be able to transact with any government office). For estate tax purposes, the Death Certificate should be attached.
Where shall the TIN of the estate be secured? The registration of the estate is applied in the RDO having jurisdiction over the residence of the deceased at the time of death. If the deceased is a nonresident, the TIN shall be secured from the RDO where the executor or administrator is registered. If the executor or administrator is not a registered taxpayer, the registration of the estate shall be made with the RDO having jurisdiction over the place of residence of the executor or administrator.
The TIN is normally issued within an hour at the time of application, if the documents are in order and there is an available approver or signatory.
2. PERIOD TO WITHDRAW FROM THE BANK ACCOUNT
Withdrawing from the bank account without first settling the estate tax and the BIR clearance shall be allowed only within one year from the date of the depositor’s death. This prescription period complements the one-year deadline for filing the estate tax return. Beyond the one-year period, the heirs would have no other way of withdrawing the bank deposits, except to file the estate tax return and secure the BIR clearance. The prescriptive period for the withdrawal will discourage complacency on the part of the heirs in settling the estate tax.
3. IF THE ACCOUNT IS A JOINT BANK ACCOUNT
If the account is in the name of two or more depositors, the 6% withholding tax shall only be imposed on the share of the deceased in the joint bank account.
One of the surviving joint depositors will also be required to sign a sworn statement in the withdrawal slip to the effect that all the other joint depositors are still living at the time of withdrawal, and that the withdrawal is subject to 6% final withholding tax.
RMC No. 62-2018 acknowledges that banks are not precluded from requiring pertinent documents to ascertain the identity and the right to claim of the heirs or its authorized representative before allowing any withdrawal from the bank deposit accounts. Banks would have their own policies in this regard, whether internal or in compliance with requirements under applicable laws, rules, and regulations.
The heirs, nonetheless, should bear in mind that it is best to first evaluate if the bank deposit can be exempt from tax, if the estate tax return will be processed. If the taxes are paid through the estate tax return, there is a P5-million standard deduction and a deduction of up to P10 million of the value of the family home. A maximum of P300,000 in estate taxes can be saved, if the cash of up to P5 million is included in the estate and subjected to tax as part of the estate tax return. Likewise, claims of debtors against the estate, as well as unpaid mortgages, are still deductible expenses under the TRAIN Law. These reliefs, if existing, can only be availed of if the estate will be settled by filing an estate tax return.
There are just a few of the possible reliefs from taxes. For estate taxes, these reliefs can be availed of only once in the life and death of a person. Our legislators have fought hard so that these reliefs can be part of our laws. The opportunity should be enjoyed when it comes.
 
Lina P. Figueroa is a principal of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

Expansion of ASEAN food corporations

Many Philippine companies expand overseas to reach more consumers and increase revenues. Also, companies can utilize global markets to introduce unique products and services (https://www.bizjournals.com/).
ON ACQUISITIONS
According to the McKinsey consultancy, “the strategic rationale for an acquisition has the following six archetypes: “improving the performance of the target company, removing excess capacity from an industry, creating market access for products, acquiring skills or technologies more quickly or at lower cost than they could be built in-house, exploiting a business’ industry-specific scalability, and picking winners early and helping them develop their businesses” (https://www.mckinsey.com/the-six-types-of-successful-acquisitions, May 2017).
CHRONOLOGY
ASEAN is one of the fastest-growing regions with a large population. In the past five years, there have been exciting developments in corporate expansion/acquisition. Here are some in the Philippines.
Universal Robina Corp. (URC). The leading snack foods firm took over New Zealand’s leading biscuit and snack food company Griffin’s Foods Ltd. for NZ$700 million ($580 million) in 2014. This was followed in 2016 with the takeover of Australia’s Consolidated Snacks Pty. Ltd. for AU$600M ($454 million).
Del Monte Pacific. In 2014, the firm purchased Del Monte Foods (USA) consumer products business for $1.675 billion. Del Monte Pacific is 67%-owned by NutriAsia Pacific Ltd. The latter is owned by the NutriAsia Group of Companies, which is majority-owned by the Campos family.
Emperador/Alliance Global. Emperador is the world’s largest brandy maker. In 2016, it bought the Domecq brandies and wines of Pernod Ricard in Mexico. In the previous year, the biggest acquisition was its buyout of Beam Suntory’s brandy and sherry business in Jerez, Spain for $290 million in cash for Bodegas Fundador.
In 2014, Emperador acquired United Spirits’ Whyte & Mackay whisky business for £430 million ($729 million).
San Miguel Group. The group has been present in food, beverage, and packaging in Southeast Asia, China, and Australia. In 2017, its packaging unit, San Miguel Yamamura, acquired Australia-based Best Bottlers, which specializes in wines, cider, ready-to-drink and nonalcoholic beverages. Best Bottlers is the third Australian bottling company acquired by San Miguel this year after Barossa Bottling and Portavin.
Liwayway/Oishi. Asia’s leading snack maker operates 30 factories overseas: 16 in China, some 14 overseas (ASEAN, India, and South Africa), plus three in the Philippines. In 2016, the Liwayway Group acquired Spain’s Cola Cao business in China in a transaction costing $13 million.
Monde Nissin. In 2015, the Philippines’ leading noodles and biscuit maker, bought United Kingdom-based Quorn for £550 million ($831 million). Quorn is the world leader in meat alternatives.
Bounty Fresh. The poultry value chain player has expanded overseas. In 2016, PT Bounty Segar Indonesia, a joint venture company with an Indonesian conglomerate, began. Also, Bounty Agro Ventures, together with its business partner, will soon introduce their flagship rotisserie product “Chooks-to-Go” in Malaysia.
In 2017, Bounty Fresh mounted a $309.4-million cash offer for New Zealand’s Tegel Group Holdings. A spokesman for Bounty’s mergers and acquisitions said the bid was part of an expansion strategy for Southeast Asia.
Jollibee Group. As of end-2016, Jollibee International operated 167 stores, with 35 in the United States, one in Canada, 84 in Vietnam, 14 in Brunei, three in Hong Kong, four in Singapore, and 26 in the Middle East. In 2016, Jollibee opened its first store in the Midwest USA, in Illinois. This was followed by opening in Winnipeg, Canada.
This year (2018), Jollibee Foods said it would raise its stake in US restaurant chain Smashburger to 85%, in a $100-million transaction to be paid in cash.
Jollibee Foods also announced it will bring Vietnamese noodle house Pho 24 to the Philippines.
ASIAN FORAYS INTO THE PHILIPPINES
While Philippine companies are expanding overseas, Asian companies have also been investing or acquiring businesses in the Philippines.
Itochu (Japan). The biggest acquisition was Itochu’s purchase of the worldwide packaged foods and Asian fresh businesses of Dole Food Co., Inc. for $1.685 billion in 2013. The transaction resulted in the takeover of Dole’s pineapple and banana operations in Mindanao.
Charoen Pokphand (CP). The company plans to invest $500 million a year in the country, as discussed during its meeting with President Duterte in Bangkok in early 2017. CP, ASEAN’s largest agribusiness conglomerate, already operates a subsidiary in the Philippines.
QAF/Gardenia. Singapore-based QAF Holdings owns the Gardenia brands in the Philippines. Gardenia dominates the packaged bread market with its wide array of bakery products. It has three plants in Laguna and Cebu.
In 2016, Gardenia brought Australia’s Bakers Maison to Manila, with plans to open 100 stores in the next few years. Bakers Maison specializes in French-style breads and pastries. In 2017, Gardenia created a new wholly owned company Nutribake Food Products, Inc. to rationalize its Philippine operations. This year, it is investing P1 billion for the construction of a manufacturing facility in Cagayan de Oro. It is also constructing a new plant in North Luzon.
DelfiFoods/Goya. Headquartered in Singapore, Delfi chocolate confectionery products have core markets in Indonesia, Philippines, Singapore, and Malaysia.
Why do Philippine firms expand overseas? The Philippine consumer market, while growing, is getting crowded for them. And they have money to invest.
Why do foreign firms expand in the Philippines? A large population, growing incomes, an expanding middle class, and having different products to offer, give them an advantage.
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
 
Rolando T. Dy is the Vice Chair of the M.A.P. AgriBusiness and Countryside Development Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.
map@map.org.ph
rdyster@gmail.com
http://map.org.ph

France wins 2nd World Cup


MOSCOW — France celebrated their second World Cup win 20 years after their maiden triumph on Sunday, overcoming a passionate Croatia side, 4-2, in one of the most gripping finals in recent history.
The breathless victory under stormy skies at Moscow’s Luzhniki Stadium means Didier Deschamps’ side — balancing youthful zest and tournament nous — have buried the pain of their defeat in the Euro 2016 final on home soil.
For Croatia, a country of just over four million people, the loss spells bitter pain but their fans celebrated the best run in the nation’s history, which featured a stunning win against Argentina and a semifinal victory against England.
Croatia started the match strongly but an own goal from Mario Mandzukic and a controversial VAR-assisted penalty from Antoine Griezmann following an Ivan Perisic leveler gave France a 2-1 halftime lead.
Further strikes from Paul Pogba and Kylian Mbappe gave France a comfortable cushion before a late consolation from Mandzukic after an error by French goalkeeper Hugo Lloris.
France captain Lloris lifted the World Cup trophy as torrential rain cascaded down in the Russian capital.
Deschamps, thrown into the air by his ecstatic players as they celebrated their win, said the victory was “just as big and just as beautiful” as the 1998 triumph in France.
“There are two things that matter — one is that these 23 players are now together for life, whatever happens, and also that from now on they will not be the same again, because they are world champions,” he said.
“To be champions of the world as professional footballers, there is nothing better.”
Deschamps, who captained the team when they lifted the World Cup in 1998, has become just the third man to win the trophy as both a player and a manager after Franz Beckenbauer and Mario Zagallo.
“We did something incredible, we made history and we are going to enjoy it,” said France goalscorer Griezmann.
US President Donald Trump quickly sent congratulations to France for their “extraordinary soccer” and also praised Russia’s President Vladimir Putin for his hosting of the tournament, which he described as “one of the best ever.”
French President Emmanuel Macron, who had punched the air during the match and stood next to Putin on the podium, tweeted simply “MERCI” to the team.
Putin said Russia could be “proud” of its hosting of the football World Cup, judging it a success “in every respect”.
He added that foreign visitors holding fan ID cards for the World Cup could have visa-free entry to Russia for the rest of 2018.
CLINICAL FRANCE
In chaotic scenes during the post-match French press conference, the celebrating players burst in, soaking Deschamps with drink.
Across France, people erupted in joy, with fans streaming into the streets, honking car horns and flying the tricolore flag at the start of an enormous national celebration.
Croatia dominated the match for large periods, enjoying 61% of possession, but the French defense for the most part held firm and France took their chances with devastating efficiency.
Arguably the turning point of the match was when referee Nestor Pitana awarded France a penalty for handball after consulting the video assistant referee (VAR).
As thunder rolled around the stadium, Griezmann was made to wait but he held his nerve to lash the spot-kick into the net.
FRANCE VICTORIOUS
France’s tournament started slowly before gathering tremendous momentum in the knockout rounds.
Even before the final whistle in Moscow, crowds packed the Champs-Elysees avenue in Paris in a repeat of the scenes of 20 years ago when more than a million people partied there.
Cheers rang out throughout the country for each of four goals, transforming the young team into national icons.
Croatia coach Zlatko Dalic said his side’s luck had run out after the VAR penalty.
“I never comment on referees but in a World Cup final you do not give such a penalty,” said Dalic, whose team had to battle through extra-time in all three of their knockout games before the final.
But he added: “You should never give up, never stop believing. At 4-1 down I was not defeated. Overall, Croatia played a great tournament and showed its strength and quality.”
Disappointed but proud Croatian fans in Zagreb applauded their team as their “heroes”.
When it was over, applause from tens of thousands of Croatian fans rippled through the capital’s main Jelacic square as many lit flares and set off firecrackers.
Croatia’s Luka Modric won the best player of the World Cup award, with Mbappe picking up the prize for best young player.
Belgium stopper Thibaut Courtois was named the best goalkeeper of the tournament while England’s Kane won the Golden Boot as top-scorer. — AFP

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