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New e-commerce platform Qarabao equips small business operators with enterprise-level tools.

For many small business owners, running their business is more than just a source of livelihood. It’s a guarantee of a secure future, the extra income helping them build up their savings. And it’s also a source of hope, a vehicle to move up in life, not just for themselves, but for their community.

But grit and drive won’t get you far without the tools and business savvy to guide it. Various operational problems often cause unnecessary stress and lost profit for micro, small, and medium enterprise (MSME) owners.

Last June 27, Mike Tiongson launched Qarabao, a platform that, like its namesake, was designed to take the burden off of MSME operators.

Big features for small businesses

Two years ago, Mike Tiongson, CEO of Qarabao, was tasked with marketing an e-commerce chatbot towards MSMEs. He found that most MSMEs had little use for a chatbot, but were in dire need of a whole suite of other solutions.

So with Roy Nepomuceno, Chief Operating Officer, and Cookie Enriquez, Product and Business Development Manager, they developed Qarabao, a subscription-based ecommerce platform that provides solutions for everyday problems.

“[In our previous system], we weren’t able to track anymore how many orders there are, we committed to give a customer this product but we don’t have any stock of it left,” said Inah Villanueva, a business owner selling on Qarabao’s platform. “So the reaction of the customer when they find out, of course they’re dismayed… so it’s already lost sales.”

Qarabao’s standard plan offers multiple payment channel options (catering to unbanked customers and those located outside of Metro Manila), order and shipping management, and inventory tracking (which can send notifications for items about to run out of stock).

Other features include a customer relations management system and analytics reporting. “[These] are available in enterprise-level software, and we’re saying that no, even small businesses can make use of these features,” said Tiongson. “And turns out… [our sellers] did enjoy the fact that they had a picture of how [their] business performed’ when they see the reports, charts, and sales.”

Adding quality to life

Riding on the success of their initial offerings, development on additional features is underway for two more plans slated for release in the third quarter of the year.

The Plus plan will include a website, campaign management, and, yes, a chatbot. Upgrading further to the Premium plan gets you a point-of-sale system, essential to managing physical stores.

By empowering MSME owners through their businesses, Qarabao aims to take the weight off of small business owners’ shoulders, allowing them to forget the how’s and focus on the why’s behind their businesses — security and hope for themselves and their communities.

DoE seeks oil contract counterproposals

THE DEPARTMENT of Energy (DoE) has invited local and foreign challengers to the three applications for petroleum service contracts in three areas in the Philippines outside the 14 pre-determined areas it had offered to exploration companies.

In a notice posted on its Web site, the department identified these areas as an area in Sulu Sea, in Northwest Palawan and in Southeast Luzon. These areas are not among those previously offered to interested investors under the Philippine Conventional Energy Contracting Program (PCECP).

The DoE posted the notice to invite counterproposals or challengers as called for under DoE Department Circular No. DC2017-12-0017 or “The PCECP Circular and Guidelines.”

DoE Undersecretary Donato D. Marcos did not immediately respond when asked to identify companies concerned, or whether these are all Filipino entities.

The 60-day challenge period for the Sulu Sea nomination will end at 11 a.m. on Aug. 16, the challenge period for the Northwest Palawan nomination will end at 11 a.m. of Aug. 19, while the challenge period for the Ragay Gulf in Southeast Luzon nomination will end at 11 a.m. of Aug. 20.

Challengers must submit their complete application documents to the DoE records management division and pay the “challenge” fee of P1 million at the department’s treasury division.

Mr. Marcos, who supervises the DoE’s Energy Resource Development Bureau, earlier said that regardless of their method of application, all interested parties must comply with the legal, financial and technical requirements, which include the proposed work program and economic development plan for the contract area.

The PCECP is a transparent petroleum service contract awarding mechanism that allows the government to develop and utilize indigenous petroleum resources under a service contract with qualified local and international exploration companies.

Under the PCECP, awarding of service contracts is conducted either through a competitive selection process or through nomination.

The DoE said it has so far received 21 requests from 11 companies for area clearances covering portions of the Sulu Sea, Recto Bank, Palawan, Quezon, Albay, and Mindoro.

Of the 21 requests, seven area clearances had been issued as of June 25. Area clearances are issued by the department to inform interested parties that there is no overlap between the areas they are looking to explore and other energy projects or restricted areas.

Of the seven companies that have received their area clearances, four have submitted their letters of intent for the department’s approval and subsequent publication as a PCECP-nominated area, it said. — Victor V. Saulon

PHL an outlier in slowing Asia-Pacific M&A market

THE PHILIPPINES was the fastest-growing market in the Asia- Pacific (APAC) region ex-Japan in terms of mergers and acquisitions (M&A) last semester, driven by the consolidation of one of the country’s largest cement players.

In its Global & Regional M&A Report for the first half of 2019, media firm Mergermarket revealed that the value of M&A deals in the country soared by 398.2% or $2.2 billion during the period.

This was primarily driven by conglomerate San Miguel Corp. (SMC)’s acquisition of an 85.7% stake in Holcim Philippines, Inc. from LafargeHolcim Ltd.

“The surge in the Philippines was largely driven by the flagship ‘Build, Build, Build’ campaign of President Rodrigo Duterte, which is spurring consolidation among cement players,” Mergermarket said in its report.

Holcim Philippines disclosed in May that SMC has agreed to acquire 85.7% of the firm for $2.15 billion, making it the biggest M&A deal in the local cement industry. The sale of LafargeHolcim’s Philippine assets is part of its rationalization program to exit from the “hyper competitive arena in Southeast Asia.”

The Philippines defied the slowdown seen in the region as well as in individual markets. Mergermarket noted that dealmaking “slowed down to levels unseen since 2013,” attributing the decline to the escalating trade war between the United States and China.

APAC ex-Japan tallied 1,525 deals last semester worth $241 billion, resulting in a drop in global market share to 13.4% from 18.6% in the same period last year.

China and Hong Kong accounted for more than half of the region’s total deal value, although deals from the former dropped by 44.7% year on year.

Deals in Hong Kong meanwhile dipped by 11.1%.

India followed as the largest M&A market, despite also posting a 52.8% decrease to $33.5 billion.

Southeast Asia showed a more favorable performance in the same period, with Singapore increasing by 154% to $17.1 billion for the period. Indonesia picked up by 88.6% to $6.6 billion, while Malaysia jumped by 16.4% to $3.7 billion.

In terms of sector, consumer-related transactions booked a 7.6% increase to $23.2 billion from 144 deals. The technology sector dropped by 66% to $22.9 billion, “as the tech war between the US and China is threatening to disrupt the supply chain and create a digital iron curtain between countries using US technologies and those who adopt Chinese ones.”

Meanwhile, Mergermarket also said that private equity (PE) buyouts appear “bleak and is expected to worsen in the near future.” PE buyouts amounted to $28.8 billion in the first half, 57% down from last year’s $67.1 billion. PE exits were also weak at $28.25 billion, 62% lower than last year’s $73.4 billion. — Arra B. Francia

Central bank chief sees ‘a lot of policy space’

MONETARY AUTHORITIES will have “a lot of policy space” ahead amid global monetary policy easing and as inflation slows further next quarter, the head of the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

“We have a lot of policy space considering the global trend of monetary easing,” BSP Governor Benjamin E. Diokno told reporters.

BSP’s Monetary Board on June 20 opted for “a prudent pause” after cutting benchmark interest rates by 25 basis points (bp) on May 9 and firing off a phased 200 bp cut in banks’ reserve ratio requirement (RRR) that will be completed on July 26 in order “to observe and assess the impact” of these policy adjustments.

It had increased benchmark rates by a total of 175 bp last year in a bid to hem in multi-year-high inflation rates that had hit a nine-year-high 6.7% in September and October last year, and cut the RRR by a total of 200 bp in two moves besides.

Citing “base effects” from last year’s price spikes, Mr. Diokno said headline inflation — which has been on a general downtrend to average 3.6% in the five months to May, within the BSP’s 2-4% target band for 2019, and which the central bank now expects to have slowed to 2.2-3.0% last month — “would be around two percent or even lower than two percent” in the next few months, with the pace in the “third quarter… very much lower than second quarter.”

Mr. Diokno also added to expectations that second-quarter gross domestic product (GDP) growth would have clocked in by “[a]t least six percent last quarter” on the back of improved state spending after the P3.662-trillion national budget was finally enacted in mid-April — a four-month delay — “plus consumption” of households which contributes about 70% of GDP and which should be boosted by easing inflation.

The Philippine Statistics Authority is scheduled to report June inflation data this Friday and second-quarter GDP data in the morning of Aug. 8, hours ahead of the Monetary Board’s fifth policy review for 2019.

The six-percent second-quarter GDP growth estimate — also held by other state economic managers and private sector analysts — compares to a four-year-low 5.6% in the first quarter and the 6.2% logged in April-June 2018.

Mr. Diokno said that the BSP is still “studying” whether to cut the RRR further, noting that “[r]ight now, wala namang (there is no) immediate requirement” to do so.

He also said that the BSP is looking at issuing debt securities this year, after Republic Act No. 11211 authorized it to do so as part of reforms aimed at fortifying its capability to carry out its functions. “Within the year. Inaaral na iyon (It’s already being studied). We are just preparing the guidelines,” he said. — RJNI

Senators shun top post in tax committee due to political stigma

THERE are still no takers for chairmanship of the Senate Committee on Ways and Means due to the “stigma” attached to tax measures, Majority Leader Juan Miguel F. Zubiri told reporters on Wednesday.

Mr. Zubiri said Senate President Vicente C. Sotto III might have to appoint a senator to the post, after Senator Pia S. Cayetano, whom he initially asked, expressed no interest in the committee.

“Walang senador na gustong maging chairman ng Ways and Means. Pinamimigay na namin ‘yung committee, ayaw tanggapin ng aming mga kasamahan, so the Senate President may have to appoint somebody (No senator wants to be Ways and Means committee chairman. We are practically giving away the post but none of our peers wants it),” Mr. Zubiri said.

“Maybe because ‘yun nga, natatakot din sila na may stigma pagdating sa taxes (Maybe precisely because senators are afraid of the political stigma attached to tax measures).”

Lawmakers looking at running for reelection will be preparing for the 2022 national polls.

Just last Monday, Finance Secretary Carlos G. Dominguez III said he is confident that remaining tax reforms will hurdle the 18th Congress, noting that reelectionist lawmakers who supported the first packages managed to win the May 13 mid-term polls. Mr. Dominguez cited as example Senator Juan Edgardo M. Angara and Albay 2nd district Rep. Jose Maria Clemente S. Salceda, who were both reelected despite sponsoring Republic Act No. 10963 which slashed personal income tax rates but increased or added levies to several goods and services besides.

Lawmakers have become reluctant backing tax measures, drawing from the experience of current Senate President Pro-Tempore Ralph G. Recto, who lost in the 2007 senatorial race after sponsoring the increase of value added tax to 12% from 10%.

The Ways and Means body had been chaired by Mr. Angara, who is poised to head the Finance committee when the 18th Congress opens on July 22.

‘HINDI NIYA GUSTO’
“Actually, I spoke to Senator Pia. She says it’s not her priority. She says she has other advocacies, but if asked by the Senate President, no choice daw siya, but that’s not her core competence. Personally, sabi niya hindi niya gusto (she said she doesn’t want it),” Mr. Zubiri said, adding that the Senate will form a new special standing committee on sustainable development, which Ms. Cayetano will head.

The Ways and Means committee will be tackling proposals to reduce the corporate income tax rate gradually to 20% by 2029 from 30% currently, to streamline fiscal incentives by making them performance-based and time-bound and by removing redundant ones, to simplify taxes on financial instruments, to centralize real property valuation and assessment, as well as to increase the government’s share in mining revenues and excise taxes imposed on alcohol products.

Also enacted recently was RA 11213, which grants estate tax amnesty and amnesty on delinquent accounts that remained unpaid after being given final assessment; while the proposed gradual increase in excise tax on tobacco products to P60 per pack by 2023 from P35 currently awaits President Rodrigo R. Duterte’s signature.

Mr. Zubiri said neophyte Senator Christopher Lawrence T. Go — who had been a long-time aide to Mr. Duterte — will be the chamber’s link to Malacañang “para wala nang ma-vi-veto na bills (so that no more bills will be vetoed).” — Charmaine A. Tadalan

Fresh funds seen to boost Converge’s expansion efforts

By Denise A. Valdez, Reporter

CONVERGE ICT Solutions, Inc. is seen to become a “more formidable player” in the fixed broadband segment, after the company received fresh funds from a United States-based private equity firm, according to an economic research firm.

In a report released on Tuesday, Fitch Solutions Macro Research said Converge has the potential to grow its business as it recently secured $250.4 million in fresh funds from Warburg Pincus.

Fitch Solutions said Converge is expected to allocate the funds for the expansion of its fibre optic infrastructure. But it added Converge could also consider moving into reselling mobile services to revive its intention of becoming a major telecommunications player in the country.

“While fixed broadband will initially be the focus for Converge, the company could move into reselling mobile services,” Fitch Solutions said. “To become a more comprehensive competitor in the consumer space, Converge could look to launch mobile services through a mobile virtual network operator (MVNO) agreement with another operator.”

Converge had planned to participate in the government’s auction for a new major telecommunications player last year, joined by KT Corp. and Teltech Group, but eventually backed out due to the performance and financial conditions required from the bidders.

Fitch Solutions noted Converge is currently lagging behind incumbents PLDT, Inc. and Globe Telecom, Inc. in terms of broadband subscriber count, as it reported last year that its base was at 200,000, trailing both PLDT at 2 million and Globe at 1.6 million subscribers.

The research firm said it sees that Converge will eventually “seek to further monetize its fiber backbone further by leasing capacity to other operators.”

“Converge already offers ICT services for small-to-medium enterprises (SMEs) and larger corporates, providing wholesale, colocation and leased line services, among others,” it said.

But it noted the company’s expansion is hounded by the government’s “slow pace of regulatory reform,” suggesting legislative challenges in infrastructure rollout will be the biggest threat to Converge’s success.

“The process of deploying fiber optic cable requires several local government entities to issue up to 27 permits as part of a process which could take several months or years,” Fitch Solutions said.

“While government efforts…will be positive at simplifying the application process for telecoms companies seeking right of way to rollout their infrastructure…the unrushed pace at which new law is passed in the country will continue to be a hurdle.”

It noted while several initiatives are already in place to skirt around the bureaucracy and form “one-stop shops” for regulatory requirements, these are still yet to materialze, delaying further the growth potential of telecommunications companies.

“For one, the Open Access In Data Transmission Act which was introduced in the Senate in March 2018 to remove requirements for companies to enter the data transmission business has yet to be approved by lawmakers,” Fitch Solutions cited.

Converge is targeting to reach 7 million subscribers in four years with a five-year, $1.8-billion investment for its nationwide fiber rollout, together with partners KT Corp. from South Korea, Tyco Electronics Subsea Communications LLC (TE SubCom) from US and Filipino-Korean venture LSI-Fibernet Konstrukt Corp.

Former DFA chief Del Rosario resigns from First Pacific board

FORMER Department of Foreign Affairs (DFA) Secretary Albert F. del Rosario has resigned as non-executive director of Hong Kong-listed First Pacific Co. Ltd., citing poor health and his decision to focus on personal advocacies.

This comes less than two weeks after Mr. Del Rosario was denied entry to Hong Kong, which caused him to miss First Pacific’s board meeting and shareholders’ meeting on June 21.

In a disclosure posted on the Hong Kong Stock Exchange on Tuesday, First Pacific said that Mr. Del Rosario has tendered his resignation on July 1.

Salim-led First Pacific controls three Philippine firms, namely Metro Pacific Investments Corp., PLDT, Inc., and Philex Mining Corp.

Mr. Del Rosario, who turns 80 in November, attributed his decision to leave the company to “poor health” and “other constraints, such as, his increased involvement in a number of personal advocacies which makes it difficult for him to continue to serve as a director of the company.”

The company noted that Mr. Del Rosario does not have any disagreements with the board of directors, and that he has no claims over fees, remuneration or compensation, or loss of office.

“The board would like to express its profound thanks to Ambassador del Rosario, who has been a source of invaluable counsel to the company during his tenure,” First Pacific said.

On June 21, the country’s former top diplomat was held and questioned by immigration officers at the Hong Kong International Airport, before being deported back to Manila.

At that time, Mr. Del Rosario called Hong Kong’s denial of entry despite his diplomatic passport a “disrespectful act” of the special administrative region of China against the Philippines.

Mr. Del Rosario and retired Ombudsman Conchita Carpio-Morales sent a “communication” to the International Criminal Court (ICC) last March asking the organization to conduct a preliminary examination against Chinese President Xi Jinping and other officials in connection with the harassment of Filipino fishermen in the West Philippine Sea.

Mr. Del Rosario first sat on First Pacific’s board in June 2003 as independent non executive director. He left the board after being appointed as Secretary of the Department of Foreign Affairs from February 2011 to March 2016 by former President Benigno S. Aquino III. He returned to First Pacific on June 2016, occupying the same post.

He also served as the Philippine Ambassador to the United States from 2001 to 2006 under then President Gloria Macapagal-Arroyo.

First Pacific now has nine members, namely, non-executive chairman Anthoni Salim, managing director and CEO Manuel V. Pangilinan, chief financial officer Christopher H. Young, Benny S. Santoso, Tedy Djuhar, Edward K.Y. Chen, Margaret Leung Ko May Yee, Philip Fan Yan Hok, and Madeleine Lee Suh Shin.

Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls. — Arra B. Francia

Widus International expands deal with AboitizPower

ABOITIZ Power Co. said on Wednesday that it had signed up Widus International Leisure, Inc. to switch to its Cleanergy brand.

In a disclosure to the stock exchange, the company said the owner and operator of the hotel and casino tapped AboitizPower for a 2.5-megawatt (MW) energy requirement, which is an expansion of its previous 1.5-MW supply deal.

“There are a lot of energy companies in the Philippines, so we are really honored to be the preferred partner of Widus in its journey toward sustainability. With AboitizPower’s proven track record in the industry, as well as adequate capacity of Cleanergy, we are confident that we will be able to support the current and future energy needs of Widus,” said Emmanuel V. Rubio, AboitizPower chief operating officer.

The energy supply is being sourced from one of the energy company’s renewable plants, the MakBan geothermal power plant that straddles the provinces of Batangas and Laguna.

The partnership was established in 2018 when the premier leisure destination at Clark Freeport Zone in Pampanga made the switch to the listed company’s brand of clean and renewable energy.

AboitizPower quoted Neki A. Liwanag, WILI assistant vice-president for corporate planning and compliance, as saying: “As a thriving metropolis, Clark is teeming with exciting activities and places of interest. Since it opened in 2008, Widus has become a leading destination for its topnotch facilities and world-class entertainment offerings. But apart from being known for our signature warmth and hospitality, we are proud to be a company that values sustainability.”

AboitizPower said Widus signed a power supply agreement under the retail competition and open access (RCOA) scheme, which allows businesses and institutions with a monthly average peak demand of 750 kilowatts to source their energy supply from a retail electricity supplier.

“In the retail electricity market, customers are given the opportunity to choose the supplier and rate that will allow for savings and security from market volatility,” it said.

AboitizPower and its partners have around 1,200 MW of Cleanergy capacity from its hydro, geothermal, and solar power plants all over the country. — Victor V. Saulon

Milky Way stays true to its roots

HOME COOKING has a way of connecting us with a purer version of ourselves. Before the world left us all scratched, somebody loved us and prepared food for us. We guess that’s the magic of Milky Way Café, where each dish brings us back to our mother’s table, when nothing yet could go wrong.

It’s not just our memories that Milky Way Café taps into, but the collective memory of the nation. The restaurant has been around since 1962, and many people have fond memories of the era: before the smog, before the skyscrapers, before the traffic; before everything that had come to pass since then.

Chef J Gamboa, son of Milky Way founder Julie Araullo Gamboa, talked with BusinessWorld earlier this week in the newly renovated Milky Way branch in Rockwell, the second; the first being the bigger Milky Way in Makati’s Arnaiz Ave. (though some still call it by its former name, Pasay Road). The restaurant’s concept is even older than he is: he was born in the purple of his parents’ success in 1971, almost a decade after they first opened Milky Way Turo-Turo (literally point-point, which means cafeteria-style service) across Malacañang. Educated in the US, he and his siblings have since expanded into Spanish, Thai, and Japanese cuisines, all the restaurants located beside the Arnaiz Ave. branch.

At its peak, his mother had 15 Milky Way branches across Metro Manila. Now, there are only two, while his cousins have branches that share the brand name, but not exactly the same fare. See, the restaurant started as an ice cream factory that was bought by his grandfather from two Spanish ladies who opened it up immediately after the war. His grandfather gave his eight children permission to open up their own independent restaurants, with the condition that none of them would go into business together. So at some point in time, there were several Milky Way Cafés owned and operated independently by various Araullo siblings. Mr. Gamboa says that the only thing they all have in common now is the ice cream, which they provide for everyone.

Mr. Araullo said that his favorite dish is their ox-tongue asado, stewed in tomato sauce, leaving a cut of meat that is almost buttery-soft. Other selections include the Bistek Tagalog (beef cooked in soy sauce and onions) and the Kare-kare (meat and vegetables stewed in a peanut-based sauce) which one might argue appears on all tables in the Philippines anyway.

So why do people come to them for food that’s accessible to nearly everyone? He gave the example of their Crispy Hito (catfish), which they would have at least once a week at his late mother’s house. “We kind of taught people how to eat it.” A few years ago, a lady who was a loyal customer approached him, praised him for the fish, but balked at the prices, declaring that she could make it cheaper at home. Mr. Gamboa taught this lady, whom he fondly called one of his titas, how to make it the Milky Way way. She came back and said that she failed in replicating the recipe, and went back to ordering it.

“I don’t think people have cooks like before. There aren’t those big families anymore, but people still want to eat home cooking.”

In fact, over at the Rockwell branch, families send their help over at lunchtime for takeout, he said. “They have time to make it? I don’t think so.”

I could write lines and lines of prose about how good everything was, but it’s hard to do justice to recipes older than this reporter, and all of them bringing back a fond memory of a time gone by. Of course, there’s also the factor that almost everything in the menu is made in-house: from the 20 ingredients that go into the halo-halo (a shaved ice desert) not counting the milk, to the ice creams and the bagoong (fermented fish paste).

Mr. Gamboa recalls that as a child, he was placed on ice cream duty. “The flavors are still the same, if not improved. It will still taste like Milky Way Pinoy food.”

Mr. Gamboa says that the secret to surviving that long is, “We’re here everyday… making sure that everybody’s getting the food that they deserve.”

This is the main reason why they haven’t seriously entertained expanding abroad, bringing comforting Filipino food to the migrant population. “We won’t be able to deliver the same level of service,” he said. “Here na lang. Fun pa (Let’s keep it here. It’s fun).”

Some of the strongest restaurants still around from before the 1990s are built around comfort food. As we’ve said before, one can argue that these are all available at home anyway, but what makes them all, including Milky Way, still stand? “We have the strongest cultural connection to that cuisine.

“You’re going to eat that, no matter what.” — JL Garcia

Samsung completes folding phone redesign after screen failures

SAMSUNG Electronics Co. has completed a two-month redesign of the Galaxy Fold to fix embarrassing screen failures that forced its delay, people familiar with the matter say, allowing the Korean giant to debut its marquee smartphone in time for the crucial holiday season.

The world’s largest smartphone maker is now in the final stages of producing a commercial version but can’t yet pin down a date to begin sales, people familiar with the matter said, asking not to be identified describing an internal effort. Samsung pulled the device after several publications including Bloomberg News reported problems with test versions, such as screen malfunctions that emerged after a film on the display was peeled off.

Korea’s biggest company is trying to move past yet another product faux pas. It has now stretched the protective film to wrap around the entire screen and flow into the outer bezels so it would be impossible to peel off by hand, said the people, who have seen the latest versions. It reengineered the hinge, pushing it slightly upward from the screen (it’s now flush with the display) to help stretch the film further when the phone opens.

That tension makes the film feel harder and more a natural part of the device rather than a detachable accessory, they added. The consequent protrusion, almost imperceptible to the naked eye, may help reduce the chance of a crease developing in the middle of the screen over time, one of the people said.

Samsung is keen to salvage its reputation after canceling the April 26 launch of the $1,980 device when folding displays on review models exhibited problems. It had counted on the world’s first mass-produced foldable smartphone to challenge Apple, Inc. and widen its lead over Chinese rivals such as Huawei Technologies Co. Instead, some models developed issues after mere days of use: Bloomberg’s test unit failed to function properly after a plastic layer covering the screen was removed, and a small tear developed at the top of the hinge where the gadget opened.

Samsung will soon start shipping major components for the Galaxy Fold, including the display and battery, to a main plant in Vietnam for assembly while the company debates a launch date, one of the people said. But the company is unlikely to unveil its re-upholstered Galaxy Fold during an Aug. 7 “Unpack” event in New York for the new flagship Note 10 phone, one of the people said. A Samsung representative declined to comment.

The Fold’s postponement marked a setback for a company that had bet on its latest innovation to extend its dominance and ignite a stagnating smartphone market. But the Suwon, South Korea-based firm was keen to avoid the kind of fiasco it suffered in 2016 when it recalled the Note 7, which showed a tendency to burst into flames. Samsung also finds itself in no rush to launch the Galaxy Fold after Huawei postponed the roll-out of its own foldable device, the person said.

Samsung’s shares slid 1.8% Wednesday while South Korea’s benchmark Kospi fell 1.2%.

Foldable phones let users double their screen real estate while also keeping devices compact enough to fit into a pocket. But analysts say it’s unclear whether companies can develop apps to take full advantage of the innovative screen. Samsung’s delay underscored the challenges of creating a display that folds like a notebook, something Samsung spent eight years trying to master.

Even if the phone is made to perfection, the market may not be ready for it: Samsung shipped more than 290 million phones last year, according to Strategy Analytics, but said earlier this year it would produce about one million foldable phones in 2019.

Samsung, which supplies the organic light-emitting diode screens used in Apple iPhones, is also developing a clamshell-like foldable phone and has already created dozens of prototypes, one of the people said.

Bloomberg News reported in March Samsung was working on a pair of new foldable models to follow the Galaxy Fold, including one that folds vertically and another that folds outward like Huawei’s Mate X. The company also envisions smartphones with rollable and stretchable displays in the future, Samsung Executive Vice-President Chung Eui-suk said in February. — Bloomberg

Yields on term deposits decline as offer attracts strong demand

THE CENTRAL BANK’S term deposit facility (TDF) was more than twice oversubscribed on Wednesday, bringing yields down, on the back of strong demand from banks due to recent reserve requirement cuts.

The Bangko Sentral ng Pilipinas (BSP) received P67.548 billion in tenders yesterday, higher than the P30 billion placed on the auction block. This is also higher than the P31.407-billion tenders received last week for its P20-billion offer.

Bids for the seven-day papers amounted to P25.42 billion, which led to the full award of the P10 billion in offer. This is also higher than the P14.41 billion in tenders received a week ago.

Banks sought yields ranging between 4.5% and 4.6% for the one-week term deposits, slightly lower than the 4.58-4.65% margin seen a week ago. This caused the average yield for the papers to decline to 4.5537% from the previous week’s 4.624%.

Meanwhile, demand for the 14-day deposits amounted to P22.095 billion, well above the P10 billion on offer. This is also an increase from the previous week’s bids worth P16.997 billion.

Accepted yields settled within 4.5-4.6999%, declining from the 4.65-4.75% margin seen a week ago. As a result, the average rate of two-week tenor dropped to 4.6129% yesterday from last week’s 4.7002%.

On the other hand, the 28-day term attracted tenders totalling P20.033 billion versus the P10 billion placed in the auction block.

Banks sought yields between 4.5% and 4.75%, leading to an average rate of 4.6347%. The BSP did not offer one-month deposits last week.

The TDF stands as the central bank’s primary tool to shore up excess funds in the financial system and to better guide market interest rates.

The BSP’s Monetary Board last month kept rates unchanged on expectations of steady inflation and economic growth and as it monitors the impact of recent monetary adjustments.

The central bank left the interest rate on the BSP’s overnight reverse repurchase facility untouched at 4.5%. The interest rates on the overnight lending and deposit facilities were likewise held steady at five percent and four percent, respectively.

BSP Governor Benjamin E. Diokno said it is “normal” for TDF to be oversubscribed, which can be attributed to excess liquidity driven by the regulator’s recent reductions to banks’ reserve requirement ratio (RRR).

“There was a time na undersubscribed siya (when the TDF was undersubscribed). Don’t worry too much. Mga blip lang yan (Those are just blips). The economy is growing much faster,” Mr. Diokno told reporters on Wednesday.

After a 100-basis-point RRR cut across all banks last May 31, the BSP trimmed the reserve ratios of universal and commercial lenders and thrift banks by another 50 bps last Friday to 16.5% and 6.5%, respectively.

Another 50-bp reduction will be implemented on July 26 to finally bring the RRR of big banks to 16% and thrift banks to 6%, which completes the phased cuts the BSP announced in May.

Last Monday, asked if the central bank is expecting higher demand for TDF in the coming weeks, retired BSP Deputy Governor Diwa C. Guinigundo said: “Not really because we have actually stabilized the volume of TDF offerings because that’s what we expect to happen in terms of liquidity. More or less stable yung liquidity situation considering on one hand, you have a balance of payments surplus. If you have a balance of payments surplus, that should be expansionary. It will add more peso liquidity to the system.”

“On the other hand, you still have the national government’s money inside the BSP. That actually tightens liquidity conditions. If the government would be able to start spending, and spending more on infrastructure, paying their contractors and their creditors…then you will have a more normal liquidity condition which could possibly increase the TDF volume…. We don’t see that yet,” Mr. Guinigundo said. — Reicelene Joy N. Ignacio

Slow electronics market growth a hindrance to tech investments

By Charmaine A. Tadalan
Reporter

SLOW MARKET growth for the electronics industry is a hindrance to the entry of Taiwan-based technology firms into the Philippines, officials of several companies said.

Wireless broadband solutions provider Browan Communications, Inc. and automobile components company Mobiletron Electronics Co., Ltd. said they have no plans of investing in the Philippines in the near future, while test and measurement firm Tenmars Electronics Co. Ltd. said it is still in the process of looking for distributors in the country.

“Business side, compared to other countries — for example, the TDM (text and data mining) companies in Europe actually bring a lot of business opportunities for us — but the market in the Philippines compared to others is slower, but I think it takes time,” Browan Business Division Senior Account Director Steve Lin said in the Taitronics 2019 pre-show media tour in their headquarters in Hsinchu, Taiwan on June 13.

Browan in July 2018 partnered with Filipino start-up company Packetworx, the first provider of the internet of Things (IoT) solutions in the Philippines. It offers various LoRaWan devices which provide “long-range sensor and control capability devices.”

When asked if Browan sees more investments in the Philippines, Mr. Lin said “for Philippines, I’m not sure so far, but as I mentioned, if there’s business, good and big enough, sure, we will consider.”

For Packetworx founder and chief executive officer Arnold Bagabaldo, to attract more investors to the Philippines, the government should provide the necessary infrastructure for IoT devices, among others.

“Sa Philippines, para dumami ‘yung IoT devices…kailangan mo ng network, kailangan mo ng infrastructure para ma-connect ‘yung (In the Philippines, to increase the number of IoT devices, you need the network and infrastructure to connect the) devices to the internet,” Mr. Bagabaldo told BusinessWorld in a June 19 interview at the IoT Technology Hub in Pasig.

“The government plays a big role for that to happen, kasi ang (because the) policy is people invest in a country because they feel safe, they feel that their investment is supported they feel they have a chance, so a lot of that is support from the government.”

Moreover, Browan Product Line Manager Gordon Chang said there is growing sentiment among their consumers to build factories in Southeast Asia as a result of the trade war between the United States and China.

“I hear customers consider instead a factory in Vietnam or in the Philippines or Malaysia. In these three countries, they want to set up their factory there because of the trade war,” Mr. Chang said.

AcBel Polytech Inc., a Taiwanese power supply firm, likewise cited the trade war as reason for its move to expand its existing factories in Taiwan and the Philippines.

Mobiletron Electronics, which specializes in developing components for the automotive industry, said its market in the Philippines is “not so big.”

“You know if you want to build a subsidiary, we have to consider a lot of things — not only the support from the government but also we have to consider thinking about the culture and the employees and also like the facility there,” Mobiletron Electronics Director Robin Chen told foreign media in their office in Taichung, Taiwan on June 13.

“So far, I think for the Asian countries, it’s a good area for us to go there but…we don’t have too much concern to build up a subsidiary in the Philippines today.”

Mobiletron Electronics currently has subsidiaries in China, US and the United Kingdom.

Mr. Chen noted solar power supply may be a viable product in the Philippines in light of environment protection issues.

“Maybe in the future, maybe if we’re talking about energy storage system, that would be a good product for the Philippines in the future because of energy shortage and also you have more sunshine there, so we could think about solar panel and combine with our energy storage products,” he said.

Mobiletron Marketing and Sales Division manager Miriam Lu said one of its subsidiaries had previously distributed electronic buses in the Philippines. “We already worked with Philippines for E-Bus because of environment protection issues, so the government, we discussed with India, we discussed also with Indonesia, I remember also including the Philippines, this is something we can work with.”

Tenmars Electronics, meanwhile, said the company is still looking for importers that will carry their brand.

“Our chairman is looking for more customer to present our Tenmars logo, especially in the Asia market, like Korea, Japan, Singapore, Philippines, Malaysia,” Tenmars Electronics International Sales Director Katy Wang told foreign media in a pre-show tour in their office in Taipei, Taiwan on June 11.

Tenmars manufactures test and measurement products like temperature or humidity data loggers, infrared thermometers, solar power meters, and air velocity meters, among others. It exports mainly to Europe, Japan and the United States.

Browan Communications, Mobiletron Electronics, Tenmars Electronics and AcBel Polytech are among the participants of this year’s Taitronics International Electronics Show hosted by the Taiwan External Trade Development Council, which will be held in Taipei on Oct. 16-18.

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