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Vox populi

I am pleased to share with readers the political section of a primarily macroeconomic and financial quarterly report my colleague, Christine Tang, and I wrote last month for GlobalSource Partners (globalsourcepartners.com). GlobalSource Partners is a New York-based network of international analysts whose client subscribers are mostly international banks and asset managers.

And so the people have spoken — the final electoral tally showed rousing support for candidates allied with President Rodrigo Durterte at both local and national levels.

Hope and fear accompany the results, which many have taken as a referendum on the highly popular President and his policies. Amidst fears that the President’s stronger hold on power would embolden him to ride roughshod over opposition to his policies, there are hopes that the reform window opened up by a more cooperative Senate would strengthen the administration’s resolve not only to speed up implementation of its programs, especially upgrading infrastructure, but also push for longstanding proposals aimed at increasing the economy’s competitiveness and attractiveness to foreign investments. (See table above.)

The fears on the political front are that the President, in line with his rhetoric, would doggedly carry out his extreme measures for achieving law and order to the end, and, true to his campaign promise, revive his proposal to shift to a federal form of government. In the event, the latter endeavor — involving a complex and lengthy process of amending the Constitution — would most certainly dominate the legislative agenda, leaving Congress little time and energy for other priority reforms. In this regard, worriers fret that the incoming Senate has only four members in the minority bloc (one of whom is in jail) and two “independents”; seven votes are needed to block a proposal for charter change.

On the economic front, there are fears of more populist measures slipping through, as well as mid-stream rules changes for long-term infrastructure contracts. An example of the former that has made the news lately is the proposal, nearing approval in Congress, requiring security of tenure for seasonal hires that businesses argue would raise the cost of labor. An example of the latter is the ongoing Department of Justice review of existing PPP (Public-Private Partnership) contracts initiated by the President, starting with the MWSS (Metropolitan Waterworks and Sewerage System) water concession agreements with two of the country’s largest conglomerates.

Countering these fears is the hope that Finance Secretary Carlos Dominguez, the head of the economic team who appears to have the President’s complete trust, would prevail upon him to follow economically sound policies, including abandoning proposals for federalism which Secretary Dominguez publicly criticized as a fiscal nightmare. In light of the accolades heaped at the administration’s economic reforms following S&P’s decision to upgrade the sovereign credit rating, the more optimistic hope is that the President would instead use his abundant political capital to forcefully back his economic team’s reform program, starting with the remaining packages of the tax reform program. Considering that the reform window is a narrow one, one to one-and-a-half years, having the President himself champion the reforms would ensure speedier passage and less opportunity costs for the economy from the uncertainties associated with rules changes.

Should hope trump fear or the other way around? While it is quite impossible to read this President’s mind, it seems to us that it is not unreasonable to let hope have the edge over fear. After all, politically speaking, whatever the President’s plans are for ensuring effective succession planning in 2022, he would surely have his two decades-long Davao experience in mind and grasp the necessity of having a healthily growing economy to keep strong public support and dissuade challenges. We expect him to spell out his legislative agenda at his State of the Nation Address in late July.

Moreover at this time, political pundits reading the tea leaves from the outcome of the senatorial race have noticed how: 1. Senator Grace Poe, who led the race the first time she ran, has slipped to the second place; 2. the top spot has been taken by Senator Cynthia Villar, the wife of country’s richest man, Manuel Villar, a former House Speaker and Senate President who ran and lost to Benigno Aquino III in the presidential elections of 2010; 3. how unlike her husband, the lady senator does not seem to harbor ambitions for higher office; and, 4. in her speech during the proclamation of winners for the Senate, Senator Villar thanked not only the President but also his strong-willed daughter and mayor of Davao City, Sara Durterte, who was instrumental in forming a coalition of well-funded national and local parties under the banner of her own party, Hugpong ng Pagbabago, which endorsed nine of the 12 winning senatorial candidates, including Senator Villar herself.

Their conclusion? Rather than Senator Villar, the tea leaves seem to point to Mayor Duterte as the lady to watch. And that scenario should not trouble the President.

As a post script, allow me to add two things that happened since we came out with this report last month.

1. A cabinet official confided that he thinks the odds for Federalism taking off are next to nil;

2. It is likely too early to say who will be the “Presidentiables’ in 2022, much less who will prevail. I am reminded that “necropolitics” defined presidential election outcomes on more than one occasion in the past. Another lesson from election history, unlike elsewhere, here it is not the early bird who catches the worm. It is the second mouse who gets the cheese.

Finally, as a wise or wisened man said: “The Presidency is a matter of destiny.”

 

Romeo L. Bernardo was finance undersecretary during the Cory Aquino and Fidel Ramos administrations.

romeo.lopez.bernardo@gmail.com

The REIT thing at the right time

A REIT — or Real Estate Investment Trust — is a 33%-publicly owned listed company which uses pooled funds of investors to purchase, lease, re-sell, and manage income-generating real estate assets such as malls, offices, condominiums, warehouses, and other infrastructure. The REIT Law of 2009 that formally established the REITs is meant to help develop and democratize the capital markets, with prospects for even the small investors to earn regular income and long-term capital appreciation, much like participating in mutual funds.

You don’t have to buy the real estate, pay the real property taxes (and association dues if any), hope for rental streams, and pray for a buyer when you want to sell a property. Just buy into a REIT company (through the Stock Exchange) and you can do without ifs and buts, because the REIT company is obliged by law to pay out 90% of net income as dividends — and that goes to you, no tax on dividends, no Value Added Tax (VAT), and no transaction taxes.

That seems rosy for you, the investor. Then why has REIT investing been withheld from the public even until now, ten years after Republic Act No. 9856, “The REIT Law,” when the Implementing Rules and Regulations (IRR) were approved by the Securities and Exchange Commission (SEC) on May 13, 2010?

The very generous tax incentives for the REIT companies were perhaps the main reason for the hesitancy of the SEC, the Department of Finance (DoF), and the Bureau of Internal Revenue (BIR) during the administration of President Benigno S.C. Aquino III to award such gallant opportunities to the real property development sector when there already was a property boom that we now know has sturdily lasted these past 10 years. The DoF wanted to temper the estimated revenue losses of P3.7 billion a year that would be incurred from the implementation of the REIT Act in the IRR’s original interpretation. Conflicts of interest issues bothered the Finance group, but eventually the corporate separateness of big real estate development companies with their property management subsidiaries blurred in subsequent definitions of eligibility to do REIT. Eventually, the SEC offered a compromise of a 33% public float versus the proposed 40% required float.

Early on, Megaworld Corp., DoubleDragon Properties Corp., and Robinsons Land Corp. expressed interest in doing REITs. But why did they banish the thought? REITs must have a minimum paid-up capital of P300 million, with 1,000 public shareholders having at least 50 shares each. Sigh. And the REIT Law slept through the change in administration to that of President Rodrigo Duterte in June 2016. Then the new DoF became busy with its “Tax Reform for Acceleration and Inclusion” (TRAIN Law) and launched an aggressive “Build, build, build” program to pump-prime the economy.

Three years into “Build, build, build” and a steady GDP growth bolstered by a BBB+ credit rating, the real estate development, construction, and related industries are booming. And in this glorious setting, the REIT concept, with its generous subsidies, was reinvigorated — with the expression by Ayala Land to raise $500 million (P26.25 billion) as it prepares to participate in the erstwhile unappreciated REIT (“Ayala Land files first real estate investment trust listing,” Philippine Star, April 24, 2019). Ayala Land, a real estate division of Ayala Corp., is one of the largest developers in the land, with a net income attributable to parent of P29.2 billion in 2018 according to the company’s annual report.

At the Banco de Oro (BDO) Global Feeder Funds Forum last week, a segment of the forum offered investor participation in a developed markets property index fund totally invested in global REITs. A cumulative performance of 15.29% for three years of the target fund can be expected. Global real estate securities, in general offering 3.5 to 4% dividend yield, forecast earnings growth of 5% per annum. But why invest globally, when the Philippines needs all the financial resources for its hyped-up infrastructure development projects?

In a summary of 2019 macro forecasts, actual GDP growth of 6.2% will go down to 6% or a little lower. The BSP Policy Rate will be cut to 4.2% to 4.7%, vis-à-vis the 10-year Peso GS yield which will likewise be going down from 7.07% to 5.5-6.0%, to tame inflation from 5.2% in 2018 to 3.2% expected at end 2019. The peso will go down from P52.72 to P54 to the US dollar. Short term net yields on investments will stay in the areas of 3%, hardly covering inflation. The PSE Index will pull up from 7,466 to 8,300, assuming returning confidence in equities.

Impliedly, this anxious scenario is why the forum recommended that investors look at the more reliable global markets. Here, will the local REITs be the Avengers, in this noble war for financial inclusion and acceleration?

But financial inclusion may not come hand in hand with intended economic acceleration, and may have to be slowed to push that obsessive desire to “go, go, go” to the peak of what our country can be. The poor will always have their entitlements, but what about the middle class? Real financial inclusion must include the middle class, who must at least keep marching in place lest they be left behind in the reallocation of socio-economic status.

Unfortunately, it looks like the REIT will give added (and unsolicited) financial advantage in terms of superfluous subsidies to big businesses much more than the middle class investor can hope for as promised in the REIT plan of distributing 90% dividends after deducting all costs of operations — can you imagine the “flexibility” of the REIT company? And this is rewarded by the lowering of their corporate income tax on just the 10% remaining income.

What will now happen to my small rental business, a widow asks? I bought my condos at “pre-selling” from the developers, meaning they used my money to build the units I bought, and now their REITs are again taking advance money from the people for rental and property management of developments that were financed in advance by that “pre-selling.” Direct rentals will struggle like the small Mom-and-Pop stores that suffer thin margins to price themselves cheaper than the big businesses that enjoy advances from the public, economies of scale in production and operations, and, for the REITs, the subsidies. And what about the real estate brokerage industry? We will have to make do with the small retail says, a sad broker cries.

Location, location, location — they say of real property valuation and rentals or sales. REITs will create their own favored location, a “community,” which will draw buyers or renters to them. These choice locations can scatter around the country, and land banking by big developers has assured perpetual control, strengthened by the REIT entrenchment, to keep their property interesting and in demand always. There are so many developments, not only residential units. Malls are expected to add 250,000-square meters of space this year (The Philippine Star, Feb 1, 2019).

Is REIT the right thing at this time, for financial inclusion and economic acceleration?

 

Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.

ahcylagan@yahoo.com

Right time to invest in Metro Manila property?

A part from being an economist and columnist for this paper, I am also a business owner of a medium-sized food group and a country head of an American multi-national firm. Like many involved in the food business and investments, 2017 and 2018 were good years for us. The favorable business conditions in our industries is something we are grateful for and do not take for granted.

Suffice to say that we have outgrown our two rented offices in the Ortigas Center and must now look for bigger spaces to accommodate our expansion. This time, we are contemplating investing in the property instead of just renting it. After all, it will look better on our balance sheet if our office space forms part of our asset account rather than a monthly operating expense.

The idea of purchasing office space prompted me to look deeper into the real estate industry. Is the property market facing a bubble? Is it the right time to buy? Are property values seen to increase in the medium term? How strong is demand in the re-sale market? Will it be easy to rent if ever we decide to do so?

The collective industry reports from the country’s three experts — Colliers International, Jones Lang LaSalle, and Leechiu Consultants — provided me the answers. Fortunately, they all tell the same story.

Lets talk about the worst-case scenario first. Is the property market in the midst of a price bubble? It will be recalled that the steep rise in property prices in Metro Manila over the last seven years raised rumors of a bubble last year. With all factors taken to account, the three property experts refute the idea, saying that if one compares property prices today versus what it was in 1997 (the year of the financial crisis), you will find that current prices are still 20% cheaper than it was back then when adjusted for inflation. Besides, the experts argue, the majority of buyers today acquire property to use, not to speculate. The price increases are justified by the spike in demand.

Four sectors are driving demand for office spaces in Metro Manila. The largest is still the IT-BPO industry. Although growth in this sector decelerated from double digits to just seven percent this year, it still comprises 41% of total take-up. Offshore gaming operations from China is another driver, comprising 28% of take-up. Growing rapidly too are flexible workspaces such as WeWork, KMC, Penbrothers, and Regus who collectively lapped-up four percent of all available office spaces in the city. Other large consumers of space are the finance & insurance industry, tech companies and multinational companies.

As of the end of 2018, Metro Manila had an inventory of 11.01 million square meters (sqm) of grade A and B office space, with 2.88 million sqm more coming on-line between 2019 and 2023. The bulk of new office spaces, 725,000 sqm to be exact, is presently being built in the Ortigas-Pasig-Mandaluyong corridor. Makati, BGC, Quezon City and the Bay Area each have between 400,000 to 580,000 sqm in the pipeline. Alabang and Las Piñas have 192,000 sqm under construction.

What is interesting is that out of the 2.88 million sqm under construction, 28% is already pre-leased or pre-sold. This is a strong indication of strength in demand. It is therefore safe to assume that prices will continue to climb in the medium term.

There has been a mad rush for PEZA-certified buildings since the investment agency stopped awarding new certifications in the National Capital Region region a few years ago. From 2019 to 2023, only 19 buildings were awarded PEZA certifications, leaving in limbo 48 other application. PEZA hopes that limiting the number of PEZA-certified buildings in Metro Manila will induce developers to expand outside the city center, thereby paving the way for development and employment opportunities in provincial areas. It is also a way to shore-up generous incentives given to IT-BPO companies. These companies need to be located in PEZA-certified buildings to qualify for a package of fiscal incentives. Hence, having the opportunity to invest in a PEZA building will ensure easy rentals at premium rates and tremendous value appreciation.

As far as vacancies are concerned, unsold or unleased properties were lowest in the Bay Area, Alabang, and Makati at one percent, two percent, and three percent of total inventory, respectively, as of the end of 2018. Vacancy rates stood at six percent in Ortigas-Pasig-Mandaluyong and seven percent in BGC. It was highest in Quezon City at 15%.

The nature of our business requires us to be in the center of the financial district. Hence, we are looking at properties in the Fort, Makati, and Ortigas areas. We do not require the building to be brand-new but we factored-out those that are seven years or older. Also important is for the developer to have a good track record in construction, maintenance, and management.

In BGC, we looked at the new Finance Center building. For a 245-sqm space, the asking price is P61.2 million or roughly P250,000 per square meter. In Ortigas, there are no new grade A buildings for sale (the new BDO towers above the Podium Mall are exclusively for lease). The next best option is the 25-year-old Tektite Tower whose office space goes for P73,000 per sqm. In Makati, we are looking into the Stiles Enterprise Plaza for which the going rate is P250,000 per square meter.

Our analysis would not be complete without looking into lease rates. We found that lease rates for grade A office spaces in Makati is most expensive at P1,300 to 1,600 per sqm depending on the age of the building. This represents a 100% increase from rental rates in 2010. Rates in BGC range from P1,000 to P1,400 per square meter, a 140% increase from what it was nine years ago. Having the lowest rise in least rates is Quezon City whose rental costs stand at P600 to P800 per sqm, a mere 40% uptick from a decade ago.

Alabang properties command between P650 and P750 per sqm, while those in Ortigas-Pasig-Mandaluyong go for as low as P500 per sqm.

Taking all the information into consideration, my board and I concluded that the office property market in Metro Manila is in the midst of a long road of growth which will ride in tandem with the economy. For as long as the economy grows at its current pace, the momentum of the property market will follow. In fact, studies show that office space value will spike anew in 2022 when demand outstrips supply. Several analysts equate the Manila property paradigm to that of Hong Kong in the early 1980s.

So, what can foil the otherwise rosy picture of the property market? Eco-political turbulence. These include uncertainty brought about by shifting tax laws, the specter of federalism and the uncertainty it brings, government’s pro-China foreign policy backfiring, and a deteriorating current account deficit.

So in the end, we conclude that the risks to the property market are not due to weaknesses from within nor demand-supply issues. The risks are external. Far as long as one has confidence in the government and the policies it espouses, then investing in property is a safe bet.

 

Andrew J. Masigan is an economist.

PAL urged to drop Europe flights

PHILIPPINE Airlines (PAL) must cut down its widebody fleet to help it reduce low-yielding routes from its long haul operations, particularly to Europe and North America, an aviation think tank said.

Australia-based Center for Asia Pacific Aviation (CAPA) said in a report over the weekend the flag carrier should consider replacing its long-range jetliners with new aircraft that would more suitably meet the demand for long haul flights.

“Operating fewer long haul aircraft would enable PAL to cut capacity to North America and/or drop Europe entirely… The Philippines-Europe market is extremely competitive, due to aggressive competition from the Gulf carriers and from other Asian airlines. PAL is best off retreating from Europe entirely,” it said.

PAL currently has 16 long haul aircraft in its fleet: six Airbus A350-900s and 10 Boeing 777-300ERs. These are flying to London, Los Angeles, New York, San Francisco, Toronto and Vancouver.

The CAPA report noted PAL has not been making profit out of its Manila-London route, despite numerous attempts to adjust its schedule, frequency and aircraft since it was launched in 2013.

While PAL is looking at the possibility of halting London flights and opening a Paris route instead, CAPA said the better option is for the carrier to stop flying to Europe altogether.

“The Philippine carrier is probably better off dropping its European ambitions entirely and reducing the size of its widebody fleet. PAL is looking at acquiring more (Airbus) A350s or ordering (Boeing) 777Xs to replace its older model (Boeing) 777-300ERs, but should instead use upcoming lease returns as an opportunity to cut long-haul capacity and improve profitability,” CAPA said.

PAL’s 10 units of 777-300ERs are on lease, which would all be expiring starting 2022 to 2025.

“PAL should consider returning the first two 777-300ERs without replacing them — and therefore postpone a selection of new widebodies for another two years, when it will have to decide on the eight 777-300ERs that can be returned in 2024 and 2025,” the report said.

“Without a reduction in the fleet, it is difficult for PAL to cut back in North America or axe London without launching Paris (as is tentatively planned),” it added.

Regarding flights to North America, CAPA said the potential new destinations are “competitive and have significantly less local traffic to the Philippines,” hence it is better for the carrier to only keep its flights to Los Angeles, New York and San Francisco.

“PAL could be better off with a reduced year-round schedule to North America. For example, a 10% to 15% cut would still result in significantly more North America capacity than in prior years and provide impetus to improve load factors and yields,” it said.

PAL has been recording losses since 2017, which CAPA attributed to the operations of long-haul flights. “Suspending London and shelving the launch of new US destinations is a sensible initial move by PAL as it tries to restore profitability,” it said.

In the first quarter of 2019, the listed carrier posted an attributable net loss of P838.17 million, 24.3% slimmer compared to in the same period last year, driven by a growth in passenger volume from added flight frequencies and new routes. — Denise A. Valdez

Chelsea investing $34 million in two new ships

By Denise A. Valdez
Reporter

CHELSEA Logistics and Infrastructure Holdings Corp. is investing around $34 million (about P1.7 billion) for the acquisition of two new ships this year, which will be used to boost its existing passenger routes and open new ones.

Chelsea President and Chief Executive Officer Chryss Alfonsus V. Damuy said in a mobile message Friday the company received a 67-meter roll-on, roll-off passenger (ropax) vessel in April, which will be deployed for the Cebu-Surigao-Cebu route in July.

“Next month, we will deploy one brand-new ship for the Cebu-Surigao-Cebu (route)… We (also) have a big one coming in November,” he told BusinessWorld.

Mr. Damuy noted one vessel is priced around $14 million (about P720 million), while the other is estimated at $20 million (about P1 billion). No firm plans have been made yet on the route where the 98-meter ship arriving in November will be deployed.

Last year, Chelsea acquired nine new vessels namely: MT Chelsea Providence, MV Trans-Asia 15, MV Trans-Asia 16, MV Trans-Asia 17, MV Trans-Asia 18, MTug Fortis VIII, MTug Fortis IX, MTug Fortis X and MTug Fortis XI.

Mr. Damuy said the fleet expansion is intended to “boost existing routes and (add) new routes.”

Aside from the ropax ships the company is receiving this year, Chelsea is also modifying some of its older ships to be used for existing routes linking Cebu to Cagayan de Oro (CdO), where the listed firm is leading the market.

“We will also deploy two coming from last year which modifications are just about to be completed… (It will be in) July this year. We will deploy (the modified ships) to increase our presence in Cebu-CdO-Cebu,” Mr. Damuy said.

He noted the demand for the Cebu-CdO-Cebu route is increasing, and Chelsea currently holds around 70% of the market with four players in that segment.

“We wanted to ensure our market dominance in that route… We wanted to further dominate,” Mr. Damuy said.

The listed firm led by Davao-based businessman Dennis A. Uy reported a net income of P139 million in the first quarter, up 21% from the same period last year with a bulk of its revenues coming from its shipping business.

Mr. Damuy earlier said the company is allocating the biggest chunk of its capital expenditures this year to boosting its logistics segment, with a P2.5-P3-billion investment for a new warehouse to be built in Taguig City.

Spring flowers inspire LV menswear collection

PARIS — Louis Vuitton unveiled its latest menswear collection on Thursday, using a picture-postcard scene of Paris as the backdrop for models parading in pastel colors and flowery statement pieces that evoked the joys of spring.

Around an outdoor stage, models strutted down a runway that ribboned between typical terraced cafés, ice cream stands, and giant green Parisian benches covered with the LV logo.

Artistic director Virgil Abloh, a DJ and entrepreneur as well as a fashion designer, showcased a Spring-Summer 2020 collection that featured pastel hues and playful approaches to the staples of menswear with a slick sense of street style.

Notable looks included layering of asymmetrical pleated skirts over flared trousers in cotton poplin and multicolor hoodies covered in rope embroidery.

In a monochromatic silhouette, one model wore a matching set of a concrete grey T-shirt and shorts, with a scallop-edge padded coat and a tufted monogrammed trekking backpack.

He was followed by others wearing clear plastic raincoats, parkas with floral embroidery and flowered printed pants.

Accessories included large bags containing spring flower bouquets, straw gardening hats — sometimes decorated with flowers — and footwear that consisted essentially of rubber range shoes or trainers.

Louis Vuitton, which drives the bulk of sales and profits at French luxury group LVMH, is betting on Abloh, who was hired last year, to attract a younger generation fond of logo-heavy urban clothes that leverage brand and bling.

However, his last collection, which was inspired by Michael Jackson, sparked an unusual outcry after a documentary about alleged child abuse by the late pop star. Louis Vuitton pledged not to put those items on sale in its stores.

Jackson’s family has said he was “100% innocent.” — Reuters

AEV banks on recovery of power business to drive profit higher

ABOITIZ Equity Ventures, Inc. (AEV) is banking on the recovery of its power business to push earnings higher this year, after it saw a 27% profit decline in the first quarter.

“What happened to us in the first quarter, it was a temporary situation. The business should be running already basically where we expected it to be,” AEV Chief Financial Officer Manuel R. Lozano told reporters recently.

The listed conglomerate delivered a consolidated net income of P3.5 billion in the January to March period, lower than the P4.8 billion it posted in the same period a year ago. This came amid a 28% uptick in gross revenues to P47.40 billion for the same period.

Mr. Lozano noted that Aboitiz Power Corp. mainly dragged the previous quarter’s results, as they had to purchase power which were priced higher at the time due to outages and over-contracting in preparation for the opening of Therma Visayas, Inc. (TVI).

“So what we’re seeing is that that requirement for purchase power has already been decreasing, so we should be seeing better results moving forward. Probably part of the second quarter will still be affected,” Mr. Lozano explained.

Alongside delays in operating TVI, AboitizPower also experienced the unexpected shutdown of its geothermal plants for the quarter.

“Those delays should already be behind us. The outlook has improved versus where we were a few months ago,” Mr. Lozano said.

The two-unit TVI plant with a combined capacity of 340 megawatts (MW) started operations this second quarter. The facility will deliver power to Visayan Electric Co. Inc. and electric cooperatives, as well as open-access customers in Luzon and Visayas.

The company also expects the first unit of its 668-MW GNPower Dinginin Ltd. Co. to go online later this year. The second unit of the super-critical coal-fired power plant in Dinginin, Bataan is scheduled to start commercial operations in 2020.

Mr. Lozano said they continue to be scouting for opportunities in the renewable energy space in the country as well as regional markets such as Indonesia, Vietnam, Myanmar, and Malaysia.

“We’re looking at solar, wind, and hydro. Those are the main opportunities we found in those countries… Hopefully within the next six to 12 months some of these will already start to become more concrete,” Mr. Lozano said.

AEV recently raised P5 billion from the issuance of fixed rate bonds at the Philippine Dealing and Exchange Corp. The company is planning to offer more bonds to the public as part of its P30-billion debt securities program, as it looks for more acquisitions that could further expand its business. — Arra B. Francia

Livestock trade show moved to 2020 amid swine fever fears

THE LIVESTOCK Philippines trade show has been postponed to 2020 at the request of the industry and the Department of Agriculture amid fears the exhibition may serve as a vehicle for spreading African Swine Fever (ASF), organizers said.

In statement, UBM Exhibitions Philippines said the expo has been moved to May 28-30, 2020. BusinessWorld reported earlier that the trade show was to take place on June 26-29 at the World Trade Center in Pasay City.

“The Department of Agriculture (DA) has implemented tightened quarantine controls as one of its strategies since the outbreak started last year. As a result, the Department and the local swine industry have raised the possibility of ASF entering the country through exhibitions such as Livestock Philippines, as some of the foreign exhibitors and/or participants may come from ASF infected countries,” UBM said in a statement.

UBM supplied media outlets with a letter from the DA said the postponement decision to 2020 was “mutually agreed.” The DA said another date is also possible “until such time ASF is officially controlled in accordance with the recommendations of the World Organization for Animal Health (OIE).”

It also attached a statement from the Philippine Veterinary Medical Association recommending that the trade show be postponed.

Keeping the bloom of youth

OUR FACES show the passage of time, in the same way sweeping hands on a clock’s face do. A frequent criticism of the youth is their lack of experience, and this may be because the world has hardly marked their pure, unmarked faces.

Actress Jasmine Curtis-Smith is a pretty girl; there’s no other way to say it. But not having enough experience is something that can’t be said of the young actress. At her young age (she was born in 1994), she has been nominated and awarded many times for her acting. Ms. Curtis-Smith has been nominated as Best Supporting Actress from the Gawad Urian awards for her role in Siargao, and won the Metro Manila Film Festival award for the same role. She’s also well-known in the indie circuit, and won Best Actress from the Cinema One Originals Film Festival for her role in Baka Bukas.

Ms. Curtis-Smith is the new endorser for Mecca Aesthetic Clinic and Spa, specifically for their Ulthera Youth service.

Ulthera Youth is of the same Ulthera family of which actress and presidential daughter and sister Kris Aquino is an endorser. Ulthera uses ultrasonic energy to lift and tighten skin, a noninvasive procedure that takes no downtime.

While lifting and tightening seems to be in the realm of what Ms. Curtis-Smith calls the “tita audience,” she said in a mixture of Tagalog and English, “We’re also busy, same as our titas (aunts).”

“It doesn’t mean that our beauty regimen has to stop, or has to be on hold.”

According to her and Dr. Gigi Rodriguez, an aesthetic consultant at Mecca, the Ulthera Youth service is meant to rejuvenate and prevent collagen degradation by stimulating cells that produce collagen — the original Ulthera service seeks to repair damage that has already been done.

“It keeps you young, it keeps your wrinkles and fine lines hidden, or at least [tucked] somewhere hidden,” says Ms. Curtis-Smith.

It’s also Mecca’s first anniversary in the business. Mecca CEO Mars Balajadia said that she founded the clinic last year due to her own skin issues, which included acne. “I want[ed] to build a clinic where the younger generations can come in without being intimidated,” the 36-year-old said in a mixture of English and Tagalog.

At some skin clinics, for example, treatments can go as high up in the six-digit figures. While this can also happen at Mecca, Ms. Balajadia emphasizes the flexible installment plans. “We continue to update and upgrade and make sure that we give… with the highest standards and offer machine treatments that actually give results without breaking the bank.” — Joseph L. Garcia

EEZ deal with Indonesia to take effect this year

THE agreement clarifying the Philippine maritime boundary with Indonesia where their exclusive economic zones (EEZs) overlap is expected to take effect within the year, following a meeting between President Rodrigo R. Duterte and Indonesian President Joko Widodo Saturday.

The agreement, signed in May 2014, delimits the overlapping EEZs of both states. The Philippine Senate ratified the agreement on June 3.

“Both leaders look forward to the entry into force of the agreement within this year, upon the formal exchange of the instruments of ratification by their respective Foreign Ministers,” the Philippine and Indonesian governments said in a joint statement, released by the Department of Foreign Affairs Sunday.

The two Presidents met on the sidelines of the 34th Association of Southeast Asian Nations (ASEAN) Summit in Bangkok.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS), to which both the Philippines and Indonesia are parties, entitles them to a 200 nautical-mile EEZ. The EEZs of the Philippines and Indonesia, however, overlap in the Mindanao and Celebes Seas and in the southern section of the Philippine Sea.

“The agreement provides legal certainty on the EEZ boundary between the two countries, promotes deeper cooperation in their respective maritime sectors and thus contributes to the prosperity and economic development of both countries and the larger region,” it added.

The President’s Spokesperson Salvador S. Panelo on Sunday said the agreement can serve as a model in addressing maritime concerns between states.

“The Palace views this legal instrument as a good precedent on how to address maritime concerns and settle disputes in accordance with the United Nations Convention on the Law of the Sea (UNCLOS), bearing in mind the archipelagic nature of the Philippines which inherently shares common borders with many ASEAN member-states,” Mr. Panelo said in a statement.

“In line with the independent foreign policy course that PRRD (President Rodrigo R. Duterte) charted for our country — where we are friends to all and enemies to none — we hope that this accord would serve as a benchmark for future agreements with other countries with shared or similar concerns as we continue to deepen cooperation with our strategic allies in the region,’ Mr. Panelo also said. — Charmaine A. Tadalan

Fall armyworm invades crops across Asia, smallholders worst hit

BAN NONG TOR, THAILAND/SINGAPORE — Looking out at his empty, red-earth field, Thai farmer Puang Timdon said his two-week-old maize crop didn’t stand a chance against the fall armyworm pest.

“All the 8 rai (1.28 hectare) I planted were all heavily infested,” said the 42-year-old from his farm in Ban Nong Tor town in Pak Chong district, 180 km (120 miles) northeast of the capital Bangkok.

“The worm ate the whole field in three days, leaving so much damage that it wasn’t worth saving.”

Fall armyworm, a caterpillar that got the name because it invades croplands in droves, much like an army, has rapidly spread across Asia since it was detected in southern India late last year. Fields in Bangladesh, Myanmar, Vietnam, Indonesia and Taiwan have fallen victim. In Thailand, it has badly affected the country’s corn crop, much of which is sold to the animal feed industry.

In recent months, the pest has also been found in 18 of China’s 33 provinces and regions and is now threatening to spread across the key corn region in the northeast. China is the world’s second biggest corn consumer and producer.

“It is a major issue for crops. It could pose a food security threat,” said Phin Ziebell, an agribusiness economist at National Australia Bank. “Management cost is an issue for small farmers.”

Marjon Fredrix, an agricultural officer at the UN Food and Agriculture Organization (FAO), said some countries have reported damage to crops hit by the pest at 1.2% to about 10%, while others had put the figure at 20% to 40%.

“Once the fall armyworm has arrived, it can’t be eradicated, and farmers will have to manage it,” Fredrix said.

A dip in the production of corn, largely used in Asia to feed animals, could force hog, poultry and cattle growers to rely on expensive imports and dent incomes of millions of small farmers.

The fall armyworm invasion comes against the backdrop of planting delays in the United States which lifted benchmark Chicago corn futures Cv1 by nearly a fifth last month.

“AWFUL COMBINATION”
Asia’s millions of smallholder farmers — many with less than an acre of land — are likely to take a bigger hit from the pest than larger growers given their reluctance to adopt new technologies to combat production threats.

“There is an inertia about new technologies,” said Paul Voutier, Singapore-based director at Grow Asia, a World Bank funded organization that works with small farmers and other stakeholders to improve productivity.

“And the treatment for fall armyworm has the awful combination of being both costly and difficult,” he said, noting the pest’s tendency to burrow low into the stem of the crop made it hard to combat with traditional pesticide sprays.

Asia is the world’s biggest consumer and importer of corn. The region accounts for 34% of global corn imports and nearly 36% of world corn consumption, according to the US Department of Agriculture data.

The pest, which has been known for almost 200 years in the Americas, was first reported in Africa in 2016 and has since spread across the entire continent, according to FAO.

In July 2018, fall armyworm — which can fly up to 100 km in one night — was spotted in the southern Indian state of Karnataka, and by the end of February this year it was reported in 10 of India’s 29 states. The armyworm has been detected in more than 50 of Thailand’s 76 provinces, and is concentrated in six western provinces with large maize areas. It has a preference for corn, but can attack 80 crops, including rice and sugarcane.

The pest thrives in tropical and sub-tropical climates. Its life cycle is 24 days to 40 days, and so two or three generations of it can feed off a single crop during a growing season before moving on.

“Fall armyworm attacks the corn crop in all stages, right from the germination of seeds and early establishment of the crop, which is the most vulnerable stage, till the harvesting stage,” said Prasanta Patra, who heads the corn and row crops market in Asia for global agrichemicals firm Corteva.

“As the fall armyworm larva prefers to stay in the central part of the young corn plant, a very specific application technique needs to be applied to ensure that the insect comes in contact with insecticide.”

LOWER FEED DEMAND
China has seen corn and sugarcane crops damaged by the pest, according to a government official at one of the provinces hit by armyworm.

“It is very challenging. Corn farmers don’t use much pesticide usually as corn is considered easier to grow and manage, compared with other crops,” said a manager at a pest-trapping equipment producer that works with the Chinese government on fighting the armyworm.

The invasion of fall armyworm has hit China at a time the world’s most populous nation is battling African swine fever which has resulted in culling of millions of pigs.

Demand for animal feed in China will therefore fall, and a drop in the production of corn may not immediately impact local prices, people in the industry said. — Reuters

Picture perfect: Chinese tourists flock to lake to recreate viral photos

DALI, CHINA — Chinese tourists are flocking to a lake in southwest Yunnan province to recreate photos that have gone viral on social media, the country’s latest selfie craze.

Visitors to Erhai lake say photography sets offering everything from rare animals to fields of brightly colored flowers are essential to creating their Kodak moment.

“A lot of my friends have come here to take their photos, so I thought I would try it too,” said Zeng Xinyue, 18, a recent high school graduate.

She decided to visit after seeing videos and photos of Erhai lake on Douyin, a video platform owned by startup ByteDance Technology.

Erhai is one of China’s biggest freshwater lakes and a backdrop to the city of Dali, which drew 47 million visitors last year, more than triple the number in 2010.

Hotels and homestays have sprung up along a 50-km (31-mile) stretch of lakeside road to accommodate tourists. But officials ordered some hotels demolished after President Xi Jinping during a 2015 visit called for the lake to be protected.

The selfie seekers can take a picture with woolly alpacas imported from South America’s Andes Mountains. Others can take a picture sitting in a hanging bubble chair or on a mirror-covered platform.

A package of 35 photos costs 199 yuan ($29), said Zhang Hongtao, who manages a photo stall.

Yan Mengjie, a tourist from Shanghai, wore a sequined dress with a mermaid tail as she struck a pose in a bubble chair. She was surprised by the half-demolished buildings nearby.

“I did feel a little disappointed, because it didn’t look like the pictures,” Yan said, referring to images she had seen on social media.

“But I can photoshop it,” she said. — Reuters

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