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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

DTI counting on TRABAHO bill to expand supplier networks

THE Department of Trade and Industry (DTI) said it hopes the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill will help develop supplier networks here to make economic zones more attractive for potential locators.

DTI Undersecretary for Industry Development and Trade Promotion Group Ceferino S. Rodolfo said the bill, particularly the version approved by the House, provides for a 50% additional deduction on the increment of domestic input expense incurred in the taxable year — provided that the inputs are directly related to and actually used in the registered export activity.

Para samin, its importance is core. Gusto namin mawawala nationality bias and export bias and… (For us the importance of the bill is core. Se want to remove nationality bias and export bias) encourage behavior to develop local supplier base, (which) is very important,” Mr. Rodolfo told reporters in Makati City last week.

Mr. Rodolfo noted the Philippine Economic Zone Authority’s export performance in the past three years, where for every $1 worth of goods exporter-locators ship out, only $0.25 derives from local value added activity.

Ibig sabihin $0.75 iniimport natin. Ano yung $0.25, labor cost lang halos yun eh. Imagine if yung $0.75 na yun madevelop mo pa na maging locally sourced… Malaki yung multiplier (What this means is that the $0.75 represents the value of the imports. The $0.25 was just the labor cost. Imagine how that will change if we develop local sourcing (of parts). The multiplier effect will be huge),” he added.

The House version of the TRABAHO bill allows the use of this incentive for only five years. Mr. Rodolfo is hoping to have discussions on extending the use of the incentive.

The DTI recognizes that the country’s lack of raw materials and parts sourcing networks represents a major gap in boosting the country’s contribution to the global value chain.

“Currently, many of our industries are performing low-value, back-end processes in the value chain (for instance, legacy products and activities like assembly, process, testing electronics) and to be able to upgrade and move up in the value chain, we need to grow our domestic supply of raw materials, parts, and components similar to what successful manufacturing countries like Thailand and China, and now Vietnam (which has already overtaken the Philippines) have done,” the DTI has said in a leaked document which showed the agency’s negotiating point for the TRABAHO Bill.

The report said the country’s lack of components can be addressed by offering incentives, which “have an important part to play in addressing the issue of missing markets.”

“Without addressing the market failure, the Philippines might not be able to grow and develop new and high value-added exports which put the country at risk of incurring higher trade deficits in the near future,” it added.

Data from the Philippine Statistics Authority show that the country posted in 2018 a record trade deficit of $41.440 billion, which the central bank projects to widen this year.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. President Danilo C. Lachica said the industry has much to do in local sourcing.

“One of the knocks against our electronics industry is, on one hand, we are the biggest dollar generator, but on the other hand we’re also the biggest dollar exporter. We have to import a lot of materials,” Mr. Lachica said in a briefing last month.

Although electronics account for over half of the country’s exports by value, the industry’s imports make up about a quarter of total imports by value. Mr. Lachica cited as one of the big factors behind this as the high use of power in wafer fabrication.

SEIPI said it has launched an “aggressive” parts localization program, to bring small and medium enterprises into the supply chain,” Mr. Lachica said.

“We will match them with local companies if they have products that can be supplied.”

Part of the program is also growing the supplier network, most of which are concentrated in the Calabarzon region where 70% of SEIPI members are located. Mr. Lachica said the association has secured initial deals with electronics suppliers based in Mindanao. — Janina C. Lim

T-bill rates seen moving sideways at BTr auction

YIELDS ON Treasury bills (T-bill) on offer tomorrow will likely move sideways following the decision of the central bank to keep interest rates steady.

The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bill) on Tuesday, broken down into P4 billion and P5 billion for the three- and six-month instruments, respectively, and P6 billion in one-year papers.

Two traders interviewed expect rates of the T-bills to move sideways from the previous auction.

Last week, the Treasury fully awarded the T-bills on offer, raising P15 billion as planned out of bids worth P43.1 billion.

Rates of the 91-, 182- and 364-day papers went down to 4.453%, 4.856% and 5.05%, respectively.

At the secondary market on Friday, yields on the three-month and six-month debt instruments were at 4.567% and 4.839%, respectively, while the one-year tenor fetched a 5.029% rate.

“We only expect rates to move sideways from the previous auction. The BSP (Bangko Sentral ng Pilipinas) did not hike interest rates during their meeting,” a trader said in a phone interview.

The central bank’s policy-setting Monetary Board left the interest rate on the BSP’s overnight reverse repurchase facility untouched at 4.5%, it announced after its review on Thursday. The interest rates on the overnight lending and deposit facilities were likewise held steady at five percent and four percent, respectively.

“A prudent pause allows the BSP to observe and assess the impact of prior monetary adjustments including the phased reduction in the reserve requirements to be completed by the end of July,” BSP Governor Benjamin E. Diokno said.

At its meeting last May 9, the MB cut key rates by 25 basis points. The BSP also reduced the reserve requirement ratios (RRR) of lenders by a percentage point effective May 31 to 17% for universal and commercial banks, 7% for thrift banks, and 4% for rural and cooperative banks. The reserve ratios of big banks and thrift lenders will be reduced further to settle at 16% and 6%, respectively, on June 28 and July 29.

BSP Deputy Governor Diwa G. Guinigundo said these RRR reductions are expected to unleash a total of P200 billion into the financial system once the phased implementation is completed.

“Since the BSP didn’t cut the rates, we expect yields to move sideways until the market finds fresh leads,” the trader added.

Meanwhile, Robinsons Bank Corp. peso debt trader Kevin S. Palma said yields on the T-bills may move sideways from the previous auction ahead of the release of the BTr’s borrowing plan for the third quarter.

National Treasurer Rosalia V. De Leon earlier said the Treasury’s programmed borrowing for the next quarter will be lower than the April-June program due to “slow” government spending earlier this year.

Despite the sideways movement of yields, Mr. Palma said the auction could be “another will-bid auction” as steepening bias of the local yield curve will continue driven by expectations that the US Federal Reserve may ease its policy rates as soon as July.

“[Y]ou have your usual reinvestment requirement ahead of a P9.3 billion T-bill maturity on July 26 that will further boost demand for the front-end of the curve,” Mr. Palma added.

The government is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — Karl Angelo N. Vidal

Taiwanese firm mulls PHL expansion

By Charmaine A. Tadalan
Reporter

TAIPEI — Taiwanese electronics firm Protech Systems Co., Ltd. is setting sights on Southeast Asia, including a possible expansion in the Philippines in the next two years.

“We have to move our focus outside of the Japanese market like the Southeast Asia. The Southeast Asian market is very high. It has high potential,” Protech Vice-President for Sales Simon Teng said during the recent Taitronics 2019 pre-show in Taiwan.

“We are spreading our focus to the market we are not operating well in the past.”

Protech largely manufactures retail point-of-sales systems, kiosks, and industrial PC products, which the company can also customize according to their clients’ needs.

The company will be among the participants of this year’s Taipei International Electronic Show, Taitronics 2019, which will be held on Oct. 16-18.

At present, majority of the company’s revenue is generated from the Japan market with 42%, followed by Europe and America with 35% and 18%, respectively. The remaining 5% is from other regions.

“The first move that we made in Southeast Asia, we opened branch in Singapore because we set up a holding company there, by way of the Singapore holding company. Then we will make further step of moving to a branch office to the Philippines or Malaysia,” Mr. Teng said.

“I think I can foresee in the coming future, maybe just one or two years later, we can have overseas branch in the Philippines, in Manila.”

Aside from its Taiwan headquarters, Protech also has a global office, particularly in Tokyo, Japan; California, USA; Madrid, Spain; and Dusseldorf, Germany.

Mr. Teng noted there is a high demand for Protech’s kiosk products in the Philippines.

“It can run 24 hours a day for seven times a week. You don’t have to pay overtime salary and there’s no problem for the kiosk,” he said.

“The purpose of developing kiosk is not to replace human being job, it’s to replace the regular boring job from the people, and the people can do higher value-added job.”

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