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Duterte: Taxes helped deliver economic promises

PRESIDENT Rodrigo R. Duterte said the government’s greater capacity for collecting revenue has helped him fulfill most of his campaign promises, including free state university tuition, universal health care and higher salaries for soldiers and police, with schoolteachers next in line.
He said tax reform, known by its acronym TRAIN, had to be in place to fund some of his programs.
“Alam mo, ang TRAIN, nangako ako sa inyo. Wala akong pangako na hindi ko natupad except ‘yang EDSA [traffic congestion]. Nangako ako na free tuition, nandiyan na ang batas, (TRAIN was necessary because I made promises. There are no promises that I have not fulfilled except fixing congestion on EDSA. I promised free tuition, and the law is in place),” Mr. Duterte said in a speech at a campaign rally of the Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban) in Laguna on Saturday.
Mr. Duterte also told his audience he signed the Universal Health Care Act, which will automatically enroll all citizens into the National Health Insurance Program.
“Nangako ako na free universal health care, pirmado ko na ang batas. (I also promised free universal health care, and the law has been signed),” he said.
Mr. Duterte added that he continued the previous administration’s flagship poverty alleviation program, the Pantawid Pamilyang Pilipino Program or 4Ps.
He further said that higher salaries for schoolteachers may be his next priority.
“Na-deliver ko lahat. Sweldo ng mga maestra. Sabi ko maghintay, (I’ve delivered on all that. About salaries for schoolteachers — just wait),” he said.
He also clarified that the infrastructure program, known as “Build Build Build,” was not a campaign promise but a program he pursued after winning the election.
“Iyong Build Build Build ko? Hindi ako nangako niyan. Hindi niyo narinig sa bunganga ko ‘yan. Pagkatapos na lang nung sigurado nang manalo ako kasi malaking pera. Iyong akin, simple lang. Sabi ko, infrastructure, ‘yung eskwelahan… Pantawid, Universal. (Build Build Build was not a campaign promise. You never heard me say it on campaign. I think it came afterwards when I was sure of winning because it involved a lot of money. I wanted to focus on fundamentals like infrastructure, education… Pantawid, Universal Health Care).”
In a statement, the Presidential Communications Operations Office (PCOO) on Sunday said that “apart from combatting illegal drugs, criminality and corruption were also addressed.”
Mr. Duterte said in his speech, according to the PCOO, that “he terminated several officials, even those who were close to him, after they were proven to have committed wrongdoing.”
Asked for comment, University of Santo Tomas Political Science Department chairperson Dennis C. Coronacion said in a phone message: “He forgot to mention his other unfulfilled campaign promises such as ending the practice of endo, protesting our West Philippine Sea claim, and ensuring even economic development through federalism.”
Also on Saturday, Mr. Duterte’s spokesman Salvador S. Panelo said: “The economic horizon appears to be bright per our economic managers. The economic measures placed by them have curbed inflation and prices in the market have gone down.”
“While detractors of this administration consistently deliberate on how to (sling mud on) the President’s achievements, we remain focused on how to improve the lives of our countrymen through projects that will bring about genuine change for the nation. Expectedly, the opposition, especially those who wielded power prior to the present ones, who either by incompetence or sheer negligence failed to initiate any major infrastructure, has denigrated the initiatives of (the president) to establish the foundation for the country’s development and growth,” he added. — Arjay L. Balinbin

DPWH feasibility study for Quezon-Bicol road due March

THE Department of Public Works and Highways (DPWH) said it has completed its feasibility study for the Quezon-Bicol Expressway (QBEx) and is looking to submit the documentation to the National Economic and Development Authority (NEDA) next month.
“DPWH targets to submit the QBEx (study) to NEDA by March,” Alex G. Bote, DPWH Public-Private Partnership (PPP) director, said in a text message on Saturday when asked for updates on the project.
On Wednesday, Mr. Bote told BusinessWorld on the sidelines of the North Luzon Expressway (NLEx) Harbor Link Segment 10 inspection that the feasibility study for QBEx has identified a 220-kilometer alignment running from Lucena City to San Fernando, Camarines Sur, which is southwest of Naga City.
DPWH Undersecretary for Planning and PPP Maria Catalina E. Cabral said the DPWH is considering packaging parts of the project as PPPs.
“We will have to see which parts are most viable for PPP treatment. A 220-kilometer project is too long, and we’re not sure the private sector can finance all of it,” she said.
Ms. Cabral noted, however, that the DPWH’s backup plan is to seek funding through the general appropriations act (GAA) or official development assistance (ODA).
“What we could do is obtain local funding for the portions where traffic is low to aid the project’s financial viability,” she said.
“Financing can be a combination of local, ODA or PPP. It will all depend (on NEDA)… What’s important is to start QBEx under this administration,” Ms. Cabral added.
After the DPWH submits the feasibility study, the NEDA will evaluate, determine the cost and give the go signal for the QBEx project. Ms. Cabral said while awaiting NEDA approval, the DPWH will start acquiring right of way. — Denise A. Valdez

House adopts Senate bill setting up databases for social safety net

THE House of Representatives has adopted a Senate bill establishing a system for a more targeted implementation of the government’s social protection programs.
Senate Bill No. 2172, or the “Community-Based Monitoring System (CBMS) Act,” will authorize local government units (LGUs) to coordinate with the Philippine Statistics Authority (PSA) and other agencies to gather data at the community level. The measure was approved by the Senate on third reading on Feb. 4.
The bill will be endorsed for signing by President Rodrigo R. Duterte, as its adoption by the House eliminates the need to convene the bicameral conference committee.
If enacted, the measure will also create the CBMS Council composed of the PSA, Department of Interior and Local Government, and the Department of Information and Communications Technology.
The CBMS will serve as an “economic and social tool towards the formulation and implementation of poverty alleviation and development programs,” which shall be instituted in cities and municipalities.
Cities and municipalities are to employ statisticians, while the PSA will be authorized to create additional positions for statisticians at the provincial level.
The PSA will lead the implementation of the CBMS and set standards, develop and review data collected as well as capacitate LGUs in data collection.
The DICT is to develop data-sharing arrangements, while the DILG is tasked to publicize activities of the CBMS.
The bill will also require conduct of regular and synchronized data gathering every three years, to be collated and stored in a national CBMS databank.
The measure also provides participants a right to privacy, with their consent required for a city or municipality authorized to disclose identities.
The CBMS databank is intended for use in developing “timely, relevant and much-needed social protection programs of government in areas identified to have the highest incidence of poverty.”
The measure classifies as priority areas cities and municipalities under the fourth, fifth and sixth class in the first three years of implementation. — Charmaine A. Tadalan

Senate approves Davao international airport authority bill on 2nd reading

THE SENATE approved on second reading a bill creating the Davao International Airport Authority (DIAA).
Senate Bill No. 2168 or the proposed Charter of the Davao International Airport Authority transfers the existing assets of the Francisco Bangoy International Airport to the proposed DIAA.
The proposed airport authority will manage Davao City’s airport and other airports to be established in Davao del Sur, Davao del Norte, Davao Oriental, Davao Occidental and Compostela Valley.
The DIAA’s mandate is to promote and develop air traffic in the Davao Region “as a means of making the region a center of international trade and tourism.” Once enacted, the DIAA will be under the Department of Transportation (DoTr).
The bill also exempts the DIAA from realty taxes. It has the authority to raise funds, either from domestic or international sources, by way of loans, credit or securities and other financing instruments, subject to the prior approval of the President.
“Obviously, closer is better. Certainly the provinces that are going to be affected will try to make sure that Davao airport becomes a very, very busy and very, very profitable enterprise, and not only for the airport itself, but to be a factor in generating business, investment, and tourism in the areas concerned,” Senator Richard J. Gordon, chair of the Senate committee on government corporations and public enterprises, said in his sponsorship speech.
The Davao City Chamber of Commerce and Industry has been awaiting the passage of the new airport authority law, with the hope that it helps improve the airport’s terminal facilities and services.
Under the bill, corporate powers of the DIAA are exercised by a Board of Directors, with the Transportation Secretary and the General Manager as ex-officio chairman and vice-chairman, respectively. Other members of the Board include the Civil Aviation Authority of the Philippines (CAAP) Director General, Secretaries or their representatives from the Department of Finance (DoF), Department of Justice (DoJ), Department of Health (DoH), Department of Agriculture (DA), and Department of Tourism.
Five members from the private sector, who will be nominated by the five governors of the region, also form part of DIAA’s Board of Directors, according to the bill.
Among the functions of the Authority’s Board of Directors is to approve programs and policies for the development and operation of the Francisco Bangoy International Airport,
Meanwhile, the general manager, who is appointed by the Authority’s board, is tasked to handle the day-to-day operations of the Davao Airport.
Its counterpart measure in the House of Representatives, House Bill No. 8691, was approved on third reading on Dec. 10. — Camille A. Aguinaldo

House approves tourist protection bill on 2nd reading

A BILL creating an intergovernmental task force to protect tourists has made it past second reading at the House of Representatives.
House Bill No. 8981, or the “Tourist Protection and Assistance Act,” which passed via voice vote, proposed to form a task force to impose measures “to protect and assist local and foreign tourists.”
If enacted, the bill, sponsored by Speaker Gloria Macapagal-Arroyo, will authorize the Department of Tourism (DoT) to establish the Tourist Protection and Assistance Task Force and designate the Tourism Secretary as its chairperson.
The Task Force will also include the Department of Interior and Local Government, Department of Transportation, Department of Public Works and Highways, Department of Justice, the Philippine National Police as well as representatives from the private sector.
Among others, it will be the Task Force’s duty, in coordination with other agencies, to ensure the adoption of a uniform standard on signage throughout the country.
The measure provides for standardized signage in airports, seaports, land border crossings, highways and public utility vehicles and also requires the distribution of multilingual travel and tourism information and promotional materials.
The bill also proposes to establish a toll-free telephone assistance center with multilingual operators.
The Task Force, in partnership with local government units (LGUs), will also establish tourist help desks and impose measures to prevent the harassment of tourists.
The creation of the Task Force and its operation will be funded by DoT appropriations and LGUs’ internal revenue allotments. — Charmaine A. Tadalan

British Chamber of Commerce calls on gov’t to implement ease of doing business law

THE British Chamber of Commerce of the Philippines (BCCP) has urged the government to hasten the implementation of the ease of doing business (EoDB) law.
“Obviously, we are hoping that it is done as soon as possible because the point of that act was to set standards,” BCCP Chairman Christopher J. Nelson said in a briefing in Makati City last week.
“EoDB, whenever I have gone to the UK, has been one of the key questions. We 100% support the act. We would like to see the head appointed and obviously that agency to take off,” he added.
The EoDB penalizes government officials who fail to complete “simple,” “complex” and “highly technical” transactions set with a deadline of three, seven and 20 days, respectively.
Apart from the EoDB, the chamber is also in support of the retail liberalization bill which lowers the threshold of the minimum $2.5-million capital requirement for foreign investors to wholly own a retail establishment.
“Even after the election is over, I think the existing Congress will still be there for three weeks. There is still a three-week legislative window, so the hope is that act well could pass. I think it is more of the message that is being sent, and that is that the British Chamber, along with the other foreign chambers, we want to see a lot more foreign investment. We want to see and encourage that,” Mr. Nelson added.
The BCCP plans to hold this year its third annual trade and investment mission outside the capital, possibly in Clark, Pampanga.
“We are currently looking at Clark. The reason we are trying to do this is it coincides with the government’s 10-point plan,” Mr. Nelson said, noting that Clark is receiving great interest from investors due to intensive promotion by the government.
The BCCP trade mission first went outside Metro Manila in 2017 in Davao. Last year’s event was held in Iloilo.
Mr. Nelson noted the group, which has at least 288 member companies, has received inquiries from 2,000 companies in the past four years. The group helps bring British firms closer to possible business opportunities in the Philippines.
“We have seen those companies actually grow in terms of their exports or doing business here. We would like to see a lot more,” Mr. Nelson said. — Janina C. Lim

DoLE in talks with Japan for entry of workers in 14 industries under special visa

THE Department of Labor and Employment (DoLE) will sign an agreement with Japan that will expand Tokyo’s intake of Overseas Filipino Workers (OFWs) with specialized skills.
In an interview with BusinessWorld last week, Philippine Overseas Employment Administration (POEA) Officer-in-Charge for Pre-Employment Services Levinson C. Alcantara said that the labor department is currently discussing with the Japanese government an agreement that will allow a “specialized skills category visa” to OFWs.
“The Secretary (Silvestre H. Bello III) is leading the negotiations on the Memorandum of Cooperation that will implement the law that was passed by the Japanese government regarding a specified skills category visa for incoming foreign workers,” Mr. Alcantara said.
The Japanese Diet passed a new immigration policy last December that will offer new visa categories for foreign workers, one of which is meant for workers with skills in 14 industries.
The DoLE is projected to finalize the agreement before the start of Japan’s fiscal year in April.
“It’s already a law for them and it’s going to be implemented by April. We are bent to finish a Memorandum of Operations before April,” he said.
Mr. Alcantara said that the DoLE and POEA are studying potential Japanese demand for OFWs in the industries specified under the law.
“We are very careful in looking at the standards of employment that our Filipino workers will be entering so we don’t have a race to the bottom. Instead, there will be a level playing field on the salary that Japanese nationals receive and we are negotiating for the same package for Filipino workers,” he said.
The 14 categories of specialized labor are: care workers; building management; machine parts and tooling; industrial machinery; electric, electronics, and information; construction; ship building and ship machinery; automobile repair and maintenance; aviation; accommodations; agriculture; fisheries and aquaculture; food and beverage manufacturing; and food service. — Gillian M. Cortez

Revitalizing retirement, pensions and social security

(First of two parts)
If we evolve our thinking about social security, pension, retirement and voluntary savings, could we deliver better socio-economic outcomes for the Philippines and better financial well-being for millions of Filipinos?
SUSTAINABLE ECONOMIC PROSPERITY REQUIRES A MATURE CAPITAL MARKET FUELED BY SAVINGS
The Philippines has been experiencing a long period of unprecedented growth and prosperity. At the same time, its young population offers a temporary demographic dividend. However, the capital needed for infrastructure to further spur the country’s economic growth is lacking and has exposed an area demanding additional evolution: the depth and breadth of the country’s capital market constrained by limited sources of long-term savings to enable sustainable domestic funding.
More evolved social security, pension and retirement systems, and long-term savings are the most effective and sustainable answer. We should note that there are many relevant regional and global success stories. Both Singapore and Malaysia used substantial savings generated by mandatory social security, pension and retirement systems to support their creation of deep and broad capital markets, which in turn enabled economic prosperity and infrastructure evolution. Even in the United States, a significant share of the fuel for the country’s capital market originates from public and private pension, retirement and voluntary savings. This article focuses on government-driven solutions. Future articles will cover private retirement and savings.
EVOLVING EXISTING SOCIAL SECURITY AND PUBLIC PENSION
The Philippines has three well-established mechanisms, two of which already rank among the country’s largest institutional asset owners. But various challenges currently limit maximizing savings, which in turn limit positive capital market and funding effects.
1. Social Security System (SSS): Mandatory contributions from participating Filipinos provide pension, retirement and related benefits to more than 36 million Filipinos globally. Long-term sustainability and funding gaps are exacerbated by significant challenges to nudge more Filipinos, mostly from the informal sector, to participate and contribute. Benefit adequacy and administrative efficiency challenges are also heavily impacted by common manual processing limits, available savings and increased cost to service. Additionally, regulatory investment restrictions result in lower than expected average investment returns. Improvements could both increase savings and returns while reducing cost to service. However, change requires all stakeholders (including members and employers) to collaborate. (Note: Republic Act No. 11199 or the Social Security Act of 2018 was signed by the President on Feb. 7).
2. Government Service Insurance System (GSIS): Mandatory contributions from most public sector and government employees provide benefits to more than 1.5 million members, but benefits adequacy remains insufficient. Long-term funding gaps and administrative efficiency challenges impacted by common manual processing and lack of standardization across various government agencies offer improvement opportunities. Similar to the SSS, regulatory investment restrictions result in less than expected average investment returns. Progressive changes could significantly expand available savings and member outcomes. But that change requires the collaboration of all stakeholders including members and government agencies as sponsoring employers.
3. Military retirement and separation benefits: Annual budget appropriations fund this mechanism. However, the rising longevity of military personnel drives benefits costs, which makes this pay-as-you-go solution a growing burden for Government’s annual budget. Benefits are accumulated over 40 years without any dedicated system assets. Therefore, enabling long-term financial sustainability will require a systemic solution.
These three existing saving mechanisms provide a sound starting point to evolve into a necessary comprehensive and modern social security, pension, retirement and voluntary savings solution that aligns with the Philippines’ current and future socio-economic strengths. Such a solution acts as a savings engine that will fuel the capital market, attract more foreign investors and increase employment and prosperity.
A GLOBAL FRAMEWORK FOR SOCIAL SECURITY, PENSION, RETIREMENT AND VOLUNTARY SAVINGS
While economies vary in terms of population and stages of economic development, EY has developed a global framework for social security, pension, retirement and voluntary savings. There are nine key dimensions supported by various sub-dimensions that serve to guide a holistic assessment, design and evolution of such systems in emerging, evolving and mature countries and systems. The framework focuses on the relevant ecosystem with key direct and indirect drivers across relevant stakeholders.
1. Country and policy context — This entails gaining deeper insights into various areas such as socio-economic context and outlook; the social contract, vision and social culture of the stakeholders; the pension program’s long-term strategy and objectives; existing regulations and incentives to save; measurable outcomes; and the depth and breadth of the capital market.
2. Customer and member context — This sub-dimension looks at the needs of customers and members; a balance between the savings culture of the country and the risk appetite of members; consumer protection and advice programs; customer relevance and choices; empowerment for informed decision-making; and alignment to financial well-being.
3. Benefits, products, and services context — This considers the existence of subsistence welfare programs; basic retirement; sound retirement; death, disability and other protections; healthcare and related essentials; and additional retirement and voluntary savings practices.
4. Delivery context — Effective programs will require a sound operating model and appropriate delivery agility; relevant focus on best interest fiduciary duties, effective governance and oversight on possible conflicts of interest; effective risk management; and programs to strengthen public confidence.
5. Solution context — The system should have adequate benefits, financially sustainable operations and investment rules; and efficient management that addresses customer relevance and empowerment.
6. Reform context — This sub-dimension considers elements such as political, stakeholder and reform governance; flexibility in implementing reforms; and continuous evolution for the system.
7. Solution culture, leadership and accountability — Building the right system necessitates establishing the right culture and expected conduct, with the right incentives, all supported by accountable and outcome-driven leadership, including appropriate supervision and relevant penalties.
8. Stakeholder behavior — Members and stakeholders need to be willing to collaborate to come up with new ideas and innovations, work under a culture of transparency and disclosure, share a long-term perspective, all while taking responsibility and accountability for their behavior.
9. Delivery principles — At the last step, a good system should be customer-centric, providing relevant choices while maintaining simplicity, which can be supported by automation, digital platforms and straight-through-processing protocols that leverage exchange-to-exchange value chains.
There is hope that this framework adds value to an informed debate in the Philippines to evolve the existing government-driven long-term savings system. Such evolution is perceived to deliver better retirement and financial well-being outcomes for all Filipinos, and, in turn, deepen the capital market and assist in delivering further economic prosperity.
In the second part of this article, we will discuss how greater collaboration between the public and private sectors can deliver improved results.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.
 
Josef Pilger is EY’s Global Pension and Retirement Leader. Christian Lauron is an Advisory of Partner from SGV’s Financial Services and Government and Public Sectors.

Infracorp expects green light for Taguig monorail within Q1

INFRACORP DEVELOPMENT, Inc. is optimistic it can get the government’s approval to proceed with its P3.5-billion monorail project in Taguig City within the first quarter.
Infracorp President Kevin Andrew L. Tan said the proposal for the Skytrain is currently being reviewed by the National Economic and Development Authority (NEDA), after the company was given original proponent status by the Department of Transportation.
“We’re still waiting for NEDA approval…Hopefully they’ll finish it by first quarter, they’ll consider it,” Mr. Tan told reporters during sister firm Megaworld Corp.’s event in Pasig City on Feb. 12.
Once it secures approval from the NEDA board, the project will be subjected to a competitive Swiss challenge where other firms can submit counter proposals. As the original proponent, Infracorp will have the right to match the new offer.
The Skytrain is a two-kilometer railway that will link Metro Rail Transit Line 3’s Guadalupe Station to Uptown Bonifacio, Megaworld’s mixed-use estate in Taguig City.
The railway will have a capacity of 350 passengers per five-minute trip, for a total of 60,000 to 100,000 commuters per day.
The company said it can build the Skytrain within two years, with initial operations slated for 2021.
Infracorp is currently looking for an operations and maintenance partner for the project, with Mr. Tan earlier saying that they were speaking with firms from Austria, France, Japan, and China for possible partnerships.
Asked if they have other infrastructure proposals under way, Mr. Tan said they are looking at transport-related projects but declined to disclose further details.
Infracorp last year planned to propose another monorail project that would connect Megaworld’s Eastwood City to Santolan Road. The company said it has already held preliminary discussions with local government units for the proposal.
Aside from transport projects, Infracorp is also part of the consortium of seven conglomerates that proposed to rehabilitate the Ninoy Aquino International Airport, with the others being Aboitiz InfraCapital, Inc., AC Infrastructure Holdings, Corp., Asia’s Emerging Dragon Corp., Filinvest Development Corp., JG Summit Holdings, Inc., and Metro Pacific Investments Corp.
The consortium was granted OPS for the airport rehab last year, and the proposal is now with the NEDA board for approval.
Infracorp is the infrastructure arm of tycoon Andrew L. Tan’s holding firm, Alliance Global Group, Inc., which has core interests in property, gaming, liquor, and quick service restaurants. — Arra B. Francia

Daikin PHL targets 60% sales growth for 2019

Daikin logo
By Janina C. Lim
Reporter
THE LOCAL unit of Osaka-based Daikin Industries Ltd. is eyeing 2019 sales to grow over 60% from last year, hiking its target after achieving record-high sales in 2018 driven by strong demand for air-conditioners.
“In 2018, we posted another high record in sales despite challenging market conditions, with the (US-China) trade war, and the higher fuel price in the market,” Daikin Philippines President Lee Wai Kok said in a press conference in Pasay City last week.
Mr. Lee told BusinessWorld the company’s sales reached P4.5 billion in 2018, 50% higher year on year — the high end of its target range. In terms of volume, the figure translates to 80,000 units sold.
Residential air-conditioners accounted for 40% (around 32,000 units) of the company’s sales, while commercial and variable refrigerant volume (VRV) aircons — multi-split type for commercial aircons — accounted for 30% (24,000 units), respectively.
Daikin Philippines attributed the strong sales last year to the rising middle class; the government’s massive infrastructure program; and continued growth of the business process outsourcing industry.
Confident these positive developments will continue, Daikin Philippines targets sales to grow 62.5% to P6.5 billion this year.
However, Mr. Lee flagged concerns of an economic slowdown stemming from the US-China trade spat.
“The only thing we are worrying now is of course the trade war between China and US. It will temper the market, not only in the Philippines. The global market will slowdown. So when the global market is slowing down, the investment coming into the Philippines is affected… so consumer buying power is also affected,” Mr. Lee said.
Should China and the United States fail to reach a trade compromise before March 1, Mr. Lee said the backup strategy will be to look into other expanding sectors where a potential market can be tapped.
“Maybe we should shift the focus to some sectors that are growing, like seaports, airports and hospitals,” Mr. Lee added.
For this year, Daikin Philippines will roll out new products in the country, including the large floor mounted series; an upgrade for residential air-conditioning series FTKC and FTKM; and a Multi-S series for residential application.
Daikin Philippines will also be expanding its local offices, particularly in North Luzon, Eastern Visayas and Northern Mindanao.
Operating since 2010, Daikin Philippines is engaged in the sales and distribution of Daikin air-conditioning units and spare parts, servicing of air-conditioning units, and related warranty services.
Although its current performance puts it fourth in the overall air-conditioner distribution market, Daikin Philippines aims to be number one in the country in the next two years, according to Mr. Lee.

Expansion plans, index rebalancing lift ICTSI stock price

By Mark T. Amoguis
Researcher
INTERNATIONAL CONTAINER Terminal Services, Inc. (ICTSI) was one of the most actively traded stocks in the Philippine Stock Exchange (PSE) last week with analysts pointing to ICTSI Chairman Enrique K. Razon, Jr.’s interest in taking over a bankrupt Subic-based shipbuilder, the company’s expansion plans abroad, and the rebalancing of a global equity index that increased the stock’s weight as driving factors.
A total of P1.913 billion worth of 16.064 million shares were traded during the Feb. 18-22 period, data from the PSE showed.
Shares in the Razon-led firm closed P119.40 apiece last Friday, 3.8% up week on week from the P115 finish on Feb. 15.
Since the start of the year, ICTSI’s share price has risen 20%.
Cristopher Adrian T. San Pedro, certified securities representative at Unicapital Securities, Inc. noted speculations on Mr. Razon’s interest in developing Hanjin Heavy Industries and Construction Philippines’ (HHIC-Phil) facilities in Subic Bay into a possible industrial complex with container port facilities, a liquefied natural gas (LNG) terminal, dry bulk handling facilities, and an LNG power plant.
Several “white knights” are currently in discussion to rescue HHIC-Phil., which filed for corporate rehabilitation before an Olongapo court last month. It has around P20 billion in debt with the country’s big banks.
“When it comes to international expansion, ICTSI also confirmed that they are reviewing and exploring profitable investment opportunities on privatization deals in the container port industry including ports in Thailand and Cameroon,” Mr. San Pedro said.
The analyst also noted the workers’ strike at Port Sudan last Monday against the privatization deal of ICTSI and Sea Ports Corp. (SPC) may have contributed to the stock’s trading activity last week. However, Mr. San Pedro said investors’ reaction to these developments “have been generally positive” judging from last week’s stock price movement.
In a disclosure to the local bourse last Jan. 4, ICTSI, through its wholly owned subsidiary ICTSI Middle East DMCC, signed a 20-year concession agreement with Sudan’s SPC to operate, manage, and develop the South Port Container Terminal at the Port of Sudan.
ICTSI will assume the operational and development responsibility for SPC’s existing container terminal infrastructure and terminal handling equipment, while SPC will become the landlord of the terminal.
Transfer of the facilities to the management of ICTSI will take place in the first quarter of 2019, the disclosure said.
In a separate disclosure last Tuesday, ICTSI said it is keeping an eye for “profitable investment opportunities” with the company looking to secure more port projects in Thailand and Cameroon.
Meanwhile, AP Securities, Inc. research analyst Rachelle C. Cruz attributed ICTSI’s trading activity last week to the MSCI rebalancing.“They were the only company to receive an upweight [in the index],” she said in a phone interview, ascribing it to the stock’s “higher foreign float factor.”
The rebalancing of the MSCI Philippines index released on Feb. 12 saw the index weight of ICTSI increase by 1.518%. Meanwhile, downweights were seen in SM Prime Holdings, Inc. (-0.203%), Ayala Land, Inc. (-0.168%), BDO Unibank, Inc. (-0.129%), SM Investments Corp. (-0.120%), Ayala Corp (-0.117%), and JG Summit Holdings, Inc. (-0.097%)
Meanwhile, the Philippines saw its index weight in the MSCI Emerging Markets index increase by 0.012%. The MSCI world equity index tracks large and mid-cap equity performance across 23 developed markets. The index covers approximately 85% of the country’s stock universe.
Ms. Cruz added that following the news of the rebalancing, ICTSI’s stock price increased to as much as P122 per share, which is a 52-week high. “I think this is the all-time high for the stock,” she said.
ICTSI’s attributable net income reached $153.287 million in the nine months to September, up by 2.7% from $149.316 million in the same period last year due to a 10% increase in revenues from port operations reaching $1 billion.
For the full year 2018, Unicapital’s Mr. San Pedro expects ICTSI’s bottomline to range between $150 million to $160 million driven by “robust growth” from its port terminals in the Americas, Asia, Europe, Middle East, and Africa. As of Nov. 7, 2018, ICTSI and subsidiaries are involved in 31 terminal concessions and port development projects in 18 countries worldwide.
AP Securities’ Ms. Cruz pegged ICTSI’s resistance price for the near term at P122, and its support at “around P115.”
“I expect the stock to consolidate between P113.70 support and P122.00 resistance with the possibility of testing P125.00 and P130.00 if it stays above P115.00 in the short term,” Unicapital’s Mr. San Pedro said.

Bureaucracy seen delaying benefits to rice farmers

By Reicelene Joy N. Ignacio
Reporter
THE NEWLY-SIGNED Republic Act (RA) No. 11203 or Rice Tariffication law is expected to reduce poverty by bringing down rice prices, but the bureaucratic process may delay the farmer relief measures attached to the law, academics said.
The law is to implemented beginning March 5, with the National Food Authority’s (NFA) import functions to be removed, leaving the task to the private sector. A 35% tariff will be charged for imports from ASEAN countries, while 40% will be imposed on shipments from non-ASEAN countries for imports within the Minimum Access Volume (MAV) of 350,000 metric tons (MT).
The tariffs will finance the Rice Competitiveness Enhancement Fund (RCEF) at P10 billion a year for six years, with 50% to be distributed for farm mechanization; 30% for development, propagation and promotion of inbred seed; 10% for low-cost credit to be facilitated by the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP); and 10% for extension services to upgrade farmers’ skills.
“Farmers will be affected because imported rice can be sold at P35 per kilogram (kg) or about P17 per kg for palay (unmilled rice), (which is) great for consumers. That is why the government must have income support for rice farmers,” Rolando T. Dy, Executive Director of the University of Asia and the Pacific (UA&P) Center for Food and Agribusiness, said in a mobile message.
Mr. Dy noted that if government acts in accordance with the law, it will spur development, though the bureaucracy may take time to establish an efficient process for distributing the RCEF benefits.
“It will take time to implement the P10 billion RCEF due to organizational and bureaucratic weaknesses. I support the Rice Tariffication Act. I am skeptical on the bureaucracy to quickly deliver the RSBSA (Registry System for Basic Sectors in Agriculture) fund transfer and the RCEF,” Mr. Dy said.
The Department of Agriculture (DA) said last week that it is now fast-tracking the updating and validation of its National Farmers and Fisheries Information System (NFFIS) which will form part of the RSBSA that will serve as the official list of recipients of RCEF.
Mr. Dy said that investing in mechanization will benefit farmers, reducing the labor required and lowering production costs.
“Mechanization has done well for Vietnamese farmers. Based on the IRRI (International Rice Research Institute) PhilRice study, rice farmers in Nueva Ecija use 44 man-days per hectare mainly for transplanting and harvesting. Vietnamese farmers use only four man-days. Big cost difference. The machinery should be the farmers’ choice,” Mr. Dy said.
Mr. Dy noted that rice demand falls as per capita income increases.
“Rice demand falls as per capita income increases. Our problem is very high poverty. Malaysia’s per capita demand is down to 82 kg compared with the Philippines’ 110 kg. South Korea’s is 62 kg, China’s is 78 kg, Japan’s is down to 60 kg… Per capita consumption in most of Asia is falling,” Mr. Dy said.
Roy S. Kempis, a professor with Pampanga State Agricultural University, said imports outside the MAV will be charged higher tariffs of up to 180%, which is why he does not expect imported rice to flood the Philippine market. However, he said the game at the point of import becomes misdeclaration of rice volume.
“Volume to comply with the MAV for 35% tariff must meet the 2012 minimum of 350,000 MT from ASEAN countries, 50% from non-ASEAN countries. Any excess imports from the MAV shall be assessed higher tariffs… One has to be wary of misdeclarations of volume of imports,” Mr. Kempis said in an e-mail interview.
“Opposition to the law must be based on responsible and objective appreciation of the principles of agricultural economics, not politics,” according to Mr. Kempis.
Mr. Kempis said he does not expect the law to encourage dependence on imported rice or threaten the livelihood of farmers.
“Filipino rice farmers will always plant rice, especially for their home consumption. Local and fresh rice is an experience that rice farmers will not exchange for imported rice which is usually old stock… But you have to be wary of people mislabeling rice sold to consumers public,” Mr. Kempis said.
He added some opportunists could scare farmers into selling their land by painting a negative scenario under rice tariffication.
Mr. Kempis backs consolidation of small farms into 50 to 80-hectare plots in order to maximize the efficiency of farm machinery.
Krista Danielle S. Yu, a professor with De La Salle University’s (DLSU) School of Economics (SoE), said the government should also make a strong push for crop insurance and direct cash transfers.
“There is a need to develop programs should rice tariff collections exceed P10 billion. Based on our computation, the welfare loss due to operating with quantitative restrictions was P28 billion. We suggest that a cash transfer program targeted specifically to rice farmers be implemented with the remaining collections. Also, given that farmers are vulnerable to the effects of climate change, crop insurance is also another program worth looking into,” Ms. Yu said in an e-mail.
Asked if farmers will experience losses from more extensive imports, Ms. Yu said, “Initially, rice farmers may incur losses as a result of influx of imported rice. But rice farmers are also rice consumers. Harvested palay meeds to be milled in order to become rice which is now cheaper for farmers thereby yielding gains for them as rice consumers.”
On Sunday, the Federation of Free Farmers (FFF) warned economic managers and Senator Cynthia A. Villar, the sponsor of the law, of the consequences of the liberalization of rice imports.
“We warned her (Ms. Villar) several times of the danger of abruptly removing NFA’s price stabilization functions, but she did not listen. She just echoed the theory of the economic managers that the free market will take care of everything. Now she is saying the President will take care of it. In effect, she has placed the President in a legally tenuous and politically dangerous trap in case things go awry,” FFF National Manager Raul Q. Montemayor said in a statement.

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