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All-new Subaru Forester wins Grand Prix Award

TOKYO — Subaru Corporation announced recently that the all-new Forester won the Grand Prix Award for earning the highest score (five stars) in the Japan New Car Assessment Program (JNCAP) collision safety performance assessment conducted by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) and the National Agency for Automotive Safety and Victim’s Aid (NASVA).

The Forester has also received Advanced Safety Vehicle Triple Plus (ASV +++) rating, the highest rating in the 2018-2019 JNCAP preventive safety performance assessment.

The 2018-2019 Grand Prix Award in JNCAP collision safety performance assessment marks the second winning of the award for Subaru following the Grand Prix Award for the Impreza and the XV in the 2016-2017 assessment. Winning these safety awards reflects Subaru’s commitment to its all-around safety principle.

The new Forester employs the Subaru Global Platform, a new common architecture used in Subaru vehicles, and enhances passenger protection with improved energy absorption compared to previous generation of the model. Combined with the optimized body structure and proper layout of high-tensile steels, the Forester improved passenger protection for frontal, side and rear-end impacts with minimal weight increase.

The Forester also employs pedestrian protection air bag as standard equipment. A pressure sensor inside the front bumper determines whether the vehicle has collided with a pedestrian, and the air bag covers the wipers and the bottom of the front pillars right after the collision is detected to reduce the impact on the pedestrian’s head.

Subaru will continue to enhance its primary, active, passive, and pre-crash safety technologies under its “all-around safety” principle, which underpins enjoyment and peace of mind for all drivers and passengers, and target to eliminate traffic accident deaths by 2030.

Fashion for the future: London students present sustainable designs

LONDON — Clothes grown from slime mould and tupperware handbags were among the environmentally friendly designs and ideas presented by fashion graduates at a London arts school.

The Royal College of Art held its annual fashion show early this month, in which students in womenswear, menswear, knitwear, footwear, accessories and millinery unveiled their creations.

This year, the All At Once show looked at the fashion industry’s impact on the environment at a time when many designer houses are seeking to improve their green credentials to appeal to increasingly environmentally conscious consumers.

“Fashion and sustainability have to now be one. You have to be thinking in different ways,” student Andrew Bell told Reuters at a preview.

“Fashion has been doing the same thing for so long, we’ve created the same black top and the same black jeans and we’re constantly calling them new… there’s actually nothing new about these items.”

Bell uses ultrasonic welding to make clothes that fold completely flat, like coats with non-fray linings. His garments are “mono-material,” meaning they can be recycled more easily.

That is something Margot Vaaderpass is also looking at when making tops, coats, trousers and skirts using pineapple leather, biodegradable buttons, and knitted tailoring.

“That’s one of things that I have taken up as a challenge — how can we create a suit that’s knitted,” Vaaderpass said. “The advantage of that is that we can shape the garment, that means that we can produce less waste.”

Piero D’Angelo hopes fashionistas can one day grow their own garments with slime mould. The living organism is applied on pre-designed patterns, and can grow up to one centimeter (0.39 inch) per hour.

“We designed a 3D printed prototype… Once we apply the slime mould it will just grow, spread all over, connecting each of those holes,” he said.

“I am fascinated by the idea of growing garments and working with different materials, like living materials but also pushing further the idea of fashion.”

Clara Chu has turned her attention to kitchenware as accessories. One of her handbags is made from ice cube trays, while another has a water-bottle lock as a clasp.

“Each handbag consists of recognizable everyday mundane objects that we find in the house, in the kitchen,” Chu said. “People don’t necessarily associate these kind of items with fashion.”

At a time of growing public awareness of waste and its impact on the planet, Anna Sophie Goschin is studying digital design and 3D manufacturing, which she says could have “huge potential” in making fashion more sustainable.

“We make a lot of garments with a categorized sizing system,” she said. “But with planning and designing digitally, we can simulate the garment before production in the 3D manner, working directly with the shape of the body.” — Reuters

Pag-IBIG gets highest opinion from CoA anew

THE Home Development Mutual Fund (Pag-IBIG) said it has secured the highest opinion from the Commission on Audit (CoA) for the seventh straight year.

In a statement, Pag-IBIG said state auditors gave it an unmodified opinion, considered the best opinion any government agency or corporation can receive from the CoA.

“The auditor rendered an unmodified opinion on the fairness of the presentation of the financial statements of HDMF for the years ended Dec. 31, 2018 and 2017,” CoA’s Social Security Services and Housing Cluster Officer-in-Charge Ma. Lisa P. Inguillo was quoted as saying in a June letter to Pag-IBIG.

Pag-IBIG said it secured the CoA’s unqualified opinions on its financial statements from 2012 to 2017, and an unmodified opinion for 2018.

It noted that CoA uses both unqualified opinion and modified opinion to mean that the financial statements presented are in accordance with applicable financial reporting frameworks in all material respects.

“For the seventh consecutive year, CoA has granted on Pag-IBIG Fund its highest opinion on our financial statements. This milestone is yet another proof that Pag-IBIG Fund is working hard to serve members while maintaining the integrity and sustainability of the Filipino workers’ fund which is in line with President Rodrigo R. Duterte’s directive for all government offices to maintain a corrupt-free operation in serving the people,” Eduardo D. del Rosario, chairman of the Housing and Urban Development Coordinating Council and Pag-IBIG Fund Board of Trustees, was quoted as saying.

Pag-IBIG reported a record net income of P33.17 billion in 2018, 9.6% up from P30.27 billion in 2017.

Housing loan takeout increased by 16% to P75.3 billion in 2018, benefiting 90,375 members. Short-term loans in 2018 rose 9% to P49.23 billion which benefited 2.43 million members. Members’ savings collections jumped 11% to P40.27 billion last year. — R.J.N.Ignacio

BMW 7 Series plug-in EV to make PHL debut in July or Aug.

By Kap Maceda Aguila

ON THE SIDELINES of the recent launch of the all-new versions of BMW’s Z4 and 3 Series, this writer had an exclusive interview with BMW Group Asia Managing Director Christopher Wehner. The executive had mentioned in a speech that the Munich-headquartered car maker was poised to systematically launch a total of 25 electrified vehicles by Year 2025.

Asked by “Velocity” whether these specific models would eventually make their way to the Philippines, Mr. Wehner replied: “I hope that you will see all of these 25 models but, of course, it depends on the customers in the Philippines if they want electrified cars or not. We deliver what the customers want.” The executive revealed that half of the models will be comprised of plug-in hybrids, the other full EVs.

He remained bullish about the local market, saying, “We see a lot of pros for BMW Philippines in the premium market (including) a strong trend towards SAVs (sport activity vehicles, the company’s term for SUVs). Our X model range is perfect for that from X1 to X7. This is why we presently see high demand for the X5 and X7.”

The BMW 7 Series PHEV

How soon can Filipinos see the first electrified BMW? “July or August,” replied Mr. Wehner. “The first electrified vehicle that we’ll bring here is the 7 Series plug-in hybrid. This is our newest plug-in hybrid, and a good alternative for our customers.”

While expressing hope for escalating electrified vehicle demand in the future, he conceded that this “depends heavily on taxation benefits for the customer, and available infrastructure.”

And even as the company is facing an electrified future, BMW “will still offer all the technologies — pure combustion engines, plug-in hybrids, and fully electric vehicles. We will see all these three technologies over the year 2030,” maintained Mr. Wehner.

Again, there’s no hard stop for the ICE (internal combustion engine) yet. “The customer decides what he or she wants to buy, (and) we will offer that,” he concluded.

Using infrared rays for rejuvenation

IMAGINE the rays of the sun, which give life to all things on earth, being harnessed in a machine that heals your body. That’s the promise of Vital Dome, an infra-therapy ecosystem machine.

Vital Dome was founded in France by Alexandra Gavsevitch and Eric Fauchon, and was brought to the Philippines just this year by Katherine Alejar. Ms. Alejar is the sole distributor of Vital Dome in the country, but while she offers the infra-therapy sessions at a clinic in Centuria Medical Makati, her aim is to sell her machines to clinics and aesthetic centers around the country.

The machine envelops a patient in a dome fitted with carbon panels that emit far infrared, akin to the safer, healthier levels of sunlight. There’s no risk of radiation poisoning here, Ms. Alejar iterates.

“We have clinical studies which prove that 82% of those who experienced Vital Dome’s Infra-therapy system feel more relaxed while 77% achieved a slimmer silhouette. Almost 70% noticed how their skin got firmer and almost 80% proved they attained lighter legs, improved sleeping pattern and an enhanced overall well-being,” said Ms. Alejar. What it is supposed to do, basically, is heat up your body to sweat out toxins, while at the same time, the rays penetrate the body and revitalize the organs. It promotes cell rejuvenation and cell repair. It’s akin, according to Ms. Alejar, to getting a tune-up for your car.

“We’re not saying it’s a [cure-all]. It will help with maintenance,” she said. It could be used as a complementary treatment for people suffering from diabetes and cancer, according to her, and most people can hop in. The only restrictions are pregnant women and people who have consumed large amounts of alcohol beforehand.

Ms. Alejar herself looks much younger than her age of 40. She hops into the machine three to four times a week, with each session lasting about 40 minutes. “I want to be living proof of what I sell.” — JLG

Philex targets environmental compliance certificate for Silangan mine by Q3

PHILEX Mining Corp. is aiming to secure its environmental compliance certificate (ECC) for the Silangan mine project by the third quarter.

“We’re trying to work for the ECC approval in two to three months… by third quarter,” Philex Mining Chief Executive Officer Eulalio B. Austin, Jr. told reporters after the Philippine Mining Club’s 50th Luncheon held in Makati City.

“Because it’s a new project we have to revise the ECC, but what’s important there is the public hearing and the endorsements of the people,” he added.

Philex Mining has been working with regulatory bodies to facilitate its compliance with all permitting requirements for the Silangan project.

The Silangan mine in Surigao del Norte has three deposit areas, Boyongan, Bayugo, and Kalayaan, with the latter a joint venture with Manila Mining Corp. This might be Philex Mining’s biggest source of revenue after its 61-year-old Padcal mine in Tuba, Benguet will be closing in 2022.

The operation for Silangan was originally set to begin in 2018, but has been moved to 2022 due to the ban on new open-pit mining introduced in 2017.

This has prompted Philex Mining to look at a new design that would shift its method to underground mining.

Mr. Austin said the company has so far spent about P16 to P17 billion for exploration in the mining site.

Philex Mining is one of the three local units of Hong Kong-based First Pacific Co. Ltd., the two other being PLDT, Inc. and Metro Pacific Investments Corp. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which is controls. — Vincent Mariel P. Galang

Peso seen steady as mart awaits Fed, BSP reviews

THE PESO is expected to be broadly steady this week ahead of the policy meetings of the local and US central banks and as global crude oil prices stay within four-month lows despite growing tensions in the Middle East.

On Friday, the local currency weakened to close the week at P52.02 against the greenback from the previous day’s finish of P51.865 per dollar due to tensions between the United States and Iran.

Week-on-week, the peso was slightly stronger than its P52.04-per-dollar finish on June 7.

Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC) said in a text message that the peso will likely “remain relatively stable in the coming week…as global crude oil prices lingered among four-month lows despite attacks on two tankers in the Gulf of Oman earlier last week.”

Escalating tension in the Middle East is driving up oil prices, a huge import cost for many economies, putting more strain on global growth already hurt by the trade war being waged by US President Donald Trump and weakening consumer confidence.

Crude oil prices spiked more than 4% after two oil tankers were attacked in the Gulf of Oman on Thursday, just a month after strikes on tankers in the United Arab Emirates and oil-pumping stations in Saudi Arabia.

Mr. Ricafort said the recent decline in US Treasury yields will also continue to support the peso.

“Market expectations recently about possible cut in US key short-term interest rates (fed fund rates) in 2019 have also supported the peso. The markets are also anticipating the upcoming local monetary policy-setting meeting on Thursday,” Mr. Ricafort added.

The US Federal Reserve’s Federal Open Market Committee’s policy meeting is scheduled on June 18-19. The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board will also hold its own review on June 20.

Another trader said in an email that dovish cues from the Fed and BSP may also lend some strength to the peso.

“The dollar is expected to move with a downward bias this week as the US Federal Reserve might provide more concrete hints of a possible rate cut this year amid signs of slowing growth and muted inflation. The greenback’s downtrend, however, might be tempered by similar dovish cues from the BSP,” the trader said.

The trader said in the first three days of the week, the dollar may move sideways ahead of the Fed’s and Bank of Japan’s policy meetings.

Meanwhile, the peso could gain strength versus the greenback toward the end of the week as the US central bank wraps up its policy-setting meeting as the market expects “a U-turn” in its stance. — RJNI

Trump trade blows fail to slow Mexican demand for US wheat

MEXICO CITY — Mexican bread and flour tortilla makers will likely use significantly more wheat sourced from the United States this year despite growing unease with President Donald Trump, according to Mexico’s main wheat chamber.

Wheat shipments to Mexico from Russia are also expected to repeat last year’s big jump in volume, while Argentine wheat is seen gaining a new foothold as the Mexican industry continues to diversify its suppliers.

Mexico relies on wheat imports to supply about two-thirds of domestic demand.

Overall, Mexican wheat imports will “very likely” be between 5.1 and 5.2 million tonnes, up from 4.9 million tonnes in 2018, boosted by a 4 percent jump in domestic demand, said Jose Luis Fuente, head of the CANIMOLT wheat chamber.

The big jump in US wheat imports, forecast by the chamber to reach between 3.5 million and 4 million tonnes this year, or as much 40 percent higher than last year, is noteworthy given Trump’s threat to slap tariffs on all Mexican exports and the possibility of Mexican retaliation.

Trump suspended the threat last week after reaching a deal with the Mexican government to curb the flow across the border of migrants, mostly from Central America. He has since revived the tariff threat if Mexico cannot meet his demands.

Fuente said US suppliers are more convenient and that opposition to Trump does not play a major role in the industry’s calculations.

“I’d love to send him a message that we’re not going to buy more American wheat, but that’s not viable,” Fuente told Reuters in an interview on Wednesday.

Still, he said he expects more US wheat this year because it is logistically more attractive, especially when moved by train, as well as due to the quality and price stability traditionally associated with American supplies.

Last year, US wheat imports totaled 2.8 million tonnes, down nearly 20% from 2017, central bank data show.

For years, Mexico has been American wheat farmers’ top export market.

“We have to learn to live with (Trump’s) threats,” said Fuente, adding that he expects them to continue, calling the US president intolerant and likening him to a “spoiled child.”

CANIMOLT, which represents around 80 percent of Mexican millers, held talks with representatives of the US Wheat Associates, a major export group, at the Mexican beach resort of Cancun in the days after Trump’s tariff threat on May 30.

“The Americans arrived very worried about the tweet from President Trump,” said Fuente, noting that both sides pledged to lobby their governments to defuse the spat. “We’re in the business of trade and we have to focus on that.”

While he emphasized that weather in the United States and elsewhere could scramble the forecasts, Fuente said wheat imports from Russia, which last year overtook Canada to become Mexico’s second biggest foreign supplier, is likely to reach around 1 million tonnes this year, similar to 2018 shipments.

Last year, the Black Sea suppliers, including those from Ukraine, increased wheat exports to Mexico nearly three-fold compared to 2017.

Argentine wheat farmers, meanwhile, are seen selling around 100,000 tonnes to Mexican buyers this year, Fuente said, up from a 33,000 tonne cargo delivered in 2017.

Fuente attended a wheat conference last week in Argentina, and said he may return for more talks in November. He is also considering a separate trip to meet Russian and Ukrainian exporters later this year. — Reuters

Shares seen to rally ahead of Q2 earnings reports

By Arra B. Francia
Senior Reporter

LOCAL SHARES are seen to firm up this week as companies are expected to report good earnings results for the second quarter.

The bellwether Philippine Stock Exchange index (PSEi) dropped 0.76% or 61.56 points to close at 7,990.20 on Friday as investors decided to take profits after the main index posted gains for most of the week.

On a weekly basis, the PSEi added 0.08% or six points thanks to a 1.53% increase in industrials and 1.45% uptick in services. This offset the 1.97% slump in the mining and oil counter. Turnover slipped by six percent to P7.53 billion on a daily average last week, supported by average net foreign buying of P406 million.

“I am more inclined to believe that the market is going to rally as companies across the board are expected to post robust earnings in the following weeks and with economic fundamentals getting better and government spending picking up, we are going to see a pickup in economic growth,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

The Bangko Sentral ng Pilipinas (BSP) will also have its policy meeting on Thursday. It is expected to keep policy settings steady after it cut interest rates by 25 basis points last May, on top of reductions to banks reserve requirement ratios (RRR).

“However, if they do reduce rates again [this] week, that may be an incentive for investors to increase positions in the market,” Mr. Mangun said.

Online brokerage 2TradeAsia.com also sees some upside for the market once second-quarter earnings results are out.

“Plotting our target price levels for core index anchored on net earnings estimates for 2019, the simulated level for PSEi would be at 9,070. We may consider upward adjustments based on second half prospects, post-announcement of initial semester results,” 2TradeAsia.com said in a market note.

The brokerage added that the BSP’s 50-basis-point RRR cuts for universal, commercial and thrift banks scheduled this month and July, higher infrastructure spending, and corporate capex rollout will support the PSEi moving forward.

“Specific sector premiums might be commanded, depending on merger and acquisition prospects, including approval of necessarily industry-related bills,” 2TradeAsia.com said, citing the implementation of real estate investment trusts and reclamation projects, among others.

Overseas, the company said investors may focus on the movement of oil prices as the Organization of the Petroleum Exporting Countries considers the continuation of supply cuts.

Mr. Mangun placed the market’s support from 7,700 to 7,880, with resistance from 8,000 to 8,140.

“The last two weeks may have been boring but the next two weeks are going to be interesting and I will not be surprised if we see this market explode to the upside,” the analyst said.

How PSEi member stocks performed — June 14, 2019

Here’s a quick glance at how PSEi stocks fared on Friday, June 14, 2019.

 

Trends in the food industry

The food service industry in the Philippines is growing at a phenomenal rate and everyone wants a part of it.

For those unaware, the food service industry is composed of all forms of food retail. This includes fast-food chains, food kiosks, cafes, bars, take-out and delivery stores, and full-service restaurants.

The Philippine food service industry, in 2016, generated P535.9 billion in revenues on the back of 84,503 food outlets operating in the country. This year, revenues are seen to top P616 billion with 3,126 more food service establishments in operation than there were in 2016.

The insatiable demand for food comes from our enormous population of 106.5 million whose median age of 24.3 years old is the prime age for eating out. There are 4,875 newborn Filipinos added every day.

The food service industry is seen to expand in tandem with the growing population and rising incomes. For the year 2020 and 2021, revenues are seen to reach P637.3 billion and P656.5, respectively.

No surprise, then, that everyone wants to put up a restaurant, be it fledgling entrepreneurs or established businessmen looking for a cash cow on the side. To many, the food business seems like an easy way to make money.

I have been in the food industry for more than 30 years and I can tell you that it is more complicated than it appears to be. The rate of closures is nearly just as high as the rate of new openings. To be successful, one must have the basics in place. These include a strong concept, a good value proposal (food quality in relation to price), a favorable location, an efficient supply chain, tight cash and inventory controls, and enough competitive advantages to compete with the established players in the industry.

It is equally important to understand the trends in the market. Being cognizant of trends and leveraging on them is like swimming along with the tide, not against it. In many cases, it could spell the difference between success and failure.

TWELVE TRENDS BASED ON INDUSTRY REPORTS
More foreign competition. Local companies will bring in more food establishments from abroad rather than build their own brands from the ground up. Although doing so will require payment of steep franchise and royalty fees, it is justified by the instant recognition of the brand, immediate market acceptance, a tried and proven business model, and savings on recipe development. A big incentive too is that foreign brands are more likely to secure prime retail spaces as opposed to their local counterparts.

Not only from the US. Unlike in decades past where only food establishments from the US were immediately recognizable and accepted, the market today is more open to brands coming from Japan, South Korea, Taiwan, ASEAN, Australia, and the European Union. This is due to the democratization of travel among Filipinos and their exposure to global food retailers. There is still an element of distrust from brands emanating from China.

Filipino food will evolve. The influx of foreign brands will compel homegrown Filipino concepts to up their game not only in food quality and dining experience but also in terms of recipes and presentation. In other words, Filipino cuisine will evolve quickly. For example, it will not be not far-fetched for some Filipino restaurants to serve fried chicken using the same caramel breading used by BonChon, or local kare-kare presented in the manner of Spanish cocido. New cooking techniques like sous-viding, smoking, and the use of foam will also find their way into local dishes. Evolution of the cuisine will be how retailers of Filipino food will remain competitive amid stiff competition and an environment where the standards of quality are constantly on the rise.

Online platforms are here to stay. To reach a younger demographic and to overcome the logistical barrier of traffic and parking, online delivery services such as Foodpanda, Honestbee (which temporarily halted Philippine operations in April), and GrabFood will play a more important role in every restaurant’s marketing strategy.

An emerging trend too is for Filipinos abroad to order food for their loved ones during special occasions. These online platform makes this possible.

Filipinos have also adopted the habit of making prior reservations before visiting full-service restaurants. This makes apps like Zomato, Eatigo, and Booky indispensable marketing tools in this category.

Customized food delivery. The increasing demand for niche cuisine like halal, keto, pure organic, and vegan will compel many restaurants and private chefs to offer these options by way of online delivery platforms.

Alternative locations will emerge. Due to the high rental costs and market cannibalization among malls and commercial centers, restaurateurs will begin mushrooming in uncustomary sites. These include food trucks in high-traffic areas, residential villages, commercial spaces in the upper floors of buildings and even home dining rooms. We will also see a new wave of expansion of casual dining restaurants in secondary places such as CALABARZON, Central Luzon, and Greater Cebu and Palawan.

Judged by the wine list. The Philippines is one of the fastest growing markets for wines with imports seen to top $121 million this year. While the A and Upper B classes have become discerning about wines, the broad B and C markets are beginning to follow suit given their rising incomes and evolving taste. Thus, restaurants with the wider range of wines of various grapes, origins, and price points will have the advantage. The wine list will become an important deciding factor as to whether an establishment is patronized or not. This applies to both fine-dining and casual-dining restaurants.

Cuisine curiosity and authenticity. A recent market study done by De La Salle University revealed that Filipinos are only willing to patronize a restaurant offering non-mainstream cuisine (e.g. Latin American, European, or Caribbean) if the chef, proprietor, or face of the brand hails from that country. Skepticism is high toward Filipino restaurateurs offering exotic menus.

Increasing popularity of artisanal coffee and gastropubs. Demand for artisanal coffee such as those offered by Toby’s Estate and Single Origin will continue to rise given their superior value proposition. The same is true for gastropubs or establishments that offer high quality food along with specialty alcoholic options like craft beer and gin bars. Artisanal coffee joints and gastropubs outperformed their traditional counterparts by 12% last year in terms of revenue per square meter. So strong is this category that even Starbucks, Krispy Kreme, J.CO Donuts, and Tim Hortons are now offering premium or reserve coffee options to grab a piece of the market.

Asian restaurants will rule. Independent players dominate the full-service restaurant category with only 25% of them operated by mega-chains like the Max’s Group, the Bistro Group, and Shakey’s. The rest are independently owned. Asian themed restaurants (Chinese, Japanese, and Filipino) account for 67% of some 19,000 full-service restaurants in operation today, the balance is comprised of European, American, and Middle Eastern concepts. Asian restaurants will continue to dominate this category in terms of market share and customer preference.

No stopping fast-food growth. The fast-food category will posts the highest growth rate in the years to come expanding by 12% year on year. Interestingly, fast-food sales inside convenience stores will grow at a more phenomenal rate of 32%, thanks to their improving quality and democratic price. Fast-food chains are seen to expand their product offerings to sustain demand even if it encroaches on other food concepts. For instance, we will soon see burger chains offering pizza, chicken chains offering salads, and pizza chains offering rice meals.

Slow growth for food kiosks. Growth in the food kiosk category will not exceed 5% due to market saturation. In this category, the name of the game is novelty and low prices. Those that enter the food kiosk scene selling dimsum, shawarma, popcorn, and Jamaican patties will be clobbered by mega-chains who have carved their own army of loyal customers. The more ingenious, innovative, and affordable the product offerings are, the higher the chances of success.

The food service industry will continue to show tremendous growth over the next few years on the back of our strong, consumer lead economy. Those who wish to take part of it should not make the mistake of oversimplifying it. The industry is in fact akin to a high stakes poker game where those who understand its nuances and play with a well thought-out strategy will win.

 

Andrew J. Masigan is an economist.

Hong Kong’s rights and freedoms

Hong Kong might be called the unwanted love child of the British and the Chinese, from an ill-fated port romance, when Western merchant sailors crossed vast oceans for half a year to see what could be had from the beautiful East.

When the Qing dynasty transitioned from the isolationist Ming at the dawn of the 17th century, restrictions on private maritime trading and coastal settlement were lifted. “Although European demand for Chinese commodities like tea, silk, and porcelain was high, Chinese interest in European manufactured goods was insignificant. To counter the trade imbalance, the British sold large amounts of Indian opium to China” (Chen, Li. 2011). Drug addiction became a major problem of China.

And when the Daoguang Emperor ordered the destruction of opium stockpiles and halted all foreign trade, the British attacked China in the First Opium War. Defeated by the foreigners’ superior power, the Qing surrendered and ceded the barren Hong Kong Island to the British Queen Victoria, ratified in the 1842 Treaty of Nanking. In 1860, the British crown colony was extended including the Kowloon peninsula and in 1898, the Second Convention of Peking further expanded the colony with the 99-year lease of the New Territories (“Lessons in History.” National Palace Museum, Taipei).

The love child, the British crown colony Hong Kong, grew in awesome strength and independence, as unwanted children are blessed with compensatory pluck in later life. It thrived as an independent capitalist economy, besting its bigger neighbors in Southeast Asia. By the late 20th century, Hong Kong was one of the busiest ports in the world, and the seventh-largest trading entity in exports and imports, trading more goods in value than its huge gross domestic product.

Under the 1984 Sino-British Joint Declaration on the Question of Hong Kong, these territories were transferred back to the People’s Republic of China (PRC) on July 1, 1997, in “the Handover” (“The Joint Declaration.” Constitutional and Mainland Affairs Bureau, The Government of the Hong Kong Special Administrative Region [HKSAR]). In the 22 years as the HKSAR under the PRC, the government has had a passive role in the Hong Kong economy. The Hong Kong Dollar continued to be used, as it had been a major currency of the world. And the Beijing government lived with and enjoyed the capitalist ecosystem through its HKSAR while maintaining its limitations under it communist ideologies.

Yet civil society in HKSAR anxiously counts on promises under the “One Country, Two Systems’ policy that allows it to retain certain key liberties, such as freedom of speech and an independent judiciary, until 2047 (“High points of Hong Kong’s huge protests.” Agence France Press. June 15, 2019).

The first mass demonstration (estimated half a million people) since the 1997 handover was against a national security law attempted by the government that the Hong Kong people feared would hamper free speech. The government dropped the bill. In 2012, tens of thousands protested for 10 days against forced propagandist subjects in schools. The government abandoned the proposed curriculum (Ibid.). Remember the 2014 Umbrella Movement when, for two months, tens of thousands of protesters held sit-ins to demand democratic reforms such as the right to elect the city’s leader? No way would the mainland central government allow free elections for the city.

Then on April 28, the biggest demonstration since the Umbrella Movement protested the extradition bill, as it roused fears of framing, set-ups, pick-ups and swift extradition of foreign and Chinese nationals. Violent demonstrators rallied for three weeks until Saturday, June 15, when HKSAR Chief Executive Carrie Lam put the extradition bill on hold indefinitely, without withdrawing it yet (“Calls mount for compromise over unpopular Hong Kong bill.” Associated Press, June 15, 2019).

But though the Handover agreements guarantee the Basic Law for 50 years after 1997, it does not specify how Hong Kong will be governed after 2047, and the central government’s role in determining the territory’s future system of government is the subject of political debate and speculation, analysts say. Will Hong Kong’s political and judicial systems be reintegrated with China’s at that time, or will the territory continue to be administered separately? (“The case for extending Hong Kong’s 2047 deadline” and “Too soon to talk about 2047? Legal experts split on when Hong Kong should debate its future.” South China Morning Post, March 23, 2015, and May 10, 2016, respectively).

Of course, it will be the central government in mainland China, the PRC, who will be the final interpreter and executor of what will happen to HKSAR in 2047. That is barely 28 years, coming soon. By then, civil society in Hong Kong will have been used to the futile demonstrations and protests on judiciary and legislative issues being ignored or “shelved” by the Beijing-controlled executive branch. Most everyone predicts HKSAR will be fully integrated, politically, economically, socially with the PRC come 2047.

For the rest of us looking on in this “domestic” drama of an oxymoronic “One Country, Two Systems”: it doesn’t work, nor will it ever work. HKSAR will have to change in toto to be just “One Country, One System” with the whole PRC. It had better be a silent but strong lesson to the world on how to deal with this strong-willed China, who will want to have her way always.

Will US President Donald Trump have to back off (gracefully, if ever such grace is doable) from his tough-guy stance with China? “The United States kicked off a tariff battle with China in 2018, seeking sweeping structural changes from Beijing. But tensions between Washington and Beijing rose sharply in May after the Trump administration accused China of reneging on promises to make structural economic changes during months of trade talks” (“Trade war will hurt China more than U.S.: top White House economic advisor.” Reuters, June 11, 2019). Trump raised tariffs on $200 billion of Chinese goods to 25% and took steps to levy duties on the additional $300 billion in Chinese imports. Beijing retaliated with tariff hikes on a revised list of $60 billion in U.S. goods. (Ibid.). On April 16, Bloomberg ran a piece titled “Trump’s trade war with China doesn’t look like a win: prevailing against a fast-growing country run by autocrats isn’t so easy.”

And the small country, the Philippines, seems intimidated even before attempting to fight for sovereignty of the West Philippine Sea (South China Sea) territories despite a long-awarded UN Convention on the Laws of the Seas (UNCLOS) ruling in the Philippines’ favor, but ignored by China. The yet unspoken protest over the already adjudicated and awarded territorial claims now cries to speak out in the recent controversy over whether or not to protest the ramming of a Philippine fishing vessel by a Chinese ship. Finally, finally, the Philippines filed a diplomatic protest on Wednesday, warning that the Philippines could end diplomatic relations with China if it is proven that the Chinese fishing vessel “intentionally” sank the Filipino boat (“China probes ramming of Filipino boat in disputed waters.” CNN Philippines, June 14, 2019). “Intentionally” allows so much defense for China.

President Rodrigo Duterte is a good friend and avowed admirer of China’s President Xi Jin Ping… more than a love child like HKSAR and its petulant wants to keep its rights and freedoms.

 

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

ahcylagan@yahoo.com

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