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Smartphone shipments grow 5.6% in first half of 2018

By Anna Gabriela A. Mogato
Smartphone shipments in the Philippines grew 5.6% year on year in the first half of 2018, data from the the International Data Corporation (IDC) Philippines showed.
IDC’s Quarterly Mobile Phone Tracker, released on Monday, placed smartphone shipments in this period at 7.8 million units, rebounding from a 6.6% drop recorded in the first half of 2017 due to more midrange smartphone shipments arriving.
IDC noted that while “ultra-low-end” smartphones continue to take the biggest chunk in the market, the first half of 2018 saw the average selling prices (ASP) increase to $192 from $127 the year before.
IDC Philippines Market Analyst Polyn Gallevo said that the higher ASP means that the consumers are willing to invest in smartphones that suit their needs.
“[The u]se of phones has become heavier. Aside from end users being accustomed to using smartphones as a platform for capturing, sharing, saving content, and streaming videos, engaging in higher form of mobile gaming has also been emerging,” she said.
IDC also noted that having more payment options and the rise of small loaning companies have made it easier for consumers to buy more expensive smartphones.
Here are the top five smartphone vendors, according to the IDC report:
– Cherry Mobile
– Samsung
– Vivo
– OPPO
– Huawei

State violence, crime, terrorism among top security concerns in PH: study

By Anna Gabriela A. Mogato
Criminal violence and terrorism, as well as violence from state authorities, are the top security concerns in the Philippines, a survey commissioned by International Alert and the British Council showed.
In the Peace Perceptions Poll 2018 conducted by global pollster RIWI, more than a quarter of Filipino respondents pointed to a lack of jobs and the need to provide for families as the most likely motivators for violent actions.
The study found that the second leading reason for violent actions was a “sense of justice.”
As violence from state authorities was the third leading security concern, respondents said that political leaders need to recognize military force as the least effective path towards long-term peace, and prioritize instead negotiating peace agreements.
Country manager of International Alert Philippines Nikki Philline de la Rosa noted that while the poll did not field respondents from the Autonomous Region in Muslim Mindanao, she believes their findings reflect the violence caused by communist insurgency and Moro rebellion in the south.
Violent extremism in Mindanao is also fueled by various factors such as clan feuds, governance issues, and control over land, Ms. de la Rosa said.
“We have emphasized time and again how rebuilding structures and executing military action are never enough in addressing the strings of violence caused by interlinking factors,” she added.
“The Bangsamoro Organic Law is a win in the decades-old peace process between the government and the rebels, and we hope that this will heal fissures in relationships and foster genuine autonomy, peace and development in the region in the long run.”
Ms. de la Rosa noted that there is a pressing need to ensure education, employment, and civic participation in governance to curb further violent extremism.

IMF cautions gov’t on fiscal deficit

THE PHILIPPINES should aim for a more modest budget deficit by trimming “non-priority” expenses in order to reduce the risk of overheating, the International Monetary Fund (IMF) said.
IMF country representative Yongzheng Yang said that the Philippines should be “reprioritizing expenditures” primarily by doing away with some unitemized entries in the national budget.
“In the Philippine government budget, there is a portion allocated for special purpose funds. These funds are not allocated to specific projects and these funds, to my understanding, amount to one percent of GDP (gross domestic product),” Mr. Yang said during a media briefing on Friday.
Special purpose funds are lump-sum provisions in the national budget that are given to various agencies for projects or allocations which are not yet identified during national budget preparation. Some offices use it as a calamity fund, others for pension payments or as subsidy to state-owned corporations, to name a few.
“This could be achieved by intensifying efforts on the revenue side and containing non-priority spending, such as new hiring of public sector employees and non-urgent capital projects,” according to the 67-page IMF report released on Friday.
“Further reduction in nonpriority spending, especially those unrelated to flagship infrastructure projects and social protection, would be warranted if tightening of global financial conditions engenders a surge in borrowing costs, while expanding social protection spending as needed.”
The IMF completed its report following the Article IV Consultation with Philippine officials in July, which is an annual health check on member-economies.
The multilateral lender said the Philippines should keep the fiscal deficit at 2.4% of gross domestic product (GDP), steady from the 2017 level and lower than the government’s three percent ceiling.
The budget deficit stood at 2.3% of GDP last semester.
The Duterte government has been pushing for a wider budget gap to accommodate increased spending on infrastructure, particularly big-ticket items in its “Build, Build, Build” pipeline.
“We fully support infrastructure investments, but it is very desirable to keep the fiscal stance neutral… We think that tightening monetary policy and neutral fiscal stance would help reduce overheating risks,” Mr. Yang said, noting that the bank now sees “increased” risks of the economy overheating.
Mr. Yang announced last week that the bank has scaled down its growth forecast for the Philippines to 6.5% this year from an earlier 6.7% estimate in the wake of a slower-than-expected six-percent second-quarter growth that brought last semester’s pace to 6.3%, against the year-ago 6.6%.
The IMF official said he expects growth to accelerate this semester, with GDP growth seen to recover to 6.6% in the third quarter and 6.9% in 2018’s final three months. Still, it would mean that the 7-8% growth goal of the Duterte administration will be out of reach.
“We think the growth slowdown in the second quarter is temporary,” Mr. Yang said, even as he noted risks to growth amid quickening inflation fueled partly by rising global oil prices, rapid credit growth, increasingly tight global credit conditions and worsening world trade tensions.
The growth rebound is expected to be fueled by “very strong investments” and robust consumer spending, even if the latter softened in the previous quarter.
Sustained policy reforms to attract more foreign investments as well as the impending shift to a regular tariff scheme for rice imports that is expected to slash retail prices of the staple, however, could help lift growth prospects while easing inflation pressures.
The IMF said economic growth should remain “very respectable” and “strong” even as the Philippines faces new challenges. GDP expansion is seen to pick up to 6.7% in 2019, although inflation is expected to remain elevated at 4.9% this year and 3.9% next year versus a 2-4% government target.
The IMF is also calling for enactment of all planned tax reforms in order to raise more revenues to support state projects. — Melissa Luz T. Lopez

Analyst poll adds to expectations of even faster Sept. inflation

By Melissa Luz T. Lopez
Senior Reporter
INFLATION likely clocked in faster in September as a strong typhoon that month pushed food prices even higher, according to a BusinessWorld poll in which analysts cited the need for more interest rate hikes from the central bank to rein in overall price pressures.
A poll among 13 economists yielded a median inflation expectation of 6.8%, which if realized would speed up from August’s 6.4% rate and soar from the three percent climb in September 2017.
The Philippine Statistics Authority (PSA) will release official inflation data on Friday. Last week, the Bangko Sentral ng Pilipinas (BSP) gave a 6.8% estimate — within a 6.3-7.1% range — while the Department of Finance pegged last month’s inflation at 6.4%.
It would also mean that price increases will be the fastest since a 7.2% rate in February 2009, according to rebasing done by the PSA using 2012 prices.
Analysts' September Inflation Rate Estimates
Economists said damage by typhoon Mangkhut, locally called Ompong, worsened supply issues for rice and other crops, adding to inflation pressures from an unrelenting increase in world crude prices.
“We see food inflation rising further in the near term on supply disruptions, exacerbated by Typhoon Ompong,” said Chidu Narayanan, Asia economist at Standard Chartered Bank, adding that since “September is usually harvest season in the Philippines, the impact of the typhoon is likely to weigh heavily on supply for the rest of this year.”
In mid-September, Ompong damaged swathes of farms in Benguet, Isabela and Cagayan which are among the country’s major sources of rice and vegetables. Prices of these products have been skyrocketing in the past months.
However, the central bank said a reprieve from lower electricity rates could have helped cap inflation for the month.
Headline inflation averaged 4.8% in the eight months to August, well above the 2-4% target band for 2018. The central bank now sees 2018 inflation averaging 5.2%, with the third quarter expected to have experienced the peak.
Economists polled were split on whether September inflation had already been 2018’s worst, with some noting that the BSP needs to remain hawkish in order to calm market speculation and prevent further spikes.
“We expect inflation to decline starting October 2018, although such decrease does not preclude the possibility of more rate hikes from the BSP this year,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.
He noted that the BSP might need to match tightening moves in the United States to “protect the local currency from depreciating further,” with the peso currently hovering near 13-year lows weaker than P54 to dollar.
“Despite the projected slowdown in inflation for the last three months of the year, the BSP may need to remain hawkish to snuff out brewing concerns about runaway inflation,” said Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila.
“More decisive, deliberate and consistent messaging will be needed from the central bank if BSP would like to rein in these concerns and look to establish its credibility as an inflation fighter.”
Emmanuel A. Leyco, economics professor at the Asian Institute of Management, believes inflation will keep rising to “up to seven percent” by December.
Ateneo de Manila University’s Alvin P. Ang also sees above-six percent inflation toward yearend.
The analysts tagged the planned shift to a regular tariff scheme for rice imports and non-monetary measures to improve crop supply as key steps to easing overall price pressures.
The BSP last Thursday fired off another 50 basis point (bp) hike in benchmark interest rates to 4-5%, taking the year-to-date increment to 150 bps in four consecutive policy meetings since May.

WESM operator flags tax reforms’ price impact

THE OPERATOR of the Wholesale Electricity Spot Market (WESM) has projected ongoing tax reform to increase overall electricity prices progressively until 2020, when the price hike could be as high as P0.1311 per kilowatt-hour (/kWh).
Francis Saturnino C. Juan, president of the Independent Electricity Market Operator of the Philippines, Inc. (IEMOP), placed the increase this year with the imposition of new or higher taxes on fuel at P0.0904/kWh, increasing to P0.1111/kWh in 2019.
“This is the price impact, say, on Meralco (Manila Electric Co.) or a utility given a set of assumptions — they are getting (electricity) from certain suppliers that will be running on this fuel pero (but) they will also get a portion of their requirement from the spot market,” he said in an interview after an energy forum last week.
IEMOP took over WESM operations from the Philippine Electricity Market Corp. (PEMC) last week.
“There is no one-to-one correlation of the increase in the tax rate and the increase in the electricity rate of a particular utility. It will all depend also on the sourcing of that particular utility,” he clarified.
He said the simulation for the estimated incremental increase in power prices used actual data from Meralco.
“That is the incremental (rate increases)… since the prices of fuel have already gone up, then that will add to the increase in the electricity rate,” Mr. Juan explained.
“That will be passed on also to the consumers of these distribution utilities.”
Of the projected overall power rate increase this year, the IEMOP computation expects generation charge to account for P0.0204, or 22.6% of the total. The corresponding figures for 2019 and 2020 are P0.0411 or 37% and P0.0611 or 46.6%, respectively.
The market operator placed Meralco’s average supply mix that makes up the generation charge at 31% coal, one percent oil, 15% WESM and 53% other energy resources, which it did not break down.
Republic Act No. 10963, or Tax Reform for Acceleration and Inclusion Act (TRAIN), this year added P2.65 per liter to the price of gasoline as excise tax, P0.32 per liter as value-added tax (VAT), or a total of P2.97 per liter, the Department of Energy had said.
For diesel, the law resulted in an increase of P2.50 per liter in excise tax and P0.30 in VAT, or a total of P2.80 per liter. Diesel — consumed by public utility vehicles — used to be free of VAT and excise tax.
A succeeding tax reform tranche will add P2.24 per liter to the price of gasoline and P2.24 per liter for diesel in both excise tax and VAT. For 2020, the price increases for gasoline and diesel are P1.12 and P1.68 per liter, respectively.
RA 10963 also raised the excise tax on domestic and imported coal starting Jan. 1, 2018 to P50 per metric ton (/MT) from P10/MT. The tax will increase up to P150/MT on Jan. 1, 2020. — Victor V. Saulon

A runway show at LVMH’s Celine just shifted luxury’s landscape


PARIS — Star designer Hedi Slimane revealed his first collection for LVMH’s Celine brand in Paris Friday in the most anticipated runway show of September’s fashion weeks.
It was youthful, it was black, it was rock-and-roll. Tailoring was skinny where bodies were covered at all. Unsurprisingly, it looked a lot like Kering’s Saint Laurent.
Under Slimane, who’s returning to fashion after a two-year hiatus, the French luxury conglomerate wants to double or triple Celine’s sales within five years, adding new product categories to transform it into a megabrand on the scale of Christian Dior or Prada.
Here’s how the designer’s new vision for Celine could affect the luxury sector’s bottom line.
THE MAN
Slimane is best known for setting the menswear agenda for over a decade when he brought back skinny suits and jeans at Dior Homme in the early 2000s, prompting men around the world to retire their flouncy trousers and pay a premium for form-fitting looks.
During a subsequent four-year tenure at Kering SA’s Yves Saint Laurent, he turned the floundering French fashion house into a commercial force. He put in place an ultra-branded, black-and-white aesthetic for marketing campaigns while mining the house’s archives to pull together retro, rocker-chic looks that put a California spin on French luxury. Slimane filled Saint Laurent’s shelves with biker jackets, sleek handbags and easy-selling $450 low-top sneakers.
THE BRAND
Celine, a Parisian accessories brand founded in 1945, was elevated by designer Phoebe Philo, who left last year after a 10-year stint during which her designs were lauded for their intellectual, grown-up woman chic. While star products like the $3,000 Phantom handbag and $500 Edge sunglasses increased revenue to roughly €1 billion ($1.16 billion), Philo remained committed to niche positioning, shunning e-commerce and social media.
Slimane’s mandate is to scale up the brand, expanding into menswear, fragrances, and haute couture.
THE CHALLENGE
The move by LVMH Chief Executive Officer Bernard Arnault to tap a star designer at Celine could be seen as a riposte to archrival Kering, which reported 25% growth last year, with its hip Gucci and Balenciaga properties outpacing competitors.
For LVMH to meet its revenue target of €2 billion to €3 billion for Celine, the label will need to grow as much as 15% a year. That’s at least three times the pace of the global luxury market, according to consultancy Bain.
Sector experts seemed unconcerned ahead of the show. LVMH — whose other brands include Louis Vuitton, Dior, and Fendi — is the world’s largest luxury goods maker and France’s most valuable company, and has unrivaled investment firepower to promote Slimane’s Celine.
“He’s a brand in himself, and anything he touches makes money,” said Gachoucha Kretz, marketing professor at HEC Paris business school.
THE RIVAL
Since Slimane’s departure from Saint Laurent, that brand’s growth has continued. New designer Anthony Vaccarello has made his mark on ready-to-wear collections with a sexed-up, 1980s aesthetic and cinematic runway shows against the backdrop of the Eiffel Tower. But the brand has largely remained within the outlines of Slimane’s monochromatic, youth-focused template.
“If Celine is going to grow significantly, and I believe it will, the question is from which brand it will take market share,” Mario Ortelli, a luxury consultant, said before the show. Saint Laurent is one label that could be affected “due to its price point as well as its recent heritage with the designer.”
THE LOOK
The mood and references of Slimane’s Celine debut were Parisian where his Saint Laurent had been Californian. Tailoring was slim, but not skin-tight. Long-time fans of Slimane’s look celebrated. “King is back,” posted the record producer and Polish reality-TV star Maja Sablewska.
The skimpy, rock groupie-inspired womenswear looks were enough to burn devotees of his predecessor’s arch aesthetic in one go, however. Little satisfied with the brand’s statement that the covered-up menswear looks would all be marketed as unisex, they decried the collection as disrespectful and retrograde in flurry of Instagram comments before the show had even ended.
Runway critics and junior stylists wondered why LVMH hadn’t given Slimane his own brand rather than imposing his singular vision on Celine. “There are now two YSLs in town,” casting director James Scully commented on Instagram following the show. “I was hoping for a bit more evolution.”
Don’t expect any of this to shake Slimane’s devotion to his trademark skinny look.
“I found my style more than 20 years ago, unless it’s the other way around,” he said in a rare interview with French newspaper Le Figaro Tuesday. “It passes through a line, a stroke, an appearance, a silhouette that I have been obsessively pursuing since.” — Bloomberg

NFA plan to require rice permits for supermarkets ‘impractical’

THE “uncoordinated and impractical” imposition of the National Food Authority (NFA) of a rice permit for supermarkets provides an additional argument for the grains agency’s abolition, Senator Sherwin T. Gatchalian said on Sunday.
“This is an ill-conceived move… If you are the supermarket owner, are you going to pay the permit fee if in the first place you are not required to sell NFA rice?” the senator said in a statement.
“This is yet another reason why the NFA should be abolished,” he added.
On Sept. 19, the NFA signed a memorandum of understanding between the Department of Trade and Industry (DTI) and the Philippine Amalgamated Supermarkets Association (Pagasa), Inc. to allow supermarkets to sell NFA rice.
The move was intended to improve access to affordable grades of rice sold by the NFA, according to the DTI.
According to news reports, Pagasa said the NFA is charging P115,000 from retailers with a paid-up capital of P10 million in order for them to be permitted to sell NFA-grade rice.
“Even the DTI (Department of Trade and Industry has said that there was no permit fee in the MoA. So why is the NFA now suddenly and unilaterally charging this arbitrary fee?” Mr. Gatchalian said.
Asked for comment, NFA spokesperson Rex C. Estoperez said supermarket owners can call a meeting with the grains agency to further discuss the issue.
“We have told (supermarket owners) that the license cannot be waived. We can relax some requirements but not the license because it is mandated by the law,” he said in a phone interview. — Camille A. Aguinaldo

PSEi seen ending 2018 at 8,200

By Arra B. Francia
Reporter
THE stock brokerage arm of the Bank of the Philippine Islands (BPI) projects the Philippine Stock Exchange index (PSEi) to close around the 8,200 level by year-end, as investors focus on companies’ fundamentals amid rising inflation and the weakening peso.
Amid the volatility experienced in the first three quarters of the year, BPI Securities Corp. President and Chief Executive Officer Hermenegildo Z. Narvaez said market participants will still look at how companies perform and the outlook for earnings growth.
“The main determining factor is still fundamentals, the corporates’ prospects for earnings growth…and how investors expect them to perform,” Mr. Narvaez told BusinessWorld in an interview at the company’s head office in Makati City last Friday.
“If there’s going to be a rally, it’s gonna be towards the end of this year around December, we should end not far away from 8,200,” he added.
Should this materialize, this would place the PSEi about 4.2% lower than its finish of 8,558.42 in 2017, a reversal of last year’s 25.1% increase from 2016’s close.
‘CHALLENGING’ Q3
By the end of the third quarter, the PSEi has already sunk to 7,276.82, about 15% lower than its 2017 finish. In September alone, the PSEi saw four consecutive weeks of losses.
Mr. Narvaez said the third quarter was a “challenging” time for the PSEi.
“It’s a confluence of all the risks that we were considering could happen, actually manifested in the third quarter. The peso continued to weaken, inflation continued to accelerate. We’re starting to see that impact the earnings of the companies,” he said.
Mr. Narvaez explained that compared to the second quarter where the outflow of funds was driven by the cautiousness against emerging markets, the third quarter put a spotlight on inflation, as well as other short term issues hounding the Philippine market.
The Bangko Sentral ng Pilipinas’ efforts to curb inflation by hiking interest rates — now up by 150 basis points — is also seen affecting companies’ capital-raising efforts.
“When you’re also raising rates, lending rates are going up. So there’s a concern how that will affect consumption, and the investments of companies moving forward and in effect will that affect growth,” Mr. Narvaez said.
With this, some analysts have downgraded their forecasts for some companies in the consumer sector that are directly affected by rising inflation.
“So that includes FMCGs (fast moving consumer goods) like URC (Universal Robina Corp.), restaurants… It’s not just commodity prices, but there’s also some concern about labor cost and how inflation will eventually force companies to likewise raise wages,” Mr. Narvaez explained.
Asked which companies were able to weather the volatility for the quarter, Mr. Narvaez cited San Miguel Corp. and Jollibee Foods Corp. (JFC) due to their aggressive expansion efforts.
He noted, however, that these companies “barely” got through the weak performance as well, as only a few companies actually posted gains.
On the other hand, companies like GT Capital Holdings, Inc. may have faced more headwinds due to the implementation of laws affecting their businesses, such as the Tax Reform for Acceleration and Inclusion law, while regulatory concerns weighed on Metro Pacific Investments Corp.
Moving forward, Mr. Narvaez said the market can correct to around 7,000-7,100. The 7,000 level will indicate a price to earnings ratio of 15x, which he said will be a good entry point for investors.
Mr. Narvaez expects property companies such as Ayala Land, Inc. and SM Prime Holdings, Inc. to deliver strong growth for full-year 2018. He also cited oleochemicals and aerosols manufacturer D&L Industries, Inc., noting its business model can allow it to pass on higher input costs to end-customers — an effective hedge against inflation.

Playing with clothes


It’s always been the goal of people in the creative industries to push boundaries, when they can. But do limits exist? How can you push something to its limit, then take a look back, and still say it’s acceptable, even beautiful?
The trick, apparently, is to learn all the rules before you even begin to break them. Mark Higgins, the son of avant-garde designer Salvacion “Slim” Lim Higgins, used the terno as an acceptable. “Don’t change the sleeves.”
Mr. Higgins sits as a co-director of Slim’s Fashion & Arts School, and on Sept. 27, the school had an exhibit in SM Mega Fashion Hall’s atrium, featuring the best designs of its graduating students, with the theme “Laro” (“to play” in English). The exhibit will run until Oct. 3. The exhibit was done in collaboration with Swatch, and is evident in the dress forms and mannequins having the watches as heads. Apparently, according to Mr. Higgins, the partnership is perfect as the brand is releasing a collection called “Think Fun.”
As for the dresses, the students were told to “Play with colors, textures shapes. Think of children’s games, nursery rhymes: knock yourself out, but do it well,” said Mr. Higgins in an interview with BusinessWorld.
Some of the more striking designs we saw on exhibit was a man’s suit with butterfly sleeves, inspired by kites, by student-designer Marvien. A popular dress that attracted visitors to the exhibit was a terno printed with a design inspired by comic books by student Vanessa Pinlac, while several students attempted to interpret card games as garments, resulting in designs that were grand but playful. A design by Jomar Saldo recreates the lightness of childhood with a dress inspired by bubbles, executed with a Japanese technique that created small puffs of translucent fabric. Menswear was well-represented as well, with barongs taking cues from marbles, party games, and catching dragonflies.
“You can do something as outrageous as you like, but it has to be very well-made,” said Mr. Higgins, recalling what he says to students. His mother, Slim Higgins, was known throughout the 1950s to the ‘70s for creating avant-garde looks that took inspiration from playing around with Filipiniana, resulting in outfits that propelled the wearer well into the territory of Balenciaga. The designs showed a Filipina eager to join the party of fashion worldwide, while tiptoeing through the Filipino postwar politics and issues that shaped the nation. Asked about how his mother pushed boundaries in the conservative era of the ’50s, he said, “She would push the limits, and would do very avant-garde designs, but the women always looked beautiful.”
It’s one of the requirements for every student of Slim’s to know how to make a terno before graduating. The terno has fallen in and out of fashion, but it still remains in the collective Filipino consciousness, as seen in Slim’s exhibit. “It is part of the story of the birth of the Filipina,” said Mr. Higgins, when asked about the importance of students to learn how to make a terno. Of course, few of the ternos and dresses exhibited were wholly traditional, so the students also participate in the evolution of the national dress, experimenting with its form but still remaining deeply rooted in its origins. Mr. Higgins used artist Pablo Picasso as an example: while he is known for his abstract work, his earlier work reflects an artist skilled in distilling perfect form and enviable realism. “It makes for an educated designer.” — JLG

Small farms in Davao upland district eyed for agri-tourism

DAVAO CITY — The upland district of Marilog — home to numerous small vegetable, fruit, and flower farms as well as a growing number of hillside resorts and restaurants — is being groomed to become one of the city’s main agri-tourism site.
Davao City Chamber of Commerce and Industry, Inc. (DCCCII) President Arturo M. Milan said the chamber will be working with the City Tourism Office to develop a comprehensive plan in coordination with the farmers.
“There are so many farms, especially in Marilog area… people (on their own) just go there,” Mr. Milan said in an interview after the recently-held Davao Agri Trade Expo 2018, where farm tourism development was identified as a priority sector.
Mr. Milan said one of the components being discussed is a dedicated tour bus route.
“As of now, if you don’t have your own vehicle, you can’t really go there… There should be a bus (from the city center) to Marilog that will make stops at the farms. That is really our vision, to do it as a regular service,” Mr. Milan said.
At the same time, the farmers need to be organized to prepare them to offer tourism services.
He cited Bemwa Farms as a potential model site because it has become popular among locals as an agri-tourism destination.
“If you just go to Marilog during weekends, you will see so many cars, all the restaurants are full… Just like Bemwa, that is actually how it is should be, there are a lot of small farms there that could be included in a system that is structured, ” he said.
He said Davao City is in a good position to host farm tours because the urban center is not too far from the agricultural areas.
“The good thing with us is, we are so close to the farm sites and we can really bring, especially people from Manila, to visit a farm and do harvesting,” said Mr. Milan, adding that it is also one way of promoting direct links between farmers and buyers.
Mr. Milan also noted that Davao Region as a whole has a “from highlands to islands” tourism campaign, “So this is our way of promoting, adding value to the promotion of highlands in Davao.” — Maya M. Padillo

Treasury bill rates likely to go up

RATES of the Treasury bills (T-bill) on offer today will likely climb, with oversubscription in tenders expected, as investors await the local inflation print for September.
The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills on Monday. Broken down, the government plans to raise P4 billion through the three-month papers, P5 billion via the six-month T-bills, and another P6 billion in one-year debt.
Traders interviewed before the weekend said yields on the T-bills on offer today could pick up from last week’s offer, with one saying it will climb by five to 10 basis points (bp).
The Treasury opted to reject all bids for the P15-billion T-bills auction last week.
Had the BTr made a full award, the rates of the three- and six-month papers would have fetched rates of 4.381% and 5.142%, respectively, while the rate of the one-year bills would have climbed to 5.643%.
At the secondary market on Friday, yields on the 91- and 182-day papers were quoted at 4.3094% and 4.6491%, respectively, while the 364-day T-bills fetched a 5.276% yield.
The trader said that the offer volume will be 1.5 times oversubscribed, although the Treasury could reject offers at the longer tenors.
“The BTr could reject bids again probably on longer tenors this time because they have been rejecting the 91-day [papers] for two consecutive weeks,” the trader said.
“That’s the usual demand for the T-bills. Usually, tendered volume is 1.5-2 times oversubscribed.”
Another trader added that market players will await the September inflation print due to be released on Friday.
The Bangko Sentral ng Pilipinas (BSP) said last week it is expecting inflation to have further accelerated to 6.8% in September or a range of 6.3-7.1%.
If realized, it would be faster than the 6.4% print in August and would be the highest since the 7.2% tallied in February 2009.
“[This is due to] higher domestic petroleum prices, higher prices of rice and other agricultural commodities due to typhoon Ompong, and the peso depreciation contributed to the upside pressures for the month,” the central bank’s Department of Economic Research said in a statement.
“For [this] week, we are looking at the inflation data and the auction last week,” the trader said.
The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal

Cebu Pacific to take delivery of its 1st A320neo aircraft by November

BUDGET carrier Cebu Pacific expects the delivery of its first Airbus A320neo (new engine option) by November, which will be deployed for international routes before the end of 2018.
“I think the upcoming neo deliveries is going to be exciting for us. We expect our first neo to be delivered around November. Entry into service sana [hopefully] by December. We hope to use it on international routes,” Cebu Pacific Vice President for Commercial Planning Alexander G. Lao told reporters last week.
Although the Gokongwei-led airline has yet to finalize which routes the A320neo will be used, Mr. Lao said they are looking at a combination of flights to Indonesia and Japan.
Cebu Pacific currently has an order of 32 Airbus A321neo, five A320neo, two A321ceo (current engine option) and six ATR 72-600 aircraft.
Mr. Lao said the plane acquisitions are expected to fuel the budget carrier’s growth, as Cebu Pacific has not expanded its fleet as much in the last few years.
By next year, Mr. Lao said the budget carrier is seen to receive an aircraft almost every month. All the company’s orders are targeted to be delivered between this year and 2022.
These new aircraft will likely be deployed to different airports, Mr. Lao said, such as Ninoy Aquino International Airport (NAIA), Mactan-Cebu International Airport (MCIA) and Clark International Airport.
“I think there’s plenty of places to deploy. It’s a matter of us trying to stimulate the market also and see if we can get enough traffic. (There are) enough places to put them,” he said.
Mr. Lao also noted the company may partially phase out some of its older Airbus A320 units once its new orders arrive.
Cebu Pacific currently has a fleet of 67 planes, of which 36 are Airbus A320s, five A321ceos, eight A330s, eight ATR 72-500s and 10 ATR 72-600s.
Cebu Air, Inc., the listed operator of Cebu Pacific, took a hit from rising jet fuel prices and the weakening of the Philippine peso as reflected in its first half net income, which fell 24% from last year at P3.309 billion.
Last month, the airline started raising fares for international and domestic flights with the implementation of a Level 3 fuel surcharge. With the surcharge, it hopes to recover some of the losses incurred from rising fuel expenses. — Denise A. Valdez

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