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Factory activity growth recovers in May

By Reicelene Joy N. Ignacio
Reporter

MANUFACTURING in the country picked up in May after business for factories improved at the slowest pace in nine months in April, with the increase in new orders “the most marked in four months” on the back of a “moderate” improvement in demand that was nevertheless “the greatest since February,” according to the latest monthly survey IHS Markit conducted for Nikkei, Inc.

The seasonally adjusted Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) increased to 51.2 in May from the 50.9 in April, signaling a “modest, but stronger, improvement in the health of the manufacturing sector.”

It was the first time in six months that headline PMI increased.

“Filipino goods producers reported an improved picture in May as output growth strengthened amid a sharper increase in new orders. Firms were helped by a rise in foreign demand for only the second time since last September as the global trade war intensification led to weaker export conditions. This should ease some nerves in the wake of further tariffs announced by the US and China,” a Nikkei news release quoted IHS Markit Economist David Owen saying.

The manufacturing PMI consists of five sub-indices, with new orders having the heaviest weight at 30%, followed by output with 25%, employment with 20%, suppliers’ delivery times with 15% and stocks of purchases with 10%. Readings above 50 signal improvement of factory activity from the preceding month, while those below reflect contraction.

The output index showed increase in production was “moderate” though “the quickest in three months.”

Moreover, the May survey data bared “a sharper increase in total new orders” that was “the highest in four months,” while new export orders marked “the second monthly improvement in external demand” since July last year.

Supply constraints appeared to lessen, with lead times for production inputs cut for the second straight month “and at the fastest rate” in 27 months as further easing of port congestion enabled suppliers to deliver goods on time.

Increase of input costs was the weakest in 39 months, although some survey respondents cited increased prices of produce due to recent weather disruptions.

Selling prices, on the other hand, rose “at the fastest pace since January.”

On the other hand, factories were hounded by “multiple resignations” in May, leading “to the sharpest decline in employment in 15 months as firms chose not to replace these employees.”

“Manufacturers may need to curb these resignations if they hope to sustain higher production levels,” Mr. Owen said.

The outlook on production “improved for the second successive month in May from the record low in March,” Nikkei noted in its press release, with “nearly 59% of respondents” expecting “an increase in activity over the coming 12 months… citing current growth in new orders from home and overseas” as well as “new stores and product launches.”

PROSPECTS UPBEAT
Sought for comment, Robert Dan J. Roces, chief economist at the Security Bank Corp., said in an e-mail that “[t]he improved PMI number may be the first salvo of higher capital formation as sentiment turns to a positive growth outlook.

“With the recent [monetary] policy cuts and tapering inflation, business sentiment is improving and supports our view of stronger growth for the next quarters as domestic consumption picks up,” Mr. Roces said.

“Private investments will continue to sustain jobs and income creation while the government has pledged to accelerate its infrastructure projects after the budget was signed, and so the unemployed in the rural areas can potentially find jobs in non-farm sectors such as construction and manufacturing,” he added.

“Barring potential headwinds from the worsening trade war, an improved manufacturing sector is an essential condition for further economic growth.”

Also sought for comment, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail that “[t]he improvement reflects a pickup in new orders as prospects remain upbeat which could point to a possible rebound in agricultural production in Q2 as well versus Q1’s 0.67% performance.”

“Food manufacturers constitute roughly 33% of the total manufacturing sector and the largest single subsector for manufacturing. A rebound in overall PMI manufacturing could signify a similar improvement in the agricultural sector,” he added.

“Going forward, the Philippine economy hopes to move past the Q1 [economic growth] snafu [with gross domestic product growth clocking in at a four-year-low 5.6%] as well as to see improved performance in both the agriculture and industrial sectors which could complement the ever-reliable performance of the services sector to achieve a more balanced growth dynamic.”

Recession fears grow as manufacturing shrinks in Asia

HONG KONG — Factory activity contracted in most Asian countries last month as an escalating trade war between Washington and Beijing raised fears of a global economic downturn and heaped pressure on policy makers in the region and beyond to roll out more stimulus.

Such growth indicators are likely to deteriorate further in coming months as higher trade tariffs take their toll on global commerce and further dent business and consumer sentiment leading to job losses and delays in investment decisions.

Some economists predict a world recession and a renewed race to the bottom on interest rates if trade tensions fail to ease at a Group of 20 summit in Osaka, Japan at the end of June, when presidents Donald Trump and Xi Jinping could meet.

In China, Asia’s economic heartbeat, the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) showed modest expansion at 50.2, offering investors some near-term relief after an official gauge on Friday showed contraction.

The outlook, however, remained grim as output growth slipped, factory prices stalled and businesses were the least optimistic on production since the survey series began in April 2012.

PMIs were below the 50-point mark separating contraction from expansion in Japan, South Korea, Malaysia and Taiwan, came below expectations in Vietnam and improved slightly in the Philippines.

“The additional shock from the escalated trade tensions is not going to be good for global trade and if demand in the US, China and Europe continues to soften, which is very likely, it will bode ill for Asia as a whole,” said Aidan Yao, senior emerging markets economist at AXA Investment Managers.

“In terms of the monetary policy response, almost everywhere the race is going to be to the downside.”

Central banks in Australia and India are expected to cut rates this week, with others around the world seen following suit in coming weeks and months.

HSBC economist Jingyang Chen said the PMI figures could mean “Beijing will double down on easing for the private corporate sector.”

Euro zone activity is expected to shrink as well, while US manufacturing is expected to grow steadily, although economists expect the global malaise to eventually feed back into the US economy.

Fed funds rate futures are now almost fully pricing in a rate cut by September, with about 50 percent chance of a move by July 30-31.

J.P. Morgan expects the Federal Reserve to cut rates twice this year, a major change

from its previous forecast that rates will stay on hold until the end of 2020.

DIVERTED TRADE FLOWS
In India, where growth depends largely on domestic demand, the manufacturing sector expanded at its quickest pace in three months, with sentiment boosted by a dramatic election win by Prime Minister Narendra Modi.

But further economic reforms will be crucial, as highlighted by Friday’s data showing the economy growing at its slowest pace in more than four years in January-March.

The expansion in Philippines reflects strong domestic demand and less reliance on trade, while for Vietnam it is a reflection of a diversion of business and trade flows due to the tariffs.

A Societe Generale analysis shows that in industries affected by the implemented tariffs — such as capital goods and some electronics — Germany, Mexico, South Korea and Taiwan have each won more US business.

Vietnam has been the biggest beneficiary in industries where tariffs are a threat, such as smartphones, and is also seeing investment from companies moving production out of China.

“Southeast Asian countries, especially Vietnam and Thailand, are often cited as the top choices, and indeed they look ready,” Societe Generale analysts said in a Friday note.

Ominously, South Korean exports — seen as a bellwether of world growth — fell 9.4% in May, worse than a median forecast for a 5.6% decline, data released on Saturday showed.

The trade conflict between China and the United States suddenly escalated last month when Trump raised tariffs on hundreds of billions of Chinese imports to 25% from 10% and threatened levies on all Chinese goods.

If that were to happen, and China were to retaliate, “we could end up in a (global) recession in three quarters,” says Chetan Ahya, global head of economics at Morgan Stanley.

Washington’s new tariff threats against Mexico last week also contributed to global recession fears, with stock markets tumbling around the world. The 10-year US Treasuries yield fell to 2.121%, a nadir last seen in September 2017.

Over the weekend tensions flared again between China and the United States over trade, technology and security.

China’s Defence Minister Wei Fenghe warned the United States not to meddle in security disputes over Taiwan and the South China Sea, while acting US Defence Secretary Patrick Shanahan said Washington would no longer “tiptoe” around Chinese behavior in Asia.

On Friday, China also threatened to unveil an unprecedented hit-list of “unreliable” foreign firms, groups and individuals that harm the interests of Chinese companies.

That came after Washington last month put Huawei on a blacklist that effectively blocks US firms from doing business with the Chinese telecoms equipment giant.

“We take this seriously. It means that the trade war has not only become a technology war but also a broad-based business war. There will be more retaliation actions from China, especially for the technology sector,” Iris Pang, Greater China economist at ING, said, adding that the tensions over Taiwan were a background worry rather than a pressing concern. — Reuters

Senate approves proposed tobacco tax hike

By Charmaine A. Tadalan
Reporter

SENATORS on Monday approved on third and final reading a proposal to increase excise taxes on tobacco products to P60 by 2023, a day before the 17th Congress ends.

Senators were still proposing amendments as of 7:30 p.m., but approved it by 7:45 p.m.

Earlier in the day, Senate President Vicente C. Sotto III said the Senate would take into account proposals of both chambers in introducing amendments to Senate Bill No. 2233.

“We are trying to thresh out all the proposed amendments today and hopefully at the end of the day we will be able to reach a consensus on how to go about it,” Mr. Sotto told reporters ahead of the plenary session on Monday.

“We expect that for this to be passed and enacted into law, we will ask the House to adopt the Senate version, so we have to be very careful with the Senate version and try to incorporate already all the ideas, not only from us, but also from the House of Representatives. So the period of amendments later will be very important.”

In a mobile phone message, he explained that there will be no need to convene a bicameral conference committee to harmonize versions if the House “adopts or accepts the Senate version.” Asked if the bill would secure final approval in Monday’s session, Mr. Sotto replied: “Hopefully yes.”

President Rodrigo R. Duterte on May 28 certified the measure as urgent, allowing lawmakers to approve it on second and on third reading on the same day.

Congress is supposed to adjourn today, although its calendar puts its end on June 7.

In its last version, the Senate proposed to increase tobacco excise tax to P45 in January 2020 from P37.50 currently; to P50 in January 2021; to P55 in January 2022 and to P60 in January 2023 and then by five percent every year thereafter.

Among major amendments proposed as of 5:30 pm, is to also tax heated tobacco and vapor products, which are not currently taxed. Approved so far was P10 rate per pack of heated tobacco and up to 10 milliliter of vapor products.

Its counterpart measure, House Bill No. 8677, approved on third and final reading in December 2018, proposed lower rates of P37.50-45 per pack in 2022, and by four percent annually thereafter.

Cigarettes are at present levied P35 rate per pack after Republic Act No. 10963 increased it to P32.50 from P30 in January 2018 and to P35 beginning July 2018. It is scheduled to go up to P37.50 in January 2020.

Presidential Spokesperson Salvador S. Panelo said Mr. Duterte can be expected to sign the bill as soon as it is transmitted to the Office of the President. “Siguro, I’m sure. If the President wants it passed, then necessarily the logic is he will sign it,” Mr. Panelo said in a briefing in Malacañan Palace on Monday.

The Department of Finance estimates the Senate version to generate an estimated P15 billion in revenues in the first year of the new law’s implementation, lower than the P30.1 billion targeted under its original proposal of abruptly raising sin tax on cigarettes to P60 per pack.

Members of the Philippine Medical Association (PMA) and the Philippine College of Physicians gathered in front of the Senate along with health advocates to push for SB 2233’s approval.

“We fully support the committee report of Senator Angara, which is P60 by 2023,” Dr. Ma. Encarnita B. Limpin, PMC Board member, told reporters.

“What is important is mapasa na po siya (that it is approved) by today, para po sa ganon (so that) before the end of the 17th Congress ay makuha natin ‘yung inaasam asam na pagtaas ng buwis ng sigarilyo (we achieve the increase in cigarette tax) primarily for the health objective and also to fund ‘yung Universal Health Care (law implementation).”

Outdated real property valuation seen depriving LGUs some P30.5 billion

THE FINANCE department (DoF) estimates that local government units (LGUs) have been foregoing about P30.5 billion in collections a year under the current system for updating schedules of market values (SMV) for real property tax, which has proven impractical for political reasons.

Republic Act No. 7160, or the Local Government Code of 1991, requires SMV updates every three years. This requirement is largely ignored, however, as local officials are elected very three years as well.

There is also a wide disparity between LGUs’ SMVs and zonal values of the Bureau of Internal Revenue’s (BIR) regional district offices that are used to compute estate, donor’s and capital gains taxes which are national levies.

The statement quoted Bureau of Local Government Finance (BLGF) Acting Deputy Executive Director Jose Arnold M. Tan as saying that cities could have collected as much as P23.077 billion in incremental revenues from real property taxes, while provinces could have gotten up to P7.379 billion with updated SMVs.

According to Mr. Tan, the amount that could have been collected by cities could have been used to build 513 transport terminals, 339 landfills, 1,154 satellite health centers or 3,330 low-cost resettlement projects.

For provinces, the revenues foregone could have been used for building 551 public markets, 771 kilometers of road, 7,542 classrooms or 2,155 day care centers.

Mr. Tan noted that only 36% of LGUs have updated SMVs, while the remaining 64% — composed of 97 cities and 48 provinces — have been non-compliant.

Moreover, 60% of BIR regional district offices have updated zonal values.

According to Mr. Tan, 23 national government agencies are involved in valuations using their own systems, leading to SMV-zonal value disparities amounting to 13-94%, while disparities between government and private real estate valuations range from 187% to 7,474%.

In order to fix this situation, the DoF has proposed as part of its tax reform program the establishment of a single valuation base for taxation and benchmarking that LGUs and the BIR will use, while still leaving with local governments the task of setting tax rates and assessment levels. The DoF has also proposed that LGUs that fail to update SMVs or implement new schedules after the Finance chief approves them be barred from getting “conditional or performance-based grants or any form of credit financing from the national government.”

Romero ups stake in AirAsia PHL operator ahead of planned IPO

By Denise A. Valdez, Reporter

THE Romero-led F&S Holdings, Inc. increased its stake in the operator of Philippines AirAsia, Inc. to become the single largest shareholder in the low-cost carrier ahead of its planned initial public offering (IPO) later this year.

F&S Holdings, owned by businessman Michael L. Romero and his wife Sheila B. Romero, acquired the shares held by Philippines AirAsia Chairman Marianne B. Hontiveros and Zest-O Corp. Founder Alfredo M. Yao in the airline company, bringing its stake to 44.4% from 15.7% previously.

The announcement was made by Sheila B. Romero, chairman of F&S Holdings, during a media briefing in Makati City on Monday.

“We are now taking on the role as the majority shareholder of AirAsia, Inc. (AAI), the corporation that owns and manages Philippines AirAsia. Owned by (1-Pacman Party-List Rep.) congressman Mikee Romero and I, F&S Holdings recently acquired (28.7%) shares of AirAsia, Inc., raising its total shares to (44.4%),” Ms. Romero said.

Based on records from the Philippines AirAsia website, Ms. Hontiveros and Mr. Yao each had a 15.7% stake in the company, while Malaysia AirAsia International Ltd. holds the remaining 39.9%.

The value of the deal was not disclosed, as Mr. Romero said the board is still finalizing the figure. He also noted the restructuring is not expected to change the composition of Philippines AirAsia’s current board of directors.

The development comes ahead of the planned recapitalization of the company to prepare for IPO by around November or December.

“Based on our EBITDA (earnings before interest, tax, depreciation and amortization) right now, we plan to put a valuation of about $600 million for the company,” Mr. Romero said.

“We get $600-million (valuation), so we’re planning to raise about $200 million. That’s just initial, kasi [because] our partners want to list the company within the year,” he added.

The recapitalization will be a mix of common shares of about P900 million ($17 million) and preferred shares of P17 billion. Mr. Romero noted all existing shareholders of Philippines AirAsia will subscribe to the recapitalization.

It tapped Citigroup, Inc. as financial advisor for the IPO, and is looking at BDO Capital & Investment Corp. as another potential advisor.

The $200 million that the company aims to raise from the IPO will be used mostly for aircraft acquisitions and additional working capital.

Philippines AirAsia currently has a fleet of 23 aircraft. Mr. Romero said the plan is to raise it to about 30 planes within the next two years.

In the first quarter, Philippines AirAsia booked a profit of P424.5 million, a 12% growth from the same period last year, due to a 27% increase in revenues at P6.68 billion.

Mr. Romero said the company expects to end the year at a profit after recording a loss of P2.11 billion in 2018.

“The company is now turning around and becoming very profitable… We plan to make our revenue from P30 billion this year to about P50 billion in three years’ time,” he said.

Petron’s preferred share offer gets SEC go signal

THE Securities and Exchange Commission (SEC) has given the green light for Petron Corp. to offer perpetual preferred shares worth up to P20 billion.

“(The company) received (on May 31) from the SEC the order rendering effective the registration statement for the registration of the Company’s perpetual preferred shares series 3, with an aggregate principal amount of P15 billion and an oversubscription option of up to P5 billion, and the corresponding Certificate of Permit to Offer Securities for Sale,” Petron told the stock exchange.

Petron has set the annual dividend rate for its P20-billion preferred shares offering at 6.8713% for 5.5-year shares and 7.1383% for seven-year shares.

In a final prospectus dated May 30, Petron said the offering will consist of 15 million perpetual preferred shares Series 3 with an oversubscription option of up to five million perpetual preferred shares priced at P1,000 each.

The Series 3A preferred shares will be redeemable 5.5 years after their issuance, while Series 3B preferred shares may be redeemed after seven years.

The company noted that the preferred shares are not convertible into common shares, and will not be given any further dividends beyond than what is stated above.

The preferred shares will also have “preference over holders of common stock in the distribution of corporate assets in the event of dissolution and liquidation of the company,” among other rights and privileges.

The shares are being offered from June 3 to 18, with listing at the Philippine Stock Exchange scheduled for June 25.

Petron expects to net P19.84 billion from the offering, should it fully exercise the oversubscription option. Proceeds will be used for the redemption of the company’s outstanding Series 2A preferred shares, the repayment of outstanding short-term loans, and other general corporate purposes.

Petron engaged BDO Capital & Investment Corp., BPI Capital Corp., Chinabank Capital Corp., and PNB Capital as the offering’s joint issue managers, joint lead underwriters, and joint bookrunners.

First Metro Investment Corp. has also been tapped as co-lead underwriter.

Petron’s net income attributable to the parent dropped 80% to P1.11 billion in the first quarter of 2019, amid a four percent decline in gross revenues to P124.56 billion. The company attributed the slowdown to lower sales volume posted by Philippine operations following the implementation of the Tax Reform for Acceleration and Inclusion law.

The company operates over 3,000 stations in the Philippines and Malaysia, after opening 40 new outlets during the quarter. It targets to add 300 stations until 2022 to continue expanding its operations.

Petron has committed to spend more than $1 billion for its expansion plans this year, including the construction of two stream boilers in its refinery in Limay town, Bataan. With a production capacity of 180,000 barrels per day, the Bataan facility supplies about 30% of the country’s total fuel requirements.

The company held a market share of 28.5% of the Philippine oil market as of end-2018, based on sales volumes and industry data from the Department of Energy.

Shares in Petron were unchanged at P6.12 each at the stock exchange on Monday. — Arra B. Francia

Palmary invests in PhilWeb

By Arra B. Francia, Senior Reporter

PHILWEB Corp. has signed a P292-million share purchase agreement (SPA) with Palmary Corp., as the firms embark on the joint development of their electronic bingo (e-bingo) businesses starting this month.

The listed gaming firm said in a statement Monday that it has issued 97.33 million shares to Palmary, equivalent to a 6.78% stake in PhilWeb.

“The price per share is P3. This is based on the average closing price per share in the last 30 days,” PhilWeb Vice-President for Legal Raymund S. Aquino said in an e-mail.

PhilWeb described Palmary as an accredited supplier of e-bingo machines across the Philippine Amusement and Gaming Corp. (Pagcor)’s network of more than 300 e-bingo outlets carrying more than 30,000 e-bingo terminals.

“I welcome the Palmary Group’s investment in our company, a great sign of faith in the positive developments we have attained in the past year. I believe this investment will result in positive gains for both over the next few years,” PhilWeb Chairman and Chief Executive Officer Gregorio Ma. Araneta III said in a statement.

Following the SPA, the two firms also signed a cooperation agreement that would allow them to expand their e-bingo business. PhilWeb currently has six e-bingo outlets, while Palmary operates 16.

“We are very excited about our future in the e-bingo business in cooperation with the Palmary Group. When combined with our growing e-Games business, we now have an expanding, two-fold footprint in the whole electronic gaming sector,” Mr. Araneta said.

PhilWeb trimmed its net loss attributable to the parent to P10.59 million in the first quarter of 2019, less than half its attributable loss of P28.88 million in the same period a year ago. Gross revenues also improved 38% to P120.72 million.

“I remain deeply committed to getting PhilWeb back to its former profitability levels, during which times we were able to pay out high dividends to stockholders and generate significant share price increases as well,” Mr. Araneta said.

The company was forced to shut down its operations in 2016 after Pagcor declined to renew its license. This came after President Rodrigo R. Duterte singled out former PhilWeb Chairman Roberto V. Ongpin as an “oligarch that must be destroyed.”

Mr. Ongpin then sold his shares to Mr. Araneta for P2 billion.

“We are also committed to our role in consistently increasing the revenues of PAGCOR, which we have done for over thirteen years,” Mr. Araneta said.

Shares in PhilWeb jumped 2.09% or seven centavos to close at P3.42 each at the stock exchange on Monday.

Relationships and family are the focus of the French Film Festival

FOR ITS 24th year, the French Film Festival will have a slate of 15 films which “explore the depths of human relationships and the importance of family.”

The festival will run from June 12-18 at the Bonifacio High Street Cinemas in Taguig and Greenbelt 3 Cinemas in Makati.

“For nearly a quarter of a century, the French Film Festival has been attracting audiences to discover films that offer a particular French aesthetic — those that tell stories that make you laugh, cry, or reflect on the human condition in our society,” French Ambassador Nicolas Galey said during his message at the festival’s media launch on May 30 at Greenbelt 3, Makati City.

This year, French director Nils Tavernier graces the festival’s opening night on June 11 to formally open the 24th French Film Festival with the screening of his latest film, 2017’s L’Incroyable histoire du Facteur Cheval (The Ideal Palace). Set in Southern France in 1879, the film recounts the true story of an ordinary mailman who devotes 33 years of his life to build a castle for his daughter. This “Ideal Palace,” located in France’s Auvergne-Rhône-Alpes region, was named a Historical Monument by the French government in 1969.

Another film by Mr. Tavernier will also be screened in the festival: De Toutes nos forces (The Finishers) (2014) which tells the story of a paraplegic teenager who wants to finish the Ironman triathlon in Nice.

Other films to be screened in the festival are: 2018’s Le Grand bain (Sink or Swim) by Gilles Lellouche, a group of men setting up the local pool’s first men’s synchronized swimming team; 2014’s Bande de Filles (Girlhood) by Céline Sciamma, about a conservative girl who joins a gang of liberated girls; 2017’s

La Promesse de l’Aube (Promise at Dawn) by Eric Barbier about a novelist and his relationship with his mother.

Justine Triet’s 2016 film Victoria (In Bed with Victoria), tells of a criminal defense attorney looking for stability and true love, while Le Brio (2017) by Yvan Attal is about a woman who dreams of becoming a lawyer and a mean professor who helps her.

Jean Paul Civeyrac’s 2018 film Mes Provinciales (A Paris Education) follows three friends who are apart by love, friendship, and art. Barbara (2017) by Mathieu Amalric is about a director sets out to make a film about a singer, but both he and the actress find themselves overwhelmed by the project. Serge Bozon’s Madame Hyde (2018) is about a teacher who becomes Mrs. Hyde due to a lightning strike.

Xavier Legrand’s 2018 film Jusqu’à la Garde (Custody) is the story of a young boy caught in the middle of his divorcing parents. Robert Guédiguian’s 2017 movie La Villa (The House by the Sea) is a family drama about an old man whose children stay with him in his seaside villa for the last of his days. Daniel Roby’s 2018 movie Dans la brume (Just a Breath Away) tells the story of a father who needs to rescue his daughter after an earthquake

Benjamin Renner and Patrick Imbert’s 2017 film Le Grand Méchant Renard (The Big Bad Fox & Other Tales) is the only animated film the slate. It tells about the chaos brought about by a fox who thinks it’s a chicken, a pig that acts like a stork, and a duck who wants to replace Father Christmas.

And finally, Varda by Agnès by Agnès Varda (2018) is a documentary about her experiences as a director and her journey from Paris to Los Angeles to Beijing.

The film festival will also screen select Filipino films during its run: Pepe Diokno’s Above the Clouds (2014) which was co-produced with funding from the Aide aux Cinémas du Monde program of Institut Français; Carlo Catu’s Waiting for Sunset (2018) which received the Audience Award at the 2019 Vesoul Festival of Asian Cinema; Carlo Manatad’s Jodilerks Dela Cruz, Employee of the Month (2017) which was featured in last year’s Semaine de la Critique at the Cannes Film Festival; and National Artist for Film Kidlat Tahimik’s Mababangong Bangungot (Perfumed Nightmare) (1978) which was partly filmed in Paris.

On June 14, a screening of Bande de Filles will be followed by a forum, co-organized with SPARK! Philippines, about issues faced by young girls in France and the Philippines.

The French Film Festival will run from June 12-18 at the Bonifacio High Street Cinemas and Greenbelt 3 Cinemas. Screenings will also be held at the Ayala Center Cebu from June 20 to 22; the Abreeza Mall, Davao from June 28 to 30, and Ayala Capitol Central Mall, Bacolod City on July 10 to 12. Tickets are P150 per screening and can be purchased through the box office or via sureseats.com

For details on the film-line-up, synopses, trailers, and screening schedule, visit www.ph.ambafrance.org or www.facebook.com/FrenchEmbassyManila or @FrenchEmbassyPH on Twitter and Instagram.

Why logistics is next big thing for Philippine real estate sector

THE LOGISTICS sector is expected to be the “next big thing” to watch in Philippine real estate, as it presents growth opportunities for developers amid the ecommerce boom, according to a report by Santos Knight Frank.

In its report “The Future of Logistics: A Real Estate Perspective,” Santos Knight Frank noted the logistics industry is seen to continue growing, alongside the economy and the property market.

“It is presently going through a remarkable evolution as market players consider escalating land values, transportation challenges, changing market dynamics and increasing competition in their strategy formulation and feasibility studies. Technology is playing a vital role that will define the future of logistics in the country,” Santos Knight Frank said.

“New regional areas will emerge as logistic battlegrounds, supported by improvements in accessibility and realization of infrastructure programs,” it added.

Some of the country’s top conglomerates have started developing industrial estates, and entered the logistics sector.

Ayala Land Inc. is venturing into industrial parks and warehouse facilities through Prime Orion Philippines, Inc. (POPI), which has been renamed as Ayala Land Logistics Holdings, Corp. Last April, the logistics unit broke ground for the P172-billion Laguindingan Technopark in Cagayan de Oro.

Additionally, the Ayala Group also owns 49% of the online shopping platform Zalora.

SM Investments Corp. (SMIC) has a minority stake in country’s largest integrated supply chain operator, 2GO Group Inc.

Metro Pacific Investments Corp. (MPIC) expanded into logistics in 2016 through the acquisition of a 12% stake in Air21. It also acquired a 20-hectare property in Cavite, as it plans to expand its warehouse business under Metropac Movers, Inc.

JG Summit Inc. has invested in internet platform Sea Limited, which operates Shopee. Its budget carrier Cebu Pacific last year said it was converting two of its planes to expand into cargo transport.

Filinvest Land, Inc. is planning to develop a logistics and industrial park in New Clark City, while the Marajo Group has introduced Space Solutions in Makati.

“These developers and companies place value on the smart application of technology to boost productivity and efficiency, offering value-added services and end-to-end solutions to clients, continuous expansion plans and capacity enlargement,” Santos Knight Frank said.

As more players enter the logistics sector, Santos Knight Frank expects more technology-based and highly efficient warehouses and logistics platforms to sprout up.

CHALLENGES
There is growing demand for last-mile delivery hubs, inner-city distribution centers and warehouse facilities in Metro Manila. However, Santos Knight Frank noted that industrial land values have gone up, with Makati and Mandaluyong hitting P250,000 per square meter (sq.m.). In Valenzuela, Taguig and Muntinlupa, industrial land values are estimated at P10,000 per sq.m.

On the other hand, lease rates for industrial land have remained stagnant. Rents in Makati and Mandaluyong range from P400 to P650 per sq.m. per month, while those in Parañaque, Muntinlupa and Las Piñas range from P200 to P350 per sq.m. a month. In Valenzuela and Quezon City, rents of warehouse are between P150 to P250 per sq.m. a month.

“Given the present land values, construction costs and lease rates in Metro Manila, it has been increasingly difficult to achieve an ideal internal rate of return (IRR) of 15% for a traditional warehousing business model. In fact, a warehouse project under the current situation will result to an average payback period of 18 years with an IRR ranging from 5% to 10%,” Santos Knight Frank said.

It further noted that the asking price of land has to drop by 70% to allow a project to get at least 15% IRR with payback period of almost 10 years.

“Constructing a warehousing facility used purely for storage within Manila will result to a longer payback period and less attractive profitability numbers. For this reason, developers seek locations in provincial areas with more developable land and reasonable land values,” Santos Knight Frank said.

With the strong demand for warehousing and limited supply of land, Santos Knight Frank said the warehousing business should provide more value-added services and increase profitability. — V.M.P.Galang

Shakey’s acquires Project Pie assets

SHAKEY’S Pizza Asia Ventures, Inc. (SPAVI) on Monday said it is acquiring the assets of artisanal pizza brand Project Pie.

In a disclosure to the stock exchange, the listed full-service restaurant operator said it inked a memorandum of agreement to buy the various assets and intellectual property of Project Pie for a nominal amount.

Project Pie was majority owned by SPAVI parent Century Pacific Group and Singapore’s sovereign wealth fund GIC.

The US-based pizza chain introduced the do-it-yourself pizza concept to the Philippines in 2013.

In 2017, Project Pie closed all of its branches in the Philippines, except for the branch located at Block 28, Commerce Avenue in Alabang, Muntinlupa.

Meanwhile, SPAVI said on Monday it has completed the purchase of Peri-Peri Charcoal Chicken, expanding its portfolio of restaurant brands.

“Following an Asset Purchase Agreement signed last April 2019, (SPAVI) acquired the assets and intellectual property relating to the Peri business, including its brand, trade name, and the various proprietary recipes used by the chain to make its trademark peri-peri chicken,” the company said.

With the completion of the deal, SPAVI now owns and operates all company-owned Peri stores. It also serves as brand-owner and franchisor of those stores being operated by franchisees.

There are currently 23 Peri stores in the Philippines.

As of end-March, SPAVI had 229 stores in the Philippines and three overseas.

The company is planning to open seven more stores in the second quarter, as part of plans to have 20 new stores for a total of 248 outlets nationwide by end-2019.

For the first quarter of 2019, SPAVI reported its net income rose 2.5% to P188 million, driven by a 4% increase in revenues to P1.84 billion.

K-drama star charms Filipino fans

By Cecille Santillan-Visto

WHEN Korean actor and singer Seo Kang Joon first appeared on the reality TV show Roomate five years ago, his quiet charm immediately caught the viewers’ attention, and early on pundits were confident that he had the makings of a full-fledged K-drama star.

After Roommate — where he appeared alongside superstars like actor Lee Dong Wook, 2NE1’s Park Bom, EXO’s Park Chanyeol, emcee and model Lee So Ra and Jackson Wang of Got7 — the 25-year-old Seo went on the star in the college drama, Cheese in the Trap, the Korean adaptation of Entourage, and the romantic piece, The Third Charm.

But his biggest break was Are You Human?, a fantasy rom-com which now airs weeknights over the GMA Network. Mr. Seo plays a robot who impersonates a corporate heir who was embroiled in an intra-corporate dispute before falling into a coma.

He held his first fan meeting — The Last Charm: Seo Kang Joon Live in Manila — at the New Frontier Theater in Quezon City two days before the May 27 launch of his TV series, which ran for 36 episodes in Seoul. He even sang “You are My Love,” which is part of the Are You Human? official soundtrack, to open the show. The Fantagio Entertainment talent could carry a tune very well, as he is heavily trained in acting and singing along with his fellow members of 5urprise, a Korean group.

When he dished out Ed Sheeran’s “Thinking Out Loud” and his version of “Falling Slowly” by Glen Hansard and Marketa Irglova, the audience was sold. Singing live and with respectable English diction, Mr. Seo’s rendition is by far the best among Korea actors who have had fan meetings in Manila.

When asked how he feels about his status as an up-and-coming international actor during a press conference on May 24 at GMA Studios, he said he still has a long way to go.

“I don’t think of myself as an international star yet but I just want to thank everyone (who consider me such). The title humbles me but it motivates me to do my best in all projects,” he said.

He is also grateful for his widening fan base, with whom he connects “through social media and fan meetings like this.” He added that he found his Filipino fans “beautiful and friendly.”

Aside from singing three songs, Mr. Seo also played several games with his fans where winning fans won prizes such as a 10-second hug and even the right to stare at him for the same period. The fan who clinched the right to look him eye-to-eye later said she was mesmerized by his brown eyes.

The program also gave the Korean star the chance to eat some Filipino delicacies including lechon (roast pig), leche flan (flan) and empanada (a fried filled pastry), all of which he thoroughly enjoyed save for the vinegar dip used for the Ilocos pastry. He also gamely made his own sago’t gulaman (a beverage made with gelatin and tapioca pearls), which he shared on stage with two fans.

The fan meeting was well organized by CDM Entertainment, and while a “no videography and photography” rule was initially enforced, the producers later allowed fans to video snippets of the event for posterity.

If there was anything that Seo Kang Joon proved during his first fan meeting in Manila, it was his appeal and his sincere effort to reach out to his growing supporters in the Philippines. As his K-drama continues to air locally, more followers will likely fall for his charm .

Avida targets ‘upgraders’ for Imus subdivision

AVIDA LAND Corp. is beefing up its residential portfolio in Cavite with the launch of a subdivision inside parent Ayala Land Inc.’s mixed-use estate Vermosa in Imus.

Avida Verra Settings Vermosa offers 370 units on a 10-hectare property that is easily accessible via South Luzon Expressway through the Muntinlupa Cavite Expressway (MCX) Exit.

“(The project) is within the 700-hectare masterplanned estate Vermosa. Vermosa boasts of accessibility from MCX… Travel time is 55 minutes from Makati, from NAIA, it’s 38 minutes, and from Alabang, it’s 23 minutes… We’re anticipating the completion of the Cavite leg of CALAX (Cavite Laguna Expressway) by 2020, with this the travel time will be cut to 30 minutes from Manila. It will be easily accessible from Kawit, Dasmariñas and Sta. Rosa,” Avida Land South Luzon Project Strategic Management Group Head Anne B. Jara said during a recent press briefing.

Cavite is an important market for Avida, having introduced projects since 2002. Avida Verra Settings Vermosa is the company’s first and only Cavite subdivision within an Ayala Land estate.

For Avida Verra Settings, the target market is AB, such as professionals, senior executives, entrepreneurs with a monthly household income of P150,000.

“These are families from Cavite and nearby areas who want to upgrade and live in a secure and complete community. Unlike our core Avida market, this one targets more of the ‘upgraders.’ They have an existing house but want to move to an estate development. We are also looking at attracting Metro Manila residents who are willing to relocate to suburbs,” Ms. Jara said.

Buyers can opt for lots-only, house-and-lots, or a house-and-lot with an adjacent empty lot.

“This option allows buyers to expand and customize their living or outdoor spaces as they see fit. For example, they can choose to redesign the house with an extension or design the outdoor space with a water feature or garden patio,” Ms. Jara said.

The house-and-lot with the adjacent lot option can bring the lot size to a minimum of 250 square meters (sq.m.). There are only 64 such units in pre-selected areas of Avida Verra Settings.

Avida Land offers two bi-level, modern contemporary house designs — Macy and Trista. Both have three bedrooms, and two toilet and baths. The roof uses weather-resistant stone chips, while the facade features stone cladding.

Macy has a standard floor plan of 67 sq.m. with a minimum lot size of 125 sq.m., while Trista has a floor size of 85 sq.m. with a minimum lot size of 138 sq.m.

The Macy model with adjacent lot option is priced at P12.5 million, while the Trista model with adjacent lot option is pegged at P14 million.

The price of a house and lot starts at P7.6 million, while the lot alone is priced at P5.7 million.

Amenities include an adult pool, kiddie pool, basketball court, children’s park and playground, clubhouse, and landscaped parks.

Land development for Avida Verra Settings is expected to completed by May 2021, with the target turnover for units by second half of 2021.

By the time units are turned over, Ms. Jara said Vermosa is expected to be a thriving community with a shopping mall, school, sports hub and commercial areas.

The mixed-use estate will have two central business districts — Vermosa Midtown and University Town. De La Salle Santiago Zobel-Vermosa has already started operations.

Ayala Malls Vermosa, with 65,000 sq.m. in gross leasable area, is on track to open by the fourth quarter of 2020. The church is expected to be completed by 2021.

Avida Verra Settings Vermosa is the company’s eighth residential project in Cavite. It also has five subdivisions Avida Residences Santa Catalina, Avida Settings Cavite, Avida Village Santa Cecilia, Avida Residences Dasmariñas, and Southgrove Estates, and two residential condominiums Serin East and Serin West in Tagaytay. — Cathy Rose A. Garcia

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