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SMPC remits P3.57 billion in royalties to government

SEMIRARA Mining and Power Corp. (SMPC) remitted lower royalties to the Department of Energy (DoE) in 2018 at P3.57 billion, as it recorded a drop in coal sales volume for the year.

In a statement over the weekend, the integrated energy company said the royalties — or the government’s share in its mining revenues — was 17% lower than the P4.3 billion it remitted in 2017. This came after an 11% decline in coal sales volume to 11.6 million metric tons (MMT) from 13.1 MMT.

About P1.43 billion of the royalties will be distributed to SMPC’s host communities: Barangay Semirara will get about P500 million, the municipality of Caluya will receive P642 million, while the province of Antique will get P285 million.

This brings SMPC’s remittances to the national government to more than P21 billion since it was acquired by Consunji-led DMCI Holdings, Inc. in 1997. The remittance is in line with Republic Act No. 7160, which mandates that local government units are entitled to a 40% share of royalty proceeds from petroleum, coal, geothermal, hydrothermal, and wind resources.

“Our partnership with DoE allows us contribute meaningfully to the economy of our host communities. Aside from royalties, we also generate employment in Semirara Island and nearby areas,” SMPC President and Chief Operating Officer Maria Cristina C. Gotianun said in a statement.

The company directly employs more than 3,300 people in its mine site, making it the biggest employer in Semirara Island and Caluya.

SMPC reported a 49% drop in earnings to P2.33 billion in the first quarter of 2019, weighed down by an 18% decline in coal prices to P2,272 per ton during the period from P2,786 per ton last year.

Despite its slower performance, SMPC remains to be the largest contributor to DMCI Holdings’ net income at P1.42 billion, 49% lower year on year.

Overall, DMCI Holdings saw its net income slump by 26% to P2.87 billion in the first quarter, from the P3.86 billion it posted in the same period a year ago. Revenues also slipped by 3.2% to P19.65 billion. — Arra B. Francia

Agriculture dep’t lifts ban on hog products from Japan

THE Department of Agriculture (DA) has lifted the temporary ban on imports of farmed and wild pigs and other hog products from Japan.

In Memorandum Order No. 11, series of 2019, Secretary Emmanuel F. Piñol said the Bureau of Animal Industry (BAI) has found that the risk of contamination from classical swine fever of pig and pig products from Japan is negligible.

Products such as domestic and wild pigs including pork, pig skin, and semen from Japan can be shipped again to the Philippines.

“All import transactions of the above products shall be in accordance with existing rules and regulations of the Department of Agriculture, Bureau of Animal Industry and National Meat Inspection Service (DA-BAI-NMIS),” he said.

Mr. Piñol earlier ordered a ban on pork imports from Japan in February after reports of African Swine Fever (ASF) in that country. There were four separate cases in Japan in January, and seven cases were confirmed between October and January involving pork inspected at domestic airports.

ASF is a non-treatable and contagious, and can kill swine in as little as two days.

Other territories affected by the virus are China, Hong Kong, Cambodia, Vietnam, Hungary, Belgium, Latvia, Poland, Romania, Russia, Ukraine, Bulgaria, the Czech Republic, Moldova, South Africa and Zambia. — Vincent Mariel P. Galang

Tips on starting a jewelry collection

Adornata’s Veronica earrings, a multiwear mismatched set made of round and pear cut rhodolite, marquise cut amethyst, cushion cut citrine and white topaz, set in 10 karat solid yellow gold.

JEWELRY can melt even the hearts of the coldest cynics. The shine and sheen of precious stones, according to a study by Belgian researchers, turn on the brain and tap into the primeval search for water, explaining our attraction to shimmering surfaces.*

That’s your primeval brain talking, but then, in a world as messy as ours, maybe when we gaze into the depths of a jewel, what we’re looking for is the security and perfection that we can’t find in this world. BusinessWorld trooped to a trunk show by young jewelry brand Adornata earlier this month, which was similarly flocked by young actresses and older socialites.

Chynna Gonzalez, Adornata’s founder, brought out for this season a line of classic diamonds (tennis bracelets and the like), in contrast to her previous collection of flamboyant pieces taking inspiration from the Venetian Festa del Redentore, a festival that celebrates the city’s freedom from the Black Plague through fireworks. The simplicity of the new line brought on a discussion of the right jewelry purchases for a young woman.

First off, when it comes to jewelry, there’s no such thing as age. “I personally don’t believe in age-appropriate jewelry — from someone who wear a two-carat diamond everyday,” said Ms. Gonzalez, pointing to an heirloom ring from her grandmother. The two-carat center stone was flanked by baguettes that formed the illusion of wings. Certainly a piece ahead of its time then, but today a grand piece. For those who don’t favor the antique settings on antique jewelry, she may reset and redesign the stones, but warns that about 12% of the gold’s weight is lost in the process.

“Even though my pieces look young, the clients for those are mixed too — the young and the young at heart.”

Ms. Gonzalez’s brand, Adornata, is anchored on earrings in precious stone and precious metals that can be taken apart and built again in different configurations: say, a dangler from her collection can be taken apart and worn as a stud, or a stud with a halo. “You feel like you’re getting more value for your money. It’s functional luxury.”

For starter collectors, she immediately says, “Always invest in gold, gold, gold.”

“You can easily track the weight, the value, and it has not gone down in like, 10 years.”

Diamond studs seem like a charming addition to a small collection, but she warns, “The resale value is kind of low. If there’s no certification, they kind of debate on the value of the diamond.”

For those who aren’t serious about the investment game, and just really want to build a jewelry collection for the sheer beauty of it, Ms. Gonzalez has a tip: “Go to a jeweler that you trust, and bring a picture, whatever. Tell them your budget.”

Ms. Gonzalez says that jewelers like her can execute more expensive designs with the use of lower-priced stones — Ms. Gonzales refrains from calling them semiprecious stones. “They’re really all precious stones, there are just tiers.” — J.L. Garcia

*https://www.dailymail.co.uk/sciencetech/article-2543625/My-precious-Scientists-discover-attracted-shiny-objects-say-key-inbuilt-desire-water.html

Honda Brio: A first drive

Words and photos by Ulysses Ang

PAUSE for a minute and imagine everything that a small car is. Ugly, terrible to drive, cramped — these are just some of the words used to describe what’s commonly considered as the lowest tier in motoring: the subcompact or A-segment car. Now, open your eyes and see the 2019 Honda Brio. It’s the most affordable car in Honda’s stable, yet it manages to adhere to everything the Japanese car maker stands for.

Everything starts with the styling. Compared to the startled look of the first-generation Brio, this new one looks every inch more refined. Lengthened by close to 200mm, the stance is less awkward now. It keeps the front doors from the first-generation model, necessitating the continuation of that sharp side crease, though everything else is new. There are still some angles where it looks tall and skinny, but for the most part, it looks great. The Mobilio headlights do well to visually widen the front, despite the identical width with its predecessor, while the formal steel hatch at the back removes the sourness that most complained about before.

Despite carrying on with the first-generation Brio’s platform, the wheelbase’s been stretched by 60mm. While that sounds like a miniscule number, it plays dividends in making the interior much more habitable. Jumping directly to the back, knees no longer scrape against the front seats anymore. The redesigned hatch also gives birth to more headroom, and with it, adjustable headrests. There’s a claimed capacity of three in the back, but in all honesty, fitting two regular-sized motoring journos is the most possible. Even more impressive is the larger cargo hold. Grown by 83 liters, it now allows large pieces of luggage to fit without having to reduce the passenger count to two (there’s no split-folding function here).

Improved as the Brio is from the back, it’s from the front where it truly shines. Borrowing the Mobilio’s angular dashboard, it’s straightforward to use. Compared to other subcompacts out there, the seating position is lower and sportier, aided by a well-positioned meaty three-spoke steering wheel and easy-to-read gauges. Like the first-generation Brio, the front seats have fixed headrests (except for the RS), but are comfy even for long drives. The Brio scores big for its sturdy construction, amount of storage spaces, and easy-to-use digital type air-conditioner, too.

Perhaps Honda’s gamble is their decision to swap the previous generation’s 1.3-liter engine for a 1.2-liter one. The downsized motor gives up 10hp and 17Nm of torque in a car that weighs just one kilogram lighter than before (22kgs more with the RS). On the surface, it seems Honda’s levying a performance penalty to make it more affordable, but thankfully, that’s not the case.

Getting the most out of the engine still requires wringing the accelerator, but it’s confident enough to hit the highways. It can feel taxed with three people and luggage onboard, but the engine isn’t at all vocal thanks to impressive NVH; plus, it’s smooth and refined even at high rpm. Swapping the traditional automatic for an Earth Dreams CVT should have dulled the responses, but it’s actually quite the opposite. It picks up speed pretty quickly, at least until the needle reaches 120 km/h. Fuel economy is also good, registering 14.5 km/L in a mixed city/highway route (about 10 km/L in the city).

With a carryover platform that’s, in turn, based off the first-generation Jazz, the Brio keeps its crown as the best handling A-segment car. The steering has this immediacy that the chassis could match. This tandem makes the Brio a great dance partner; the only car in this price range confident enough to tackle winding roads and sweeping corners. What’s even better is the ride hasn’t been affected at all; it’s actually softer than the previous generation while also being impervious to road cuts or potholes.

The name “Brio” means verve in Italian and with that, Honda managed to choose a very apt name. Just as the first-generation Brio presented itself as a fun-to-drive small car, this second-generation model successfully continues that trend. Honda’s penchant for making a well-engineered car continues here, and with that, enthusiast will reap the benefits by having a choice with qualities that exceed its class.

Full foreign bank entry, (almost) five years in

UP UNTIL May 1994, no foreign bank was permitted to enter the country apart from four foreign lenders that were already operating at that time. In February 1995, the Bangko Sentral ng Pilipinas (BSP), under Republic Act (RA) No. 7721, approved the application of 10 out of 22 foreign banks that had expressed interest. Under RA 7721, only when one of the 10 banks pulls out could another offshore lender enter the Philippine financial system.

RA 10641, which was signed by then-President Benigno S. C. Aquino III in July 2014, removed that limit, allowing foreign banks to invest in subsidiaries, buy into existing local banks or set up branches, so long as domestic banks — or those majority-owned by Filipinos — own at least 60% of the resources or assets of the Philippine banking system.

Since then, the BSP has approved 12 foreign bank applications. The latest to set up operations is Industrial and Commercial Bank of China Ltd., the first Chinese bank to do so in recent years after the Bank of China’s entry in 2002.

As of March 2019, there are 29 offshore lenders operating in the Philippines, with 24 of them operating as foreign bank branches while the remaining five are foreign bank subsidiaries.

BusinessWorld’s banking report covers 26 of those foreign lenders, of which they hold a combined five percent of the Philippine banking industry’s total loan portfolio and 7.3% of its total assets as of the first quarter of this year.

This means that the economy can still accommodate more foreign banks if it wants to with the foreign banks’ aggregate share remaining well below the 40% asset ceiling.

“The BSP welcomes foreign players to promote healthy competition in the banking sector and at the same time attract additional foreign direct investments, international expertise in customer service and financial technology innovation,” said BSP Deputy Governor Chuchi G. Fonacier in an e-mail to BusinessWorld.

Ms. Fonacier said that the Philippine economy’s “strong macroeconomic fundamentals” as well as the steady growth of its banking system remain to be the “sweet spots” that make the Philippines an attractive destination for investments and foreign bank entry.

Affirming this, Ms. Fonacier said, were two things: the upgrades of the Philippines’ banking industry country risk assessment (BICRA) score in February 2019 that is “anchored on the strengthened supervisory powers and monetary functions of the BSP” and the country’s long-term sovereign credit rating earlier this month.

S&P upgraded the Philippines’ BICRA score to group 5 from group 6, citing “improvement in the institutional framework of the country’s banking system” with enactment of RA 11211 of which key features include providing full legal support for central bank officials and employees as they carry out their mandate of inspecting and penalizing banks and other supervised financial businesses.

Meanwhile, S&P raised the Philippines’ long-term sovereign credit rating to “BBB+” from “BBB” — just a step away from a single “A” tier rating. Furthermore, the rating was also assigned a “stable” outlook, indicating the country is likely to maintain the grade in the next six months to two years as the economy is expected to remain strong over the medium term.

“Other growth opportunities include the integration of the ASEAN economies, huge demand for infrastructure projects/business developments, and financial inclusion,” Ms. Fonacier said, referring to the Association of Southeast Asian Nations.

Malaysian lender CIMB Bank is among those who had expressed interest in entering the Philippine market.

“The Philippines has definitely been a potential market for CIMB Group even before the entrance of foreign banks has been liberalized in the country,” said Vijay Manoharan, Chief Executive Officer of CIMB Bank Philippines, Inc. (CIMB Philippines).

CIMB has long been eyeing to venture into the Philippine market as it previously tried to acquire a controlling stake in San Miguel Corp.’s Bank of Commerce back in 2012.

The Malaysian-based lender formally launched its banking operations in the country last February, more than a year after it received the central bank’s approval.

Mr. Manoharan cited economic indicators that made the Philippines an attractive market which include its fast-growing economy, high Internet penetration, and a rising electronic commerce (e-commerce) ecosystem.

“The growing presence of online aggregators, delivery services and related platforms suggests a demand for online services and solutions in the market. In line with our product proposition, the top two projected payment methods in the e-commerce space are e-wallets and bank transfers by 2023,” Mr. Manoharan said.

“Companies from other industries are continuously building and developing new and innovative products that cater to providing convenience to the market, and it’s about time that the banking industry in the Philippines adapts to the digital and mobile lifestyle of the market,” he added.

The Malaysian banking giant is positioning to be the first “all-digital, mobile-first” bank in the country. Last Dec. 2018, CIMB Philippines formally launched its mobile application OCTO, to which local users can now open a deposit account without going to a physical branch.

“Our customers do not need to look for a physical bank branch to have a basic savings account and transact,” Mr. Manoharan said.

In contrast to CIMB’s recent entry, Citibank, N.A. (Citibank Philippines) has been in the Philippine banking scene for more than a century.

“In its 117-year history in the Philippines, Citi has encountered and successfully navigated several economic cycles. This highlights not only Citi’s resilience but also its long-term commitment to the Philippines,” said Citibank Philippines’ Chief Executive Officer Aftab Ahmed.

Mr. Ahmed noted that the bank’s evolution in the Philippines has been “multi-faceted.”

“In 1990, Citibank launched its first Philippine-issued credit card and pioneered wealth management for its consumer clients. In 1994, we became the settlement bank for the Philippine domestic dollar transfer system and introduced Citiphone banking,” Mr. Ahmed said.

“Our goal in the Philippines has always been to leverage our global network as well as our local, regional and global technology platforms to deliver superior financial services and solutions to our clients. Today, Citi Philippines has more than 8,000 employees and that number continues to grow,” he added.

BENEFITS
BSP’s Ms. Fonacier underscored RA 10641’s importance as it paved the way for the entry of more foreign direct investments as well as employment opportunities.

“The establishment of foreign banks’ presence in the Philippines will also increase the banking system’s ability to compete in the globalized environment to better manage the growing economy’s cross-border commerce,” Ms. Fonacier said.

“The full liberalization on the entry of foreign banks is likewise expected to contribute to the promotion of healthy competition in the banking industry, resulting in greater market penetration and more efficient delivery of financial products and services. Moreover, it is expected that there will be sharing or exchange of more quality management and governance practices as well as technology innovations and usage contributing to the overall operational efficiency of banks,” he added.

For technological innovations, this may appear to be case judging by CIMB’s and Citibank Philippines’ massive adoption of digital technology in their product offerings.

“[I]nnovation is our lifeblood,” CIMB Philippines’ Mr. Manoharan said.

“[I]t is something that we try to do constantly based on the market needs and feedback that we get from our customers. We do have services and products that we will be launching and we are very excited to tell everyone about them,” he added.

CIMB Philippines currently offers two types of savings accounts named the Fast and Fast Plus accounts, which let customers open an account through its OCTO mobile app within 10 minutes.

The savings accounts come with a Visa-powered debit card to allow withdrawals from 20,000 Bancnet, Visa and Visa Plus automatic teller machines (ATM) in the country, on top of two million Visa ATMs worldwide.

CIMB Philippines also offers an UpSave account which offers a yearly interest rate of 2.5%.

CIMB also offers personal loans wherein customers get instant initial approval and next day disbursement to any local savings account.

For Citibank’s Mr. Ahmed, bringing innovation to the marketplace is an “ongoing goal.”

“We are committed to building digital capabilities which will enable us to acquire, engage, and service clients on enhanced basis through digital channels to enhance our accessibility and to make it more convenient for our customers to access our services,” he said.

Last year saw Citibank has launched its updated Citi Mobile App, which helps its clients manage outstanding balances, track transaction details and rewards points, as well as pay bills.

“We remain exceptionally optimistic and bullish about the growth opportunities in the country and look forward to continuing to grow and invest in the Philippines. We are committed to the Philippines and its future,” said Citibank’s Mr. Ahmed. — Lourdes O. Pilar

Gov’t debt yields end flat

By Mark T. Amoguis
Senior Researcher

YIELDS ON government securities (GS) ended flat last week, mirroring the safe-haven US Treasuries as they dropped on the back of ongoing trade war between the world’s two largest economies.

GS yields, which move opposite to prices, declined by a week-on-week average of 7.9 basis points (bps), the PHP Bloomberg Valuation Service Reference Rates as of May 24 published on the Philippine Dealing System’s Web site showed.

“GS yields tracked the move of US Treasuries which dipped in reaction to escalating trade tension with the US and China trading tariffs recently. Risk-off tone forced dealers into relatively safer assets,” ING Bank NV Manila Branch senior economist Nicholas Antonio T. Mapa said in an e-mail.

“Market players were also reacting to the move of the BSP (Bangko Sentral ng Pilipinas) to reduce RRR (reserve requirement ratio) for smaller banks, a move well telegraphed and received by the market given the downward trajectory for inflation,” he added.

“With the US Fed[eral Reserve] minutes showing a patient policy stance and US Treasury yields nearing year-to-date lows, local bond market yields tracked foreign market counterparts. The recent announcements on the BSP cuts in small banks reserve ratio did not have much impact on government securities,” UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said in a separate e-mail interview.

Last week’s movement was due to “improved liquidity due to looming effectivity of RRR (reserve requirement ratio) cuts, better CPI (consumer price index) outlook for the rest of the year, and slower growth as signaled by less government spending in April,” a bond trader said via text message last Friday.

Due to the trade war between the world’s two largest economies, US Treasury yields dropped across the board last week with US 30-year bond yields sinking to roughly 16-month lows, while those on benchmark 10-year notes fell to their lowest level since December 2017, according to a Reuters report.

Back home, after cutting the reserve requirement of big banks last May 16, the BSP’s policy-making Monetary Board on Thursday likewise announced a cut in the RRR of thrift, rural, and cooperative banks.

Thrift banks’ RRR will be gradually slashed by 200 bps to six percent from eight percent in three moves: 100 bps effective May 31, 50 bps effective June 28, and 50 bps effective July 26.

Mandatory deposit reserves of rural and cooperative banks will also be trimmed by 100 bps to four percent from five percent effective May 31.

A percentage point cut in big banks’ RRR will free up to P90-100 billion, while that for smaller banks will unleash around P22 billion into the financial system.

At the close of the trading last Friday, GS yields went down across the board. Three-month, six-month, and one-year debt were down by 15.5 bps, 9 bps, and 7.3 bps, respectively, to fetch 5.359%, 5.694%, and 5.895%.

The two-, three-, four-, five-, and seven-year bonds also declined by 12.0 bps, 8.5 bps, 5.8 bps, 4.3 bps, and 4.7 bps, respectively, to yield 5.674%, 5.673%, 5.682%, 5.696%, and 5.716%.

Yields on the 10-, 20-, and 25-year notes likewise dipped by 7.9 bps, 8.4 bps, and 3.2 bps, respectively, to 5.709%, 5.867%, and 6.014%.

Market watchers pointed to the central bank’s May inflation forecast as the likely catalyst for this week’s trading.

The bond trader expects “steady tone with downward bias” on GS yields movement this week.

“Market will still be waiting for significant market movers [this] week. At this point, the external environment has been largely influencing the GS yields’ performance,” UnionBank’s Mr. Asuncion said.

“Market players will likely take their cue from the overall global sentiment, BSP’s inflation forecast for May inflation and on the 10-year auction [this] week,” ING’s Mr. Mapa said.

The Bureau of the Treasury will offer P15 billion worth of Treasury bills today. It will also auction off reissued 10-year Treasury bonds with a remaining life of nine years and seven months tomorrow.

Nestlé, Valenzuela launch plastics recovery program

NESTLÉ Philippines has teamed up with Valenzuela City government, alongside the Department of Education of Valenzuela City branch and Green Antz Builders, Inc., to introduce a citywide program to recover post-consumer waste laminates such as sachets and beverage cartons.

In a statement over the weekend, Nestlé Philippines said its chairman and CEO Kais Marzouki signed the memorandum of understanding for “May Balik! Sa Plastic!,” along with Valenzuela Rexlon T. Gatchalian, DepEd Assistant School Division Superintendent Dr. Benjamin D. Samson, and Green Antz Builders, Inc. President Rommel Benig.

The program will provide incentives for street sweepers and schoolchildren who turn in waste laminates and beverage cartons at designated booths in the barangay and schools. They will receive Nestlé products or school supplies as reward.

The scheme is seen to encourage the collection of waste laminates and used beverage cartons which can be used for co-processing in cement kilns, or for recycling and upcycling.

“There is a need to accelerate action on the issue on plastic. For Nestlé, this means addressing post-consumer wastes that would otherwise go to landfills and leak into waterways and oceans,” Mr. Marzouki was quoted in a statement.

Mr. Marzouki said the pilot program in Valenzuela City may be later replicated in other cities. “The best thing about it is that the approach involves the participation of various stakeholders. Our partnership with Valenzuela City, one of the most progressive cities in Metro Manila, is a milestone not only for us at Nestlé and Valenzuela City, but more importantly, for the environment,” he said.

As mayor, Mr. Gatchalian said his approach has not been to ban plastics, but to recycle, reuse and repurpose plastic.

“In our city, we already have a system in place for larger waste plastic materials which are segregated and sold for extra income by our haulers. ‘May Balik! Sa Plastik!’ gives us a solution for what to do with smaller plastics, laminates, sachets,” he said.

For the program, Green Antz will serve as training partner, main hauler of collected wastes, and recycler under the program, utilizing a portion of the waste materials.

In April 2018, Nestlé announced a global commitment to make 100% of its packaging recyclable or reusable by 2025. — Janina C. Lim

Palm oil regulator to create separate standards for smallholders

JAKARTA — A global palm oil industry watchdog is planning a separate standard for smallholders to help them adopt sustainable practices and get green certification, the Indonesian director of the Roundtable on Sustainable Palm Oil (RSPO) said.

Indonesia is the world’s biggest palm oil producer and smallholders account for roughly 40 percent of the country’s 14 million hectares of palm plantations, and are often blamed for practices such as burning to clear land, causing forest fires.

The European Commission earlier this year determined that palm oil has resulted in excessive deforestation and it should no longer be considered a renewable transport fuel, albeit with some exemptions, a decision that angered the Indonesian government.

Independent Indonesian farmers, with land no larger than 25 hectares, will have to meet environmental and social sustainability standards, but some requirements will be adjusted soon, RSPO Indonesia director Tiur Rumondang said in an interview this week.

Getting farmers to obtain sustainable certification would encourage them to comply with good agricultural practices and reduce the risk of forests being converted or damaged, she said.

“Imagine if this 40 percent is not looked after, this is potentially a massive land conversion if we don’t manage it.”

Small Indonesian farmers generally suffer low productivity due to the use of poor quality palm seeds and substandard farming practices.

Indonesia currently runs a subsidized palm replanting program for small farmers to help boost yields without expanding plantation size. The government aims to replant 2.4 million hectares of palm cultivation area by 2025.

Details of the new smallholder standards are still being discussed, Rumondang said, but among requirements that will be changed are those related to labor, since farmers managing only a few hectares of land generally get help from family members.

These farmers would still have to comply with rules such as when teenaged family members work, they should not do so during school time and only for a certain amount of time per day.

The RSPO will also allow farmers to enjoy the benefits of certification in stages so that, for example, they can start to get RSPO benefits as soon as they confirm the legality of their land ownership.

Access to the RSPO credits would help farmers to finance further audits needed for the certification, Rumondang said.

Proving land is legally owned or farmers have the right to use land had been among the main hurdles for Indonesian farmers wanting to join the replanting program, farmers have said.Bambang Gianto, a farmer in South Sumatra, whose plantation has been certified by RSPO, said the process had been quite costly, including improving farming methods and fertilizer use.

“Costs at the beginning were pretty big,” Gianto said.

In addition, he said getting certified did not guarantee better pricing for palm fruits, but the improved methods made his output jump by up to 20 percent.

RSPO has certified 2,919 independent smallholders in Indonesia, its data showed, covering 7,272 hectares of cultivation area. — Reuters

Prada bans fur from catwalk, bowing to ethical fashion demand

ONE OF the fashion industry’s most iconic designers is turning her back on fur.

Miuccia Prada, the creative director and controlling shareholder of Milan-based Prada SpA, said in a statement that her company — also the maker of MiuMiu apparel and Church’s shoes — would no longer feature the material starting with her next runway show in September.

The brand joins the ranks of labels like Burberry Group Plc and Kering SA’s Gucci in giving up the material’s use, which has drawn ire from animal rights and environmental groups for decades. As consumers become increasingly concerned about the social and environmental impact of fashion, banning fur has become a way for brands to show they’re serious about curbing the industry’s most harmful excesses.

The move makes Prada — who used fur in some of her most notable collections, like spring 2011’s “banana” show — one of the biggest names to agree to an outright ban. She has already experimented with fur alternatives like the plush fabrics from German teddy bear-maker Steiff in recent seasons.

‘NEW BOUNDARIES’
“Focusing on innovative materials will allow the company to explore new boundaries of creative design while meeting the demand for ethical products,” Prada said Wednesday.

Even as animal welfare concerns have seen fashion’s tide turn against real fur, and cities like San Francisco and Sao Paolo banned its sale, advocates for the material like LVMH’s Fendi brand have insisted that fur farming can be done ethically. They have also raised questions about the environmental impact of fake furs, arguing that the small plastic fibers they shed are not biodegradable and can easily find their way into the water supply when items are cleaned.

Other recent industry measures to clean up its reputation include a pact to stop hiring extremely thin models by LVMH and Kering, and internal audits on diversity at Gucci and Prada after the brands released products that were called out as insensitive for resembling blackface imagery. — Bloomberg

Sand and sea with the Mitsubishi Strada

Words and photos by Manny N. de los Reyes

SAN VICENTE, PALAWAN — Drive a nice car in heavy bumper-to-bumper traffic and you’d be hard-pressed to appreciate it.

Conversely, drive a crappy car or truck on a scenic or picturesque location and it’ll flatter to deceive.

Mitsubishi probably didn’t have the latter intention when it brought the local media to this beautiful and largely unoccupied city in Palawan for three days. But it certainly didn’t hurt.

But first things first: the Mitsubishi Strada is not a crappy truck. Now on its fourth generation, the Strada, whose prices range from P1,165,000 to P1,670,000, has established itself as one of the best and most refined among the half-dozen pickup trucks on the market.

Considered as one of the most important models of Mitsubishi, the Strada, which is produced in Mitsubishi’s Laem Chabang plant in Thailand, is sold around the globe in no less than 150 countries. Yet it sings to a different tune relative to most of pickup truckdom.

While most trucks exude muscle and brawn, the Strada expresses an altogether different character — one that’s not all about machismo, but of an almost futuristic sleekness. Under the brand’s design concept “Rock Solid,” which embodies a strengthened structure inside and out, the latest Strada flaunts Mitsubishi’s new-generation “Dynamic Shield” design language. The high hood, slim LED headlamps, and aggressive grille and bumper design present a compelling and upscale fascia. The sculpted body curves with contrasting sharp lines express a car-like sleekness. The sharp and distinctive character lines that start at the front fenders and terminate at the front doors then emerge again from the rear doors and end at the rear fenders express a sense of upscale futurism.

The trademark rising rear windowline and the J-shaped rear door opening serve to tie up the latest Strada’s cutting-edge styling with that of its forebears. Even the palette of seven available colors — White Diamond, Graphite Gray Metallic, Sterling Silver Metallic, Jet Black Mica, Red Solid Clear, Grayish Brown Metallic and Impulse Blue Metallic — was carefully chosen to serve as the finishing touch to the very detailed body design.

Inside the new Strada is a functional and contemporary dash and console trimmed with silver and piano black accents. All variants feature a 2-DIN touchscreen monitor with tuner/MP3/USB/iPod/Aux/Bluetooth connectivity and Mirror Link. All variants are also equipped with a GPS navigation system. There is even a front smartphone tray which includes USB terminals. A rear smartphone tray is also available and is located at the rear of the center console including two USB power sockets.

The new Strada boasts a spacious interior which can comfortably seat five adults, thanks to the cab’s unique J-Line design that offers class-leading legroom for greater comfort, especially on long drives. The door panels may be a tad too plasticky — fabric covering for some of the panels would’ve helped — but are nonetheless good-looking and functional, thanks to generous-sized bottle holders.

The cabin is truly big on comfort and space. The tilt-and-telescope steering wheel with audio and cruise control buttons is covered in smooth leather. The front seats are very comfortable and supportive and are covered in a plush yet seemingly durable fabric. The rear seats, often the bane of most pickups, are reasonably comfortable, thanks to a more inclined rear backrest and supportively sculpted cushioning. It’s certainly a long way from the hard, flat, and upright bench seats of pickups of yesteryear.

The Strada is powered by Mitsubishi’s super-smooth state-of-the-art 4N15 2.4-liter Clean Diesel engine with Variable Geometry Turbo and MIVEC (Mitsubishi Innovative Valve timing Electronic Control System). The powerplant delivers 181ps and 430Nm of torque. It’s one of the smoothest and quietest diesel powerplants in existence.

This cutting-edge motor is mated to an equally advanced six-speed automatic with Sports Mode and paddle shifters. It was an absolute joy wringing the truck from corner to corner during our rushed drive back to Puerto Princesa airport to catch our return flight to Manila. The engine delivered on the power side while the paddle shifters made short work of gearshifts, especially on winding roads and during overtaking maneuvers.

The Strada’s already (relatively) comfortable ride is improved with the use of larger rear dampers, which contain more damping oil. There is still some jarring on choppy surfaces, but the overall riding comfort is still at the top of its class. Braking power was also improved with the use of larger front discs and caliper pistons for the GLS and GT variants.

A pickup truck will never handle as confidently as a car, but the Strada hung on impressively well, even during hard cornering maneuvers. The generously sized 265/60R-18 all-terrain rubber proved just as adept at high-g cornering on pavement as they were driving on sand on the beach — despite our truck being a 4×2 and not a 4×4 model. The suspension is just very well sorted out.

The new Strada hosts an array of advanced passive and active safety features, including Mitsubishi’s RISE (Reinforced Impact Safety Evolution) body, which absorbs the impact of collision. It retains the current model’s high-durability and high-reliability ladder-type chassis and high-impact safety cabin structure. Active Stability Traction Control (ASTC), Hill Start Assist (HSA) and Trailer Stability Assist (TSA) are now standard on all variants. A nice touch is the push-button engine start/stop and keyless Smart Entry system.

All things considered, while most other pickups are playing the tough truck card, the Strada is confident in its sheetmetal skin just being an exceedingly capable truck — one that pushes the envelope in pickup refinement, comfort, and safety.

Financial markets outlook positive as inflation eases, in line with expectations

By Mark T. Amoguis, Senior Researcher

THE FURTHER EASING in domestic inflation buoyed investor sentiment for much of the first quarter this year even as upside risks — mostly from the external front — remain.

In the first three months of the year, headline inflation slowed to 3.8% compared to 5.9% in the fourth quarter of 2018 according to data from the Philippine Statistics Authority. The 3.8% first-quarter average is now within the 2-4% target range by the central bank.

The first-quarter deceleration, according to the Bangko Sentral ng Pilipinas’ (BSP) first-quarter inflation report, reflects mainly the slowdown in food inflation amid improved supply conditions.

The inflation slowdown was mostly broad-based with much of the downtrend seen in the heavily weighted food and non-alcoholic beverages index at 4.6% in the first quarter versus the 8% in the fourth quarter of 2018. Food alone averaged 4.1% in the January-March period against the 7.7% average in the preceding quarter.

With the decelerating inflation, analysts that time have said that the conditions are ripe for policy easing. The BSP’s Monetary Board, however, maintained benchmark rates and the banks’ reserve requirement ratio (RRR) in its first and second policy reviews on Feb. 7 and March 21 albeit cutting their headline inflation forecast for the year by a tenth of a percentage point in each of those meetings to a flat three percent from 3.2%.

It was in its May 9 meeting when the BSP slashed key policy rates by 25 basis points (bps). A week later, it announced cuts in RRR imposed on big banks in three phases: 100 bps by May 31, 50 bps by June 28, and 50 bps by July 26.

The central bank also revised lower its inflation forecast this year to 2.9% (from three percent previously) and hiked next year’s forecast to 3.1% (from three percent).

The bellwether Philippine Stock Exchange index (PSEi) peaked during the quarter at 8,144.16 on Feb. 1, to which the BSP attributed mainly to the slower-than-expected domestic inflation in December as well as the US Federal Reserve’s dovish stance on its first policy meeting this year, and the perceived easing trade tensions between the US and China that time. However, the delayed enactment of the 2019 fiscal budget as well as the concerns in global economic growth and the growing uncertainty over the US-China trade tensions caused the index to decline to end the quarter at 7,920.93.

Nevertheless, the end-quarter reading marked a 6.1% increase compared to the 2.6% growth in the fourth quarter of 2018 and the 6.8% drop in the first quarter of 2018.

Gains were also made in the money and bond markets as the peso appreciated for much of the quarter while bond yields declined.

The same three months brought the value of the peso up with the currency averaging P52.37-to-a-dollar versus the P53.26-per-dollar average from the previous quarter, according to BSP data.

As of end-March, yields on government securities (GS) declined on average by 111.8 bps relative to the end-December 2018 levels as GS yields in the secondary market for all tenors declined except for that in the 91-day debt paper, according to the PHP Bloomberg Valuation Service (BVAL) Reference Rates published on the Philippine Dealing System’s website.

During the quarter, GS debt yields were lower by a range of 57.4 bps for the 182-day GS to 167.2 bps for the 20-year GS compared to yields in end-December 2018.

“Developments in 2019 were similar to those faced by the Philippines in 2018 but in reverse polarity,” ING Bank NV Manila Branch senior economist Nicholas Antonio T. Mapa said in an e-mail.

On the local front, Mr. Mapa said that while inflation — considered as the “bane of 2018” — is on a decelerating trend, government spending “disappeared after supporting growth in 2018,” which resulted in “disappointing” economic growth in the first quarter.

Economic growth grew at a four-year-low 5.6% in the first quarter. Largely blamed for this was the slowdown logged by government spending, which in turn was blamed on the delay in passing the 2019 fiscal budget. The government operated on a reenacted 2018 budget from the start of the year until April 15, when President Rodrigo R. Duterte signed the latest general appropriations into law, but vetoed P95.3 billion in appropriations.

On the external front, the economist also noted the turnaround in the monetary policy stance of the Federal Open Market Committee (FOMC), the US Fed’s policy-making body.

“[T]he FOMC suddenly halted its rate hike march, now seen to be on hold for rest of the year,” Mr. Mapa said.

“Possibly the only development that was not in reverse was oil prices, which climbed sharply from January levels, but this still has had limited effect on inflation and thus also only a marginal impact on [foreign exchange] and fixed-income securities,” Mr. Mapa added.

Moving forward, economists are betting that inflation could even go lower this year due to base effects.

“Inflation in 2Q 2019 may ease further to 2%-3% in 2Q 2019 and could even average below 3% in 2019, largely due to the continued decline in food prices… even before the full effects of the Rice Tariffication Law are felt in terms of further increase in rice imports,” said Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort in an e-mail.

For Sun Life Financial economist Patrick M. Ella: “I still fully expect inflation to remain lower than [the first quarter] and I would not be surprised if it will break under 3% by June,” he said in a separate e-mail.

“For the balance of the year, we think inflation can reasonably touch close to 1% by [third quarter] before turning up as the base effects are responsible for this as well as the absence of inflationary pressures in the food and energy prices.”

ING Bank’s Mr. Mapa was of a similar view: “Even with oil prices surging, we still see inflation hovering about the 3% target and with the Philippines now touting its single best inflation fighter in history (i.e. the rice tariffication law), we can expect this to be an integral part of keeping cost push inflation in check for the time being.”

The government signed the Republic Act No. 11203 — the rice tariffication law — last February to curb rising food prices by removing quantitative restriction on rice imports and replacing it of tariffs.

Similarly, economists expect the economy to grow within target despite the first-quarter letdown.

“Despite the Q1 snafu, the budget passage will mean that growth in [the second half] will receive a substantial boost. Household spending continues to recover while the BSP rate cut (and further easing) are seen to help revive slowing capital formation,” ING’s Mr. Mapa said.

“The 6%-7% GDP growth target for 2019 may still be achieved amid the country’s improved economic and credit fundamentals, as well as the country’s favorable demographics,” RCBC’s Mr. Ricafort said.

Here are the economists’ forecasts on the financial market this year:

EQUITIES
ING’s Mr. Mapa: Positive as GDP recovers.

Sun Life’s Mr. Ella: Our equities team has a bottom-up PSEi index target of 8,750, which is a 17.2% upside from 2018. This implies a P/E (price-to-earnings ratio) of 18.4 times and earnings growth expected at 11.7% for 2019.

RCBC’s Mr. Ricafort: Further declines in both inflation and interest rates would fundamentally increase net profits/income of listed companies, assuming all other factors are the same, thereby may support higher valuations.

Any further increase in foreign portfolio inflows after the S&P credit rating upgrade on the country may also provide support for the local equities market.

FIXED INCOME
ING’s Mr. Mapa: Yield curve to normalize on BSP rate cuts and RRR reductions.

Sun Life’s Mr. Ella: Fixed income will likely see lower yields in response to the BSP that is on a clear easing mode. I’m looking at 5% for the benchmark 10-year bond yield by yearend.

RCBC’s Mr. Ricafort: Continued easing trend in inflation, as well as any further cut/s in local policy rates and any cut in RRR (additional P90 billion in liquidity/money supply infused into the financial system for every 1-percentage-point cut in RRR) may lead to further easing in local interest rate benchmarks, or at least sustain local benchmark yields at relatively lower levels.

The latest S&P [Global Rating] credit rating upgrade on the Philippines by one notch to BBB+ (two notches above the minimum investment grade) would increase international investor confidence on the Philippines in terms of increased inflow of foreign portfolio investments and foreign direct investments into the country, thereby may lead to further gains in the local economy as well as in the local financial markets.

FOREIGN EXCHANGE MARKET
ING’s Mr. Mapa: Depreciation pressure given fundamental C/A (current account) deficit but tactical strength to be seen during times of risk on [sentiment].

Sun Life’s Mr. Ella: our USD/PHP view is at P53.20 and we have not changed this view since the start of the year.

RCBC’s Mr. Ricafort: The peso exchange rate may continue to remain relatively stable, as partly supported by the sustained easing trend in inflation, as well as some narrowing in the trade deficit date since late last year.

Going forward, any pick up in foreign portfolio investments and foreign direct investments after the latest S&P credit rating upgrade may provide some support on the local currency.

Grab PHL sees strong growth of food delivery service

GRAB PHILIPPINES (MyTaxi.PH, Inc.) said it has seen robust growth for its food delivery service, Grab Food, in the last six months.

“GrabFood Philippines, compared to GrabFood in other markets, is growing (at) a very nice (rate)… It’s not profitable… (but) we’re growing in a way that it’s sustainable for the company,” Grab Philippines President Brian P. Cu told reporters last week.

In the Philippines, Grab noted the food delivery service now contributes 10% to 12% of total revenues. GrabFood was launched in November.

“We’re growing at a very decent 3-6% week on week. So we are tapping the market. We are expanding by adding more food partners, by making the app easier to navigate,” Mr. Cu added.

While Grab continues to develop its transportation services, Mr. Cu said there are challenges to introducing these in the Philippines.

One of these is the Trip Planner feature that Grab currently has in Singapore and Indonesia, which allows a user to book a multi-modal trip through the Grab app. Mr. Cu said this could not be launched in the Philippines yet because it would require the different transport modes to have a working global positioning system (GPS) and automated fare collection system.

“That’s why we’re moving outside of transport… Food is a very big growth driver for us. Since the start of the year, we’ve grown maybe 3 time already. Only by a low base, but it’s significant growth that we’re seeing,” he said, noting the opportunity is big for GrabFood in Metro Manila.

Mr. Cu said Grab Philippines is targeting to double the number of daily orders through GrabFood by yearend. It plans to add Grab’s in-app mobile wallet GrabPay as a payment option for GrabFood orders.

“GrabPay will be available as a payment channel of Food, which means drivers don’t have to carry a working capital. Ngayon si driver nag-carry ng [Right now drivers carry a] working capital, so that limits how big of an order size we can get,” he said. — Denise A. Valdez

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